> His plea felt like a microcosm of the pain experienced by restaurant owners across the US as food prices remain stubbornly high despite cooling inflation.
This is like being surprised total data at AWS isn't dropping even though they've halved their customer intake. "Cooling inflation" -> The prices are increasing more slowly. They aren't going to go down, the policymakers are explicit that they think prices dropping would be a problem to be solved.
This is a simple result of policy. All the factors in the article are transient - wars end, droughts break, competition forces companies to reduce their profit margins. But the price of goods is not expected to come down, because if it does then money will be printed until it goes back up.
I'd take this with a grain of salt, given the focus on the infographic and it's prices. I picked one ingredient at random, beans, and the in the first page of Google, there were two food suppliers offering them at a price halfway between the article's "before and after" prices. Similar story for rice.
So has inflation across the food chain driven up costs? Absolutely. Are businesses exaggerating the impact while raising prices disproportionately? Absolutely.
The rice is also an example of some disingenious comparisons used, where he switched from a $25 / 50 pound bag of Long Grain rice to Jasmine rice at $42. Duh, Jasmine is a more premium rice. Don't use that as an inflation indicator unless you're comparing the same product.
> With Italian food, customers “don’t have an issue” with paying $22 for pasta al pomodoro, Lopez pointed out, even though the dish is relatively cheap to make
I certainly do have an issue with paying $22 for noodles with tomato sauce even if it is called pasta al pomodoro.
Personally I think especially vegetarian dishes should be much cheaper, though I like meat but I think the increased production and environmental cost should be reflected in the price.
I find this annoying as well. It's like minimum seat pricing, where they don't want to let you dine there unless you're spending over $20 per person, plus tip. I do understand they are likely using high quality tomatoes and EVOO, but if it's dried pasta the total cost should be under $20.
The article dances around the reality, which is that the guy raised the price because he believes he can establish a premium brand for his dishes.
He might have decided to take the leap recently because increasing costs were troubling, but everybody is navigating the challenges of inflation and the $22 burrito got buzz because it's a gross exagerration of what others are doing.
And as the guy makes clear in paragraph 17 or whatever, he knows that.
I like the guy who called saying GTFO of my country. Like too good to be seen in the same country as "Mexicans" yet too poor to afford $22 for a burrito.
If I got a dime for every time someone believed markets work in practice like they do in theory I'd be rich, except for the fact that someone else would be willing to do the same job for a nickel.
The permitting fees and time to open a restaurant in SF are astronomical. There is also a finite amount of space in SF, so the owner can collude or otherwise engage in price fixing using his existing market position. also, the owner can drop prices and sell at a loss or near loss and force you out of the market if you somehow manage to get the permits.
This is literally what's happening as that's what it costs at El Farolito next door. People are willingly forking over twice as much for this burrito because they want to or don't know any better.
Would really be a less bullshit article if they gave the weights and per burrito amounts/costs. Telling us a bushel of onions went from 15$ to 40$ for instance is bullshit when the burrito only has 0.05$ worth of the onions and now has maybe 0.12$ of burrito.
But no they won't say that because then people will see even with increased costs the fucking burrito shouldn't be 22$.
Has anyone else had this burrito? I got it once or twice last year (when it was probably only $16). Pretty good but not exceptional. I believe the owner when he says he's trying to charge a premium for a viral product. Anyone who doesn't want to pay that much can go next door to El Faro and get a 90% similar burrito for considerably less.
tl;dr: Food prices are growing due to material shortages (war, drought), price stickiness, wage growth, and higher profit margins on substitute goods that weren't affected by the other causes.
This translates into higher prices at the cash register, both at the grocery, and at the restaurant.
Russia produce(d) a significant amount of fertilizer which is required to keep much of the world's breadbaskets and farming functioning such as farmland in Brazil. Less fertilizer means less yield from land which has cascading affects into prices of various inputs. Lower yields of onions, tomatoes, etc will raise the prices of the product.
One of Ukraine's exports was wheat and sunflower products. The absence of wheat from a major producer puts the rest of the world in competition with your wheat products. In addition to bread products and much of the middle aisle of your grocery store, wheat products also go into animal feed. Higher inputs to your animal food costs.
Most "quality" beef is grain-finished in the US (this is not a debate about if grain finished makes better steak, its' just a reality in restaurant supply). If you have more expensive wheat inputs for your higher quality beef, prices go up.
You left out all the new money The Fed pumped into the system during Covid. We all know it happened. I don't understand why anyone would expect a return to pre-Covid prices.
Well yes, it kinda does (happen by "magic"). Inflation is not about prices going up, it's about the value of your dollar going down. That is, what $10 used to buy can't buy that any more. Pump money into the system devalues what is presently in the system. Ok, maybe not magic, just Finance 101.
Inflation, The Fed's 2% target type, is a systematic way of devaluing your buying power. Full stop. Do the math... in 35 yrs - half a lifetime - that cuts the value of your money *in half*. But 2% "inflation" sounds so sweet, easy and must be inevitable, doesn't it? btw, Inflation also helps increase income inequality. It helps move more to the top.
Put another way, given the improvements in technology, productivity, efficiency, globalization, etc. why are prices going up at all? Who benefits from a system that runs complete counter to logic?
I recently finished Lyn Alden's "Broken Money" and highly recommend it, especially the first four sections.
It's also 4 years later. Even if inflation had stuck to the 2% levels we had prior to COVID, we would expect prices to be almost 10% higher today just due to baseline inflation.
Keep in mind the Consumer Price Index is manipulated in the sense different things are swapped in and out in order to get out the number they want.
That is, for (random) example, consumers didn't switch from beef to pork because their tastes changed but because beef became too exoensive. But swap out beef for pork and POOF you've lowed inflation. Yeah. But you've also lowered the broader quality of the goods in the index.
I don't think there is anyone I know who believes inflation is back down to 2%. Anecdotal? Sure. But perception is reality, especially in an election year.
Inflation feels like it is about 2% here, but I think they’ve reached a ridiculous cap on things where I live. I can imagine different parts of the country (and world) getting hit differently depending on how badly they’ve already been hit.
I mean, there's no singular smoking gun. It's all of these factors at once, and as such, there's no simple remedy for it.
We could outlaw war and drought, I suppose.
We could have more labour done by indentures and slaves, that might drive the wage part of the equation down.
We could tax or seize the profit margins and redistribute them to the people buying $22 burritos.
Or we could just live with the understanding that this is a Premium Burrito (tm) that should only be eaten for weddings or birthdays, and it's not supposed to be affordable.
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(I make Premium Burritos at home for a lot less than $22, but I also don't have to pay myself - or shovel money into rent for a hip storefront... Or raise prices by $5 because my ingredient and labor costs went up by $2...)
This is like being surprised total data at AWS isn't dropping even though they've halved their customer intake. "Cooling inflation" -> The prices are increasing more slowly. They aren't going to go down, the policymakers are explicit that they think prices dropping would be a problem to be solved.
This is a simple result of policy. All the factors in the article are transient - wars end, droughts break, competition forces companies to reduce their profit margins. But the price of goods is not expected to come down, because if it does then money will be printed until it goes back up.