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Old 01-02-2017, 03:06 PM   #1
Clayton
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Restaurant industry

Interesting article: https://www.thrillist.com/eat/nation...y-bubble-burst

Not exactly a shocker that a successful restaurant in San Fran eventually gets crushed by rising costs, so I don't think it's realistic to look at this guy and declare the whole industry is a bubble.

However, with rising minimum wages and Trump's immigration/deportation plans eventually coming into effect (topics that I am not too well versed on), I'm wondering how the industry as a whole looks in the next 5 years.

Will restaurants be pivoting their business plans to accommodate higher wages and fewer immigrants, or is the industry cushioned heavily by patrons that don't mind taking the loss?

Does that pivot look like more delivery, fewer table tops, fewer waiters? Is there a specific company that could benefit from disrupting this environment?

Robotics are already marginalizing a lot of lower-paying jobs. This industry seems to be currently unaffected by robotics, but stands to lose a lot of jobs if the ideal business plan has to pivot into more takeout.

Some charts for reference: 1 2 3
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Old 01-02-2017, 03:50 PM   #2
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Re: Restaurant industry

Restaurant culture in the US is pretty horrible. Tipping waiters is a good example. It's just an added cost with no real purpose or logic. In many countries, they just ask you what you want without introductions or smiling. Most countries, it is all about the food - in the US it's about the mood, plate design, lighting --complete nonsense. And the opposite side you have all the fast food and sit down chains... It's just all around horrible when compared to other countries.
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Old 01-02-2017, 03:55 PM   #3
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Re: Restaurant industry

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Just want to say as someone with celiac disease I love your name
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Old 01-02-2017, 04:03 PM   #4
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Re: Restaurant industry

I'm still bullish on light service restaurants (aka fast food). The faster they raise min wage, the faster they will automate. It's been a while since I've looked at Domino's and their UK operation (LON: DOM) (NYSE: DPZ) but I think they still have great management and growth opportunity in Europe.

I don't know anything about high end dining, but that article was tilting. No wonder they aren't sharp operators, they spend all their time complaining instead of getting asses in the chairs. And that restaurant that changes their menu and decor every 10 minutes is retarded. People crave consistency. You can be an amazing chef, but it doesn't mean you can run a business (e.g choosing lower cost ingredients and boosting margins), probably why a lot of these joints have one good season and then flop.
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Old 01-02-2017, 04:06 PM   #5
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Re: Restaurant industry

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Originally Posted by OmgGlutten! View Post
Restaurant culture in the US is pretty horrible. Tipping waiters is a good example. It's just an added cost with no real purpose or logic. In many countries, they just ask you what you want without introductions or smiling. Most countries, it is all about the food - in the US it's about the mood, plate design, lighting --complete nonsense. And the opposite side you have all the fast food and sit down chains... It's just all around horrible when compared to other countries.
Nice, every thread on two plus two eventually devolves into a tipping debate, thanks for getting right to it in the first reply.
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Old 01-02-2017, 04:33 PM   #6
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Re: Restaurant industry

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Nice, every thread on two plus two eventually devolves into a tipping debate, thanks for getting right to it in the first reply.
Lol seriously. Although I'm always up for a good tipping debate. Bring it on.
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Old 01-02-2017, 04:49 PM   #7
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Re: Restaurant industry

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Lol seriously. Although I'm always up for a good tipping debate. Bring it on.
please no
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Old 01-02-2017, 07:12 PM   #8
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Re: Restaurant industry

I don't see how an industry where 80% of new businesses close within 5 years can possibly be in a bubble. The author seems to think that capital reallocation automatically means bubble.

That being said, the restaurant industry is already being brutalized by the decrease in illegal immigration - Tyler Cowen had a link to an article a few months ago on this. I don't think higher minimum wage laws outside of very large cities in liberal states are going to happen within 15 years. As always I think the market will prevail. People are still going to pay whatever it costs for really, really good food. Thomas Keller and Grant Aachatz can raise the price of their menus by 20% and no one will notice. The cheap ethnic places will survive because of low rents and low costs of labor. The middle will be squeezed but all these places should be avoided anyway. https://www.washingtonian.com/2015/0...ad-meal-again/

Also, in the interest of devolving this into a tipping debate, here's a recent article on how no-tipping is going in NYC: http://www.nytimes.com/2016/12/13/di...g-service.html
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Old 01-02-2017, 10:41 PM   #9
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Re: Restaurant industry

I can't think of a single country that I visited where high end dining is not more about the food, plate design, lighting, and general atmospherics.

That's including some really dirt poor countries.

If anything, American restaurants' service suck at the mid and high ends. If nothing else, I could expect waiters to know the menu in other countries. In US of A, more often than not, the waiter has no clue.
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Old 01-02-2017, 11:19 PM   #10
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Re: Restaurant industry

You've obviously never been to a high end restaurant in the US if you think the servers have no clue.
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Old 01-03-2017, 12:47 AM   #11
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Re: Restaurant industry

Really enjoyed the article - it was a thousand times more interesting that the stuff was trying to read tonight

It was interesting to hear such an in-depth account of what it's been like for this restaurant to try and stay afloat, from 5 years ago as a new venture, to today. Would have liked to have been able to hear even more! Especially if the author had been able to find a restaurant that's defying the odds - to hear more about maybe what might be working for them (if there are any)?


PS. Maybe a repeal of Obamacare might affect things as well, if that winds up happening?
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Old 01-03-2017, 03:14 AM   #12
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Re: Restaurant industry

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I can't think of a single country that I visited where high end dining is not more about the food, plate design, lighting, and general atmospherics.

That's including some really dirt poor countries.

If anything, American restaurants' service suck at the mid and high ends. If nothing else, I could expect waiters to know the menu in other countries. In US of A, more often than not, the waiter has no clue.
I wasn't talking only high end. There is an overemphasis on experience across the restaurant spectrum imo. Most countries I've been to have much more hole in wall type places.

These countries are disproportionately asian though fwiw
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Old 01-03-2017, 03:20 AM   #13
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Re: Restaurant industry

The traditional sit down mid tier place is gonna be a dinosaur. Nobody likes those places anyway and the middle class will continue to get squeezed.

You don't have to be fast food, but it certainly has to be faster than those places all were.
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Old 01-03-2017, 09:47 AM   #14
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Re: Restaurant industry

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The traditional sit down mid tier place is gonna be a dinosaur. Nobody likes those places anyway and the middle class will continue to get squeezed.
Yup - this. People want cheap or white glove. Whatever is in between is going to be hurting bigly.
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Old 01-03-2017, 10:05 AM   #15
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Re: Restaurant industry

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Yup - this. People want cheap or white glove. Whatever is in between is going to be hurting bigly.
This has been happening across the whole economy. Most people are discovering they'd rather go cheap most of the time and super expensive on stuff they care about.

Perfect example of this is Whole Foods. Their customer base is made up of people who genuinely care about what they eat (to the point where they will make financial sacrifices to make it happen) and rich people who just buy max quality everything but don't care enough to get a meat guy, a produce guy, and a fish guy.

Whole Foods is the high end of my local grocery market (with a few local/regional competitors) and Kroger. Kroger runs a very solid low end grocery store, but they don't have the supply chain to compete on Whole Foods ground. Yes they sell organic stuff, and yes they sell some up brand dry goods, but they are missing the entire point of Whole Foods which is to curate a grocery store to be full of things that people can consume with minimum guilt.
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Old 01-03-2017, 04:12 PM   #16
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Re: Restaurant industry

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Yup - this. People want cheap or white glove. Whatever is in between is going to be hurting bigly.
Hmmm I think in most major US cities this is pretty off base. The white gloves are coming off at a lot of the best places these days. Younger people tend to want world class food and drink without all the stuffiness. There will always be a market for 2-3 michelin star dining but fine dining is really moving away from that (thank god). The main issue with these places is that they struggle to make it work even while they are very busy. Ultimately a lot of places will go under and the ones who weather the storm will have to raise prices, and we will likely see tipping done away with in states that are drastically hiking up minimum wages.
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Old 01-03-2017, 07:32 PM   #17
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Re: Restaurant industry

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You've obviously never been to a high end restaurant in the US if you think the servers have no clue.
I am curious about where you eat because I spend quite a bit on food and still get rather bad experiences from time to time.
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Old 01-03-2017, 08:19 PM   #18
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Re: Restaurant industry

I like HABT
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Old 01-03-2017, 08:42 PM   #19
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Re: Restaurant industry

Restaurant industry is in gloom. The number of Americans eating out has been tumbling big time. Millions of Americans have little or no money.

So many people are becoming nurses, are waiters, or bartenders because there are very few productive jobs. These kinds of jobs just add to the trade deficit.
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Old 01-03-2017, 09:18 PM   #20
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Re: Restaurant industry

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I am curious about where you eat because I spend quite a bit on food and still get rather bad experiences from time to time.
Sounds like you should eat at better restaurants. I'm with stinkypete on this one.
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Old 01-03-2017, 10:29 PM   #21
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Re: Restaurant industry

Recommendations for NYC/Chicago/DC then?
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Old 01-04-2017, 12:45 AM   #22
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Re: Restaurant industry

I agree with the general sentiment that the restaurant industry is bubbly. no data to back that up, just personal observation and my guesses for things moving forward. the tail end of this 'foodie' run is going to coincide with a lot of things that will give the spoils to a select few. sites like yelp, opentable, thrillist all do separate things that will contribute. for example, when I get neopolitan pizza in chicago, it's almost always at this one restaurant. they do it perfectly, even if it's only marginally better than the 2nd best. (and it's generally recommended as the best on yelp and food critic sites). Opentable allows me to cherry pick times, so as long it isn't a last second crave, our group has no problems. not coincidentally, imo, this place is always packed, and many other great competitors (with better prices) are empty. so combine the spoils to the victors phenomenon with the issues the article highlights

most importantly, the massive uptick in the restaurant industry seems to coincide with the economic recovery. IMO we are very late in that cycle. that could be the biggest factor of all.
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Old 01-04-2017, 12:53 AM   #23
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Re: Restaurant industry

oh btw, x1000 on the fast casual restaurant concept poised to thrive. smaller menu makes things so much more streamlined, less staff needed
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Old 01-04-2017, 01:12 AM   #24
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Re: Restaurant industry

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Originally Posted by GBP04 View Post
the tail end of this 'foodie' run is going to coincide with a lot of things that will give the spoils to a select few. sites like yelp, opentable, thrillist all do separate things that will contribute. for example, when I get neopolitan pizza in chicago, it's almost always at this one restaurant. they do it perfectly, even if it's only marginally better than the 2nd best.

Was just noticing the restaurant in the article AQ was 2nd best on a lot of lists, like here on Zagat:

Could see how the smallest things could make a big difference if people are eating out less at more pricey restaurants. Their food sure does look gorgeous though! Nicer than the nicest restaurant in my town

Last edited by TrustySam; 01-04-2017 at 01:28 AM.
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Old 01-04-2017, 01:24 AM   #25
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Re: Restaurant industry

Restaurant industry... brestaurants... tits and tater tots are money in any economy.
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