Q: "Why would you sell something for 5 euro when people are happily paying 10?"
A: "We'd make a killing!"
From what you've written it seems the customers are not happily paying €10. They've simply traded satisfaction for convenience.
So your idea is a pasta place that enters a market where the only choice is "terrible and overpriced" and provides an alternative of just "terrible", attempting to price-out the competition and rake in the dough.
Exactly what OP is considering (replace 'terrible' with 'equivalent').
So I guess what your boss is getting at is that the smarter business strategy would be "less terrible and overpriced" - compete on value not cost.
to go along w/ this--why not enter the market at $5, hopefully serve even a slightly better product, and get your competitor out of business and up your prices to $7 or $8, still cheaper, but better quality, and you'll stay in business longer, esp. if you knock your competition out.
If the competition is already charging $10 but could get by just fine if they charged $5, then that means they have far more capital available than you do and can afford to wait for you to go out of business.
It also means they have additional capital to
a) Advertise more
b) Improve ingredients and taste
c) Do all sorts of things to improve the customer experience.
In short, there are benefits to charging more from the outset that aren't always obvious until you're playing catchup.
Q: "Why would you sell something for 5 euro when people are happily paying 10?"
A: "We'd make a killing!"
From what you've written it seems the customers are not happily paying €10. They've simply traded satisfaction for convenience.
So your idea is a pasta place that enters a market where the only choice is "terrible and overpriced" and provides an alternative of just "terrible", attempting to price-out the competition and rake in the dough.
Exactly what OP is considering (replace 'terrible' with 'equivalent').
So I guess what your boss is getting at is that the smarter business strategy would be "less terrible and overpriced" - compete on value not cost.