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Originally Posted by loK2thabrain
So then why is it that places like Subway are so much cheaper than the restaurant alternative?
For the same reason Walmart is cheaper than a mom and pop store. Volume. Small margins at high volume. The process is streamlined and the ingredients are cheaper in both quality and processing (including transportation, prep, etc). Also, Subway takes less than 3 or 4 minutes to get you in and out the door once it's your turn to be serviced. They're not paying someone to wait on you for 45-60 minutes, and to keep a cook, a hostess, and a manager on duty. They're just paying a manager and a glorified sandwich making cashier.
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I have a hard time believing food would cost 20% more than it does now if tipping establishments went to a non-tipping model. Neither of us have the data to back up our side of this, so we'll just have to agree to disagree.
A simple analysis of the difference in wages for two waitresses for one shift at a small restaurant:
Right now they make $2.50 an hour. There's three of them at 8 hours, so that makes $60 bucks.
If they were to make $10 an hour (a more realistic wage to recruit the same level of service they were getting for $2.50+tips), so three waitresses at 8 hours..that's $240 bucks, a difference of $180.
That's not just $180 bucks. That's $180 going into the cost of the goods, and I won't go into profit margins and stuff because my point was assuming the owner didn't make a dime more or less than they currently do. I wish I knew more about the restaurant business to throw some realistic numbers out there from here but I can't and I'm not going to sit here and pretend I know for sure. It might not be a 20% increase in the price to the customer, but I'd wager it's close.
The more realistic thing that would happen is that the owners would keep the wages at or below $8 an hour and every restaurant in the country will employ the same people that society has scrubbing toilets and calling you at home to sell you cleaning products or credit card offers. Bottom of the barrel in an industry that is alive because people enjoy eating out so much.
Wow, this is going deeper than I thought. I'm going to stop here because now I'm thinking about the entire economy and how things would have to change to phase out tipping from the entire system.
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And I have backed up what I'm saying with logic.
Not really. Your argument has degenerated to "neither of us know for sure, so let's leave it at that."
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You're agreeing that it started out as a way for business owners to increase profits, but your claim is that somewhere along the way, they decided to go ahead and reduce food prices to the point where it's now a wash.
You're giving business owners way more credit than they deserve. Not to say they're all evil people or anything, because I don't think they are, but their job is to maximize profits. To assume (with zero data to back it up) that they have reduced prices along the way to make it a wash is pretty laughable.
I'm not saying they reduced prices to keep it fair for the public. I'm saying that over time, to be competitive, the price wars keep everything down quite a bit. Unless everyone agrees to fix prices (lol gas industry much?), general economics dictates that everyone will price around the same as the lowest price one business is willing to settle for, and the few profitable businesses will scrape by with ****ty margins. It's the same reason Walmart is putting mom and pops out of business. The mom and pop cannot streamline and keep costs down low enough to make a profit at the sale prices Walmart sets, and consumers generally refuse to pay more than they have to for a good.
I can agree with you that the original intent in tipping was for the owners that originally designed the process. It's not the same anymore though. Now it's just kinda stuck that way, and you're deluding yourself into blaming "the current owners" and "the current industry" to save two dollars.
*edit* This is actually kinda fun btw
Last edited by ReidLockhart; 07-28-2011 at 09:01 PM.