The state of the restaurant industry • Hacker News Board

Re: The state of the restaurant industry

#551

Post by coldtea » Wed, Mar 18, 2020, 1:47 PM UTC

traitsnspecs wrote: post #549

spookthesunset wrote: post #281

Earlier quoted context omitted.

People will start dropping dead from social unrest, addiction, substance abuse, suicide, etc. this “lockdown” isn’t free. It has massive health impacts that could easily outweight any lives saved by the lockdown. People need to put on their critical thinking caps around here. What is the end game of this lockdown? What data is it based on? How will we know when to end it—given all factors, which include vastly more t…

Yup, my gut feeling is that follow on effects from rampant unemployment and financial insecurity will have a much larger effect (via stress-induced heart attacks, suicide, etc.) than the 3.4% mortality rate among reported cases (WHO numbers, not all infected, maybe not even most infected.) I would love to see an actual statistical comparison. spookthesunset is making an excellent point. Unless we know that deaths fro…

>Unless we know that deaths from the virus are greater than the deaths caused by the second-and-third-order effects of panicking

Do you believe that when the death toll raises from non-panicking and not imposing a lockdown (not to mention the total saturation of the healthcare system), that wont create even more panic and self-lockdown -- and have their own second and third order effects?

Re: The state of the restaurant industry

#552

Post by imtringued » Wed, Mar 18, 2020, 1:51 PM UTC

vkou wrote: post #438

whatshisface wrote: post #212

Earlier quoted context omitted.

If you can kick the can down the road until the virus goes away, you just saved the whole economy. The ability of my local Chinese place to serve customers is undiminished, my desire to eat Chinese food is undiminished, and all that's in the way is an ultimately temporary law.

> The ability of my local Chinese place to serve customers is undiminished, my desire to eat Chinese food is undiminished, and all that's in the way is an ultimately temporary law. Six months from now, when the quarantine ends, you aren't going to go to your local Teriyaki and Wok, and order six months wroth of Chinese food. The restaurant will never recoup those six lost months of rent. The employees will never reco…

That's not how margins work. God didn't descend down to earth and declared all restaurants to be low margin. Margin is a matter of competition. If there is lots of competition then the margin will shrink to barely cover costs of running the business. If suddenly every restaurant has a problem finding customers and a load of debt then restaurants are forced to increase their margins to cover their debt payments.

Low margins are the result of heavy competition. If there is less competition margins will be high again.

Re: The state of the restaurant industry

#553

Post by imtringued » Wed, Mar 18, 2020, 1:54 PM UTC

bjourne wrote: post #250

rosybox wrote: post #187

Earlier quoted context omitted.

The WSJ Editorial Board has suggested that the Fed create a new facility that gives very cheap loans to businesses that need them. These loans will not need to be repaid right away and should sustain any business that needs it during this period. It sounded workable. https://www.wsj.com/articles/financing-an-economic-shutdown-...

How would loans help? A lot of employees aren't currently needed so they will be laid off regardless of whether the business owner can take out cheap loans. I don't see how loans can make up for the much reduced economic activity.

The economy is an engine that isn't allowed to stop or it will break. The idea behind loans is that you force the engine to keep turning through external support. Yes this is obviously a money losing strategy but the value of the engine is much higher than the cost of keeping it running during the pandemic.

Re: The state of the restaurant industry

#554

Post by imtringued » Wed, Mar 18, 2020, 1:59 PM UTC

slg wrote: post #53

thedogeye wrote: post #40

Earlier quoted context omitted.

SBA just announced a program for loans up to $2M at 3.75% to make payroll

Loans don't solve this. It isn't like once this is over restaurant patronage will jump up to 200% of normal. This is business these companies will never get back. Giving them a loan that they can't repay is just delaying the problem.

Ok, shut that business down then. Layoff all workers. If all you can think about is profit at the expense of everyone else then this is the course of action. I personally am in favor of solving a liquidity crisis with liquidity but well if people want to throw a wrench in the gears that's fine with me.

Re: The state of the restaurant industry

#555

Post by repsilat » Wed, Mar 18, 2020, 2:53 PM UTC

anovikov wrote: post #510

repsilat wrote: post #503

Earlier quoted context omitted.

> The restaurant sector generates $3 trillion in annual sales worldwide, and provides employment to a vast number of individuals Can someone with an economics background tell me whether this is a sound argument? It looks like it could be reasonable to me, but it also looks a lot like the examples of deadweight losses in Bastiat's "That Which is Seen, and That Which is Not Seen". I would guess that we should count the…

I don't even know how to comment on this. The restaurant industry isn't just about food. It's about life. It may make just 3.5% of world's GDP but for many people it's most of what they do outside of home. I feel it more acutely than ever now when all restaurants are closed due to the quarantine, in our place.

Sure, it's a big part of life for many, but my question is whether it'd be better if it were cheaper. If all of the staff were replaced by robots and prices dropped by 20% GDP would go down, but society as a whole would be richer.

Re: The state of the restaurant industry

#556

Post by blaser-waffle » Wed, Mar 18, 2020, 2:55 PM UTC

dillonmckay wrote: post #436

charwalker wrote: post #428

Earlier quoted context omitted.

Various headlines as different states open up application options, see below. A reduction in hours or cuts to zero may be considered constructive dismissal and allow collection of benefits but many states are allowing expedited collection or no wait times. Layoffs have hit hard and these types of headlines have floated around for a lot of states. https://www.delawareonline.com/story/news/politics/2020/03/1... https:/…

Thanks for that info. I had assumed there was some Federal coordination, but I see it is up to each state to take initiative.

This federal government tale initiative? LOL

"I don't take responsibility at all" -- DJT

Thankfully most states are picking up the slack. I know Ohio passed something comprehensive for the service/restaurant folks and was looking at more support.

Re: The state of the restaurant industry

#557

Post by repsilat » Wed, Mar 18, 2020, 3:01 PM UTC

foota wrote: post #506

repsilat wrote: post #503

Earlier quoted context omitted.

> The restaurant sector generates $3 trillion in annual sales worldwide, and provides employment to a vast number of individuals Can someone with an economics background tell me whether this is a sound argument? It looks like it could be reasonable to me, but it also looks a lot like the examples of deadweight losses in Bastiat's "That Which is Seen, and That Which is Not Seen". I would guess that we should count the…

I think the most important thing is that they're both a net wealth transfer to local food service workers (who by and large are relatively low income) and fuel demand down the road. Most people will be able to cook for themselves just fine, but by doing so they'll be saving money, which would otherwise have been spent locally. This means that that money won't go on to restaurant workers to be spent, and the remainder…

> So honestly, I would argue that paying people to dig ditches (vs do literally nothing else, though at that point you might as well just give them cash) is in and of itself beneficial

This is the point -- paying people to dig ditches breaks down into two activities:

- Paying people, which is net zero benefit. (Otherwise we could all sit in a circle and pay each other to riches.)

- Doing useless work, which is net negative. (Effort, materials and time spent that coukd have been spent on leisure or actually productive ends.)

GDP is obviously a bad measure here. For the same problem stated another way, Google and Wikipedia are free, but increase productivity and aggregate wellbeing immeasurably.

Re: The state of the restaurant industry

#558

Post by Chris2048 » Wed, Mar 18, 2020, 3:09 PM UTC

baby wrote: post #107

slg wrote: post #39

The government has talked about bailouts for various industries from airlines, to cruise ships, to shale companies. But almost every sector of the US economy is going to be hit by this and I have no idea how we are going to react. Will there be a restaurant bailout? What would that even look like? It is much easier to work on bailing out a handful of airlines but how do you handle it for literally thousands of small…

UBI is honestly the only solution here.

What will UBI do that food stamps etc won't?

Re: The state of the restaurant industry

#559

Post by imtringued » Wed, Mar 18, 2020, 3:19 PM UTC

smallgovt wrote: post #498

slg wrote: post #240

Earlier quoted context omitted.

>There will be many profitable restaurant businesses who find their business lacking liquid cash over the next few months Like I said in my earlier comment, the best hope for these businesses is to return to normal revenue numbers. They aren't going to make up for the business they are currently losing. They don't have a liquidity problem. They have a lost revenue problem. They are still accruing costs without accrui…

I think you're overestimating the magnitude of lost revenue. We're talking about 1 month of lost revenue. A profitable restaurant's unit model might be: 10% net profit, 30% COGS, 30% fixed cost, 30% labor cost During this one month shutdown, the restaurants won't incur labor cost or COGS. So, they're really only in the hole 30% of one month's revenue. With a little back of the envelope math, you'll see that the resta…

You're forgetting that businesses can jack up prices after a crisis. Let's say there are 10 restaurants. One of them survives because it has taken a loan and others just crumble. Suddenly all the competition is gone and people are storming your place.

Re: The state of the restaurant industry

#560

Post by anovikov » Wed, Mar 18, 2020, 3:44 PM UTC

repsilat wrote: post #555

anovikov wrote: post #510

Earlier quoted context omitted.

I don't even know how to comment on this. The restaurant industry isn't just about food. It's about life. It may make just 3.5% of world's GDP but for many people it's most of what they do outside of home. I feel it more acutely than ever now when all restaurants are closed due to the quarantine, in our place.

Sure, it's a big part of life for many, but my question is whether it'd be better if it were cheaper. If all of the staff were replaced by robots and prices dropped by 20% GDP would go down, but society as a whole would be richer.

Ofc not. Personal service by real people is essential to the experience.