Troubling trend for restaurants in San Fran..................................

I just happened to find this article and found it both interesting and troubling, figured I would share it with my left coast friends.

Dormitories?
Really?

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“Dormitories?
Really?”

Certainly an out of the box idea to maybe alleviate the housing problem and help retain staff. The cost of rent in San Francisco is as we all know, ridiculous. Many years ago, when I was in the business, it was taken for granted that restaurant staff moving into the City shared flats with room mates. Folks with families usually lived in the East Bay and commuted to work in SF.

These days, sharing an apartment in a decent neighborhood is probably in the $1500/month range. A hefty share of the monthly take, even with a $15/hr min wage.

I’ve seen dormitory style housing with meals provided by some companies for their employees in Asia, hospitality industry and otherwise. Also not too unusual in some areas in the USA with immigrant workers, working under the table and 60+ hours weekly. Its may actually be cost-effective for a restaurant owner to provide housing and meals, which keeps staff close at hand and available for shifts.

And, less likely to be poached.

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Yeah I’m really unsure what exactly that is going to do. If you are looking for the employers to “own” the dormitories for their employees to live in then you are just again adding more cost(s) to owning a restaurant there.

If the dormitories will be some kind of community housing, then what’s the difference between this and regular low income housing? Interestingly enough there has been a trend here on the east coast to get rid of “dormitory” style public housing as it was deemed to carry a stigma of abject poverty. So now you will go through certain area’s and fine new condominium / townhouse style housing which has replaced traditional dormitory style public housing.

In San Francisco, the waiting list for low incoming housing is months if not years long.

Obviously, the San Francisco political machine does not recognize Laissez Faire Economics https://www.investopedia.com/terms/l/laissezfaire.asp as a rule of governance.

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When the cheapest house is $600,000, and the city is in the middle of a tech boom, restaurants complaining about the cost of doing business seems a bit disingenuous, at least in appearance.

  1. Just an FYI, nobody in the Bay Area calls it “San Fran.” To my ears (and I suspect those of many others in SF), “San Fran” lands about as weirdly as someone repeatedly calling New Jersey “NuhJerzz”.

  2. It’s a famously low-margin business in a high-cost city; we’ve all heard the restaurant lobby make most of these complaints for years if not decades. They’re mad about minimum wage increases. They’re mad about having to provide employees with health care just like other employers. Probably minor things like permit fees could be reduced and the permitting process should be streamlined, but the key point is that for all of these successful restaurateurs whining over the years about this or that high cost supposedly driving them out of the business…

… 3. Investors and restaurateurs just keep on opening new restaurants here, over and over again. So it is not immediately obvious what the problem is from a consumer perspective. If there has been a spike in vacant restaurant storefronts, it is far from obvious on an anecdotal level. (In the piece, Laurie Thomas, the leader of the local restaurant trade association, claims she has data showing this. I am skeptical of of her methodology for measuring openings vs closures - apparently, uh, “garnered through Yelp”.)

IMO, the main thing to be concerned about in the latest round of restaurant whining is that lots of the whiners seem to include larger, well-capitalized restaurant groups. The one trend I think I have noticed over the last decade or so is that these mini-chains (restaurant groups running 2-7 locations in the area) seem to be somewhat replacing true mom-and-pops with a single location, so if these groups are starting to feel a squeeze, it could potentially be a sign that new restaurants really won’t be eager to replace the closures this time around. But right now it’s too early to tell.

  1. The real problems with the restaurant business in SF are much more structural than this or that permit fee or burglary adding marginally to costs. It’s that the market for land is still white-hot (people still really want to move here; local firms are still adding high-paying jobs) but the city is still not coming up with effective ways to sate this demand via changes to the built environment (building bigger buildings, allowing the city’s population to meaningfully increase). So instead there’s a shortage causing residential and commercial rents (and consequently, menu prices) to spike, and landlords gobble up an ever-greater share of the economic gains. The problem with NIMBY “preservationists” frustrating Kim Alter’s wish to build a gate isn’t that it makes her business more vulnerable to the occasional burglary; it’s that the fact that NIMBYs can prevent something as small as a gate from being built is a sign that they also have a stranglehold on building anything bigger than a gate.
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Would be interesting to hear thoughts from other retail segments doing business in San Francisco. Can somebody ring up the owner of an Aston Martin dealership and ask them their comments on the CODB in the City By The Bay?

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San Francisco’s 5,200 restaurants generate $4.7 billion in taxable sales to the city and provide for 3,600 jobs in SF,

How can there be fewer jobs than restaurants? I know everybody has to work 3 jobs to make ends meet, but …

:thinking: … maybe there should be another zero on the jobs number?

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There’s tons of reading material on the subject, and the whole Bay Area is under the same duress, clear to the Central Valley and over the hill to Santa Cruz.
As stated above, too many people with too much money and too little physical space to accommodate everyone, so folks like restaurant workers along with the rest of everyday humanity are the flotsam and jetsam of the situation.

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Yep. A good friend of mine recently sold a restaurant in the city because of trouble making it profitable despite running it for several years, even though it was seemingly always full even on weeknights and had great reviews. Seemed to think you have to open a couple locations like these mini empires you see from some SF restauranteurs in order to be profitable.

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To be clear, the problem is not that there is literally not enough physical space. (Not saying you’re saying this, but want to make it clear for anyone not from the area.) The physical scale of the Bay Area is enormous. The problem is that we are not making efficient use of the space we have by doing things like upzoning much of SF, abolishing height limits, reforming the planning commission so it doesn’t give extreme deference to NIMBYs, and eventually experimenting with things like non-ground-floor retail in more buildings. The city could probably sustain a substantial increase over the number of successful restaurants it has now if it weren’t currently trapped in an endless dumb cycle of finding reasons not to build up.

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Sometimes it seems like half our Valley is
Expat BAers, so I understand. We have professionals(Doctors etc.) who now live here but commute down there 3-4 days a week such is the difference in cost of living and property.

Also, as far as low income housing is concerned, the wait up here is 3-4 years, so I can’t imagine the BA being less waiting time. The funds allocated across the country don’t meet the need generated by the Great Recession and no housing stock was built.
A perfect storm.

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Her data can only be trusted if its vetted by @hyperbowler. :smiley:

Its already been mentioned in other articles, but a portion of restaurant workers left to work in the tech cafeterias. Mostly daytime work. Weekends off. Better comp. Its not a surprise a local Chipotle is advertising that its hiring for $16-18/ hr.

In theory, the mini empires allow you to consolidate some of the management duties and negotiate better prices on higher volumes of ingredients. They might have one pastry kitchen that supplies multiple locations.

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Noticed today that the In/Out in SF Fishermen Wharf hit the $17 starting threshold. Pegged at the high$16’s for some time. Obviously not enough to fill the slots.

As labor moves elsewhere to find more affordable cost of living. Wages have to keep moving up to compete for the ever shrinking pool.

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I went down to San Jose for a meal and some music last week. It was a Thursday, and I ended up at Paper Plane for dinner and Stritch for some music, and walked between them.

I was honestly amazed and surprised the number of vacant storefronts. It felt like about half. GF and I started reading about it.

For all the complaints about the restaurant industry and “how hard it is to make it”, let’s recognize that retail is FAR WORSE off because of mandatory 5 year leases, and other entertainment has almost no share of wallet next to food. Governments have a hard time passing laws to get property owners to fill storefronts, because just about any kind of “fine” ends up being a tax and thus can’t be passed.

Thus, what should be a vibrant downtown is mostly restaurants.

Just to provide some perspective… it might be a lousy business but it’s better than so many others!

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How does the length of the lease make it harder? Doesn’t anyone opening a retail shop plan to be in business for at least 5 years?

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You can’t regulate a market. Governments aren’t smart enough. Governments aren’t effective enough. This leads to unintended consequences from things like minimum wage and cascading inefficiencies for ineffective process like permitting and inspection. The tech boom will just move elsewhere as quality of life declines. SF just isn’t that special.

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