A cake made with some cake mix and a can of frosting even with some fancy goop to spell out “happy birthday” is about $5 max.
So why does the same cake in a plastic pan cost $29 at the grocery store.
WTF?
Convenience cost money but that’s really out there.
Are people really paying this or are multiple pre-made cakes getting tossed at the Pick-n-Slave every week?
From what I’ve seen the cakes tend to be pretty big. Don’t they tend to also have a couple dollars worth of frosting layered on them? And they’re gonna have to get rid of any cakes they don’t sell in a pretty short amount of time. All that combined with a hefty convenience markup pretty much removes any mystery regarding the price.
Edit: And given that I see store-bought cakes used at parties or whatever all the time I’d say yes, they sell just fine.
Well it was shipped in rather carefully. And anyway each location can chose its own price… its a specialy item not a staple that will affect the stores price reputation (eg in price surveys.)
Restaurants are even more outrageous. $3.25 or even 3.75 for a slice of cake or pie. It’s like a bad joke. They get maybe 7 or 8 slices out of a cake? That’s a good profit.
:eek:
Cakes aren’t mass produced in a factory. They are produced in relatively small numbers in a labor intensive environment.
Let’s look at the math for a small bakery.
Let’s assume maybe $1000 per month for the cost of the building, and maybe $500 a month for equipment, electricity, advertising, etc. Let’s also assume there are 5 grocery stores within driving distance of this bakery and each store sells 10 cakes per day. The bakery needs a delivery van, so tack on an additional $500 per month for that. So we’re up to $2000 per month and let’s assume each month has 30 days, so that’s $67 per day just to have the building and a van.
The bakery makes 50 cakes per day. Let’s assume they have 2 bakers, 1 driver, and 1 manager. The bakers make $10 per hour, the driver $10 per hour, and the manager $20 per hour. For an 8 hour day, that’s $400 per day total in salaries. But then there’s health insurance and overhead and all of that, so it ends up being more like $800 per day.
And there’s the raw materials. Let’s assume $2 per cake, so a total of $100.
So costs of $967 per day divided by 50 cakes is roughly $19 per cake. The owner needs to make a profit, otherwise he’s better off putting his money into a bank rather than a bakery, so they need to sell the cake to the grocery stores for maybe $22 per cake. The grocery store needs to make money, and they have building costs and electricity and all kinds of overhead as well, so if they don’t sell it for at least $27 per cake they lose money. At $29 per cake they make a decent profit, but they aren’t getting rich on the deal.
I just pulled all of these numbers out of my backside and I doubt that they are anything more than roughly in the same ballpark for a real bakery, but the point is to illustrate how something that is relatively low volume and labor intensive can cost a big chunk of money.
High volume assembly lines are what gets the cost per unit of your cake mix boxes down to $3 per box.
Personally I’d say it has more to do with the short shelf like of a made cake vs a long one for a mix. Add in the extra manufacturing and shipping costs and there you are.
Also, pricing often has more to do with what the market will bear than the actual value. People are clearly willing to pay for the convenience of a ready made product. If you want to see really high prices - try buying a bespoke wedding cake.
Compare “sunday sweets” to everyday “cake wrecks” on the “cake wrecks” homepage to see why it pay to order your special occasion cake from a reputable bakery
This. Are they selling at $29? Well then there’s your answer. A cake is going to take you a good hour or more to make, probably two if you take into account icing etc. Many people would value their time at more than $10-15/hr.
90% of the time, the answer to the question “Why is something so expensive” is “Because people are willing to pay that much.” The optimal price for *anything *is the highest price the seller can get away with.
Because you don’t want the cake to look like it was frosted by a drunk orangutan.
Getting a cake well assembled, frosted, and decorated takes skills that the average person doesn’t have, because they only make cakes maybe twice a year. You have to get the frosting the right consistency, know how to smooth it out, know how to write with the fancy goop. It takes practice. Professionals practice because they do it 50 times a day, every day.
Are those hourly rates real? In Australia you earn $25 per hour sweeping the floor. I think minimum wage is around $17 per hour.
Minimum wage in the US is $7.25/hour. Some states have higher minimum wages.
Yup. Minimum wage in most US states is around $7.25/hour. There’s a movement to push it up to $10/hour, but hell if that’s going to go through because we’re the US, and we like our people poor and uneducated. At least, those in power seem to.
That actually seems pretty cheap, especially if it’s a good quality cake. Hell, the one or two times a year I get the bug to make some cake, it can cost me nearly $20 in ingredients. The ballpark restaurant guideline is charge 4x ingredient price. Heck, I just bought a $55 9-inch circular cake, and I felt it was worth every penny.
I think this is a big part. You’re paying for the skill of someone with a steady hand who knows how to write on a cake and make little flowers. I play with cake decorating occasionally, and I’ve been pretty happy with my results. But there was a lot of trial and error to get there.
I can write a bit on a cake if I cheat by using plastic imprints to mark the words and then piping into the marks, but even that’s a bit tricky to get smooth, uninterrupted letters.
A friend of mine if a professional cake decorator, and she’s taught me a few tricks. The person at the grocery store is going to be better than I am, and not as good as she is.
There is a lovely custom in Latin America, where a housewife will bake and decorate a round layer cake, slice it, and walk through her neighborhood streets selling it by the slice. I’ve seen this in Nicaragua, Colombia and Chile. There is no Spanish name for that kind of confection, so they are called by the English name “birthday cake”. This can occur only in countries where street peddling is not controlled by licensing and health regulations.
Depending on the store, it may have been made on site. My mother works in the bakery for Jewel (Chicago area grocery chain) and they do their own cakes. Also, Jewel’s workers are union and the “cake maker” role is for the more experienced bakery employees so they’re not making minimum wage.
I don’t have any special insight though into cake pricing. I assume they charge what they do because they can. People who need a quick pre-made/decorated cake for an office party or other event probably aren’t shopping around. They’re running to the grocery store because they know one will be there.
The rates are real, but the discrepancy is not as large as it appears from raw numbers.
A year or so ago, the Atlantic looked at minimum wage levels in a variety of countries, accounting for both exchange rates and purchasing power parity (PPP). That is, they looked not only at how many actual dollars end up in your pocket, but exactly what sort of things you could buy with that money.
On the list of about 26 countries, Australia had the greatest gap between nominal pay rates and purchasing power parity. That is, lots of shit is much more expensive in Australia, so the minimum wage there is not as great as it first appears when you compare it to places like the United States.
Australia was still ahead of the US (and ahead of most other countries) in PPP, but not by anywhere near as much as a basic look at minimum wage levels would suggest. Normalizing just using basic exchange rates, Australia’s minimum wage worked out at the equivalent of $16 per hour, while the US was $7.10. But normalizing for PPP left the difference at $9.77 versus $7.10.
You can see the full article here: How America's Minimum Wage Really Stacks Up Globally - The Atlantic
It is also worth noting that more than 20 states have state laws setting minimum wages higher than the US federal minimum, and that those states include many of the most populous states (California, New York, Florida, Illinois, Ohio, Michigan, New Jersey), and so, by my calculation, over half of the US population is covered by such laws.
And what’s with the pricing for produce? I can get a pack of 125 asparagus seeds for $2.99 and grow the plants myself. I mean, convenience costs money but that’s really out there!