RealFood’s West Coast Director of Operations, Rick Graves, an expert in hospitality labor modeling and the Bay Area restaurant scene, gives his thoughts on The New York Times’ August article “Dinner, Disrupted” by Daniel Duane. The Opinion piece recently shook up the industry due to its critique of Silicon Valley’s controversial impact on the restaurant business.
Well, the article is correct. The workforce is dwindling due to cost of housing, the options in SF are crazy from $5 burritos to $1000 meals, and the margins are just like he says: extremely tight.
It’s a snowball effect with everyone in the Bay Area jumping on board, starting with landlords seeing blood and charging for both commercial spots and residential locations. With these soaring rents, restaurant staff are seeking out lower rent districts, which are nearly impossible to commute from, thereby decreasing the desirability of working in the city… Which draws us right back to the issue restaurant consultants are seeing more and more of: too many restaurants with not enough staff.
However, is this tumult because of the tech industry? I’m not sold on that.
I think it is just a fact that in order to not lose money, restaurants need to be innovative. Most are innovative in their recipes or culinary skills, but not in their marketing and staff structure. Thus they find the A-location and then charge prices to cover the rent, labor, etc.
Unfortunately for them, raising the item prices to get to the $15 minimum wage is not going to solve the staffing issues in Northern California either. A full time employee at $15 still can’t afford to live in SF.
I believe that’s where the tech money comes in.
A prime example of these tech money “saviors” is Eatsa, a new Quick Serve concept with NO front of house staff members. You order on an app, you pay on an app, your app tells you when your food is ready and it appears in a numbered bin. You open the bin and take your food that is packaged to-go (there are no tables), which sums out to a total lower price point of 8 bucks.
With no dining room, the restaurant can have a smaller foot print, thus decreasing the sales price. The staff costs are lower with zero front of house wages being paid, and perhaps one busser. They are now working to automate the food production to lower the employee head count in the kitchen.
In my view, the app world is here to staff. Soon we will all be pushing a button with food appearing right before our eyes, straight out of a scene from Star Trek. And in some households, this future is already here.
A couple in San Francisco that is purchasing a 1m to 1.2m condo in the city, lives by the app. They love bubble tea from a specific café, which unfortunately does not deliver, so in order to avoid the inconvenience of going out of the way to get it themselves, they have the tea delivered through an app. The delivery fee? $15 for one drink.
The couple has breakfast and dinner delivered via a number of different apps/services, because they don’t cook and prefer eating out. The amount of money paid for convenience is questionable for some, but completely reasonable for them.
And you would think that if that’s the price to get your hands on inconveniently located products, it would be cheaper to obtain the food products close to home. But that farm-to-table discount is gone.
Most believe that receiving fresh produce from a farm a few miles down the road would be cheaper than the same fruits and veggies from Dallas or Chicago, but unfortunately that is not the case. A trip to the farmers market with no middle man just means that the farmers are the ones making the middle profit. I’m not saying the farmers are getting rich, but you don’t read about another farm going under in Nor-Cal.
So, take what you want, and save your money. Or be on an expense account when you come to SF. But while reading the article, I was thinking that I could almost fly to Mexico and have dinner for less than going to an upscale Mexican restaurant in SF.
Perhaps that’s the next RealFood blog piece, however this time it’s interactive. I’ll fly down to Mexico, and you fly to Maine for a lobster dinner, and see if the food is better and cheaper than your average lobster roll at a local Boston restaurant. Let me know in the comments!