A “complaint” by a diner at the Angelmó market sparked a wide-ranging debate on social media and in the news. The diner, clearly upset, posted the bill for their meal, which totaled 162,000 pesos. One of the items that stood out most on the bill was the price of the paila marina, for which they were charged 18,000 pesos. Regardless of any irregularities the restaurant may have committed—such as failing to display prices (though apparently they weren’t asked for either) or failing to provide a receipt—I’m interested in analyzing the reasons why a popular local dish could cost nearly 20,000 pesos.

During the week, we learned the CPI figures for January, which rose 1.2% from the previous month—well above expectations. As a result, year-over-year inflation reached 7.7%, a level not seen since November 2008. Of particular concern was the rise in core inflation (specifically, the CPI excluding volatile items), which also rose 1.2% month-over-month. Looking at the categories, the largest monthly contributions were seen in Transportation (0.395 percentage points) and food and non-alcoholic beverages (0.330 percentage points). Restaurants and hotels also made a significant contribution, reaching 0.110 percentage points. If we disregard the shares that each of these categories holds in the basket (known as their weighting) and look only at year-over-year changes, the order shifts slightly: Transportation leads by a wide margin at 20.9%, followed by Recreation and Culture (14.0%) and Restaurants and Hotels (11.0%). Food ranks slightly lower, in the middle of the table, at 6.0%. 

I mention this because the president of the Chilean Gastronomy Association (ACHIGA) tried to explain the high prices of dishes by citing the rising costs the industry has faced. Reduced capacity, the implementation of health measures, and increases in food and transportation costs, among other factors, have impacted the business and, in his words: “That is ultimately passed on to the customer.” I have no idea how much a paila marina cost in Angelmó a little over two years ago (my last visit there was even longer ago than that), but I get the feeling that the high price level—which is one thing—doesn’t necessarily have much to do with recent cost increases. I don’t think that before the pandemic, dishes cost, I don’t know, 4,000 pesos, and that all the extra cost is due to rising expenses. Inflation—which is a general increase in prices—is one thing, but it’s quite another that, even when facing the same cost increases, a paila in Angelmó costs twenty lucas while one at a famous seafood restaurant in Providencia costs less than half that.

Let’s look, then, at the other side of the story. Because we often forget that, in a free-market economy—or something close to it—companies can’t do anything without demand for their products, which comes from all of us, the consumers. Let’s start with the idea that a dish at a restaurant is more expensive than the simple sum of its basic components (the food): the location, the service, the tradition, the prestige, and so on. Therefore, trying to analyze the cost based solely on how much a kilo of fish or clams costs is irrelevant. Just as it is irrelevant to point out that the eateries have dirt floors, plastic tablecloths, or a bench to sit on. All of the above is meant to justify the claim that the bill was “extortionate.” However, the very detail in the story told by the person who started the “shaming campaign” is extremely important. And I quote: “As we all know, February is vacation season, so Angelmó was absolutely packed—we couldn’t find a parking spot. In fact, we went into a small eatery where there was a table available. We went in, ordered, and ate some traditional dishes.” Dirt floor, plastic tablecloth, benches to sit on, etc., but the whole area was absolutely packed. They were lucky to snag a table. In other words, even though they were charging 18,000 pesos for a seafood platter, the restaurant had every table filled. I’ll say this again: I’m not going to defend the lack of price tags or the failure to provide receipts, but we as consumers have a role to play if we think a price is excessive. That powerful role lies in not buying, in walking away, and in not condoning poor treatment or subpar service.

So why does a paila marina cost 18,000 pesos? Because there’s someone willing to pay 18,000 pesos for one. Or 5,000 pesos for a cup of coffee. Or half a million pesos for a concert.

Nathan Pincheira 

Chief Economist at Fynsa