Why Did the Chicken Cross the Road of Inflationary Economics?

Because it had the misfortune of living in a hellhole caused by the unregulated free market of the Invisible Hand

Let’s do some math shall we.¹

How much does it cost to make our most popular item, the Chili Chicken Sandwich? It’s a fried boneless chicken thigh dipped in our house chili oil served with B&B pickles, a generous slather of Kewpie mayonnaise, all nestled on to beautifully toasted Japanese milk bread AKA shokupan.

$16 in store and $18 on the delivery apps because our digital society has put tollbooths on fucking everything. Somebody’s got to pay for Andy Fang’s courtside Warriors tickets.²

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Boneless, skinless chicken thigh - $1.25

Japanese milk bread - $1.04

B&B pickles - $0.10

Kewpie mayonnaise - $0.33

Butter for toasting - $0.05

Flour for dredging - $0.17

Chili oil - $1.20

Buttermilk marinade - $0.27

9x6x3 Eco-friendly bagasse container - $0.30

10x7x14 brown recycled paper bag - $0.31

One sheet of custom branded Pecking House paper - $0.04

Total Cost of Goods Sold (COGS) = $5.06 per sandwich

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So that’s 5.06/16 = 31.63% food cost. And that’s assuming nothing got burned, no mistakes, no waste, a perfect service.

Labor can waffle from 27% to 38% of gross sales depending on how the month went so let’s just split the difference at 33%. We give dependable hours to our employees because they deserve the dignity of our best attempt at providing a livable wage. I acknowledge we’d probably make more money if we sent someone home every time it rained.

Overhead can fluctuate but our rent, accounting, utilities, trash removal, linens, ice machine and, most profoundly, our insurance can cost upwards of 13-15% of gross sales. Commercial insurance, worker’s comp/disability and employment practices insurance cost us nearly $3000 a month. These are the consequences of a litigious society.

Credit card processing fees - 2.5% of gross sales.³

Delivery app promotions and discounts - 8%. It simply isn’t an option to not run delivery promos such as “Spend $30, get 20% off”. The density of restaurants in Manhattan make app visibility cutthroat and the Food Tech Fraternity suppress restaurants that don’t play the game. Tell me the last time you ordered from a restaurant on the 2nd page of your UberEats search after you’ve had a few.

So we’re scratching at 89.5% of costs with a theoretical profit margin of 10.5% assuming we never make a mistake or incur an unexpected cost such as a repair, plumbing mishap or a broken blender jar.

$1.68 in profit per Chili Chicken Sandwich if we’re positively smashing it. And if we don’t burn any bread. A scorched piece of toast is $0.52 gone right there, nearly a third of your entire profit margin. Good thing it’s really difficult to burn bread.

Any quick service restaurant that is a household name is either a national brand and/or has private equity involved. Those sorts of restaurants are mandated to operate between 20-30% profit margins. PE ain’t interested unless you’re raking it in. There are only a handful of ways to get to that magic number but it usually involves buying the cheapest ingredients and paying your employees the bare minimum. And how do they sell a chicken sandwich for $6? Well, they have massive buying power. If a chicken supplier knows he can count on you to buy millions of pounds of product each year he’s going to give you a price a small business owner could never imagine. I urge you to consider these things the next time you hit the value menu.

There isn’t really a point to this Substack other than to explain the math. I would say the most common criticism of Pecking House is the price point of our food. Fried chicken and Chinese takeout are two cuisines with infamously low value perception. It’s a race to the bottom as we undercut one another to earn the public’s affection. I would have thought that your average person would understand you can’t compare a small business to the might of The Colonel, but the failings of the American education system are rather obvious these days.

How did we get here?

Well, some would say that corporations jacked up the price on everything during COVID because of supply chain issues and never brought the price back down. But that would be a rather unethical thing for a corporation to do, and Libertarians assure us that that isn’t how the free market works.⁴

Some would say that this wild game of retaliatory tariffs is causing chaos and is causing prices to rise on everything from natural gas to auto parts to soybeans. And unfortunately, the food supply chain enjoys a butterfly effect from practically everywhere given its complexity and ubiquity.

And others still would say that there were trillions of dollars shoved up the vice-like sphincter of the ultra wealthy in what will be remembered as a generational reaping of wealth from the global working class. But Republicans assure us that it will trickle down any day now. Larry Ellison is going to unleash a diarrheal downpour of wealth, fellas, don’t you worry. Cut his taxes and trust. We’re going to shower in that shit.

But I’m just a chef who has never taken a macroeconomics class so what do I know? These are just things I read on the internet. My data is anecdotal. Anecdotally speaking, I know that I saw a grande coffee loud and proud on the menu for $8.10 at LaGuardia. And anecdotally, I know that Brian Nicol’s pay package of $96 million is feeling a bit awkward in the room as Starbucks conducts a vicious round of layoffs.

Liberal policies are also squeezing restaurants. We’re all here for higher minimum wages, rent stabilization and trying to find some measure of providing livelihoods to workers. But until someone can take a huge win from the wealthy elite and balance the scales, small time restaurants are stuck in the middle and feeling pressure from every direction. State-funded family leave is a good thing, but it’s a difficult cost to carry for a restaurant with such a slim profit margin. It is a gangbang gone awry. I consented to having three people at this party and to being the power bottom. However, I did not agree to this turning into a Bonnie Blue situation of political fuckery.

Anecdotally speaking, it sure does feel like a lot of independent restaurants are closing and it sure does feel like food and beverage are impossibly expensive. $8 for Starbucks and $22 for a martini feels pretty normal right about now. I think we should go back to carrying around sacks of coinage to really hit the point home. Laying down a parcel of doubloons for a coffee would hit the point home a lot more than an ethereal tap of the phone.

Where do we go from here?
No fucking idea!

Since I have literally zero ability to influence economic policy, I’m going to take this nonconsensual butt plug like the rest of the mom & pop businesses in America. And if it forces us to close then oh well. The harsh economic climate and unpredictable consumer behavior played a huge part in why we closed our Brooklyn location.⁵ So if this spells the end for our little Chinatown restaurant, well that’s a bit of salt in the wound I’m already familiar with. For now, we remain above water. But I hope I’ve effectively illustrated just how close we are to drowning at all times.

If you ask me, I would say returning to a pre-Nixon marginal tax rate, overturning Citizens United and changing the tax code to address off-shore tax havens would be a decent start. But that would be flirting with socialism and socialism is gay and gay is pejorative for apparently the majority of white American men. I’m just looking at the voting data, folks.

What do I think is going to happen?

A lot.

Contrary to the rather pessimistic tone of this post, I don’t think this is the end. But it will be a mass extinction event. Like the Cretaceous-Paleogene extinction event AKA we’re about to get slammed with a giant fucking meteor. Except there will be an inverse of the effect on biomass. Only small tetrapods and mammals survived the asteroid that killed the dinosaurs. That changed the dominant life form on this planet and resulted in hairless monkeys running the show. For our modern hospitality ecosystem, it will likely be the opposite scenario. Only food & bev megafauna, Big Corporate Chungi, will survive this wave. They are the most able to survive the lean times to come.

Your local coffee shop, wine store, bakery, and neighborhood restaurant are in serious trouble, however.

Restaurants will have to entirely rethink labor. Minimum wage is going to have to skyrocket for workers to be able to survive in New York City. Almost all of it is going to go to the landowning class in the form of monthly rent, but it’s a necessary stopgap. In my opinion, the days of brigades and heavily staffed kitchen teams are over. Operators are going to have to figure out how to cook food more efficiently and with less resources. If this means less tweezers, less passing purees through tamis, less Escoffier-era knife work … that might not be a bad thing. It will mean innovation is going to look very different in the world of gastronomy. The answer for centuries had been to just keep throwing labor at a problem until it resulted in genius. Thomas Keller had unpaid interns strain chicken stock through a chinois a dozen times and told them to let gravity do the work. We called it refinement. Grant Achatz had his unpaid interns trespass onto private property to chop down juniper branches for a course about his childhood memory of sledding or some shit like that. We called it genius.

Those days are either over or creativity is going to be decided by the people who have the most resources. You decide if that’s a good or a bad thing.

The consumer base and their relationship to restaurants is probably going to reflect the widening income gap in the United States. The ultra-expensive luxury, three Michelin star restaurant is probably going to be okay. It isn’t too hard to find 60 wealthy people to come in to eat for a special occasion. They have tons of disposable income, caviar and Champagne for everyone. And the cheap eats corporate biosphere will also probably be okay. Buy one get one free, apps personally catered to you with dynamic pricing based on your preferences, shoving advertising down your throat at every bus stop, every commercial break — they’re probably going to be just fine. Everything else in the middle is a big unknown. I don’t know. But this new environment we’re entering is a hostile one. And a lot of us aren’t going to make it.

I think menus will reflect a similar bifurcation in cost. Dry-aged beef, big Bordeaux, caviar, uni, truffles are staying in. As long as they look at home in the dining room and on the menu, it’s a fucking lob. Pulling in several hundred dollars just to pop open a tin a caviar is a beautiful thing for a restaurant owner. Selling a ribeye and Cab Sauv value meal a few dozen times a night is real erection-inspiring stuff. Restaurants that exist at the other end of the spectrum are going to get even more creative with driving down food costs. We already see it happening in the fast food world. A small dip in chicken commodities means everyone is putting chicken nuggets on the menu, even Taco Bell. The McRib will be back once pork prices hit a seductive low. We haven’t seen the last of that saccharine patty of porcine Play-doh. The middle class of restaurants are going to have to commit to a direction though. Does your local farm-to-table cafe continue to buy the best possible hanger steaks and raise prices? Or do they go to the bargain bin for something less ethical, less special? Which is the right call and which will play out more successfully?

Who knows?

I hope you’re detecting a theme.

The middle class is going to have an existential crisis.

An argument can be made that the idea of a middle class is a myth to allow the wealthiest Americans to sell you the dream of social mobility. I could see that. The middle class of restaurants, however, most certainly did exist and they were having a great time. After The French Laundry Cookbook came out in 1994 and Anthony Bourdain launched a thousand ships to culinary school in the early Aughts, a million and one chef hopefuls (myself included) went to train at the highest level of cooking. After earning a respectable diploma we all shared a similar dream; take this high intensity training in a Michelin star restaurant to open something close to home and close to heart. Open a neighborhood spot that anchors our communities.

This is why you see Wagyu at your local pub, heirloom tomato salads, dry-aged duck, and big seasonal produce hauls on Instagram from the local greenmarket at small cafes and bistros. High end gastronomy percolated down into the zeitgeist and it continues to this day. This is largely a good thing, the quality of your average restaurant has greatly improved.

But that class of restaurant is now in grave danger. Not having an established identity as a restaurant is a risky thing. Do diners come to you for special occasions or are they expected to spend their shrinking disposable income on your restaurant a couple times a month? Which business model is going to give your restaurant the best possible chances of survival? Which business model is going to best support that lease you signed before the pandemic and reflects a different time, an unrecognizable time?

I’m afraid to say yet again that I have no fucking idea.

And I won’t encourage you as a diner to go in any particular direction. You do what’s best for you, the aggregate of our behavior will determine the restaurant industry’s fate.

I’m just here to try and illustrate how truly cavernous the wealth gap has become and how it shows up in what you eat.

You may not agree. And I’m probably unqualified to give an opinion. But the next time you ask yourself how a chicken sandwich came to be $16 just know that the person cooking it has done their math.

The $16 chicken sandwich should galvanize us. It should coalesce the working class. It is reflective of how unfair our society has become. So the next time you’re in our DMs, try and remember that it isn’t you versus Pecking House. It’s us versus the asset wealthy, the digital tax collectors, the landowners and the policy makers that they purchase with your money.

If the revolution starts with a spicy chicken sandwich, raise a fist and tell them I sent you.

You can get that extra hot, by the way.

-E-

1. Disclaimer; I’m not the sort of Asian that is good at math. I am a very rare varietal of Chinese-American, the artistic creative kind. We’re usually pruned at the bud early on.

But I can do restaurant math. Because as could most fourth graders.

2. Delivery app commissions can actually now be upwards of 30% of the sale thanks to a repeal of the previous cap in May 2025. While you can technically opt for a 15% commission to the Great Moocher in the Sky, our CEO who art in heaven will punish you with increased fees for your customers, a smaller delivery radius and less visibility. So in order to offset their take we would have to charge $21 for a Chili Chicken Sandwich. We take the loss because we unfortunately need the revenue and because no one would buy a $21 chicken sandwich with fees on top of it.

3. Does anyone else find it crazy that we basically pay a 3% tax as a society on participating in the holiest act of capitalism that being buying shit? And that tax is completely privatized by credit card companies? No? Just me?

4. Don’t cry for me, Argentina.

5. I’m going to write that Substack one day, I pinky promise.