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Comment by colechristensen | Hacker News Reader

It certainly seems like it should be more efficient for 100 people to eat dinner in a restaurant than for 40 people to cook 100 meals. (100 / average household size (~2.5) = ~40)

And yet it's considerably more expensive.

Because, it seems, a considerable amount of the cost of restaurant food goes to the overhead costs of the real-estate owners and the financial system. This is both directly and indirectly (the cost of the rent or financing of the restaurant space + the portion of employee wages that go to renting their homes + the cost of everything the employees purchase going towards rent etc.)

In other words it seems a disproportional amount of our economy goes towards people that own instead of people that do.

How do you solve that though? Increase rent-seeking taxes (interest, rentals, etc) and lower income taxes? (basically lowering significantly the benefits from buying things you don't use yourself)

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> And yet it's considerably more expensive.

Even after you've included all of your costs?

It's easy to say the raw food ingredients are considerably less expensive, but that's only a small part of the story. There is a cost of having a kitchen (tools and space in the home), utility costs, not to mention your time.

Maybe a high end specialty restaurant that is selling an experience, but I'd be surprised if you could actually compete with a place like McDonalds on cost.

Maybe a high end specialty restaurant that is selling an experience, but I'd be surprised if you could actually compete with a place like McDonalds on cost.

Fries and a hamburger are about the easiest thing to make, requiring no special equipment. The ingredients are a lot cheaper than buying at McDonald's, too.

If you have more than one person eating, then the cost savings can really add up.

> Fries and a hamburger are about the easiest thing to make, requiring no special equipment.

For all practical purposes of modern urban life, you at least need some kind of specialized heating apparatus.

More importantly, somewhere to store that apparatus. Which is quite often a kitchen. In San Francisco, the median housing cost per square foot is almost $1,000. A small kitchen is defined as 70 square feet, or $70,000. If we assume a rate of 3%, the opportunity cost of that kitchen is almost $6 per day, or $2 per meal if we assume three meals per day.

That brings the cost of an $8 McDonalds meal down to about $6 right there.

Then there is your time. San Francisco has officially declared that your time is worth at least $13/hr. At that rate you have just 28 minutes before you've already used up that $6. That includes gathering the ingredients, prepping the food, cooking the food, and cleaning up afterwards. That does not leave a lot of room for error, even for something as simple as burgers and fries.

It does indeed get better with scale, but I have also left off a number of other costs, including the cost of the food itself. For a single person (in SF) it is no contest without even getting into other costs.

Of course, there is something to be said about the food you can create yourself, versus eating at Mcdonalds every meal. Cost isn't everything.

There's also the fact that you can't just buy enough to make one hamburger and some fries. At a minimum, you can buy enough to make 2-3 hamburgers (and you'll have leftover buns, cheese, etc). So now you have to store that extra stuff (more sq footage and refrigeration costs). You might not eat it all (and it goes bad, meaning you throw it away). Or you might freeze it for later (maybe - some things you can't freeze of course).

I don't think you can get an apartment without a kitchen.

Of course, that doesn't mean they are free. There is a very real cost to having the means of production.

...Have you never cooked a meal for yourself or something? Yes, even after accounting for those things, which are amortized over time, the cost of a single meal is not 4+ times the cost of the ingredients. Maybe if you insist on comparing cooking to your hourly wage it starts to look more competitive.

As for McDonald's, well, if you want McDonald's-quality food you can do it cheaper.

> ...Have you never cooked a meal for yourself or something?

No? I try to cook most of my meals. In fact, I prefer it over eating out. I'm not convinced it is fiscally optimal though, but I'm okay with paying the premium for my preference.

> which are amortized over time

Like I pointed out in my other comment, simply having a small kitchen in San Francisco will cost you $2 per meal (assuming you eat three meals per day in it), on average. And that amount per meal goes up if you ever decide to skip a meal or eat away from home on occasion. That is not an insignificant amount when prepared meals are also available in the single digit range.

> Maybe if you insist on comparing cooking to your hourly wage it starts to look more competitive.

If we're talking a programmers wage, you can barely even get into the grocery store before you've accrued enough to pay for several McDonalds meals. Never mind the actual cooking, cleaning, etc. It's not even in the same ballpark of competitiveness. But, like I pointed out in the other comment, even if you only accounted for minimum wage, it barely gives you enough time to serve a meal before it is costing you money.

For a fair analysis, you do have to consider some amount. Maybe not the full amount that you would make at your day job, but something for sure. It is another opportunity cost, after all. If you are not including opportunity cost, you are not painting a true picture.

> As for McDonald's, well, if you want McDonald's-quality food you can do it cheaper.

I wouldn't get too hung up on McDonalds specifically. There are some decent mom and pop joints that will give you a good meal for even less than McDonalds. The point was to exclude $50+ a plate-type places, or whatever, as they are selling an experience that so happens to include food.

My point is that if you compare like meals with like meals home cooking is going to be far cheaper just about every time. If you compare cooking a steak to eating eggs and potatoes at a diner maybe not. Restaurants sell just about everything at at least 4 times the cost of the ingredients. The energy and so on aren't exactly free but they're not running a charity either.

And further, it's not like there are all these no-kitchen apartments for rent so you almost certainly have a stove anyway. Your average refrigerator apparently costs you less than $12 a month in CA (http://homeguides.sfgate.com/calculate-cost-run-refrigerator...) so it's a pittance too.

> My point is that if you compare like meals with like meals home cooking is going to be far cheaper just about every time.

Is that meant to be a tangent to the original discussion?

This discussion was about restaurants not seeing the benefits of economies of scale. I'm suggesting that they have, it's just not particularly obvious because people are quick to ignore most of the costs of cooking at home.

If all you are saying once you have already invested in the means of production, and don't value your time, that a home cooked meal is cheaper... then sure. I'm sure just about everything you could possibly buy is cheaper than retail if you are only including the raw materials you need to get the job done.

If you already have a garden and your time is free you can grow the food for far less than the grocery store charges. Heck, if you already own a silicon fab and don't value your time designing chips, you can likely build a computer for a fraction of the cost of one in the store. But that's a pretty silly way to look at it. There are real costs to having the production capability that should not be ignored.

Well, I'd argue that we should talk about the world we actually live in and not one where people have homes without stoves and with silicon fabrication devices.

Well, that's certainly an interesting topic of its own, but I don't see how it applies to the context of this discussion.

Because arguments like the square footage of your stove as a percentage of your rent assume, unrealistically, that you have to opt in to having a stove instead of it being a standard part of dwellings.

> And yet it's considerably more expensive.

Is it? I thought one reason that obesity was higher among people with lower incomes is that it's cheaper for them to buy prepared food than to work an hour less and cook themselves?

If I spent the time I did on cooking on paid work instead, the money I would make could pay for a very good meal. (of course, I don't, I still cook because I can't spend every waking hour working or I'd go insane)

That's not exactly it. It's more practical and it's more expensive but not so much more expensive that it's out of reach like better prepared options might be.

For things like this, since the majority of lawmakers are also real estate owners, it would be a non-starter. But, even if it did happen, I feel like the food costs would just increase to compensate for the taxes, since the rental prices would certainly go up disproportionately.

But food prices _wouldn't_ go up in the owner-operated restaurants which would then have a significant competitive edge. Likewise real estate prices should go down, higher taxes would mean less demand and owner-operators would be more motivated to buy than investors. Likewise investor dollars would be guided by taxes to more productive targets.

Investing in restaurants that own land as opposed to investing in land that restaurants use seems like it would have significantly different effects to the economy.

This is not a problem of people who decide on the laws, as they are the owners. So in their pont of view it's the opposite that should happen.

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