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The Economics Behind the Rise & Fall of Fast Food & Restaurant Chains; The role of Stimulus Package

One of the main reasons that favor fast food market are-
“Many fast-food consumers have more money in their pockets, thanks to massive $258 billion worth of stimulus package. “

This got me thinking.

What is a stimulus package? 🤔

When the economy is going too slow, the government needs to step on the gas and increase spending.

1. Government intervenes(through tax cuts/investment projects) –>
2. Generating employment and money
3. Spending power increases
4. Production& Sales improve ( Eg. Improvement in sales of fast-food restaurants).

Now, let’s bring in the Indian Scenario into the picture –

Government has instead been doing just the opposite, what is known as
Contractionary fiscal policy “.

By increased taxes, consumers are left with less money to spend, and lower government investment results in lower jobs. All of it ultimately leading to a decrease in sales.

So are our financial policymakers not competent?

Well, let’s look at the other side of the coin.

When the government uses ” Expansionary Fiscal Policy “, i.e lowering taxes, and improving investment.  The government needs more money than it has because someone ultimately has to pay the price. Leading to, what is known as – ” Deficit spending“.

So what does the government do?
It borrows money which in turn results in an increase in per capita debt and adds fuel to the decrement of already free falling Indian Rupiah ₹.

This contradiction popularly is known as “Keynes V/S Austrian Economics”  which is not new and has been a hot topic for TV Debates for decades now.

Well, given the ever dynamic and multi-dimensional nature of Economics and the Indian Ecosystem, this contradiction was quite well anticipated especially in the COVID context.

Or was it not?

PS – Former American President, George W Bush once famously said –
Read my lips, No new taxes” 
And we know what followed.

To read about the significance of stimulus package for restaurant chains, click here

Read the journey of dosa plaza here


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