Soup & Sandwich Economics

Probably the first two things that pop into most people's minds when they think of what to eat for lunch – soup and sandwich. Not surprisingly, lunch places have cornered their market in large part due to their reliance on soups and sandwiches. It is why we often think of them in tandem. But if you really think about them, a soup and a sandwich could not be more different.

It takes me a solid hour to make a good pot of soup from scratch and even longer if not using store-bought stock. A sandwich? It takes me about two minutes, probably far less if I had an assembly line in front of me. But when people come in to a place for lunch, they expect fresh, homemade soups and sandwiches. A pot of soup would have to serve at least 60 people's lunches to even out soup and sandwiches in terms of time resources spent. And I know that at least my big pot of soup won't feed 60.

So simple answer, right? Soup should just cost more than a sandwich because it takes more human resources to prepare a single serving. But it never does. Most often, a sandwich far exceeds the cost of a soup, and people have come to expect that.

So it must be the cost of the ingredients that matters then? Maybe not. With a sandwich you have veggies, bread, condiments, cheese and meat. Throw out bread from the equation, as a soup nearly always comes with a hunk of bread. So now we're comparing a few slices of deli meat and cheese, lettuce, tomato and mayo to ingredients in a soup. Water/stock, veggies, herbs and spices, butter/oil, maybe cream, maybe cheese, maybe seafood, maybe rice/noodles, maybe meat. With a good soup, you're going to be getting quite a bit of “stuff.” But let's also assume that this is a good sandwich, and thus it will probably be piled fairly high. I would give the slight edge in terms of cost of ingredients to the sandwich, but not by as much as you might naturally think. With human resources costing more for a soup and components costing more for a sandwich, why does the sandwich still cost more?

Could it be perception? People kind of think of soup as low-brow, right? Well that might not be the case. Just take a look at fancy restaurants and perhaps rethink. Soups are a mainstay of nearly every level of cuisine in nearly every culture – even in the nicest of restaurants, you will find gorgeous soups and rarely a sandwich. But where have I had the absolute most gorgeous soups? On the street at little soup stands and other lunchy type places! They make their money only by standing out from the competition, which is why I have seen some of the most creative, tasty and high-brow soups at lunch places.

Then people just think that soup is less filling and simply less than something like a sandwich, right? Again, maybe not. With a big hunk of bread and all the liquid in a soup, I myself find that I get full faster when I eat soup and am just as satisfied if not more. Considering that low-fat and low-calorie stock-based soups are fairly commonplace and this soup satiety phenomenon, soup could actually be a healthier option and actually provide you with too much food.

With soup actually being more food than you need rather than less AND being more high-brow than low, why is it still costing less than a sandwich?

Even when you throw in capital resources, it doesn't help the anomaly look more normal. Making a sandwich requires a fridge, sandwich paper and a knife. Making a soup requires a kitchen complete with fridge and knife (and stove, pot, ladles, spoons, bowls and cutting boards). Plus you might actually need a chef or cook to make a soup or come up with a unique recipe, whereas a sandwich, as said before, can be made by anyone. So a soup requires much more overhead than a sandwich, and yet it costs less than the sandwich.

So it must simply be demand. Stupid demand. People, for whatever anomalous reason, must want sandwiches so much more than soup that they're willing to pay more for something that should not be priced any higher than the higher-costing soup. For the soup makers, this leads to profit minimization and eventual exit from the market (i.e. going out of business). I know that I would not be thrilled about paying more for soup, but I would do it because I don't want my favorite soup spots going under. If we, as consumers, cannot adjust to this truth, then the market for high-quality lunch soups will no longer exist (unless subsidized by the higher-profit sandwich). Either all soup will be junk or there will be no soup option at all. Failed economics leads to failed industries, and sometimes demand can't simply be the excuse. I mean, we might actually miss our soup if we're too laissez faire and let it slip away.

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