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[Vanillalite]

Thrillist

The American restaurant business is a bubble, and that bubble is bursting. I've arrived at this conclusion after spending a year traveling around the country and talking to chefs, restaurant owners, and other industry folk for this series.

To do that I'm going to tell the story of the rise and fall of Matt Semmelhack and Mark Liberman's AQ restaurant in San Francisco. But this story isn't confined to SF. In Atlanta, D.B.A. Barbecue chef Matt Coggin told Thrillist about out-of-control personnel costs: "Too many restaurants have opened in the last two years," he said. "There are not enough skilled hospitality workers to fill all of these restaurants. This has increased the cost for quality labor." In New Orleans, I spoke with chef James Cullen (previously of Treo and Press Street Station) who talked at length about the glut of copycats: "If one guy opens a cool barbecue place and that's successful, the next year we see five or six new cool barbecue places... We see it all the time here."

Even Portland, the patient zero of the Good Food Revival Movement, isn't safe. This year, chef Johanna Ware shut down universally lauded Smallwares, saying, "the restaurant world is so saturated nowadays and it requires so much extra work to keep yourself relevant." And Pok Pok kingmaker Andy Ricker closed his noodle joint Sen Yai, citing "soaring rents, the rising minimum wage, and stereotypical ideas about 'ethnic food' as 'cheap food'" in an interview with Portland Monthly.

Rising labor costs, rent increases, a pandemic of similar restaurants, demanding customers unwilling to come to terms with higher prices -- it's the Perfect Restaurant Industry Storm. And even someone as optimistic as Ricker offers no comforting words about where we're headed.

 

[Slayven]

I always wondered if all these copy cats had an impact on each other. Can't be that big of a deman for Korean Mexican fusion

 

[Bowler]

The only movement needed... is to start eating local. Go to the mom and pops shops, stop eating/shopping with corporate mega franchises

 

[FyreWulff]

I thought it was something like 80% of restaurants fail since restaurants have been a thing.

It's really fast in the PNW though, I'd walk down a block in Vancouver BC or Portland and a month later all the restaurants except one were new.

 

[Beer Monkey]

The only movement needed... is to start eating local. Go to the mom and pops shops, stop eating/shopping with corporate mega franchises

There's no such thing as local food. But I get it.

 

[Timedog]

Smallwares was just too expensive for what you got. If its gonna be really expensive with tiny portions it needs to be knockout good, like Yakuza. Smallwares was also in a bad location for being expensive.

 

[FyreWulff]

Smallwares was just too expensive for what you got. If its gonna be really expensive with tiny portions it needs to be knockout good, like Yakuza.

Does Dar Salam still exist? That was like a mountain of great food for what felt like pocket change.

 

[DudeWithNoName]

In my area, it seems like a new brew pub opens every few weeks. There are simply too many choices which dilutes the whole pool.

 

[Timedog]

Does Dar Salam still exist? That was like a mountain of great food for what felt like pocket change.

Yeah, dude. I haven't been there in awhile, thanks for reminding me! That place rules.

 

[FyreWulff]

In my area, it seems like a new brew pub opens every few weeks. There are simply too many choices which dilutes the whole pool.

I think that's partly due to small scale brewing become more legalized and less strictly regulated only recently.

Yeah, dude. I haven't been there in awhile, thanks for reminding me! That place rules.

Damnit now I'm hungry for some Dar Salam.

 

[this_guy]

The only movement needed... is to start eating local. Go to the mom and pops shops, stop eating/shopping with corporate mega franchises

That's what this article is about. It's the hip trendy places opened by local chefs that are suffering.

 

[Slayven]

Does Dar Salam still exist? That was like a mountain of great food for what felt like pocket change.

I always took you for the Golden Coral or Shoney's type

 

[DocSeuss]

stereotypical ideas about 'ethnic food' as 'cheap food'

I mean, uh, yeah? Locally, all the little hole in the wall cafes for Asian places are priced in a range I can afford (like $5 for a meal and a half? awesome), and burger places start at like $15 for a filling meal. This is because rice and chicken are dirt cheap, and hamburger/hamburger buns are not? It's not really about stereotyping, it's about ingredients.

 

[Human Resources]

Seriously though guys, come eat at my friends' cool new barbecue spot in New Orleans.

 

[Wilsongt]

It's hard for small mom and pop restaurants to compete with chains sometimes. I live in area that has a deluge of chain restaurants and it's hard to find a really good, filling local place to eat at that isn't on the other side of town.

 

[GoldenEye 007]

Complaining about labor costs? Is $4 an hour too much for servers? Because the only way a server is making that is if they're not getting tipped/subsidized by customers, causing the company to make up the minimum wage difference. Which frequently isn't their fault.

And if it is more counter service/fast casual, there generally isn't a wait staff or food runner. Just chefs/food prep staff and cashiers.

 

[Slayven]

stereotypical ideas about 'ethnic food' as 'cheap food'"

Just because you add Truffle oil to some noddles doesn't magically turn it into mana from heaven

 

[Silent Chief]

There's no such thing as local food. But I get it.

When in Boston I eat only beans and cod.

 

[Wilsongt]

Complaining about labor costs? Is $4 an hour too much for servers? Because the only way a server is making that is if they're not getting tipped/subsidized by customers, causing the company to make up the minimum wage difference. Which frequently isn't their fault.

And if it is more counter service/fast casual, there generally isn't a wait staff or food runner. Just chefs/food prep staff and cashiers.

$4?

It's $2.13 where I live.

 

[Slayven]

When in Boston I eat only beans and cod.

No Chowder?

 

[GoldenEye 007]

I mean, uh, yeah? Locally, all the little hole in the wall cafes for Asian places are priced in a range I can afford (like $5 for a meal and a half? awesome), and burger places start at like $15 for a filling meal. This is because rice and chicken are dirt cheap, and hamburger/hamburger buns are not? It's not really about stereotyping, it's about ingredients.

And yup. Ethnic food generally is dirt cheap. And it's by design given the ingredients used a lot of the time. So if someone walks in with at least a general understanding of that, they certainly could be put off by a place trying to charge $15 for a bowl of noodles or whatever.

Yeah I get that part of the price includes the technique, etc., but that is judged on a case by case basis. Basically if it is something I can reasonably pull off myself, I shy away from ordering it if I feel the price is unreasonable. If I know it would be truly unique, difficult, or impossible for me to pull off, then I'm more apt to order it.

 

[Coriolanus]

I mean, uh, yeah? Locally, all the little hole in the wall cafes for Asian places are priced in a range I can afford (like $5 for a meal and a half? awesome), and burger places start at like $15 for a filling meal. This is because rice and chicken are dirt cheap, and hamburger/hamburger buns are not? It's not really about stereotyping, it's about ingredients.

they also are dirt cheap.

unless the person is grinding usda choice for reasons.

 

[FyreWulff]

I always took you for the Golden Coral or Shoney's type

I think the last time I ever ate at a Golden Corral was like.. I was.. um.. 9?

also looked it up and Shoney's doesn't exist outside the southeast

 

[GoldenEye 007]

I mean, uh, yeah? Locally, all the little hole in the wall cafes for Asian places are priced in a range I can afford (like $5 for a meal and a half? awesome), and burger places start at like $15 for a filling meal. This is because rice and chicken are dirt cheap, and hamburger/hamburger buns are not? It's not really about stereotyping, it's about ingredients.

$4?

It's $2.13 where I live.

Just threw out a number. It's been awhile since I've worked in a restaurant setting and forgot what the general rate can be.

 

[captive]

I thought it was something like 80% of restaurants fail since restaurants have been a thing.

It's really fast in the PNW though, I'd walk down a block in Vancouver BC or Portland and a month later all the restaurants except one were new.

well duh, over what period of time? Over 20 years? of course most will fail/close down/whatever. Over a year? No, not at all.


I'm not surprised by this at all, the ability to make great food and the ability to manage a business are not one in the same.

 

[GSG Flash]

In my area, it seems like a new brew pub opens every few weeks. There are simply too many choices which dilutes the whole pool.

Same in my city. I certainly wouldn't mind there being a pub bubble burst. Most of these pubs serve shitty food and they push out proper restaurants from the market.

 

[djplaeskool]

The restaurant and related service industries will always be the front lines of labor policy.
Needless to say, the next few years are going to be crucial.
There definitely is an absolute raft of me-too-ish medium to high-end brewpubs/gastropubs/blah-blah-pubs, and I believe the other shoe is likely to drop within the next 18-24 months.

 

[FyreWulff]

also i dislike when places are like we're so unique and i try their custom house tea

9 out of 10 times it's just fucking Lousianne

I like Lousianne but that ain't your fucking custom tea lol

 

[ponziacs]

Complaining about labor costs? Is $4 an hour too much for servers? Because the only way a server is making that is if they're not getting tipped/subsidized by customers, causing the company to make up the minimum wage difference. Which frequently isn't their fault.

And if it is more counter service/fast casual, there generally isn't a wait staff or food runner. Just chefs/food prep staff and cashiers.

In some states it's $2.13 an hour + tips. In others, most notably on the west coast, it's minimum wage + tips.

I don't see how a restaurant can afford to pay tipped employees, servers, bussers, food runners, bartenders, hosts (sometimes) $15 an hour without seriously increasing prices. Then customers are going to see those expensive prices and realize they need to pay another 30% on top of those to account for the sales tax and tip.

It will be interesting to see menu prices when the $15 minimum wage fully kicks in.

 

[captive]

I mean, uh, yeah? Locally, all the little hole in the wall cafes for Asian places are priced in a range I can afford (like $5 for a meal and a half? awesome), and burger places start at like $15 for a filling meal. This is because rice and chicken are dirt cheap, and hamburger/hamburger buns are not? It's not really about stereotyping, it's about ingredients.

jesus where are you getting burgers? The only places that are near that much for burgers are overpriced chains like Five Guys. When you go to local places a burger is half that.

 

[The Technomancer]

I thought it was something like 80% of restaurants fail since restaurants have been a thing.

It's really fast in the PNW though, I'd walk down a block in Vancouver BC or Portland and a month later all the restaurants except one were new.

Yeah, the restaurant industry has always been precarious. I think that with the modern economic shifts we're seeing though people want to believe that something or other is a sure thing, or at least reliable and a lot of people are going to get some wake up calls

I think also some people have overestimated the whole "millennials live in big cities to eat out every night instead of making housing payments" thing. Yeah I live in Chicago. Its so I can use the train because I can't afford a fucking car, not because I eat out three times a week

 

[kirblar]

I mean, uh, yeah? Locally, all the little hole in the wall cafes for Asian places are priced in a range I can afford (like $5 for a meal and a half? awesome), and burger places start at like $15 for a filling meal. This is because rice and chicken are dirt cheap, and hamburger/hamburger buns are not? It's not really about stereotyping, it's about ingredients.

It's also because in their native countries, this stuff is cheap food.

And cheap does not equal bad.

 

[teruterubozu]

Isn't this always a fear in the restaurant industry since time immemorial?

The American restaurant business is a bubble, and that bubble is bursting. I've arrived at this conclusion after spending a year traveling around the country and talking to chefs, restaurant owners, and other industry folk for this series.

Well yeah, not surprising. lol.

 

[siddx]

I read an article years ago that also predicted a bubble burst for similar but slightly different reasons. It talked about how the vast majority of restaurants are opened by people with no clue what they are doing. They choose terrible locations. They create ridiculous menus that either require absurd amounts of resources to maintain or are so fussy that they limit their target audience. And they just copycat other restaurants instead of looking for holes in the marketplace they can take advantage of (derp I'm gonna open the 500th Italian restaurant within a one block radius instead of the first Ethiopian restaurant in the city.)
It largely said that most people opening restaurants are terrible at business and that's why they keep failing.

 

[Slayven]

What happened in 2007-2008 in the restaurant industry? Did the crash hit them hard too?

 

[entremet]

What happened in 2007-2008 in the restaurant industry? Did the crash hit them hard too?

Very much so.

 

[teruterubozu]

What happened in 2007-2008 in the restaurant industry? Did the crash hit them hard too?

Yes. In fact the restaurant industry is one of the leading economic indicators of consumer spending.

 

[gnomed]

I always took you for the Golden Coral or Shoney's type

I think the last time I ever ate at a Golden Corral was like.. I was.. um.. 9?

also looked it up and Shoney's doesn't exist outside the southeast

I will not take kindly to this mudslinging of Golden Corral. A stoner's wet dream is turned up after years of homely buffets. Socal just opened up a couple of locations about five years ago.

You Yankees can have back your overpriced grilled burgers from five dudes and we'll keep our ins and outses. But please lend us your whataver burgers and ivory castles because we can't kick the habit.

And there's nothing gourmet about pho and ramen. Weirdos charging extra for wrapped meat, rice, and beans plus more for fried potatoes with gauc.

 

[TangoAlphaLima]

That's such a strange article title. I mean, how is there an "industry bubble" that's going to burst? Sounds to me like individual restaurants are closing up shop all the time, which has always been a thing.

 

[Sibersk Esto]

I wonder how places like Park Slope haven't cannibalized themselves by having the same food offerings literally a block away from each other.

 

[gnomed]

The only movement needed... is to start eating local. Go to the mom and pops shops, stop eating/shopping with corporate mega franchises

Spoiler

I just had a bowler movement

 

[Laieon]

I will not take kindly to this mudslinging of Golden Corral. A stoner's wet dream is turned up after years of homely buffets. Socal just opened up a couple of locations about five years ago.

You Yankees can have back your overpriced grilled burgers from five dudes and we'll keep our ins and outses. But please lend us your whataver burgers and ivory castles because we can't kick the habit.

And there's nothing gourmet about pho and ramen. Weirdos charging extra for wrapped meat, rice, and beans plus more for fried potatoes with gauc.

How dare you associate whataburger with yankees.

 

[Slayven]

I read an article years ago that also predicted a bubble burst for similar but slightly different reasons. It talked about how the vast majority of restaurants are opened by people with no clue what they are doing. They choose terrible locations. They create ridiculous menus that either require absurd amounts of resources to maintain or are so fussy that they limit their target audience. And they just copycat other restaurants instead of looking for holes in the marketplace they can take advantage of (derp I'm gonna open the 500th Italian restaurant within a one block radius instead of the first Ethiopian restaurant in the city.)
It largely said that most people opening restaurants are terrible at business and that's why they keep failing.

ANd when you think about it the barrier of entry is deceptively simple. Just need a spot, some people, and so food.

But they don't think about overhead, labor costs, and food costs.

 

[Rockandrollclown]

I've often wondered if the suburbs aren't seeing the benefits of this. As mentioned in the article, rent is a killer. Anecdotally, I have noticed restaurants in the burbs getting way better over the past decade or so.

 

[eddievanclaylen]

He's absolutely right about one thing. Too many restaurants and too few skilled workers.

Out of my class in culinary school I can count the people on one hand that are still in the industry. Its hard work and once these kids get a taste, they're off to target or starbucks.

Some of my crew are guys that had zero experience but needed jobs. Training these guys is a nightmare but theres literally nothing out there employee wise.

If the minimum wage goes to $15/hr (well it wont with cheeto jesus) you're going to see a lot more counter service and a lot less servers, thats for sure.

I could talk about this all day, but I'm running late for my 12 hour monday, which should be extremely busy ... since all the normal people have yet another holiday day off.

Subscribed!

 

[gnomed]

How dare you associate whataburger with yankees.

I find the meat pouches dandy from the place. Doodles!

 

[Korey]

How about food trucks.

I don't get why some people want to spend $12 on 6 wings. Or $16 for a roll with a few pieces of lobster in it.

 

[nampad]

I will not take kindly to this mudslinging of Golden Corral. A stoner's wet dream is turned up after years of homely buffets. Socal just opened up a couple of locations about five years ago.

You Yankees can have back your overpriced grilled burgers from five dudes and we'll keep our ins and outses. But please lend us your whataver burgers and ivory castles because we can't kick the habit.

And there's nothing gourmet about pho and ramen. Weirdos charging extra for wrapped meat, rice, and beans plus more for fried potatoes with gauc.

WTF? Cooking that broth is a fucking art.

 

[NealMcCauley]

He and Liberman wanted to create a hyper-seasonal restaurant with a menu and decor that changed with the seasons. So winter meant stark white walls and Brussels sprouts and winter squash, and fall meant harvest colors and apples and mushrooms, and summer meant tomatoes and bell peppers and, um, bikinis or something. Menus changed whenever new ingredients came in. "I think we had like five or six fall menus at one point," says Semmelhack. "If there was something new at the market, even just for a couple of weeks, chef was going to use it in a dish."

No goddamn wonder they had to shut down.

 

[mmazurkiewicz]

How about food trucks.

I don't get why some people want to spend $12 on 6 wings. Or $16 for a roll with a few pieces of lobster in it.

cause Instagram bro!