Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large.

With what money?

I go the mall sometimes during the weekday lunch hours, and I would see the local high school kids buying lunch at the food court. How on earth do they have the money for it? The allowances they get from parents must be hefty. I make above the American median household income, and I only feel comfortable enough to get Chipotle once in a while. Kids, with no income - how are they doing it?

Especially these days when $10 can’t even buy you a meal at McDonalds. At least back when I was in high school, there was the dollar menu. That’s a lot of McChicken for the $20 my father would give me once in a while. A dollar now can literally buy nothing at the Golden Arches. I understand inflation, but people aren’t making that much more money? A suitable food allowance for a higher schooler of today must be in the hundreds per month.

I guess there’s a lot of rich parents out there in San Francisco.

No wonder it’s said that child rearing is so expensive. With the recent inflation it’s got to be more than the quarter million to raise a child from baby to 18 years of age.

My parents most certainly did not spend a quarter million dollars to raise me. They didn’t have to money to. Not even close. I think it’s people’s expectations of what entails child-rearing that drives up the costs. Childcare, birthday parties, toys, trips to Disneyland (allowance when they reach teenage years); a lot of it is more wants than needs.

I read an article about parents getting into debt to bring their kids to Disneyland. News flash: if you cannot cash flow a Disneyland trip, you cannot afford it. There’s no rule that a child must experience Disneyland. For sure they will be sad when they hear from their school friends who went, but I didn’t have Nike shoes growing up, and I turned out just fine (allegedly). No emotional damage at all.

We did it!

What I want to know is how is everybody affording these (illegal) fireworks? From what I can gather, a stash of them can easily go into the many hundreds of dollars. Those who have lit 4th of July fireworks since the start of the week is almost literally lighting a ton of money on fire. In this economy?

Or, put it another way: is there anything more American than going into (long-term) debt for some momentary fun?

Frequent readers of this blog (shout-out to the dozens of you) knows that I am hugely price-elastic. The high inflation of recent years has completely taken me out of the dining-out market. Even though I can afford it, I simply cannot in good conscience pay $12 for a meal at McDonald’s. We indeed have food at home, kids.

It seems there are a lot more than a dozen of us price-elastic consumers. I’ve started to see McDonald’s advertising a $5 meal deal: your choice of two sandwiches, four nuggets, a drink, and fries. The only explanation for this new strategy is there’s enough customers balking at the high menu prices. Me the customer do not care about your labor and material costs. If your price is above a certain emotional and rational threshold, we will simply go elsewhere.

Restaurants should at least do two out of these three: cheap, fast, and quality. McDonald’s is not quality (we can all agree), so it must deliver cheap and fast. With the recent outrageous menu prices, the company has failed at being cheap. No wonder people are choosing other options.

It’s too bad that just as this $5 meal thing arrives, my local McDonald’s has shut its doors. Sad!

Pour one out for McDs

Word on the street is the McDonald’s franchise store nearest to my home is inexplicably closing permanently. Quite a rapid turn, too. Today - June 23rd, the year of our lord 2024 - is the final day of operation after many decades in business. The cynical part of me thinks the workers there were equally as surprised as the general public. That is a sucky situation indeed to suddenly be out of work - and the financial security that comes with it - just like that.

I can still remember going to the Stonestown McDonald’s as a high school student. Back when a few dollars can get you quite a bit of food. These days? You’d need three of those dollars to buy just the apple pie. As much as it is lamentable to see the restaurant close down, I have to be honest: I’ve stopped patronizing that McDonald’s ever since food prices started inflating like crazy. If I’m going to spend $12 to $15 for a burger/sandwich meal, I rather go to an In-N-Out, or the Shake Shack that recently opened at the same mall.

But it seems I’m amongst the minority of price sensitive restaurant goers. The Stonestown McDonald’s remains busy, at least it looks like so every time I walk past it. If revenue isn’t the issue, then perhaps it’s the newly instated California fast-food workers minimum wage law? One month of this increase in payroll cost and the franchisee is already crying uncle? As much as it's en vogue to besmirch owners as evil, profit-hoarding fat cats, I think often times the math simply isn’t math-ing. It’s not like restaurants aren’t already infamous for ultra low margins and frequent failure.

According to this article, the owner also points finger at the Stonestown mall for the store’s demise. To put it most succinctly: the rent is too damn high. This I can definitely believe. McDonald’s would not be the first food establishment to be chased out of Stonestown due to exorbitant rent.

You love to see it

Word on the street is that McDonald’s is finally feeling the heat from consumers for charging high menu prices. I am very happy to see that I am not the only one around here who is immensely price elastic when it comes to outside food. Ever since a simple meal at the local McDonald’s crossed over the rubicon of $10, I’ve been largely abstaining from the Golden Arches. The only time I go now is during free fries Fridays on the McDonald’s app - spend $1, get medium fries for free. I buy a soda.

I am also very happy to see the supply-demand economic see-saw is alive and well. Capitalism and the free market is not dead! Restaurants can’t keep hiking the prices forever. Though honestly I am a bit surprised at how quickly consumers have pulled back on spending vis-a-vis high menu prices. It’s way too easy to put things on a credit card, isn’t it? What’s $20 here and there when it’s the future you that have to pay for it. I’ve certainly been young, dumb, and friviolous with spending before.

If cost of goods sold remains high into the foreseeable future, I don’t see how much McDonald’s can reduce its prices. Especially here in California, where the government saw fit to implement a $20 per hour minimum wage for fast food workers. Forcing a salary floor is a hugely anti-free market move, an undue burden on the entrepreneur. California McDonald’s franchisees will be stuck between rock and a hard place: corporate rolls out new value menus, but their high labor cost leaves a very thin operating margin.

The way I see it, I don’t see outside food getting less expensive - back to pre-pandemic times - again. I’m going to be like my friend who lives in Switzerland. Eating out over there is tremendously expensive, so she mostly doesn’t. That’s going to me. We’ve got food at home, baby!

Would you like some fries?

Is anyone eating at McDonald’s these days? Prices there have become absurd. A cursory check on the McDonald’s app shows (for San Francisco, California) that you cannot get a meal - a sandwich, a drink, and fries - for less than $13. For the same kind of money, I rather go to In-N-Out for a much fresher burger. The last time I actually ate at McDonald’s was when they were giving out free fries.

Inflation is inflation, right? Cost of goods sold has gone up, and so has cost of labor. Here in California the minimum wage for fast food workers is scheduled to go up to $20-per-hour in a few months. McDonalds (and other restaurants) have already signaled they are going to raise menu prices in response. When a meal is already at least $13, who the heck is willing to pay even more?

It’s basic economics: you can only raise the prices so much before customer demand goes down. I understand McDonald’s want to protect their margins, but it can only go so far. I have to think we’re already at that critical juncture of price vis a vis demand. If my middle-class income is cutting back on McDonalds due to cost, people making less are certainly doing the same.

The high prices won’t change until these fast food places feel the squeeze of less demand. It looks like it still hasn’t happened yet, despite my not so herculean efforts. Revenue and net-income for McDonalds beat expectations due to menu price increases. This is just pure greed, hiding behind the facade of inflation.

Up and up

Word on the street is that Netflix is once again raising its prices. For 4K top quality Netflix, folks are now looking at $22.99 per month. Is it just me or is that dangerously close to basic cable pricing? Include the other streaming services a person is likely to also subscribe to, then it is basic cable TV costs. We’ve cut the cord, but the money is still flowing out.

Fortunate for me, I don’t subscribe to Netflix. But I am not delusional to think that other streaming services - the ones I do subscribe to - won’t hike their monthly fees soon enough. Imitation is the sincerest form of making money. Remember a few months back when Netflix effectively banned password-sharing? It seems to be a surprise revenue increaser for the company. So of course Disney Plus has begun doing the same thing. Our neighbors up north in Canada will receive the initial brunt of the crackdown. It’s just a matter of time for us here in the States.

My friends who are sharing my account (would this be incriminating?) will have to find other ways to watch Disney programming. Legal or otherwise.

Prices for everything keep going up and up, way too rapidly. A good way to combat this, at least for McDonalds, is to use its app. The deals offered on the McDonalds app really blunts the hefty prices. Yesterday there was a buy-one-get-one-free deal on the double cheeseburger. Two sandwiches for less than five dollars is a win these days. Also, the more you use the app, the more points you earn towards free food.

Not to say you should make McDonalds a constant staple of your diet…

Sunset Night Market

It’s National Cheeseburger Day! I hope you all went to your local McDonald’s and got a double-cheeseburger for only 50-cent (apparently, the original price for one when it first debut on the menu). A single day promotion only available on the McDonald’s app. I saw a kid trying to order from the counter and got declined. They really want to harvest your data!

I made the mistake of going to McDonald’s after work. Thanks to the promotion, it was absolutely packed with people ordering the $0.50 double-cheeseburger. Especially in these inflationary times, who can say no to a sub-dollar sandwich (with cheese)? Nutritional value be damned, we just want to save a buck or two. Regular price for a double-cheeseburger (San Francisco, mind you) is $4.19. I’ll take the nutritional deficit hit, thank you.

The first ever Sunset Night Market this past Friday was also absolutely packed with people. The local district supervisor had visited Taiwan and drew inspiration from the famous night markets there. The somewhat quixotic attempt to replicate it here in San Francisco (we can’t have nice things) was a rousing success… if you only count the sheer number of visitors. It was so packed that one could not see what a booth was selling without being right next to it. I haven’t been in such a dense crowd since rush hour subway in Guangzhou, China.

Prolific crowd number aside, there’s much to improve upon if the Sunset Night Market wants permanent staying power. Firstly there needs to be way more food vendors. The draw of the night markets in Taiwan is numerous food stands. By my count, the amount of food vendors at the Sunset Night Market was less than ten. This in turn worsened the experience of getting food, because the lines -for the vendors that were there - were super long.

The organizers didn’t allocate enough space for the lines (they’ve closed down only three blocks) so it was a mess of people in line blocking the general flow of the crowd. They need more space for everything. The next night market should close down at least six blocks for the same amount of vendors. Sadly, plans for the next one won’t be until Spring 2024!? I am rooting for its continued success, though.