>Ok so, here’s the plan: you pay $15 for a sandwich and I give my whole team a raise. Sweet. You’re the best! The money’s gotta come from somewhere. People seem to forget that part. But yes, I like this idea. In fact, Chipotle has recently increased both wages and pricing. McDonald’s as well. Now our turn, LFG!
And yet, if you go to the source the article links directly in that paragraph: "Chipotle Mexican Grill has hiked menu prices by roughly 4% to cover the cost of raising its workers’ wages...In May, Chipotle said that it would raise hourly wages for its restaurant workers to reach an average of $15 an hour by the end of June."
4% price increase to get to a living wage. Not $15 sandwiches, just $7.28 instead of $7. Pay your employees. It's that simple.
Yea sure, but you ignore that Chipotle and McDs have magnitudes larger supply chain optimizations, cash reserves, and operate in high and low cost markets such that there is more margin to keep the business afloat when there is a squeeze.
It's because you can't control materials or rent costs, but you can control (morally or immorally) your employees, simply because you have power over them.
This is hilariously wrong in the case of McDonald’s. They are a real estate arbitrage corporation that leases space to franchises and gives sweetheart self-dealt deals to its wholly owned stores.
I think it's more likely that most people are employees and so are familiar with how employers try to negotiate down labor costs and are not as familiar with how businesses try to negotiate down the cost of materials. I doubt business owners just shrug at rising materials costs, they probably try to negotiate those down too.
They do but it's harder to do so. Two businesses that trade are usually not in such an extreme dichotomy of power differential as an employer and employee; a business is usually at the same level of power as its trade partner, so were it to demand too low of a price of materials, the trade partner would take their business elsewhere.
Contrast this to a labor market, where a laborer needs work to survive and thus it already has a lower level of power than its employer, even before any negotiation takes place.
> a business is usually at the same level of power as its trade partner
That just isn’t true. Companies exploit power asymmetries with trading partners all the time, especially if they’re massive corporations like McDonalds.
I'm not talking about McDonald's or other mega corporations, I'm talking about small to midsize companies who are roughly equal in power between each other.
> Yea sure, but you ignore that Chipotle and McDs have magnitudes larger supply chain optimizations, cash reserves, and operate in high and low cost markets such that there is more margin to keep the business afloat when there is a squeeze.
Aren't most McDonalds franchises? You definitely see individual owned stores going out of business.
"McDonalds is a fine example of how vertical integration can keep costs down and profits up. They grow their own beef through contracted producers, process their own meat, create their own spices and mixes in factories that they contract, grow their own potatoes and other vegetable through contracted producers, transport their goods on their own. McDonalds owns the land that their restaurants are situated on, so they do not have to deal with leases and landlords. They have taken control of their supply chain nicely."
edit: a mom and pop operation can't compete with McDonalds.
McDonalds can increase employees wages thus force others to do the same even if mom and pop doesn't have a vertical integration like McDonalds. by increase wages, it force smaller operators to cut staffs or shut down. McDonalds can keep their competition down.
> You definitely see individual owned stores going out of business.
Where? In my five+ decades on this planet I have never seen one close. Might see them shift to new nearby location, newer building…but never seen one close.
The only way I see an individual store going out of business is if community around them dies. I seriously doubt that a McDonalds in a populated area would close. You would have people lining up to buy the franchise.
It’s likely because the space was more valuable to Walmart for retail needs than as a McDs. It was an experiment and it turns out that people probably just went to the McDonald’s down the street.
By the way, the McDonald’s in our local hospital has been in operation 24/7/365 since the late ‘70s. It’s a symbiotic relationship I guess.
Sorry but equating a satellite restaurant experiment to actual restaurants is a false equivalency. Ask yourself how many of those Walmart McDonalds had a McDonald’s within a mile of the Walmart and whether or not they are still operating.
There was a Walmart with a McDonald’s in my town that closed, however the McDonalds in its parking lot is still going strong.
Franchisees still benefit from the supply chain. Even if individual stores wouldn't be subsidized by the company, they benefit from brand recognition and already operating at the price floor for food you dont make yourself.
There's actual research in this space, and it found that for every 10% increase in minimum wage, some restaurant prices rose by 0.36% and others decreased[1]. Price increases are negligible at best.
This is a dubious statement for a number of reasons.
Let's just use raw analysis.
If a restaurant's current labor budget is 30% of revenue, and the restaurant's profit margin is 3% and the cost of labor increases by 10%, how much profit is the restaurant making now? If the restaurant owner wanted to maintain a 3% profit margin in such a scenario, how could they do it?
edit: upon discussion with the parent, it appears that the parent was supporting the author's argument, not critiquing Chipotle or saying living wages require charging $15 for a $7 sandwich.
No...
> 4% price increase to get to a living wage. Not $15 sandwiches, just $7.28 instead of $7. Pay your employees. It's that simple.
This isn't in the article [0]. You're conflating revenues and wages.
Chipotle raising prices by 4% for EACH sandwich allows you to increase salaries by way more than 4% for employees.
I think you and OP are saying the same thing. Everyone can pay 4% more for their sandwiches so employees can earn a living wage, and saying it would be everyone paying $15 vs $7 is disingenuous.
I don't see how that disagrees with what I said. To increase wages significantly doesn't mean increasing prices significantly - that was my entire point.
The part you missed is if they raise the worker pay by 50% then the C-level pay also needs to increase by 50% to maintain the proper ratio and that raises the prices much more than 4%.
I mostly agree with the sentiment, but other prices which factor in to their operating costs will eke up over time as their suppliers also add on their 4% hikes to get to 'living wage'. Over time prices will go up, but... so what? They've already gone up plenty for a variety of reasons over the years.
> 4% price increase to get to a living wage. Not $15 sandwiches, just $7.28 instead of $7. Pay your employees. It's that simple.
At a large chain like Chipotle, sure. But most "fine dining" restaurants have razor thin margins on food. Alcohol is how they make money. With the pandemic, people have switched to ordering food for takeout and therefore restaurants can no longer make a profit on drinks.
There's also two other aspects the author won't touch on: if you open a legitimate fine dining restautant you'll have to compete with places employing illegal aliens. And lastly, some restaurants are really just fronts for money laundering. They can operate a really long time without making any real profit; it's a business where it's easy to claim some large transactions were made in cash.
Thing is, people will pay $20 for a good sandwich.
We have a place down the street, Deli Board, that makes truly amazing sandwiches. The only sandwich I've ever had that made me say "You know, this might be too much filling and not enough bread". They're expensive, literally $18 to $22, but you never ever feel like it wasn't worth it.
But many places aren't interested in making food that feels worth paying for.
Some people will pay for a Bentley. Doesn't mean a lot of people will.
Best example might be In-N-out burger, that is relativity good quality for the price that is accessible to most people, and compensates their employees relativity well, though they work super hard. . But I don't know what their margins are
In n out burgers are half the radius they were in 1995-2000. So it makes sense they can charge the same prices. They also paid >$9/hr during that period, too. In n out is making money on thin margins and volume. Also I assume the drinks and shakes are high margin.
I haven't really enjoyed in n out in a decade, maybe I just grew out of it.
> Thing is, people will pay $20 for a good sandwich.
Really? Where is that?
I live around Paris -- a city where the cost of living isn't considered low by world standards. Here the normal price for an excellent sandwich made of fresh bread (1/2 baguette), chicken or beef, lettuce, tomato and sauce is around €4.5; if it's just ham and cheese, and the same wonderful bread, the cost is €4.
I consider that expensive because I can make a meal at home for less than €2 (the cost can even go down to 0 if I just eat the leftovers from yesterday's dinner).
I don't think I'd ever pay $20 for a sandwich of any quality.
Get a Reuben from Katz's Delicatessen in New York City and tell me it ain't worth $22.
Sometimes I fly from Dallas to New York just to get one. Whenever the price for tickets goes down below $100 for a weekend round-trip flight, I snag a ticket and fly up there just to eat at Katz's.
If you're the kind of dude who would not only fly across half the country and contribute to burning all that fuel just for the sake of a fucking sandwich, but also brag about it, then you're way outside the normal of people paying for sandwiches. So yeah, a $22 dollar sandwich is expensive and for most folks, not worth the price.
Other people are on that plane with me, but your attitude kinda makes me want to start a highly scalable business so I can one day take a private jet to NYC and really contribute to CO2 emissions.
But you've touched on a real problem with NYC... There's just nothing to do there besides eat at Katz's!
I go up there for my sandwich and then I'm stuck in the hotel for the rest of the weekend because there's never anything going on in NYC!
A restaurant at 16th and I Streets NW in Washington, DC, (a block from Lafayette Square, that is, and two from the White House), made the newspaper a few years ago for offering a ham sandwich for $25. I have never bought one, have never even entered the restaurant. But I assume that some people ordered it, else why have it on the menu?
Before the pandemic, good sandwiches ran $8 to $11 from food trucks in DC. This I assume was set by the need of the food truck to make a profit. The result was the sandwiches were sized to make $11 sense for the workers thereabouts--I thought them a bit large for lunch.
I live west of Paris as well and this is what I was thinking too.
A decent sandwich in a bakery wild have great bread (which is really important) and wild not be that enormous either (we do not have the kind of sandwiches where there are 20 folds of ham).
I wild occasionally have one but if I bring the bread back home what I will make myself won't be different (they have the same ham, cheese and vegs I do, there is not much more to add)
My first time in Paris, I ordered what amounts to a grilled cheese sandwich and they charged me 20 euro. 10 years ago. Felt outrageous but I gotta admit it was a pretty good sando and it was my bad for eating at a tourist trap.
The place from my original comment[1] is in San Francisco.
People come from far and wide to have these sandwiches. I’ve seen people in the wild wearing swag from this sandwich place. Calling them sandwiches is almost criminal. Even making it at home you would certainly spend $10 on ingredients. There is no skimping on the meat.
I mean just look at the photos on their homepage. The sandwich is unlike anything I’ve seen in a European bakery. They’re typically 2 meals for me.
Deli board is good but it still feels quite overpriced (as with most things in SF). I’ve had it a bunch (I live close) but it’s never quite worth the $20
I just visited New York for Christmas and my wife wanted to stay in the East Village out of nostalgia because she lived there a while back. We were around the block from a place called Katz's Delicatessen. You can see the menu here: https://localmenu.katzsdelicatessen.com/
Looks like the cheapest sandwich is about $25. I never tried to go in to see what the hype is about, but I've never seen a place quite like this before. Every time we walked back to our hotel, the line was backed up at least an entire city block, like a six hour wait to get a sandwich.
Yeah, well. I don't understand this personally, and the pictures look really unappetizing to my French eyes -- but I have a lot of respect for a shop that's able to pull this off.
Another guy in the thread says he flies from Dallas to NYC to get those sandwiches, which means that they probably should charge even more...
There is a place called Sandwich Sandwich in the UK that does similarly huge sandwiches (two meals, way too much filling). The cost is 4 GBP. San Francisco prices are out of control.
The minimum wage in the UK is a little complicated, as it has differing rates based on age. The higher rates are known as the "National Living Wage", while the lower rates are known as the "National Minimum Wage".
Banh mi in southern California is cheap, too. $2-$3 for a full baguette with a decent amount of stuff inside. That's at Lee's, possible other places are overpriced.
I haven't found that style of sandwich anywhere else so I don't know the prices.
I just looked up Lee's... I hope the pictures don't do it justice cause that looks nothing like a good proper VN banh mi. Looks more like a bastardized chain version of it.
I paid around $9 in San Diego a few months ago and while it was delicious and completely oversized (american style), my Vietnamese friends would kill me if they knew how much I paid.
My understanding is the cost of goods a parabola with respect to wages, where until an inflection point, the wages are not high enough to allow workers to have discretionary spending. But once wages are high, demand increases enough to cover the increased wages and cost of goods can come back down as marginal cost decreases.
>> 4% price increase to get to a living wage. Not $15 sandwiches, just $7.28 instead of $7
That only works if the price elasticity is 0 - meaning that a 4% price increase doesn't lead to a decrease in sales. The price elasticity isn't 0. It's close to 1. A 4% price increase leads to close to a 4% drop in sales. Fixed costs stay the same.
They're not actually making a prediction. This is what actually happened. The prices increased by 4% and, including elasticity, this allowed for a 15$ minimum wage. It's empirical.
Those numbers don't contain enough information to calculate a price elasticity. Even sales numbers don't contain enough information to calculate a price elasticity, because you don't just need to know the change in sales after a price change, you need to know what percentage of that change was due to the price change instead of other changing factors - slowing of the pandemic, changing menu, advertising, growth in customer base that was happening anyway, etc.
Those numbers are hard to get. But people who have done studies have estimated that in the restaurant industry, the number is close to 1.
I mean think about what you are saying if you are claiming that the price elasticity is 0. You are saying that even before the wage increases, they could have raised prices by 4% and returned that money to their investors as pure profit, in an industry where profit margins are single digit and not usually high single digit. Not a chance.
No, that is not all what I meant, and at this point I don't really understand how I can make it clearer.
The 4% increase in prices leading to a 15% minimum wage is a FACTUAL DATAPOINT. It is EMPIRICAL REALITY. No theorem, model, or anything, can change that, because that's what ACTUALLY HAPPENED.
It's not theoretical. After all was said and done, prices were increased by 4%, and wages were increased to 15$/hour.
It's completely useless to talk about elasticity, and try to estimate it, in this context. You are trying to apply a model, to reality, and arguing that the model is correct, but reality is not correct.
Article: The money’s gotta come from somewhere. People seem to forget that part.
Response: 4% price increase to get to a living wage. Not $15 sandwiches, just $7.28 instead of $7. Pay your employees. It's that simple.
The clear implication of the response, clear to me at least, is that where the money comes from to raise the employees' wages is revenue due to the price increase. Let me know if you understand it differently.
That only works if the price elasticity is 0. They sell the same amount of food at higher prices and use the money to pay higher wages.
If price elasticity is 1, they raise prices by 4%, they sell 4% less food, and the money for wages needs to come from somewhere else. Could be less profit for the restaurant, could be hiring fewer workers or giving them fewer hours, could be smaller portions or cheaper ingredients, could be the money comes from the bondholders who don't get repaid when the company goes bankrupt.
If price elasticity is infinite, they raise prices and demand goes to 0 and they eventually go bankrupt.
No restaurant would intentionally be operating with prices set in a range where the price elasticity is 0. They would raise prices until it wasn't in that range. The money for wages can't (only) come from increased revenue from a price increase. That was my point.
That's the biggest flaw I see in these discussions. People think that they can tweak one variable and hold everything else flat. It doesn't work; everything is related. Raise your price 4% and...
Competitors may do the same, or less, or more, driving business to you or away from you.
Suppliers may increase product cost.
Employees may be taxed more.
Employees may lose benefits.
Demand will fall by an unpredictable amount.
Demographics of employees and customers will shift.
Inflation may hit, temporarily/geographically localized or not.
labor cost increases may need to ripple up through the entire labor pool, not just bottom-tier.
Employee's cost of buying food just went up, diluting their gains.
And so on.
Many of those effects are miniscule. Some are good, some bad. But there's an endless amount of them. It's a chaotic system, it's not just some simple equations.
As you increase the wages of people making little, you gain more customers from those same people. Of course this may not apply to restaurants service 30 dollar meals, but more people will buy a $5 sandwich when their wages go up.
>As you increase the wages of people making little, you gain more customers from those same people.
presumably that's already factored into the price elasticity calculations. also that logic only slightly offsets it. At the end of the day you're paying your workers more, and only a small fraction of that increase goes into your pockets. All in all it's still a net negative.
What actually hapens in practice is that the sandwich place will advertise $7 sandwiches on their menu, but in small print say they'll automatically add an "optional" $1 fee to all items at check-out.
It's far beyond what's needed to cover increased wages, and they don't even have the guts to list prices honestly.
Not sure about OP but in my experience, SF has so many hidden fees for restaurants it's not even funny.
Restaurants were tacking on COVID surcharge fee on top of the SF mandate fee that they were imposing on diners. Tack on tax and tip and you literally have four additional fees on top of what you see on a menu.
They claim it's for transparency, but they were still advertising fee-less prices on the menu the last time I was there. You'd only see this sign at the check-out counter. Here's a Yelp review complaing about just that (raised to 75 cents as of 2018): https://www.yelp.com/biz/ikes-love-and-sandwiches-berkeley-6...
a few shops in town added 'extra fee' notices a few months in to the covid outbreak (may 2020?).
"We are having to add a 50c surcharge per beef entree"
"Each burger has a 50c surcharge"
etc.
Later this went to 50c charges for all meats (chicken or beef or whatever).
In the short term, it was to avoid having to reprint all signage/menus/etc when they were unsure how long things would go on. I think in the restaurants in our town, they've just raised prices and don't advertise the 'surcharge' any longer.
I’ve said it before and I’ll say it again. The problem of low wages isn’t that your margins are low and you’ll have to increase price of a sandwich to pay people enough.
The real problem is restaurants artificially lowering prices of a sandwich by paying people less for decades to the point people don’t realize that eating out used to be expensive. All the full service restaurants in my small town still do well. The ones that don’t are the sandwich shops where you pay $14 for a cold sandwich. Eating out is expensive and should be expensive if you want businesses to sustain themselves when there’s turmoil in the industry.
> Eating out is expensive and should be expensive if you want businesses to sustain themselves when there’s turmoil in the industry.
Eating out shouldn't have to be more expensive than eating in. And in many countries it isn't.
Restaurants benefit from scale that your kitchen doesn't.
If you were feeding a family of 150, your per-meal price would crater.
Of course a restaurant has to pay staff, so the numbers have to add up, but conceptually, there's no particular reason why a chicken sandwich at a restaurant should cost more than a chicken sandwich at home, as long as that restaurant is serving chicken sandwiches, chicken tacos, and chicken pasta all afternoon/evening.
Granted during covid and shipping shortages all bets are off.
And obviously even during non-covid times, restaurants can set their own prices, charge a 100x multiple for exclusivity, ambiance, etc.
But fundamentally there's no obvious reason why getting food at a restaurant needs to cost more than getting food at home, while still making the restaurant a profit that lets them pay salaries and sustain their business.
> there's no particular reason why a chicken sandwich at a restaurant should cost more than a chicken sandwich at home
There are many reasons! You're the one making the sandwich at home and bringing it to your table, so you absorb the labor costs. And you're already paying for space, heat, light at your place whether you eat there or not, whereas the restaurant has to pay for these. Not to mention profits (why would they run a place if not to earn money?)
The only things that your place and a restaurant have in common are the ingredients; and while restaurants can maybe pay less because they buy in bulk, they also have to abide by health codes that don't apply to you; you can eat yesterday's meat if you want, but restaurants usually can't serve it to you.
So it's really unclear how restaurant food could ever approach the cost of meal made at home.
Sort of. Papa Johns' food costs is about 30%. The margin on a store is 10-20%. Papa Johns is a takeout pizza chain, one of the few consistently profitable restaurant models. Most do not have these margins.
Also, the hard part about making a Papa John's pizza from grocery store ingredients is finding ingredients that are crummy enough and in small enough quantities. ): It's easier to make a a big pizza with good cheese and fresh ingredients at home for $20-30 of ingredients. You would pay more than that for the equivalent at a restaurant when dining or delivery tax and tip are factored, especially.
Economies of scale do help restaurants, but only to the extent that they can pack their labor and other operating costs into the price and not lose money. Many restaurants have not survived because they couldn't attract a high enough percentage of customers to the higher margin items on the menu. So when someone orders out they are going to end up paying for the labor they're not spending, outside of unusual circumstances or the few money-printing carryout formats (like mass market carryout pizza.)
> But fundamentally there's no obvious reason why getting food at a restaurant needs to cost more than getting food at home, while still making the restaurant a profit that lets them pay salaries and sustain their business.
Food is not that expensive. The restaurant is not getting their materials much cheaper than people are at Costco.
What is expensive is good labor. Labor that wants to work a laborious, strenuous job, at very inconvenient hours. How are you going to convince someone to work at times when everyone else is out and having fun or having meals together at home as a family? Or getting ready for weekend trips? You have to pay them more to sacrifice.
The only reason this has not been a problem until now is there has been a big supply of labor willing to do that undesirable job at undesirable hours, so they had no negotiating power for higher wages.
In which countries is it not cheaper to cook your own food than to buy it out? The only things I can think of are:
- truly street food in areas like sinagpore or india which is not a sustainable every meal option for most digestive systems
- island nations where you're comparing fresh produce to a prepared meal
It should be and is cheaper to cook your own food. Purchases are limited to need, meals are usually a tiny percentage of the overall purchase, cost does not include: rent, talent, fixed costs such as kitchens/tables/plates/etc, healthcare, marketing, etc.
Mexico for one. It's typically cheaper to eat at a Taco restaurant then to buy your own at a grocery store. There are a lot of reasons for this, but the biggest is more limited selection, more efficient service and cheaper real estate. The real estate issue is not one that is easy to address, but the other issues are adjustable. It's silly to expect the government to bail out restaurants when they admit they can't even pay their employees a living wage.
Regardless of what you think the government should do about helping poor people, it most certainly should not be guaranteeing small business owners a 6+ figure income. They can innovate like every other business. The ones that succeed will get rich, and the ones that fail will at least have access to a living wage working for a more successful business.
How much does a 100 pack of the cheapest thin patties cost? A 100 pack of american cheese? A 100 pack of terrible buns? The only challenge is that most grocery stores aren't even stocking food so crappy, not that the food costs are considerably higher.
The rolls I get at the store for that price are way better than the ones act McDonalds. And if you really want rolls for cheap, you can make them yourself from a couple cents of flour.
People working two jobs, having to juggle a family, don't have time for all of these luxury processes. Kudos to you that you are affluent. But this conversation isn't obviously about people at your level.
This is a false argument. You're switching the goal posts from cost of ingredients to cost of time in a society that literally purposefully ensures that you dont have time so you spend money.
We can discuss the system but its not a given. What is a given is the ingredients you use for your one meal at home should be cheaper than what it takes to make it at a restaurant. The inclusion of other humans to hire, manage, train, and then process, create, and discard the remainders of your order and clean alone should be indicative of that.
Restaurants waste tons and tons of food every year. Literally. I, on the other hand, waste very little food at home. I buy fresh, i freeze and i plan ahead.
Also, good luck with your mcdonalds only diet. I'll stick with a balanced, healthy, home cooked diet myself.
> fundamentally there's no obvious reason why getting food at a restaurant needs to cost more than getting food at home
You're assuming the only thing that contributes to costs is the raw material. In reality, there's raw materials, labor, rent/mortgage on the space, taxes, and other costs including your initial investment and constant upkeep. Combine all of these and making a Sandwich at home is almost 100% cheaper (even if you shop at Whole Foods and only eat organic).
And comparing it with other countries is not exactly Apples to Apples comparison. In India or Singapore, almost all businesses cheat on taxes, labor is overexploited (more than the US), there's limited licensing or health oversight, and ingredients can get downright questionable. Those help a lot with lowering costs, but not feasible in US. (Or rather only McDonalds can achieve to some degree)
Pretty sure that applies to Japan with the caveat of disregarding food options that wouldn‘t sustain a reasonably healthy life in the long run. A decent & healthy meal is possible there incl. drinks for about 6 USD. Trying that with home cooking doesn‘t seem feasible at that price point and quality.
Not sure why you would go to McDonald's in Japan (or Thailand or Vietnam etc), but I do know that they are seen in some of those as somewhat special because they are not local food so maybe they can get away with different pricing. In a lot of countries I frequent you would see (much) higher prices at McDonald's than in small local places. And japan was an example of that (been 3.5 years since I been). At my local in Portugal my wife and myself eat 2 lovely (and too large, we usually take half of one home), 2 coffees and a local sweet for less than E2/person. And that is not pre packaged stuff. The menu of the day costs less than E5/person and that includes wine, coffee, dessert, soup and a main; again, that is cooked that day and not fastfood or pre packaged. McDonald's is more expensive than that and it is a matter of taste if you go there or not of course. I have seen the same thing in many countries; especially Thailand and such, it is so much cheaper (and nicer, but that is taste again) to eat at a small local. I think those prices would probably make some countries cheaper even accounting for the wages.
It is hard to compare apples to apples though; I don't like the typical American fast food and probably many don't like the food here. So even though it would be cheaper, if you would never go there...
Ah, was just more curious about an apple to apples comparison. Lots of countries have cheap fast/street food options, but restaurants are quite expensive for locals.
The US has, in my experience, by far the cheapest restaurant experience in the world, relative to the average worker's wage. Of course I haven't been everywhere. Currently in Czech Republic and it's cheap by most standards but relative to wages on point with most western countries.
Just to counter the McDonalds idea, if you want some meat in Japan on the cheap it‘s much better and healthier to get a set of gyudon and miso-soup [1]. McDonalds there is a fun once-in-a-while place to go if you have at least a small amount of disposable income, it‘s by far not the lowest budget option available.
The problem is that a lot of people are used to eating out being cheap. Kitchens have dwindled in size, as have the basic skills of grocery shopping and preparing meals.
It might be longterm good for eating out to be expensive again (especially for waistlines) but it will come as a big shock and do short term harm.
Is that true? In a lot of new homes where I live the kitchens are one of the places the builders spend money. It's pretty common to see multiple ovens, a high end stove top, big dishwasher, gigantic refrigerator, etc...
> In a lot of new homes where I live the kitchens are one of the places the builders spend money.
Regular people generally can't afford new homes. Working class professionals usually get shoved into apartments (usually small ones) with small kitchens in 5+1 buildings or renovated industrial buildings.
Were small apartments of yesteryear more generous with their kitchen sizes?
The parent comment said kitchens are getting smaller and smaller but I'm not sure if that's actually true. I lived in quite a few houses (middle / lower-middle class) growing up and it seemed like the older homes all had much smaller kitchens than the ones that weren't as old.
Maybe that is happening for apartments for singles and DINKs living in urban areas where your lifestyle may be shifting towards eating at restaurants more than at home, but especially for families with kids, the trend definitely seems to be larger kitchens and kitchens that are more integrated into the home.
I live in a very old studio apartment (built in 1909) and it has a separate kitchen that is the size of the kitchen in most of my friends' single family homes. It is probably ~1/3rd the square footage of the entire apartment. Obviously that's just anecdotal but I do think that the kitchen used to be prioritized much more, at least in apartments.
Certainly seems to be true here in Sweden. All new houses and apartments I've seen recently have tiny open plan kitchen with terrible layouts. It's clear that they layed out the rest of the house first and then just crammed in a kitchen in whatever space was left over.
In the neighborhood where I live, most of the houses were build between the late 1920s and the late 1940s. Generally they had galley kitchens, for people who could afford the houses could afford cooks, and why use up space on the cook's area. Kitchen renovation probably came in on the second turnover, about 2000, when boomers etc. moved in.
This. Can’t afford a 10% increase in a restaurant meal? Make it yourself. If that means changes in the market so be it. The world will be a better place with less fast food.
Yeah, a cheap joint is usually paying cash without proper rates and benefits (the staff being complicit and not declaring income/violating visa work restrictions if not local).
In these places the credit card machine is often ‘broken’ or there is a 5% discount for paying cash. I’ve even seen a place that was ‘cash only’ and had built an ATM right next to the cash register in the middle of the restaurant so you couldn’t complain.
In Australia it isn’t helped by a labor law system so complicated that even large firms with HR and finance departments the size of a small army can’t pay people properly.
Why should everyone be paid a lot? Is everyone's labor really worth the same? Should not people be paid according to the value of their input? I am super fine with people charging me little for their services as long as they deem that it makes sense for them and the quality is acceptable. I want people that can provide great value for a fair price to outcompete others, because I want to promote them and hopefully they will develop and make economy a little bit better a little bit more efficient.
Th people who complained the loudest about restaurant closures are the ones that get off the hardest on being served. They will most certainly NOT pay more for their meals.
It's been painful watching my family members who own a restaurant and a bar.
I think this post still misses the mark.
Food prices are not up 5-15%, based on what my family is seeing it's up 40-50%. They're desperately trying to find cheaper solutions.
In addition to that, when the restaurants were forced to be shut down in 2020, people switched roles. People started working at Amazon and other companies.
Now there's a shortage of cooks, bar-tenders, etc. Previously, they were paying $7/hr + tips for a bar-tender. Now, they can't get people to apply for under $15/hr + tips. My one family member cannot even find a cook and they're offering 50% more than they were in 2019 -- $30/hr. So they're working 12-14 hr days, 7 days a week to keep the place running.
Combined with increased costs, there was a drop of 20% or so of patrons (compared to 2019) and patrons are more price sensitive.
To me, it's clear from reading this comments that many people do not understand the economics of a restaurants. Which are far different than chain fast-food place locations.
>>To me, it's clear from reading this comments that many people do not understand the economics of a restaurants. Which are far different than chain fast-food place locations.
How much clearer can it be than if the financial balance of the restaurant is not profitable, it is time to shift into a different menu and price points, or shut down all together and find a different avenue of work.
The restaurant owners are in the same predicament as their workers. If it's not worth pursuing for your time and money, then pursue something else more worthwhile. Adjust or die.
> The restaurant owners are in the same predicament as their workers. If it's not worth pursuing for your time and money, then pursue something else more worthwhile. Adjust or die.
Oh I (and my family members) agree, they're trying to sell the businesses.
Typically small time businesses like this are highly tied with personal finances. You can't just "close up shop" when you have a $50k loan and no job lined up.
Again, it's more complex than people recognize. For instance, you can raise your prices (and my family has), but they have to compete with other chain restaurants. So they can't raise prices too much faster than the competition.
>>Typically small time businesses like this are highly tied with personal finances. You can't just "close up shop" when you have a $50k loan and no job lined up.
Understandable, of course. Some of my sentiment was informed by the article-in-question's supposition that workers were being too demanding in terms of wages and a plea for sympathy that rang hollow in terms of her arguments (IMO at least). Workers do not owe anything to anybody - if a more prodigious opportunity presents itself, it ought to be taken.
The pain points are going to become more apparent as we try and sort through a new standard that has upended much of what we took for granted emotionally, socially and culturally (including morality and finances in the latter).
> Some of my sentiment was informed by the article-in-question's supposition that workers were being too demanding in terms of wages and a plea for sympathy that rang hollow in terms of her arguments (IMO at least).
She complained about being screwed and left out by govt programs, and about Facebook commenters who called for higher pay like it was something she hadn't thought of. Didn't notice any bashing of workers.
Read the article again. She talks about Uber helping her business and that tips don't help her bottom line, which is... categorically untrue: they save her from having to pay her employees a living wage and hiring delivery people, which she would be paying a living wage to.
then she goes on a rant about how people don't want to work because "unemployment" during A PANDEMIC! Boo-hoo to someone who cares less about he health and lives of her employees than her bottom line. Again... this is coming from someone who is already financially stable with several successful businesses and a very successful spouse. Completely oblivious in her perspective.
Read the article again, this time slower and with fewer prejudices.
To point out one last thing: most restaurants fail. She is complaining about being successful but not as much as she'd like... while the US experiences a 4.2% unemployment rate, which is amazing given where we were a year ago. Talk about lacking any perspective.
> then she goes on a rant about how people don't want to work because "unemployment" during A PANDEMIC!
She specifically says "I don't blame them" (emphasis hers) referring to those people on unemployment. she is complaining about the incentives created by the govt program, which I referred to.
59% of the population is currently employed, down from 65% in 2000. We're down ~2.5% from where we were in 2020. Which doesn't exactly seems to jive with the reported "unemployment rate" - https://tradingeconomics.com/united-states/unemployment-rate
In 2020, 158M were employed, now 155M are employed (with millions increase in population). We're probably looking at a gap of at least 5 million.
There are people genuinely exiting the workforce, however. Biggest of note is those over 65 that were previously working part or full time that have decided to rely solely on retirement income.[0] You have have a lot of exits due to childcare related issues.[1] The workforce has genuinely contracted during the pandemic.
ETA: Looking on the other side, there is likely some unknowable number of 16-18 year olds that are not entering the workforce yet, that would have pre-pandemic.
It's quite weird seeing people talk like this here. Most of the users here, who probably work at IT companies and startups that never made money until now, never will make money, or needed to burn 10 years through investors money, that are basically the pensions of the people you mock here, come and talk about adjust or die and time to find something different to work on, if you're not profitable.
>>Most of the users here, who probably work at IT companies and startups that never made money until now, never will make money, or needed to burn 10 years through investors money, that are basically the pensions of the people you mock here.
Umm, no - I'd sincerely doubt that "most of the users" here are working at IT companies and startups that never made money until <insert random date>. Even if they did, they certainly were being compensated well for the work. Are you aware that we are discussing a POSSIBLE living wage of roughly 15 USD/h, which is still ridiculously low, but at least a laudable goal, while you are selling me laments about the VCs and owners not making it in what is an incomparable industry to hospitality (60% of restaurants fail in the first year - she's still profitable throughout her multiple restaurants even in the middle of a pandemic and has the temerity to complain about paying her workers living wages... done here)
My argument is not about IT companiesand VC-funded startups, but about the restaurant business in a mid-pandemic economy and the lack of perspective the owner of said restaurant displays regarding her worker's wages.
If she is willing to treat them as merely expenses to be eliminated and not as partners in a struggling business reaching success, then again, she should not be running a restaurant.
Food is essential - restaurants are not (to quote someone else somewhere up/downthread).
> For context, when I wrote the first post, we had just the one Wolf Down location in Ottawa. We’ve since opened our second location, in Vegas of all places (we raised funds for this, that’s another story for another post), and launched ghost kitchens in Toronto and Calgary (in partnership with REEF, no upfront cost to us).
That doesn't seem much fucked to me. In fact it sounds like business is going great.
It's a lot of complaining and blaming other people, presumably from the same people that'd object to being told they're exploiting labor by saying they're assuming all the risk.
This should be higher up. Without any judgement on the author as a person, they live in different circumstances than 99% of the employers, employees or customers in the restaurant business. Knowing this is an important part of understanding their social commentary.
I thought it was a little odd for someone to write an article about how the restaurant industry is "so fucked", then proceed with a dramatic expansion of their business during the pandemic, and then write another article about how terrible things are in the industry. Not to say the article is wrong, but it certainly undercuts the argument. Knowing that she had virtually unlimited access to additional capital makes the apparent contradiction more understandable.
>Let’s start with the government paying our workers to stay home. First, let me say that anyone high risk, or with young kids at home, I understand. This isn’t about you. But I’m talking about the restaurant industry here. We employed 1.7M teens in the US before the pandemic. Of course they rather get paid to Netflix & chill than scrub dishes. I don’t blame them. I’m not exaggerating. I know this. How? Cause they told me. They’d ask to only work a few shifts a week or else they’d stop getting their ‘free money’ (ie our tax dollars). This made it nearly impossible for us to stay open. It’s gotten a bit better as these programs wrapped up, but in Canada at least, they are talking about bringing them back.
I don't think a couple of infrequent Covid stimulus checks is the equivalent of paying people to not work. Even minimum wage pays a lot more than Covid checks.
This article is full of generalizations and assumptions that are wrong or exaggerated. Lettuce being 15% more expensive does not mean the final product is 15% more expensive. That is because there are a lot of inputs that go into determining the price besides the raw materials. Where I live I only noticed 2 restaurants closed out of probably 50. Some cut hours or only do drive-though. A long way from being fucked as the title suggests.
They're in Canada, where the covid stimulus was $2000/month up until October 2021. Not disagreeing though, CERB is long over and anyone who got that money has spent it. Before the pandemic, I lived in a relatively cheap bachelor where the rent was $1250. I got laid off in the first week, and didn't find a job til a year later.
My groceries used to cost $200/month, now they're $300. Internet and my phone cost $120, leaving $330 month to cover anything that wasn't bare minimum essential. Thank god I already had a bike, because paying for my car would have eaten the last of the money. Also, CERB was a taxable benefit, but deductions weren't taken, meaning that I'll have to pay back some of it at tax time.
Not even joking, if I hadn't moved in with my wife a month before covid hit, I'd be homeless today, CERB or not.
A new analysis by Peter Ganong, Pascal Noel and Joseph Vavra, economists at the University of Chicago, uses government data from 2019 to estimate that 68 percent of unemployed workers who can receive benefits are eligible for payments that are greater than their lost earnings. They also found that the estimated median replacement rate — the share of a worker’s original weekly salary that is being replaced by unemployment benefits — is 134 percent, or more than one-third above their original wage. A substantial minority of those workers, particularly in low-wage professions like food service and janitorial work, may end up receiving more than 150 percent of their previous weekly salary.
A Bank of America Global Research report published in April estimated, nationwide, workers who earn less than $32,000 annually could make more money on unemployment than they could from work.
An analysis of California Employment Development estimates showed $31,200, or $15 an hour, was the break-even point in the state, not accounting for differences in how the money might be taxed. The state portion of benefits is capped at $450 per week for higher-income earners.
“You could potentially earn $750 a week maximum in California using unemployment. That can be a disincentive to some workers especially some of those workers in lower-paid jobs,” said Roccato.
Literally the entirety of that "argument" falls apart when one takes into consideration that unemployment benefits are regularly limited to a short time span and a fraction of your recent income, qualified by lay offs, not being fired or voluntarily leaving work, and even when they were extended due to something as disruptive as a GLOBAL PANDEMIC, the payments were still limited and are no longer in effect.
And the fact that the most anyone could make was capped under 24,000 USD a year - if you consider anything above poverty level in the US in 2020/2021, then this conversation should stop here...
Look, this whole argument is terribly messy-- made so by entrenched political positions and lack of constructive dialog.
The thing is, a terrible feature of current poverty programs in North America is the existence of cliffs, where the net resources of a household can decrease -- especially in the short to intermediate term-- if one pursues more lucrative careers. See https://www.atlantafed.org/economic-mobility-and-resilience/...
This is at baseline. Some of the pandemic response measures have further worsened the picture. Work, in the short term, is punished.
We need a (small) basic income, and to structure the rest of poverty programs to make sure these kinds of perverse incentives no longer exist.
The cliffs are designed to divide the population on the issue of the benefits.
Making benefits universal is understood as a way to make the population unite behind them long-term, a political danger to capitalist elites who benefit from worker precarity.
Having no benefits at all is another political danger. The obvious cruelty of total economic exclusion results in social movements for reform.
Crippled benefits gate-kept by a punitive bureaucratic layer are the stable compromise.
> a political danger to capitalist elites who benefit from worker precarity.
This seems like an unusually pejorative way of describing the desire to have a functioning economy, where workers actually have an incentive to work instead of being paid to Netflix and chill.
And this article and its commentary are replete with examples that defy the usual straw men associated with arguments for UBI, if that helps. CERB at $2k a month is the prime example and the source of the original article.
> And this article and its commentary are replete with examples that defy the usual straw men associated with arguments for UBI, if that helps. CERB at $2k a month is the prime example and the source of the original article.
CERB does exactly what a UBI shouldn't do: phase out if you made more than a (small) income threshold. This creates an explicit incentive to not work. The "U"-- "universal" -- is important to not create these types of cliff where work is punished.
Right now in the US we have a mess of systems: tax brackets, EITC, SNAP, housing assistance, WIC, etc. I don't think we can quite "nuke them all" and replace them with a UBI, but a UBI with a flatter tax system, no EITC, less unemployment insurance, and a bit less SNAP could ensure everyone can still eat; would tide over people between jobs; would assist people in situations where they're voluntarily changing careers, etc... and most importantly, would remove the perverse disincentives to work that the cliffs on SNAP, WIC, etc, do.
Rather, “capitalist elites who benefit from precarious workers”, is not neutral or objective. That’s an editorialized and oversimplified view of what are the motivations and needs of people actually creating the jobs in the first place.
There are likely more unproductive (deliberately) workers on balance who are siphoning wages from companies than there are “capitalist elites” who prey on their workers needing a job.
The entire article and thread of comments demonstrate that people would prefer to stay at home and be paid than to work and be paid. It’s not hard to imagine why and see the negative downsides unless you’re one of the people trying to justify being paid to stay at home.
FYSA: one's "interests" are very, very similar to ones "motivations and needs."
But I agree to walk away. If you ROFL at the prospect of someone who is legitimately creating jobs being an interested party in the discussion of our economic structure, it's probably not worth the typing energy to debate with you.
> I don't think a couple of infrequent Covid stimulus checks is the equivalent of paying people to not work. Even minimum wage pays a lot more than Covid checks.
I assume the author was talking more so about the extended unemployment benefits and not the stimulus checks. At least in the US, working 15 hours instead of 30 wasn't going to be the difference between getting a stimulus check or not, since the cutoff was something like an AGI of $75,000 for the previous year, whereas the unemployment benefits are done one a week-to-week basis and are based on how much (if any) income you're bringing in.
edit: I understand the author's main business base is Canada and things are different there
Labor participation fell even as unemployment dropped back to ~4%. The significant repeated stimulus payments absolutely were the root cause and are a big part of why inflation is rocking 8%.
Raw materials + labor + profit = end price. If raw materials go up, labor goes up and profit stays the same.. that would suggest prices will increase too. The fed has already stopped labeling inflation as transitory and it will continue likely through a good portion of this year too.
I'm glad only 2 restaurants of the 50 near you have closed. About 30% of the restaurants near me have closed, most were small and locally owned. A few chain locations closed too. Most of the remaining ones significantly cut hours. They seem to still be bleeding.
> a couple of infrequent Covid stimulus checks is the equivalent of paying people to not work. Even minimum wage pays a lot more than Covid checks.
Author is from Canada. The welfare checks given there were 2K per month since the beggining of the pandemic. And that's exclusing other welfare programs.
You could get CERB/CRB for a maximum of 54 weeks, so just over a year. Those who started collecting CERB right at the beginning of the pandemic would have run out of it more than nine months ago. And that's before the programs ended in October.
This article is utter BS. Just read her other posts and you'll see she's been raking it in over COVID, her business is doing better than ever and she opened a Vegas restaurant.
I think she's looking for publicity more than anything, seems to me she's as manipulative and cynical as she is wealthy and successful.
This series keeps pretending that restaurants are the only source of food. Restaurants aren't grocery stores. Restaurants are great, and they're a big part of our economy, but they're a luxury. Sorry your margins aren't higher, but I won't be terribly upset if cheaper non-chain restaurants go the way of the dodo bird.
Am a Canadian myself. Lived in the US for 6 months last year, but am back living in Canada since June 2021. I will agree that the Canadian labour market is utterly $^%$ed right now, and it is entirely due to the way our government has handled this situation.
The government of Canada gave money to anyone who (1) was over the age of 15, (2) made more than $5000 in the year prior to the pandemic and (3) lost at least 50% of their wages.
CERB was $2000/4 weeks * 6 periods,
CRB was $900/2 weeks for up to 54 weeks
So do the math ... you're a 18 year old student that made $5000 the year before the pandemic. The government potentially has paid you upwards of $30,000 to stay home over the past year and a half. You could go back to a $15/hours job (that's Ontario's minimum wage), but you have more money in the bank than you ever thought you would at this point.
It's not the older, "full time" worker staying home. It's that none of the students feel the need to work anymore.
And it's not just restaurants. I went to a very large, major chain, grocery store last night at 7pm. Half of the shelves were empty and they had ONE self checkout open (with a line of customers). No staff there either ...
Canadian real estate price rose 20% in 2020 and another 20% in 2021, although I think that has more to do with interest rates staying at effectively zero for the past decade. Canada never had their correction in 2008 to reset everything like the US did.
So many of these restauranteur articles. One thing is certain -- it is not the governments job to fix this. This is the market playing out in a pandemic. Restaurants are non-essential and faced with this level of distress should perhaps consider shutting down and coming back when the market can support them. Unless one has deep pockets or the will power, I'm not sure how many can survive.
With the thin margins, most can't afford to pay more and many customers aren't either regardless of how much they want to eat out. I love restaurants and it has been sad to see some of my favorite ones shut down -- hopefully they'll be back!
Here's what I don't understand. I the example the author gives, a sandwich is $11, and at let's say 9% profit margin the restaurant makes $1 on it. Why not make the sandwich $12 and double your profit? Sure it doesn't make a huge difference for the customers.
> Maybe a few of 'em tried that strategy, and found that it usually didn't work out so well.
We know that's not the case because if there was even a shred of data driving this decision they would have been crowing about it. This happens every time someone proposes that businesses be better members of their communities — some reactionary will say that they'll be unable to create all of those jobs, but they're never asked why they're less wrong than everyone who very confidently said the same thing on the previous iteration. You can copy-and-paste that for so many issues — wages, benefits like sick leave or health insurance, pollution, banning indoor smoking or serving drinks to obviously intoxicated people, etc.
The flip side of this is that it only looks at a single part of a complex system: for example, how much does staff turnover cost the average business? You'll never, ever hear someone whining about the prospect of paying a living wage acknowledge the businesses who've found that treating their workers better saved them money because they saved money from not having to constantly be hiring and people were more productive.
It depends on if X% of customers decide the sandwich isn't worth more than $11 and the reduced demand reduces the overall profit. Whether they can afford it or not, many consumers have a psychological value they place on a sandwich.
But that would mean he would have to pay his workers more. How will he keep his employees in their place when they don't have to kowtow to him for shifts and payments?
Maybe the problem is there are too many restaurants and too many people who think they want/need to eat at a restaurant. In Switzerland, restaurants pay a living wage, and sandwiches cost $15. If you can't afford to eat out, you don't. There are plenty of low cost grocery stores like Aldi and Lidl. One even has an advertisement showing how a grandma can serve 5 grandkids a homemade spaghetti lunch for.... wait for it... $15.
I see a lot of comments about "Just raise prices". And it's true, that's what restaurants have to do to survive on an individual level.
The problem is aggregate demand across the entire economy. Consumers are getting squeezed by inflation for, well, everything. Quicker than wages are going up in the economy. So overall demand isn't rising as quickly as restaurants need to raise prices.
Consumers are still eating out and paying those higher prices, they're just doing it less often or, even worse, ordering less per visit.
This isn't necessarily the death knell for restaurants with a specific competitive advantage but it does mean lots of restaurants won't make it.
What is this guy talking about? Workers are not getting COVID benefits of any kind right now, not unemployment, not relief checks, nothing, in the US. If you quit voluntarily in most states you don't even qualify for normal unemployment. The improved unemployment benefit was ended in September 2021, and it did not result in increased employment!
Note that the author is Canadian. Very different up here right now. For example, Ontario where the author is based is entering complete lockdown tomorrow for at least 3 weeks. Restaurants completely closed to indoor dining, and workers will receive government assistance that is greater than they were making when working.
I concur. Where are all the employees? Labour force participation has collapsed over a number of years, but where are all the people if not getting some unemployment somewhere? It seems every retailer I pass in every city has a sign up right now looking for employees.
Some stayed at home to take care of the kids. Others upleveled and went for jobs that pay better wages. A bunch of people died as well, I wonder of this affected the job market.
I'd love to read a study on this specific topic.
I don’t think the link you’ve provided confirms that it is simply due to the population aging, though I don’t disagree that may be a component of it. The link just doesn’t help explain what relative contribution comes from aging vs participation. If you click male or female over 20, participation rate, the numbers drop over the last decade quite a bit. What are these people doing if not working?
Yes, the BLS graph was meant to show it has not collapsed. Nov 2016, 2017, 2018, 2019 participation rates were 62.7%, 62.7%, 62.9%, 63.2%, and Nov 2021 is 61.8%.
Also, over 20 also includes people over retirement age, so they have stopped working.
See graph labeled "age ratio". If you hover your mouse over it, you will see working age portion of population starts to decrease after 2010, and had flatlined prior to that.
A very good scream of rage.
This past year's christmas special from The Economist has a well though-out history on what restaurants used to be and where they are heading.
One interesting quote from the end appropriate for HN:
What does the history of the restaurant say about its future? People have relished their reopening. In recent weeks global restaurant reservations have been near their pre-pandemic levels. The best ones are booked up for months: Silicon Valley nerds have created automated bots which instantly reserve tables.
But of course someone is botting their way to reservations...
I agree. If your customers won’t pay your new, increased prices, then you or one of your competitors goes out of business. The competitive set consolidated and trims the day until prices can come down to a point where consumers will pay.
The problem is that the bulk of businesses have grown fat and lazy on the good times that have lasted seemingly forever. It’s time for a reset. This time we won’t be able to be bailed out - interest rates are already rock bottom and inflation is at a 30 year high. We are in for massive upheaval.
The hospitality sector is over saturated and pressure on wages is a result of PPP money to restaurants that would otherwise not be around to hire now. I wish they would stop being such babies about relief checks though.
The same type of people in the US pretended not to notice price increases directly caused by the trade war. They even defended it because they had their guys in charge: “need some pain for some gain”
There was a constituency for a trade war, a very powerful one. And NOW they want to blame their opposition for the logical outcome of those cost increases, more cost increases!
There’s a constituency for UI benefits, the “nobody wants to work” crowd has lost all good will with workers for the whole industry.
Any critic of “defund the police” will tell you not to bash a social service that is so damn popular.
Whether it’s a social service that offers free policing or direct checks, people LOVE free stuff from the government.
They had two production lines: one for in-house shoppers, and one for the delivery services.
What shocked me is that the in-house consumer experience was AWFUL. The Burrito was bad even for Chipotle, they were slow.
The other production line was cranking away and of course the burrito was "better".
Yet they are making, what, 30% more on me? And I have a chance of buying a fountain soda which is pure fucking profit to a fast food joint.
Truly an example of misaligned incentives. I'm not saying to short the delivery services, but at least provide a bit... extra... for the people that are delivering good margins.
You know, the margins that are the difference between the restaurant staying open and not?
I get that the UberEats supply is ... some money ... and it is kind of advertising, but why not offer ... something ... ANYTHING to reward people that get out of bed and give you 30% more money.
Idea here, not sure if this is available now or not, but something I was thinking about throughout COVID + restaurant industry.
They're a huge employer, particularly of some of the lowest paid sector. Why didn't the government consider tax subsidies to restaurants that kept 80-90% employees on to help keep food and other costs down?
If takeaway costs could have stayed the same or even lower, it would have pushed people to keep patronizing restaurants at the same level, and keep staff employed (re-purposed somewhat to support takeaway from in house service) but keep that tax revenue + light CERB load (this is in Canada) and the whole industry could have hopefully weathered this better.
Seems doable? Also, seems like a model that could be potententially used in other businesses too, particularly smaller ones.
The restaurant business is awful to begin with. Don't even think about it if you don't own the property. You do not want to be in this business trust me (family owned a few restaurants). It requires the longest fucking hours you can imagine, employees that could give a shit no matter how much you pay them, unstable food costs and add to that an expiring product, insane red tape (licensing), etc.
Incredibly lucky that we were able to sell both remaining businesses in NOV-DEC/19. Dodged a bullet, buyer has since closed down and gone out of business. I predict that 90% all the restaurants (privately owned) in Toronto will be out of business in the next year. Corporate owned have incredibly deep pockets and will survive. Complete slaughter.
It's astounding to watch businesses just demand workers without the willingness to pay what the free market demands. Some of those restaurant workers upskilled to better jobs so don't expect them to go back to lower paying jobs if they can.
It's even more astounding to witness the entitlement of someone running a "small business" in LAS VEGAS complaining about paying living wages and related business costs all the while married to the co-founder of Shopify and financially more stable than 99.99999+% of her employee base... the lack of self-awareness is shocking, though not that surprising given the bubble she lives in.
I regularly suggest restaurants pay people more. I will not be shocked or upset when the prices go up. Hopefully way up so we can retire the silly process of having to tip while we're at it, and the restaurant can, in fact, actually pay people. (Note that with pickup orders, the tip line on the receipt is incredibly stressful for me: I shouldn't tip because there isn't table service, but I should tip because the restaurant staff are still getting underpaid...)
And yeah, it's probably going to cause some people to reevaluate going to restaurants. They might cook more at home, and better appreciate the higher cost when they do eat out, and in turn, the world moves forward.
I'd be willing to pay more for a better experience. When you go to a restaurant who treats their employees like shit, those same employees seem to not give a shit, because they aren't paid well enough to give a shit. I'd rather go to a great restaurant once than a shit one three times.
It's pretty hard to be hospitable to your guests when you aren't treated hospitably by your employer. Inhospitality trickles down too.
There's a lot of ways to raise wages without prices. You can reduce profits. You can reduce staff (paying each staff member more). Why should this be the consumer's problem?
This is the second time I've posted a comment on a similar article [1], so I'll try to make this one a little different. First, there's a lot of genuine pain that restaurants are feeling that's not their fault. But I will say that the restaurant industry has been due for a reckoning for 10-15 years - they became addicted to 1) lower and lower margins, 2) a workforce ready to deal with the low pay, terrible hours, and abusive environments, and 3) a seemingly endless stream of customers.
All of this combined to create a world where #1 forced many restaurants to become dependent on #2 and #3 to be profitable - which was clearly unsustainable, but no one was willing to recognize that.
Part of the dynamic for #1 is that you had a flood of first-time operators coming on the market with lots of capital and a long runway for profitability. Restaurant concepts that make no sense if you're a traditional owner/operator might be fine if you have cash to cover the losses for 1-3 years. There was also a huge shift from solo location operators to people with "concepts" that are built out of the gate with dreams of building an empire - everyone saw Shake Shack and Chipotle and said, "How hard can that be?"
All of these well-funded, inexperienced operators got their restaurants out the door, optimized for growth rather than sustainability, and then the pandemic hit, and suddenly the sand that their business was built on began to slide out from underneath them.
This is a generalization, of course, and only reflects a subset of the restaurants that have been hurt/closed by the pandemic. I'll absolutely say that another big swath of restaurants that closed are restaurants that have been around a long time and were probably running on fumes already, and unable to adapt.
But at the heart of both groups are businesses that were built on unsustainable foundations and poor business practices. Running a restaurant is _hard_ - comparing it to running an accounting business is laughable (as the author did in their first essay). The best restaurant operators can look at a menu and know_ exactly how much they are going to make on each dish, have a professional level nderstanding of electrical and mechanical maintenance, understand a forest of local laws and regulation, and can hire and attract quality talent AND keep them interested and engaged. On top of that, in major metro areas, they also have to be branding, social, and marketing experts.
Covid has been hard for everyone, especially restaurants, but the best-run restaurants were able to dig in and adjust and adapt, because they had a solid foundation and a strong leadership team. Complaining that teenagers don't want to work a shit job for low pay and terrible hours totally misses the point.
I predict the Republican party will make an about-face on immigration. Businesses have come to depend on a semi-infinite supply of cheap labor, and the only way they're going to get it is by letting in a new flood of unskilled workers.
The Republican party has always been two-faced about immigration (with the exception of Trump, and even he didn't live up to all his anti-immigration promises). The Republicans in congress have always been wishy-washy about enforcing immigration laws because they don't want bad optics and they don't want to piss of corporate backers, despite the rank-and-file membership being extremely anti-immigration (especially illegal immigration). The constant lies from party leadership about actually enforcing immigration laws was a major factor in Trump's rise.
>We employed 1.7M teens in the US before the pandemic.
You mean you exploited 1.7M teens, and they figured out it's not worth it, not worth getting long covid and not worth it for the "wage" they're paying. Large parts of the US economy worked simply on the threat of your existence ceasing if you run our of money. Turns out it's not that bad.
Blaming teenagers for not wanting to work if you barely made it worth their time is pretty disgusting. Maybe your industry needs to thin out and raise prices.
I stopped reading at the part that blames the “free money” for sitting at home. Fuck that. This is especially obnoxious when part 1 said let’s raise margins. So you want more money but don’t want to pay sufficient wages to the staff? Fuck that! You lost complete credibility and just appear to a greedy person.
Edit: I’m calling the restaurant owner greedy for not wanting to pay decent wages. Why is that controversial?
I have zero problem with the lowest paid members of society holding out for more. I have a hard time calling anyone greedy who is looking to make a living wage.
The restaurant industry is notoriously high-risk to start with, and they certainly have been impacted more than most other industries. Many other businesses were simply shut down (i.e. you can't have customers), which is devastating on its own. But, that period lasted a relatively short time. With restaurants, they had to make new investments in plexiglass crap, outdoor dining areas, etc..._and_ they were partially or fully shut down, or had to adapt to takeout only -- all of it costing time and money, and adding risk. The rules for them changed more frequently and unpredictably, and have been in effect throughout these 2 years.
The author should also mention another factor limiting the number of patrons who show up, and aggravating those that do: turning the restaurant into an enforcement arm of The State in demanding proof of vaccination.
Consider the opposing factor: many more people might be unwilling to visit restaurants if they thought they would get covid from unvaccinated fellow customers. Proof of vaccination is what enables restaurants to be open at all; without it, they might still be closed as an unacceptable risk.
In the end, maybe the writer, is just a bad operator and being in an unsustainable business.
Being a restaurant operator is not for everyone.
Not everyone wants what you want as an operator. In the previous article, he went on about how much more protein his meats have over whatever next door restaurant had and that there was a labor cost of $2.58 per sandwich made. Even at $15/hr wage, that means en employee was expected to make shy of 6 sandwiches an hour at $60/hr gross revenue for $6 in net profit.
Personally, once an item surpasses $15, I will go and make it myself in my kitchen from grocery goods. Scale of Economy is supposed to reduce labor, cost and make a product consistent. Even before pandemic, I don't like not being aware of everything in my food and hidden sugars in sauces. I even think $10 is expensive per dish when compared to wholesaling shopping and making my own food - but I understand, this is a food business.
I don't understand why I, the reader, am supposed to feel sympathy for a poor business operator, especially when the new article linked above writes:
"For context, when I wrote the first post, we had just the one Wolf Down location in Ottawa. We’ve since opened our second location, in Vegas of all places (we raised funds for this, that’s another story for another post), and launched ghost kitchens in Toronto and Calgary (in partnership with REEF, no upfront cost to us)."
They essentially limited liability on opening a restaurant, crowdsourced investors who bought into the sympathy scheme and then continue to write about how unsustainable it is running this sort of business.
I still don't get it. Are these articles just an excuse, to mitigate liability and risk to the investors and saying "Hey guys, thanks for believing me in - but today's market circumstances are x,y,z - no profit but thanks for the money!"
Then with the conclusion:
"But I can’t do it alone. We have to do it together as an industry. And we need you, our guests. I ask for your help."
Why? This is the same mantra that /r/WSB has been sprouting about pubic companies, privatize profits, publicize debt and liability.
While it goes on to blame customers - a business itself survives on customers.
Restaurants aren't a right or a guarantee. Customers vote with their money and social media reviews. Owning a business isn't a right or guarantee to make a profit or living.
All in all, learning to cook for yourself is simply the best. Fast food, restaurants and related food companies really do seem overleverged right now in terms of the debt they've taken on for the profit potential. High risk and low reward,
But here's the kicker, the same author also wrote this just right after publishing "Why Restaurants are fucked."
"COVID-19 was a wake up call. A catalyst for change. We were caught in a vicious cycle. Now our day of reckoning has arrived. And I, for one, am optimistic we can come back stronger than ever.
Besides low margins, there’s another critical issue we ignored for far too long: the restaurant industry is over-saturated. And too many restaurants cause hyper-competition and undercutting — triggering the race to the bottom. "
>Ok so, here’s the plan: you pay $15 for a sandwich and I give my whole team a raise. Sweet. You’re the best! The money’s gotta come from somewhere. People seem to forget that part. But yes, I like this idea. In fact, Chipotle has recently increased both wages and pricing. McDonald’s as well. Now our turn, LFG!
And yet, if you go to the source the article links directly in that paragraph: "Chipotle Mexican Grill has hiked menu prices by roughly 4% to cover the cost of raising its workers’ wages...In May, Chipotle said that it would raise hourly wages for its restaurant workers to reach an average of $15 an hour by the end of June."
4% price increase to get to a living wage. Not $15 sandwiches, just $7.28 instead of $7. Pay your employees. It's that simple.