Why Restaurants Are So Fucked • Hacker News Board

Re: Why Restaurants Are So Fucked

#81

Post by 2019-nCoV » Sat, May 02, 2020, 4:34 AM UTC

christiansakai wrote: post #68

In my opinion. In here (NYC), food quality compared to big cities in Asia (at least that's what I know, both from 3rd world countries Asia and 1st world countries Asia) are way better than here in NYC. It is crazy how bad food quality in NYC for its price. It is so bad that I almost feel like there is a conspiracy between restaurants in the city that goes on like this: restaurantA: "Hey you know, we can make good foo…

No difference to Western food in big Asian cities. Either passable yet overpriced, or completely unpalatable yet still overpriced.

Re: Why Restaurants Are So Fucked

#82

Post by yellowapple » Sat, May 02, 2020, 4:35 AM UTC

8f2ab37a-ed6c wrote: post #58

teddyh wrote: post #54

> It’s very simple: let’s reset our expectations and restore respectable margins. If restaurants in general raise their prices, what’s to stop landlords from doing the same and raise rents to match?

Or, who's going to pay $15 or $20 for a sandwich? Most people will pass.

I mean, if it's a really good sandwich I might.

Re: Why Restaurants Are So Fucked

#83

Post by Digory » Sat, May 02, 2020, 4:35 AM UTC

triceratops wrote: post #50

> Drinks for instance cost us more than at the grocery store — but we can’t exactly go get 20 cases of pop per day, so we don’t have much choice. I didn't understand this. It may not be feasible to buy 100 cases of pop at a regular grocery store, but isn't Costco/Sam's Club set up for that? I do think it comes down ultimately to real estate prices. Major metros in North America have gradually become unaffordable for…

And yet I'm not sure it's a smart deal to be a commercial landlord. These "Retail space per capita" graphs have been eye-popping for awhile.[0]

The landlords that win seem to be the landlords who play the political subsidy and tax games, not just good developers.

[0]

Re: Why Restaurants Are So Fucked

#84

Post by sokoloff » Sat, May 02, 2020, 4:37 AM UTC

throwaway17_17 wrote: post #57

Alex3917 wrote: post #47

In NYC a huge percentage of restaurant workers are already dead, so whether or not the owners remain solvent is kind of moot at this point.

This is just a ridiculous exaggeration. There are at a minimum (the number of reported and taxed restaurant workers) 302,000 in NYC. There have been 13,500 deaths in NYC. That is less than .5 percent of the number of restaurant workers in the city.

One percent of 300K is 3K. Your figure is “less than 5 percent”, not “less than 0.5 percent”.

Re: Why Restaurants Are So Fucked

#85

Post by dehrmann » Sat, May 02, 2020, 4:37 AM UTC

nickff wrote: post #12

This post misses the forest for the trees. The reason for the low margins in the restaurant business is the lack of differentiation. Their products are largely commoditized, so they have no competitive advantage or market power. Peter Thiel discussed this in a lecture for YC, where he said that you can work very hard to make the best restaurant in a city, but it doesn't give you much pricing power, because the second…

> 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.

Re: Why Restaurants Are So Fucked

#86

Post by novok » Sat, May 02, 2020, 4:40 AM UTC

8f2ab37a-ed6c wrote: post #56

My guess is that moving forward businesses will try to reduce labor and overhead through automation and centralization in places like cloud kitchens. Delivery costs to the consumer will eventually be sufficiently streamlined to be negligible, like they allegedly already are in East Asia. A $20 kebab is not going to fly. The only other option is to optimize whatever costs can be optimized. Unfortunately it's not looki…

Delivery food tends to not taste as well as food that come straight out of the kitchen, and that dynamic is going to be hard to compete with without a much faster delivery pipeline (drone delivery)?

Re: Why Restaurants Are So Fucked

#87

Post by Waterluvian » Sat, May 02, 2020, 4:42 AM UTC

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.

Re: Why Restaurants Are So Fucked

#88

Post by mark-r » Sat, May 02, 2020, 4:42 AM UTC

triceratops wrote: post #50

> Drinks for instance cost us more than at the grocery store — but we can’t exactly go get 20 cases of pop per day, so we don’t have much choice. I didn't understand this. It may not be feasible to buy 100 cases of pop at a regular grocery store, but isn't Costco/Sam's Club set up for that? I do think it comes down ultimately to real estate prices. Major metros in North America have gradually become unaffordable for…

Landlords, like any other business, are out to maximize their profits. Their goal is to capture 100% of the profit of businesses that rent from them. Given that the mechanisms for doing this are very crude, there's a chance that they could be getting 101% or more and that spells death for your business.

Re: Why Restaurants Are So Fucked

#89

Post by [deleted] » Sat, May 02, 2020, 4:42 AM UTC

throwaway17_17 wrote: post #57

Alex3917 wrote: post #47

In NYC a huge percentage of restaurant workers are already dead, so whether or not the owners remain solvent is kind of moot at this point.

This is just a ridiculous exaggeration. There are at a minimum (the number of reported and taxed restaurant workers) 302,000 in NYC. There have been 13,500 deaths in NYC. That is less than .5 percent of the number of restaurant workers in the city.

[deleted]

Re: Why Restaurants Are So Fucked

#90

Post by nrp » Sat, May 02, 2020, 4:44 AM UTC

nickff wrote: post #12

This post misses the forest for the trees. The reason for the low margins in the restaurant business is the lack of differentiation. Their products are largely commoditized, so they have no competitive advantage or market power. Peter Thiel discussed this in a lecture for YC, where he said that you can work very hard to make the best restaurant in a city, but it doesn't give you much pricing power, because the second…

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.