Sunday, October 21, 2007

Rising Inequality:

Wall Street Journal Article by Greg Ip details the Income-Inequality Gap

“The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.

The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.”

The gap has been widening for thirty years so the effect has been pronounced. What might be an interesting question for restaurateurs is how this plays out in their restaurants. The last three decades has seen the rise of specialty coffee houses (i.e. Starbucks, Caribou), gourmet sandwiches (i.e Panera, Corner Bakery) and national upscale concepts (i.e. McCormick and Schmicks, Mortons).

Could the inequality that is being created be offset by the fact that some one can walk into Starbucks and for the price of a cup of coffee feel wealthier. The cost of meal or cup of coffee from a percent of income perceptive is negligible, however the wealth effect is substantial.

If your restaurant can find a way to make the vast majority of Americans at the lower 99% of the income strata, feel like they have experienced what the 1% of Americans at the top feel in their dining experience, than your restaurant will have bridged the Rising Inequality!