I really dislike the way in which this article has been written - it reads as the typical piece from the "bro culture" that massively ignores the rest of the world. Besides this, which is not the point...
1) most restaurants in US and high-end Europe that survive and thrive do so by having big margins on alcohol. Their margins are not single-digits. (edit: just saw other comments mentioning this).
2) Many restaurateurs don't have the skill or knowledge to run a restaurant, and yet they do so because it's often one of the few options left (if you can't land a high-paying job, and don't like a low-pay one).
3) What she describes in the article is very US-centric. Most of Europe, or Japan (where I am currently sheltering before returning to the US soon), have a very different restaurant landscape. Most are small mom-and-pop shop, they have very low ops costs, and can do not too bad in a time like this one. I spoke with a few owners recently (in Italy and Japan) and they all confirmed it. They mostly don't have personnel, or if they do, their relationship is flexible enough that they can quickly react to 2-3 months of 50-70% less business than usual.
4) For the long term, nobody knows what's going to happen. Are we ever going back to pre-covid levels? Don't know. Probably not. Some restaurants will close, sure, as well as car dealers, etc. Good restaurateurs will manage to find a way, IMHO.
Re point 1, there has been a major change in pubs in the U.K.
All are trying to migrate into dining, as the margins on alcohol have fallen. Those that didn’t become restaurants have basically gone bust. There are no longer any normal classic pubs in England!
I know a couple that tried to rejuvenate a failing “free house” in a tourist hotspot and failed. Passing the spot recently I saw it is now a pub restaurant like all the rest.
I also once talked with the owner bartender of a very trendy micro brewery pub. The beer was their hook but the money came from food and the stables converted into b&b.
It doesn’t invalidate your point at all, I’m just adding detail to a very varied landscape.
A "bro culture" article written by a female entrepreneur who isn't from Silicon Valley… right. I think you need to check your prejudices.
1) plenty of restaurants don't sell alcohol, including it seems this one. she also had a point about how drinks aren't a great revenue generator given the price you can expect to charge in a fast-casual setting vs. the costs (higher than grocery stores)
2) how is the restauranteur's motivation relevant?
3) her restaurant isn't in the USA so I'm not sure how you can call it US-centric.
US restaurants ask me to pay their tax and their personnel separately, and are still expensive. I get it that cheap fastfoods operate on slim margins but I have a very hard time believing the decent restaurants do. I read the article hoping to find what the hell costs 50-70 USD + tax + waiter wages (aka “20% tip that you’re a monster if you don’t pay”), found no such thing.
> it reads as the typical piece from the "bro culture" that massively ignores the rest of the world.
Why should articles need to be generalized to the world? It certainly fits the Canadian and US markets. You can't have comprehensive coverage of everything and everyone in an article.
2) is the correct answer. Most restaurateurs in Canada (and probably the US) are simply unsophisticated. Most of the restaurants I've worked for and/or run are basically money printing machines (I've been lucky and feel I'm pretty good now) while a few crashed and burned hard (and it was always pretty obvious they would).
The example in the article has many, many things wrong with it.
0) I kind of wonder how anything that reads as a typical piece from a certain culture could not be criticized for massively ignoring the rest of the world.
1) In France most restaurants sell the same desserts that they buy from the same wholesale Metro that's open only to food professionals. They buy it less than a euro and sell it more than five, with a bit of an english cream they buy by liters.
2) Not sure what's your source, but I suppose running a tobacco shop would be far easier. I have yet to know one restaurant owner who has 0 experience as either a waiter or a cook.
3) Basically you're saying that doing 0 business activity is "not too bad", when you still have to pay the rent. Just because you've spoke with a couple of owners in Italy and Japan.
4) You can be good, but paying for a 10k/month rent + furlough and making absolutely 0 business activity after throwing away your stocks can kill your business even if you're a "good restaurateur".
But maybe Simone is right: if COVID killed your business then it's because you're not "good enough".
I've yet to read such a both senseless and self sufficient comment on hn.
Nice culture, nice inclusiveness, maybe one day you grow a heart.
Good restaurateurs will manage to find a way, IMHO.
That’s literally what the article is about. More importantly many restaurants cant sell alcohol. Sounds like you and the article are talking about two very different things.
Having a restaurant is like owning your production tool. The invested capital allows you to make a revenue. High margin is not required since there is little investment to do, except refreshing the furniture every 2 years.
They do, however, have a serious problem with the pandemic, unless they turn to pick up meals or delivery.
I'll make another observation about the landscape of restaurants.
You may notice that in Europe, Asia, the demographics of restaurants are noticeably different from the US. There are far more hole-in-the-wall mom-and-pop restaurants in those places compared to the US, running a small and seemingly profit-thin but subsistence restaurant for the neighborhood. Think of a suburban neighborhood in Madrid or Rome, where a small restaurant is just as common as a tabacchi / corner convenience store.
I believe (have not seen a careful study yet) that the rent-seeking / zoning policies of our cities in the US increase greatly the cost of running restaurants. And incentivize / prohibit anything but large commercial / chain places from surviving as a rule. It makes it very hard for small experiments or small-time mom-and-pop shops to survive and stay in a community for decades at the low profits those places are willing to accept. There may also be something about the small square footage of typical shops in such cities being unfavorable towards chain restaurants which seem to require a certain size (like hotel properties).
The landscape of our policies for cities, neighborhoods, plus the way they interact with our corporations, directly translates into the kinds of restaurants that we get as a result.
Where I live in Seattle, there is a lot of new dense neighborhoods going up. And many of these large apartments have ground-level retail, which is supposed to be that urban planning magic sauce for walkable neighborhoods.
The problem is, most of these retail spaces are actually vacant, despite massive job and housing growth. But why? Because the retail spaces are simply too large. These spaces are big enough to seat 100-200 people, but most restaurants, even popular ones, will not seat that many people most of the time, so they end up paying rent on real estate that is not being fully utilized the vast majority of the time, and then they go belly up because they can't afford the rent.
One recent trend that has kind of taken us back to the roots of small restaurant square footage is the food hall, where many small setups share one large communal seating area. Another is the food truck, with no seating, minimal rent costs, and the entire operation fits in a parking space. There is a great irony when I've been to a food truck serving food out of the parking lot of an under-occupied strip mall, because the strip mall spaces are simply too large.
It also doesn't help that mom-and-pops are not exactly the most attractive tenants for commercial lending; better to ink a long-term contract with a sure bet like a bank branch or a national chain.
As a counterpoint, SF has some of the strictest zoning in the country. It has very few chains, from my experience. Most places where I know the owners, they are just normal people scratching out their existence.
I want small restaurants as much as I want shoe makers instead of automated Nike factories.
The way forward is not by enabling people who can serve 500 people/day to exist when we can have a robot serving 5,000.
We want automation, we want people doing what they choose to do because we've automated away things they had to do, such as work for a living.
The way to get there is more automation.
Restaurant cooks/servers are the equivalent of hand washing clothes. We have washing machines - technology has enabled humanity to do a great deal more with their life, let's move in that direction please.
The other piece of the puzzle is this - technology alone is not enough - technology alone is why we have nuclear weapons and idiots with nuclear codes. The time will come soon, when we have to have a frank conversation about the number of idiots inhabiting this Earth and that it's not climate change, it's idiots, that will be the end of all of us if this keeps up.
I worked bar and restaurant for 25 years. I would never, ever open or own a restaurant voluntarily. The margins are minuscule and require huge up-front costs with micro-managed inventory, labor and quality control to break even.
Bars however are a dream. Inventory control is simply tracking portions and comps. Outside of garnishes nothing rots or goes bad. And assuming tips are good, labor is no worry either. We had a saying: "In good times the bar business is good. In bad times it's even better because everyone needs to cry into their beer..."
I suspect some of these prices are generously rounded up. I think there is a very good possibility that the author doesn't actually track costs down to that level. They are probably looking at their overall costs and extrapolating downwards to the one item. Possibly a good review of their spending could save them a lot of money.
Yes, I realise it is Ottawa and CDN, but I lived in Ottawa for over 10 years and these prices don't really line up for me. $2.50 for 125g of protein. That's $2 per 100g -- without labour. I understand going for high quality, but there is high quality and there is needless spending. I should introduce them to some good butchers... Tofu should be bought from the tofu maker in Ottawa (forget the name). It is awesome (and cheap).
And $0.50 for sauce? I don't know what sauce they are using and the amount they are using, but donair sauce is primarily yogurt, mayonaise and sour cream... (condensed milk if you are going for Halifax style, apparently...) The ingredients should be on the order of $1-2 per liter.
The "toppings" appear to be cucumber, red pepper, red cabbage and lettuce. $0.50. Looking at the amount there, I'm guessing it should be about half that price.
Unless you're a really special restaurant with significant differentiation capabilities and people come to eat at your place irrationally, here's a tip:
Restaurants are never the ones making the money. They enable others to make money. Usually, landlords.
And generally, be cautious about going into a business where people want to do it because it's their passion. It means you're going to competing with people who are willing to work for nearly $0 because it's their passion.
Restaurants are fucked but the underlying costs associated with real estate are insane. Where I live, treasured restaurants close at a regular cadence due to rent hikes. Nobody can afford to run a restaurant at the prices being charged here. The end result is a cocktail that is $25 or a pint thats $10. High real estate prices are essentially forcing every commercial space to become a chain restaurant unless they can be just a super busy bar in a controlled neighborhood.
The bizarre thing is that even before the pandemic I've seen popular Bay Area restaurants close down due to huge rent increases and then the spaces are still vacant years later. I don't understand what commercial landlords are thinking?
There is a retail development near me that sat largely empty for years. They kept it up and clean, but word was the prices were sky high. It still has a huge number of vacancies ... we're talking 5+ years after it was built.
Meanwhile other retail places had shops closing, word was the rent kept climbing.
I almost want to suggest that the local city come up with a concept that somehow would encourage actual occupancy. Granted that could be complex but it seems a real waste to have these spaces empty / taking up space with high rents where maybe some business could try to run if rents were lower...
It is a weird dynamic. It's like every spot is just waiting for a Chipotle or Noodles & Company or some small fitness fad / chain and if not that ... nothing.
I love the cojones in this post. The argument isn't "pay more so we can pay our staff more, so we can buy better ingredients, so our restaurants can be cleaner." No, it's literally "pay more so we have a bigger profit margin and as a side effect we might not go under when the next economic collapse happens."
The author literally wants society to agree to a massive price-fixing scheme where instead of them competing with other restaurants we all just agree to sacrifice some other part of our budgets so we can afford to pay more for the same dining experience we're getting now.
According to the census bureau in the last ten years spending at restaurants has grown twice as fast as ALL other retail spending. Fast-casual dining is experiencing a 9% yearly growth rate. There are too many people in the market. So the question is, where is this cut in the number of restaurants to create a 19% margin going to come from?
> Drinks for instance cost us more than at the grocery store — but we can’t exactly go get 20 cases of pop per day, so we don’t have much choice.
I didn't understand this. It may not be feasible to buy 100 cases of pop at a regular grocery store, but isn't Costco/Sam's Club set up for that?
I do think it comes down ultimately to real estate prices. Major metros in North America have gradually become unaffordable for the middle-class over the past 20 years. It's not surprising that it's the same story for small businesses such as restaurants. Businesses have to pay workers more (because housing is expensive) and they have to pay their landlord more (because commercial rents are high). All that profit margin is ending up in landlords' pockets.
This post misses the forest for the trees. The reason for the low margins in the restaurant business is the lack of differentiation. Their products are largely commoditized, so they have no competitive advantage or market power. Peter Thiel discussed this in a lecture for YC, where he said that you can work very hard to make the best restaurant in a city, but it doesn't give you much pricing power, because the second best is still pretty good.[1]
What I don't understand is that restaurants seem very well differentiated to me. I have a significant preference for the food of some restaurants over others, and I'm not remotely a foodie.
The medium post seems to be arguing for charging $12 for the example Doner instead of $11. It could just be that I'm relatively price-insensitive, but if I'm choosing between meals at two different restaurants where one costs $11 and the other $12, the decision is being made by which meal I'd prefer eating, not by the $1 difference.
If we're talking a 2x in price, then sure, that can sway my decision. But the article is not talking about such big differences.
I know I'm being pedantic, but the best restaurants in the biggest food cities have pricing power because they effectively become Veblen goods. Benu, Coi, Quince, and so on can pretty much charge what they want to. They will continue to be booked out a month in advance, and the exclusivity itself becomes a draw. The line a restaurant needs to cross to achieve that differentiation is apparently a second Michelin star.
Exactly. The French Laundry can charge $325+ for dinner because it is arguably one of the 15 best restaurants in the country. It is incredibly differentiated.
A döner is between 2.5 and 5.0 EUR in Berlin (roughly 2.75 to 5.5 USD).
That's takeaway or eat in at a place with a few tables but w/o table service.
Meraba, which uses high quality organic meat from the region, comparable to the quality of the protein stated in the article, asks 4.5 EUR. A whole plate is 10 EUR.[1]
I would argue Berlin has some of the cheapest food in Europe. Though to be honest the food quality of the 2.5 EUR Döners is usually questionable and I'm not sure how they can turn any profit or actually live from it.
But isn't it cash-only at even most established joints in Germany much less mom and pop immigrant-run hole-in-the-walls? My friend tells me even vape shops that sell hundreds of dollars of gear are cash only.
We have plenty of those in our ethnic neighborhoods. Heck even some very successful joints like Rosamunde Sausage Grill in the Mission District (S.F.) were cash-only until a couple of years ago, when I last went there.
Most other places accept cards & thus have to factor that into the price of the offerings.
> So, why are the margins so bad anyway? Well, it starts with the fact that the industry as a whole shot itself in the foot when it started competing on price.
Started? You're always competing on price until you hit a certain status. Restaurants are low-margin if they offer a commoditized product.
They're also up against time. People lose interest in restaurants, and if they can't maintain enough business a few years after opening, they're not going to make it.
Something's up. In Germany in a normal city I can get a döner the same size as the one in the photo for €3 ($3.50?). It's not sourdough nor high quality protein but that can't explain the $7.50 difference.
Edit: as the commenter below reminded me, it's actually more like €4-5 but my point stands.
The article kind of misses the point, it's not 'margins' it's about the variability of costs.
If a restaurant has x% less business, they can buy x% less 'proteins' and x% fewer servers.
But they are screwed on the fixed costs, which is mostly rent.
The thing is, these are not normal conditions. Real-estate owners everywhere are as worried as anyone about their business.
If restaurants and other such businesses start collapsing - they will take a whole chunk of businesses with them - and maybe even risk the viability of some banks.
If one major bank has been doing stupid things, like Bear Sterns, and collapses, it could take the whole system down.
(Don't want to chastise but HNers could develop a stronger appreciation for how all of this stuff is connected and there are some really scary outcomes from this economic meltdown)
So - there might be a kind of reckoning.
Restauranteurs could legit approach landlords and say: "If my rents stay the same, we go bankrupt, you won't see a dime, and you will not rent this place for a year, and when you do, it will be for 20% less"
That's a credible premise.
In other words - the property is really worth a lot less.
So it's hopefully an opportunity for some hard bargaining.
People love food, but eating out at restaurants to the extent that happens in the modern world is a historical aberration. It’s not just other restos you’re competing with but a home-cooked meal too.
I get the sense from the tone taken here that this owner is going to be in trouble down the line. It’s good to be passionate but their objectivity is clouded. The restaurant with the really expensive donair is indeed likely to find itself in trouble ...
If we want convenience and scale, we need more cafeteria style restaurants. Everything is cooked in bulk, you walk in and choose visually what you want. This is very popular in post Soviet countries.
There doesn’t need to be a compromise on quality and taste either. Maybe presentation only. Won’t be able to get an instagram shot out of the cafeteria portion.
Analogous to that are food markets in South East Asian countries. Each stall just does one thing. You walk thru the market and just grab what you want. It’s like micro services of food.
As Hamilton notes, even before coronavirus restaurants were facing increasingly tough financial situations. I agree in principle that restaurants should raise their prices. There's really no other option. But it's a tough pill to swallow. Especially with the stagnation of wages. People aren't making more money and yet everything is getting more expensive. Of course if we raise minimum wage, this also hurts restaurants because they rely on cheap labor to keep their already thin margins.
Unfortunately it appears that delivery is part of the solution. Restaurants can do more volume with fewer staff and smaller spaces with a proper delivery presence. But the prospect of turning a full fledged restaurant experience into eating another meal from a plastic container just makes me sad. It's not the same.
I wish opening a business was easier in the states. You want an office location or want to sell something? You have to rent a commercial place. You can’t operate out your front door.
Meanwhile, in Asia, many cafes and bars and other types of industries are run downstairs from their living room....
I think at least the more casual/lower-end restaurants are fucked because a lot of people probably learned how to cook in the last few weeks and realized that it isn't hard to make food that is pretty good, and it's a lot cheaper and easier to do when doing it regularly.
I'm sure the "fine dining" restaurant business will pick back up again, but I think the medium tier restaurants will be hurting for a while. I'm certainly going to be buying a lot less Thai, Mexican, Chinese, etc. food and making it myself instead. It's almost as good if not better and I tweak dishes to make them how I prefer.
[+] [-] simonebrunozzi|5 years ago|reply
1) most restaurants in US and high-end Europe that survive and thrive do so by having big margins on alcohol. Their margins are not single-digits. (edit: just saw other comments mentioning this).
2) Many restaurateurs don't have the skill or knowledge to run a restaurant, and yet they do so because it's often one of the few options left (if you can't land a high-paying job, and don't like a low-pay one).
3) What she describes in the article is very US-centric. Most of Europe, or Japan (where I am currently sheltering before returning to the US soon), have a very different restaurant landscape. Most are small mom-and-pop shop, they have very low ops costs, and can do not too bad in a time like this one. I spoke with a few owners recently (in Italy and Japan) and they all confirmed it. They mostly don't have personnel, or if they do, their relationship is flexible enough that they can quickly react to 2-3 months of 50-70% less business than usual.
4) For the long term, nobody knows what's going to happen. Are we ever going back to pre-covid levels? Don't know. Probably not. Some restaurants will close, sure, as well as car dealers, etc. Good restaurateurs will manage to find a way, IMHO.
[+] [-] willvarfar|5 years ago|reply
All are trying to migrate into dining, as the margins on alcohol have fallen. Those that didn’t become restaurants have basically gone bust. There are no longer any normal classic pubs in England!
I know a couple that tried to rejuvenate a failing “free house” in a tourist hotspot and failed. Passing the spot recently I saw it is now a pub restaurant like all the rest.
I also once talked with the owner bartender of a very trendy micro brewery pub. The beer was their hook but the money came from food and the stables converted into b&b.
It doesn’t invalidate your point at all, I’m just adding detail to a very varied landscape.
[+] [-] kenneth|5 years ago|reply
1) plenty of restaurants don't sell alcohol, including it seems this one. she also had a point about how drinks aren't a great revenue generator given the price you can expect to charge in a fast-casual setting vs. the costs (higher than grocery stores)
2) how is the restauranteur's motivation relevant?
3) her restaurant isn't in the USA so I'm not sure how you can call it US-centric.
[+] [-] virgilp|5 years ago|reply
[+] [-] MattGaiser|5 years ago|reply
Why should articles need to be generalized to the world? It certainly fits the Canadian and US markets. You can't have comprehensive coverage of everything and everyone in an article.
[+] [-] Mikeb85|5 years ago|reply
The example in the article has many, many things wrong with it.
[+] [-] aoeu12332|5 years ago|reply
1) In France most restaurants sell the same desserts that they buy from the same wholesale Metro that's open only to food professionals. They buy it less than a euro and sell it more than five, with a bit of an english cream they buy by liters.
2) Not sure what's your source, but I suppose running a tobacco shop would be far easier. I have yet to know one restaurant owner who has 0 experience as either a waiter or a cook.
3) Basically you're saying that doing 0 business activity is "not too bad", when you still have to pay the rent. Just because you've spoke with a couple of owners in Italy and Japan.
4) You can be good, but paying for a 10k/month rent + furlough and making absolutely 0 business activity after throwing away your stocks can kill your business even if you're a "good restaurateur".
But maybe Simone is right: if COVID killed your business then it's because you're not "good enough".
I've yet to read such a both senseless and self sufficient comment on hn.
Nice culture, nice inclusiveness, maybe one day you grow a heart.
Somebody had to say this.
[+] [-] scarface74|5 years ago|reply
[+] [-] pkaye|5 years ago|reply
[+] [-] givinguflac|5 years ago|reply
That’s literally what the article is about. More importantly many restaurants cant sell alcohol. Sounds like you and the article are talking about two very different things.
[+] [-] jerome-jh|5 years ago|reply
They do, however, have a serious problem with the pandemic, unless they turn to pick up meals or delivery.
[+] [-] supernova87a|5 years ago|reply
You may notice that in Europe, Asia, the demographics of restaurants are noticeably different from the US. There are far more hole-in-the-wall mom-and-pop restaurants in those places compared to the US, running a small and seemingly profit-thin but subsistence restaurant for the neighborhood. Think of a suburban neighborhood in Madrid or Rome, where a small restaurant is just as common as a tabacchi / corner convenience store.
I believe (have not seen a careful study yet) that the rent-seeking / zoning policies of our cities in the US increase greatly the cost of running restaurants. And incentivize / prohibit anything but large commercial / chain places from surviving as a rule. It makes it very hard for small experiments or small-time mom-and-pop shops to survive and stay in a community for decades at the low profits those places are willing to accept. There may also be something about the small square footage of typical shops in such cities being unfavorable towards chain restaurants which seem to require a certain size (like hotel properties).
The landscape of our policies for cities, neighborhoods, plus the way they interact with our corporations, directly translates into the kinds of restaurants that we get as a result.
[+] [-] bobthepanda|5 years ago|reply
The problem is, most of these retail spaces are actually vacant, despite massive job and housing growth. But why? Because the retail spaces are simply too large. These spaces are big enough to seat 100-200 people, but most restaurants, even popular ones, will not seat that many people most of the time, so they end up paying rent on real estate that is not being fully utilized the vast majority of the time, and then they go belly up because they can't afford the rent.
One recent trend that has kind of taken us back to the roots of small restaurant square footage is the food hall, where many small setups share one large communal seating area. Another is the food truck, with no seating, minimal rent costs, and the entire operation fits in a parking space. There is a great irony when I've been to a food truck serving food out of the parking lot of an under-occupied strip mall, because the strip mall spaces are simply too large.
It also doesn't help that mom-and-pops are not exactly the most attractive tenants for commercial lending; better to ink a long-term contract with a sure bet like a bank branch or a national chain.
[+] [-] stock_toaster|5 years ago|reply
[+] [-] edmundsauto|5 years ago|reply
[+] [-] alexashka|5 years ago|reply
The way forward is not by enabling people who can serve 500 people/day to exist when we can have a robot serving 5,000.
We want automation, we want people doing what they choose to do because we've automated away things they had to do, such as work for a living.
The way to get there is more automation.
Restaurant cooks/servers are the equivalent of hand washing clothes. We have washing machines - technology has enabled humanity to do a great deal more with their life, let's move in that direction please.
The other piece of the puzzle is this - technology alone is not enough - technology alone is why we have nuclear weapons and idiots with nuclear codes. The time will come soon, when we have to have a frank conversation about the number of idiots inhabiting this Earth and that it's not climate change, it's idiots, that will be the end of all of us if this keeps up.
Anyhow :)
[+] [-] every|5 years ago|reply
Bars however are a dream. Inventory control is simply tracking portions and comps. Outside of garnishes nothing rots or goes bad. And assuming tips are good, labor is no worry either. We had a saying: "In good times the bar business is good. In bad times it's even better because everyone needs to cry into their beer..."
[+] [-] mikekchar|5 years ago|reply
Yes, I realise it is Ottawa and CDN, but I lived in Ottawa for over 10 years and these prices don't really line up for me. $2.50 for 125g of protein. That's $2 per 100g -- without labour. I understand going for high quality, but there is high quality and there is needless spending. I should introduce them to some good butchers... Tofu should be bought from the tofu maker in Ottawa (forget the name). It is awesome (and cheap).
And $0.50 for sauce? I don't know what sauce they are using and the amount they are using, but donair sauce is primarily yogurt, mayonaise and sour cream... (condensed milk if you are going for Halifax style, apparently...) The ingredients should be on the order of $1-2 per liter.
The "toppings" appear to be cucumber, red pepper, red cabbage and lettuce. $0.50. Looking at the amount there, I'm guessing it should be about half that price.
[+] [-] supernova87a|5 years ago|reply
Restaurants are never the ones making the money. They enable others to make money. Usually, landlords.
And generally, be cautious about going into a business where people want to do it because it's their passion. It means you're going to competing with people who are willing to work for nearly $0 because it's their passion.
[+] [-] thinkingkong|5 years ago|reply
[+] [-] nradov|5 years ago|reply
[+] [-] duxup|5 years ago|reply
There is a retail development near me that sat largely empty for years. They kept it up and clean, but word was the prices were sky high. It still has a huge number of vacancies ... we're talking 5+ years after it was built.
Meanwhile other retail places had shops closing, word was the rent kept climbing.
I almost want to suggest that the local city come up with a concept that somehow would encourage actual occupancy. Granted that could be complex but it seems a real waste to have these spaces empty / taking up space with high rents where maybe some business could try to run if rents were lower...
It is a weird dynamic. It's like every spot is just waiting for a Chipotle or Noodles & Company or some small fitness fad / chain and if not that ... nothing.
[+] [-] causality0|5 years ago|reply
I love the cojones in this post. The argument isn't "pay more so we can pay our staff more, so we can buy better ingredients, so our restaurants can be cleaner." No, it's literally "pay more so we have a bigger profit margin and as a side effect we might not go under when the next economic collapse happens."
The author literally wants society to agree to a massive price-fixing scheme where instead of them competing with other restaurants we all just agree to sacrifice some other part of our budgets so we can afford to pay more for the same dining experience we're getting now.
According to the census bureau in the last ten years spending at restaurants has grown twice as fast as ALL other retail spending. Fast-casual dining is experiencing a 9% yearly growth rate. There are too many people in the market. So the question is, where is this cut in the number of restaurants to create a 19% margin going to come from?
[+] [-] triceratops|5 years ago|reply
I didn't understand this. It may not be feasible to buy 100 cases of pop at a regular grocery store, but isn't Costco/Sam's Club set up for that?
I do think it comes down ultimately to real estate prices. Major metros in North America have gradually become unaffordable for the middle-class over the past 20 years. It's not surprising that it's the same story for small businesses such as restaurants. Businesses have to pay workers more (because housing is expensive) and they have to pay their landlord more (because commercial rents are high). All that profit margin is ending up in landlords' pockets.
[+] [-] nickff|5 years ago|reply
[1] https://www.youtube.com/watch?v=3Fx5Q8xGU8k
[+] [-] blueblimp|5 years ago|reply
The medium post seems to be arguing for charging $12 for the example Doner instead of $11. It could just be that I'm relatively price-insensitive, but if I'm choosing between meals at two different restaurants where one costs $11 and the other $12, the decision is being made by which meal I'd prefer eating, not by the $1 difference.
If we're talking a 2x in price, then sure, that can sway my decision. But the article is not talking about such big differences.
[+] [-] jariel|5 years ago|reply
If restaurants had 20% margins they would still be facing collapse.
Rent is a huge portion of costs vis-a-vis most other businesses that can be run 'anywhere' whereas restaurants need prime locations.
[+] [-] nrp|5 years ago|reply
[+] [-] dehrmann|5 years ago|reply
Exactly. The French Laundry can charge $325+ for dinner because it is arguably one of the 15 best restaurants in the country. It is incredibly differentiated.
[+] [-] wendyshu|5 years ago|reply
[+] [-] virtualritz|5 years ago|reply
A döner is between 2.5 and 5.0 EUR in Berlin (roughly 2.75 to 5.5 USD).
That's takeaway or eat in at a place with a few tables but w/o table service.
Meraba, which uses high quality organic meat from the region, comparable to the quality of the protein stated in the article, asks 4.5 EUR. A whole plate is 10 EUR.[1]
If order to your doorstep it's 6.5 EUR.[2]
[1] https://www.top10berlin.de/en/cat/eating-257/kebab-shops-230...
[2] https://www.lieferando.de/en/meraba
[+] [-] Schweigi|5 years ago|reply
[+] [-] bistro|5 years ago|reply
[+] [-] patothon|5 years ago|reply
[+] [-] mgsk|5 years ago|reply
[+] [-] 2019-nCoV|5 years ago|reply
[+] [-] wozniacki|5 years ago|reply
We have plenty of those in our ethnic neighborhoods. Heck even some very successful joints like Rosamunde Sausage Grill in the Mission District (S.F.) were cash-only until a couple of years ago, when I last went there.
Most other places accept cards & thus have to factor that into the price of the offerings.
[+] [-] unknown|5 years ago|reply
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[+] [-] gladskdks|5 years ago|reply
Prices really do vary wildly across Europe.
[+] [-] dehrmann|5 years ago|reply
Started? You're always competing on price until you hit a certain status. Restaurants are low-margin if they offer a commoditized product.
They're also up against time. People lose interest in restaurants, and if they can't maintain enough business a few years after opening, they're not going to make it.
[+] [-] sleavey|5 years ago|reply
Edit: as the commenter below reminded me, it's actually more like €4-5 but my point stands.
[+] [-] jariel|5 years ago|reply
If a restaurant has x% less business, they can buy x% less 'proteins' and x% fewer servers.
But they are screwed on the fixed costs, which is mostly rent.
The thing is, these are not normal conditions. Real-estate owners everywhere are as worried as anyone about their business.
If restaurants and other such businesses start collapsing - they will take a whole chunk of businesses with them - and maybe even risk the viability of some banks.
If one major bank has been doing stupid things, like Bear Sterns, and collapses, it could take the whole system down.
(Don't want to chastise but HNers could develop a stronger appreciation for how all of this stuff is connected and there are some really scary outcomes from this economic meltdown)
So - there might be a kind of reckoning.
Restauranteurs could legit approach landlords and say: "If my rents stay the same, we go bankrupt, you won't see a dime, and you will not rent this place for a year, and when you do, it will be for 20% less"
That's a credible premise.
In other words - the property is really worth a lot less.
So it's hopefully an opportunity for some hard bargaining.
[+] [-] talentedcoin|5 years ago|reply
I get the sense from the tone taken here that this owner is going to be in trouble down the line. It’s good to be passionate but their objectivity is clouded. The restaurant with the really expensive donair is indeed likely to find itself in trouble ...
[+] [-] moltar|5 years ago|reply
There doesn’t need to be a compromise on quality and taste either. Maybe presentation only. Won’t be able to get an instagram shot out of the cafeteria portion.
Analogous to that are food markets in South East Asian countries. Each stall just does one thing. You walk thru the market and just grab what you want. It’s like micro services of food.
[+] [-] MattGaiser|5 years ago|reply
[+] [-] teddyh|5 years ago|reply
If restaurants in general raise their prices, what’s to stop landlords from doing the same and raise rents to match?
[+] [-] _hardwaregeek|5 years ago|reply
As Hamilton notes, even before coronavirus restaurants were facing increasingly tough financial situations. I agree in principle that restaurants should raise their prices. There's really no other option. But it's a tough pill to swallow. Especially with the stagnation of wages. People aren't making more money and yet everything is getting more expensive. Of course if we raise minimum wage, this also hurts restaurants because they rely on cheap labor to keep their already thin margins.
Unfortunately it appears that delivery is part of the solution. Restaurants can do more volume with fewer staff and smaller spaces with a proper delivery presence. But the prospect of turning a full fledged restaurant experience into eating another meal from a plastic container just makes me sad. It's not the same.
[+] [-] torgian|5 years ago|reply
Meanwhile, in Asia, many cafes and bars and other types of industries are run downstairs from their living room....
[+] [-] fouc|5 years ago|reply
It would be nice if we moved away from the big restaurants and moved towards smaller shops that are more kitchen than restaurant.
Restaurants should stop wasting money on signage, interior design, and fancy tables or dishes. Let's go back to simple, plain, and cheap.
[+] [-] creato|5 years ago|reply
I'm sure the "fine dining" restaurant business will pick back up again, but I think the medium tier restaurants will be hurting for a while. I'm certainly going to be buying a lot less Thai, Mexican, Chinese, etc. food and making it myself instead. It's almost as good if not better and I tweak dishes to make them how I prefer.