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The true costs of inflation in small-town Texas

newyorker.com

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Re: The true costs of inflation in small-town Texas

#11

Post by thebooktocome »

gumby wrote: post #5
thebooktocome wrote: post #3

That’s rough, but when a business is no longer economically viable it’s probably time to close up shop.

What if the economic change is transient? There are only two regular restaurants in town. The impact is larger than just the owner.

These increased food and fuel costs are largely not transient.

The town itself might very well not be viable anymore. I’ve seen this happen in my own neck of the woods. It’s sad, but the death of small towns like this is just a reality of the economic policy we’ve chosen to pursue here.

Re: The true costs of inflation in small-town Texas

#12

Post by imgabe »

bee_rider wrote: post #4

> This year, Tyson Foods, the country’s largest meat processor, saw its first-quarter profits nearly double. Meanwhile, all over Texas, barbecue places have shut their doors: Two Sawers BBQ, in Floresville; 1836 BBQ, in New Braunfels; Brisket Bar-BQ, in Bellaire. Kinda curious what the long term plan is here for Tyson -- just sell directly to customers after all the restaurants have closed, I guess?

It's misleading to talk about profits purely in absolute terms. The profit margin could stay the same while the absolute number doubles.

If you make $10 profit on $100 revenue one year (a 10% margin) and $20 profit on $200 revenue the next year (still a 10% margin), profits "doubled" but the profit margin stayed the same. When you add in the inflation and the fact that the $20 this year is not worth as much as $20 was last year, it's not even a real doubling in absolute terms.

Inflation will produce "record highs" in terms of absolute number of dollars in all sorts of things, but if you don't account for the fact that the dollars are not worth the same amount as before it's disingenuous.

Re: The true costs of inflation in small-town Texas

#13

Post by InefficientRed »

imgabe wrote: post #12
bee_rider wrote: post #4

> This year, Tyson Foods, the country’s largest meat processor, saw its first-quarter profits nearly double. Meanwhile, all over Texas, barbecue places have shut their doors: Two Sawers BBQ, in Floresville; 1836 BBQ, in New Braunfels; Brisket Bar-BQ, in Bellaire. Kinda curious what the long term plan is here for Tyson -- just sell directly to customers after all the restaurants have closed, I guess?

It's misleading to talk about profits purely in absolute terms. The profit margin could stay the same while the absolute number doubles. If you make $10 profit on $100 revenue one year (a 10% margin) and $20 profit on $200 revenue the next year (still a 10% margin), profits "doubled" but the profit margin stayed the same. When you add in the inflation and the fact that the $20 this year is not worth as much as $20 wa…

Sure, but someone loses, and in this case the loser is the local restaurant that doesn't appear to have much pricing power.

Re: The true costs of inflation in small-town Texas

#14

Post by sokoloff »

thebooktocome wrote: post #11
gumby wrote: post #5

Earlier quoted context omitted.

What if the economic change is transient? There are only two regular restaurants in town. The impact is larger than just the owner.

These increased food and fuel costs are largely not transient. The town itself might very well not be viable anymore. I’ve seen this happen in my own neck of the woods. It’s sad, but the death of small towns like this is just a reality of the economic policy we’ve chosen to pursue here.

I'd be fairly surprised if we don't see gas under $3/gal sometime in the next decade. There's a reason several key economic indicators exclude food and energy (due to the much higher volatility of these categories).

Re: The true costs of inflation in small-town Texas

#15

Post by tylermac1 »

thebooktocome wrote: post #11
gumby wrote: post #5

Earlier quoted context omitted.

What if the economic change is transient? There are only two regular restaurants in town. The impact is larger than just the owner.

These increased food and fuel costs are largely not transient. The town itself might very well not be viable anymore. I’ve seen this happen in my own neck of the woods. It’s sad, but the death of small towns like this is just a reality of the economic policy we’ve chosen to pursue here.

this is just a reality of the economic policy we’ve chosen to pursue here.

Now who is "we" in this scenario?

Re: The true costs of inflation in small-town Texas

#16

Post by thebooktocome »

sokoloff wrote: post #14
thebooktocome wrote: post #11

Earlier quoted context omitted.

These increased food and fuel costs are largely not transient. The town itself might very well not be viable anymore. I’ve seen this happen in my own neck of the woods. It’s sad, but the death of small towns like this is just a reality of the economic policy we’ve chosen to pursue here.

I'd be fairly surprised if we don't see gas under $3/gal sometime in the next decade. There's a reason several key economic indicators exclude food and energy (due to the much higher volatility of these categories).

Let’s see, they opened in 2001.

So their original business model assumed gas would be around 1.40/gal (1.90 inflation adjusted).

When do you think gas will fall that low again?

Re: The true costs of inflation in small-town Texas

#17

Post by throwaway1777 »

InefficientRed wrote: post #6

> a box of a hundred and eighty eggs, which had cost around eight dollars when he opened the restaurant, in 2001, was nearly fifty. I don't think I've seen wholesale eggs even close to that high at any point. I think the only place I've seen unit prices that high is at a Whole Foods (which is organic, not wholesale, and has a "premium brand"/convenience markup). Are eggs just outrageously expensive in the Texas marke…

At my Costco the 180 box is just under 40 with tax, and thats for the medium eggs. If you want large its $60 for the box. So this seems believable…

Re: The true costs of inflation in small-town Texas

#18

Post by wins32767 »

tylermac1 wrote: post #15
thebooktocome wrote: post #11

Earlier quoted context omitted.

These increased food and fuel costs are largely not transient. The town itself might very well not be viable anymore. I’ve seen this happen in my own neck of the woods. It’s sad, but the death of small towns like this is just a reality of the economic policy we’ve chosen to pursue here.

this is just a reality of the economic policy we’ve chosen to pursue here. Now who is "we" in this scenario?

American citizens collectively.

Re: The true costs of inflation in small-town Texas

#19

Post by imgabe »

InefficientRed wrote: post #13
imgabe wrote: post #12

Earlier quoted context omitted.

It's misleading to talk about profits purely in absolute terms. The profit margin could stay the same while the absolute number doubles. If you make $10 profit on $100 revenue one year (a 10% margin) and $20 profit on $200 revenue the next year (still a 10% margin), profits "doubled" but the profit margin stayed the same. When you add in the inflation and the fact that the $20 this year is not worth as much as $20 wa…

Sure, but someone loses, and in this case the loser is the local restaurant that doesn't appear to have much pricing power.

It sounds like the restaurant was a side project that was barely solvent to begin with. They could try raising prices, but if the customers leave then people simply aren't willing to pay what it costs to keep that place open and the demand to support that restaurant in that place just isn't there.
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