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Why Restaurants Are So Fucked

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Re: Why Restaurants Are So Fucked

#231

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.

Yea, a döner can be made for far less money.

They're using over-the-top expensive premium ingredients, but if you just use regular supermarket ingredients, you could make a döner for far far less. Let me attempt a prices breakdown:

I'm in the U.S., and the nearby Aldi sells boneless, skinless chicken breasts for $2.49 per pound (a restaurant could probably order in bulk, and get that an even lower price). A pound is 453 grams. There's probably only 100 grams of meat in a döner. So 113g of chicken in a döner should cost around $0.50. (It cost them $2.50, a 5x premium.)

Pre-packaged pita bread (döner wrappers) probably cost far far less than $0.75. I'm not going to analyze, but I'm going to guess it actually costs closer to between $0.05 and $0.10. Then there's the sauce. It too, when bought it bulk, likely costs less than $0.10 per döner.

So that's all to say you can definitely make a good döner in the U.S. for less than $1 per döner in terms of ingredient costs.

In terms of labor cost -- if you pay someone $15/hour, and if they take 1 minute per döner, which is definitely possible if you do things assembly-style, then the labor cost is $0.25 per döner. If you're less efficient, then maybe the labor cost is $0.50 per döner.

So now labor + ingredients is somewhere between $1.25 to $1.50.

Lastly, there's rent/utilities/etc. This totally depends on where you're located, but assumeing you're in a non-super-expensive area, let's guesstimate it costs around $1 total per döner purchased to cover these things.

We've reached a final cost price of $2.50 per döner. I can see how a 3 euro price is totally achievable in Germany.

Food can be cheap in the U.S., even in nice neighborhoods. As an example, I offer "Tara Inn", a tiny old local restaurant in Port Jefferson, NY. (Their menu: https://zmenu.com/tara-inn-port-jefferson-online-menu/) They sell pretty darn good hamburgers for $1.00 each, cheeseburger for $1.50 a piece, a grilled chicken sandwich for $2.00, etc. And the food there is actually good. This, in a neighborhood (North Shore Long Island) where the typical family income is $100k+. (Although the immediate vicinity of Port Jefferson is not considered super-bougey by north shore folks.)

There's another reason why döners can be fairly expensive in the US (even at a places using non-premium ingredients). Turkish cuisine is still somewhat exotic here. The US doesn't have the huge fairly-recent immigrant Turkish population that Germany has, so döners fall under the realm of "exotic mediterranean" foods. Hence their higher-than-typical prices.

Re: Why Restaurants Are So Fucked

#232
post #213

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.

That's uncommonly cheap. East Germany somewhere? Those Döner prices are usually found in Berlin itself. I live in a cheap part of Germany, and our Döners have gone up from 4.50 or 4.70 Euros to about 5 Euros everywhere. But let's not forget that even 5 Euros is an insane price for that much meat. It works out because (a) the meat isn't great to begin with and (b) Dönerstuben are hotbeds for tax evasion. Many many Dön…

To add to this, the Dönnerbude is probably in a part of the city where rents are low (whereas US restaurants are often in designated city center high rent areas), and the Dönnerbude is usually very, very small.

Re: Why Restaurants Are So Fucked

#233

>The craziest thing to me in all this is, I love food. Like, obsessed. Who’s with me? My point is: if eating is literally one of our favourite things ever, are we willing to pay adequately for it? Do we value it sufficiently? Honestly, seems to me like, if there’s one industry that should be profitable, it’s restaurants. One, we have to eat. Two, we love to eat! I'm wondering if there is some personality differences…

You (and me) sound like the target market of Soylent. I don't think it's bad.

If everyone treats nutrients as necessities and dining as treats, reckon over time people will be willing to pay more for dining than they do now, making the whole sector more financially sustainable.

People like us helps uncommoditize dining.

Re: Why Restaurants Are So Fucked

#234

I think this can all be collapsed into a very simple explanation. Almost everyone has a kitchen in their home and practices being an amateur chef every day. What else does everyone practice almost every day at home that has higher margins? Restaurants are competing with a baseline price of homemade meals. Most other businesses aren't competing like this.

I think trying to collapse this into a simple explanation is a simple mistake when other countries around the world have the same 'competition' and not the same issues.

So when you start looking at issues with American restaurants vs other countries, a different picture starts to arise. One with a whole lot of rent-seeking behavior.

Re: Why Restaurants Are So Fucked

#235
post #227

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.

Wolf Down is in Canada. Your currency conversion is incorrect.

Ah, that's starting to explain the difference here. 5 EUR is approximately 8 CAD.

Re: Why Restaurants Are So Fucked

#236

>Let’s aim for 19% 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…

First, I don't see how you can call it price-fixing given that we are talking of an industry with thousands and thousands of isolated players.

But even going with the sentiment behind your claim, it's not unfair to say that if you like the restaurant eating experience it is in your benefit that it remains profitable enough for people to open restaurants.

Re: Why Restaurants Are So Fucked

#237

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 restaurateu…

> 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.

Re: Why Restaurants Are So Fucked

#238

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.

Using SF prices to represent the US would be like using Swiss prices to represent Europe.

Re: Why Restaurants Are So Fucked

#239

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…

I don't think the passion argument is that valuable. For a LOT of people programming is their passion. Yet they command some of the highest salaries. The labor market doesn't care about passion. It will settle where it needs to based on demand and supply.

May I introduce you to the video games industry? While there are good paying jobs out there, I'd risk saying the vast majority of people working in games are hugely underpaid. At my first job I was literally told "yeah the pay is crap, but you get to work on big titles so it's fine". And it's not just demand and supply - we're having a very hard time recruiting for senior positions as there just aren't any candidates around, but the pay is still very poor compared to other industries.

Re: Why Restaurants Are So Fucked

#240
Independent restaurants in their current form I think are interesting, it's always interesting to see what other people think.

I think it's mostly people who are artistic and creators and have a work ethic, working massive hours for below minimum wage.

This is not necessarily a bad thing, to create is a reward in itself. And at a societal level, we all benefit.

But it doesn't change, they are fucked.

Just asking people in the up and coming Depression to eat out more or pay more money won't work.

C19 has destroyed the restaurants, they won't come back for years, that's all there is to it. C19 has destroyed a large part of our wealth. Holding hands together and singing won't help.

There are ways to catch up, they are the same as 40 years ago. Like reducing environmental restrictions, reduce employee safety. C19 will continue to kill for decades, even if we get a vaccine or treatment.

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