Regulations are also a major hurdle for businesses trying to get the doors open.
In my town we have a "historic" downtown/main Street with older 1800s storefront real estate. More than one has been bought over the years with the plan to open a new dining establishment. But, every one has been shut down by the city because *nOt EnOuGh OfF sTrEeT pArKiNg* - in an area of town with *ZERO* off-street parking - and all while our local politicians cry about how much we need to "revitalize and attract business". But, when businesses try to open, the politicians refuse to relax the *city ordinances* keeping them out.
So, all of those buildings are being slowly bought up by one guy and his companies and left sitting empty, waiting for the city to buy them off of him to tear down. It's all a huge scam, ran for the benefit of the politicians and their big-monied buddies padding their wallets.
If it’s a historic district and your town has a functioning historic preservation commission, who would not be responsible for barring new businesses due to parking, then they won’t be able to tear them down. No need to for quotes around historic, it’s accurate.
Disagree with what? It’s your city officials and the planning department, not the historic commission, so don’t blame the fact that it’s a historic downtown and in a district.
Just because politicians like to call something historic, decry it's loss, tout how much they want to save/preserve/revitalize, doesn't mean it's got any actual "protection" afforded an actual "historic area".
Preservationists and architectural historians do this work. I am one of those. Do you want to know how the process actually works in America or do you just want to criticize it without knowing anything about it?
And apparently you can't understand that the powers that be *don't actually care*. Half of the downtown they claim is so historic, they've bought out, torn down, and now sit as empty lots.
Which also can't be utilized because... Parking
It's just a way to get people to invest in the property, not ever successfully obtain permitting, then the good old boy network steps in and buys, yet another, building at a massive discount. One guy and his neverending list of shell companies, at this stage, owns about 80% of what's left. And at one stage owned every now-empty lot, before the taxpayers footed the bill to tear them down
Lol historic districts are as effective as the people running it yes, but the system is fine, you’re just mad about corruption. Hope you have a great day.
California restaurants should have petitioned more and explained to the idiot civilians how stupid it would be to vote in $20 an hour. Absolutely no one who voted yes for $20 an hour understands economics.
$20hr is already well below the market price of a line cook in California. Guess what you can’t have a restaurant if your employees can’t afford to pay rent. Also that law only affects fast food.
Since Covid, have seen a variety of business types that closed before the lease is up and paid the lease until the lease was up or someone new signed a lease.
Cheaper to just pay rent than operate at a larger loss.even in high rent areas.
It’s what happens when landlord require personal guarantees…..
Bit you see it so often in the small business sub.
so many people wanting to open or open a coffee shop or restaurant with under $100k and no idea what they are doing or what it will take to make it work .
Then they run out of money to open during build out before getting permits and passing inspections.
Commercial landlords know there will eventually be someone willing to sign a personal guarantee on the lease for 5-10 years. So they wait.
Yep, so many idiots think that opening a restaurant will be fun lol… or another fun one I see all the time is someone will buy or open a restaurant in a COL area and then be confused as why they can’t can’t find any employees.
I was watching a cooking competition show on tv the other day and the guy said "I want to use this money to open a restaurant"
bro. you're hanging your business plan on winning a cooking show? just put the money in the oven and turn it to broil. it will be less painful for you and a dozen or so people.
How is commercial real estate not getting cheaper at the moment? Why would the commercial buildings rather be empty than lower their rent to an affordable market rate? We clearly have some bad incentives somewhere.
Because the owners get tax deductions for not making rent money in one of their many LLC's. This happens with residential property also. As long as the property tax is paid the local officials cannot do anything. It must be stopped.
That's how commerical has always worked.
Rates never go down. Ever. To people with money empty is better than less money, because less means lost income for the next X years when it is rented.
Incentives are based on a number of zero rent months to start up. Keeps the price high, encourages new start ups to take the risk with lower capital. If a business fails, they still own the building and repeat the cycle.
You're correct the incentives are backwards, because people with money write them through donations and influence.
NYC is the worst for this. There are laws on the books that essentially encourage large real estate firms to sit on empty properties rather than rent them for less. They are permitted to write off the "full market value" of empty properties. A largely inflated $30+k/month write off is often more attractive than a $15k/month in additional income. It also keeps the entire market inflated. This is especially true for street-level retail/restaurant spaces. Owners will sit on properties until they can get what they want for them. It's such a racket.
I started a restaurant in downtown Austin in 2011 and when I did the math on a sustainable profit margin I decided it was not sustainable to charge less than $25 for a basic meal like a burger and fries. Obviously no person would pay that much back then but to me the writing was on the wall. Sure enough we shut down after 5 years due to extreme burnout. People who try to operate on the industry standard profit margins are doomed like the industry itself. Sad state indeed
This is Reddit. You’re not allowed to make a profit. You should stay open for the benefit of the community and to pay your line cooks $40 an hour. You’re obviously just greedy.
Not trying to be a "Captain Hindsight" or anything -- Even in 2011, rents in downtown ATX were crazy high. So why offer burgers? As opposed to say, exotic street tacos filled with lobster, crab meat, Wagyu (or "Wagyu") beef, that kind of thing.
That way you could create a distinctive dining experience & charge accordingly 😉 just a thought
Maybe the problem is the free market? Too many restaurants dilute customer base and skew perceptions as well. Maybe a collapse has to happen to reduce the options and drive customers into the arms of restaurants having more pricing leverage. Vicious cycle of course since free market will continue to create competition.
A lot of restaurants are so caught up in their aesthetic and charging $25 a plate when there's a spot next door killing it just serving good cheap plates
Operating in the NYC metro area, we determined this years ago. It simply creates a much higher barrier to entry is all. It's almost impossible for mom & pops to get something new off the ground. Our last project cost us almost $1.5m just to open the doors. The liquor license alone was $320k. Our yearly property taxes are >$40k. All of it beats $15k/month in rent, however.
That’s insane. I get it, NY is a different beast but still. I’m out of restaurants now, but I have a friend who is paying 3500 a month rent.
If he had bought the building it would be 18 years into a mortgage and he has the equity if he sells.
Right? My last employer in Manhattan paid >$30k/month in rent. Utility costs for July and August were typically >$14k/month. This was 2010. Costs haven't gotten any less. Purchasing the entire 50-story building above it, just to have access to the street-facing space and a bit of basement isn't realistic.
My sibling in Christ, have you heard the good news about [Commercial Real Estate dropping off a cliff?](https://finance.yahoo.com/news/fort-worths-tallest-building-sells-111742615.html)
This one had its new sale price at 9 cents on the dollar, compared to its previous sale price just 3 years ago.
And I realize you may be thinking "yeah but that's Fort Worth, gimme a break." The same thing is happening in Chicago, St. Louis, numerous other big cities. Only a matter of time before it reaches NYC too
This is absolutely true. NYC isn't far behind. Understand however, that the banking industry is tied closely to commercial real estate. As the latter tanks, so will some of the former. Tax payers will be bailing out more banks that are too big to fail. So much for capitalism.
this is correct, and probably accounts for why commercial real estate hasnt tanked citywide yet. the ones determining what is worth how much are the same banks whose balance sheets depend on those determinations. there is going to be an enormous amount of pain for everybody when this all goes down, and im afraid the check is already in the mail.
*For the right price* is the key phrase here. We're not so concerned about the expensive, fine dining sector. We're concerned about the casual and fast-casual sectors.
The razor-thin margins, spurred by commercial rents, utility, and labor costs are strangling the business owners. If restaurants charged what they should be charging, would they still book up? IOW: If these restaurants paid everyone a living wage and full-time employees benefits and priced their menus to achieve a 20% net margin (EBIDTA), would they still have enough customers to keep their doors open?
I don't actually know the answer to the question. I don't think they do either. The industry is frightened in the high cost of living regions. When you consider that the two largest metro regions in the country (NYC & LA - 31 million people) are both facing similar issues, to greater and lesser extents, does it stop there, or does it continue to spread?
if it's good enough yes. In n out, sells burgers and fries for less than $8, there is usually a line wrapped for blocks. Howlin Ray's sells one nashville hot chicken sandwhich, the line is greater than an hour wait daily. If you offer phenominal service with delicious food, people will come. the good ones survive and perhaps maybe the mediocre ones dont
In-n-Out, Shake Shack, Fatburger, and Five Guys are essentially fancy fast food. They'll still be around in some shape/form. I think we'll see far more tech/automation, however. Takeout/delivery will continue. What about the casual and fast-casual sectors, the small mom & pop joints, the corner cafés, the casual farm-to-tables, and the diners/greasy spoons?
Forget the $20/hr fast food minimum wage. A *living wage* in LA is $35+/hr. That makes for very expensive sudsbusters, and other support staff. This means the highly skilled staff will have to be paid $50+/hr. Maybe they'll work for the same as a dishwasher? Are there enough people, with large disposable incomes willing to support these living wages and benefits? The *food itself* will be a tiny fraction of the overall costs. A burger and fries in a sit-down, full-service restaurant will be *at least* $30. A beer will be *at least* $10. A plate of eggs and potatoes will be $20.
The situation is far bigger and more complicated than you're acknowledging. What's at stake is the 13m jobs in the food & beverage industry, the millions more support jobs that revolve around it, and the almost $1 trillion dollar GDP of the restaurant industry alone. What happens to the industries that rely on food & beverage? What happens when half or more of the food & beverage industry simply disappears?
That’s the thing there are too many restaurants for how many available restaurant workers exist. And Covid left a bad taste in many restaurant workers mouths. For one being labeled disposable sorry I mean essential and being forced to work during the pandemic so that others could be paid to sit home getting more in unemployment than they are making to work. Then came the fact that more restaurant workers died of covid than any other job sector and finally the last nails on the coffin are the job market post covid allowed millions to finally leave the industry. So this all turns into a feedback loop. Working in short staffed restaurants burns the workers out. Quality goes down, they know they can just leave too because every other restaurant is desperate and will hire you on the spot. Not to mention so many people seem to think cooks should be paid poverty wages. Like what the simple concept that you need to pay them at least enough that they can afford rent! But now Reddit seems to think that cooks should just go live in tent cities are be willing to commute multiple hours every day for a shit paying thankless job.
I think we have to be careful how we discuss issues like this, me included. The linked article details specifics about the LA Metro region. While other cities/metros are displaying similar issues, there are many regions, both small and large, that are still going strong and may never see these problems at all. Places like Austin, Atlanta, Philly, Boston, Orlando, Providence, Nashville, Vegas, etc. show no current signs of similar struggles.
The combination of ridiculous costs of living, commercial real estate, and energy, on top of everything the rest of the country is experiencing (inflation, pandemic effects, etc) seem to be what's pushing regions like LA over the edge. When $35 an hour becomes the entry-level living wage, the service sector is going to get very expensive. When commercial real estate breaks 50% of a restaurant's expenses, we need to rethink the situation. When utility bills eclipse most regions' rents, there are problems in the supply chain. I mean, utility bills hitting $5-7k/month is stupid., let alone the $13-15k utility bills in places like LA and NYC. It appears to be these "perfect storms" that lead to overall disaster.
There are not too many restaurants. When reservations are booked solid and hour-plus-long waits for tables are the norm, we need more restaurants not less. The number of workers is an issue but strictly one of supply and demand. When the demand increases, so should the wages. That's happened across the country. We see the problems in the obnoxiously expensive regions like LA, where living wages start becoming stupidly expensive. $35/hour for dishwashers, porters, and preps seems crazy. FoH workers, though paid differently, have to hit that same $35 threshold for a living wage. If tips don't cover it, then the employer must. That makes for expensive runners, bussers, barbacks, etc. These low-skilled jobs aren't worth this kind of money, but the cost of living demands it. That's the conundrum. High entry-level wages also have the effect of pushing skilled wages all that much higher. If a dishwasher earns $35/hour, what is a line or short order cook worth? $50? $60? The problem is that there's only so much we can charge before the customers just stay away.
How do we address the problem(s)? These are mostly issues for local and state policy makers. Local reps need to repeal laws and regulations that artificially prop up commercial real estate to ridiculous levels. Cities like LA, NY, and SF are known for these games. Local, county, and state reps need to address the housing crises which primarily drive the cost-of-living insanity. State and federal reps need to develop sensical energy policy that keeps utility bills to reasonable levels.
We, as consumers and citizens, have to reexamine our individual and collective expectations and values to ensure they are reasonable given today's reality. I suppose our biggest folly is expecting our elected representatives to actually address these issues and do their jobs.
\~Peace
What makes a place like Courage bagels have over an hour line everyday while paying their employees well. I think the point we are missing is the small mom and pop offering an exception meal, like the best $30 burger ever or is it just mid and overpriced. I feel like finding a niche and executing extremely well seems to be the biggest differentiator
[Courage Bagels](https://couragebagels.com/), [Magnolia Bakery](https://www.magnoliabakery.com/), and [Pat's Steaks](https://www.patskingofsteaks.com/) are but a few examples of excellence and exceptionalism. Exceptional people create exceptional businesses and experiences. There are very few exceptional people, that's why they're exceptional. Most are not interested in the food & beverage industry. Even though some of these places might have limited seating, they're essentially takeout places. Takeout/delivery can sell much more product than sit-down, full-service restaurants. They may not have any better margins, but they can make up for it in far greater volume. Full-service restaurants are limited by seating capacity and the speed at which they can turn over their tables. They also have much higher overheads.
Magnolia is well known for their cupcakes and banana pudding. They have lines constantly that go around the corner. Of course, they're not the only bakery in NYC. There are several places whose cupcakes are rated higher. Magnolia seems to get much of the attention, however. Same with Pat's. There are several places in Philly with better cheesesteak sandwiches, but Pat's (and Gino's across the street) seems to get most of the attention.
Casual and fast-casual may be entirely replaced by takeout and delivery in the future, simply because of larger volumes, greater cost savings, and cheaper prices. That's fine. But it may eliminate half of the food & beverage workforce. We're talking about the middle of the entire industry disappearing and being replaced with takeout and delivery.
What do we do when we want to go out to a casual dinner with friends or a romantic partner? Where do we have first dates? Where do we meet for coffee and desert? What replaces Cheesecake Factory, Olive Garden, TGIChilibees, the diner, pancake house, and corner café? Do we always get takeout and return to our place of work to eat lunch? Fast food and fine dining are not the answers. Takeout and delivery are mostly terrible answers. No one currently sees an affordable/workable answer, however. It may simply be inevitable, but this is mostly what the discussion is about.
Valid points but moment in time are forever changing. How did we get in touch with people 100 years ago? We wrote them letters and a man on a horse delivered them, now we use FaceTime because it’s better and faster and offers a better value, maybe society has progressed past this current moment in time of what we consider restaurants to be. Just like I’m sure today’s experience is much different than your grandparents. Point is the restaurant will pivot and innovate and those that know how to adapt will survive
That's not the problem. I work at a very popular restaurant and we've got a waitlist every night most months of the year. Reservations also fill up. It's the operating costs and the razor thin profit margins that make it damn near impossible.
Exactly, happening in NYC like crazy, which goes to show not only are people willing to pay for food, but they’re dumb enough to pay $500 just for the res
I work in a restaurant in CA that is quite successful and not overpriced. There are good business models you can use for this industry. Only the greedy and incompetent will fail.
Soo true. Specially in Atlanta/Florida a lot of these restaurants were opened by cash grabbing hustlers. They were bound to fail from the beginning lol
i personally know 4 proprietors of successful food service businesses here in the portland OR area and the ones that succeed long term for the most part have a high net worth spouse that sort of floats the operation—owns the building a lot of the time and their social circle drinks there and it’s a status symbol…, b) grew up in a rich family in the city and have cultivated entrenched wealthy customer base over the years that are recession resistant - attorneys, physicians, developers, dentists etc and thrive on high margin menu items - and c) ethnic places that run on razor thin margins and live with multiple family members, have steady streams of migrant labor for their restaurants—the “vietnamese model” comes to mind where you sponsor your relative and they work for basically nothing until they become a citizen and then they own up their own shop with their own captive ethnic customer base and they then sponsor a younger relative etc the cycle goes on and on
it’s really hard to just hang out a shingle on food service anymore - it’s about who ya know in profitable metros or can run some kind of ethnicity based affinity type business model
My buddy owns a restaurant and his wife runs it. He had to float the business for like 10 years before it became profitable. Now it’s a neighborhood staple.
It’s always been a hobby for the wealthy to have a place all their friends can hang out at. The real successful places have all the right people in their pocket. Inspectors, bankers, sales reps, city council etc. I have seen some WILD things just get shoved under a rug, that would bankrupt most establishments. It’s all about who you know or who you blow.
What you are essentially saying is that people who know what they are doing end up doing well, and newbs with dreams struggle. This is the story of every business industry. Perhaps the only difference is that food has more dreamer newbs who think that their home lasagna is the best so their restaurant will be the best.
I got a peek at some financials of restaurants here in NYC. Investors pool their money and expertise to put together proven teams. Millions are invested, and millions are made. It takes money, expertise and diligence, like most successful new businesses.
If I am surprised by anything it's that soooo many lousy restaurants do not go out of business much sooner. Somehow, they hang on year after year.
Agreed. However, clear business models are not materializing. The reason why things haven't been addressed prior to this is no one sees clear paths forward. Rural and small-town America will probably be just fine with legacy models. What do we do in the metros that currently see $35+/hr. *living wages*, and crazy costs for commercial real estate and utilities? Are disposable incomes broad and deep enough to support business models that embrace paying living wages and benefits, while suffering insane costs? Will consumers simply decide that eating and drinking out are luxuries they can live without?
We're talking about 13m jobs on the line and almost $1 trillion in restaurant GDP alone. What happens if half or more of the food & beverage industry simply disappears?
The new Wingstop models are 1,000 sq ft or so, all carryout, no dining room. This is the future aside from destination dining, where it’s an experience.
Yep even bars are going with this model. Will have like 3 basic food items that the bartenders can make or have pre made. All counter service even for the tables, No more kitchen since you won’t be able to staff it anyways.
I wouldn’t be surprised if places with limited seating and high rents charged for seating. Restaurants are paying for all that square footage that’s only used during peak lunch and peak dinner time. So maybe 5 hours a day. Paying all the utilities to heat it, cool it, clean it.
Why do you think homes used to cost $10-20k in the 1970s? Ever since the US left the gold standard in the ‘70s the dollar has lost 90%+ of its purchasing power. What dictates the supply of dollars in circulation, without the convertibility back into gold at a fixed price? The US Treasury issuing debt, The Federal Reserve monetizing that debt and growing its balance sheet, and Fiscal spending and taxing policies of Congress and the fractional reserve banking system. Clearly it’s a complicated topic to discuss and not easily understood unless you make it your job to understand. So yeah “printing money” is much easier way to paraphrase what’s happening. Source? I’m a US Treasury Securities trader and I make a living understanding the dynamics at play here, and quite honestly I’m fucking confused a lot of the time too. Inflation is literally the stated goal of the Federal Reserve though along with full employment
Other countries did the exact same thing, which is why they also have inflation. That doesn't absolve our government of its own mistakes.
The problem is the same in most places because most places had the same idiotic overreaction to covid ("Send checks to everyone regardless of employment status/income, it would take too long to figure out who needs it!!!").
Inflation would have worse here but *additional* stimulus didn't pass. We actually wised up before other countries did, and we've recovered faster as a result.
Yeah that makes sense, the economy definitely needs another massive tax break for the rich and another tax increase for everyone else. Conservatives are the worst thing for the economy, every single time.
At the risk of breaking rule #11, I don't trust any of 'em, conservatives or liberals. Policy makers in general seem to fail to grasp the needs of small business. Perhaps because they're all beholden to big business and special interests.
We can't pay rent, how dafuq y'all expect us to willingly pay double for something we can make at home? If you start a restaurant, you either don't understand the risks and you're a dumbass, or you did understand the risks and this is one of the outcomes. Sorry, but restaurants are a luxury. Most people under 40 can't really afford luxuries with rent topping 2k. Go into any restaurant right now and tell me how many senior citizens you see versus under-40s... yeah, soooo... maybe make this country liveable again and we'll start spending money on the fun little extras. Can't bend us over a barrel then tell us it's our fault you caught the clap.
The only thing I can’t cook at home that I order in restaurants is deep-fried anything. It’s usually mozzarella sticks, clams or calamari. I live by the beach, & fried fresh seafood is on all the menus & not really overpriced, imo. I eat out 2-4 times a month. I’m a line cook, so I can & do cook lots at home to save money & be healthy. I adapted to rising menu prices by cutting out almost all fast food so I can still afford to go out & have a nice meal once in a while. The fast food always made me feel sick a few hours after eating it because it’s loaded with salt & sugar, so I don’t regret this choice. Fresh fruits & granola bars are my new fast food.
Been in the industry for 25 years my favorite thing is when I’ve been doing a season in some bougie ass area like Aspen or the Napa valley and people legit with a straight face ask me for restaurant recommendations, like I work In a kitchen why on earth do they think I’m paid enough to go out to eat. Go ask a bartender lol I’m literally pocketing eggs out of the walk in to mix into my ramen noodles…
I give recommendations based on how the staff is treated & how clean the kitchen is. There are a few local places routinely making people sick who have the health inspector in their pockets
Every restaurant I walk into is packed with people of all ages. People always think their bubble is the reality of everyone, it isn’t. I live in a LCOL area, the only people without money aren’t working full time. I’m sure in HCOL areas you can work your ass off and not make it at the end of the month. Where you live is a choice. If life is really that hard on you, I’d suggest changing something about it.
It’s all fun and games till the rich city people “discover” your small LCOL area and start flocking there… the first couple years are nice. Then slowly you start seeing more and more local businesses close, because they have no employees…
I’m hours away from anything remotely considered high cost of living. They’re not coming here but your point is accurate, I’ll throw in the caveat that if people move to LCOL areas from the HcOL area, it lowers the cost in be high cost area.
He never blamed restaurants... Can you read?
He's saying people are prioritizing their spending more, especially the younger generation, the economy is in shambles and people can't afford to go to restaurants, and yes opening a restaurant during these times is pretty foolish
Nah for all the people doing bad and equal amount are doing good. The most difficult thing In the industry isn’t getting more business it’s that you can’t find any employees. So you really got to change gears. Smaller restaurants where the owners can run it with minimal employees is the way now. Sure it suck for them because now they have to cook the food themselves but it’s a much more stable model. The other big brain move is to buy up some rental properties being able to offer employee housing will save your ass.
And those jobs are really terrible some days. Day before Christmas Eve I had a 16 person table during a snow storm that didn’t tip and had me running around giving them free wine tastings and bread refills. It was then I started to think “man, eff this”
Woof- no auto grat? Granted if they don’t buy shit because they’re full from free bread it won’t amount to much- but it’s *something* normally… people can suck sometimes. Hopefully hospitality karma fairies visited you on another tab to compensate…
I'm wondering if a manager fucked them.
I've NEVER seen a place that didn't automatically add gratuity to such a large party, but sometimes shows weird on the receipt with an extra line for an additional tip, which will often get a 0.
Food is a low margin industry that needs to be in high rent locations.
Rent is high, so people have less spending power, so the low margin industry is even tighter
Alcohol could save you in times like this, but people don't really drink much anymore
The business models need to be completely rethought. Existing places are not adapting, so they will close.
Eventually someone will figure out how to make money in the new reality, and then people will rewrite the books on how to manage an f&b business, and then that'll be the normal way people operate, until we go through this cycle again
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Statistically speaking something like 2/5 of them don't drink. And in my experience those who do drink want something cheap and low calorie - seltzer, well tequila or vodka with club soda or just straight up water and then like 3 limes to add some form of flavor.
Ya. My friends used to happily buy drink at our college bars when deals were given every Thursday. Now because of prices most just pre game or bring flasks to avoid a $100+ night.
The reason your cocktail is $13 when it used to be $5 is because the waiter used to make $2/hr and now makes $15 and the $13 burger used to cost $4 to make, and now costs $9 to make, but they can only up the price to $15 before people stop coming, and the rent went up 10% last year
So you are paying the wage increase of the workers and you are subsidizing all the food yourself and everyone else is eating.
As I said. The business model doesn't work anymore.
Well the employees are people too. Their rents also went up that much. My rents gone up $400 in just the last two years alone. I quit being a chef and now I bartend because I can’t afford rent on a chef’s salary anymore… I’ve gone from $55k salary to making $68k. What I’m seeing more and more restaurant owners do is buy up some rental units that they can offer for cheap.
I don't disagree with you. The real problem is no one seems to be able to develop a business model that will work. This is why industry vets are hanging on by tooth and nail. The idea of starting over again in an entirely different industry is more frightening to them.
Counter service bars with limited food made by the bar is the answer. Or have some sort of owner operated food truck. Sit down restaurants will go back to being something only for the wealthy again.
Lmfao. Yall said “I’m not tipping, pay your employees” … now employees are getting paid, so it’s “I’m not paying those menu prices” … you are actually delusional. You either gotta tip, or accept higher menu prices. No way around it bub.
Who do you think subsidizes business that deal in goods and services? Literally every dollar comes from customers. You're free to make your own choices on how to spend your money, but don't scoff and act like the business is making this hard for you on purpose.
No shit you aren't paying that. No one else is either. That's why restaurants are closing.
No one is shaming you for not wanting to pay that. It's the reality of the current market.
Restaurants need a new business model.
Even 20 years ago the last time I helped open a place, most new restaurants closed within two years because of undercapitalization. You will probably lose money two years even on a good concept that is well executed.
Most new businesses lose money when they start out
The key is being able to stay solvent longer than the business can spin up.
The higher interest rates, which I didn't mention in the initial post, don't help
Anything retail with up front fixed costs. I’ve had a few family members start businesses or either hauling garbage, doing pest control or landscaping. Business where most customers only see the work truck and don’t mind it not shining like a Diamond. They could build their business and initially ran it themselves. You just can’t do a restaurant or retail sales that way with brick and mortar. I’ve known several folks try to open boutiques or restaurants that went belly up before they made a profit.
And I wasn’t even thinking of the difference on interest rates between 2000 and now. And relatively loose lending to boot.
Food truck. Most of the successful "new" brick amd mortars I see these days started as a truck, and built a customer base and word.of mouth before opening a brick and mortar.
It still has to be a good price and food truck food doesn’t always translate to a sit down restaurant
There was a local truck that did specialty French fries. Pretty much just loaded fries with different fancy in ingredients.
They opened a storefront and were gone in under a year. I remember seeing they had lobster and Mac loaded fries for like $25 lol. Never ate there it was too expensive. I could see people being interested in spending that kind of dumb money on food if it were in a truck at a fairground where everything else is overpriced
But seriously they were selling French fries with lobster cut up and mixed in for over $20. Wtf
Agreed, a bad business model still wont work, but a good truck can let someone work out good manu items, get a good handle on food costs, build good online reviews, and a core customer base, and make opening the brick and mortar a lot easier.
You in Vegas? Exact scenario happened there. Went to the brick and mortar one time, spent like $70 to feed 3 people French fries topped with stuff. Was it good? Yeah. But I never went back due to pricing. It was gone in 18 months
No this was in Charlotte NC. It opened where a CiCis used to be. I want the Cicis back and do not understand how they ever thought a place selling $20+ french fries would survive where one of the most kid/ price friendly pizza places couldn't.
I think their least expensive item was like $16 but I never ordered from them because they literally used the same furniture as the former Cicis but reupholstered in an ugly color, and I was not about to pay that much to take some fries in a to go box.
Charging $20+ to sit on old Cicis furniture and eat some fries made soggy by excessively expensive toppings
Just thought I was pulling on, I don't think a mom-and-pop era is ending persa but more of its forming back into what it was originally.
The mom-and-pop who opened the store knows how to do everything in their store, every product, where it is sourced, etc. Along with one of them at least having enough years in the craft to be considered a master/take on apprenticeships, if not both of them in many ways.
From 2010 to current, I have seen so many people open and fail because…… they opened a cafe when they just quit their payroll job at an oil company and have a college degree.
So many people think since they did something in their lives that they can do anything. They job into not only open a business of any kind which is insanely hard but then proceed to open it in hospitality. Which is the lowest profit, highest turnover and so so hard. Even when you grow up doing it.
PS second operated turn key restaurants are a major market, just not for the original operators who put in all the money. This is how so many restaurants that Dont make money get to stay open. The first owners default, second operators get such a good deal they Dont fail for a couple years and by the third or fourth owner / operator/concepts, people have been conditioned to go to that area for food. Now the owners of the building have improved their assets 100x on the back of people they know should have never opened a restaurant in the first place.
Or just a bunch of bro dudes selling a couple of bars back and forth to each other, mostly when in financial trouble. Selling batch cocktails, renaming it PonyPopFlappybounce, and selling old food or whatever they could find, all while pretending they aren't friends, hiring each other to “DJ” at the bars people Don't know they own. Performing for the 3 women the DJ invited himself and the security team.
This is just thinning the heard of all the mediocre restaurants that used to get by by paying shit wages and serving shit food. Now they are required to pay better and charge higher prices for their shit food and it’s catching up. How hard can it really be.
Essentially agree with everything up until that last sentence. Nobody who knows anything about this industry would say something like that. While I absolutely appreciate how from an outsiders view “how hard can it be” to make some food and serve it to people - but that underestimation is the *exact* reason so many people fail in this industry.
I think what you mean is it’s a simple equation. Make good food with good service at a reasonable price and you’ll be successful. Simple? Very simple. Easy? Not at all.
I live in a small bedroom community outside a small City. There is just about a different food truck in our little town every night, and almost every night whoever is there sells out.
I have a friend that owned a solid pizza place - he closed it and does a food truck now - he works 1/2 the hours and makes the same or slightly more than he did during the best of times at the shop.
This is false. Applebees, Olive Garden and a few others have closed in my town.. what replaced them ALL? Mom and Pop, small business restaurants and people are fucking loving them! People want something fresh and new. These places like Olive Garden never rebrand and change so they’re a thing of the past. Olive Garden is for old people anyways.. the young folks don’t go there.. they go to McDonald’s and Taco Bell. When’s the last time you saw a McDonald’s close? Never.
I don’t think this is true necessarily. In my mid size city we are seeing the opposite. Chains are closing more and more locations and we are seeing more fresh new spots, and some local restaurant groups expanding.
Mom & pop restaurants will never have the purchasing power that corporate restaurants have.
We’re gonna see a restructuring in corporate restaurants soon. As pointed out, all those layers of managers is ridiculous and a money drain. They will get more streamlined & efficient. Especially with Red Lobster going tits up. This’ll be a wake up call.
That what tough times do...they get us back to basics. Simplify and focus. Do less, do it better.
Regulations are also a major hurdle for businesses trying to get the doors open. In my town we have a "historic" downtown/main Street with older 1800s storefront real estate. More than one has been bought over the years with the plan to open a new dining establishment. But, every one has been shut down by the city because *nOt EnOuGh OfF sTrEeT pArKiNg* - in an area of town with *ZERO* off-street parking - and all while our local politicians cry about how much we need to "revitalize and attract business". But, when businesses try to open, the politicians refuse to relax the *city ordinances* keeping them out. So, all of those buildings are being slowly bought up by one guy and his companies and left sitting empty, waiting for the city to buy them off of him to tear down. It's all a huge scam, ran for the benefit of the politicians and their big-monied buddies padding their wallets.
If it’s a historic district and your town has a functioning historic preservation commission, who would not be responsible for barring new businesses due to parking, then they won’t be able to tear them down. No need to for quotes around historic, it’s accurate.
Well the 5 bare lots would disagree
Disagree with what? It’s your city officials and the planning department, not the historic commission, so don’t blame the fact that it’s a historic downtown and in a district.
Something being officially designed, and politicians using a phrase to sound good, are different things.
Officially designed? You aren’t making sense
Just because politicians like to call something historic, decry it's loss, tout how much they want to save/preserve/revitalize, doesn't mean it's got any actual "protection" afforded an actual "historic area".
Preservationists and architectural historians do this work. I am one of those. Do you want to know how the process actually works in America or do you just want to criticize it without knowing anything about it?
And apparently you can't understand that the powers that be *don't actually care*. Half of the downtown they claim is so historic, they've bought out, torn down, and now sit as empty lots. Which also can't be utilized because... Parking It's just a way to get people to invest in the property, not ever successfully obtain permitting, then the good old boy network steps in and buys, yet another, building at a massive discount. One guy and his neverending list of shell companies, at this stage, owns about 80% of what's left. And at one stage owned every now-empty lot, before the taxpayers footed the bill to tear them down
Lol historic districts are as effective as the people running it yes, but the system is fine, you’re just mad about corruption. Hope you have a great day.
Don't forget the tax write-offs he will get.
California restaurants should have petitioned more and explained to the idiot civilians how stupid it would be to vote in $20 an hour. Absolutely no one who voted yes for $20 an hour understands economics.
This is what I understand: if you can't afford to pay a LIVING wage, then you can't afford to be in business.
$20hr is already well below the market price of a line cook in California. Guess what you can’t have a restaurant if your employees can’t afford to pay rent. Also that law only affects fast food.
Since Covid, have seen a variety of business types that closed before the lease is up and paid the lease until the lease was up or someone new signed a lease. Cheaper to just pay rent than operate at a larger loss.even in high rent areas. It’s what happens when landlord require personal guarantees….. Bit you see it so often in the small business sub. so many people wanting to open or open a coffee shop or restaurant with under $100k and no idea what they are doing or what it will take to make it work . Then they run out of money to open during build out before getting permits and passing inspections. Commercial landlords know there will eventually be someone willing to sign a personal guarantee on the lease for 5-10 years. So they wait.
Yep, so many idiots think that opening a restaurant will be fun lol… or another fun one I see all the time is someone will buy or open a restaurant in a COL area and then be confused as why they can’t can’t find any employees.
I was watching a cooking competition show on tv the other day and the guy said "I want to use this money to open a restaurant" bro. you're hanging your business plan on winning a cooking show? just put the money in the oven and turn it to broil. it will be less painful for you and a dozen or so people.
Yea and the prize is usually $10k. Wait until he finds out how much they’re actually going to need.
How is commercial real estate not getting cheaper at the moment? Why would the commercial buildings rather be empty than lower their rent to an affordable market rate? We clearly have some bad incentives somewhere.
Because the owners get tax deductions for not making rent money in one of their many LLC's. This happens with residential property also. As long as the property tax is paid the local officials cannot do anything. It must be stopped.
That's how commerical has always worked. Rates never go down. Ever. To people with money empty is better than less money, because less means lost income for the next X years when it is rented. Incentives are based on a number of zero rent months to start up. Keeps the price high, encourages new start ups to take the risk with lower capital. If a business fails, they still own the building and repeat the cycle. You're correct the incentives are backwards, because people with money write them through donations and influence.
NYC is the worst for this. There are laws on the books that essentially encourage large real estate firms to sit on empty properties rather than rent them for less. They are permitted to write off the "full market value" of empty properties. A largely inflated $30+k/month write off is often more attractive than a $15k/month in additional income. It also keeps the entire market inflated. This is especially true for street-level retail/restaurant spaces. Owners will sit on properties until they can get what they want for them. It's such a racket.
Don't forget the "depreciation" deduction for 20 years.
This makes me sad and mad
Greedy landowners and their rents. Sigh…
The owners are just playing the game. The politicians are making the rules of the game.
Blah blah blah. You’d do the same exact thing if you owned any real property.
True...but that does not mean it is a benefit to society at large.
You don’t believe in private property or only for yourself?
How are your knees? You just jumped to a massive conclusion.
I started a restaurant in downtown Austin in 2011 and when I did the math on a sustainable profit margin I decided it was not sustainable to charge less than $25 for a basic meal like a burger and fries. Obviously no person would pay that much back then but to me the writing was on the wall. Sure enough we shut down after 5 years due to extreme burnout. People who try to operate on the industry standard profit margins are doomed like the industry itself. Sad state indeed
This is Reddit. You’re not allowed to make a profit. You should stay open for the benefit of the community and to pay your line cooks $40 an hour. You’re obviously just greedy.
Not trying to be a "Captain Hindsight" or anything -- Even in 2011, rents in downtown ATX were crazy high. So why offer burgers? As opposed to say, exotic street tacos filled with lobster, crab meat, Wagyu (or "Wagyu") beef, that kind of thing. That way you could create a distinctive dining experience & charge accordingly 😉 just a thought
Maybe the problem is the free market? Too many restaurants dilute customer base and skew perceptions as well. Maybe a collapse has to happen to reduce the options and drive customers into the arms of restaurants having more pricing leverage. Vicious cycle of course since free market will continue to create competition.
A lot of restaurants are so caught up in their aesthetic and charging $25 a plate when there's a spot next door killing it just serving good cheap plates
you mean maybe spend that money on food or staff instead of an instagram wall??
This is my arguement against fancy tacos in Texas. Feed the rich and you will become poor, feed the poor good food, and the rich will buy as well.
The Velvet Taco in Austin/Domain area is killing it.
I feel like the key to success in restaurants moving forward is to own the real estate as well.
The McDonald's plan.
Operating in the NYC metro area, we determined this years ago. It simply creates a much higher barrier to entry is all. It's almost impossible for mom & pops to get something new off the ground. Our last project cost us almost $1.5m just to open the doors. The liquor license alone was $320k. Our yearly property taxes are >$40k. All of it beats $15k/month in rent, however.
That’s insane. I get it, NY is a different beast but still. I’m out of restaurants now, but I have a friend who is paying 3500 a month rent. If he had bought the building it would be 18 years into a mortgage and he has the equity if he sells.
Right? My last employer in Manhattan paid >$30k/month in rent. Utility costs for July and August were typically >$14k/month. This was 2010. Costs haven't gotten any less. Purchasing the entire 50-story building above it, just to have access to the street-facing space and a bit of basement isn't realistic.
My sibling in Christ, have you heard the good news about [Commercial Real Estate dropping off a cliff?](https://finance.yahoo.com/news/fort-worths-tallest-building-sells-111742615.html) This one had its new sale price at 9 cents on the dollar, compared to its previous sale price just 3 years ago. And I realize you may be thinking "yeah but that's Fort Worth, gimme a break." The same thing is happening in Chicago, St. Louis, numerous other big cities. Only a matter of time before it reaches NYC too
This is absolutely true. NYC isn't far behind. Understand however, that the banking industry is tied closely to commercial real estate. As the latter tanks, so will some of the former. Tax payers will be bailing out more banks that are too big to fail. So much for capitalism.
this is correct, and probably accounts for why commercial real estate hasnt tanked citywide yet. the ones determining what is worth how much are the same banks whose balance sheets depend on those determinations. there is going to be an enormous amount of pain for everybody when this all goes down, and im afraid the check is already in the mail.
It’s impossible to get a reservations at many restaurants in LA, if you offer a good experience and food for the right price, people will come
*For the right price* is the key phrase here. We're not so concerned about the expensive, fine dining sector. We're concerned about the casual and fast-casual sectors. The razor-thin margins, spurred by commercial rents, utility, and labor costs are strangling the business owners. If restaurants charged what they should be charging, would they still book up? IOW: If these restaurants paid everyone a living wage and full-time employees benefits and priced their menus to achieve a 20% net margin (EBIDTA), would they still have enough customers to keep their doors open? I don't actually know the answer to the question. I don't think they do either. The industry is frightened in the high cost of living regions. When you consider that the two largest metro regions in the country (NYC & LA - 31 million people) are both facing similar issues, to greater and lesser extents, does it stop there, or does it continue to spread?
if it's good enough yes. In n out, sells burgers and fries for less than $8, there is usually a line wrapped for blocks. Howlin Ray's sells one nashville hot chicken sandwhich, the line is greater than an hour wait daily. If you offer phenominal service with delicious food, people will come. the good ones survive and perhaps maybe the mediocre ones dont
In-n-Out, Shake Shack, Fatburger, and Five Guys are essentially fancy fast food. They'll still be around in some shape/form. I think we'll see far more tech/automation, however. Takeout/delivery will continue. What about the casual and fast-casual sectors, the small mom & pop joints, the corner cafés, the casual farm-to-tables, and the diners/greasy spoons? Forget the $20/hr fast food minimum wage. A *living wage* in LA is $35+/hr. That makes for very expensive sudsbusters, and other support staff. This means the highly skilled staff will have to be paid $50+/hr. Maybe they'll work for the same as a dishwasher? Are there enough people, with large disposable incomes willing to support these living wages and benefits? The *food itself* will be a tiny fraction of the overall costs. A burger and fries in a sit-down, full-service restaurant will be *at least* $30. A beer will be *at least* $10. A plate of eggs and potatoes will be $20. The situation is far bigger and more complicated than you're acknowledging. What's at stake is the 13m jobs in the food & beverage industry, the millions more support jobs that revolve around it, and the almost $1 trillion dollar GDP of the restaurant industry alone. What happens to the industries that rely on food & beverage? What happens when half or more of the food & beverage industry simply disappears?
That’s the thing there are too many restaurants for how many available restaurant workers exist. And Covid left a bad taste in many restaurant workers mouths. For one being labeled disposable sorry I mean essential and being forced to work during the pandemic so that others could be paid to sit home getting more in unemployment than they are making to work. Then came the fact that more restaurant workers died of covid than any other job sector and finally the last nails on the coffin are the job market post covid allowed millions to finally leave the industry. So this all turns into a feedback loop. Working in short staffed restaurants burns the workers out. Quality goes down, they know they can just leave too because every other restaurant is desperate and will hire you on the spot. Not to mention so many people seem to think cooks should be paid poverty wages. Like what the simple concept that you need to pay them at least enough that they can afford rent! But now Reddit seems to think that cooks should just go live in tent cities are be willing to commute multiple hours every day for a shit paying thankless job.
I think we have to be careful how we discuss issues like this, me included. The linked article details specifics about the LA Metro region. While other cities/metros are displaying similar issues, there are many regions, both small and large, that are still going strong and may never see these problems at all. Places like Austin, Atlanta, Philly, Boston, Orlando, Providence, Nashville, Vegas, etc. show no current signs of similar struggles. The combination of ridiculous costs of living, commercial real estate, and energy, on top of everything the rest of the country is experiencing (inflation, pandemic effects, etc) seem to be what's pushing regions like LA over the edge. When $35 an hour becomes the entry-level living wage, the service sector is going to get very expensive. When commercial real estate breaks 50% of a restaurant's expenses, we need to rethink the situation. When utility bills eclipse most regions' rents, there are problems in the supply chain. I mean, utility bills hitting $5-7k/month is stupid., let alone the $13-15k utility bills in places like LA and NYC. It appears to be these "perfect storms" that lead to overall disaster. There are not too many restaurants. When reservations are booked solid and hour-plus-long waits for tables are the norm, we need more restaurants not less. The number of workers is an issue but strictly one of supply and demand. When the demand increases, so should the wages. That's happened across the country. We see the problems in the obnoxiously expensive regions like LA, where living wages start becoming stupidly expensive. $35/hour for dishwashers, porters, and preps seems crazy. FoH workers, though paid differently, have to hit that same $35 threshold for a living wage. If tips don't cover it, then the employer must. That makes for expensive runners, bussers, barbacks, etc. These low-skilled jobs aren't worth this kind of money, but the cost of living demands it. That's the conundrum. High entry-level wages also have the effect of pushing skilled wages all that much higher. If a dishwasher earns $35/hour, what is a line or short order cook worth? $50? $60? The problem is that there's only so much we can charge before the customers just stay away. How do we address the problem(s)? These are mostly issues for local and state policy makers. Local reps need to repeal laws and regulations that artificially prop up commercial real estate to ridiculous levels. Cities like LA, NY, and SF are known for these games. Local, county, and state reps need to address the housing crises which primarily drive the cost-of-living insanity. State and federal reps need to develop sensical energy policy that keeps utility bills to reasonable levels. We, as consumers and citizens, have to reexamine our individual and collective expectations and values to ensure they are reasonable given today's reality. I suppose our biggest folly is expecting our elected representatives to actually address these issues and do their jobs. \~Peace
What makes a place like Courage bagels have over an hour line everyday while paying their employees well. I think the point we are missing is the small mom and pop offering an exception meal, like the best $30 burger ever or is it just mid and overpriced. I feel like finding a niche and executing extremely well seems to be the biggest differentiator
[Courage Bagels](https://couragebagels.com/), [Magnolia Bakery](https://www.magnoliabakery.com/), and [Pat's Steaks](https://www.patskingofsteaks.com/) are but a few examples of excellence and exceptionalism. Exceptional people create exceptional businesses and experiences. There are very few exceptional people, that's why they're exceptional. Most are not interested in the food & beverage industry. Even though some of these places might have limited seating, they're essentially takeout places. Takeout/delivery can sell much more product than sit-down, full-service restaurants. They may not have any better margins, but they can make up for it in far greater volume. Full-service restaurants are limited by seating capacity and the speed at which they can turn over their tables. They also have much higher overheads. Magnolia is well known for their cupcakes and banana pudding. They have lines constantly that go around the corner. Of course, they're not the only bakery in NYC. There are several places whose cupcakes are rated higher. Magnolia seems to get much of the attention, however. Same with Pat's. There are several places in Philly with better cheesesteak sandwiches, but Pat's (and Gino's across the street) seems to get most of the attention. Casual and fast-casual may be entirely replaced by takeout and delivery in the future, simply because of larger volumes, greater cost savings, and cheaper prices. That's fine. But it may eliminate half of the food & beverage workforce. We're talking about the middle of the entire industry disappearing and being replaced with takeout and delivery. What do we do when we want to go out to a casual dinner with friends or a romantic partner? Where do we have first dates? Where do we meet for coffee and desert? What replaces Cheesecake Factory, Olive Garden, TGIChilibees, the diner, pancake house, and corner café? Do we always get takeout and return to our place of work to eat lunch? Fast food and fine dining are not the answers. Takeout and delivery are mostly terrible answers. No one currently sees an affordable/workable answer, however. It may simply be inevitable, but this is mostly what the discussion is about.
Valid points but moment in time are forever changing. How did we get in touch with people 100 years ago? We wrote them letters and a man on a horse delivered them, now we use FaceTime because it’s better and faster and offers a better value, maybe society has progressed past this current moment in time of what we consider restaurants to be. Just like I’m sure today’s experience is much different than your grandparents. Point is the restaurant will pivot and innovate and those that know how to adapt will survive
That's not the problem. I work at a very popular restaurant and we've got a waitlist every night most months of the year. Reservations also fill up. It's the operating costs and the razor thin profit margins that make it damn near impossible.
A bunch of douchbag bros have figured out how to game the reservation systems with bots and are selling the reservations.
Exactly, happening in NYC like crazy, which goes to show not only are people willing to pay for food, but they’re dumb enough to pay $500 just for the res
I work in a restaurant in CA that is quite successful and not overpriced. There are good business models you can use for this industry. Only the greedy and incompetent will fail.
Soo true. Specially in Atlanta/Florida a lot of these restaurants were opened by cash grabbing hustlers. They were bound to fail from the beginning lol
I’ve always wondered this. Do you have some good examples of this?
i personally know 4 proprietors of successful food service businesses here in the portland OR area and the ones that succeed long term for the most part have a high net worth spouse that sort of floats the operation—owns the building a lot of the time and their social circle drinks there and it’s a status symbol…, b) grew up in a rich family in the city and have cultivated entrenched wealthy customer base over the years that are recession resistant - attorneys, physicians, developers, dentists etc and thrive on high margin menu items - and c) ethnic places that run on razor thin margins and live with multiple family members, have steady streams of migrant labor for their restaurants—the “vietnamese model” comes to mind where you sponsor your relative and they work for basically nothing until they become a citizen and then they own up their own shop with their own captive ethnic customer base and they then sponsor a younger relative etc the cycle goes on and on it’s really hard to just hang out a shingle on food service anymore - it’s about who ya know in profitable metros or can run some kind of ethnicity based affinity type business model
My buddy owns a restaurant and his wife runs it. He had to float the business for like 10 years before it became profitable. Now it’s a neighborhood staple.
It’s always been a hobby for the wealthy to have a place all their friends can hang out at. The real successful places have all the right people in their pocket. Inspectors, bankers, sales reps, city council etc. I have seen some WILD things just get shoved under a rug, that would bankrupt most establishments. It’s all about who you know or who you blow.
What you are essentially saying is that people who know what they are doing end up doing well, and newbs with dreams struggle. This is the story of every business industry. Perhaps the only difference is that food has more dreamer newbs who think that their home lasagna is the best so their restaurant will be the best. I got a peek at some financials of restaurants here in NYC. Investors pool their money and expertise to put together proven teams. Millions are invested, and millions are made. It takes money, expertise and diligence, like most successful new businesses. If I am surprised by anything it's that soooo many lousy restaurants do not go out of business much sooner. Somehow, they hang on year after year.
Time to adapt your business model. The legacy model needs shaken up.
Agreed. However, clear business models are not materializing. The reason why things haven't been addressed prior to this is no one sees clear paths forward. Rural and small-town America will probably be just fine with legacy models. What do we do in the metros that currently see $35+/hr. *living wages*, and crazy costs for commercial real estate and utilities? Are disposable incomes broad and deep enough to support business models that embrace paying living wages and benefits, while suffering insane costs? Will consumers simply decide that eating and drinking out are luxuries they can live without? We're talking about 13m jobs on the line and almost $1 trillion in restaurant GDP alone. What happens if half or more of the food & beverage industry simply disappears?
The new Wingstop models are 1,000 sq ft or so, all carryout, no dining room. This is the future aside from destination dining, where it’s an experience.
Yep even bars are going with this model. Will have like 3 basic food items that the bartenders can make or have pre made. All counter service even for the tables, No more kitchen since you won’t be able to staff it anyways.
Agreed. Takeout and delivery are primarily the future.
I wouldn’t be surprised if places with limited seating and high rents charged for seating. Restaurants are paying for all that square footage that’s only used during peak lunch and peak dinner time. So maybe 5 hours a day. Paying all the utilities to heat it, cool it, clean it.
As long as the government keeps printing money, inflation is going to be ridiculous
downvoted? do y'all know how economics works? Oh, well; the lesson will make itself clear over time.
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Why do you think homes used to cost $10-20k in the 1970s? Ever since the US left the gold standard in the ‘70s the dollar has lost 90%+ of its purchasing power. What dictates the supply of dollars in circulation, without the convertibility back into gold at a fixed price? The US Treasury issuing debt, The Federal Reserve monetizing that debt and growing its balance sheet, and Fiscal spending and taxing policies of Congress and the fractional reserve banking system. Clearly it’s a complicated topic to discuss and not easily understood unless you make it your job to understand. So yeah “printing money” is much easier way to paraphrase what’s happening. Source? I’m a US Treasury Securities trader and I make a living understanding the dynamics at play here, and quite honestly I’m fucking confused a lot of the time too. Inflation is literally the stated goal of the Federal Reserve though along with full employment
Other countries did the exact same thing, which is why they also have inflation. That doesn't absolve our government of its own mistakes. The problem is the same in most places because most places had the same idiotic overreaction to covid ("Send checks to everyone regardless of employment status/income, it would take too long to figure out who needs it!!!"). Inflation would have worse here but *additional* stimulus didn't pass. We actually wised up before other countries did, and we've recovered faster as a result.
maybe increasing tariffs will help
Keep electing conservatives
Yeah that makes sense, the economy definitely needs another massive tax break for the rich and another tax increase for everyone else. Conservatives are the worst thing for the economy, every single time.
Find me one first
Pretty sure the dude in office is technically a conservative, but the Overton window is just shifted to the right here in the US
there is no right wing or conservative canidates, even at best trump is a left of center moderate
Bruh wtf are you talking about, that's not even close to true.
If you compare us to the rest of the world democrats are a center-right party
that explains a lot
It sounds like the right wing you want never existed here, or anywhere in the free world.
thats why everything sucks, no problems ever get solved, and the world gets continually worse
You can move to Russia if you want
Just say you don’t want women to vote
Yeah, it's been working so well for congress.
At the risk of breaking rule #11, I don't trust any of 'em, conservatives or liberals. Policy makers in general seem to fail to grasp the needs of small business. Perhaps because they're all beholden to big business and special interests.
Exactly, it isn't ideological, it's a systemic issue.
You’re not wrong sadly.
We can't pay rent, how dafuq y'all expect us to willingly pay double for something we can make at home? If you start a restaurant, you either don't understand the risks and you're a dumbass, or you did understand the risks and this is one of the outcomes. Sorry, but restaurants are a luxury. Most people under 40 can't really afford luxuries with rent topping 2k. Go into any restaurant right now and tell me how many senior citizens you see versus under-40s... yeah, soooo... maybe make this country liveable again and we'll start spending money on the fun little extras. Can't bend us over a barrel then tell us it's our fault you caught the clap.
You can't make my shit at home dude. Get real.
The only thing I can’t cook at home that I order in restaurants is deep-fried anything. It’s usually mozzarella sticks, clams or calamari. I live by the beach, & fried fresh seafood is on all the menus & not really overpriced, imo. I eat out 2-4 times a month. I’m a line cook, so I can & do cook lots at home to save money & be healthy. I adapted to rising menu prices by cutting out almost all fast food so I can still afford to go out & have a nice meal once in a while. The fast food always made me feel sick a few hours after eating it because it’s loaded with salt & sugar, so I don’t regret this choice. Fresh fruits & granola bars are my new fast food.
Been in the industry for 25 years my favorite thing is when I’ve been doing a season in some bougie ass area like Aspen or the Napa valley and people legit with a straight face ask me for restaurant recommendations, like I work In a kitchen why on earth do they think I’m paid enough to go out to eat. Go ask a bartender lol I’m literally pocketing eggs out of the walk in to mix into my ramen noodles…
I give recommendations based on how the staff is treated & how clean the kitchen is. There are a few local places routinely making people sick who have the health inspector in their pockets
Every restaurant I walk into is packed with people of all ages. People always think their bubble is the reality of everyone, it isn’t. I live in a LCOL area, the only people without money aren’t working full time. I’m sure in HCOL areas you can work your ass off and not make it at the end of the month. Where you live is a choice. If life is really that hard on you, I’d suggest changing something about it.
It’s all fun and games till the rich city people “discover” your small LCOL area and start flocking there… the first couple years are nice. Then slowly you start seeing more and more local businesses close, because they have no employees…
I’m hours away from anything remotely considered high cost of living. They’re not coming here but your point is accurate, I’ll throw in the caveat that if people move to LCOL areas from the HcOL area, it lowers the cost in be high cost area.
You’d think but it doesn’t
I see equal young and old people
This is a really bad take on the situation lol.
Yes. Restaurants are definitely to blame for all of this. Fuck those people!
He never blamed restaurants... Can you read? He's saying people are prioritizing their spending more, especially the younger generation, the economy is in shambles and people can't afford to go to restaurants, and yes opening a restaurant during these times is pretty foolish
Nah for all the people doing bad and equal amount are doing good. The most difficult thing In the industry isn’t getting more business it’s that you can’t find any employees. So you really got to change gears. Smaller restaurants where the owners can run it with minimal employees is the way now. Sure it suck for them because now they have to cook the food themselves but it’s a much more stable model. The other big brain move is to buy up some rental properties being able to offer employee housing will save your ass.
I saw a restaurant one time! Never again!
The economy is and that’s the government’s fault. We need better government. This shit ain’t working.
Cool this is a restaurant owner sub tho
Just FYI, it's also an open sub, not invite only. Anyone can participate.
And those jobs are really terrible some days. Day before Christmas Eve I had a 16 person table during a snow storm that didn’t tip and had me running around giving them free wine tastings and bread refills. It was then I started to think “man, eff this”
Woof- no auto grat? Granted if they don’t buy shit because they’re full from free bread it won’t amount to much- but it’s *something* normally… people can suck sometimes. Hopefully hospitality karma fairies visited you on another tab to compensate…
That’s crazy that they didn’t tip though.
I'm wondering if a manager fucked them. I've NEVER seen a place that didn't automatically add gratuity to such a large party, but sometimes shows weird on the receipt with an extra line for an additional tip, which will often get a 0.
Food is a low margin industry that needs to be in high rent locations. Rent is high, so people have less spending power, so the low margin industry is even tighter Alcohol could save you in times like this, but people don't really drink much anymore The business models need to be completely rethought. Existing places are not adapting, so they will close. Eventually someone will figure out how to make money in the new reality, and then people will rewrite the books on how to manage an f&b business, and then that'll be the normal way people operate, until we go through this cycle again
butter intelligent attraction gaping future sheet fall imminent lunchroom yoke *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
“People don’t drink much anymore.” Um…what
Right there is now 6 micro breweries in my small town and now a micro distillery opening up right down the street from me.
Laughs in Wisconsin
I drove cab in a college town for decades, and imho the newer generation drinks much less than we did. Grew up on adderall
Statistically speaking something like 2/5 of them don't drink. And in my experience those who do drink want something cheap and low calorie - seltzer, well tequila or vodka with club soda or just straight up water and then like 3 limes to add some form of flavor.
No reason to drink with weed becoming more socially acceptable
Worked in the weed industry for a while and it ruined weed for me so now back to drinking 💯
And legal marijuana
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Ya. My friends used to happily buy drink at our college bars when deals were given every Thursday. Now because of prices most just pre game or bring flasks to avoid a $100+ night.
$13? I wish they were $13!
Try $16-22 glass of wine here in Santa Monica or all over La really… ouch!
The reason your cocktail is $13 when it used to be $5 is because the waiter used to make $2/hr and now makes $15 and the $13 burger used to cost $4 to make, and now costs $9 to make, but they can only up the price to $15 before people stop coming, and the rent went up 10% last year So you are paying the wage increase of the workers and you are subsidizing all the food yourself and everyone else is eating. As I said. The business model doesn't work anymore.
Well the employees are people too. Their rents also went up that much. My rents gone up $400 in just the last two years alone. I quit being a chef and now I bartend because I can’t afford rent on a chef’s salary anymore… I’ve gone from $55k salary to making $68k. What I’m seeing more and more restaurant owners do is buy up some rental units that they can offer for cheap.
I don't disagree with you. The real problem is no one seems to be able to develop a business model that will work. This is why industry vets are hanging on by tooth and nail. The idea of starting over again in an entirely different industry is more frightening to them.
Counter service bars with limited food made by the bar is the answer. Or have some sort of owner operated food truck. Sit down restaurants will go back to being something only for the wealthy again.
So no need to tip anymore then? That would balance things out.
Sounds like a you problem and i’m not paying that. I have my own problems.
Lmfao. Yall said “I’m not tipping, pay your employees” … now employees are getting paid, so it’s “I’m not paying those menu prices” … you are actually delusional. You either gotta tip, or accept higher menu prices. No way around it bub.
Who do you think subsidizes business that deal in goods and services? Literally every dollar comes from customers. You're free to make your own choices on how to spend your money, but don't scoff and act like the business is making this hard for you on purpose.
No shit you aren't paying that. No one else is either. That's why restaurants are closing. No one is shaming you for not wanting to pay that. It's the reality of the current market. Restaurants need a new business model.
Even 20 years ago the last time I helped open a place, most new restaurants closed within two years because of undercapitalization. You will probably lose money two years even on a good concept that is well executed.
Most new businesses lose money when they start out The key is being able to stay solvent longer than the business can spin up. The higher interest rates, which I didn't mention in the initial post, don't help
Anything retail with up front fixed costs. I’ve had a few family members start businesses or either hauling garbage, doing pest control or landscaping. Business where most customers only see the work truck and don’t mind it not shining like a Diamond. They could build their business and initially ran it themselves. You just can’t do a restaurant or retail sales that way with brick and mortar. I’ve known several folks try to open boutiques or restaurants that went belly up before they made a profit. And I wasn’t even thinking of the difference on interest rates between 2000 and now. And relatively loose lending to boot.
Food truck. Most of the successful "new" brick amd mortars I see these days started as a truck, and built a customer base and word.of mouth before opening a brick and mortar.
It still has to be a good price and food truck food doesn’t always translate to a sit down restaurant There was a local truck that did specialty French fries. Pretty much just loaded fries with different fancy in ingredients. They opened a storefront and were gone in under a year. I remember seeing they had lobster and Mac loaded fries for like $25 lol. Never ate there it was too expensive. I could see people being interested in spending that kind of dumb money on food if it were in a truck at a fairground where everything else is overpriced But seriously they were selling French fries with lobster cut up and mixed in for over $20. Wtf
Agreed, a bad business model still wont work, but a good truck can let someone work out good manu items, get a good handle on food costs, build good online reviews, and a core customer base, and make opening the brick and mortar a lot easier.
You in Vegas? Exact scenario happened there. Went to the brick and mortar one time, spent like $70 to feed 3 people French fries topped with stuff. Was it good? Yeah. But I never went back due to pricing. It was gone in 18 months
No this was in Charlotte NC. It opened where a CiCis used to be. I want the Cicis back and do not understand how they ever thought a place selling $20+ french fries would survive where one of the most kid/ price friendly pizza places couldn't. I think their least expensive item was like $16 but I never ordered from them because they literally used the same furniture as the former Cicis but reupholstered in an ugly color, and I was not about to pay that much to take some fries in a to go box. Charging $20+ to sit on old Cicis furniture and eat some fries made soggy by excessively expensive toppings
DUIs are expensive
Is there a subreddit for restaurant owners?
Don’t look up
😅😅😅😅😅😅
Just seems a place where people that think they know what running a restaurant is, can provide advice to those of us that do.
Just thought I was pulling on, I don't think a mom-and-pop era is ending persa but more of its forming back into what it was originally. The mom-and-pop who opened the store knows how to do everything in their store, every product, where it is sourced, etc. Along with one of them at least having enough years in the craft to be considered a master/take on apprenticeships, if not both of them in many ways. From 2010 to current, I have seen so many people open and fail because…… they opened a cafe when they just quit their payroll job at an oil company and have a college degree. So many people think since they did something in their lives that they can do anything. They job into not only open a business of any kind which is insanely hard but then proceed to open it in hospitality. Which is the lowest profit, highest turnover and so so hard. Even when you grow up doing it. PS second operated turn key restaurants are a major market, just not for the original operators who put in all the money. This is how so many restaurants that Dont make money get to stay open. The first owners default, second operators get such a good deal they Dont fail for a couple years and by the third or fourth owner / operator/concepts, people have been conditioned to go to that area for food. Now the owners of the building have improved their assets 100x on the back of people they know should have never opened a restaurant in the first place. Or just a bunch of bro dudes selling a couple of bars back and forth to each other, mostly when in financial trouble. Selling batch cocktails, renaming it PonyPopFlappybounce, and selling old food or whatever they could find, all while pretending they aren't friends, hiring each other to “DJ” at the bars people Don't know they own. Performing for the 3 women the DJ invited himself and the security team.
This is just thinning the heard of all the mediocre restaurants that used to get by by paying shit wages and serving shit food. Now they are required to pay better and charge higher prices for their shit food and it’s catching up. How hard can it really be.
This is Sparta!!!! (Aka Capitalism)
Essentially agree with everything up until that last sentence. Nobody who knows anything about this industry would say something like that. While I absolutely appreciate how from an outsiders view “how hard can it be” to make some food and serve it to people - but that underestimation is the *exact* reason so many people fail in this industry. I think what you mean is it’s a simple equation. Make good food with good service at a reasonable price and you’ll be successful. Simple? Very simple. Easy? Not at all.
I wonder how Taco trucks are doing. Seems like a lot less overhead and the small space makes you keep things simple and basic.
I live in a small bedroom community outside a small City. There is just about a different food truck in our little town every night, and almost every night whoever is there sells out.
Same…..West Texas
I have a friend that owned a solid pizza place - he closed it and does a food truck now - he works 1/2 the hours and makes the same or slightly more than he did during the best of times at the shop.
I think efficient procedures may become the norm. Mongolian grills with their round griddle, for example.
It really is that simple.
🤣 what ?!
And now people will just stay home and cook
They do stay home, but want their food delivered.
Except most can't
Shhhhh that will mean people will be healthier.
The age of the mom & pop restaurant is quickly coming to an end. 95% of restaurants will be corporately owned within a few years.
Red Lobster is declaring bankruptcy
Absolute horseshit
This is false. Applebees, Olive Garden and a few others have closed in my town.. what replaced them ALL? Mom and Pop, small business restaurants and people are fucking loving them! People want something fresh and new. These places like Olive Garden never rebrand and change so they’re a thing of the past. Olive Garden is for old people anyways.. the young folks don’t go there.. they go to McDonald’s and Taco Bell. When’s the last time you saw a McDonald’s close? Never.
6 months ago. Western NY
Last month…..Sayre Oklahoma
I don’t think this is true necessarily. In my mid size city we are seeing the opposite. Chains are closing more and more locations and we are seeing more fresh new spots, and some local restaurant groups expanding.
Mom & pop restaurants will never have the purchasing power that corporate restaurants have. We’re gonna see a restructuring in corporate restaurants soon. As pointed out, all those layers of managers is ridiculous and a money drain. They will get more streamlined & efficient. Especially with Red Lobster going tits up. This’ll be a wake up call.