Maybe? Maybe not. I'm not certain that restaurant owners know to the penny what people will or won't pay for this or that on a menu. It depends a lot on how cost conscious the customers are and other factors.

Try bumping up the wages and advertising the fact that you do pay a living wage, that might have some impact. My fiance and I try to choose restaurants that are locally owned and are known to treat staff well. (We have friends in food service, locally. Word gets around.) I doubt we're unique in this.

It does depend a lot on location and other factors - you're going to find more people willing to spend more in some areas than others. Other people are perfectly happy to go to restaurant X knowing they fuck over workers but have the cheapest menu.

I think that most small restaurants tend to undervalue their food and service. Part of it is people's expectations, but even beyond that I believe they are so worried about going out of business that they try to run on the thinnest margins possible rather than raising prices by 50 cents and having some room for error.

There's also a lot of... this is how much it costs for me to make, so I should charge a little bit more. Where I think it should be... this is how much it would cost my customers to make in groceries and time.

When I eat out I almost only get food that is too inconvenient to make at home. I don't get spaghetti at the Italian restaurant, I get lasagna or stuffed shells or something that would take me hours of work at home. Yet, for a restaurant these are fairly easy items to cook because the time is less of a problem and are in many ways simpler for them to prepare because they are cooked ahead of time and reheated when ordered.

So for the restaurant, it makes sense to price a big plate of lasagna the same or lower than a plate of pasta they have to do more work on to serve. But to me the lasagna is worth more because it would take me at least 2-3 hours to make. So the restaurant sees it as a cheap thing while I see it as a valuable thing.

> There's also a lot of... this is how much it costs for me to make, so I should charge a little bit more. Where I think it should be... this is how much it would cost my customers to make in groceries and time.

Your competitors would love it if you set your prices like that.

Oh, no doubt. It's a difficult place to be, with no real margin for serious actual testing of what the price should be. It's too risky.

But I do think that they're subject to the pressure to under-price what they produce because to them it's easier. It's easy to discount your own labor when you think the job is easy.

Usually that perception of whether the job is easy is wrong.

In any case, I can't imagine a small restaurant having any way to seriously or accurately measure what their prices should be better than maybe a dollar. There's just not enough business to tell, and if you hit a bad region the place shuts down.

You can try setting it based off nearby businesses, but even then it's probably not better than a dollar of correct.

Every restaurant could raise every price on the menu by a dollar tomorrow and I wouldn't notice unless it was a soda or something. I'm highly skeptical a small increase in prices would drive people away. Like with minimum wage increases, every time it's allegedly going to be the end of small businesses in the area and then it never is.

I remember an old lady talking about the diner her daughter and son in law were going broke running. She came in and raised prices 10 cents here, 15 cents there, and buck there. And after a few months the books were a lot better.

You wouldn’t notice, but many millions of people would. This is pretty established economic theory of supply and demand curves. Are you arguing that increasing prices doesn’t decrease demand?

Why do you think companies don’t just raise prices by $1, since jimmaswell won’t even notice it or care?

I’ve never heard that increasing minimum wage will be the end of small business, I’ve just heard that it will be incrementally harder to put those wages and number of jobs at the low end of the wage increase will go down. (And that’s what happens) Again, that’s a supply and demand thing.

Are you arguing that prices don’t have an impact on purchases? Again, how do you explain companies just increasing prices arbitrarily? What do you think stops them from doing this?

We used to go to Red Robin at least once a month. It would cost us about $30-35 to feed all 3 of us before tip. We stopped going regularly and recently went back on a whim. Our bill was for $60 for 3 burgers and (non-alcoholic) drinks, still before tip. Nevermind that they were obviously running on a skeleton crew. I can go to a fancier place like cowfish/bad daddies for a better burger and better experience that actually costs less, or go "cheap" to five guys or culvers or freddies.

I'm not sure what their reasons are for raising their prices so much compared to 5-6 years ago, but it will probably be a long time before we go back, the prices are just too high compared to other options.

Small price changes don't necessarily always impact purchases, as in the example of the diner the other poster gave. You also wouldn't pass up a gum stick if it was 57 cents instead of 56, and you wouldn't buy more if they were 10 cents. There was a term for this in my economics class but I don't remember, essentially elasticity of demand is not always a perfectly continuous function in reality. Somewhere like Wal Mart might have the price figured out perfectly by their team of researchers but probably not most non-chain restaurants.

I'm with you, but others do notice. I know several people who will off-handedly comment on small increases in produce prices.

Likewise with items moving on/off the dollar menu at fast food places.

If there are 4 people in your family, that's an extra $4 at least, which is ~30 minutes of minimum wage, or about 1.25% of a week's pay before taxes. I'm not going to try to guess what portion of that hypothetical family's income is expendable, but if it's 1.25% of their total weekly earnings then it's probably a much higher percentage of their weekly disposable income.

If you've got $40 a week left over as disposable income, an extra $4 starts to seem like a lot more. In an economy where most people can't cover a surprise $200 bill, $4 means something to a lot of people.