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SF restaurants are suffocating (medium.com)
210 points by tarr11 33 days ago | hide | past | web | favorite | 416 comments

> the average monthly rent for a one-bedroom apartment at an insane $3,447, according to a 2018 rent report by Adobo. The U.S. Census revealed in March, the median rent in San Francisco in 2016 was roughly over $1,600/month. These numbers are worrisome in a few ways: 1. The egregious rent amount that is required for somebody to live in the city today. 2. The jump in median rent in a mere two years. 3. The $1,600 median rent from 2016 also included rent-controlled apartments which indicates their rapid disappearance.

She's comparing apples and oranges, and doesn't even realize it.

$3,447 is the asking price for apartments now on the market. $1,600 is the median rent price people are actually paying, including people with rent control and affordable housing. People who have been living in rent-controlled apartments for many years pay a fraction of the current market rate.

As a result, her second and third conclusions don't follow. If this is the kind of critical reasoning that comes with "an MBA from a top school, the rigor of an engineering education and a decade and a half launching and managing some of the most successful businesses for Google and other tech companies," it's worrying.

In fact, it's easy to find actual market rate rent prices from 2016. According to the sites below, it was around $3,500, so rental prices have remained very flat over the last few years.

[1] https://www.zumper.com/blog/2016/05/zumper-national-rent-rep... [2] https://www.rentjungle.com/average-rent-in-san-francisco-ren...

>$3,447 is the asking price for apartments now on the market. $1,600 is the median rent price people are actually paying, including people with rent control and affordable housing. People who have been living in rent-controlled apartments for many years pay a fraction of the current market rate.

Which is why this problem is a slow burn. It's not like everyone was evicted and the worker pool cratered overnight. But as existing low/middle income workers leave for whatever reason, they cannot be replaced. Their numbers are on a one-way ratchet downward.

Being able to code and get degrees is quite different from actually thinking critically rigorously.

I think the median rent also includes people sharing a 2/3/4 bedroom home. There aren't that many 1 bedroom apartments to go around in SF, as I understand it.

This article was a bit scattered over the various sources of issues (high living costs, low labor pool (leading to high salaries and high turnover), reduced high-skilled chefs, high taxation, complaints about customer base with some nativism thrown in); figured I'd try simplifying it.

On the labor side, there's enough labor competition to drive salaries of line cooks to $50k/year. That's about $38k post-tax, which even after spending spending $19k/year in rent (split a two bedroom maybe 40 min from downtown) leaves $19k. Not great, but mind you the average line cook in the US is pulling $30k/year pre-tax (24k post-tax) -- the COL difference is pretty much compensated for.

Where things break down badly is with older, more experienced workers that have/might have families (e.g. the cook with 4 kids in the intro paragraph). Space comes at a premium in the Bay Area and if they prefer to not be crammed in to a small place, the salary an experienced worker can make isn't going to cut it to cover the desired marginal living space.

The final piece in the puzzle is that the desired salary multiple of these experienced workers (over entry-level ones) is higher than their productivity gains. That is, if the experienced cook needs twice as much take-home ($110k pre-tax) as the entry-level one (due to family needs), unfortunately, there is insufficient customer demand to pay 2.2x as much for food for this higher quality. (but mind you much more base demand in SF than elsewhere!). Result is that experienced folks move to areas where housing costs (per-sq feet) are lower as a percent of salary.

Net effect might be that the dominant strategy for someone in the restaurant business is to start out in SF but later move to a somewhat lower COL area. With such a strong economic incentive, restaurant composition will likewise follow; city policies, etc. are likely secondary.

One of the challenges, I think, is that landlords don't want to rent to you if your salary isn't three times annual rent. I'm not a real estate professional, but I've been told that multiple times when looking for my own apartments.

In your example, you have the worker coming out okay or possibly slightly ahead (compared to lower COL areas) by spending half their net on rent. But by this 3x rule the landlords renting a property that costs $19k/yr would want to see an income of at least $57k and the worker wouldn't qualify.

> Result is that experienced folks move to areas where housing costs (per-sq feet) are lower as a percent of salary.

If working class adults with families aren't able to afford to raise a family in San Francisco and therefore move to lower COL areas, what's the future of San Francisco?

Where will future inexperienced workers come from if not from today's working class families?

>The final piece in the puzzle is that the desired salary multiple of these experienced workers (over entry-level ones) is higher than their productivity gains. That is, if the experienced cook needs twice as much take-home ($110k pre-tax) as the entry-level one (due to family needs), unfortunately, there is insufficient customer demand to pay 2.2x as much for food for this higher quality. (but mind you much more base demand in SF than elsewhere!). Result is that experienced folks move to areas where housing costs (per-sq feet) are lower as a percent of salary.

Or, in even shorter terms, high land rents divert value away from skilled workers and towards largely parasitical speculators.

Not mentioned here is that Tawla had a slightly rough start [1] (that they purportedly righted):

> My reactions were mixed on my first visit, but by the third, I was a major supporter. Flavors blossomed, and I could sense the kitchen becoming more confident.

I went early on, found the food to be reasonable but not great, and ultimately didn’t return. Roughly, she shot for Mourad-level prices, but without the track record or execution. I grew up with this food, and while (again) it was okay, it simply wasn’t great. For $16, that should be an amazing dish of mujadara.

I assume many people felt that they’d rather get tastier middle eastern food, rather than feel hip with the pretty decor. I’d love to see an upscale middle eastern restaurant succeed, but the food has to come first.

[1] https://www.sfchronicle.com/restaurants/diningout/article/Ta...

This is a serial problem with Middle Eastern restaurants. For lovers of the cuisine, there's always cheap and delicious alternatives, so we feel a little betrayed paying 2 or 3x for the same dish and finding it isn't as tasty the hole-in-the-wall joint with plastic tables. This isn't a knock on Tawla specifically, but as you said, the food has to come first. I am willing to pay, but when I leave I don't want to be thinking of a $15 meal I had that was better.

According to the laws of economics and supply and demand, restaurant prices should be rising accordingly, if customers are still demanding restaurant food. In other words, if the tech industry has produced so much wealth that has driven up rent prices, it should be driving up everything else too, right? People need to go out to eat somewhere, right? (And my experience says this is true -- I live in NYC and I get sticker shock at SF restaurant prices.)

Presumably other restaurants are thriving? Are we sure this particular one just didn't have the right business model, like most attempted restaurants don't? The restaurant industry is notoriously competitive, and the customer is always right -- you've got to give them the food they want (not the food you think they should want) at the location they want at a price that's competitive.

As long as plenty of other restaurants are managing to pay their staff enough so that they'll commute... and it doesn't seem like restaurants are disappearing from SF... then isn't this just the case of a bad business plan, or product-market-mistmatch, for this one particular restaurant?

> Presumably other restaurants are thriving?

Maybe some are, but a lot are not. From my experience the vast majority in SF only last a few years. I talked with a friend who lived in SF for 30 years and he said it's pretty normal to see restaurants regularly go out of business. Supposedly because renting the space is so insanely expensive. But there's always another sucker who thinks they can win this game.

Isn’t that true everywhere? A quick google turns up that 90% of restaurants fail in their first year and the average lifespan for the rest is only five years.

I think it’s because it has relatively low barriers to entry, is something a lot of people want to do, and it seems easy.

> Maybe some are, but a lot are not. From my experience the vast majority in SF only last a few years.

This is how the restaurant industry works everywhere. It's how most small businesses work.

> ...and it doesn't seem like restaurants are disappearing from SF...

Once they do start to disappear en masse the city will be a less desirable place to live in, rents will drop and restaurants will be able to move back in -- AKA the flip side of the law of supply and demand.

Right now there's a major imbalance with all the Silicon Valley folks wanting to live in the city causing the pricing structure to get all out of wack but eventually it will stabilize as these things tend to do. Just sucks if you're the one trying to keep a service oriented business running in the current market.

There are somewhat hard limits on the availability of labor though. I know a guy who owns a very popular and expensive restaurant that had to start closing one day a week because he couldn't find enough staff, and not because he pays them peanuts.

There are hard limits on the supply of skilled labor. Less on the supply of semi-skilled labor. The situation implies that some people will substitute less-skilled cooks for skilled ones. Hence the overall quality of SF restaurants will decline but restaurants will continue to exist - those dining out will simply choose the best of a less-good collection.

> not because he pays them peanuts

Not paying peanuts still doesn't mean it's enough.

But if customers pay in peanuts and you have to offer staff cashew or macadamias to attract enough skilled employees, you might find you have a non-viable business.

This is my general response whenever these types of articles appear. If your labor costs are insanely high, you need to raise prices. If people won't pay more for your products, you need to create better products worth more money, give staff equity and reduce profit, or shut down.

These types of articles are based on the assumption that we would like to continue having restaurants & the fact that they are (slowly) becoming economically nonviable is a social problem.

If rising prices reduced the demand so much that they become economically nonviable, then it means that we actually don't like having restaurants all that much, otherwise we'd pay.

Voting with your wallet is only one way of expressing a preference. San Francisco in particular also likes to vote with its votes. We may not care enough about restaurants to pay what they really cost, but by all accounts we’ll care enough to vote for a ballot measure that makes “big developers” and “the techies” pay for them.

Indeed, residents of Bay Area definitely like trying to vote away the microeconomics of supply and demand.

Then charge customers more. If they won't pay more, your product might not be worth it and your business was never viable.

Anyhow, my opinion as someone in the restaurant business, the blogger's business had plenty of flaws.

> If they won't pay more, your product might not be worth it and your business was never viable.

That's what I wrote.

There is a market-clearing price where supply of labor equals demand for labor.

If your friend can't find enough people then the wage he's paying is less than the market-clearing price.

Doesn't matter if you or I think their pay is peanuts or not.

Even if that's true, it doesn't mean he or others can afford to pay it.

When the market price of jet fuel increases, airlines don't cry that they can't find jet fuel, they pay the higher price and then they raise fares.

When the market price of coffee increases, coffee shops don't cry that they can't find coffee, they pay the higher price and then they raise prices.

But when the market price of labor increases, employers don't raise their wages, and then they say they can't find workers and can't afford to pay more.

Why is labor pricing treated differently from any other economic input?

Has he tried raising the prices of his products? Based on the average rents cited in the article, and what the average tech salary is there, his customers may well be able to afford it.

With alcohol it's not that much cheaper than somewhere like Boulevard or Gary Danko, so unless he were to rack up some Michelin stars, I think the answer is probably no.

In a way I guess he is helping fix the problem by closing one day a week. If the supply of open restaurants go down and the demand stays the same, everyone will be able to raise prices.

Dining out is substitutable. At some price level, people will simply eat at home. Already there is a transition to counter-service and take-out restaurants, which save on labor and rent, respectively.

I hadn't connected this before: all brick-and-mortar retail is descending the value chain. From JcPenney to Kohls to Wal-mart. From Applebees to Chipotle.

In Danville, we see restaurants closing all over the place. Their prices tend to be about 35$ per person with tax and tip for an average meal at a nice restaurant.

Prices are high enough now, where we almost never eat out anymore. Even at the movie theater, I skip the 8$ popcorn and bring some snacks in a bag.

> People need to go out to eat somewhere, right?

Not really. I haven't eaten from a restaurant or a takeout in four years, maybe a few times in the last decade. When on the road I sometimes eat ready made food from a supermarket, but mostly bring something home prepared. Restaurants are a convenience, a luxury even.

It isn't an austerity measure for me though. I enjoy the process and get most meals prepared by someone who really cares about what I want and is the world's leading expert on that subject.

You haven’t eaten from a restaurant in 4 years? You haven’t gone out to dinner or for a drink with anyone in 4 years ? Hmmm

That's right. Do you think something is wrong with me?

Not wrong, but several standard deviations outside of the norm.

    If a country is governed wisely,
    its inhabitants will be content.
    They enjoy the labor of their hands
    and don't waste time inventing
    labor-saving machines.
    Since they dearly love their homes,
    they aren't interested in travel.
    There may be a few wagons and boats,
    but these don't go anywhere.
    There may be an arsenal of weapons,
    but nobody ever uses them.
    People enjoy their food,
    take pleasure in being with their families,
    spend weekends working in their gardens,
    delight in the doings of the neighborhood.
    And even though the next country is so close
    that people can hear its roosters crowing and its dogs barking,
    they are content to die of old age
    without ever having gone to see it.
While you're probably not this extremely content (maybe one std dev outside the norm, not several -- do you ever have dinner parties with guests at your place or a friend's place?), not everyone can live in such a manner, or even consider it. It's what I thought of when reading your comment, though.

You're very strange. What line of work are you in?

>world's leading expert on that subject

I'm seriously not trying to poke fun but do you mean your mother?

Pretty sure they're talking about themselves.

I may be the world's leading expert on what I want, but when it comes to food, I'm not actually the world's leading expert at making it...

oh duh

It's his wife.

She argues they're managing by focusing on "me too" concepts like ramen, pizza or pasta shop that don't need staff of the same calibre.

OK, but that still doesn't explain why "me too" food should outcompete ethnic/specialty/niche food when workers at both kinds of establishment (not to mention the establishments themselves) are paying the exact same rent. Perhaps when eating at a restaurant gets so expensive, people opt to trade off food quality rather than e.g. doing less of it in the first place, or whatever else.

I can tell you why the whole Service Charge Inclusive irritates customers. Its false advertising. You are increasing the cost of the meal but not reflecting it on the menu. People find it dishonest like every other time in our lives where we are told a price, but then we get hit with a fee. Ask bank customers about it.

Just be honest, the meal needs to cost more because the cost of production is more.

Mensho Tokyo is a ramen place I frequent regularly in SF and that has abolished tips. Every time I go, it's a pleasant surprise and I leave feeling happy about it. I can't recall right now if the prices on the menu are inclusive of the automatic service charge or not… but that's kind of the point. All I'm left with is a positive impression that this place is better than the norm. What I remember is at the end of the meal, I am told by staff that a tip isn't necessary, that it's already included in the service. Compare this to the way many people handle this: they include a mandatory service charge, or worse, a "healthy SF tax," all the while still happily soliciting further tips. It feels like a money-grab.

At the end of the day, it's all about execution, and unless you're able to fully commit to abolishing tips, don't bother trying.

The "healthy SF" 4% mandate is especially egregious. It's simply a common way for restaurants to falsely advertise prices. When I see it, I'm left with a strongly negative impression, and I tip significantly less as a result.

I've personally stopped giving tips in every restaurants not including them.

This is ridiculous and incredibly unfair to the service workers. You're not sticking it to restaurant owners by refusing to tip, you're just being an asshole.

How? It is optional and plenty of other people are not tipping. I think you're being an idiot for throwing your money away if you tip because you feel forced to. If you tip because you appreciated the service then it's different.

> It is optional and plenty of other people are not tipping

No it's not and no there aren't! I can't believe you think this is normal. Not tipping unless you particularly appreciate the service is like... dumping your fast food trash out the car window when you're done with it. You can probably do it every week for years and get away with it but it's awful behavior.

Yes tipping is optional. If we can't agree on a fact we won't go really far.

There is a list of restaurant without tips. Zazie is one of them.

I’m all in favor of abolishing tipping culture from the US but that’s not something you can expect a single restaurant to accomplish on their own. Given the reality of US culture I think this is a good compromise for now. It’s much more honest then pretending that the restaurant isn’t expecting a 20% tip on every order.

I'd like to get rid of tipping too, and I'm inclined to agree with you that service charge included (suitably noticed) is not a terrible intermediate to get there.

However, that said, restaurateurs need to realize that it changes the business model. Their waiters are no longer de facto independent contractors that have aligned incentives. Instead they are regular wage earning employees that need more management attention. It's fairly easy to see the impact if you go to a restaurant with a service included threshold (e.g. party of six) and try it both ways.

If you expect a mandatory fee and its not on the item's price, then its dishonest. Sales tax in the US is bad enough, but at least we all know about it and its the government. If they want to break out the "labor" cost on the menu like auto folks do, then fine, but this fee crap is just plain irritating.

It's dishonest, but in my eyes it's less dishonest than how tipping works as a socially-mandatory fee. So I welcome it as a path to improvement.

Maybe some day we'll get it and sales tax to be part of the list price. But that will probably take legal force.

I will note that a service charge on the menu is actually pretty common in a lot of places in Europe. Not saying it’s good or bad but it’s not something a few places in the US have dreamed up.

Most engineers in the bay area don't tip anymore.

I'm sure this has done wonders for the degree of warm feelings the SF service-sector has had in the past for techies...I'd just tell everyone I worked as a landscaper.

Why would you care? Waiters don't expect tipping as much as in the rest of the country.

Hopefully, that'd be because the majority of restaurants are including a service charge with every meal, and not because the waiters have become inured to their techie clientele being chiselling niggardly prats. In circles I move in, being a bad tipper is right up there with shoplifting, dog-kicking or vandalism as a moral failing, and how one treats service employees a touchstone of one's character.

You should change friends. People shouldn't decide what you do with your money.

Well, you can rage against it. You'll be joined by all the people who never want tipping to end because they're intoxicated by the feeling of power they hold over waitstaff as they decide how much to tip.

Oh give me a break. If you need to charge the money, then you need to be like every other business and charge the money. In fact, they are charging the money, they are just throwing it on at the end as a fee. Businesses who do that are dishonest.

I know a large group of people who have stopped tipping in SF. I'm the same. 0$ tip if it's not included.

On principle I agree with you. I'd be perfectly happy walking into a restaurant that raised prices by 20% across the board and put a note on the menu saying "tipping not expected - our prices account for service."

The problem is that every actor - from the diner to the server - is so used to the tipping system. Diners won't factor in the fact that they don't have to tip, because they will probably still want to tip (as mentioned in the article, a lot of people like the feeling of control tipping gives them). Servers won't like it because unlike a service charge or tip, that 20% baked in isn't only for them and they will feel like the owner is shorting them compared to tips (even if they aren't).

Path dependence is hard. I don't know how to fix this situation.

The tone of the article was really off-putting. I get that it is a hard business, especially in SF, but it felt like she was blaming everyone (including her staff) for her restaurant's failure and taking zero responsibility herself.

I used to live on the same block as her restaurant (Tawla) and only went once (despite eating out pretty frequently). The concept - upscale Mediterranean - just didn't resonate. There's a similar restaurant across the street serving upscale Burmese that seems to be doing really well.

That said, a friend who runs one of my favorite places in SF posted this article to Facebook and said it's really spot on. Diners expect food to be cheaper than the labor market permits.

This is part of the reason that “service included” places don’t pass it through to the menu prices. It’s a mistake to be the only ones doing it (the Bauer review I linked to above just quotes the prices directly, “nobody” mentally compares by adding/removing the 20%).

Since you lived nearby, I always felt that the location was unlikely to succeed. Is there actually a lot of foot traffic there?

Orenshi Ramen, Burma Love, and Shizen all opened in the past few years and seem to be doing really well. On the other hand there’s a spot between 14th & 15th on Valencia that went through 3 restaurants in 3 years.

The places that are succeeding are all second or third efforts - maybe experience really pays off?

Agreed, blaming the customer (damn transplants displacing the natives that understand fine food!) was the low-light of the article.

Plenty of restaurants are doing fine; she simply didn't produce what people wanted.

we once wanted to eat there when the place was new. the staff was so unfriendly (we were there 5 minutes prior to opening) that we decided that we'd never eat there. if they were as snobby with other people I'm not surprised they went out of business. we eat out a lot/ have friends who eat out a lot and I never heard anyone rave about that place. if I were a cook I'd try to work at the place that everybody wants to eat at OR the place that pays the best. if you're neither it's just bad luck.

Based on how everyone in here is remarking on how off-putting and patronizing the tone of the article is, I wasn’t surprised to hear what you said.

I didn't read the article yet but what are some responsibilities an average failed restaurant owner should take? Improper location/menu? Bad hiring? Poor ability keeping staff morale up?

> I didn't read the article yet but what are some responsibilities an average failed restaurant owner should take?

Think of a restaurant owner more like the founder of a start-up. They're literally responsible for everything. Or should be, if they have any sense. Outsourcing every single aspect of a start-up isn't a great idea, is it?

Ideally, a restaurant owner creates the concept, menu, picks the location, hires staff, trains staff, sets service standards, cooks or interacts with guests, orders product, sets prices, etc... You can't just hire people and expect success. If you're a first time owner and not in the restaurant at least 70 hours per week, you're probably going to fail.

I've known several people who have started their own restaurant - let me confirm that the hours required are more than any other job or startup I've ever seen. I am 100%, never, ever, going to start a restaurant.

Is that worth it in terms of life/work balance?

It can be. Successful restaurants are very profitable (it's possible to do revenue that's 5x your startup cost in the first year, with a 10-20 percent margin, thus paying off your startup costs in 1-2 years). And if you want time off, just close the restaurant for a few weeks in the winter/summer.

Also, restaurateurs can eventually put in a few less hours. The main point is that it pays off to be there for the startup phase, especially if you actually bring skills and talent to your business.

The biggest problem I've seen in restaurants is owners who aren't restaurant people or don't have the right personality and temperament for it.

Probably depends how much of your life you expect to spend at a restaurant. If it's less than all of it I don't think you can expect much of a work/life balance.

I don't disagree with the problems outlined. But, for this particular case, start and end with the fact that the restaurant has 3.5 stars on Yelp and people were consistently dissatisfied with the food and service?

SF has incredible 4-5 star restaurants of all price levels. So who wants to eat at a very expensive 3.5 star one when there's a Michelin Star place 5 minutes away?

If SF's problems are so insurmountable, how do other good restaurants do it, even ones not owned by some major group?

This argument is silly. If restaurants are harder to run, the average quality of the place goes down. The existence of high quality restaurants does not refute the possibility of the average going down.

Maybe, but if staff is in short supply, it makes sense that they will prefer to work for restaurants that can afford their wages.

I'm reminded of this part of David Chang's take on "the next global food mecca" being Houston, a city in many ways the complete opposite of SF:

I've always wondered where the food in a Blade Runner-like future would appear first and what it would taste like—and I genuinely believe it's here.

Partly that's due to a demographic reality: By some measures, Houston is the U.S.A.'s most ethnically diverse city (a bunch of New Yorkers just choked on their halal kebabs reading that, but it's true), and when you get a collision of immigrants, the food scene is guaranteed to be bonkers.

Houston also has cheap commercial and residential rents—oh, and no state income tax—which means broke-ass cooks and chefs can afford to live and open here. Zoning laws are more permissive than an Amsterdam brothel. And customers have cash to spend.

Source: https://www.gq.com/story/david-chang-houston-food-city

Added disclaimer- I grew up in SF and left in 2005. I live in Houston now.

Every Christmas, I go home to Houston for a week or so. Every time I budget 5 pounds weight gain. It is never enough.

Houston is a crossroads of different food cultures. It is the South, the West, and the bayou rolled up into one. At first it was Cajun, Creole, Soul, Mexican, and it has been like that for 50 years. But in the last 25 years, lots of more has mixed in like Vietnamese, Central and South American, and a significant New Orleans diaspora due to Katrina.

Plus, you have a car culture where it isn't uncommon to travel 20 miles in 25 minutes for a weekday dinner out. There's so much money sloshing around that lots of folks eat out every night. That plus a healthy supply of labor means it is a very good restaurant city.

This is the first time I’ve heard the entire state of Illinois being labeled a “rich locale”. I’m assuming the author meant Chicago suburbs? That or they’ve never traveled through rural Illinois (95% of the state).

Illinois is also home to some of the most violent and poor metropolitan areas in the country. East St. Louis which ranks in around 18x the national homicide rate and South Side Chicago which is consistently one of the most violent places in the country.

I've lived in SF for 25 years, and eat out often. While I never visited this particular restaurant, as others have noted, 3.5 stars on Yelp in SF's hyper-competitive market is telling. 3.5 is maybe enough to keep the cheap place you go to across the street when you're lazy in business. Less than 4 stars isn't going to get enough people to make a reservation, travel across town and shell out $$$. We have over 4500 restaurants listed in Yelp, and roughly 7% turnover of openings/closings per year. It's physically impossible for anyone to eat at all, let alone a fraction, of the places here. Foodie places which are successful may be a big hit when they first open, but if they don't keep up the quality, they will die quickly as that crowd moves onto the next shiny thing. It takes a lot to stay in business here.

The way that some restaurants blame their success and failure on the high cost of labor makes about as much sense as when people review restaurants on Yelp and complain how surprised they were by the bill at the end of the night. It's a math problem. Other people are managing to balance their costs and revenue and stay in business.

Nah, closures are up and openings are down all across the city due to higher costs.[1] You may have lived here 25 years but that’s no substitute for hard data.

[1] https://www.sfchronicle.com/food/article/2017-wasn-t-the-gre...

That’s where I got the data. That article mentions higher costs, but the Harvard study they referenced links review stars to closures. Clearly costs are one of the main pressures on restaurants, but there are plenty of things that restaurants can do to improve diners’ experiences which don’t necessarily cost more.

Hypothetically, restaurant A and B are the same except A is better organized and your food gets to the customers table faster and at the right temperature. Or restaurant B’s staff doesn’t notice when your wine glass is almost empty and doesn’t sell that second or third glass. Little things can make a huge difference in revenue and ratings, and yet you can see restaurants making stupid mistakes all the time.

>> Foodie places which are successful may be a big hit when they first open, but if they don't keep up the quality, they will die quickly as that crowd moves onto the next shiny thing.

Q: Is keeping up the quality going to be enough, though, when it appears crowds seem to demand "the next shiny thing" above other factors (including, perhaps, quality)?

Oh the irony that the author is a former Google executive, who I assumed started the restaurant after cashing out big time.

She doesn't realize that she has a role in this as well? How much did she pay for her house/rent? Did she outbid someone in cash?

Yes, I realize the supply side is a major issue to. SF should build more.

It's just the finger pointing (those evil landlords with their Ellis evictions!) made me chuckle a bit.

Why the service charge? Why not simply raise your prices to that same level, while still letting people tip if they want to?

More specifically, why does the cook only make $24 per hour while the waiting staff gets $42-48?

I understand that San Francisco is an expensive city, but doesn't that simply mean you should raise your prices? Of course that will mean poor people won't be able to eat at your restaurant, but it sounds like poor people have trouble affording anything at all in San Francisco anyway. Clearly the only viable market to focus on is the rich people who can afford to live there.

I don't mean to be callous about this: it's terrible when a city is so expensive that only rich people can afford to live there, and kicking poor tenants our of rent-controlled housing should be illegal. But if your employees are leaving because you don't pay them enough, the solution seems obvious: pay them more. Raise your prices correspondingly. If the market can't bear those prices in such an expensive city, then clearly there's not enough demand for restaurants in San Francisco, which would be sad, but it may be the reality.

Meanwhile, the city would do well to invest in some affordable housing if they don't want to turn into a rich people's ghetto.

Raising prices does seem to be the right answer.

Many expensive restaurants in SF are packed and it is quite difficult to get a reservation. There is clearly market demand in that segment.. if the food is good enough.

The low or mid-range segment demand is likely shrinking. Why go out to get mediocre food when it is increasingly easy to have food, groceries, or meal-packs delivered to your door?

Yeah, I read in other comments that it's not actually that good a restaurant. If it's expensive and mediocre, I guess they may have to look for an easier market.

> More specifically, why does the cook only make $24 per hour while the waiting staff gets $42-48?

That was my takeaway from the article as well. Does anyone know if this par for the restaurant industry? Does FOH make more than the line cooks?

Yes it is definitely par, for a multitude of reasons.

What are the reasons, if you could elaborate?

> In nearby San Francisco, only 0.1% of restaurant staff can find affordable housing in the city, with the average monthly rent for a one-bedroom apartment at an insane $3,447.

Lack of affordable housing is doing the suffocation. America was built by a strong middle class, and SF is setting an example of what happens when people stop caring about the middle class and $70K/year becomes low income.

Just because the median apartment is not affordable doesn't mean there isn't affordable housing. Half of all people have apartments that are cheaper than the median.

The stat doesn't mean that on its own, sure. But if you've searched for downmarket housing recently... it's pretty bleak.

It's amazing that front of house staff are making $80-90k. That's starting salary for engineers in many parts of the country. Absolutely boggling.

That’s senior engineer salary in most of Western Europe, and the vast majority of the rest of the world has significantly lower salaries than Western Europe.

Senior people definitely make less than this in europe. Unless you're taking about large corp in london.

Pretty sure in big tech hubs like London, Amsterdam, Dublin, senior engineers make at least this much. Probably more. I can only offer my experience from London, not sure about other places but for sure there you can make over 100k as senior engineer.

Oh. But then we're not talking about equivalent levels of senior. Senior in the US can be reached in 2 years.

$80k is just under €70k, which is very possible for senior engineers in Berlin.

Idk I'm in NL and senior managers make this easily.

But in most Western Europe, you've got health coverage, unemployment and also retirement is included. Plus cheap and good public transit so you don't have to pay for a ca

> retirement is included

I’m not holding my breath for my European government retirement benefit to actually be useful in thirty years, to be honest.

Those SF-based servers are getting every one of benefits.

Engineers outside of American tech centers are generally highly underpaid.

Tawla is not a cheap restaurant. Dinner was $40/person + tax & tip, wine and dessert were extra. The food was good, don't get me wrong, but it's a fancy place.

It's the same in places like NYC, Vegas, and some restaurants in Washington, DC. The patrons spend big on expensive wine and entrees, especially when the space is reserved for private events. It's also incredibly stressful, somewhat seasonal, and means working late hours in an industry that plays very hard.

In DC, at least, front of house tips out to the kitchen. Apparently that's forbidden by the law in San Francisco.

just out of curiosity, which restaurants in Washington DC?

It's more than I made when I moved to the bay area. I remember meeting wait staff that earned more than me with more flexible schedules.

That said it's easy to look over the skills of some of these folks. Being able to be gracious and provide a good customer experience for 8+hrs/day in a hectic environment requires skills that take effort to learn and maintain.

They're making the equivalent of $80k – not necessarily $80k.

"With the service charge, our servers were making $38 per hour (hourly base + hourly service charge) or the equivalent of $70,000 to $80,000 a year if you were working for us full-time."

It's like citing contractor hourly as if it were employee hourly. The wages are feast-or-famine, but we're only counting feast!

I'm a freelance fullstack dev (laravel + vue), probably intermediate-senior level. That's more than I've ever made. I live in utah and Rent is $1000 for a 4-5 bed house, and I under-price my services cause I suck at marketing. ($40-60/hour, when most freelancers get $100+).

Underpricing your work sends a strong signal about quality, or the lack thereof. I opened with charging well above my peers (we're talking 150%+ of their rates) when I started practicing law, and not a single client balked.

In comparison with my more experienced co-workers that were offering cut-rate deals, I garnered more respect and support, had higher client satisfaction, and almost every client I had decided to stay in my book of business during transitions.

Charge a lot. Be good enough to deserve it. Use that impostor syndrome to up your game.

Hey thanks for the advice. I'm trying to be 'good enough', pivoting a little to focus more on JavaScript back and front ends, always learning and what not. I think if I take a chance and land a few North of $80/hr clients I'll get the confidence. I'm just not sure where those type of clients exist...

Part of my issues also were ADHD made it really hard to stay on task and focus but now I'm on meds for that and I'm super focused when I'm in my office, I'm also really neat and orderly around the house lol.

I live in SF and am charging $15/hr for Clojure exclusively. No bites yet. My budget is $1,500/mo total, $600 being food. Awe yea. I charge what the market will bear, starting at minimum wage. China is about $45 fyi, last I paid—good talking point.

If you're trying to do only clojure and nobody is biting, you might want to pivot to a less obscure framework/platform...

I picked vue because I prefer it's templates to jsx, and I like vuex and it's sort of well documented for use with laravel. But if I hadn't picked vue, I'd have gone with react because of market domination.

I'm currently even thinking of pivoting from laravel to node based backends because it seems js devs make all the $$... and I'm not so locked into laravel that I can't move or jump to other frameworks.

The more you know the more you can charge...I have many friends who target a specific vertical like Fintech that charge between $100-200/hour for js/node development as freelancers. Working on teams I've made around $35/hr, solo depending on the client I've pitched 40-60... I work w/ a lot of small businesses who that's on the high end for them --they're used to wordpress devs at $25 or less per hour on upwork.

Clojure being a bit obscure though, I think freelance would be harder to secure, but a full-time gig at a shop/agency or startup who's apps are built on that framework would be easier, as long as you have a good portfolio and very active github showing activity w/ that.

If someone approached me as a clojure dev charging $15/hr I'd think they were a scammer.

Don't orient your career around a particular programming language. Focusing on languages makes you a replacable commodity.

What industries do you understand? How can you add business value?

Do you mean 150/hr?

> My budget is $1,500/mo total, $600 being food.

How do you pay for housing in SF with $900/mo or less?

How much of that is overtime? The article mentions being aggressive at picking up shifts.

If it's a standard 40 hour work week then I agree - it's much higher than I thought.

In a service industry driven by on demand scheduling, a "standard 40 hour work week" is quaint nostalgia. Regardless of hourly compensation, total wages for semi-skilled proles are forever in the sweet spot of not-quite-enough-to-get-by.

I understand people aren’t doing regular 9-5s, but my point was if they are making $90k working 40 hours, that’s really good. If they’re making $90 working 65 hr per week, that’s not so impressive.

Maybe that engineering education and / or early experience is worth something.

Ask how much of it left in the end of the month after expenses...

Why? It's a skilled profession and there's demand for it. Given how many 'engineers' are working on yet another Facebook/WhatsApp/Twitter/whatever clone that people really don't care about, why shouldn't professionals who provide a service that people enjoy make the same money as people building a shitty app?

Basically barrier to entry. It takes a lot less time to turn a friendly adult into a good enough waiter than it takes to turn a nerdy adult into a good enough developer.

We all know wages aren't dependant on education, otherwise teachers and scientists would be rich. But they're not. Also, most of the waiters I know have at least one university degree. Many have multiple, or a graduate degree.

Not to mention, good waiters know about food, wine, spirits and have the soft skills required to put up with people who frequent restaurants.

Anyhow, barrier to entry is a bad excuse. Education does not equal a good living.

I deliberately avoided using the word good because otherwise we go down a rabbit hole talking about what makes a good engineer versus a good waiter.

> Education does not equal a good living

No but it is heavily correlated with one.

There are plenty of restaurants that will hire an 18 year old with no experience and literally no qualifications to be a waiter. Lots of places when they are looking for experienced staff just hire anyone who had any waiting experience. They aren't nearly as picky as development managers.

I don't know of any software companies that will just hire an 18 year old to write their code without any training or experience. Without a 4 year degree I've seen it take people usually a year or longer of spending all of their free time coding to get their first coding job.

But if you think it's as easy to get your first waiting job as software engineering job(which is very different from my friends experience who has done both), what do you think is the cause of the wage discrepancy?

> There are plenty of restaurants that will hire an 18 year old with no experience and literally no qualifications to be a waiter.

And they'll likely be working in a chain restaurant barely making more than minimum wage, not breaking $20K per year.

> Lots of places when they are looking for experienced staff just hire anyone who had any waiting experience.

And again, waiters in such a situation will likely not be making much money.

To actually make $60K or more as a waiter, you need to have selling ability, wine knowledge and the skills to get into a better restaurant. You likely won't see anywhere close to this until you have 5 or more years of good experience (not unlike getting a traditional education).

If you're working at Chili's (or equivalent), lets say the average person spends $30. You serve 30 people in a night, that's $900 in sales (18% is $160). Now let's say you work in a high end steakhouse, steaks can run $50 each, appetizers $25 each, and then there's wine. Bottles can run anywhere from $50 to thousands. But let's say you sell a $120 bottle, which is a pretty common price-point in those types of restaurants. For a table of 2, 2 appetizers, 2 steaks and that bottle of wine adds up to $135/per person. Times 30 people per night, around $4K in sales, with tips being $780 (although, in reality, some of that goes to your support staff - bussers, host, sommelier).

Anyhow no, a coder won't get a great job right away. And a server won't get a lucrative job right away. You still need to build up to that point in the restaurant industry. You can't just do what cooks and waiters do at places like Eleven Madison Park, Benu, Saison, etc... without lots of training and experience.

So why shouldn't it be a possibility for a restaurant worker to make a 'professional' income?

But now your comparing an entry level developer to someone who works at Saison, or the top 1% of waiters against the average developer.

I'm not arguing that a restaurant worker shouldn't make a professional income, I'm arguing why they don't.

Do you think it's a conspiracy by restaurant owners to keep down wages?

“We thought hard about all the ways we could help from tapping our networks to find a more dignified temporary place for our cook to stay, to figuring out how to pay him more without having him lose access to different low-income programs for which he currently qualifies.”

Wow. Or you could actually pay them a living wage that doesn’t require public subsidy. If this were Walmart making this statement they would be crucified.

Many people are unaware of the huge impact of the welfare cliff, especially when it comes to families with children:


If you are a single parent with two children you get the same net income at $30,000 as at $80,0000 due to benefits getting cut off above $30,000/year income.

That doesn't match other numbers I've seen, and doesn't show any sources. Do you know more about it? (Edit: I'm familiar with the welfare cliff in general, just curious about this analysis of Chicago programs).

That’s ridicilous. The system has clearly been setup to fraud the majority who needs welfare and is a political virtue signaling. I bet the mean salary was right in the Middle of the ”cliff” (around 55k$) when this was decided to ensure very few would get the benifit and cost on government would be minimal.

The logical policy would perhaps be to equalize income to a certain treshold depending on available funds and budget on a particular year. This would also make investments in transits and housing more stable for everyone involved, simplyfing business decisions and quite possibly increase long term profitability.

> The system has clearly been setup to fraud the majority who needs welfare and is a political virtue signaling.

It has this effect, but I'd blame the need to simplify over malevolence.

SF's below market rate housing is a great example of a huge welfare cliff. Make under $60k? You can get a 1 bedroom for $1600/month. Don't? Join everyone else fighting at $3k/month or what not.

So yah, it's a bit ridiculous that we have a system where someone making $59k does better than $70k.

But it's really hard to administer everything as a phase-out system, especially with non-cash benefits. (currently the apartments are required to charge X rent.. so what should happen to the person making $70k/year?)

Hence, these blunt-edge qualifications.

>Make under $60k? You can get a 1 bedroom for $1600/month. Don't? Join everyone else fighting at $3k/month or what not.

Sounds like SF should experiment with marginal rent, based on how marginal tax rates work. Something like: landlords charge a base $x rent, if you make above $50K a bit more is added one, make above $60K a bit more is added, etc. That was the person making $1 over some arbitrary cutoff isn't much worse off.

> so what should happen to the person making $70k/year?

They should ask they employer to only pay them $59k?

So I foolishly read the original sources[1][2]. The image comes from a blog with an obvious libertarian/conservative agenda. For example, another article[3] on the site decries non-discrimination laws for businesses as if red-lining never happened or would have been resolved by market forces (against all historical evidence). This site does not make any explicit recommendations but seems to imply that welfare, as a whole, should be eliminated. Replacing a cliff with a gaping chasm where we can leave our poor to try to scramble their way out.

The original paper[2] is interesting for a few reasons. First, it identifies the problem on page 15 as steep drop offs in some welfare programs, instead of a more tapered reduction in benefits. Second, it's apparent that the linked image is the most extreme scenario - which applies to only a small segment of the population. Indeed, once you look at the 2-parent household example on page 30, the cliff is much less severe. In the end the paper recommends giving individual states more power to set benefits in a way that tapers off the benefit received and removes the welfare cliff.

What neither of these sources mention is the other, tried and true way to address the problem: making many of these benefits universal. The obvious example is healthcare, where those making 30k/year and 120k+/year get access to the same public system. But other public benefits like public childcare are not unheard of[4].

[1] https://www.learnliberty.org/blog/the-welfare-cliff-and-why-...

[2] https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2014...

[3] https://www.learnliberty.org/blog/the-sweet-cakes-case-let-t...

[4] https://eric.ed.gov/?id=ED367491

They have staff making $80-90,000 Which is certainly a living wage .. somewhere else. And that's the problem the Bay Area has.

And a solid living wage for a single person in SF.

It's a problem if you have children to support.

That is a cost of living vs income thing everywhere - although they are an extreme example from their dysfunction. If nobody has a job in the area housing will generally be cheap due to lack of ability for anyone to pay and lack of reason for people to want to live there. If there is plenty of employment in an area it drives up housing demand and prices. There are always alternatives but the price may not be very well liked.

I think the implication was that he was at a welfare cliff.

Even Walmart cannot afford to open and staff a store in SF.

Paying restaurant workers a 2-3x living wage is a fine idea except that it would raise the price of a pork chop to $45 and close the restaurant. Darn macroeconomics!

A bar closed in my neighborhood and and when I was chatting with them they too blamed the spending habits of the tech crowd. I think if anything, people spend more money on eating out and drinking than the average person. So I don't think it's that people are unwilling to spend it.

I'm not sure it is technology folks or millennials, but I find there are increasing amounts of people who want the "best of" everything...shoes, falafel you name it. People aren't okay with just a "good experience", they want the best experience. As a result, I think there are plenty of people who aren't very forgiving. Especially if you eat out regularly and have a lot of things to compare it to.

Oh yeah and the housing situation is broken.

It’s pretty natural for people to want the “best” whatever that means for them. And which is probably situational. I’m willing to believe that online information, however imperfect, makes it easier to surface the best value options.

I agree with you on the 'best' thing. Every time I'm in SF hanging out with SF friends I feel like 'let's get a drink' becomes 'let's find the best cocktail bar in the Bay Area'. And nobody will step into an establishment that has less than 4.7* on Google (or whatever their preferred rating platform is), let alone just walk into a random place that looks OK. Walk-in foot traffic is non-existent.

That’s an excellent filter for who I wouldn’t want to hang out with.

The state is paying the price for two decades of anti-tenant rule. So long as no one is working to repeal the Costa-Hawkins (and to a lesser degree, the Ellis Act), the noose will continue to tighten around Bay Area quality of life and raise the price of doing business in all of California.

A similar problem with sky rocketing housing cost occurred in the 70's True rent control was established in the communities that needed it and the threat of it in other communities stabilized prices. And California 1972-1995 is unambiguously a success story. In '95 Costa-Hawkins passed, and prices have been rising faster than the 1970-1995 period ever since. With an accompanying rise in homelessness.

Particularly interesting about Costa-Hawkins, it was soundly defeated when written as proposition measure and only passed the legislature by one vote and with strong backing from the real estate industry. But today it has somehow become politically impossible to repeal. Unless California has become a lot more conservative since 95, it is clear money in politics and political advertising are to blame.

Nah, the core problem is Prop 13 (and its extensions). There's no solution to allocating dramatically less housing than people demand, regardless of how pro- or anti-tenant the law is.

Rent control, which Costa-Hawkins limits, is a form of artificial price controls that remove a bunch of housing inventory and the incentives to create more. But it's a mere footnote in the margin of Prop 13, a state wide regime that has been in place twice as long and has the effect of removing a bunch of housing inventory and the incentives to create more.

Yes, the theory is that rent control causes reduction in inventory. But housing is not an ordinary good and the evidence shows that this theory is incorrect.

New York has had rent control for most of the 20th century with 2 million units still under rent control. Yet it has plenty of development.

And as I point out, housing prices rose slower and housing supply was greater before Costa-Hawkins than they are now.

Furthermore, renters favor rent control while landlords oppose it. So whatever the mechanisms, clearly it benefits renters at the expense of landlords, clearly by reducing housing costs.

And while it is definitely worth adding as much housing as possible, all new housing will price at the top of the market. And at this moment there are thousands of high end units with vacancy in SF and essentially no low priced. So clearly this does not relive pressure on middle or low end housing.

Repealing prop 13 would raise revenue, much of it from large land holders (of which Howard Jarvis was one) so that's nice. It would lower mortgage payments by the amount which property taxes rise thereby converting some mortgage interest into tax revenue. So that's nice. And it makes it easier for new buyers by driving those who can't afford the higher property tax out of their homes. The advantage of this is less clear.

The main problem is that it is difficult for people to believe that which is in their financial interest to disbelieve.

> Furthermore, renters favor rent control while landlords oppose it. So whatever the mechanisms, clearly it benefits renters at the expense of landlords, clearly by reducing housing costs.

this is a questionable line of reasoning. it's not uncommon for people to unknowingly support policies that don't actually benefit them.

the only group of people who rent control clearly benefits are people who already have leases. it's not at all obvious that it helps new renters or people who want to move to a different place at all. it seems plausible at least that people in the business of renting buildings (ie landlords) are the group with the most information about the market, and are therefore in the best position to see the distortion.

>it's not uncommon for people to unknowingly support policies that don't actually benefit them.

The presumption of democracy is that this is a minority of cases. To suppose it is the case here is to assume that the less likely is happening here. And assume so on an apparently evidence free theory about the effects of a single pricing policy.

>it seems plausible at least that people in the business of renting buildings (ie landlords) are the group with the most information about the market, and are therefore in the best position to see the distortion.

And so are not voting against their interest when they oppose rent control. Being as rent is rentier income, it is zero-sum, and so is to the disadvantage of tenants.

> Yes, the theory is that rent control causes reduction in inventory. But housing is not an ordinary good and the evidence shows that this theory is incorrect.

Could you point to the evidence that you think disproves this?

New York has had rent control for most of the 20th century with 2 million units still under rent control. Yet it has plenty of development.

Before Costa-Hawkins and the widespread repeal of rent control ordinances, there was less of a housing crisis than after its passage.

First, correlation is not causation. Second, NYC isn't necessarily a panacea.

Third, and most importantly, this is a misrepresentation of New York's situation gross enough to border on willful deception.

Per this [1], there are only 38K units in NYC that are rent controlled, and rent control only applies to buildings built pre-1947. An additional 987K units are rent stabilized due to either being built between 1947 and 1974 or been included in buildings otherwise filled with market rate units by developers nudged in that direction by tax incentives (8% of rent stabilized stock), which is probably mildly inefficient but doesn't stand in the way of development. The majority of units are market rate, and there's no rent control requirements standing in the way of building market rate units.

[1] http://furmancenter.org/files/publications/HVS_Rent_Stabiliz...

There is a frequently repeated but completely unsubstantiated claim that rent control reduces inventory and I produced a counter example; the biggest city in America in fact.

>First, correlation is not causation. Second, NYC isn't necessarily a panacea.

I do not claim rent control _causes_ growth, I claim it has no distinct effect. And I do not claim that NYC is a good or bad place. I do not care. Growth continued in-spite of rent control therefore rent control does not reverse growth.

Indeed from 1920 to 1929 all units were susceptible to compete control over their pricing yet the 1920s were a decade of maximum growth. So again, rent control did not kill housing growth.

If for some reason NYC is dismissed as an example, Berkeley too has experienced continuous housing growth. As has Santa Monica. Repeated cases where rent control did not revers growth. And if those are dismissed, California before Costa-Hawkins had a higher rate of housing growth than after. So again, control did not reverse growth.

It is endlessly repeated that rent control reduces inventory, so there should be many examples and no counter examples. Instead we find the opposite. Indeed, where is there any case where rent control drove positive growth negative?

>border on willful deception

Is there any evidence, even theoretical, or any circumstance, however hypothetical, future or past, that could possibly dissuade you of the proposition that "rent control reduces inventory"?

I think the claim is "rent control reduces inventory of units subject to rent control". That is, new units may be produced, but they are "luxury" units that are exempt from rent control. So the claim is that rent control reduces the supply of affordable units, not total units.

Can you supply counter-evidence to that claim?

I know of no disproof off hand. But I believe the normal process is to produce proof when making a statement rather than making a statement and assume it true until disproven.

One problem with assuming a claim true until dis-proven is that a perfectly reasonable but opposite conjectures can also be produced. For example: "units which are on the market at a profitable rate are not removed from the market solely because the rate of increase in profit is constrained; profitable business tend remain in business if the profit remains at lest the same"

Another example conjecture, for which there is evidence: "the market will only produce housing at the highest price range for a given area unless subsidized or required by law to do otherwise." So affordable housing will not be freely built whether rent controlled or not.

IMO, it'd be best to have some positive proof before firmly committing to any claim.

Thomas Sowell, in "Basic Economics", in chapter 3 had a lengthy discussion of rent control. It contained what certainly looked like evidence that rent control does not increase the supply of affordable housing.

California is one of the most pro-tenant states in the U.S.

I'm sorry to hear there are worse states.

I've only ever lived in Texas, I was a renter for 10 years, and then a landlord for 5. As a renter I never had any issues except for the occasional bullshit item on the deposit.

The article seems to be transparent at first glance with giving lots of numbers about salaries and so on. Why no numbers on profit and what the owners take home?

Also, there is no mention of trying to raise the prices of their products in order to pay their employees a living wage. I guess that could mean you go out of business if your competition offers a similar product but doesn't raise prices. But I would personally be ok with that. Otherwise what's the service you're really providing? Guilt free eating for your customers who you shield from what those prices are paying the welfare dependent cook? I'm ok with not being in that business.

It does not make sense that this person is attempting to run a reasonably priced restaurant and has FOH staff.

SF needs to adopt more Japanese style ordering machines. You choose and pay up front. When you are done you just leave. It's beautiful.

You're basically talking about fast food places though not "restaurants". Yes, Ramen is considered fast food in Japan even if some of it is amazing. Also curry rice and most other things that are served in places that use those machines.

Sure, a few places that have those machines have tables but it's still a different vibe from a restaurant.

The bigger issue with those particular machines is they aren't compatible with western or in particular USA culture. Japanese generally don't ask for exceptions. Westerners often ask for tons of exceptions and substitutions either for medical reasons, religion reasons, personal convictions, or preference.

I think in the tech capital, sitting around waiting for someone to seat you, come by and take your drink order, come by and take your food order, bring your food, and check on it (if lucky) is sort of... antiquated. It feels Victorian or something - good food is good food, regardless of who serves it. You’re paying to be pampered, but if the economics of being pampered don’t work then maybe it’s something people can give up?

Go sit down, order from kiosk at table (or from kiosk up front). Panera for instance pretty much does this now.

Sheetz and McDonald’s also have food ordering kiosks, although neither serve upscale mediterannean food.

We have a lot of this sort of thing in LA (yes, in Japanese restaurants). You order by iPad, pay, and then when you get a table after waiting 3-15 minutes, your food comes pretty quickly. When you're done, you leave.

It seems to work. We Americans can adapt!

I think we would be a bit better off if US restaurants felt more comfortable telling customers to take a hike. I'm entirely ok with restaurants that have no vegan/gluten free/whatever options and refuse substitutions.

No. These are restaurants i JApan. Not fast food places.

Many ramen restaurants will have 3 people working but maybe 15-20 seats. I've also seen sit down restaurants with 1 waiter doing 2 floors by a combination of self-service and automated ordering.

SF needs to adopt more Japanese style ordering machines, density, public transit...

I refuse to use automated ordering. If I'm at a restaurant I want to be served by a person.

Okay by me as long as you’re willing to pay more.


In Portland, not SF. Place I went to 2 months ago gave me a flag with a number on it. When my order was ready, they brought it out to me.

I went there last night. Looked like there was one guy working by himself. He poured my drink and gave me a buzzer. When my food was ready, I went back to pick it up.

It looked pretty clear that the owners figured the cost of the pager system was cheaper than having a second person working.

This is at an indoor soccer place, where he could have somebody from the front desk help cover when he needs to use the restroom, etc. Cooking is mostly putting stuff into a deep fryer.

At a different restaurant, the pager system still might mean going from cashier, cook, and runner to just cashier and cook.

> SF needs to adopt more Japanese style ordering machines. You choose and pay up front. When you are done you just leave. It's beautiful.

I feel like North American restaurants are only willing to implement these with awful touchscreen UX, like the McDonald's touchscreen displays.

That may be due to capex. McDonalds can invest in a ordering system while a mom-and-pop can't front capital for some sort of ticketing machine.

I don't know how the economics work out in Japan. I'm sure a large part is cultural and shared knowledge.

Maybe there's an opportunity for vendors of Japanese ticketing machines to jump into the San Francisco market??

You don’t even need an in house ordering machine; everyone has a smart phone so just make a mobile system or website. It’d be easier if there was an aggregator like UberEats but for dine-in.

Iirc this is done in China with Wechat

I've found the McD's self-order UX pretty good. What's bad about it (as someone that hasn't used any other restaurant's self-order).

It's the supermarket self-checkout UX horrible -> I'm automatically treated as a criminal because I can't checkout the next item before bagging the first. I have two hands darnit!

> I've found the McD's self-order UX pretty good. What's bad about it (as someone that hasn't used any other restaurant's self-order).

My annoyances are particularly as compared to Japanese-style ordering machines, which in my experience are simple, reliable, fast, and easy to use. My complaints, off the top of my head:

* Responsiveness to touch feels about a decade behind consumer capacitive touch displays.

* Gratuitous animations are slow.

* For a simple order where you know exactly what you want, there are far too many steps. (IIRC, for a black coffee, the button tapping flow goes something like this: English -> Hot Beverages -> Coffee -> Small -> Add to Cart -> Checkout -> Paying with card -> Paying with Bank card.) And you have to deal with the slow/bad touch response and animations for every one of these screens.

* There's no way to avoid the machine spitting out a BPA-covered thermal paper receipt. (Other than the receipt dispensation being out of order, which happens pretty frequently.)

> It's the supermarket self-checkout UX horrible

Oh, we have our own egregious example of that up in Canada, where the largest grocery chain in the country got rid of most of the text on self-checkouts in favour of just icons: https://www.blogto.com/tech/2018/05/loblaws-self-checkout-sy...

It seems to run at around 10 frames per second and take a thousand milliseconds to respond to input. It also takes way too many taps to add an item to an order, which makes the input delay especially painful.

Their menu and pricing scheme is really what makes it extra terrible. They have far too many needless bundles and inconsistent value with substitutions. Is getting a fry, a shake, and a burger or a burger meal and substituting a soda for a shake the same price as getting everything separately? Is it just the difference between a soda and a shake?

You shouldn't have to waste mental bandwidth on that needless bullshit - the only reasons are price point sleaze.

Isn't the check barcode -> put on the tray -> check new barcode again a way to stop double checking the same item, if someone is too clumsy?

When it tells me to “wait for assistance” if I put my four oranges on one by one instead of all at once, or if I lift an item off briefly before replacing it because I need to shift things in the bag, I tend to think they feel I am a criminal. But it does have the side effect of not being able to double scan something.

It does have that effect, but that's just an aspect of the default-criminality and UX fail: there's no UNDO.

McD kiosk UX is hands down awful. Dozens of button presses for a simple order.

Does anyone know how much cost would that reduce? You still need to bus tables, and now you need to manage a ticketing system + machinery, which inevitably breaks. Unless it's bar seating area, or you have a sushi-style conveyor belt, you'll still need staff to bring food to tables.

Personally, I prefer the ticketing/ordering machine. Katz's Deli in NYC famously uses a ticketing system.

And Alinea sells tickets like a ballgame. When you are at that level you can do whatever you want, but most restaurateurs don't have that flexibility.

This kind of complaint drive me nuts. It is manifestly untrue that "restaurants are suffocating in San Francisco." San Francisco is chock-full of restaurants, and the vast majority of them are not going out of business. The author's real complaint is not that restaurants are suffocating, it is that his restaurant suffocated. But the reason his restaurant suffocated is not because there's a systemic problem with the restaurant business in San Francisco, it's because the market didn't conform to the author's preconceptions. If it were really true that there was some kind of systemic crisis among San Francisco restaurants, they'd be closing left and right. The survivors would then be able to raise prices to the point where the crisis went away. That's how the market works. But this isn't happening because there is no crisis, only a market operating just as it should by occasionally weeding out businesses that, for whatever reason, don't conform to the market's needs.

Sure, maybe the market is working "just as it should," but if it is: why is that an excuse for all of the collateral damage done to waiters/cooks/hosts/cleaners throughout the whole city? It's an objective fact that the vast majority of the service staff cannot afford to live alone in or near the city they work in, much less support their families. Is that success? Is that fair? Should we really be content to let these people suffer the fear of not being able to put food on their table and a roof over their head simply because the equilibrium point of two lines on a graph says so?

Maybe the state of the restaurant economy is fine – I don't doubt that – but what about the service staff who make it up and work there daily? Or is the solution just to get a job in tech?

If we're advocating for market-based approaches, though: lower the cost of housing by building more housing, and building it fast. Both affordable and market rate. That would solve a lot of the Bay Area's problems.

Yes, the solution is to get a job in tech. The purpose of prices is to inform participants in a market what to supply.

The 1:1 ratio of $ to societal value is something I will always fundamentally disagree with, not least because we don’t live in an economic model: life is messy, chaotic, complicated, and there’s a sizable group of the educated population that would argue it can’t be precisely and accurately quantified.

Economics is a tool we can use to improve our society in equitable ways, not some omniscient diety we have to worship blindly.

And that’s still my belief after studying economics, too.

Then society (government) should try to fix the problem structurally, by shifting the demand curve and supply curves.

Increasing supply of housing, of kids who can perform high wage jobs, etc. The prices coming down will be a marker of successful efforts to make society more equitable.

And if everyone wants to live on the California coastal region though, since you can only shift the supply curve of ideal real estate so much without affecting its ideal-ness and then it becomes a problem of how to triage, which thus far has been letting people who can afford it, pay for it. Only other option I see is some type of random lottery.

No one is forcing anyone to live in sf. So this too is subject to market forces.

Sure, but there are also valid pressures keeping people there that otherwise can’t afford the cost of living:

Family and friends. Support networks are vital for every human.

Familiarity with local transportation. SF/the Bay Area’s bus and rail network makes it possible to live without the expense of a car, a necessity in most other cities in the US

Professional networks and contacts, which exist even for blue-collar workers, and, admittedly with no data to back this claim up, may be more localized for someone who doesn’t hold a college degree and hence doesn’t have a name or reputation to fall back on when starting from a clean slate.

Demographics. Sure, many places may be cheaper to live, but most of them are definitely not as welcoming or safe as San Francisco for, say, a trans woman of color or a gay white male

And, last but not least (unless you think everything must have some quantifiable value that is): sentimentality. Would you really like to be forced out of your home involuntarily?

If you take one of these people out of their community they grew up in and throw them somewhere in the middle of the Midwest, do you really think they would thrive there lacking everything they had in San Francisco? Do you think displacing the problem until it's out of sight is both sustainable and humane? It's a fallacy to think the majority of people who can't afford to live there are the one's moving there – it's usually the peoples whose livelihoods were long established there that are being forced out.

A much simpler solution to trying to tackle all of these problems at once is to, well, build more housing.

I don’t disagree with any of that. The only thing I disagree with is the claim that sf restaurants are suffocating. They aren’t.

Yep. It’s easy to reverse engineer these arguments, because they are true in some respects. But the fact is that plenty of restaurants in the city find ways to stay in business.

Make a better product that the market will reward, and then either go high volume and lower costs or go high price lower volume for a premium product and increase your margins. Either way, you have to have a viable business model that works for the market as it exists not some fantasy market that the author things it should be. No one is saying rents in sf aren’t high, or that there aren’t real problems like the author is pointing out. There is a crisis of affordability. The question is, can your business model work in those conditions? Sounds like the answer is no. Sorry to be harsh, but the market is harsh. That’s the point.

_Her_ restaurant, not his.

> figuring out how to pay him more without having him lose access to different low-income programs for which he currently qualifies

Wow, the charitable impulses here are overwhelming. You'll pay him more, as long as it doesn't lift him out of poverty. Wow. Wow.

If you want more staff, pay staff more. This easy equation has been understood for thousands of years but business owners find it difficult to comprehend when it is their business.

Wow, the charitable impulses here are overwhelming. You'll pay him more, as long as it doesn't lift him out of poverty. Wow. Wow.

If a salary increase makes him ineligible for the services that he's using to stay in the city, the higher salary could be an effective cut in pay.

While it's possible to pay him a large enough salary to make up for those services, it's likely more than the business can afford.

Not very capitalist to run a business that is dependent on the employees being able to live in assisted housing.

San Francisco is not a good model for capitalism. The housing market in particular is highly skewed not just because of politics, but also geography.

A city that is setting aside a large portion of its housing stock for low income people isn't all that capitalist. Businesses have to learn to work with the system.

"We, among others, tried to be innovative. We tried to go the ‘service charge inclusive’ route, automatically including 20% in every check."

I wouldn't call that innovative. Innovative would be paying a fixed salaray which allows your staff to live in SF without relying on tips.

Others have done it in the US too. In lots of countries the world over, tipping is a plus, not a requirement.


eh, I think the real problem is that we're building/converting space into office space at a much faster rate than we're building/converting space into residential.

I personally think that to get zoning approval to build an office tower in this area, you should need to get someone to agree to build an apartment tower nearby with a similar number of units. I mean, I'm not saying they need to be owned by the same people or that those apartments will be occupied only by people who work in that office building, but you need housing nearby where there are jobs.

This is obviously extreme, but we're in an extreme situation here. Vote with your feet and get out of the city, move away from the Bay. Only once the upper middle class feels some pain will anything be done about it. Until then, it's not their problem, they can work around it thanks to the flexibility wealth affords you. I don't see how else this will be fixed, it has to get much worse before it gets any better.

The upper middle class in SF isn't a bunch of asshole NIMBYs who tip badly any more than the lower class is just a bunch of low-life drug dealers. It's a baseless stereotype on both ends. And possibly the most vociferous group blocking housing, Calle 24, is predominately lower class. So I'm not sure it's helpful to paint people with that brush.

Incidentally, I think the young new-money transplants that the author trashes in her article are likely to be more sympathetic on this issue than SF native homeowners.

SF ballooned their deficit by billions during the last bull market. Over $10 billion of unfunded pension and healthcare costs.

The next recession is going to be brutal.

How does that work exactly with the massive surplus the state is running? [1] couple those Donna be used to fill this gap?

[1] https://www.politifact.com/california/statements/2018/dec/18...

California has $63b and growing in unfunded pension liabilities. The surplus is only a cash cushion.

The problem is vastly reduced if you can shift healthcare costs from the unfunded pensions to single payer or Medicare for all, I think that’s likely to happen in the next 20 years.

Returning the Bay Area to a quaint, sleepy place isn’t making them feel pain, it’s giving them exactly what they want.

More businesses and types of work rely on illegal labor who are willing to live in working conditions legals often aren't.

What's the breaking point here? Are we there? SF needs to make the NIMBYs shut up and start building more housing yesterday.

There's no breaking point, just ever-increasing inequality as an inevitable consequence of structural factors. Feudalism persisted for centuries, and it can again.

You'd think there would be a breaking point somewhere around "we could pay 25% less and still attract top talent to relocate to literally anywhere in the Western world". The cost of living in the SF bubble has long since passed the point of being insulting and the salaries being commanded by those who are driving the continued growth could go so far in other major metro areas that most employees would think they're living like kings even with such a paycut.

Even in the feudal era, early landowners didn't generally pay artificially lower taxes than later landowners. What we have with prop 13 is worse than feudalism.

> our servers were making $38 per hour or the equivalent of $70,000 to $80,000 a year ... assuming 36% on rent after tax, that would mean you have about $1,460 available for rent per month.

> Cheryl Young, an economist for Trulia, found that in nearby San Francisco, only 0.1% of restaurant staff can find affordable housing in the city, with the average monthly rent for a one-bedroom apartment at an insane $3,447.

$80,000 is vastly too much pay for restaurant servers.

It's understandable that if one-bedroom rent in the bad part of town is $2447 that restaurants simply can't exist in this economy. That's just the way it is.

San Francisco isn't unique as a city with very high rents. Somehow places like London, NYC, and Washington DC all still have a nice selection of restaurants. This makes me think that it'll sort itself out even if it is painful for some of the people currently affected.

It probably doesn't help that San Francisco has been shooting themselves in the foot over housing for years. This link from a couple weeks ago has a lot of details on that: https://news.ycombinator.com/item?id=18778496.

Excellent article. Key take-away: "There is no amount of money an owner could pay an employee within the economics of a small business to allow their employee to live within the borders of the city or even within a reasonable radius that doesn’t have them traveling for two-plus hours a day to come to work. This is the reality of where we live."

It's unclear to me whether the author meant two-plus hours one way or round trip (I think they meant one-way, but I'll address both cases).

If the author meant 2+ hours round trip: Lots of tech employees making 200k+ do this regularly. For example, driving from your house to the Fremont BART station and taking the train into downtown San Francisco can easily take 1 hour and 15 minutes one way.

If the author meant 2+ hours one way: There are affordable areas outside of San Francisco's borders that have a reasonable commute. This is especially true if you're willing to have roommates, although that would be more difficult if you have four children like one of the employees mentioned in the article. Oakland comes to mind - you can take the BART from Oakland to the Mission (where the restaurant in the article is located) in ~35 minutes.

While I do think that there is a housing issue in the Bay Area, I don't think the lines you quoted from the article are fair.

I really don't find the evidence agreeing with such a broad statement.

At most you could claim: "A worker in food service with family will not be able to afford living in SF, as a restaurant will not be able to pay the needed salary without raising prices above what the market will bear"

I really don't find the evidence agreeing with such a broad statement.

Here you go: https://techcrunch.com/2014/04/14/sf-housing/

All the numbers and data have gotten worse in 2014.

Oh yeah, and SF's onerous rules are making it even harder to expand the housing supply: https://www.bizjournals.com/sanfrancisco/news/2018/12/19/hou...

Not arguing that housing is expensive, just that "There is no amount of money an owner could pay an employee within the economics of a small business" is an extremely broad claim and obviously wrong.

High-paying small businesses, especially when employees do not have children to support, do fine. It's not like you see mass retail vacancy in SF.

hm. what if the employer starts counting commuting as work time? I mean, the big difference between this and just paying enough that I'm getting more money per hour counting my commute is the recognition that if I'm commuting 10 hours a week, there's not going to be much more than 30 good hours of non-commute work in me.

I don't see how or why the employer should care how long their employees commute is it is incumbent on the employee to make the decision if the commute is worth it. Maybe people would prefer a 2 hour commute to a place where they can make $80k/year, over working 10 minutes from home and only being able to make $35k/year.

Small business owners do care about the health and happiness of their employees. But even if we pretend for a moment that they do not, it's a threat to the business viability if workers cannot afford to live within a reasonable commute. If rents continue to outpace wages, those workers will eventually leave the area or the industry. The article talks about the business impacts of people leaving in detail (loss of talent, reduced quality of service, direct hiring costs associated with turnover, etc).

'Reasonable' is defined differently by everyone. Some people would balk at a 30 minute commute. Other people like long haul truckers and sailors choose to be away from home for weeks or months on end. Some people would be okay with and even prefer a 2 hour commute if it means they get paid 3x what they would get paid with a 15 minute commute.

That may be, but good luck running a business that relies on all of your staff deeming 4 hours of daily commuting reasonable.

How do you even recruit someone living that far away for a (relatively) low paying, low skill job? 2 hours get's you almost the entire way across the state I live in, people living that far away have often never even visited my city once in their lives. Why would someone who lives as far away as San Jose (apparently just 1hr 30min from SF) be tuned in to the local job boards in SF when there are plenty of job opportunities in their back yard?

I can understand why people with valuable skillsets are willing to balance the cost of commuting from their dream homestead to their place of work but I can't see how this system works for those on the bottom rungs of the societal ladder.

The very subject of this article is why the employer should care. Ethically the owner has no requirement to care. When you can’t find people willing to make the commute then you’ve found when the employer should care.

> I don't see how or why the employer should care how long their employees commute

Long commute times makes it far more difficult to hire. Why wouldn't an employer care about that?

That's what they should care about. So they care about the commute as a factor in how easy it is to hire.

If that were the case, then restaurant owners wouldn't have much trouble finding staff, right?

Restaurant owner: "everyone walking past my door is paid so much in salary that I can't raise my prices"

Me: Think about what you just said.

That sounds ridiculous until you realize that no one is going to pay ~$100 per head every time they go out to eat on a regular basis except for those who have become so wealthy that they have lost all touch with the value of a dollar. I make the rough eauivalent of $175k in San Francisco dollars and if I had to face those prices for a dinner at a mid-range restaurant I simply would not eat out. Restaurants are a luxury that can be easily subsituted with home cooked meals by practically anyone except a Jetset/Road Warrior traveling businessman.

My takeaway from the article is that all "middle class luxury" businesses are slowly being priced out of SF, which is a non-issue for everyone living outside of that bubble but should be of enormous concern to those banking on the future success of the area. Eventually no one will want to move there for a price employers can afford to pay. In the grander scope of things, I'm actually supportive of the concept of fast food and cheap dine-out businesses going under because the habits people form around them are killing us as a people.

This article is ridiculous. Yeah, SF is expensive, but $80k+ is a ridiculously large income for front-of-house service staff. When I first started working as a software engineer in SF, I was making $70k/year and I survived just fine. I got roommates and spent <$900 on rent. Obviously, I increased my earnings over time and as soon as I could moved into a 1br. I now pay right about average, which is more than I'd like but which I make do with.

Hear that everyone? People from New York and Chicago haven't heard of small business, good food, or getting food from farms nearby.

But on to the main point. It seems obvious Bay Area restaurant prices need to come up to keep pace with everything else costing more. But if you're going to charge more, you make it part of the price. You don't tack on an "extra" charge of any kind; that's madness, and sends the wrong message psychologically to the customer. The same people complaining about a service charge will gladly pay a higher base price exactly equal to that charge. It makes them feel "upscale." Paying a service charge makes them feel penalized. Or something. Anyway it sounds like the type of thing that has reasoning or an explanation attached to it. You want to be in a business where people pay more, and either the reason/explanation is obvious, or even better, there is no explanation and they just pay more anyway. Like Apple. But either way, you don't want to be in the business of explaining/justifying a charge, ever.

It's tough to make money? Your workers can't survive? The food sucks?

Charge more. Pay the workers more. Make better food. Nothing about "the economics of a small business" prevent this.

You may still fail. The macroeconomics of the Bay Area are difficult. But you'll fail for sure if you under-charge, under-pay, and under-produce in complete disregard of those economic conditions. In a tough market it's always the mediocre who fail first. But if you survive, and enough other restaurants fail, eventually the few that survive will be able to... you guessed it, charge even more, pay their workers even more, and make even better food.

I wonder how the numbers compare nationally. I thought restaurants has a tendency to close more often than any other business (30% close within 3 years). Also, why is this only a phenomena in SF? The real estate price in NYC should be higher and the business seems pretty good for even the nonfamous restaurants. Even small coffee shops thrive like crazy here.

Coffee shops have become nearly all day affairs. Like a bar, the key product has really high margins and you don’t need many employees. So once you sell enough {coffee, tea, beer, wine, cocktails} to cover your rent plus a handful of employees, you start making a (small) profit.

tl;dr: Hot water is cheap!

"That also allowed us to give our employees private healthcare instead of relying on the broken Healthy SF system which has proven to be very hard to navigate"


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