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Why Restaurants Are So Fucked

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Re: Why Restaurants Are So Fucked

#181
If I were to start a company right now, it would be a restaurant.

Not joking there. The whole industry is begging to shaken up. People are always going to need to eat, but I'd argue that the avenues they have to get food on the table are tired and inefficient.

You have grocery stores, which have hardly changed since their "modern" incarnation over a century ago. Think of all of the inefficients around grocery stores--you have to travel there, wait in a bunch of different lines, pick out everything you need yourself, travel home, put a bunch of what you bought into a big, cold box, and then when you're finally ready to have a meal, you have to know how to cook everything yourself, and deal with the pain of cleaning up the mess you made doing so.

Food delivery seems like it should be more efficient--you don't have to waste time by going to buy ingredients and cooking food, but it's horribly expensive. That's because there's a lot of middle men in there--the delivery guy, the cook, the restaurant manager, the restaurant owner, the coders buying the app you ordered on, the marketeers who you learned about the app in the first place. All those people need to take a cut of cost of putting food into your belly.

Meal kits were supposed to be a middle point, but they've all pretty much failed, unable to bring the cost down much further than restaurant delivery. And people really just don't want to cook and clean up.

Fast, good, cheap. I think you can get all three if you focus on finding efficiencies.

1) Only do drive through or walk by pick up. People can pick up food on the way home from work.

2) Order ahead on an app. Maybe days in advance. That way, food is ready at a specified time and can be handed off as soon as the custom drives/walks up. And restaurants will know the exact amount of ingredients they need and don't need to stock extra.

3) Have a rotating menu of items that people could eat everyday. All of you working at Silicon Valley tech companies probably love your catering service, since you're getting different, quality options everyday. It's tough to living off a limited selection of unhealthy delivery options.

Re: Why Restaurants Are So Fucked

#182

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 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.

While on a work trip to Berlin, I walked into a random lebanese place in Neukolln to get a quick bite. Looked at the price of a shawarma - 2 euros - and thought, damn, this is going to be awful. But I was in a hurry and got one (actually two, in case they were tiny) anyway. Not only were they not tiny, to this day the best shawarma I've had.

Re: Why Restaurants Are So Fucked

#183
post #4

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…

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?

> I don't understand what commercial landlords are thinking?

The value of a commercial property is (generally, if it has development potential that may be the main factor in valuation) usually multiple of the rental income that it can generate. If landlords accept lower rents then that lowers the value of their property.

Re: Why Restaurants Are So Fucked

#184

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....

In small rural Mexican villages, you can use your dining room as a cafe.

Re: Why Restaurants Are So Fucked

#185

If I were to start a company right now, it would be a restaurant. Not joking there. The whole industry is begging to shaken up. People are always going to need to eat, but I'd argue that the avenues they have to get food on the table are tired and inefficient. You have grocery stores, which have hardly changed since their "modern" incarnation over a century ago. Think of all of the inefficients around grocery stores-…

1 basically describes a food truck in the US, a deli or hot dog cart in NY, or hawkers in Asia; low footprint, low startup cost.

The problem that is endemic, is that most retail spaces are far too large for an operation like that, and you can't just ask your landlord to only give you 20% of the space they're trying to rent. And in most of the US street carts are illegal, and food truck permitting can be a PITA depending on the jurisdiction.

Re: Why Restaurants Are So Fucked

#186
post #164
post #101

Earlier quoted context omitted.

Margin. McDonald's average profit margin for the past five years has been 23%. Sometimes they increase margin on price. But more often, they do it on labor and cost of goods. McDonalds takes no-skill workers, applies its systems, and spits out 5 billion cheeseburgers at five nines consistency. And then it buys in quantities that move world markets, unlike your locavore restaurant. Five Guys will have lower margins, b…

sounds like to me that one-off restaurants' owners want to be artisans and craftsman, not running a business. It's like an engineer who values good code and high quality engineering, but is beaten out by massive outsourced labour that optimizes for business value.

The silliest one I've been to was an upscale pizza joint that sold tiny $28 pizzas because they were "artisanal". They didn't make it 6 months. I walked in, looked at the portions and the price and walked out.

Re: Why Restaurants Are So Fucked

#187

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…

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…

Great restaurants are like art, in the eyes of patrons and creators. They will continue to find each other among the robotic masses.

Re: Why Restaurants Are So Fucked

#188
post #153
post #90

Earlier quoted context omitted.

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.

Those are not examples of true Veblen goods but rather goods which use price as a signal of quality. True Veblen goods are things like staple foods for the very poor where the increase in price eats so much of their income that they can only buy more staple foods.

You are thinking of a Giffen good.

A Veblen good:

>...A higher price may make a product desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure. A product may be a Veblen good because it is a positional good, something few others can own.

https://en.wikipedia.org/wiki/Veblen_good

A Giffen good:

>...The classic example given by Marshall is of inferior quality staple foods, whose demand is driven by poverty that makes their purchasers unable to afford superior foodstuffs. As the price of the cheap staple rises, they can no longer afford to supplement their diet with better foods, and must consume more of the staple food.

https://en.wikipedia.org/wiki/Giffen_good

Re: Why Restaurants Are So Fucked

#189

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…

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…

Automating society paves the way for people to do creative work about which they truly care.

One of those things is doing 20 covers of handmade tagliatelle every night.

Re: Why Restaurants Are So Fucked

#190

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…

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…

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