Why America's Restaurant Bubble is About to Burst?

This is actually a
quite good article about the state of the restaurant business. While the article uses AQ restaurant in San Francisco as an example, it doesn’t take too much of a stretch to apply it to San Diego.

Thrillist may not be the best source of news, but I do think this article does a pretty good job of presenting the issues and explaining them in easily understood language.


Interesting article. Thrillist actually does do some good reporting, you just have to dig occasionally to find it.

Happy New Year DD!!

IMO, this article is spot f*cking on.

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In my opinion too…

Originally posted this over on the SD board because it sop aptly describes our resto situation.

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Using San Francisco as an example seems problematic to me.

The tech sector here is pushing everyone except other high-income types like bankers and lawyers out of the housing market, so cooks, servers, and bartenders can generally afford to live here only if they’ve been in a rent-controlled situation. If they lose that, they often move out of the area. A large percentage of the restaurant employees I talk with in LA moved there from here.

SF also has a local minimum wage (currently $13) which requires high-end restaurants to pay servers more even though with tips they’re already making two or three times what the rest of the staff do, plus a local health-care ordinance that applies to businesses with too few employees to trigger the Obamacare employer mandate.

On the other hand, people continue to open new restaurants in SF. Go figure.

I think this also in other businesses . I am a general contractor . Very expensive to run a crew . I am being under cut by cheap labor and illegals . Only the strong survive .

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When I worked ions and ions ago at fancy pants resto’s, I would make $100-300+ an hour…

IMO, tipped employee’s shouldn’t get the $11-12+ an hour but the wage increase should go to the real stars of the show…the kitchen and back of the house…plus, they should get a little something something from the front of the house, daily…so they can get a sixer, tall boy, carne asada burrito or a pack of smokes (if they smoke, hope its American Spirits)!

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At least in the SF Bay Area, somehow the “progressive” politicians that write local minimum wage laws can’t understand that not allowing a tip credit means that the only effect on upscale restaurants is that they have to pay the employees who are making the most money even more. The laws have no effect on other employees since they’re already making more than minimum wage.

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It has always baffled me that they don’t give tip credits in SF.

How did the restaurant bubble even come about though? What made the costs low enough for it to occur? The article states it was not present even in the 90s. So what happened in the 2000s suddenly?

Also, what do they mean about the prices raising? Will everywhere be priced like Saison, $500+ on food for farm fresh stuff?

Or will it be more like $200/person?

Who knows how the pricing will shake out? In SF, it seems like a lot of places have been trying to subsidize table service through larger margins on drinks.

I’m not sure one single national bubble exists, I think every market is different.

SF had a restaurant bubble associated with the dot-com bubble that popped around 2001, then another associated with the mortgage bubble that popped in 2008. Our tech sector is booming again, but many other parts of the country haven’t really come out of the 2008 recession.

It is wild that SF went from 3600 to 7600 restaurants between 2012-2016.

Amazing to think about how few of those seem to be worth eating at.

The problem to me seems more about the absurd copycatting. One place opens to success and then six more open to copy it etc…

I’d be curious how that is happening amidst the massacre of costs simultaneously going on.

I’m skeptical about both those numbers. In 2008, the director of the Golden Gate Restaurant Association told Michael Bauer the number of restaurants in San Francisco had declined after 9/11 (which coincided with the bursting of the dot-com bubble), but had since bounced back, and was “stable at around 2,500.” In 2014, a Bloomberg story said SF had 21.44 restaurants per 10,000 residents (the highest number in the country), which would have been around 1,800.

That sounds far more reasonable. I wonder where they got those insane numbers then?

He cited the SF Environmental Health Department as the source, so maybe that’s the number of food permits, which includes a lot of other kinds of businesses besides restaurants. The Cottage Food Law went into effect at the beginning of 2013, and that could account for most of the increase right there.

Unusual figure to cite then isn’t it?

It’s kind of interesting to think of 21 restaurants for 10,000 people though. Really makes you realize that most people must not eat at restaurants often.

Which is a good thing, IMO…unless you own or work at one.

Why is that?..

Saving money. Unless you’re on track to have a million dollars in some kind of retirement and no debt, people sure should be controlling their spending and eating out is a huge number of amount for a lot of people

So you think it’s good that most people are poor?..

I would think it would be an indicator of a better world of more people were eating at them than not if its an indication of prosperity.

I know endless people who make a lot of money but have nothing for retirement. And they live HIGH. Expensive and lots of eating and drinking in bars and restaurants.