To paraphrase Adam Smith, and Warren Buffett, on hamburgers

One rather cynical lesson that can be filleted out of Wealth of Nations is that human beings are stupid, greedy and lazy. Not that it’s put in quite those words of course. But it’s difficult to find new things to do - the stupidity. We’re greedy, in that if we see someone making better than normal profits then we’ll copy them. We’re lazy, in that we’re rarely willing to put in that hard work to overcome the stupidity in finding the new things to do.

Add those all together and we find that new things that actually work are rare enough, those that are found get copied and the better than normal profits quickly disappear under the roaring waves of competition:

During the early 2010s, upmarket burger chains could do no wrong and were expanding like wildfire. New brands such as Honest Burger sprung from nowhere to become upstart chains, while US outlets Five Guys and Shake Shack decided to plant their flags on British soil.

At its peak, Byron was generating £90m in sales from 70 sites across the UK.

That idea of a burger that tasted better than the packaging was surprisingly difficult to find. When it was it was widely copied. Leading to oversupply:

The picture is very different now. Byron has collapsed and been sold not once but twice since the onset of the pandemic as costs surged and demand plummeted. Just 12 of its restaurants remain.

It is not alone: Gourmet Burger Kitchen (GBK), an earlier pioneer of the posh burger, called in administrators in 2020 and has shrunk from 85 sites to just 36.

Honest Burgers, meanwhile, has been forced to cut staff and renegotiate loans.

The posh burger boom has well and truly gone stale.

The end result is that all consumers who desire an edible burger gain that opportunity, the capitalists are back to normal profits - at best - and all driven by the usual combination of capitalist greed, human laziness and market competition.

We can also approach the same point, as Warrren Buffett does, from the other end. He is famed as an investor for only wanting to put his money where there is a “moat”. Something that protects profits from that roaring competition. On exactly the same grounds. Only those businesses which have the moat which prevents the competition are going to make above normal profits over the long term.

The lesson to draw from this is that it is the free part of free markets which is important. It’s that surge of competition to something making excess profits which benefits the consumer - our aim and point in our having an economy at all. So, we must preserve that free part, that freedom of entry into the market, above all else.

In the absence of special conditions which create those moats it is that free part which means that she’ll be right. Might take a bit of time, sure, but she will.