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

It’s good when people do, at the very least, a passing glance at the data and consider troubles that could occur.

That said, mom and pops run by just mom and pops do exist. If you’ve got savings and just want to socialize and mitigate some of the costs with a little side income, running a tiny cafe next to your home on weekends is something that isn’t unreasonable if you’re very comfortably settled.

Let’s say Vietnam found the money to do it anyway. Now you’ve got a bunch of people making minor warlord money compared to the locals. They can now afford to do just about anything their little hearts desire.

Silicon Valley may be many things, but a paragon of ethics is not one of them. When you can bribe people half a year’s salary that changes the dynamic quite a bit, and for the worse.

And you didn’t bring these people over to run everything, you brought them over to mentor the people you want to run everything. What great role models you’ve provided for them. What could possibly go wrong?

Isn't this already happening when an SV company pays an eastern European developer 1/2 a typical SV salary which is 10x the employee's average local salary?

At least on the East coast it's about the same as EE vs West Coast. If you're a night owl on one end or an early bird on the other you can make it work.

Also locals at least are socialized to think about their community to some extent. You don’t get that when you bring in outsiders who can annd probably will other most of the population from day 1.

Starbucks: they don't charge $2 a coffee. I would only ever get a drip coffee and I think it's around $3, most people who are going there get drinks in the >$5 range. Plus they have a lot of traffic - more customers = less wages required for each drink

McDonalds: They charge less than $2/coffee. They charge less than $8 for a breakfast. They make their money on super high volume.

Your vision: you're enjoying lingering, enjoying the sun. You're enjoying the floor (patio) space, which means you can't have high volume unless you have a huge space, which wouldn't work with your "little shack" concept. Unless there's a nearby park or beach with free barely limited space, while also still having enough traffic to stay busy. Very limited spots that can work.

(so as with most issues regarding our urban spaces in north america, what we need to make them better is more density. :)

Then we raise the problem that this is not longer some simple, happy little shack where I get my coffee and relax. Higher density, higher volume means I wait in a potentially long line, have my personal space violated both considerately and inconsiderately by total strangers, feel the anxiety of being in a potential fire hazard area, etc. Arguably, none of this is better. I am more willing to pay a premium on the coffee than to deal with all of that.

The better bargain is to decrease shop area and worker count, and increase number of shops.

Tokyo seems to do just fine with 5-seat places...

Convenience is a very powerful motivator, and these people are prioritizing it over minimizing monetary expense.

IIRC McDonalds even went as far as to become a landlord many of its franchisees, so it pays rent to itself.

For many small businesses - especially mom and pops, the majority of the surplus value is captured by property owners, and the amount has increased over the years. This is partly how Piketty's r > g came about.

I read somewhere that McDonald's makes more money from their real estate holdings than anything else they do. Can't vouch for how accurate that is, but it seems very plausible.

> About 85% of the company in 2016 was represented by franchisee-run locations—people who agree to operate individual McDonald’s restaurants with a licensed privilege to the branding. But rather than collect a lot in royalties or sell its franchisees cooking equipment, McDonald’s makes much of its revenue by buying the physical properties and then leasing them to franchisees, often at large mark-ups.

https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burg...

> Today McDonald’s makes its money on real estate through two methods. Its real estate subsidiary will buy and sell hot properties while also collecting rents on each of its franchised locations. McDonald’s restaurants are in over 100 countries and have probably served over 100 billion hamburgers. There are over 36,000 locations worldwide, of which only 15% are owned and operated by the McDonald’s corporation directly. The rest are franchisee-operated.

On coffee too, they're big enough to go straight to the farmers and set their prices

https://www.thecommonscafe.com/starbucks-criticized-for-low-...

(And actually, all that has been done, but action isn't being taken, so now we have to solve that problem)

Most places with high demand like this also have prohibitions (or limited parking/operating permits) on things like coffee trucks, in my experience. Another issue with our prohibitive land use practices in north america.

So maybe find a pretty outdoor area where there are lots of tourists.

Even for "speciality coffee" it went lid, cup, sleeve, milk, (syrup,) coffee.

But I think you/he should look around. If you're not a fast food restaurant coffee costs a bit more than that these days, and charging 'a bit less' craters your profit margins.

(Of course, the real money is in laundering.)

Edit: I just looked up the local 50’s diner. $2.79 for what is probably bottomless but burned drip coffee. That definitely makes them money. But That’s 39% more than $2.

To reiterate: if someone tells me they’re planning to sell coffee for $2 I believe them. And then ask where they think they’re making their money because it’s not going to be on the coffee.

Just for everyone's interest, (and based on 2022 pricing) you can get an espresso in an Italian bar for $1.33 (Trento) all way way down to $0.96 (Naples).

Having tried the US and the Italian versions, I'd take the latter every single day of the week and twice on Sundays over the US version.

https://www.statista.com/statistics/717413/average-price-of-...

I’ve watched just enough of his stuff for him to sell me on the idea that maybe manual espresso presses produce a more consistent cup with just a little practice. Also they seem to be cheaper. Is that what they were using in Italy?

They're using the big industrial-looking espresso machines, since throughput is everything.

You pay at the (separate) till first, then take your paper receipt to the bar, hand it over, and 90s later you're handed your drink.

I've ordered a lot of coffee in Italy and have never ever heard a discussion about drink size, flavours, soy, or skim milk. That stuff is apparently irrelevant.

I'd love to hear more about this, and how one defines "better", because it doesn't sound like this is going to work for everyone.

Full disclosure: I've spent the pandemic being amazingly grateful that - by chance - I happen to live in a low-density part of the world. It has its downsides, but on the plus side, from my home I can walk to open countryside in pretty much any direction in a few minutes.

I was responding to someone suggesting that increased density would help with retail profitability.

If we were ro make housing more dense but use the extra space as countryside that's not going to provide any more customers within the catchment area of the OP's coffee shop, is it?

If your current area has 400 residents but you can still easily walk to open fields, increasing that to 1200 residents in the same area would triple potential coffee customers while maintaining the same access to countryside.

Sure! The discussion was about enjoying small independent coffee shops, and how to run one profitably, so my description of "better" is w.r.t. that issue - for persons who want to run such a coffee shop, or who want to visit one. The identified issue is that per-purchase margins are fairly small, and to sustain a business it requires a lot of these small purchases. As property (mortgage/rental) costs are also high, having a small space is also important. So to get a lot of customers despite being a small space, you want to be either near a natural attraction (park, beach, etc), or near a lot of people (office building, metro station). Density helps with the latter.

> I happen to live in a low-density part of the world. It has its downsides, but on the plus side, from my home I can walk to open countryside in pretty much any direction in a few minutes.

And how many independent coffee shops can you walk to in a couple minutes?

But McDonalds sells coffee for $1, and many of those customers who are deeply invested in living wages and local businesses are also not fools who can be charged 4x for the same thing they can get faster at McD’s.

So yeah, pricing is the problem, but IMO mostly on the “willingness to pay” side. These businesses are squeezed between the real costs of inefficient small biz (where are you going to store 50 pallets of coffee needed to get great pricing, and it’ll go bad anyway) and consumers’ unwillingness to pay for the things they say they want.

Same thing as airlines, really. Everyone hates cramped seats and coin-op toilets, but enough people will always buy the cheapest ticket that it’s not economically viable to provide a good quality product at a price that will sell.

People usually ok with having to suffer in cramped seats given that slightly less cramped seat price difference is often more than they earn in a day

Tangentially, I'm also curious how McDonald's in the US can charge $1 if they also have to pay a living wage. Does their size mean they get cheaper materials from suppliers and can drive costs down or that they make up that loss by selling some of their other products? I've never gotten coffee from McDonald's in my country, but I'm _pretty_ sure it's not that cheap.

Even _more_ tangentially, I noticed a popular local chain driving their prices higher and higher to ridiculous amounts. It's not even great coffee--it's like Starbucks in my country (Starbucks apparently didn't get a good footing here because this other chain is just so established). Their usually mediocre coffee costs more than one at a boutique high-end roastery! I suspect it's because they're pushing people to instead sign up for their monthly subscription, that lets you get a coffee every 2 hours. I've begrudgingly signed up, because I like using their cafes as a work space and this way I do not feel guilty about sitting around there all day. When I want legit good coffee, I still go to a good place and get one. As annoyed as I was to see how much they charge for a mediocre cappuccino, I've got to hand it to them on the interesting monetization shift.

They probably sell coffee at loss to upsell them on burgers

That kind of sounds like everyone involved would be better off if airlines were allowed to collude to raise the ticket price floor, but regulated to cap profits, forcing them to spend the gains on improvements.

McDonald’s is our society’s revealed preference.

That's nearly always the most important factor, and it always has been. But you also have to recognize that there are different markets even for the same product.

McDonald's is selling their coffee and pancakes to a customer base that is looking for a specific benefit: something hot, fast, low-investment and inexpensive that will fill their bellies on their way to do something else.

A business such as what nobleach is talking about isn't trying to serve people with those needs. It's satisfying a completely different set of needs: relaxation, a pleasant atmosphere, a place to pause for a while. Luxury. They'll want higher quality food and drink, an "experience", and such.

It doesn't matter that it costs more than McDonald's because both of those sorts of businesses are selling different things. Comparing them is apples-and-oranges. Isn't really about the coffee and pancakes.

Your assertion makes no sense to me. I feel like I'm missing something.

A fair wage represents an exchange of equal value. This does not speak to the viability of repeating that exchange as profession; only that reasonable compensation has been given for a reasonable amount of work.

Or people working two jobs.

The former seems OK, although there’s clearly a lot of demand for coffee shops workers, and a thin slice of the population (what, like 16-20 year olds or so) can’t serve all of it (and also they should really be prioritizing education at that age, so their overall availability should be very low).

Having a bunch of people work two jobs is just failure of society.

If a teenager has a job, are they paying rent to their parents and paying for meals at the family table?

This is already subsidized - job or no. The average teenager's job supports the things they want beyond that basic level of support that parents are expected to provide.

This really boils down to the set of questions:

1. What value can a company realize with an unskilled worker?

2. What are the financial needs of an unskilled worker without dependents?

3. What are the financial needs of an unskilled worker that needs to support a household?

2 & 3 are likely not the same. And 1 will more closely match 2 than 3... and a lot of the arguments about a living wage are about case 3.

So unless we’re going to a “…to each according to their needs” society, which I think most of us oppose, we have to decide whether we want jobs that don’t pay enough for an average person to live. Calibrating wages for everyone to the needs of teenagers doesn’t seem terribly sustainable.

This is further adjusted to the cost to train an employee in that spot as they'd need to spend that again if they are to replace that employee.

For unskilled works, working in a coffee shop, where training can be done in an afternoon... the teenager has very little bargaining power to move the wage closer to "value they bring".

And that's where the minus wage gets in (I support raising the minimum wage though note that this will have second order effects of making some local coffee shops that are staffed by teenagers unprofitable).

The existing subsidies that are in place regardless of a teenager's employment by virtue of having parents with a place where you can eat and live... and health care (can be on parents' plan until 26) enables the low margin service sector to take advantage of / give employment to people who teenagers and young adults who lack skills to get other jobs (and desire flexibility for school or being a care free young adult).

If you take those subsides away, the service sector won't be able to bargain down / offer jobs at those levels anymore.

The overall unemployment rate is 3.6% which is shockingly low and has been enabling people to get higher wages. The youth unemployment rate, however, is closer to 10% ( https://www.bls.gov/news.release/pdf/youth.pdf and https://www.statista.com/statistics/217429/seasonally-adjust... ) . There are lots of teenagers out there looking for those unskilled jobs - and thus they have less ability to negotiate for better wages.

If you were to calibrate the amount you need to pay to someone at a coffee shop to the living wage needed by the person who brings in the majority of the income for a household... very few service sector companies could afford that.

The less than living wage, unskilled work, bringing in supplemental income for an individual or household is something that is needed in the overall economy.

They should do, or they should be automated so you don't need as many employees.

- More automation

- More self-service

- And more labor-intensive services and things people want that can't be delivered at the prices mainstream consumers are willing/able to pay

(And Starbucks is so dark and burnt I can't drink it nowdays)

Mom-and-pop places don't have that certainty. There are both great and terrible ones.

If you're in an unfamiliar place and just want a coffee, Starbucks can be just the ticket. It's not a gamble. And if you enjoy coffee and want something above "adequate", you'll also be keeping an eye out for promising mom-and-pop places to switch to.

And these days that's just paying someone to put a 0€40 Nespresso pod in the machine.

You and a bunch of other weirdos :) https://en.wikipedia.org/wiki/Distributism

They are not entitled to be in business and if the alternative is keeping society in a condition where people are forced to work for non-livable wages then fuck them.

Now if we had a UBI, non-livable wages become reasonable.

The economics were simple, everyone in the family worked for free and there were no benefits, sick pay or everyday rules to worry about.

Eventually the big grocery chains took over because it was easy to open up a prime local site and run it at a loss for as long as it took. Any stubborn competition remaining could easily be brought to the attention of the authorities.

Some of those Asian shopkeepers became quite successful though which, I think, goes to show that every kind of business has its golden era where anything is possible but nothing lasts forever.

Yeppers. Here is the price of coffee and pancakes at my local mom and pop in 2023:

Coffee: $4; Pancakes: $13

You'll get very much the same response if you are to suggest that some companies aren't able to get $200k/year of value out of a software developer.

If there's a company that can only get $100k/year of revenue out of a developer and pays them $70k in a low cost of living area (forget about remote work for someone in California) you'll get laughed at for "poverty wages" and that the skills that they have are worth more while at the same time complaining about how hard it is to find a job that pays "what they are worth" (which is the top 10th percentile).

Most people realize they don't know enough to open a small lab or IT consulting firm, but drastically overestimate their knowledge of the food business. It makes sense-- these businesses must hide the mountains of back-breaking low-pay manual labor from customers lest they become uncomfortable and patronize somewhere that makes it all feel calm, relaxed and easy. And for all that, particularly successful restaurant owners get a margin of maybe 5% after a few years when you really nail down your expenses and processes, though the numbers for coffee shops are a bit different.

This successful restaurateur's businesses in Boston yield 2% (though she takes a paycheck not included in that 2%.) https://www.eater.com/2020/3/9/21166993/how-much-to-run-a-re...

Particularly, white collar people who pride themselves on knowing about their local restaurant scenes are prone to this hubris. I bristle at their misguided confidence when discussing the business but will take the time to empathically but forcefully talk them out of trying trying to implement their brilliant idea in the real world. A few years ago, an old friend contacted me in a panic because she'd invested her entire retirement in her brother's dream brew pub. I couldn't help. Anybody who knew the business would point out how hare brained it was within seconds. Months later, she'd lost everything. Tragic.

I still day dream about cooking somehow, since I enjoy it as a hobby. I snap back to reality kind of quick.

About a year later, he came back to working as a sysadmin no where near as grumpy. He got a job as a chef... and realized that as much fun as the cooking is he really didn't like being a chef.

A submission of mine from a few years ago - Find The Hard Work You're Willing To Do - https://news.ycombinator.com/item?id=26209541

There are some people who I usually encourage to become line cooks. People in their early twenties who are toughened up a bit by life, intelligent, passionate about food, don't have skills that will yield them a financially viable but less punishing career path, kind of lost, and seem capable of self-regulating around alcohol and other substances. That's a rare bird, especially in the HN crowd.

Having known many hundreds of service industry workers, I do know one person who got into restaurant cooking as a fully-matured adult and didn't dejectedly leave it within a year or two. Importantly, he graduated culinary school in his twenties, worked in other service industry jobs for a few decades after, and despite also being a professional musician, didn't drink or use hard drugs. It's hard to emphasize to most people how important that last part is. I briefly worked at a well-respected, fun, vibrant, relatively pricey restaurant with an open kitchen that did 100 covers per hour on Saturdays. They wanted the customers to think the cooks were having a ton of fun, so a six pack was part of our station prep and customers could buy beer for the line at a discounted price. I have no idea how that line afforded so much cocaine on such a small salary but that was some scarface shit. Uppers are borderline a safety requirement when you're drunk and always seconds away from permanent disfigurement. A guy I know who cooked there for like 5 years went in kind of dorky and is still a slurring-every-night drunk decades later. The first night I worked there I saw my boss passed out drunk sleeping on the floor of a nearby ATM. A few years before that, a good friend and consummate drinking buddy was looking for a big change so I connected him with a third shift job cooking at a 24 hour restaurant. The most consequential things he picked up from it was an intravenous drug habit and a new career as a drug dealer.

I love Kitchen Confidential but I do think he glamorized that grittiness to some extent. From the outside it seems a little exciting and everybody likes to think they're just dangerous or upstanding enough to ride it, but that's pretty naive. I just don't think most folks used to living in polite society can grasp the negative implications of that lifestyle. For many of those people, those coping mechanisms are all they've got, and sadly, these jobs will let people rely on them until they're dead.

Are you saying that Starbucks will be the only remaining business able to pay a living wage?

Or that society simply cannot bear the price of paying it?

That the livable wages make business impossible?

Or that the coffee must stay at $2?

It looks very clearly a statement of fact to me.

Genuine question: when you looked at the costs of “plus... well all the other stuff it takes to employ a human,” what did that add up to in CA?

and why 17 to 20 year olds? that's so oddly specific. I don't like being served by teenagers.

also you write that's what _you_ want to _do_ with your retirement? what are you doing there? the dishes? the book keeping? sit around sipping coffee feeling very important?

I was watching a YouTube video on UpFlip about a guy with three coffee shops. Monthly revenues are around $80K for his main shop. His margin is less than 4%.

You can make money if your rent is low (low revenue, and low expense) or your location gets you heavy traffic or you serve a community that really wants your product—like a bar near a university. You don’t need the most ideal real estate next to the university, just within the community—(high revenue, high expense).

If you can't afford the things that a business needs, you go out of business. If you can't afford coffee, cups, electricity, water, rent or taxes, you don't get to keep your coffee shop long.

I want a gardener and house keeper, but I don't get to have them because I don't want to pay for those things. If someone can't pay three employees what their time is worth, why are they entitled to have those employees? Replace a person with a computer if you can't afford a person, or scale back in other ways. Don't punish employees for lack of business acumen, maybe unless you plan to compensate them extra when times are less lean.