Friday, September 2, 2011

Business Models I Can Respect

Every now and then, I'm struck by a company where my overwhelming response is 'Damn, I can't believe they're selling things that cheap.'

One of those is White Castle (most famous for the 'Harold and Kumar go to White Castle' movie). I had a friend in Chicago who thought this place was awesome (he also had a penchant for Michelin star restaurants, so he spanned the whole culinary universe). I went there with him once, and the burgers there were nasty. They were so bad, in fact, that it taught me something I didn't imagine was possible - that there is in fact fast food of a sufficiently low quality that I wouldn't want to eat it. Everything else - McDonalds, KFC, whatever - retained a feeling of tasty indulgence. It's low quality and bad for you, but boy is it tasty. Not White Castle. I don't plan to ever go back.

But that's not what's most important. What's truly amazing is that their base hamburger costs 63 cents. 63 frigging cents! (At the time it was 50 cents). And they're making a profit selling it for 63 cents. A profit large enough to keep them in business. Truly astonishing.

Reader, I stand in awe of a business model that can profitably produce burgers at scale for 63 cents. Sure, it's tiny and low quality. But suppose you exempted me from every health code and labor regulation. Suppose you let me make the meat out of diseased offal and scrapings from the abattoir floor. Suppose you let me make the bun using moth-eaten, moldy bread. Suppose I didn't even have to keep the quality high enough that anyone would actually purchase it.

Even then, I still can't see me way to making a hamburger for less than 63 cents.

White Castle can, and for that I take my hat off to them. I don't want to eat there, but they retain my strong respect and regard.

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