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Just for a moment, let's say all retail prices that consumers pay are fixed. Businesses cannot raise prices at grocery stores, restaurants, dry cleaners, gas pumps, utility companies, mass transit systems, or air travel - just to name a few areas where consumers are footing all the higher costs. What can these businesses do to lower their overhead, and not always pass along their higher costs to consumers? Can businesses think out of the box? Restaurants Last week, we went out to eat Mexican food to celebrate a family event. There was a sign on the table apologizing for having to charge for chips and salsa and for raising prices on the menu entrees due to higher food costs. Our dinner, iced tea, chips/salsa, and tip came to $45 for two people. We were floored and decided not to go back to that restaurant. Then, we decided to go watch an NBA playoff game at a sports bar and get pizza and hot wings. This time, the bill came to around $30 for two people - not bad we thought. But, as I was being served, I noticed all the things that could be eliminated from this meal service to help save costs and not pass along their higher food costs to consumers. For example: The free loaf of bread with dipping sauce served before the meal. We don't need that with pizza! Next time - save money and ask if we want bread. The hot wings were laid nicely on a huge bed of green leaf garnish. The garnish is not anything we could eat. Next time - save money and cut the garnish. The hot wings came with two kinds of dipping sauces in little bowls. We only used half of one kind - the hot sauce. We don't eat blue cheese dressing with hot wings. Next time - save money and ask the consumer what kind of dipping sauce they would like. The hot wings came with 3 little packets of handiwipes on the side. There were only two of us eating. Next time - save money and leave the handiwipes off the plate. I can get up and go to the restroom to wash my hands after dinner. Yes, I might use a little water, but it is cheaper than throwing away handiwipes. Gas Pumps I owned a gas station near Austin, Texas. During Hurricane Katrina when all of the Gulf Coast was evacuating by car to Central Texas high ground, every gas station from Houston to Dallas ran out of gas. Store owners could not get any gas because the Hurricane damaged the oil rigs and refineries along the Gulf. Any store that had gas was told by emergency officials that they must save it for emergency vehicles. High gas prices are a result of supply and demand. Shut down the pumps nationwide for two days like we had to do during Hurricane Katrina. Selling no gas for two days would make a difference in the demand side of the economic equation for gas prices. People can take mass transit, car pool, or ride bikes to work. We cannot control demand for gas in China, but we can control demand for gas in the U.S. Store owners make no profit on gas sales anyway. Many store owners would love to shut down the gas pumps because they are LOSING money with these high wholesale fuel prices. People are stealing the gas from store owners. Trust me, if store owners did not have to worry about the competition down the street selling gas - they would be happy to shut it down for two days. Grocery Stores I also owned a convenience store. There are at least 10 profit areas of a store. Some items are more profitable than others. For example, beer and tobacco products usually have a lower profit margin than prepared deli items. Grocery stores need to cut back on specialty items, gourmet items, and seasonal items in order not to raise prices of staples like milk, cheese, bread, meat, and produce. Instead of getting deliveries twice a week, cut back to once a week. Quit spending all those advertising dollars on mailers and newspaper stuffers. Instead, hand out flyers to customers about upcoming sales. Or, at least cut back to only mailing sale ads to customers who are in your computer system. I get mail ads for grocery stores that are not in my neighborhood and stores that I have never set foot in. What a complete waste of money in a recession where food prices are high and profits are low. Utility Companies We were just notified over the news that the natural gas utility company in Utah is requesting a 45% rate hike beginning in July. Now that is just ridiculous to expect consumers to pay that much more for their home gas utility bill. Their justification is that they have not raised prices in 3 years. In fact, they have lowered prices during the past three years. This is another example of supply and demand driving prices up. Consumers will have to cut back on cooking, heating, and washing clothes in hot water. Instead, eat cold meals, wear different clothing, and wash laundry with cold water detergents. If utility companies cannot trim the fat in their business operations, consumers can do it for them. Consumers Cannot Pay Any More Higher Prices Consumers can no longer take on all the burden of higher fuel and food prices. Businesses must take some responsibility for finding innovative ways to cut their overhead costs and quit expecting consumers to take all the brunt of a bad economy. If business leaders cannot do this, there will be a whole lot less businesses in business over the next six months. There have been reports of businesses and colleges cutting back to 4 day weeks. If this is what it takes to get us through this recession - by dang let's do it! The time for talking about it is over. Take action NOW! |
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