The kebab price spiral: Is a kebab worth €10 to me? #döner
Disclaimer: This is not investment advice. Nor is it an invitation to buy or sell financial products. I am only expressing my opinion here. You have your own responsibility towards your investments.
Hello everyone,
Instead of talking about shares, today I would like to talk about a topic that many people encounter in everyday life and that regularly sparks heated discussions. One thing is clear - it's about the kebab and its current price trend. The kebab is often portrayed as essential for people who are not so well off (see (9)).
Is the kebab fulfilling its social obligation despite inflation?
A look at the rising cost of a kebab over time shows us a median price for a kebab of €4 - in 2016. It is noticeable that the 25% percentile was around €3. This means that 75% of kebabs in 2016 were more expensive than €3, but cheaper than around €4.30. In general, kebab prices were even relatively stable until 2021, but experienced a massive increase in price at the height of inflation from 2022. Compared to the values from 2016, this results in an increase of +75% in the price of the fast food so beloved by many. The stronger divergences above and below the boxplot for kebab prices are particularly negative, as in some cases they are almost approaching the €10 mark (see (1), (2), (3)).
Why could this be critical?
Well - according to the sources mentioned, the kebab is still regarded as a kind of "cheap" fast food. Many kebab shop owners surveyed state, among other things, that kebabs should actually cost AT LEAST €9 to cover costs. Voices have also been raised that €10 should no longer be taboo (see (6)).
But it is not. According to (1), the median is still €7 in 2024 and there still seem to be a few kebabs priced at €4. However, these now represent a downward outlier and are no longer the majority. As a result, the kebab loses popularity with every price increase. A simple example (see (5)):
While the group of people over 55 years of age favors currywurst or pizza and the kebab comes a distant third with just 12%, the group of people under 55 years of age sees pizza in particular as their favorite. Bratwurst does not even make it into the top 3, while the kebab is in second place, but does not achieve the same results as pizza. In general, the kebab still seems to be able to compete with pizza, currywurst and the like (see (3)).
What do I look for in a kebab if it seems too expensive?
A relatively simple rule for kebabs is that the proportion of minced meat must not exceed 60%, which determines the ratio of veal and beef. Under certain circumstances, a coarse structure according to (6) can go hand in hand with inferior meat quality and the salad should not have any age-related discoloration. Of course, this may all be relatively subtle and we are still talking about the cheapest fast food on the market. But here too, sales and above all profitability targets must be achieved. For example, the topping on a pizza is reduced by one slice of salami, but at the same time "extra salami" is offered. As a result, some customers will go for it and overlook the fact that they may be paying more for the same thing (see (6), (7)).
In the case of kebabs, this seems to me to be somewhat more strictly regulated and the possible tricks are reduced to fewer options. In the meantime, Rewe has also started to offer kebabs in 2023. At a price that was out of competition in terms of the data described: the "Rewe" kebab was supposed to cost €3.50. The negative feedback from the competition was not long in coming and the suspicion was quickly voiced that it was a lure rather than an offer to earn money. Let's compare the price of 2023 with the general kebab prices. We get (see (1), (8)):
- Median (2023): 6€
- 25% percentile: approx. 5.70€
- Downward outlier: €3.50
Based purely on these figures, this would imply that the Rewe kebab was actually offered at a very low cost. However, this also raises questions about profitability. According to (8), smaller kebab stores in particular had problems passing on or passing on energy costs to the consumer. It will probably remain Rewe's secret as to how it was possible to offer this kebab in such a way without planning energy-optimized costs on the kebab spit that turns day in, day out. (10) may provide a clue. Here it is pointed out that a kebab near the meat counter can lead to potential customers also reaching for cigarettes, drinks and magazines. In this case, it would therefore be a kind of mixed calculation, so that the additional sales of the kebab would presumably have to be allocated to it. A fit of 1 kebab - 1 turnover would therefore not be possible (see (10)).
I took a look at the specific statements in (10) and was surprised to see that the kebab is calculated here with AT LEAST 250 kebabs per day. Nota bene: We are NOT talking about a kebab store, but a standard Rewemarkt without an isolated restaurant reference. Specifically, the following 3 variants are proposed:
- A) Small version with relatively small space requirements: 250 kebabs as a maximum
- B) Medium version, which has already been tested twice. It can handle a maximum of 450 kebabs
- C) The large version with larger space requirements as well as spit protection, hot water and label printer: 450 kebabs upwards
Now the question for you: Which of these variations is probably the most popular according to (10)?
I also found it exciting, but obviously it is C) as the most popular variant. It has been tested six times and is the most frequently used variant in this comparison.
It remains to be seen what will become of these tested findings. According to consumer advocates, we unfortunately cannot assume that prices will fall in the near future. In particular, the price levels achieved will not be abandoned despite the fall in inflation (see (7), (8), (9)).
And now it's your turn: Would a kebab from a grocer like Rewe or Edeka be something for you? Are you also affected by the high kebab prices? Do you think it's fair?
I look forward to every constructive comment 😊
Your Bass-T
Sources
(3) https://www.tagesschau.de/wirtschaft/verbraucher/inflation-doenerpreise-101.html
(10) https://www.green-kebab.com/presse/rewe-testet-doener-konzept
