
SF restaurants are suffocating - tarr11
https://medium.com/@azhar.hashem/why-sf-restaurants-are-suffocating-795392211c66
======
freyir
> _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...](https://www.zumper.com/blog/2016/05/zumper-national-rent-report-
june-2016/) [2] [https://www.rentjungle.com/average-rent-in-san-francisco-
ren...](https://www.rentjungle.com/average-rent-in-san-francisco-rent-trends/)

~~~
closeparen
>$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.

------
usaar333
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.

~~~
jurassic
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.

------
boulos
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...](https://www.sfchronicle.com/restaurants/diningout/article/Tawla-
is-the-Mediterranean-restaurant-that-S-F-9124825.php)

~~~
eigenvector
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.

------
crazygringo
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?

~~~
staticautomatic
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.

~~~
Mikeb85
> not because he pays them peanuts

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

~~~
TheSpiceIsLife
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.

~~~
Thriptic
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.

~~~
closeparen
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.

~~~
xyzzyz
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.

~~~
closeparen
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.

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

------
protomyth
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.

~~~
terandle
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.

~~~
protomyth
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.

~~~
gamma-male
Most engineers in the bay area don't tip anymore.

~~~
linksnapzz
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.

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

~~~
linksnapzz
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.

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

------
dawhizkid
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.

~~~
2arrs2ells
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.

~~~
boulos
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?

~~~
2arrs2ells
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?

------
trimbo
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?

~~~
flaque
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.

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

------
lebanon_tn
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](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.

~~~
jnwatson
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.

------
almost_usual
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.

------
s1mon
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.

~~~
abalone
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...](https://www.sfchronicle.com/food/article/2017-wasn-t-the-greatest-
year-for-San-Francisco-12480441.php)

~~~
s1mon
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.

------
refurb
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.

------
mcv
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.

~~~
aeternus
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?

~~~
mcv
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.

------
threadify
> 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.

~~~
changoplatanero
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.

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

------
robk
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.

~~~
ido
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.

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

~~~
richardknop
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.

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

------
mberning
“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.

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

[https://www.learnliberty.org/wp-
content/uploads/2016/08/welf...](https://www.learnliberty.org/wp-
content/uploads/2016/08/welfare-e1471458574375.png)

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.

~~~
kaveh_h
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.

~~~
usaar333
> 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.

~~~
kingaillas
>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.

------
diiaann
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.

~~~
eigenvector
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.

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

------
TomMckenny
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.

~~~
elgenie
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.

~~~
TomMckenny
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.

~~~
leetcrew
> 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.

~~~
TomMckenny
>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.

------
tchaffee
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.

------
reasonablemann
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.

~~~
tokyodude
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.

~~~
taurath
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.

~~~
general8bitso
Sheetz and McDonald’s also have food ordering kiosks, although neither serve
upscale mediterannean food.

------
lisper
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.

~~~
thebradbain
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.

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

~~~
thebradbain
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.

~~~
lotsofpulp
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.

------
jellicle
> 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.

~~~
Johnny555
_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.

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

~~~
Johnny555
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.

------
chinathrow
"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.

[https://www.nytimes.com/2015/10/15/dining/danny-meyer-
restau...](https://www.nytimes.com/2015/10/15/dining/danny-meyer-restaurants-
no-tips.html)

------
lsc
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.

------
BadassFractal
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.

~~~
dahdum
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.

~~~
shostack
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...](https://www.politifact.com/california/statements/2018/dec/18/jerry-
brown/does-california-have-budget-surplus-nearly-30-bill/)

~~~
dahdum
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.

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

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

~~~
cc439
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.

------
droithomme
> 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.

------
fredophile
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](https://news.ycombinator.com/item?id=18778496).

------
0898
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."

~~~
oh_sigh
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.

~~~
jurassic
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).

~~~
oh_sigh
'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.

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

------
kenneth
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.

------
eigenvector
One of the things the author points out is that restaurants in SF are moving
toward "fast dining" type setups that require less labour as well as simpler
dishes.

For the sake of argument, let us imagine that skyrocketing labour and housing
costs make the traditional sit-down restaurant extinct in SF (or reduced to a
handful of ultra-high-end establishments). This in turn makes being a waiter
or a line cook no longer a viable profession in SF.

If - and I recognize this is a gigantic if - enough of the massive amount of
wealth being created by the SF tech industry can be taxed and shared with the
people impacted by the loss of those jobs, so that they can continue to
maintain a decent standard of living, is there actually a problem?

When a waiter loses their job, I don't imagine it's the loss of waiting on
tables that puts them in a tough spot. It's losing their income and their
ability to afford food and shelter. The problem now is that the externalities
of the tech industry fall upon low-wage workers whose jobs become economically
unworkable. The rich are getting richer and the poor, poorer. But on the
whole, total wealth is increasing.

Why can't we redistribute some of the tech wealth to these put-upon low-wage
workers and leave everyone better off?

------
rdiddly
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.

------
syntaxing
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.

~~~
boulos
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!

------
vinniejames
"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"

------
aceon48
So why don't some of these restaurants come to South Bay? Sunnyvale and San
Jose have like nothing... Way less competition, at least somewhat more
affordable

~~~
usaar333
Because it's about where the customers are, not the workers. SF's demographics
favor these restaurants well (high income, low percentage of people with
children).

If you want to count gaps, the entire East Bay has a single Michellin Star
restaurant; South Bay has 3 (4 if you are willing to count Palo Alto in the
South bay)

------
gamma-male
In the bay area people:

* Don't want to tip

* don't want to see taxes added at the very end

* Don't want the service (seating, waitering, etc)

If restaurants don't evolve they will die yes

------
z3t4
I'm a big fan of Turkey and Greece home made food. Where I live, one such
meal, and if I bring the family, would cost up to 10% of my monthly salary as
an engineer with 20 years of experience. The chef at the restaurant earn more
then I do.

------
drawkbox
Inequality is a big problem.

In the meantime, retail and restaurants are going to have to come up with a
transportation system for their workers. Time to helicopter in the help...
then shuttle to where they need to go.

Until there are robots that can do the work either remotely run by
chefs/cooks/retail or removed entirely, there needs to be better
transportation systems to allow people to live elsewhere and work in the
metro/city if the metro/city is unwilling to fix the rent/housing problems.

------
Mikeb85
> When I set out to open a restaurant in San Francisco’s vibrant restaurant
> market, I thought I’d employ all I’ve learned from 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. Furthermore, I wasn’t naive to think that I knew better than all
> those who’ve been tenured in the industry. I actively sought out the
> mentorship of many titans who’ve been generous with their time and knowledge
> of the industry. So I opened Tawla, a restaurant in San Francisco’s Mission
> district.

I'm curious what the author is actually adding to the restaurant's value? In
the current economic climate in the US, there's more capital than places to
put it. Everyone wants to open a restaurant. Not everyone knows how to run
one. If she's not cooking, managing the front of house, etc..., what is she
doing?

> culinary cultures of Turkey, Greece and the Levant area

There's shawarma shops everywhere in the western world. They all offer
Mediterranean/Levantine cuisine, what does this restaurant offer beyond that?

> Over the past two years, it was quickly and often apparent that there’s
> nothing that a small and young business in SF could do to make the city a
> living option for its employees.

Yes there is, pay more. And to pay them more, raise prices. If people can
afford to pay rent and they still want to go out to eat, they'll pay more.
That being said, you need to have a compelling product. Not sure someone with
no restaurant background selling a commoditized product is going to be able to
produce a compelling product.

> As alluded to earlier, the mass exodus of individuals from this workforce
> leaves fewer people and less reason for those people to excel.

Yes, people leave because they're not paid enough. Pay more and maybe they'll
stay.

> The impact is seen when we tried the aspirational ‘Service Charge Inclusive’
> model. Diners were so dismayed by it.

Of course they were. No one likes add-ons that they weren't told about.
Instead of adding a 'service charge', just raise the menu prices. You know,
the same as in Europe and other places where service is included.

All I see when I read this article is someone who knows nothing about
restaurants, adds no value to her own restaurant, claims she's innovative and
knows better but then reverts to the restaurant status quo and claims it
doesn't work.

This is what I don't get about restaurants. Some of us work in them for 10-40
years. Do our apprenticeships in restaurants that win awards, have Michelin
stars, are top 50 in the world, and work 80 hour weeks for decades on end. And
then someone who got a little money from Google thinks they can just open
something, hire people and be successful. Just imagine if Sergei Brin and
Larry page were restaurant managers who thought they could hire a few
programmers, rent an office and create Google?

~~~
anonuser123456
>what is she doing?

Innovating.

------
_i____ii_______
If you work BOH in restaurants you develop a distaste for servers. Not only do
they make far more money but they do it in half the time. Time is money and
money time. I've worked in the industry in SF and I can tell you there is no
shortage of coke habits amongst them. They are also less skilled than the
cooks and much more easily replaced, which gets to the point the author was
making about the need for skill in cooks and the damaging mercenarial culture
arising out of desperation. In a cook you want someone you can retain who will
develop a deep understanding of the workings of a particular restaurant and
its menu. It's far more of an investment than a waiter who can cram homework
for a few days enough to sell a menu. But training to prep and cook that menu
properly will easily take weeks if not months at a high end place. You don't
want those people to bounce for a dollar more; that is a huge waste. You'd
rather lose half your FOH staff than your lead line cook or heaven forbid sous
chef. However the tip culture succubi aren't the perpetrators as regards the
pie cutting of restaurant earnings; it's tip culture and diner expectations.
But good luck changing that or getting the public to understand the changes. I
see a lot of hard-nosed posts here about basic economics, supply and demand,
and what about's regarding the "successful" places (you mean places hanging on
another year). I understand a lot of you take pride in your ability to cut
through the fat in that way. But you're glossing over perhaps the main point
of the article which is that without skilled cooks restaurants slide more into
the spectrum of dummy-proofed food processing and thus weak, boring menus.
That goes for the yelp darlings as well who are likely hoping nobody notices
drops in quality and absence of ingenuity. The average self proclaimed foodie
or just frequent diner I doubt knows enough about cuisine to realize the
hollowing out of the scene they're in. Restaurants continuing this decline
will keep it hidden and the tech crowd won't notice the difference as their
favorite haunts continue to provide what they really have always wanted
anyway: a place to see and be seen. A major priority for restaurants will be
maintaining image and hype in an increasingly superficial SF hellscape. Maybe
diners, in an honest moment, will say "fuck it" and head to the nearest Burger
King.

~~~
leetcrew
if BOH employees are much more costly to lose than FOH, why does FOH get paid
more to begin with? is it just that minimum wage plus tips is already way more
than the cook gets paid?

I don't disagree with your core claim that cooks are more valuable.
anecdotally, when I worked at a takeout pizza place the main pizza guy got
paid about twice what we made in the front, even including tips.

------
newshorts
Is no one considering the impact of foreign investment on housing and
sunbsequently rent prices? Sure tech workers play a part, but they often pay a
better part of their salary to the land owners who are more frequently likely
to be foreign investors

------
JshWright
A little off topic, but the idea of a "celebrated" pizza shop in SF strikes me
as a little funny... I try a different pizza place every time I'm there, and
I've yet to not be disappointed.

~~~
gamma-male
Yup. But I would say that pizza in the US is disapointing in general if you
know italian pizza.

------
mbrumlow
You can't have it both ways. Either change the city and build upwards or stop
complaining about the price of living.

The notion that a city should not change and keep it's "feel" across sunch
long times is backwards thinking. Cities grow.

I say this because the same people who want lower rents seem to also vote down
big new apartments because it will ruin the atmosphere. But I can't for the
life of me understand why anybody would want to preserve the current
atmosphere. The one you think you are defending is long gone.

~~~
hrdwdmrbl
They literally don't see how they constrain supply and how that leads to
higher prices.

~~~
astazangasta
You apparently literally don't see how high net worth individuals and
speculators can drive up prices much faster than new construction can possibly
keep up - remember, the demand side of price? Also, there are other forces at
work on the supply side, like a bonkers property tax system which incentivizes
never selling your home. But your tidy narrative is better for real estate
developers, so let's blithely parrot it as often as possible.

~~~
pascalxus
Well... yes, this problem has been developing for a long long time, over the
last 50 years CA has been restricting supply ever more, like those WWII frog
experiments where they boiled water very slowly to see if the frogs would jump
out. Some of those frogs jumped out and some died out. Now, we're facing the
same dilema in SF. That doesn't mean we shouldn't try to lower the
temperature. Every last apartment or house can help. We desperately need as
much housing of every type we can possibly get. I don't understand how anyone
with a conscience can continue to advocate for "character" with the current
housing crisis.

And, why are people concerned if a developer makes a profit. If people are
starving, you dont say, geez we better not grow any more food lest those pesky
farmers make a profit. If developers are making too large profits, then more
will enter and we'll have even more housing which will lower the prices even
more.

~~~
astazangasta
No, this problem appeared acutely starting in 2008. When I moved to SF, rents
were not exorbitant; they were high, but ordinary people could pay them. Then
they climbed dramatically in a short period. This is easy to ascertain; just
look at any graph of rents. This graph has no relation to the graphs for new
construction or population growth, both of which grow at a steady pace. This
is an acute crisis caused by a spike in demand due to the sudden inflow of new
wealth, not by a supply constraint. When one person can buy up every house in
the Mission, the supply side of the equation is not as relevant as the demand
size. This is blindingly obvious, and only some serious denial seems to be
preventing people from acknowledging this.

As for concern over whether developers are making a profit; apparently you
have never read any history of redevelopment. Here is a good place for you to
start, learn something about your own city: [https://hoodline.com/2016/01/how-
urban-renewal-destroyed-the...](https://hoodline.com/2016/01/how-urban-
renewal-destroyed-the-fillmore-in-order-to-save-it)

What will happen, over and over, is poor people will be moved out, rich people
will move in, and developers will make a profit. Your econ 101 fantasy will
not take place.

~~~
ubercow13
Why would that speculative new capital be interested in the property if not
because they know there is a supply constraint?

------
fourstar
Quite poetic that a Google exec talking about the issue she's contributed to
(high rents/housing prices) is complaining about it and blaming the failure of
her business on it.

Survival of the fittest. Plenty of great restaurants in Tokyo and it's almost
as expensive as SF.

------
abalone
Having >10K karma on here and knowing people involved in this restaurant and
the SF scene in general.. I can make these observations:

1\. The vast majority of people on HN are in complete denial about the impact
of a massive sudden influx of demand on SF housing.

2\. They will exclusively talk about supply constraints and also totally
ignore the concept of price inelasticity due to inexhaustible levels of
demand.

3\. pg himself had noted the importance of a vibrant restaurant scene for
startups.[1]

4\. This truly is a widespread problem for all SF restaurants. Nopa, one of
the most prestigious midrange restaurants, has been advertising for cooks in
their menu for years now.

5\. In order for the market rate price of housing to become affordable to
cooks and servers, it would first become dirt cheap for tech workers making
2-4x their compensation. Therefore all of that worldwide demand for SF tech
worker housing would need to be satiated before the market solves this
problem. (See point 2.)

6\. Most tech workers don’t give a shit. They are here to hopefully make their
fortune or at least get their career started in the next 5-10 years. A vibrant
restaurant or working class community is not a priority. If they burn through
it, it’s fine. Long term community development goals are a “nice to have”.

7\. Only reserved means-tested housing for the working class will solve this
problem. This is what divides the “market YIMBY” and “affordable housing
PHIMBY” political groups in local SF politics. It’s not just about ethics.. If
you want a vibrant city rich with interesting restaurants and cafes then you
need to provide housing for the service industry. Otherwise you face a real
macroeconomic problem.

[1] [http://www.paulgraham.com/pgh.html](http://www.paulgraham.com/pgh.html)

~~~
selestify
Why can't they pay their chefs more until the chefs too can afford to live
closer?

~~~
abalone
Is this not obvious? Seriously, this question always comes up in these
discussions. The answer is it’s a macroeconomic problem: SF restaurants have
already increased prices to $34 for a pork chop and $13 for a cocktail (Nopa..
which I attest is a very good value by SF standards). Restaurant margins are
low. If they triple their cook salaries it will result in a net decline and
they’ll close.

What we’re seeing is a shift towards “fine casual” formats like Souvla that
have lower labor costs. But there are just fewer midrange restaurants opening
due to labor and rent and the ceiling on what they can sustainably charge. The
high end and low end / fine causal are doing ok.

~~~
selestify
So then why not let them close? Seems like the supply-and-demand problem will
eventually reach a new equilibrium.

~~~
abalone
Because then chefs would be even worse off because half would lose their jobs?
A better solution is to provide them affordable housing.

------
technics256
An excellent article that highlights the biggest issues facing SF and the Bay
Area overall, and the people who do not do a lot about it.

------
mensetmanusman
Really points to how low cost robotics could potentially revolutionize food in
cities with impossible living conditions for the poor.

------
tschwimmer
I don't mean to come off as unnecesarily dismissive of the author, but I have
serious doubts about the quality of their MBA education after I read this
sentence: "The situation in this industry has created a mercenary frenzy where
everyone is running around trying to maximize what they’re able to make per
hour." That describes the general trend in human behavior worldwide for the
past six thousand or so years. This seems like such a foundational truth that
I question if the author is writing it in good faith.

The author seems to have the numbers straight in terms of personnel costs
required to run a sustainable business, but what's confusing to me is that
this analysis was not run before they decided to start this business. It seems
like the numbers were hopelessly unfavorable pretty much any way you cut them.
To me, that says that there simply wasn't a business worth creating.

I acknowledge that the problems outlined in this piece are real. The
commentary about the SF healthcare plan only being available within the city
limits when many of its beneficiaries live far away calls attention to how
badly dysfunctional our healthcare system is. Nevertheless, I keep coming back
to the conclusion that most of the hardship (on behalf of the author) here was
self inflicted. Running a restaurant is generally a very poor means of making
a living as the author repeatedly points out. It's great that this person was
following their passion, but doing so is usually expensive.

As a mental exercise to the outraged reader of this article, try substituting
the word restaurant with the word yacht and all the positions with various
nautical ones. I think you'll find yourself a lot less sympathetic. I'd argue
that they're semantically identical in this case.

~~~
krschultz
How would a restaurant be in any way analogous to a yacht? I own a boat, it is
not a place of public accommodation. The neighborhood is not better off
because I have a place to hang out with my family and friends. The point
being, this article is not one person complaining that they can't "follow
their passion". It's someone pointing out that the economics make running a
restaurant untenable in SF. Restaurants have always been run on razor thin
margins, but the piece makes a compelling case that it's tipped beyond that.

~~~
repsilat
> _How would a restaurant be in any way analogous to a yacht?_

The GP meant that it's a business people get into because it's their passion,
and it is a lot of people's passion when compared against the market for it.
I'd say a comparison against "glamourous" creative industries like acting and
journalism is more apt -- good profit to the ones people remember the names
of, and cutthroat for the 90% fighting over the rest of the market.

> _Restaurants have always been run on razor thin margins, but the piece makes
> a compelling case that it 's tipped beyond that._

Maybe it's an echo-chamber thing, but a large fraction of my friends in SF
rarely/never cook dinner. Almost none bring their lunch to work. We don't have
a shortage of places to buy prepared food.

The cost of eating out will probably scale closely with the cost of running a
restaurant. Demand is solid (though not entirely inelastic.) Profits will
always be thinner than in other industries.

Lower rents would help, but there would probably also be negative second-order
effects of lower meal prices. And positive third-order effects of increased
demand because of price elasticity...

------
boltzmannbrain
> 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.

median != average

Fun example: In 1987 the average starting salary of University of North
Carolina geography graduates was over $100,000. In 1986 Michael Jordan
graduated.

~~~
p1necone
I was taught in school that average can refer to mean, median _or_ mode (is
that common everywhere?). Mean seems to be the default when not specified but
journalists really should be specific (also as you point out, median is more
often than not the best/least misleading one to use).

Edit: wikipedia
([https://en.wikipedia.org/wiki/Average](https://en.wikipedia.org/wiki/Average))
seems to suggest that they can all be considered "averages".

~~~
Hupriene
I think it would be very unusual to refer to the mode as the average,
especially if it wasn't close to the median or mean.

~~~
torstenvl
Mode is the most common meaning for "average" in vernacular English. When
someone says "I'm just your average guy," they are not doing math. They're
comparing themselves to what the majority (or perceived majority, i.e.
plurality) of other people are like.

~~~
neumann
or perhaps implicit in the language of "I'm just your average guy" is that the
central limit theorem applies.

------
chenpengcheng
The author is just one of these people who has benefited from a system and
pretends to care for the underprivileged. And through this article, she makes
me feel that she is entitled to success in all her endeavors and if that is
not the case, then it’s others fault.

This makes me sick.

~~~
dang
Please don't post denunciatory rants to Hacker News, regardless of how
entitled you feel someone else or their article is.

Even if you're right, the cost of making this place more toxic exceeds the
benefit.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
chenpengcheng
I don't agree with your comment on "rage" and "inferior".

~~~
dang
Yes, those were two provocative words in what I posted. I can see how that
could be unhelpful.

I replaced "rage" with "denunciatory" and "inferior" with "entitled".
Hopefully those changes make the core point smoother.

~~~
chenpengcheng
thank for setting a good example

------
zozbot123
Tl;dr: The rent is too darn high! It's not just individuals that are
suffocating because of it, but marginal, specialty/niche retail businesses
like this restaurant. They should pack their stuff and move out.

------
jelliclesfarm
Am I the only one who is appalled that a person with a wife and for
children(one under 6 months) is working in a minimum wage job?

1\. They should have either not had four kids or 2. should train to pick a
higher paying job. 3. Or move to a cheaper part of the country.

The question is: how do we train people for better jobs or when jobs aren’t
available, how do we make sure they ..well..live?

These are the questions we should be asking and not talking about SF
restaurants and housing unavailability.

Where is the ‘Linkedin’ and retraining resources for people like this cook?

This author with a MBA just didn’t make compelling reading.

~~~
throwawaysea
I share the same sentiment. In my opinion, having children is a huge
responsibility, and should not be treated as a default right. If one cannot
get themselves into a stable position financially, they shouldn't be raising
children. And certainly not four. Having four children without substantial
financial security is outrageously irresponsible - people I know that are very
well off would hesitate to have even three despite having the technical
ability to afford that life.

~~~
jelliclesfarm
That detail was rather jarring to me.

