Why Chicken Sandwiches Don’t Cost $1500

Why Chicken Sandwiches Don’t Cost $1500


About a year ago, Andy George from the channel
How to Make Everything released a video called
“How to Make a $1500 Sandwich In Only 6
Months.”
I made a chicken sandwich completely from
scratch, which cost $1500 and six months of
my life.
The video was hugely successful—it got millions
of views.
Then, a few weeks ago, Andy came to me with
a question.
Obviously I didn’t use the most efficient
method of making my sandwich, but why is there
such a huge gap in price between the sandwich
I made for $1500 and one you can just buy
at a store for much less.
My nearest grocery store sells pre-made chicken
sandwiches for 2 pounds, about 2.5 US dollars.
That’s 600 times cheaper than Andy’s sandwich.
The economic principle that really makes the
modern commercial world go round is economies
of scale.
You might remember from history class that
an important step in the development of humanity
was the beginning of specialization of labor.
That was the point when advancements in technology
were far enough along that the amount of food
one person could produce was higher than the
amount one person needed to survive.
Since there was a surplus, some people could
go and do other things, like science, research,
writing, and even production.
This also helped spur the development of the
first real cities since everyone didn’t
have to live on farms.
Specialization of labor was in a way the very
beginning of the use of economies of scale
because instead of everyone growing and making
everything they needed, different people did
what they did best and exchanged goods to
get what they needed.
Fast forward almost 10,000 years, and the
world is almost entirely specialized.
Individuals almost never make things for themselves,
except for Andy George.
I challenged myself to see if I could as an
individual make something as basic as a sandwich
entirely by myself.
I grew all my own vegetables, harvested and
ground my own wheat to make bread, killed
and butchered by own chicken, and even flew
all the way from Minneapolis to LA to collect
ocean water to boil down for salt.
The salt is what we’re going to focus on.
The reason is because Andy’s salt production
process was almost identical to that of a
larger firm.
He had to gather raw materials, process it
into a product, then transport it to a final
market.
Those three steps have been optimized in our
modern world to yield insane cost reductions.
I spent $298.88 on a plane ticket, $57 for
a boat, and $6.41 on a five gallon jug all
to gather just the few ounces of salt I needed.
He only needed a small amount, but for the
same price he could have gathered more than
a pounds worth.
For his six ounces of salt, Andy paid $362.40.
That’s $52 per ounce—more than triple
the cost of silver.
Each gallon of seawater yields about 4.5 ounces
of salt when evaporated, so his five gallon
jug could have carried enough water to make
22.5 ounces of salt, or 1.4 pounds.
At that production rate, the cost per ounce
is $16.
That’s 3.25 times cheaper!
But we can make it even cheaper, we just need
more five gallon jugs.
If we buy, say, nine more five gallon jugs
at $6.41 each our total cost would be $419.98,
but we could make 14 pounds of salt!
That brings the cost down to $1.87 per ounce.
We can keep scaling this up, to an extent.
Andy’s method of transport was flying and
at that base rate his total cargo capacity
was only the capacity of his carry on bag.
The largest carry on bags have a capacity
of 45 liters or 11.8 gallons.
One gallon of salt weighs 18.1 pounds so assuming
nobody ever checks the bag Andy could’ve
carried 213.6 pounds of salt.
To produce that much, Andy would’ve needed
153 five gallons jugs and the boat he was
on could’ve only carried about 10 so he
would’ve needed to rent 15 more.
So if we add together the plane ticket, the
153 gallon jugs, and the 16 boat rentals,
we get a total price of $2191.58—a lot more,
but it’s worth it because at this production
rate the salt only costs $0.64 per ounce—but
we can keep scaling.
The average rate to hire a Los Angeles based
40 foot semi truck is $2 per mile.
To drive the 1,912 miles from Los Angeles,
California to Minneapolis, Minnesota, it would
therefore cost $3,824.
The usable capacity for these trucks is 2,395
cubic feet or 17,916 liquid gallons, or 325,000
pounds worth of salt.
Sounds great, but the US only allows a total
gross weight of 80,000 pounds on the road,
and that has to include the weight of the
truck itself, so the actual transport capacity
is only about 40,000 pounds.
Salt is just so dense that we can’t load
a truck to its full volume capacity.
So, we’ll just produce 40,000 pounds of
salt and for that we’d need 2,857 boat rentals
and 28,571 five gallons jugs.
For the sake of explanation we’ll pretend
that we can’t re-use the five gallon jugs.
Those boat rentals would total up to $162,849
and the jugs would add up to $183,141.
So including the transport cost by truck,
producing 40,000 pounds of salt would cost
$349,814.
That’s now a cost of $0.54 cents per ounce.
As you can see, as you get into higher and
higher levels of production, the advantage
of producing more grows smaller.
It was 25 times cheaper to produce 214 pounds
of salt than to produce 1.4 pounds of salt,
an 152 times increase in production, but increasing
the production from 214 pounds to 40,000 pounds,
a 314 times increase, only decreases the price
by 1.19 times.
Let’s shake up the production process.
Instead of boiling the sea water down to salt
in Los Angeles and then transporting it to
Minneapolis, let’s say that Andy transported
the sea water to Minneapolis then boiled it
down.
What would the cost be then?
Well, seawater weighs about 8.6 pounds per
gallon, and once once again we can only carry
about 40,000 pounds or 4,651 gallons.
This will cost $3,824 for the truck, $5,968
for 931 five gallons jugs, $5,358 for 94 boat
rentals, and in the end will only yield 1,308
pounds of salt.
To make these 1,308 pounds we spent $0.60
per ounce.
A difference of six cents per ounce may not
seem like a big deal, but once you get to
the scale of producing, say, 100,000 pounds
of salt, those six cents add up to $96,000
dollars—more than the price of a Tesla Model
S. This demonstrates a very important principle
in manufacturing.
There are essentially two types of products—weight-loosing
and weight-gaining.
Salt is one of the greatest examples of a
weight-loosing product—you put in a lot
of raw material, in this case seawater, to
make a little product.
Obviously it doesn’t make sense to ship
the raw seawater cross-country when you can
just boil it down in Los Angeles.
This is why processing plants for almost all
weight-loosing products will be located near
the source.
The other type of product is weight-gaining.
You take a small amount of raw material and
make it into something much heavier or larger.
A great example of this is Coca Cola.
They have more than 900 bottling plants worldwide
just so they can lower costs.
If transport was not a factor at all, they
could achieve lower costs by having one single
mega-factory, but once their soda is made,
they still have to get it to the end-consumer.
The cost of transport is closely linked to
weight so since they just take a small amount
of flavors and ingredients and add it to water—something
available almost anywhere—it makes sense
to produce their product near the end consumer.
Overall, we achieved a 92-fold reduction in
the cost of salt by using the principles of
mass-production.
Every single ingredient Andy George used to
make his $1500 sandwich could have benefited
from the principles of mass production.
We also could have gone even further—we
could’ve rented a bigger boat, used bigger
containers, there were plenty of ways we could
driven down prices even more, but these type
of cost reductions make the difference in
our modern world between a $1,500 and a $5
chicken sandwich.
I hope you enjoyed this Wendover Productions
video.
I first need to give a huge thanks to my sponsor,
Lumerit.
As I’m sure you know from my old “Why
College is so Expensive” video, college
is expensive, and Lumerit helps you do college
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Whether you’re already in college or want
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Please be sure to also check out Andy George’s
channel, How to Make Everything, for all sorts
of great videos on making things from scratch.
He just released a great video exploring where
the money you pay for coffee actually goes,
somewhat similar to my “Why Flying is so
Expensive” video so you will see an appearance
from yours truly.
I also recently started a Patreon which you
can go to by clicking here.
There are a bunch of great rewards like early
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Aside from that, please follow me on Twitter
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most of all, subscribe to this channel.
Thanks again for watching, and I’ll see
you in two weeks for another Wendover Productions
video.

100 thoughts on “Why Chicken Sandwiches Don’t Cost $1500”

  1. I'm confused. Why do you need the boat? Couldn't you just go to the shore? There's water on the shore as well!

  2. BUT WE CAN KEEP GOING. HOW CHEAP CAN WE MAKE SALT? YESRS HAVE GONE BY AND SALT ONLY COSTS 0.01 CENTS. BUT WECAN KEEP GOING.

  3. How to get Tesla model s
    Step 1 fly to the ocean
    Step 2 collect salt
    Step 3 increase production of collecting salt
    Step 4 ?????
    Step 5 profit

  4. DON’T YOU REMEMBER HIGH SCHOOL CONSERVATION OF MASS YOU CANT PRODUCE MASS YOU CAN ONLY CONVERT IT!!!

    Edit: this is a joke on him saying mass production, so don’t embarrass yourself

  5. I don't really understand why you changed your method of transportation for bringing the salt back, but didn't replace the boat. You could definitely shave a ridiculous amount of money off by buying a cheap boat or even building your own rowboat.

  6. At 4:16, you made a mistake
    It should say 64 cents, but instead, in one spot it says 67 cents.
    Anyway, EXCELLENT video! You really put a lot of time and dedication in your videos which make them so interesting.
    Keep up the great work.

  7. To summarize it costs 1500 to make one sandwich but it takes 2.5 per sandwich to produce 1000000000000

  8. I would love to see the look on the face of the flight attendant who had to help someone lift a 240 lb bag into the overhead.

  9. I would love to see what would happen to you when you carried your 213 pound bag of white crystalline powder through airport security.

    I’m sure your bail would increase production costs slightly

  10. should of used an alternative to his salt. kinda throws off the whole experiment when almost 1/4 of your total cost was just a plane ticket that you could of avoided.

  11. If it costs $10000 to send a single apple to the ISS, how much would it cost to send a chicken sandwich?

  12. The reason pounds are the best currency is not because I live in Britian which I do but bc you can troll your mates by punching them 😂

  13. Buy a truck. Cost is about 18.000-30.000€ but if you make the trip multiple times you get it in about 5-6 trips. (10-12 back and forth)

  14. I remember watching this video on the day it was released, little did I know that day would signal the decline of my country

  15. Coffee is CHEAP. My school has a coffee club, we spend 88c a cup, commercial price, decent beans, AND we throw in a free small chocolate and provide cups, INCLUDED in the price. And we sell for 3.50

  16. why did he need to rent a boat? and why the ocean. He could have flown to the great salt lake. it would take less water to produce the needed salt and staying there would have been less expensive. did he buy a chicken or raise one?

  17. "Check out Lumerit to learn how you can do college for $4,000 a year or less" Move to Denmark and GET money from it!

  18. My issue is with his salt gathering method, not yours and how you explained it, but since he only used such a small amount of salt that he got from a jug of seawater, why on earth did he rent a boat to sail out into the water instead of getting it from the beach lol

    Edit: also he flew on a plane and used a boat he didn’t make himself and a jug he didn’t make himself

  19. A Donkey train to Salt Lake,
    With a pair of sling shot. Looking for old n sick turkeys to drop on the road to n back

    😵🤙❗️

  20. The scenario is not realistic. Nobody's went to all that trouble for a chicken sandwich or any variation of chicken.

  21. you're American? why are u in UK? since you don't let us in your country how about you fuck off back to yours

  22. I could make one for 12 euros, around 14 dollars myself. The sea is nearby, milk farm nearby, I have my own ground, my own chickens. Only stuff that would cost is for the milk and seeds.

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