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The Rule of Reciprocation

#1 Dec 09 2012 at 7:35 AM Rating: Default
The All Knowing
10,177 posts
Gbaji wrote:
EDIT: Since this aspect of your confusion pops up later, let me clarify here that we're talking about the cost of the meal, not the food. If all I was buying was the food, I'd go to the supermarket and buy it there.
Huh? You're paying for the meal, not just the food.
Do you even have a reason for making this absurd distinction?

Almalieque wrote:

The meals (to include drinks) are what makes you money. So EVERYTHING comes from meals if you want to look at it like that, to include your base wage, electricity, water, furniture, etc. However, if you look at it like that, you can't arbitrarily differentiate the $.20 going towards your wage from the $.05 going towards your tip, the electricity, the water, the furniture, T.V's, cable/sat, etc.

The food is given a value based on the ratio of worth vs what people will pay and you sell the food at that price. Once you earn enough money to make profit, THEN and only THEN do you give people raises, buy more furniture, add better/more T.V.'s etc. Doing it the other way will only increase your chances of failure. While you might be able to pull it off, it is not a business move that I would believe most sane people would want to do. I would wager that most people would like to make a nice profit before investing or expanding.

Gbaji wrote:
Why? Because it actually cost me $25. When considering whether to purchase that meal, I'm going to compare the value of that meal to me to what other things I could spend $25 on in the economy. That's why the tip cost matters (and sales taxes as well).

Unless you're about to spend more than what you have, then tips and tax shouldn't be a deciding factor if you get something or not. Taxes will always be there at the same percentage, it doesn't change just because you spend more money. Alternatively, tips often work the same way. So, if you're at the point where tax and tips are deciding factors then you're already spending too much money.
Gbaji wrote:

I know you said this. But you are wrong. We decide to pay the full price the meal actually costs us. I'm honestly puzzled why you keep trying to argue otherwise.
Customers will make decisions about whether to eat at a given restaurant based on the total cost of the meal.

Read above. If you're an anomaly, that's fine, but don't act like that's the norm. If a person has a $30 budget, that person isn't going to go to place like Chilli's and spend $10 for a glass of Coke, $13 for a dinner roll, $2.50 in taxes and $5 on a tip. If the prices of food are absurd, then they will not purchase the food, resulting in no money spent on tax and/or tips. It's the meal prices that people are concerned about. As mentioned, if tax and tips are a concern for you, then you're already spending too much.

Gbaji wrote:
Thus, paying the waitstaff a higher wage (regardless of how that is derived) will impact total sales.

That's a fallacy that would only be true if your business weren't successful. As an owner, you have options, dip into your profit, decrease the amount of money spent on items not being sold, create other avenues of revenue, buy cheaper products, increase the sale prices, etc. . The last two options should be your last resort as your profit is made by the number of product sales and not the actual price of the product. Increasing the price may very well decrease your customer base, thus reducing your overall profit.

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