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  #21  
Old Posted Sep 24, 2020, 11:50 PM
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If most places went bankrupt, new places would just pop up in their stead within a few years. That's secretly what a lot of policy makers think. Who cares if restaurants go bankrupt, there will just be new ones opening in their place.
The problem with this is that most new non-corporate restaurants are opened by restaurateurs who have already been successful. For every true startup restaurant there are probably a dozen new restaurants that are the second or third location of something that already has a formula that works. All those restaurateurs have had their seed capital wiped out. The ones that make it through the pandemic will be insanely busy on the other side but it will probably take them several years to recover financially. Restaurants tend to make money slowly in good times and lose it quickly in bad. Banks don't generally finance independent restaurants because they fail at a high rate and have almost no assets that hold enough value to be worth selling at bankruptcy.

One of the downstream consequences of this is that cities have been using growing restaurant sectors to compensate for the shrinking of brick and mortar retail. In most cities commercial property is assessed at a much higher rate than residential so if a collapse of the restaurant industry leads to falling commercial property values that could blow a hole in a lot of city budgets.
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  #22  
Old Posted Sep 25, 2020, 4:17 AM
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I expect high end restaurants and most chains will be fine because they have sufficient capital, but a lot of the legacy mom 'n' pops that managed with less backing and smaller margins may disappear without being replaced. I hope I'm wrong.

Thus, at least in the foreseeable future, I suspect the dining scene will be more expensive (high end) and also cheaper (chains, fast food), but there will be fewer options in the middle, which is where the real culinary fun used to be located. I think this will be especially true of lower-margin foreign/ethnic eateries such as family-run Chinese restaurants, but also basic American diners and niche eateries such as brunch-only places and dessert cafes. Again, I hope I'm wrong.

Meanwhile, in the more expensive cities like San Francisco, six months of furloughs/layoffs has triggered an extinction event for the armies of local line cooks, bussers, waiters, barbacks, etc. who could barely afford the rent in these places even before COVID. People focus on well-off people moving out of such cities, but I think it's also likely that a large number of industry grunt workers have vacated their rented rooms and overcrowded apartments for cheaper locales, and won't be back. So I expect more 'counter service' and automation, at least in the priciest cities. For example, I once ate at a 'slider bar' with automated beer and wine pours--pay at the counter, take the mug or glass to the machine, press the correct button and hold the glass under the spigot for the regulated pour.

But I hope I'm wrong about all of that.
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  #23  
Old Posted Sep 25, 2020, 4:33 AM
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High end restaurants have razor thin margins and very high overhead. People think their owners tend to have piles of money in their pockets and access to capital because their restaurants are expensive and look fancy. The opposite is usually true. There is a reason why high end restaurants rarely make it more than five years while a neighborhood pizza joint will be there for decades. It is the pizza joint that is making all the money. I was an executive chef at chef driven high end restaurants for ten years, it is a nightmare trying to get them to make money, a busy bar, vegan restaurant, or hipster quick serve lunch place are much easier financially. Pizza is the most lucrative. There will be pizza joints until our society completely collapses, maybe even after.

The other problem with upscale in this climate is that the clientele of high end restaurants tend to be the wealthy or upper middle class professionals. I would expect those two groups to be the ones that take the pandemic the most seriously in terms of personal behavior. I was working at high end restaurant attached to a high end hotel when the pandemic broke. Even before restaurants were closed in the city our sales had dropped by 90%. The bro bars were still busy.

I suspect that high end restaurants will be hit harder than most parts of the industry. On the other hand, if you have the money to open one, the moment right after the pandemic ends will probably be the best time to do so this decade.

Also, to your second point, even before the pandemic about a quarter of our hotel staff had moved to Minneapolis from California because the pay scales were almost the same while Minneapolis was a lot cheaper (and had much better schools for their kids). That is only an anecdote, but it probably reflects a trend. I would expect the exodus of blue collar service workers and skilled culinarians from coastal California to continue and probably accelerate.

Last edited by Chef; Sep 25, 2020 at 4:51 AM.
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  #24  
Old Posted Sep 25, 2020, 5:56 AM
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I bet a lot of steakhouses--which often rely on expense accounts--are also likely to go away. But they'll be back.
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  #25  
Old Posted Sep 25, 2020, 6:11 AM
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Restaurants have always come and go. Very high failure rate. After this pandemic dwindles, expect a rapid opening of new eateries, and a return of some of the old ones with new financing. A return of demand will bring supply, as always. If the economy remains depressed, the pace of reopening will be a bit slower, but still positive. Once people feel safe, they will go out again, perhaps at first with a bit of caution. In 5 years the pandemic may be totally forgotten. That apparently happened in the 1920s after the Spanish Flu. Things got back to normal and even "ROARED" starting in 1922 after the flu and postwar recession. After the war, flu and recession people wanted to party and have a good time. It reached a manic climax in 1928 & 1929. L.A. should be ROARING by the Olympics in '28.

Last edited by CaliNative; Sep 25, 2020 at 6:43 AM.
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  #26  
Old Posted Sep 25, 2020, 3:19 PM
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Quote:
Originally Posted by Chef View Post
High end restaurants have razor thin margins and very high overhead. People think their owners tend to have piles of money in their pockets and access to capital because their restaurants are expensive and look fancy. The opposite is usually true. There is a reason why high end restaurants rarely make it more than five years while a neighborhood pizza joint will be there for decades. It is the pizza joint that is making all the money.
High end restaurants have a lot of overhead. A pizza joint, not so much.
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  #27  
Old Posted Sep 25, 2020, 7:45 PM
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High end restaurants have a lot of overhead. A pizza joint, not so much.
If you want to make money in the restaurant business go to the Northeast or Chicago to learn how to make pizza and then open a pizza joint in a sunbelt city where the pizza is crap.
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  #28  
Old Posted Sep 25, 2020, 8:47 PM
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If you want to make money in the restaurant business go to the Northeast or Chicago to learn how to make pizza and then open a pizza joint in a sunbelt city where the pizza is crap.
I missed my calling. We came from the land of great pizza (Utica) and I could have learned how and then made a fortune down here...because people like my wife (native Texan) thinks Domino's is real pizza. I even have the Sicilian name to name the restaurant.
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  #29  
Old Posted Sep 25, 2020, 9:34 PM
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Originally Posted by JManc View Post
I missed my calling. We came from the land of great pizza (Utica) and I could have learned how and then made a fortune down here...because people like my wife (native Texan) thinks Domino's is real pizza. I even have the Sicilian name to name the restaurant.
I really regret that I didn't start cooking until I moved to Minneapolis. If I had learned pizza in Utica I could have made a fortune. As far as I can tell there are only two places in the Twin Cities that have Utica caliber pizza, and they are both busy all the time.
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  #30  
Old Posted Sep 25, 2020, 10:25 PM
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Originally Posted by JManc View Post
I missed my calling. We came from the land of great pizza (Utica) and I could have learned how and then made a fortune down here...because people like my wife (native Texan) thinks Domino's is real pizza. I even have the Sicilian name to name the restaurant.
I once ate at a Pizza Inn (I never heard of it before and had no idea it was so shitty). Worst pizza I've ever had. Even worse, some customer inside was saying very loudly how it was better than some competing shitty pizza chain (Cicis? Based on the information I ascertained inside Pizza Inn, I will never go there). 7-11 has better pizza...
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  #31  
Old Posted Sep 26, 2020, 3:56 AM
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I once ate at a Pizza Inn (I never heard of it before and had no idea it was so shitty). Worst pizza I've ever had. Even worse, some customer inside was saying very loudly how it was better than some competing shitty pizza chain (Cicis? Based on the information I ascertained inside Pizza Inn, I will never go there). 7-11 has better pizza...
Question about Chicago pizza. Is it possible to get good thin crust in Chicago, or is deep dish the only reliable choice there? A good deep dish is good sometimes, especially on a cold night, but usually I prefer thin crust. Easier to eat too, don't need a knife and fork. I love Chicago style hot dogs, even the neon green relish. The best. Another food I like is Greek/Lebanese/Turkish. Love a good gyro, souflaki, falafel etc. You have to look hard in some cities to find it. Other cities, they're everywhere. Astoria, Queens...everywhere.
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  #32  
Old Posted Sep 26, 2020, 4:16 AM
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Can't speak for Chicago but there's a small chain in Phoenix called Spinatos that does a damn good thin crust. They claim it's a Chicago recipe. Metro Phoenix has more transplants from Chicago than native Arizonans
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  #33  
Old Posted Sep 26, 2020, 4:29 AM
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Originally Posted by CaliNative View Post
Question about Chicago pizza. Is it possible to get good thin crust in Chicago, or is deep dish the only reliable choice there? A good deep dish is good sometimes, especially on a cold night, but usually I prefer thin crust. Easier to eat too, don't need a knife and fork. I love Chicago style hot dogs, even the neon green relish. The best. Another food I like is Greek/Lebanese/Turkish. Love a good gyro, souflaki, falafel etc. You have to look hard in some cities to find it. Other cities, they're everywhere. Astoria, Queens...everywhere.
lol

Thats so easy. I dont have the time to post but a most locals mostly eat thin crust tavern style that rocks


hopefully Steely can give a longer answer to your question
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  #34  
Old Posted Sep 26, 2020, 5:01 AM
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Originally Posted by CaliNative View Post
Question about Chicago pizza. Is it possible to get good thin crust in Chicago, or is deep dish the only reliable choice there? A good deep dish is good sometimes, especially on a cold night, but usually I prefer thin crust. Easier to eat too, don't need a knife and fork.
Absolutely, all the deep dish places do great thin crust as well. There are multiple "Chicago" style of pizza, and the tavern square-cut style is better IMO (although not as distinctive / touristy). Of course, you can get all sorts of other types of pizza (Detroit-style, Quad-Cities-style, NY-style, Neapolitan, Roman-style) depending on where you go.
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I love Chicago style hot dogs, even the neon green relish. The best.
Yeah, they are amazing. As are Maxwell Polish Sausages.
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Another food I like is Greek/Lebanese/Turkish. Love a good gyro, souflaki, falafel etc. You have to look hard in some cities to find it. Other cities, they're everywhere. Astoria, Queens...everywhere.
Yeah I prefer the Arabic versions to the Turkish/Greek versions, but the Greek versions are a bit more widespread here.
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  #35  
Old Posted Sep 26, 2020, 2:03 PM
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Quote:
Originally Posted by CaliNative View Post
Question about Chicago pizza. Is it possible to get good thin crust in Chicago, or is deep dish the only reliable choice there? A good deep dish is good sometimes, especially on a cold night, but usually I prefer thin crust. Easier to eat too, don't need a knife and fork. I love Chicago style hot dogs, even the neon green relish. The best. Another food I like is Greek/Lebanese/Turkish. Love a good gyro, souflaki, falafel etc. You have to look hard in some cities to find it. Other cities, they're everywhere. Astoria, Queens...everywhere.
The best kept secret of Chicago style pizza is that their thin crust / tavern style pizza is way more common than deep dish. The crust is super thin and crispy and it's cut into squares.

If you're familiar with St. Louis style at all, the crust is similar due to the thinness but Chicago style uses yeast and St. Louis style does not.
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  #36  
Old Posted Sep 26, 2020, 3:14 PM
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Thin crust is all over Chicago.
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  #37  
Old Posted Sep 26, 2020, 3:28 PM
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inflation in service industry costs and wages seems to be the answer.

if you are making $500,000 per year in SF with stock options in your start-up, why do you expect to pay 20$ for dinner?

Its an interesting question, why haven't plumbers/restaurants doubled their prices in response to the rich making more money?
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  #38  
Old Posted Sep 26, 2020, 4:48 PM
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Because even people with money pay attention to price. And most techies don't make $500k...especially in start-ups! Since you're from DC I'll give you a fact about Amazonians: They don't eat fancy...the busy places around HQ1 are mostly quick and mid-priced, often ethnic.

Chef, you make great points as usual. My guess is that a lot of capital will be offered to proven restauranteurs, buying large chunks of equity on the cheap. These won't make the original business owners whole, but they'll allow them to exist and start the path back.

I'm less worried about the small family-owned dives. Much of the staff is the family, who doesn't need pay technically. Many will fail but many will scratch through. Then they'll exist with less competition for a while.

Outflow from expensive cities? Yes, to a point. Once the restaurants are busy again, workers will come back to those cities. Maybe rents will find a new slighly-lower equilibrium to even out the inflow-outflow.
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  #39  
Old Posted Sep 26, 2020, 5:12 PM
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A new restaurant opened last week on my block, in place of a coffee shop that closed in June due to COVID. The place has been booming. The coffee shop wasn't viable there anymore because the lease was too expensive and the landlord wouldn't renegotiate.

COVID might have completely killed off the local cafe/coffee shop in NYC. Bars and restaurants seem to be faring better.
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  #40  
Old Posted Sep 26, 2020, 5:20 PM
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Its an interesting question, why haven't plumbers/restaurants doubled their prices in response to the rich making more money?
It is because of supply and demand in their labor markets. The cities on the coasts are immigrant gateways. Immigration may be a net positive for the economy as a whole but it almost certainly depresses blue collar wages in places where there are tons of immigrants. Restaurants in cities like LA and San Francisco don't raise their prices because they they can still get workers for what they are paying.

Most of the Californians I've worked with in Minneapolis are the children of immigrants. They realized they could take their skills and move to a place where there was less competition for blue collar/restaurant jobs and carve out better lives for themselves.

Right now wages for restaurant workers are falling, quickly, but once the economy turns it is hard to say what the long term impact will be. If they stay depressed, restaurant workers will leave the big cities of the coasts in larger numbers because they won't be able to live there. On the other hand that might drive up wages in the long run. A lot of it depends on immigration. In Minneapolis, kitchen wages fell relative to the cost of living from 2001 until around 2015 or so and rose after that. The main driver of the increase after 2015 was that immigration from Mexico and Ecuador (restaurants main source countries for workers in Minneapolis) had slowed sharply after the financial crisis and never recovered. By 2015 the local restaurant labor market had run out of slack so labor shortages started driving wages up to pull in workers from other regions and other parts of the local economy.

If one of the long term consequences of all this is less immigration then restaurants in large, expensive cities will become much more expensive, which will probably lead to fewer restaurants and people cooking at home more. It would be great for professional cooks and bad for diners and attractive charming recent college grads looking for jobs waiting tables.

Last edited by Chef; Sep 26, 2020 at 6:35 PM.
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