seawasp | (Reply)

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Sure, soda is a weird case but it's a known case. We know within a few cents what it costs every operator from the cheapest hole in the wall to the Michelin 5-stars. This makes it useful for first order approximations.

One last note, on soda prices in specific: McD's is an outlier. Most places where I currently buy fountain soda do charge at least $3; at full service restaurants it's often $4 to as much as $6 - although almost all establishments allow free refills, and are thereby selling cups (or renting glasses).

My point exactly. People are willing to pay $3-$6 at a sit-down restaurant for exactly the same soda that they would pay $2 at McDonald's. So, we have McD's selling soda for half the price that, say, Cheesecake Factory charges, while paying their workers more than twice as much -- minimum wage for service workers here is $6.75/hour. This isn't labor costs driving price increases. It's institutional greed pushing what the market will bear and using labor costs as an excuse to do it.