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Why Restaurants Are So Fucked

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Re: Why Restaurants Are So Fucked

#131

Post by adrianN »

PaulDavisThe1st wrote: post #116
dehrmann wrote: post #75

> 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…

And yet this is not (so) true in Europe, where (1) people eat out less but (2) people pay more for restaurant food. What's the difference? Is it really just too many food vendors thinking that the $1 happy meal is their competition? Or what? EDIT: a better formulation, from a reply I wrote below: I'll restate it somewhat differently: eating out in Europe more accurately reflects the full cost of everyone involved mak…

Is restaurant food really more expensive in Europe? I only ate in San Francisco, so my perception is probably warped, but there at least eating out is significantly more expensive than in Germany. The prices on the menu are maybe comparable, but they don't include tax and tip.

Re: Why Restaurants Are So Fucked

#132

Post by kyuudou »

every wrote: post #112

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…

>Bars however are a dream. As long as the location is good and the clientele are don't fight, get unruly or drunk drive.

Ideal would be somewhere like NYC that's mostly walkable. Can't just open up a bar at the end of the universe. Unless talking cow being served.

Re: Why Restaurants Are So Fucked

#133

Post by mgsk »

virtualritz wrote: post #41

Amazing. 11 USD for a döner! 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…

I honestly thought that was cheap, and that the answer to the problem was: charge more. I would pay $15 for that doner. Looks delicious.

Re: Why Restaurants Are So Fucked

#134

Post by 8f2ab37a-ed6c »

PaulDavisThe1st wrote: post #116
dehrmann wrote: post #75

> 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…

And yet this is not (so) true in Europe, where (1) people eat out less but (2) people pay more for restaurant food. What's the difference? Is it really just too many food vendors thinking that the $1 happy meal is their competition? Or what? EDIT: a better formulation, from a reply I wrote below: I'll restate it somewhat differently: eating out in Europe more accurately reflects the full cost of everyone involved mak…

2 is not true for Southern Europe.

Re: Why Restaurants Are So Fucked

#135

Post by kyuudou »

supernova87a wrote: post #123

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…

People get food trucks instead to get around this. At least until that becomes a thing rentiers monopolize, too.

Re: Why Restaurants Are So Fucked

#136

Post by dehrmann »

PaulDavisThe1st wrote: post #121
dehrmann wrote: post #85

Earlier quoted context omitted.

> lack of differentiation. 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.

That level of differentiation, though, is only available to on the order of 20 restaurants in the entire country .

I don't think we disagree here. I was pointing out that those rare times restaurants are differentiated, they can demand a premium, but only because they're differentiated. Restaurants aren't inherently low-margin, but most are, and it's because they're not differentiated.

Re: Why Restaurants Are So Fucked

#137

Post by supernova87a »

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.

Re: Why Restaurants Are So Fucked

#138

Post by zwirbl »

wozniacki wrote: post #62
virtualritz wrote: post #41

Amazing. 11 USD for a döner! 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…

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…

But how does cashless pay make it cost a few bucks per serving more? If it is that, why would anyone offer cashless payment?

Most Döner and other Street Foods in Austria are cash only, but that's not the reason a typically priced Döner costs ~5€

Re: Why Restaurants Are So Fucked

#139

Post by spyckie2 »

Look. I know it sounds good to say, hey, there may be a catastrophic event every 100 years, let's factor that into our costs as a collective industry so that we don't all die when it happens.

But realistically, you're going to get laughed out of the park. Cheating on longer term costs to gain competitive advantage in the short term is rampant and part of how capitalism works.

An example of this kind of thinking - "if I cut my price by 5% by not paying for 100 year catastrophe insurance, then I will have an edge over my competitors who are paying that 5% for 100 year catastrophe insurance."

This is actually how all industries are run in the modern era. To compensate, western companies generally have strong finance functions to find other ways to survive.

Public companies raise capital by selling shares. You can also take a loan, reduce opex, or rely on your savings. Relying on your savings is relying on your past. Everything else is, at least in part, drawing from your future.

It's the private SMEs that have the most risk in this model because they lack similar access to capital as publicly traded companies. If SMEs do not have substantial marginal profit, they are playing a very risky game.

Re: Why Restaurants Are So Fucked

#140

Post by dehrmann »

adrianN wrote: post #131
PaulDavisThe1st wrote: post #116

Earlier quoted context omitted.

And yet this is not (so) true in Europe, where (1) people eat out less but (2) people pay more for restaurant food. What's the difference? Is it really just too many food vendors thinking that the $1 happy meal is their competition? Or what? EDIT: a better formulation, from a reply I wrote below: I'll restate it somewhat differently: eating out in Europe more accurately reflects the full cost of everyone involved mak…

Is restaurant food really more expensive in Europe? I only ate in San Francisco, so my perception is probably warped, but there at least eating out is significantly more expensive than in Germany. The prices on the menu are maybe comparable, but they don't include tax and tip.

I've eaten in both SF and Europe a lot. Is it more expensive than SF? Not notably, but I'm comparing against SF.
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