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Business & incomeExperience excerpt · English

A few years ago I was staying at an AirBnB in Carlsbad/Oceanside

A few years ago I was staying at an AirBnB in Carlsbad/Oceanside. I wandered down to a little coffee shack/breakfast place across the street from the beach. As I sat out front, enjoying my cup of coffee, I thought, "this is exactly what I want to do with my retirement... I want to buy this shack and pay some 17 to 20 year olds to make people coffee and pancakes". While that sounded great in my vacationing mindset, the reality is far more soul-crushing. Upon returning home I started doing some back of the napkin math on what it'd actually take to run a place like that. 3 or 4 employees at $20 an hour (this is California), plus insurance, plus... well all the other stuff it takes to employ a human. That's before I even consider food and supplies. Coffee at 2 dollars a cup, pancakes at 8 dollars a plate. Could we sell enough even to make payroll? Forget any profit. I believe this is why we're seeing the sunset on the little mom-n-pop businesses. There's no way these folks can pay living wages. …

Original discussionThe Coffeeshop Fallacy196 source comments · at import
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GH

I expect that over time, we'll see: - More automation - More self-service - And more labor-intensive services and things people want that can't be delivered at the prices mainstream consumers are willing/able to pay

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DI

if it’s a nice spot and good coffe, I would happily pay $4-5 for a cup of coffee. most of the other times i’ll make it at home to offset

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PI

You’ll see the same thing here on HN. I remember a discussion quite a while back about how SE Asia lacks a vibrant startup culture and people were going back and forth about how companies should just bring in Silicon Valley tech workers to get the industry going. Upon mention that Cambodian and Vietnamese simply can’t pay the wages SV techies would want, commenters seemed confused as to why—these struggling countries should just do it and quit making excuses. It’s simply obvious that a country where people are getting maybe $2000 a year should have companies with enough free cash to bring in thousands of Americans who want at least 300k but would settle for 250k if they can get a luxury condo thrown in. Bizarre to witness these statements sometimes—frustrating when it’s crowds. It’s good when people do, at the very least, a passing glance at the data and consider troubles that could occu…

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SE

If you're thinking about this, then you have to consider how those business you mention make money with a similar model. Starbucks: they don't charge $2 a coffee. I would only ever get a drip coffee and I think it's around $3, most people who are going there get drinks in the >$5 range. Plus they have a lot of traffic - more customers = less wages required for each drink McDonalds: They charge less than $2/coffee. They charge less than $8 for a breakfast. They make their money on super high volume. Your vision: you're enjoying lingering, enjoying the sun. You're enjoying the floor (patio) space, which means you can't have high volume unless you have a huge space, which wouldn't work with your "little shack" concept. Unless there's a nearby park or beach with free barely limited space, while also still having enough traffic to stay busy. Very limited spots that can work. (so as with most …

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JO

In my part of the US, there are more mom-and-pop coffee shops than chain shops, and they're thriving. I think that one of the reasons they're thriving is that they charge a lot more than $2 for coffee and $8 for pancakes.

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SO

If wages had risen appropriately then people wouldn't have trouble paying the kinds of prices necessary to keep small places like the ones you're talking about running.

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AN

I am a bit confused - is this an argument against paying a living wage? Are you saying that Starbucks will be the only remaining business able to pay a living wage? Or that society simply cannot bear the price of paying it? That the livable wages make business impossible? Or that the coffee must stay at $2?

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BA

How can McDonalds make the payroll then? Whatever they do to succeed/survive, can't it be copied?

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