$6 lunch for 6 people

We went to an ordinary food stall - aka warteg, a shorthand for 'war(ung) teg(al)', which means Tegal food stall, with Tegal being a city in Central Java where a lot of food stall vendors hail from - yesterday for lunch. It cost $6 for 6 of us. We had six full plates with sweet drinks to top them off. Go figure.

The cost boggled my mind. How come it cost only 6 bucks? $6 got me a decent Asian food lunch at the U of Calgary food court ... for one person, and I had tap water to drink. The food are similar in taste and use similar ingredients. Where does the price difference come from? I like to think about these problems. They always intrigue me.

The $1 lunch/person at the warteg could only happen if the vendor's cost of living is low or her sales volume is huge. The latter is not true, so her living cost is low. Where does the low living cost come from? Well, from the low food price to begin with ... and we are in an infinite loop now, trying to unravel it.

But the truth is that IT IS NOT AN INFINITE LOOP. The owner of the food court vendor drives a BMW X3 while the owner of the warteg lives in a small hut and rides a motorcycle. The BMW-riding owner is smarter and wealthier than the warteg owner. The former also has a higher expectation than the latter, and thus demands a higher rate of return from his investment.

My wife and I had thought previously of opening a small fast food place in Calgary, so I am not alien to its costs. A healthy revenue would be at least $12,000/month since the rent and utility would cost at least $2000. Two full-time staff would cost $4,000. It is reasonable to expect at least $4,000 monthly revenue. It is a hard work and actually does not make a lot of money. In fact, the food court vendor has more than 1 food outlet in Calgary.

The high cost of lunch in Calgary comes from high living cost of business and owner. The high standard of building causes the high cost and comes from continuous building code improvements over the years. The high standard of health and food regulations also make operating a food outlet expensive; I only saw an LPG stove and simple food utensils - no stainless steel friers and all - at the warteg. The continuing improvement process causes the living cost high since employees cannot be paid lower than the costs to rent a decent apartment and to buy food.

It is what I call the karma of technology. As technologies improve and get implemented, they create additional costs that banks will provide at additional costs. This increased cost gets rolled in to the next generation. When the current generation fumble and are not successful as the previous, things can get really difficult, which I think underlie the current recession in North America and Europe. Not a bad thought from having a $6 lunch for 6 people!