Tuesday, November 11, 2008

Less Steak and Less Shake

Julia had a get together for women last week. The boys and I went out to eat so that we would miss the "fun." We went south ten miles just to kill more time. We kicked around ideas about where to eat and finally settled on Steak & Shake, twenty miles further down the highway--killing even more time!

Steak & Shake had advertised four meals for under $4.00. Under $4.00 means, of course, $3.99. Each meal had a burger of some kind. They make great burgers.

But the burgers they served were unusually small. When we were in the southern part of the state after Roberto died we ate at a Steak & Shake. The burgers were larger than the typical fast food chain. In just two months prices had been slashed, along with the size of the burgers. The other unusual thing was that the waiters and waitresses seemed much more attentive than other times we had eaten there.

I questioned the manager on the way out and he denied everything. I do not blame him.

Here is my solution to the mystery.

During the past year food prices have soared. In addition, consumer spending is down. In addition, unemployment has inched up. Finally, the minimum wage rose over the summer. Which business strategies react to all these effects?

To counter high food prices, shrink portions. However, since consumers are spending less, lower the restaurant's prices to compete better with the typical fast food chains--hence, cut the portions even more. Finally, with a higher minimum wage and lower employment, employees will be reluctant to leave the job. So demand more work (customer service) from those employees. The higher demands on the workers are reinforced by the fact that workers are earning more, due to the increase in the minimum wage.

If we had a Steak & Shake in our town would I buy food there, given all this? You bet. The portions are small, but the food tastes great. I can eat an apple at home for dessert.

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