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Why Restaurants Are So Fucked

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Re: Why Restaurants Are So Fucked

#251

Post by jdietrich »

Schweigi wrote: post #74
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 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.

Commercial rents are still insanely low in Berlin. Low fixed costs and high turnover make a low-margin business viable, hence the proliferation of food trucks in Tier 1 US cities.

Re: Why Restaurants Are So Fucked

#252

Post by MattGaiser »

Gollapalli wrote: post #53
paypalcust83 wrote: post #25

Earlier quoted context omitted.

My great-grandfather was in the restaurant business back east, but my grandfather saw how unprofitable it was and became a mechanic rather than continue the family business. (He got fired once as a short-order chef in the 50's from a Howard Johnsons for cooking too well. ) Restaurants must relocate to cheaper areas like warehouses and shift to a delivery-first distribution model, which Uber, Lyft, and Google Express…

>Restaurants must relocate to cheaper areas like warehouses and shift to a delivery-first distribution model, which Uber, Lyft, and Google Express could help dispatch. It sucks from a customer-interaction perspective, but it's necessary. Other businesses like Pret in London were already using a hybrid centralized preparation with small, hyperlocal retail sales model. Yes. Let's just kill all community space. Great id…

> Yes. Let's just kill all community space. Great idea. I too enjoy being a pod person.

The problem is that a heck of a lot of people are ok with that. I'm one of them. When I went to university, the delivery apps arrived in the middle of my time there. I think I went to a restaurant a 5-6 times in the remaining two years after UberEats and SkipTheDishes arrived.

I lived in the centre of downtown my final year and I didn't go to a restaurant downtown once.

I'm an extreme case of wanting to be at my computer to be sure, but it only takes a small percent opting out to make slim margins go to zero.

A lot of the demand for community type space was under a certain logistical duress. I either had to go to a restaurant, choose from a limited selection of delivered foods, or order takeout (and I may as well just eat it there if I have to make the journey anyway). That no longer exists and instead of paying for the overhead of the restaurant, my money goes to UberEats.

Re: Why Restaurants Are So Fucked

#253

Post by econcon »

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…

It can also be seen in porn where porn prices are always falling because so many people passionately create free porn.

Re: Why Restaurants Are So Fucked

#254

Post by gambiting »

kinkrtyavimoodh wrote: post #249
gambiting wrote: post #239

Earlier quoted context omitted.

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…

If you are not able to recruit then that pretty much proves you are underpaying, right? If you pay market price for devs you would not have trouble recruiting, well, devs.

Yes, seems obvious, right. But every time I tell HR that we have to pay more or we won't find candidates it's always the same - "that's the standard industry pay, there's nothing wrong with it, we've done our research and programmers in comparable positions are paid this much or less"

Re: Why Restaurants Are So Fucked

#255

Post by ardit33 »

x86_64Ubuntu wrote: post #60
nickff wrote: post #19

Earlier quoted context omitted.

Home-cooked meals are actually the aberration. Back in the old days (before the 1950s), the poor didn't have kitchens, hence the proliferation of street foods such as pizza and their ancient Roman antecedents.

My family had kitchens. They were black southerners living in rural hog and tobacco land. But still, they had means to cook their food.

We are talking about Roman era urban setting. A kitchen was a luxury for most common folks in urban eras. Most poor people would go to a local shop, and eat cooked millet/grains or rarely meat (usually chicken, as beef was a luxury), and lots of local fruit/veggies.

In the country-side, yes, there were kitchens/places to cook home, or often outside the main home. (barn style of a place, dedicated to cooking).

Re: Why Restaurants Are So Fucked

#256

Post by kevingadd »

sneak wrote: post #149
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…

So, this is a refutation of one of the author’s points: either you differentiate, or is is unskilled labor (and the iron law of wages is nipping at your toes). It’s possible to differentiate purely on marketing and not just food alone, too. But it’s madness to expect to make your money on volume in the restaurant biz and make any significant money without double-digit location counts and significant capital reserves;…

"either you differentiate, or is is unskilled labor"

I don't think this assertion holds up, especially if you look at other industries.

A car mechanic doesn't have much room for differentiation beyond "I can service more car brands" and "I'm cheaper" or "I'm faster". Anyone can match your offering as long as they can balance the trade-offs involved (sufficient resources, etc). That doesn't make being a car mechanic unskilled labor - doing car repairs properly and efficiently requires a lot of practice and training.

Similarly, if I'm a bank there's only so much differentiation I can offer. Different financial services and interest rates or stuff like that, sure, but at the end of the day I just store people's money in accounts and provide loans. That's basically all I do, and any other bank can do it. A bigger bank has the ability to do it better (due to their resources and regulatory capture) no matter how much I differentiate myself, and since it comes down to policy in many cases another player can just come in and copy all of my policies. None of this means that working in banking is "unskilled labor".

The tendency to call people like chefs or line cooks "unskilled labor" is disgusting. Being a line cook or a chef in a high-pressure restaurant environment is REALLY HARD and takes tons of practice and training.

Re: Why Restaurants Are So Fucked

#257

Post by _hardwaregeek »

Gabrielle Hamilton had a good op-ed about this topic as well: https://www.nytimes.com/2020/04/23/magazine/closing-prune-re...

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.

Re: Why Restaurants Are So Fucked

#258

Post by dba7dba »

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…

So I know (not personally) this guy named Ian McCollum. He's kind of well known on youtube, filming/writing/presenting on a topic that is personally very interesting to him.

He graduated from Purdue with a degree in mechanical engineer. But he didn't want to settle with a 9 to 5 job and a normal life, just to pay his bills. So instead he earned some extra small pile of money after college and set up a low cost life style in Arizona, with off grid house etc. And now he doesn't have to spend life in 9 to 5 job but instead travels around filming/interviewing/presenting on a passion project of his.

So how did he get that bit of enough extra money within 2 - 3 years (I think) after college to pay to get himself set up with that life style? He went to a bartender school and worked as a bartender. That earned him enough chunk of money that he could set up an off grid house in AZ and get on with his passion project.

If you listen to Ian McCollum presenting on his topic, you can tell he would've been a very good bartender. Calm, articulate, polite.

Re: Why Restaurants Are So Fucked

#259

Post by TheOtherHobbes »

ip26 wrote: post #109
duxup wrote: post #70

Earlier quoted context omitted.

Yeah I wonder about the real estate situation. 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 concep…

Maybe they haven't got it exactly right, but this shoe seems to fit rather well: https://www.strongtowns.org/journal/2017/11/27/the-paradox-o... In summary, lowering rents to market price lowers the value of the building and makes the project insolvent.

You can't "make something insolvent". A project is either solvent or it isn't. You can make a mistake about estimating solvency, but that's the fault of your poor estimation skills and your inability to read the situation accurately, not the situation itself.

If a project isn't objectively solvent and banks are still lending on it, then the problem is higher up the food chain - a lending "market" based on moral hazard which encourages poor decisions that blow up later.

This is one of those situations where the people on the ground - shopkeepers, small restaurant entrepreneurs, and their customers - are being punished for policy errors in the financial and real estate industries.

Re: Why Restaurants Are So Fucked

#260

Post by _ph_ »

nullc wrote: post #209
JackFr wrote: post #150

Earlier quoted context omitted.

Yeah it’s funny that she ever mentions booze, where the markups are 200-500%. If you can use your tables and food to sell bottles of wine, you can really improve your bottom line.

Ah the benefits of selling an addictive substance in a market with a large base of addicts and a legal environment that largely shields you from liability for even the fairly direct consequences of your product (such as drunk driving after serving at places and times where the non-availability of alternatives guarentees that most of your patrons will be driving).

Most customers who have a glass of wine or beer with their dinner don't qualify as addicted. Also, the restaurants make the same (or even more profit) when selling alcohol-free beverages with their food.
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