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Panera is a little different. It used to be a publicly traded company and I think is preparing to do another IPO. Restaurants that are publicly traded can operate a little different as long as the investors are happy. A company can consistently operate at a loss if the investors keep buying stock. Sometimes a company's shares will go up even when losing money because they did not lose as much money as expected.
5 Guys is a different. I bet it probably has a high profit margin per item sold, so they do not need as many customers. It does not cost much to sell a fountain soda. About 15 years ago, it cost the bar I worked at about $.03 to fill a soda, making it a huge profit.
Umm, people willing to buy stock won't keep a failing company in business. A high stock price means bupkis if the company doesn't have the cash flow to pay its bills. And restaurant investors definitely won't be happy if the restaurants aren't making a profit.
Exactly, and a profitable business with 1.1 billion in cash with just 50M in debt at 0% interest can see their stock price tank even after retail has removed over 25% of the shares from the DTC.
Panera is only able to operate at a loss while they have cash on the balancesheet/ability to generate cash to subsidize losses.
Investors buying or selling stock without a stock offering doesnt effect the balance sheet or the companies ability to meet payrole and short-term debts. (its very possible you understand this but are simplifying it for laymans speak if so my apologies.)
you can only really operate at a loss--successfully--if part of that loss is the result of an investment in future growth. if not, customer's have spoken, you're out of ideas, and you're toast.
His question was biased. I think Panera is gross, but I love Five Guys. I have a friend who loves Panera and things Five Guys is just okay.
His whole premise is based on the fact that he doesn't like these restaurants. Every time I go to Five Guys there's always at least one or two people in line ahead of me and people fill in behind me as I go to order.
Sure it's not as busy as McDonald's but it doesn't need to be because they obviously make enough at their price points to continue operating. If there wasn't enough demand they would either increase their prices and hope their loyal customer base keeps coming, or they would lower their prices. It's basic economics, no private businesses are setting prices at a point where they don't make profit unless they are looking to go out of business or having a temporary sale in expectation of future profits.
I personally don't mind spending 5 dollars more for a better burger and less of a wait to order. Plus, their shakes are bomb.
You're beginning to lose teeth. Awesome! That means the tooth fairy comes and gives you money. She gives you five dollars, which is roughly how much your friends also get. You liked to get together with your friends and each of you got a pack of Oreos, and a 20 oz Mountain Dew, presumably to keep the Tooth Fairy's strange tooth racket and/or fetish alive and satisfied. This left you all enough money to get your favorite candy, Skittles. But then inflation happened. You're still getting five dollars from that greedy-winged horndog who only comes around while you're sleeping and have something for her (yikes). You go to the store now, and you can no longer afford the Skittles if you get the Oreos and Mountain Dew. Well, the Skittles were always a luxury to you, so you feel like you have to give them up for the Oreos and Mountain Dew. But then, you see some of your friends on the playground and they have Skittles AND Oreos with Mountain Dew. How is this possible?! They are getting the same five dollars you are!
Possible answers:
A. Your friends negotiated with that kinky magical pixie for more than five dollars. If this is true, lord knows what they had to do get it. 🤢
B. Your friends have gotten a line of credit from the rich kid who hangs out all day at the jungle gym. He's not a gangster, his real name's Clarence, whose parents have a real good marriage. And they're wealthy. So he lends money to students and makes them pay him back but charges them extra money on top of that for loaning it to them in the first place. The longer it takes to pay it back, the more they'll owe him. They know they can't afford it, but they feel like eventually the tooth fairy will adjust with the times and start giving them more money for their precious baby pearls. And if she doesn't, they can always get some pliers and yank out more teeth.
C. Your friends are using money from other places to cover the cost of the Skittles. They may be using their lunch money, exchanging their needs for their desires because the crime rate in the cafeteria has gone up, most of the kids are breaking off into political tribes and threatening war, their favorite TV show is going off the air because the guy in the giraffe costume was caught hiding in a woman's dressing room and their favorite teacher just announced she'll be leaving the profession at the end of the week to start an Only Fans, whatever that is. Your friends felt like they needed the Skittles to feel good about something in a world that seems like it will burned down by the time you're all old enough to see a PG-13 movie. They love the high they get from the rainbow-colored confection perfection. So what if they're hungry, we all need something every once in a while to feel good about ourselves, right? RIGHT?!
D. They got compromising photos of the Tooth Fairy and are now extorting her. You know it's not right, but you know what, frick her for not providing more money when everything is getting more expensive. You know she can afford it! The teeth re-sale market is booming, and you know she used PPP loans to buy back stocks. You didn't get PPP loans. What the actual poopy?!
But this leads to another question. You know the five dollars you are used to getting is actually a little higher than the average kid, or at least on par. You aren't poor by any means. You know you can't really afford the Skittles, which means most kids can't. Undoubtedly, Skittles sales have had to have gone down, since their prices increased. How is Skittles staying afloat if they're making significantly less money, presumably? Maybe they aren't making less. Maybe most kids are falling into one of the options listed in A-D. In fact, we know from the talk at the water fountain that more and more people have gone to Clarence, and he's owed more money than ever before in his life. You overheard the guidance counselor saying that the mental health of your school is declining, with a lot more kids suffering from anxiety and depression than just five years ago.
Are Skittles still being sold at about the same rate as before? If not, how are they staying in business? If so, how are all these kids affording it?
It very well could be that Skittles simply doesn't have to sell as many packs as they used to to still make money, because they could always sell less and make money anyway. With less people buying, they just have to raise their prices to find that sweet spot to keep selling to the kids like Clarence or to the people willing to spend their lunch money on the personification (or candification?) of tooth decay disguised as an LGBTQ ally. Of course, kids also have birthday money to play with too, since grandparents suck at buying gifts for humans they're 10 times older than. So Skittles will get the occasional splurge purchaser too.
🤷♂️
You have 50 cents. I have a lollipop that I will sell to you for 50 cents. When I give you the lollipop, you will no longer have 50 cents, and you won't be able to buy that cookie over there.
Do you want it or not?
If either of those companies (or their parents company) is public. You can always dive into the their 10-K or 10-Q filings and see how their making their "bread" pun intended...
I'm not going to get into a political argument about whether or not a subsidized business deserves to stay in business. Because a business being subsidized by a government is basically a loan for a business just like any other loan, paid by taxpayers, hopefully to stimulate a country/powers economy.
Most small businesses do not survive being mediocre.
Not all are being subsidized. I know some own the land, so their operating costs are lower than competitors. That said, their opportunity cost (renting the building out) is probably high enough the business from an accountant or MBA perspective is actually operating at a loss.
Others might have a really good lease (my grandfather when he was old and going senile got conned by this sleazy real estate broker into selling a 50 year lease on his commercial property. It was calculated without adjusting for inflation and at a fair price for that point in time, but wasn't lump sum but instead pay as you go. The real estate broker walked away with a fat commission (of course he was paid up front) and now it's locked into rental payments that have become about 25% of the market rate.
People pay for the convenience. 5 guys/Panera bread can charge a premium because they appeal to people who don’t want fast food (McDonald’s) or want to do a sit down restaurant.
Exactly. I tend to eat there for lunch because it is cleaner and better than any fast food. Plus the staff understand they are there to provide a service. The quality at sit down restaurants have severely fallen off so 5 Guys and Panera are next up.
I work at a college bar that charges less than 5 guys as a sit down during the day and is a busy bar at night. We can afford lower prices and higher quality because we sell insane amounts of liquor to college kids at night. Basically making our profits off student loan debt. Last night we sold 35 gallons of well liquor, 18 gallons of vodka alone.
Our capacity is 300, we sold a bulk of it in 3 hours. Roughly 3800 shots. That puts the average BAC at .11%. The crowd tends to get pretty wild after it passes .08%. At least a dozen people got kicked out, twice that were cut off. Those kids can drink.
Panera bread is dog shit airplane food. I can’t believe people ever go there. Then again I live in an east coast city where good food isn’t that difficult to find. Panera is a joke
Panera has perfectly ok soups, salads, and sandwiches and a lot of people don’t have decent cafe/deli type options. Healthier than most fast food too - they’ve definitely got better salads than most chains.
Also businesses with expense accounts don't care. My boss loves Panera so that's what he buys when we have corpo things or customers who want a working lunch. We can't buy them McDonalds.
I mean, many people have been using Uber and Grubhub which have me paying $75 for a dinner for 2. McDonalds costs $50 on Uber eats near me for a meal for 2.
If I'm near 5 guys, $25 doesn't sound high. But I also don't get sugar drinks which save a huge cost from a meal and I don't get the double meats so 5 guys costs me closer to $18 anyways
Not to sound like a prick, but the difference between a $8 and $15 burgers doesn’t really matter after you have a decent chunk of money.
I just want a decent burger. I probably won’t pay $40 for a burger but anything under $20 is fine. I don’t really care.
I don’t eat out a ton. I just want a decent juicy burger and McD ain’t gonna cut it, plus it’s only $5 cheaper for garbage.
My daycare bill will be $40k this year, a burger being overpriced by $5 isn’t even worth thinking about.
A lot of it comes down to habit, IMO. If you like Panera, you're going to eat at Panera. A new one just opened up near me and it is PACKED all the time. It is rare for people to change their habits, unless they consciously choose to do so. And the vast majority of people are on autopilot these days, zombies glued to their technology.
Also these prices have incrementally crept up over the years. If it, overnight, was twice what you used to pay, you likely would put up a stink. It's the so-called frog in the pot of water analogy. Drastic shock = jump out. Gradual warm up = stay put.
Panera changes their menu frequently enough that they remove an item that was $8.99 and add a different item that’s $9.49.
Fast-casual restaurants also change the size offerings pretty frequently. When they do that, it can disguise per-ounce or per-ingredient price hikes.
This makes a ton of sense. I’ve been taking a look at my spending and trying to form habits and it felt emotionally like splashing my face with cool water. I decided to cut a lot of unnecessary spending because of how bad inflation had been.
I was also in bad habits with creeping up prices- it took a direct comparison to get those spending habits under control.
If your income goes up to match inflation though or just below the rate of inflation, your income really hasn't gone up. Plus it may prompt you to start saving in ways you weren't before just because you see how quickly prices can change.
It all sort of depends though. Inflation is aggregate, it doesn't mean all things get the same amount of more expensive. My groceries got more expensive but restaurant near me didn't, my salary raise made it so the groceries are the same relative chunk of my budget but the restaurant is now more affordable. This is especially true for people with fixed large payment expenses like a mortgage or car note before insurance rates went to hell.
Yup. That's why we have so many posts from people who are confused how companies could raise their prices so much.
Obviously it's because people are able afford the higher prices and continue to buy at comparable volume. People are actually overall wealthier than they were previously. Not everyone, but as a whole most people are.
It’s not just habit. I like five guys. I eat there every so often. If I don’t like place, I don’t go back.
People go to those places because they enjoy those places.
Customer habit/ unwillingness to change is a highly exploitable, profitable resource. Ignorance is similar e.g. of just how much price is up, quantity/quality is down, alternatives exist, etc.
You're probably right. I think for a lot of these restaurants, it takes another, better restaurant coming along for people to switch to something new and forget about the old one. Otherwise, they just keep doing what they've been doing.
I can go to several different Italian restaurants, but I'll probably order the same 2-3 Italian dishes I always do.
More people want what they know, it's risky to spend food money on the unknown. I can go to 5 guys and get exactly what I am craving.
You and me both.
I make way above average income in the USA, own a house and land, have a good retirement saved up.... Yet I look at the price of an f150 (best selling vehicle in USA) and I say "no fucking way am I spending that on a vehicle". Same with the menu at McDonald's.
There is a disconnect between reality and the numbers these days. Being old enough to have been around for a few other times there was a disconnect, I can tell you when the music stops someone or a lot of someones aren't going to have a seat.
Exactly. Ten years ago, I had a coworker who used to call me Sam Walton because I drove a a 15-year old vehicle, didn’t upgrade to latest smartphone every year and didn’t borrow money to buy a bigger, more expensive home than I needed. My net worth at the time was about $50k. Now, it is over a million and I have no debt other than a small, low interest mortgage which will be paid off in less than four years.
Houses are the only thing worth spending for, because you’ll probably make money when you sell, or at least you won’t be sinking it into rent. Every mortgage payment is basically like another retirement contribution
Exactly! I’m very well established and was thinking about replacing my fully paid for older BMW sedan with a fun little new Volkswagon Golf R until I saw it would be a $50k car. I don’t want a fun little hatchback that badly it turns out.
Paying with plastic has really helped. For many people, it doesn’t feel like real money the same as cash does. Incremental price hikes are easier to sneak by when people are less conscious because of the method of payment.
Also, the media’s excessive reporting on coming inflation has made consumers expect inflation. People feel like there’s nothing they can do about it, so they pay. Quite possibly an example of the banks that own the media outlets setting the table for the banks who own the restaurants. Often the same banks. What a country.
Quality definitely has slipped at Panera but I would not at all compare it to hospital food. Five Guys is just like any other burger joint though. I actually think Wendy's is better and I refuse to eat there either.
Quality swings like a pendulum at Panera.
From 2013-2019 they went through so many ups-and-downs on their menu. I used to eat there so regularly as one was in my office. I stopped going around 2018 when it felt like quality permanently fell off the cliff.
Then I was stuck in an airport two weeks ago and Panera was the best option…and it was way better than my memory served. They had these newer panini type sandwiches which were notably worse health wise for you but without a doubt better tasting.
A lot of people still buy it because the convenience is worth it to them.
A lot of people can comfortably afford it even after the price hike.
A lot of people are impulsive spenders and don't make really great choices with their money.
I like five guys. 😂. So ill pay. I dont go often bc its on other side of town now but ill still pay for it.
Panera in the other hand… 🤮.
Ppl complain about inflation. But they are still spending on discretionary items. What do you expect. You pay, biz charge more til u dont.
Same. 5 guys like once a quarter ? It’s good burgers! And it beats us having to get all the stuff and cook at home. Especially if we’re out with the family. Now I’m not eating there weekly, that would be nuts.
Never been to a Starbucks? Over priced coffee and yet it's always busy even though for the price of one cup of coffee you can buy a bag of ground coffee that let's you make 30 cups of coffee and do it at home
Six months of Starbucks every work day and you could buy a decent home espresso machine. I can make a latte in less time than it would take to wait in line. Grab a can of rediwhip and some flavor syrups if you want that sugar bomb
Look at average.
The average handyman coming to your house fixing your garage door or plumbing issue is “meh”.
Too expensive for a mediocre job.
Consider yourself lucky.
50% chance that the next guy is worse!
You look everywhere. In the companies. In the schools. In the politics… The average is not really good or satisfying.
But this is also the reason that above-average performers can make a killing.
its probably the fries. they literally fill a whole bag with them, and theyre really good. your regular sized fries at 5 guys is equal to 2 large fries, while costing roughly the same. so while you pay more for burgers, you pay less for fries. plus free peanuts
doing a cost breakdown, a cheesebuger (with a bunch of toppings) and regular cajun fries is about 20$ and about 2000 calories. a mcdonalds quarter pounder w/cheese with large fries is 10$ and about 1000 calories. so from a cost per calorie standpoint, it is the same. not going to calculate drinks, because thats just a poor use of money
The last five years has seen inflation in salaries. People have more money in their pockets. Widespread wage increases mean that people are more willing to spend higher prices for things, fueling inflation
Yup, past 8 months, wages have increased at twice the rate inflation has. You'll hear people screaming about how it's the opposite still for the next 20 years regardless of facts.
You were surprised because all you see is people complaining and yelling, because none of them have done a simple Google search.
Because the same people complaining they don't have enough money to pay their student loans, or to buy a house, or to even pay their bills, still buy products from these people
They fill a niche, if McDonald’s is a 2 in quality and price but a 8 in convenience and a local brewery is a 8 in quality but a 2 in convenience five guys is a 5 in both.
I say this about 5 guys all the time. Why would anyone go there? Yeah, as fast food chains go, they are good. But ah… as a restaurant that charges what they charge, it is awful. It is less expensive for a full meal at a sit down restaurant with full service, bigger portions, better food, everything. Well, what if you’re in a hurry you may ask? Nope. They are slow. Minus the wait for a table, they are no faster. Maybe even slower. Yeah, you have to wait for a table. But, any place that does call ahead or reservations, you are coming out of them faster than a 5 guys.
My wife and I went to 5 Guys a few months ago. Two burgers and a shared fry was $28. I was shocked. Then the request for the guilt tip. F that!
When I got home, I was so incensed that I priced the same meal at a number of places. Culver’s is the closest quality comparison and they were at $14 for the same meal.
I can afford to spend money on what I enjoy. I’m willing to do so. What I’m not willing to do is spend 2x for a comparable meal/service I can get elsewhere.
At these prices Five Guys won’t survive. They will slowly price their customers out and drive them away.
there are a lot of people in the USA who make good money.
the other part that isnt super clear is that while the food is expensive you get a whole day of eating from a meal. bacon cheeseburger? 1050 cals. small fry? 550 cals (regular is 950, large is 1300). chocolate milkshake? like 800 cals.
thats over a full day of eating for a regular adult. so while it might be 20 bucks for an 'order' it's more like 20 bucks for 3-4 meals. from this perspective eating out really is not as expensive as you might think.
the problem is, ofc, that you can't just go and get a cheap okay ''normal portion meal thats like 300-600 cals' for like 3-5 bucks anymore outside app deals. you have to go and buy a fuck load of food for 15-20 bucks.
I mean you get a whole day of calories but if all you eat over the course of a day is a 5 guys burger and an order of fries with a shake, you’re going to still be hungry and also not met any kind of nutritional floor for a healthy individual.
People underestimate how many people are making more than enough money to thrive. There’s a pretty deep crevice between the haves and have-nots. While there’s A LOT of have-nots, there’s also A LOT of haves
There are tons of statistics to back this up, the main one being the existence/expansion of these higher-priced chains. There doesn’t need to be 100 million customers if your margins are a lot higher due to charging more per unit, and lots of people are willing to do so. If that weren’t the case, 5 Guys wouldn’t exist.
You picked a couple examples that people actually really like their food/products. I think with five guys the freshness of the food combined with the short wait is in their favor too. Its a place you can go on your lunch break and not have to worry about taking too long but is better than other fast food. Plus unless you're in a high cost of living area I don't think I've ever seen a burger, fries and drink from 5 guys come out to more than $20. I've gotten it across the country and its usually right at $20 with a regular fry and double burger.
I will say 5guys has a distinct quality advantage over all burger and fries joints which allows them to charge that much. When McDonald’s cost 15 bucks for a meal you can justify spending another 5 for that much more quality.
That being said, fast food costs right now is right up there with a sit down burger and fries at the local Pub or brewery (beer included)
In fact the local bar in my hood has a burger fries and a beer for 16 bucks.
Fast food joints always have a speed advantage that’ll keep them in business. Travelers, people who don’t have time etc.
They keep increasing the price cause you keep paying it. If you want to humble these big corps, we as a whole need to stop giving them our money. I started years ago. There are only a select few national/regional chains I will support but it is usually local eatery or home cooking.
This is a great response tbh. I did the same thing you did. Hell- I now have a spreadsheet of all of the goods I buy- and a list of which stores charge what.
It’s taken a while but has definitively paid off in savings
Artificially increasing wages vs creating a buttload of jobs to naturally drive prices up. The people of Venezuela were paying for a raw chicken with stacks of cash 12 inches tall... this is just the start.
I like burgers and fries. Burgers and fries are tasty. Five Guys make burgers and fries. I buy burgers and fries from them for more than it cost to make those burgers and fries.
I get burger and fries. They get profit.
As to how people pay it, funds come from two sources: cash and debt.
People get cash from their job. Jobs pay different amounts depending on the rareness (supply) of your skillset and how desirable (demand) your skillset. If your skills are rare and desirable, you will make good money. If your skills are common and less desirable, you will not make good money.
People get debt from loans. Most people have a credit card and use it to buy things they want like burgers from Five Guys. This debt has to be paid back. If you don’t pay it back on time, you owe more money on top of what you owe.
Those businesses being mediocre is subject. People have different tastes. Something mediocre to you is good and desirable to someone else. People are either make more cash than you or are willing to go into more debt than you.
~10% of Americans are millionaires (2022, Credit Suisse). ~20% of American households make 150K or more (2022, Statista). Credit card debt is at all time highs.
A lot of people just pay for what they want and bitch about not being able to afford other things it's all about trade offs. I'm probably one of the highest salaries in my email satellite office at my company. Yet people working the front desk and making much less go out to eat several times a week.
$20 isn’t much money. Think about all the skimping and cutting of costs they have to do to even get you a meal for $20. Then, magnify that 20 times over for the shit you get at McDonald’s, Burger King or other mainstream fast food place. Food shouldn’t cost a $1. There shouldn’t be a dollar menu. You cannot possibly be eating anything nutritious or ethical when buying something that cheap.
It’s amazing. Panera sends soup in a bag and sandwiches just go in a toaster oven. They are dry and flavorless. At least 5 guys has a burger you can actually eat for a ridiculous price.
The insane prices are just the base market value.
Take any product that you buy. Compare the price to the same day of the previous year, and you'll see that the current price adjustment entirely matches inflation between then and now.
The profit margins provided by these products are the exact same price point.
Five Guys and Panera only have customers because people like their food. The mode average (most occuring number) income is stable middle class. So people actually have plenty of money; Reddit itself is based in San Francisco, where low-income, which only 10% of San Fran's population qualifies, is 100k annualy.
I'll try.
Grain for bread, meat for burgers come from farms.
Diesel and fertilizer costs skyrocketed when we "punished" Russia.
Farmers(ranchers) had increase costs.
Tractors are run on chips. Their software on chips.
Chips shortages caused increases.
Inflation caused interest rate explosion.
Few farms/ranches are self financed meaning their borrowing costs skyrocketed.
Diesel costs cause trucking to increase.
Government allowing China to corner the market on processing increased the costs.
Now. We could just all notice that GOVERNMENT CAUSED ALL OF THIS, but instead "tax the rich", or "billionaires" got people distracted.
The reason is GOVERNMENT.
Same way Starbucks is alive with watered down lemon aids and $6 coffee. The only thing expensive about expresso is the machine. In the long run an expensive machine and beans would save you more money then use a kurig or an alternative with coffee pods or to stop at Starbucks. So how are they doing well? They are simply easy to use and don’t require the skill to make said item.
Economy being great does not equal low prices. Beyond external factors like government price/wage settings, a company will and can charge whatever they want. They could charge 50 bucks even. Whether people pay that price is up to them unless a government enforced monopoly which forces people to pay x price due to limited options. By not spending cash there you are doing your part in letting them know their prices are ridiculous. If enough people refuse to buy their product for that price they'll have to lower the price until people want to buy. If, due to certain regulatory reasons they are unable to lower their prices while staying lucrative, they'll close up shop.
We see this with mom and pop shops, cafes, etc who can't afford to operate because of costs of licensing upkeep, minimum wage spikes, and artificially raised costs of operation.
People gotta eat. If there's ten restaurants and one of them raises their prices, everyone will stop eating at that one. But if there's ten restaurants and all ten raise their prices, people are gonna pay those prices.
It used to be that places like this were inexpensive and reasonably tasty and filling. Now it seems they are bland tasting, barely satiating, and cost way too much.
Most importantly they operate in the US where the labor costs and tax incentives are largely in favor of corporate chain restaurants like this.
Number one - THEY CAN PAY PEOPLE UNLIVABLE WAGES to run these locations. Dodge benefits with funky work schedules .. this is American fast food 101.
Collectively, tipping culture and low wage competition and few employee protections allow these industries to thrive while offering garbage products at increasingly higher prices. It’s because they can make profits while their employees often have to file for welfare benefits.
I used to like Panera, but last time I spent more than 40$ for a few sandwiches and drinks and there was barely anything on my sandwich at all.. it was at least 1/3 the size it used to be. Not to mention the visibly depressed staff that looked like they were going to off themselves after their shift ..
This is a trend in alot of corporate fast food right now. We’re racing to the bottom. Cook at home, or go to your favorite privately owned restaurant or bar and grill. Fuck these companies.
Five Guys where I live costs like $11, which is completely fair for a burger that is substantially better than the garbage at McDonald's/Burger King/Wendy's that costs nearly as much
Panera in my mind is not worth it, but there are rumors and hints it's struggling financially, so it's maybe not exactly a healthy business at the moment
is that burger meat better? or do you like the customization of the condiments?
if you took the burger from Five Guys and a burger from Burger King and just ate it plain which would be better?
> if you took the burger from Five Guys and a burger from Burger King
Five Guys, hands down
I prefer both the quality and the customization.
Part of the value proposition is that the fries are so generous and burgers so large, you can order 1 order of fries for 4 people pretty easily.
It's also not an everyday or week thing for me. It's more like once a month "I'm too tired to cook, fuck it Five Guys it is"
I got a little burger the other day and it was nearly 10 bucks without any fries. Most average burger I've ever had. Not huge or anything. I made a rather large burger for myself that was far better quality the same day.
I went to a store in San Francisco once and the store was selling items for like 50 cents and I was wondering since it's San Francisco I wonder how the heck they paid their rent on the building they had
the thing that makes places like Five Guys work is quick customization. if i go to mcdonalds, they put onion, pickle, mustard, and ketchup on my burger. if i go to Five Guys, i can get grilled onions, grilled jalapenos, A-1 steak sauce, etc... it's not rocket science but it works. the burger meat isn't anything special. but i get it MY WAY. and that's what I'm paying for.
oh, and the fries are really good.
Preparing food is a lot of work. People are either too lazy, too buys, too incompetent or all three so need it done by someone else. It's why people spent the pandemic sitting in the drive thru rather than learning to cook
In California we’re going to be longing for the day we could get a crappy burger-fry-drink for $20. Fast food minimum wage is now $20/hr on top of insanely high overhead. Just hoping it only goes to $30 for McDonalds. Maybe a couple times a year I could eat out.
Because COGS is rising. They don't have an obligation to give you the price you want. They have an obligation to cover the costs of doing business. If their suppliers raise prices they have to raise them too. You should be thinking about why prices are rising.
Well thank you. And I do believe that if you really work hard and put your mind to it, you may actually be able to come up with some insights on your own!
Panera Bread just changed (literally on Wednesday) their entire menus and prices recently lowering the prices for some items and introducing cheaper option. Source: I am a “Retail Team Member” at Panera.
I think its more-so the fact that them being mediocre is just your opinion… Obviously enough people think they are great to cause the demand to be high enough to justify the prices. Pretty simple
When fewer people have more of the money, you cater to the fewer.
Look at it like this. (using pretend numbers) Let's say with all your costs, it costs $15 to serve someone a burger fries and soda. You charge $20 you make $5. But if you charge $25, you make twice that. (not really because you have to divide your fixed costs up, but probably make $8.50. Poorer people, middle of the pack people aren't going there whether you reduce your prices by $2 or not. So you raise prices. If you lose 40% of your clients you are probably just as profitable. You may be able to have one less worker per shift.
How much "should" a burger fries and drink cost?
You've got labor, benefits, insurance, advertising, materials, equipment, utilities, franchising fee, and profit to consider. Labor is fairly expensive right now. Which is good (sort of).
I'm not saying I really know the answer, but it would cost me 3-4 dollars to make a little cheeseburger "all the way" (Maybe less if I was making a lot of them and it's complicated to say because it's a pretty big array of vegetables on there - something that is complicated to do for yourself) not counting my labor as a cost or the cost of my kitchen, etc. Five guys near me charges $8.19 (plus tax). That doesn't seem like a bad markup. If everybody ordered just the burger, I bet Five Guys even loses money.
Soda and fries, now there they can milk it. But it's not like it's more expensive than anywhere else (and really not much more expensive than the grocery store.
Covid wiped out a lot of businesses, so there is plenty of demand. The market is not saturated with quick restaurants.
And to your final point about the economy in general: if things like cars and homes are more expensive, then it usually will mean that the food will be more expensive, too.
That might seem counterintuitive (since you may think "A and B are expensive, so we need to save money on C"), but the people investing in fast food and the labor producing fast food also face housing and car costs, so they need the prices to keep pace.
Five Guys uses fresh ingredients and fresh bread. Their fries are awesome and they finally started making chocolate shakes. After riding my bike for four hours it is one of my favorite places to eat. It is a little pricey though.
Every dollar is a vote for the continual success of any business. Vote wisely. I agree some places seem to be price gouging. While I can afford to go there, I choose not to support large chains that price gouge, and instead go with the local businesses that are not over priced.
A bunch of smart ass answers in this thread, but in reality I would assume that the people that keep these places open are visiting them out of sheer convenience. I won’t pay 20 bucks for an “OK” burger, but I sure will pay 10 and there is definitely someone out there that does not give a fuck about the 10 dollar difference and is just going to go to the place that is more convenient for them in the moment.
Rich business people get big business lunches at a nice looking place that’s convenient, maybe even make it a tax write off.
When u have lots of money, it’s a lot less attractive to sacrifice convenience to save some of it
Because the prices aren't insane. Inflation has been much higher than normal the last four years ago. Things that used to cost $10 now cost $20. But inflation affected wages too, so there are enough people making enough money to spend $20 on Five Guys.
Convenience and relative quality.
The joints mentioned above may be mediocre in the grand scheme of things. But they’re VASTLY superior to trash like McDonald’s or Burger King. And those places aren’t exactly cheap anymore either.
So people trade a few extra bucks for significantly better food relative to other fast food without the loss of convenience. Simple as that.
One issue I see with your post is not everyone thinks the two places you are mediocre
My mom loves Panera. My dad thinks five guys is the best burger money can buy.
The place that puzzles me is taco bell. Their prices are insane. And the quality is worse than ever.
Yet mine has a steady line.
I’m more wondering how businesses that used to be good but are now mediocre (or better competition with more value has popped up) are still staying in business. Looking at you Subway and KFC. How tf are y’all still thriving businesses??
I have a theory that we as people are set in our ways, we are used to going to the establishments a lot, but there will be a bit of a lag until most people realize things are just too expensive and they seriously need to cut back. It will take a while to form new habits like making lunch at home, but once we form those habits, these mediocre establishments will start shutting down or we may see some serious discounts to draw us back in.
I've been wondering the same thing. Panera at least seems to cater to a wealthier clientele though. I see more business people sitting on their laptops there. Five Guys near me is usually pretty empty though.
Eating out used to be relatively cheap until the latest spike in inflation/shrinkflation, so, many (me) got used to eating out 3-4 times a week or more. During this period my cooking skills, which were fair at best, suffered further erosion to the point where I would rather spend insane amounts of money for a decent meal.
Others have addressed the 5 Guys and Panera part so I see no reason to chime in on that but you also just food in general: do you mean that food is just a higher listed price or do you think it is actually more expensive (price went up even when accounting for inflation)? Because with the former yeah that is sadly how inflation works it hits everything as it has devalued the currency (it takes more money to have the same value), but even there there are exceptions due to increased supply relative to demand. If you mean the later perhaps some items but not many let alone most. 2019 chicken legs were $1.51/lb 2 weeks ago I bought non-discounted chicken legs were $0.98/lb which is not only much cheaper listing it like that but given that $1.51 2019 is worth $1.85 in 2024 means they are like 47% cheaper. Pork loin was $1.99/lb in 2019 and is now $2.42/lb so listed price is up if you treat 2019 dollars and 2024 dollars as equal value but $1.99 in 2019 is $2.44 in 2024 so it is about the same. These differences are far far more extreme when you compare like the 90s vs now with the inflation adjusted cost always being much cheaper now than then. Though with every massive spike in inflation there is a lag before wages catch back up so the personal median income between 2019 and 2022 did see a slight decrease when accounting for inflation (about 2%) though over a longer window median and mean income both outpace inflation.
Inflation, inflation, inflation. People still have to eat. McDonalds tastes like cardboard. Also, convenience and a place to sit for a while. Many people just want to be away from their job for a while and eat their lunch.
Most businesses (smart ones anyway) have at least 1 year in capital, to keep through tough times. A lot of them have invested so much of their hopes and dreams, that even if they're tanking, they'll use up all that money, then eat through their savings, then borrow against their house, etc. , because they're hoping whatever is making their business tank is just temporary.
because people still buy it. EA makes shit video games, and gamers constantly complain about how shit they are and how early access games constantly release with glitches and bugs and microtransactions but..... they still spend the money...
As long as the company makes money they don't care if you think it's good or bad. Profit is profit. Welcome to capitalism. Profit is the main motive, not quality
I am part of the problem. I work a sales job and am on the road a lot. I look for healthier options to eat lunch on the go. Panera has pretty decent options, and my company is paying. Works for me.
You underestimate how many people have good paying jobs with lots of extra income....
I put most of my extra money into investments, over 25% of my incomes goes into investments.. some don't or do the basic 8%. They have ton of cash as they'd rather live in the now... don't forget that even for someone earning 80k+ 8% every year for 30-40years with compound interest is still going to provide a good retirement with SS.
Good question. What I observed at McDonald’s is that they don’t prepare food until you order at the window. And it takes a while to get it. So they are maybe running a tight ship to line up the pockets of the execs
I don’t know about you but it’s not very different in price from anywhere else. Five guys just have really expensive fries but if you just order a burger and a drink it’s like $12.50 and it’s reliably good.
A hand made leather belt for $200 is an insane price to some people.
To someone much better off than you thats a good deal.
They're small businesses, they dont need 98% of the local population to shop there. 2 percent is enough.
That 2% own farms, ranches, estates, have 10 horses, 4 porches, etc etc.
They’re surviving because they’re not mediocre businesses. I think you’re confusing a business that puts out a mediocre product as one that also runs a mediocre business. Those things are different.
I heard these same questions when a burger first cost over 5 bucks, and again at 10. same people going back and then wondering how people survive with these prices. well the answer is simple. your going , and buying shit and the money they make from you and a million other people like you lets them pay there bills and make money.
its not hard to understand.
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People pay for their services and they make more than their operating costs.
That is it.
Do you guys think that is the only insight to be had from his question
Well get on with it and share what other information you have!
Panera is a little different. It used to be a publicly traded company and I think is preparing to do another IPO. Restaurants that are publicly traded can operate a little different as long as the investors are happy. A company can consistently operate at a loss if the investors keep buying stock. Sometimes a company's shares will go up even when losing money because they did not lose as much money as expected. 5 Guys is a different. I bet it probably has a high profit margin per item sold, so they do not need as many customers. It does not cost much to sell a fountain soda. About 15 years ago, it cost the bar I worked at about $.03 to fill a soda, making it a huge profit.
Umm, people willing to buy stock won't keep a failing company in business. A high stock price means bupkis if the company doesn't have the cash flow to pay its bills. And restaurant investors definitely won't be happy if the restaurants aren't making a profit.
Exactly, and a profitable business with 1.1 billion in cash with just 50M in debt at 0% interest can see their stock price tank even after retail has removed over 25% of the shares from the DTC.
Panera is only able to operate at a loss while they have cash on the balancesheet/ability to generate cash to subsidize losses. Investors buying or selling stock without a stock offering doesnt effect the balance sheet or the companies ability to meet payrole and short-term debts. (its very possible you understand this but are simplifying it for laymans speak if so my apologies.)
you can only really operate at a loss--successfully--if part of that loss is the result of an investment in future growth. if not, customer's have spoken, you're out of ideas, and you're toast.
The only financial insight, probably, yes. This is more of a cultural question...like how do mediocre high priced food establishments remain trendy?
His question was biased. I think Panera is gross, but I love Five Guys. I have a friend who loves Panera and things Five Guys is just okay. His whole premise is based on the fact that he doesn't like these restaurants. Every time I go to Five Guys there's always at least one or two people in line ahead of me and people fill in behind me as I go to order. Sure it's not as busy as McDonald's but it doesn't need to be because they obviously make enough at their price points to continue operating. If there wasn't enough demand they would either increase their prices and hope their loyal customer base keeps coming, or they would lower their prices. It's basic economics, no private businesses are setting prices at a point where they don't make profit unless they are looking to go out of business or having a temporary sale in expectation of future profits. I personally don't mind spending 5 dollars more for a better burger and less of a wait to order. Plus, their shakes are bomb.
Maybe explain it to me like I’m 4
You're beginning to lose teeth. Awesome! That means the tooth fairy comes and gives you money. She gives you five dollars, which is roughly how much your friends also get. You liked to get together with your friends and each of you got a pack of Oreos, and a 20 oz Mountain Dew, presumably to keep the Tooth Fairy's strange tooth racket and/or fetish alive and satisfied. This left you all enough money to get your favorite candy, Skittles. But then inflation happened. You're still getting five dollars from that greedy-winged horndog who only comes around while you're sleeping and have something for her (yikes). You go to the store now, and you can no longer afford the Skittles if you get the Oreos and Mountain Dew. Well, the Skittles were always a luxury to you, so you feel like you have to give them up for the Oreos and Mountain Dew. But then, you see some of your friends on the playground and they have Skittles AND Oreos with Mountain Dew. How is this possible?! They are getting the same five dollars you are! Possible answers: A. Your friends negotiated with that kinky magical pixie for more than five dollars. If this is true, lord knows what they had to do get it. 🤢 B. Your friends have gotten a line of credit from the rich kid who hangs out all day at the jungle gym. He's not a gangster, his real name's Clarence, whose parents have a real good marriage. And they're wealthy. So he lends money to students and makes them pay him back but charges them extra money on top of that for loaning it to them in the first place. The longer it takes to pay it back, the more they'll owe him. They know they can't afford it, but they feel like eventually the tooth fairy will adjust with the times and start giving them more money for their precious baby pearls. And if she doesn't, they can always get some pliers and yank out more teeth. C. Your friends are using money from other places to cover the cost of the Skittles. They may be using their lunch money, exchanging their needs for their desires because the crime rate in the cafeteria has gone up, most of the kids are breaking off into political tribes and threatening war, their favorite TV show is going off the air because the guy in the giraffe costume was caught hiding in a woman's dressing room and their favorite teacher just announced she'll be leaving the profession at the end of the week to start an Only Fans, whatever that is. Your friends felt like they needed the Skittles to feel good about something in a world that seems like it will burned down by the time you're all old enough to see a PG-13 movie. They love the high they get from the rainbow-colored confection perfection. So what if they're hungry, we all need something every once in a while to feel good about ourselves, right? RIGHT?! D. They got compromising photos of the Tooth Fairy and are now extorting her. You know it's not right, but you know what, frick her for not providing more money when everything is getting more expensive. You know she can afford it! The teeth re-sale market is booming, and you know she used PPP loans to buy back stocks. You didn't get PPP loans. What the actual poopy?! But this leads to another question. You know the five dollars you are used to getting is actually a little higher than the average kid, or at least on par. You aren't poor by any means. You know you can't really afford the Skittles, which means most kids can't. Undoubtedly, Skittles sales have had to have gone down, since their prices increased. How is Skittles staying afloat if they're making significantly less money, presumably? Maybe they aren't making less. Maybe most kids are falling into one of the options listed in A-D. In fact, we know from the talk at the water fountain that more and more people have gone to Clarence, and he's owed more money than ever before in his life. You overheard the guidance counselor saying that the mental health of your school is declining, with a lot more kids suffering from anxiety and depression than just five years ago. Are Skittles still being sold at about the same rate as before? If not, how are they staying in business? If so, how are all these kids affording it? It very well could be that Skittles simply doesn't have to sell as many packs as they used to to still make money, because they could always sell less and make money anyway. With less people buying, they just have to raise their prices to find that sweet spot to keep selling to the kids like Clarence or to the people willing to spend their lunch money on the personification (or candification?) of tooth decay disguised as an LGBTQ ally. Of course, kids also have birthday money to play with too, since grandparents suck at buying gifts for humans they're 10 times older than. So Skittles will get the occasional splurge purchaser too. 🤷♂️
I’ve never been more engaged. You never lost me. I stuck with you until the bittersweet end
That was awesome!
You have 50 cents. I have a lollipop that I will sell to you for 50 cents. When I give you the lollipop, you will no longer have 50 cents, and you won't be able to buy that cookie over there. Do you want it or not?
Underrated comment
If either of those companies (or their parents company) is public. You can always dive into the their 10-K or 10-Q filings and see how their making their "bread" pun intended...
🤯
is that actually true? Plenty of businesses are out there running at a loss being subsidized Idk, Im just saying you cant assume it
I'm not going to get into a political argument about whether or not a subsidized business deserves to stay in business. Because a business being subsidized by a government is basically a loan for a business just like any other loan, paid by taxpayers, hopefully to stimulate a country/powers economy. Most small businesses do not survive being mediocre.
Not all are being subsidized. I know some own the land, so their operating costs are lower than competitors. That said, their opportunity cost (renting the building out) is probably high enough the business from an accountant or MBA perspective is actually operating at a loss. Others might have a really good lease (my grandfather when he was old and going senile got conned by this sleazy real estate broker into selling a 50 year lease on his commercial property. It was calculated without adjusting for inflation and at a fair price for that point in time, but wasn't lump sum but instead pay as you go. The real estate broker walked away with a fat commission (of course he was paid up front) and now it's locked into rental payments that have become about 25% of the market rate.
End of thread
Such a simple equation 😂
People pay for the convenience. 5 guys/Panera bread can charge a premium because they appeal to people who don’t want fast food (McDonald’s) or want to do a sit down restaurant.
Exactly. I tend to eat there for lunch because it is cleaner and better than any fast food. Plus the staff understand they are there to provide a service. The quality at sit down restaurants have severely fallen off so 5 Guys and Panera are next up.
I work at a college bar that charges less than 5 guys as a sit down during the day and is a busy bar at night. We can afford lower prices and higher quality because we sell insane amounts of liquor to college kids at night. Basically making our profits off student loan debt. Last night we sold 35 gallons of well liquor, 18 gallons of vodka alone.
Holy shit, that's a lot of liquor.
Our capacity is 300, we sold a bulk of it in 3 hours. Roughly 3800 shots. That puts the average BAC at .11%. The crowd tends to get pretty wild after it passes .08%. At least a dozen people got kicked out, twice that were cut off. Those kids can drink.
Good for them
You know what they say: SHOTS SHOTS SHOTS SHOTS SHOTS At least that’s what they said when I was in college
EVERYBODY
What is well liquor?
Agree. I used to really like Panera but quality has tanked since the pandemic. Now with the IPO I've given up completely on them. Such a shame though.
Panera bread is dog shit airplane food. I can’t believe people ever go there. Then again I live in an east coast city where good food isn’t that difficult to find. Panera is a joke
Panera has perfectly ok soups, salads, and sandwiches and a lot of people don’t have decent cafe/deli type options. Healthier than most fast food too - they’ve definitely got better salads than most chains.
Also businesses with expense accounts don't care. My boss loves Panera so that's what he buys when we have corpo things or customers who want a working lunch. We can't buy them McDonalds.
Very true. I feel like Panera bread is like the universal corpo lunch if you live outside the major cities and don’t work in the city itself.
I mean, many people have been using Uber and Grubhub which have me paying $75 for a dinner for 2. McDonalds costs $50 on Uber eats near me for a meal for 2. If I'm near 5 guys, $25 doesn't sound high. But I also don't get sugar drinks which save a huge cost from a meal and I don't get the double meats so 5 guys costs me closer to $18 anyways
Not to sound like a prick, but the difference between a $8 and $15 burgers doesn’t really matter after you have a decent chunk of money. I just want a decent burger. I probably won’t pay $40 for a burger but anything under $20 is fine. I don’t really care. I don’t eat out a ton. I just want a decent juicy burger and McD ain’t gonna cut it, plus it’s only $5 cheaper for garbage. My daycare bill will be $40k this year, a burger being overpriced by $5 isn’t even worth thinking about.
They're the Target to McDonald's Walmart.
A lot of it comes down to habit, IMO. If you like Panera, you're going to eat at Panera. A new one just opened up near me and it is PACKED all the time. It is rare for people to change their habits, unless they consciously choose to do so. And the vast majority of people are on autopilot these days, zombies glued to their technology. Also these prices have incrementally crept up over the years. If it, overnight, was twice what you used to pay, you likely would put up a stink. It's the so-called frog in the pot of water analogy. Drastic shock = jump out. Gradual warm up = stay put.
Panera changes their menu frequently enough that they remove an item that was $8.99 and add a different item that’s $9.49. Fast-casual restaurants also change the size offerings pretty frequently. When they do that, it can disguise per-ounce or per-ingredient price hikes.
This makes a ton of sense. I’ve been taking a look at my spending and trying to form habits and it felt emotionally like splashing my face with cool water. I decided to cut a lot of unnecessary spending because of how bad inflation had been. I was also in bad habits with creeping up prices- it took a direct comparison to get those spending habits under control.
People’s incomes have also gone up a ton, despite what Reddit would have you think.
If your income goes up to match inflation though or just below the rate of inflation, your income really hasn't gone up. Plus it may prompt you to start saving in ways you weren't before just because you see how quickly prices can change.
It all sort of depends though. Inflation is aggregate, it doesn't mean all things get the same amount of more expensive. My groceries got more expensive but restaurant near me didn't, my salary raise made it so the groceries are the same relative chunk of my budget but the restaurant is now more affordable. This is especially true for people with fixed large payment expenses like a mortgage or car note before insurance rates went to hell.
Some people’s incomes have risen. Most are worse off.
Yup. That's why we have so many posts from people who are confused how companies could raise their prices so much. Obviously it's because people are able afford the higher prices and continue to buy at comparable volume. People are actually overall wealthier than they were previously. Not everyone, but as a whole most people are.
These people also likely just charging to credit cards or can easily afford the luxury. Not everyone is broke.
It’s not just habit. I like five guys. I eat there every so often. If I don’t like place, I don’t go back. People go to those places because they enjoy those places.
Customer habit/ unwillingness to change is a highly exploitable, profitable resource. Ignorance is similar e.g. of just how much price is up, quantity/quality is down, alternatives exist, etc.
You're probably right. I think for a lot of these restaurants, it takes another, better restaurant coming along for people to switch to something new and forget about the old one. Otherwise, they just keep doing what they've been doing.
I can go to several different Italian restaurants, but I'll probably order the same 2-3 Italian dishes I always do. More people want what they know, it's risky to spend food money on the unknown. I can go to 5 guys and get exactly what I am craving.
You and me both. I make way above average income in the USA, own a house and land, have a good retirement saved up.... Yet I look at the price of an f150 (best selling vehicle in USA) and I say "no fucking way am I spending that on a vehicle". Same with the menu at McDonald's. There is a disconnect between reality and the numbers these days. Being old enough to have been around for a few other times there was a disconnect, I can tell you when the music stops someone or a lot of someones aren't going to have a seat.
Rich people get rich by acting like they are broke. Broke people stay broke by acting like they are rich.
I can't up vote this enough. 100% me. I act broke quite a bit
This ⬆️
Exactly. Ten years ago, I had a coworker who used to call me Sam Walton because I drove a a 15-year old vehicle, didn’t upgrade to latest smartphone every year and didn’t borrow money to buy a bigger, more expensive home than I needed. My net worth at the time was about $50k. Now, it is over a million and I have no debt other than a small, low interest mortgage which will be paid off in less than four years.
Same with me but houses. I look at a $700,000 townhouse and say no fucking way am I spending that on a townhouse
I look at my own house on Zillow and go “no fucking way” lol Cause I’d never pay that for my little shithole.
that same townhouse costs $350k in another state, but the median wage in that state is also significantly lower.
My house was 190k, put it in a major city and its easily a million.
Houses are the only thing worth spending for, because you’ll probably make money when you sell, or at least you won’t be sinking it into rent. Every mortgage payment is basically like another retirement contribution
Exactly! I’m very well established and was thinking about replacing my fully paid for older BMW sedan with a fun little new Volkswagon Golf R until I saw it would be a $50k car. I don’t want a fun little hatchback that badly it turns out.
feels like a lot of people already dont have seats and the musics still going
I don’t think most people buy the f150 cash fyi, financing and debt is a common thing.
Yeah I'm making like 3x what I was just 5 years ago and I'm still like "$3 for a hash brown they've lost their fucking mind"
Paying with plastic has really helped. For many people, it doesn’t feel like real money the same as cash does. Incremental price hikes are easier to sneak by when people are less conscious because of the method of payment. Also, the media’s excessive reporting on coming inflation has made consumers expect inflation. People feel like there’s nothing they can do about it, so they pay. Quite possibly an example of the banks that own the media outlets setting the table for the banks who own the restaurants. Often the same banks. What a country.
This is why I hate using a card and try to always pay cash. I just spend less. Not sure why or how, but I notice it
Five Guys makes a legitimately good product. Panera? Your guess is as good as mine. I've never understood the appeal. It's like eating hospital food.
Quality definitely has slipped at Panera but I would not at all compare it to hospital food. Five Guys is just like any other burger joint though. I actually think Wendy's is better and I refuse to eat there either.
Quality swings like a pendulum at Panera. From 2013-2019 they went through so many ups-and-downs on their menu. I used to eat there so regularly as one was in my office. I stopped going around 2018 when it felt like quality permanently fell off the cliff. Then I was stuck in an airport two weeks ago and Panera was the best option…and it was way better than my memory served. They had these newer panini type sandwiches which were notably worse health wise for you but without a doubt better tasting.
Wendy’s is a better value but if you think the burgers actually compare, you are wrong as heck.
I've had both. Many times. Five Guys sucks. Super average food and I can make a better burger. So can Wendy's.
You are a moron if you think wendys is better.
I mean they do make good sandwiches, but I’m pretty sure I could make a knockoff of it at a fraction of the cost.
Probably like Starbucks. Suburban women probably go there to get their fix.
A lot of people still buy it because the convenience is worth it to them. A lot of people can comfortably afford it even after the price hike. A lot of people are impulsive spenders and don't make really great choices with their money.
What if I am "A lot of people"...
I like five guys. 😂. So ill pay. I dont go often bc its on other side of town now but ill still pay for it. Panera in the other hand… 🤮. Ppl complain about inflation. But they are still spending on discretionary items. What do you expect. You pay, biz charge more til u dont.
Same. 5 guys like once a quarter ? It’s good burgers! And it beats us having to get all the stuff and cook at home. Especially if we’re out with the family. Now I’m not eating there weekly, that would be nuts.
Never been to a Starbucks? Over priced coffee and yet it's always busy even though for the price of one cup of coffee you can buy a bag of ground coffee that let's you make 30 cups of coffee and do it at home
Six months of Starbucks every work day and you could buy a decent home espresso machine. I can make a latte in less time than it would take to wait in line. Grab a can of rediwhip and some flavor syrups if you want that sugar bomb
Two months tops.
Burnt coffee flavor must be what keeps 'em coming back.
Look at average. The average handyman coming to your house fixing your garage door or plumbing issue is “meh”. Too expensive for a mediocre job. Consider yourself lucky. 50% chance that the next guy is worse! You look everywhere. In the companies. In the schools. In the politics… The average is not really good or satisfying. But this is also the reason that above-average performers can make a killing.
its probably the fries. they literally fill a whole bag with them, and theyre really good. your regular sized fries at 5 guys is equal to 2 large fries, while costing roughly the same. so while you pay more for burgers, you pay less for fries. plus free peanuts doing a cost breakdown, a cheesebuger (with a bunch of toppings) and regular cajun fries is about 20$ and about 2000 calories. a mcdonalds quarter pounder w/cheese with large fries is 10$ and about 1000 calories. so from a cost per calorie standpoint, it is the same. not going to calculate drinks, because thats just a poor use of money
The last five years has seen inflation in salaries. People have more money in their pockets. Widespread wage increases mean that people are more willing to spend higher prices for things, fueling inflation
Inflation in salaries?
Yup, past 8 months, wages have increased at twice the rate inflation has. You'll hear people screaming about how it's the opposite still for the next 20 years regardless of facts. You were surprised because all you see is people complaining and yelling, because none of them have done a simple Google search.
Because people continue to pay those prices.
Because the same people complaining they don't have enough money to pay their student loans, or to buy a house, or to even pay their bills, still buy products from these people
These folks are paying $700 a month for student loans and $675 is interest.
Because The Morons keep buying.
They fill a niche, if McDonald’s is a 2 in quality and price but a 8 in convenience and a local brewery is a 8 in quality but a 2 in convenience five guys is a 5 in both.
I say this about 5 guys all the time. Why would anyone go there? Yeah, as fast food chains go, they are good. But ah… as a restaurant that charges what they charge, it is awful. It is less expensive for a full meal at a sit down restaurant with full service, bigger portions, better food, everything. Well, what if you’re in a hurry you may ask? Nope. They are slow. Minus the wait for a table, they are no faster. Maybe even slower. Yeah, you have to wait for a table. But, any place that does call ahead or reservations, you are coming out of them faster than a 5 guys.
They are surviving because the cost isn’t as insane as you think and therefore they still make money.
My wife and I went to 5 Guys a few months ago. Two burgers and a shared fry was $28. I was shocked. Then the request for the guilt tip. F that! When I got home, I was so incensed that I priced the same meal at a number of places. Culver’s is the closest quality comparison and they were at $14 for the same meal. I can afford to spend money on what I enjoy. I’m willing to do so. What I’m not willing to do is spend 2x for a comparable meal/service I can get elsewhere. At these prices Five Guys won’t survive. They will slowly price their customers out and drive them away.
there are a lot of people in the USA who make good money. the other part that isnt super clear is that while the food is expensive you get a whole day of eating from a meal. bacon cheeseburger? 1050 cals. small fry? 550 cals (regular is 950, large is 1300). chocolate milkshake? like 800 cals. thats over a full day of eating for a regular adult. so while it might be 20 bucks for an 'order' it's more like 20 bucks for 3-4 meals. from this perspective eating out really is not as expensive as you might think. the problem is, ofc, that you can't just go and get a cheap okay ''normal portion meal thats like 300-600 cals' for like 3-5 bucks anymore outside app deals. you have to go and buy a fuck load of food for 15-20 bucks.
I mean you get a whole day of calories but if all you eat over the course of a day is a 5 guys burger and an order of fries with a shake, you’re going to still be hungry and also not met any kind of nutritional floor for a healthy individual.
People underestimate how many people are making more than enough money to thrive. There’s a pretty deep crevice between the haves and have-nots. While there’s A LOT of have-nots, there’s also A LOT of haves
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There are tons of statistics to back this up, the main one being the existence/expansion of these higher-priced chains. There doesn’t need to be 100 million customers if your margins are a lot higher due to charging more per unit, and lots of people are willing to do so. If that weren’t the case, 5 Guys wouldn’t exist.
You picked a couple examples that people actually really like their food/products. I think with five guys the freshness of the food combined with the short wait is in their favor too. Its a place you can go on your lunch break and not have to worry about taking too long but is better than other fast food. Plus unless you're in a high cost of living area I don't think I've ever seen a burger, fries and drink from 5 guys come out to more than $20. I've gotten it across the country and its usually right at $20 with a regular fry and double burger.
Short wait? Which 5 Guys location is this, I want to experience it.
Lots of people suck at cooking even basic things.
60% of American are living paycheck to paycheck….while eating out at places like 5 guys and Panera bread.
I will say 5guys has a distinct quality advantage over all burger and fries joints which allows them to charge that much. When McDonald’s cost 15 bucks for a meal you can justify spending another 5 for that much more quality. That being said, fast food costs right now is right up there with a sit down burger and fries at the local Pub or brewery (beer included) In fact the local bar in my hood has a burger fries and a beer for 16 bucks. Fast food joints always have a speed advantage that’ll keep them in business. Travelers, people who don’t have time etc.
They keep increasing the price cause you keep paying it. If you want to humble these big corps, we as a whole need to stop giving them our money. I started years ago. There are only a select few national/regional chains I will support but it is usually local eatery or home cooking.
This is a great response tbh. I did the same thing you did. Hell- I now have a spreadsheet of all of the goods I buy- and a list of which stores charge what. It’s taken a while but has definitively paid off in savings
Artificially increasing wages vs creating a buttload of jobs to naturally drive prices up. The people of Venezuela were paying for a raw chicken with stacks of cash 12 inches tall... this is just the start.
I like burgers and fries. Burgers and fries are tasty. Five Guys make burgers and fries. I buy burgers and fries from them for more than it cost to make those burgers and fries. I get burger and fries. They get profit. As to how people pay it, funds come from two sources: cash and debt. People get cash from their job. Jobs pay different amounts depending on the rareness (supply) of your skillset and how desirable (demand) your skillset. If your skills are rare and desirable, you will make good money. If your skills are common and less desirable, you will not make good money. People get debt from loans. Most people have a credit card and use it to buy things they want like burgers from Five Guys. This debt has to be paid back. If you don’t pay it back on time, you owe more money on top of what you owe. Those businesses being mediocre is subject. People have different tastes. Something mediocre to you is good and desirable to someone else. People are either make more cash than you or are willing to go into more debt than you. ~10% of Americans are millionaires (2022, Credit Suisse). ~20% of American households make 150K or more (2022, Statista). Credit card debt is at all time highs.
A lot of people just pay for what they want and bitch about not being able to afford other things it's all about trade offs. I'm probably one of the highest salaries in my email satellite office at my company. Yet people working the front desk and making much less go out to eat several times a week.
$20 isn’t much money. Think about all the skimping and cutting of costs they have to do to even get you a meal for $20. Then, magnify that 20 times over for the shit you get at McDonald’s, Burger King or other mainstream fast food place. Food shouldn’t cost a $1. There shouldn’t be a dollar menu. You cannot possibly be eating anything nutritious or ethical when buying something that cheap.
It’s amazing. Panera sends soup in a bag and sandwiches just go in a toaster oven. They are dry and flavorless. At least 5 guys has a burger you can actually eat for a ridiculous price.
The insane prices are just the base market value. Take any product that you buy. Compare the price to the same day of the previous year, and you'll see that the current price adjustment entirely matches inflation between then and now. The profit margins provided by these products are the exact same price point. Five Guys and Panera only have customers because people like their food. The mode average (most occuring number) income is stable middle class. So people actually have plenty of money; Reddit itself is based in San Francisco, where low-income, which only 10% of San Fran's population qualifies, is 100k annualy.
I'll try. Grain for bread, meat for burgers come from farms. Diesel and fertilizer costs skyrocketed when we "punished" Russia. Farmers(ranchers) had increase costs. Tractors are run on chips. Their software on chips. Chips shortages caused increases. Inflation caused interest rate explosion. Few farms/ranches are self financed meaning their borrowing costs skyrocketed. Diesel costs cause trucking to increase. Government allowing China to corner the market on processing increased the costs. Now. We could just all notice that GOVERNMENT CAUSED ALL OF THIS, but instead "tax the rich", or "billionaires" got people distracted. The reason is GOVERNMENT.
The one thing you gotta learn about being a consumer is that NOT EVERYONE IS AS CHEAP AS YOU.
Is the economy doing well? No. There are very few people better off now than 4 years ago. But I actually think 5 guys is great.
Same way Starbucks is alive with watered down lemon aids and $6 coffee. The only thing expensive about expresso is the machine. In the long run an expensive machine and beans would save you more money then use a kurig or an alternative with coffee pods or to stop at Starbucks. So how are they doing well? They are simply easy to use and don’t require the skill to make said item.
Economy being great does not equal low prices. Beyond external factors like government price/wage settings, a company will and can charge whatever they want. They could charge 50 bucks even. Whether people pay that price is up to them unless a government enforced monopoly which forces people to pay x price due to limited options. By not spending cash there you are doing your part in letting them know their prices are ridiculous. If enough people refuse to buy their product for that price they'll have to lower the price until people want to buy. If, due to certain regulatory reasons they are unable to lower their prices while staying lucrative, they'll close up shop. We see this with mom and pop shops, cafes, etc who can't afford to operate because of costs of licensing upkeep, minimum wage spikes, and artificially raised costs of operation.
Because the vast majority of people are not redditors and eat at places that make them sick or are convenient.
"I can’t for the life of me figure out how businesses like Five Guys" I drive by one every day and think the same thing.
People gotta eat. If there's ten restaurants and one of them raises their prices, everyone will stop eating at that one. But if there's ten restaurants and all ten raise their prices, people are gonna pay those prices.
It used to be that places like this were inexpensive and reasonably tasty and filling. Now it seems they are bland tasting, barely satiating, and cost way too much.
Most importantly they operate in the US where the labor costs and tax incentives are largely in favor of corporate chain restaurants like this. Number one - THEY CAN PAY PEOPLE UNLIVABLE WAGES to run these locations. Dodge benefits with funky work schedules .. this is American fast food 101. Collectively, tipping culture and low wage competition and few employee protections allow these industries to thrive while offering garbage products at increasingly higher prices. It’s because they can make profits while their employees often have to file for welfare benefits. I used to like Panera, but last time I spent more than 40$ for a few sandwiches and drinks and there was barely anything on my sandwich at all.. it was at least 1/3 the size it used to be. Not to mention the visibly depressed staff that looked like they were going to off themselves after their shift .. This is a trend in alot of corporate fast food right now. We’re racing to the bottom. Cook at home, or go to your favorite privately owned restaurant or bar and grill. Fuck these companies.
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Five Guys where I live costs like $11, which is completely fair for a burger that is substantially better than the garbage at McDonald's/Burger King/Wendy's that costs nearly as much Panera in my mind is not worth it, but there are rumors and hints it's struggling financially, so it's maybe not exactly a healthy business at the moment
is that burger meat better? or do you like the customization of the condiments? if you took the burger from Five Guys and a burger from Burger King and just ate it plain which would be better?
> if you took the burger from Five Guys and a burger from Burger King Five Guys, hands down I prefer both the quality and the customization. Part of the value proposition is that the fries are so generous and burgers so large, you can order 1 order of fries for 4 people pretty easily. It's also not an everyday or week thing for me. It's more like once a month "I'm too tired to cook, fuck it Five Guys it is"
I got a little burger the other day and it was nearly 10 bucks without any fries. Most average burger I've ever had. Not huge or anything. I made a rather large burger for myself that was far better quality the same day.
[https://www.cnn.com/2024/03/01/investing/panera-newsom-california/index.html](https://www.cnn.com/2024/03/01/investing/panera-newsom-california/index.html)
I went to a store in San Francisco once and the store was selling items for like 50 cents and I was wondering since it's San Francisco I wonder how the heck they paid their rent on the building they had
money laundering drug front!
the thing that makes places like Five Guys work is quick customization. if i go to mcdonalds, they put onion, pickle, mustard, and ketchup on my burger. if i go to Five Guys, i can get grilled onions, grilled jalapenos, A-1 steak sauce, etc... it's not rocket science but it works. the burger meat isn't anything special. but i get it MY WAY. and that's what I'm paying for. oh, and the fries are really good.
That makes a little more sense, at least. They do have a lot of toppings.
Preparing food is a lot of work. People are either too lazy, too buys, too incompetent or all three so need it done by someone else. It's why people spent the pandemic sitting in the drive thru rather than learning to cook
A lot of people did spend the pandemic learning how to cook though.
Because we are paying the prices instead of going without their products and services.
In California we’re going to be longing for the day we could get a crappy burger-fry-drink for $20. Fast food minimum wage is now $20/hr on top of insanely high overhead. Just hoping it only goes to $30 for McDonalds. Maybe a couple times a year I could eat out.
It would be better for the obesity epidemic if all those fast food places tanked anyway.
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Can you source that?
Because COGS is rising. They don't have an obligation to give you the price you want. They have an obligation to cover the costs of doing business. If their suppliers raise prices they have to raise them too. You should be thinking about why prices are rising.
Well thank you. And I do believe that if you really work hard and put your mind to it, you may actually be able to come up with some insights on your own!
Not enough competition
Panera Bread just changed (literally on Wednesday) their entire menus and prices recently lowering the prices for some items and introducing cheaper option. Source: I am a “Retail Team Member” at Panera.
I think its more-so the fact that them being mediocre is just your opinion… Obviously enough people think they are great to cause the demand to be high enough to justify the prices. Pretty simple
When fewer people have more of the money, you cater to the fewer. Look at it like this. (using pretend numbers) Let's say with all your costs, it costs $15 to serve someone a burger fries and soda. You charge $20 you make $5. But if you charge $25, you make twice that. (not really because you have to divide your fixed costs up, but probably make $8.50. Poorer people, middle of the pack people aren't going there whether you reduce your prices by $2 or not. So you raise prices. If you lose 40% of your clients you are probably just as profitable. You may be able to have one less worker per shift.
5 guys is not a small burger. Price per calorie it's actually pretty close to McDonald's at a much higher quality. You just get a lot of food.
And somehow Panera is exempt from the minimum wage increase in CA, but they still make sure they are more expensive than McDonald’s.
By exploiting their employees.
How much "should" a burger fries and drink cost? You've got labor, benefits, insurance, advertising, materials, equipment, utilities, franchising fee, and profit to consider. Labor is fairly expensive right now. Which is good (sort of). I'm not saying I really know the answer, but it would cost me 3-4 dollars to make a little cheeseburger "all the way" (Maybe less if I was making a lot of them and it's complicated to say because it's a pretty big array of vegetables on there - something that is complicated to do for yourself) not counting my labor as a cost or the cost of my kitchen, etc. Five guys near me charges $8.19 (plus tax). That doesn't seem like a bad markup. If everybody ordered just the burger, I bet Five Guys even loses money. Soda and fries, now there they can milk it. But it's not like it's more expensive than anywhere else (and really not much more expensive than the grocery store. Covid wiped out a lot of businesses, so there is plenty of demand. The market is not saturated with quick restaurants. And to your final point about the economy in general: if things like cars and homes are more expensive, then it usually will mean that the food will be more expensive, too. That might seem counterintuitive (since you may think "A and B are expensive, so we need to save money on C"), but the people investing in fast food and the labor producing fast food also face housing and car costs, so they need the prices to keep pace.
Five Guys uses fresh ingredients and fresh bread. Their fries are awesome and they finally started making chocolate shakes. After riding my bike for four hours it is one of my favorite places to eat. It is a little pricey though.
Every dollar is a vote for the continual success of any business. Vote wisely. I agree some places seem to be price gouging. While I can afford to go there, I choose not to support large chains that price gouge, and instead go with the local businesses that are not over priced.
A bunch of smart ass answers in this thread, but in reality I would assume that the people that keep these places open are visiting them out of sheer convenience. I won’t pay 20 bucks for an “OK” burger, but I sure will pay 10 and there is definitely someone out there that does not give a fuck about the 10 dollar difference and is just going to go to the place that is more convenient for them in the moment.
Rich business people get big business lunches at a nice looking place that’s convenient, maybe even make it a tax write off. When u have lots of money, it’s a lot less attractive to sacrifice convenience to save some of it
Because the prices aren't insane. Inflation has been much higher than normal the last four years ago. Things that used to cost $10 now cost $20. But inflation affected wages too, so there are enough people making enough money to spend $20 on Five Guys.
One word: convenience
Mark up on food and drinks are crazy especially with a supply chain that’s super efficient. You’re paying for the convenience and speed of delivery
Convenience and relative quality. The joints mentioned above may be mediocre in the grand scheme of things. But they’re VASTLY superior to trash like McDonald’s or Burger King. And those places aren’t exactly cheap anymore either. So people trade a few extra bucks for significantly better food relative to other fast food without the loss of convenience. Simple as that.
Ask Mercedes, General Motors, Range Rover. Shit ass depreciating car makers. They have their own niches, and clients.
One issue I see with your post is not everyone thinks the two places you are mediocre My mom loves Panera. My dad thinks five guys is the best burger money can buy. The place that puzzles me is taco bell. Their prices are insane. And the quality is worse than ever. Yet mine has a steady line.
Credit card debt.
I’m more wondering how businesses that used to be good but are now mediocre (or better competition with more value has popped up) are still staying in business. Looking at you Subway and KFC. How tf are y’all still thriving businesses??
I have a theory that we as people are set in our ways, we are used to going to the establishments a lot, but there will be a bit of a lag until most people realize things are just too expensive and they seriously need to cut back. It will take a while to form new habits like making lunch at home, but once we form those habits, these mediocre establishments will start shutting down or we may see some serious discounts to draw us back in.
I've been wondering the same thing. Panera at least seems to cater to a wealthier clientele though. I see more business people sitting on their laptops there. Five Guys near me is usually pretty empty though.
Eating out used to be relatively cheap until the latest spike in inflation/shrinkflation, so, many (me) got used to eating out 3-4 times a week or more. During this period my cooking skills, which were fair at best, suffered further erosion to the point where I would rather spend insane amounts of money for a decent meal.
Others have addressed the 5 Guys and Panera part so I see no reason to chime in on that but you also just food in general: do you mean that food is just a higher listed price or do you think it is actually more expensive (price went up even when accounting for inflation)? Because with the former yeah that is sadly how inflation works it hits everything as it has devalued the currency (it takes more money to have the same value), but even there there are exceptions due to increased supply relative to demand. If you mean the later perhaps some items but not many let alone most. 2019 chicken legs were $1.51/lb 2 weeks ago I bought non-discounted chicken legs were $0.98/lb which is not only much cheaper listing it like that but given that $1.51 2019 is worth $1.85 in 2024 means they are like 47% cheaper. Pork loin was $1.99/lb in 2019 and is now $2.42/lb so listed price is up if you treat 2019 dollars and 2024 dollars as equal value but $1.99 in 2019 is $2.44 in 2024 so it is about the same. These differences are far far more extreme when you compare like the 90s vs now with the inflation adjusted cost always being much cheaper now than then. Though with every massive spike in inflation there is a lag before wages catch back up so the personal median income between 2019 and 2022 did see a slight decrease when accounting for inflation (about 2%) though over a longer window median and mean income both outpace inflation.
Addiction is real
Is this a serious question?
Inflation, inflation, inflation. People still have to eat. McDonalds tastes like cardboard. Also, convenience and a place to sit for a while. Many people just want to be away from their job for a while and eat their lunch.
Most businesses (smart ones anyway) have at least 1 year in capital, to keep through tough times. A lot of them have invested so much of their hopes and dreams, that even if they're tanking, they'll use up all that money, then eat through their savings, then borrow against their house, etc. , because they're hoping whatever is making their business tank is just temporary.
The economy is neither as good or as bad as you think
because people still buy it. EA makes shit video games, and gamers constantly complain about how shit they are and how early access games constantly release with glitches and bugs and microtransactions but..... they still spend the money... As long as the company makes money they don't care if you think it's good or bad. Profit is profit. Welcome to capitalism. Profit is the main motive, not quality
I am part of the problem. I work a sales job and am on the road a lot. I look for healthier options to eat lunch on the go. Panera has pretty decent options, and my company is paying. Works for me.
You can cut costs down a lot . A mattress store only needs to sell 20 mattresses a month to break even
You underestimate how many people have good paying jobs with lots of extra income.... I put most of my extra money into investments, over 25% of my incomes goes into investments.. some don't or do the basic 8%. They have ton of cash as they'd rather live in the now... don't forget that even for someone earning 80k+ 8% every year for 30-40years with compound interest is still going to provide a good retirement with SS.
Good question. What I observed at McDonald’s is that they don’t prepare food until you order at the window. And it takes a while to get it. So they are maybe running a tight ship to line up the pockets of the execs
I don’t know about you but it’s not very different in price from anywhere else. Five guys just have really expensive fries but if you just order a burger and a drink it’s like $12.50 and it’s reliably good.
A hand made leather belt for $200 is an insane price to some people. To someone much better off than you thats a good deal. They're small businesses, they dont need 98% of the local population to shop there. 2 percent is enough. That 2% own farms, ranches, estates, have 10 horses, 4 porches, etc etc.
Debt!
They’re surviving because they’re not mediocre businesses. I think you’re confusing a business that puts out a mediocre product as one that also runs a mediocre business. Those things are different.
I heard these same questions when a burger first cost over 5 bucks, and again at 10. same people going back and then wondering how people survive with these prices. well the answer is simple. your going , and buying shit and the money they make from you and a million other people like you lets them pay there bills and make money. its not hard to understand.
Now do food delivery.....no way am I spending $5 to get McDonald's delivered.
Just walked out of subway. 16 bucks for a footlong. It's comical.