THERE'S A MASSIVE RESTAURANT INDUSTRY BUBBLE, AND IT'S ABOUT TO BURST

A business that's turning over can still function on a low profit margin

Go back to school kiddo

Yes, I do know what the difference between revenue and profit.

Why would the Landlord be privy to the end profit? Why would the Landlord care?

The Landlord sees that your restaurant is the latest and greatest trend for hipster haute cuisine, and realizes that he can jack up your rent.

Summarized for the ADHD among us:

>High competition makes it hard to develop a brand or unique style without being pushed out by knockoffs
>Customers demand that everything is hand made from scratch in house with seasonal local organic non-GMO foods
>Same customers complain on Yelp and other services when they get the inevitable price increase that makes the in-house model possible, thus driving sales down further, then they hypocritically eat at McDicks
>Businesses that rent property (as you have to in most cities) will experience HUGE rent hikes the moment their landlord's hear about profits, forcing many to close
>Mandatory healthcare + minimum wage increases drive up the cost of labor
>More affordable food delivery apps offer even more competition
>General tax increases

Those are the issues listed in the article.

>Customers demand that everything is hand made from scratch in house with seasonal local organic non-GMO foods
Yes? And? I'm tired of GMO shit being the norm. I want real food.

I went in to a cafe not long ago and ordered fish & chips. The chips (a small handful) came out in some gimmicky tin basket, and the fish were frozen battered fish from the supermarket. I could tell because I've had them before.

I was assuming it was a real fish fillet with fresh batter, since the cafe was in a town literally next to the sea.

>I'm tired of GMO shit being the norm.

Kys liberal hipster scum with a gender studies degree. Nothing wrong with GMO.

>Yes? And? I'm tired of GMO shit being the norm. I want real food.
And that's totally fine. Just don't complain about the increased prices on Yelp when the restaurant tries to accommodate your trend diet.

>I'm tired of GMO shit being the norm. I want real food.

No evidence to suggest GMO is dangerous, literally no reason to dislike it

But even beyond that, the "from scratch in house local organic non-GMO gluten free low sugar low sodium" demand drives costs up, high enough that even the people (like yourself) that ask for this shit won't pay for it. Whatever your opinion of this is, it's objectively a bad business model with measurably bad outcomes in nearly ever circumstance.

It's cute that you brought up your cafe trip. You went to a bad restaurant and got shit food, so what? You really think decent restaurants are serving frozen store bought fish? If anything this proves to me that you scrounge around for the cheapest restaurant, then complain if it isn't 5 star organic cuisine (with pink Himalayan salf ony).

Never said it couldn't You're the one who needs to work on reading comprehension.

You went from
>Landlord jacks the rent up when he finds out you brought in $3 million in revenue
to
>Why would the Landlord be privy to the end profit?

>WAAH! The Restaurant Industry is gonna collapse now that line staff are demanding non-shit pay, hours, and health-care coverage for when they slip on the floor while carrying that 16-Qt stockpot of boiling broth
A lot of these restaurants can cry me a river..
The most sympathetic cost I can relate to is landlords jewing small businesses for rent.
It's going to take a lot more building construction to ameliorate that.

I do believe the long-run predictions of the article are right, though.
The industry probably IS going to hallow itself out with food trucks, electronic kiosk delivery, & Greasy-Spoon/Hole-in-the-Wall joints surviving at the margins of the low-end as structural costs rise. That will leave only those extravagant super-expensive fine dining places around up market who can bear the increases and pass them on to their deep-pocketed clientele.

The middle will probably be dominated by modernized chains like Panera Bread/Chipotle along with the traditional Big Chains that have their supply chain network on lockdown to weather the storm. Though Chipotle is having some issues of their own:
fastcompany.com/3064068/chipotle-eats-itself

If companies raise their prices in a transparent manner like one guy in the article suggested and the consumer knows where their dollars are going then I think the issue of costs of dining out won't be so bad. The patron is always paying for the convenience/skill of a chef cooking their meal for them and the variety of menu recipes/ingredients that is not normally available at home (also the "ambiance" as much I hate that word).

And if this causes a good portion of current eaters to say SCREW THAT and start cooking at home (again) instead, then I think it would be a positive development. I think this also had important implications for groceries/delis/bakeries especially with internet-based cooking. There's also growing Meal-Kit delivery services like Blue Apron, HelloFresh, & Plated.

Another point I'd like to make is that this series of articles the author writes about is heavily biased from urban food oasis POV. However, a lot of us don't live in LA/Portland/NYC, and here in Flyover™ Territory the restaurant boom discussed never really came and Olive Garden is still considered fine dining, the newly renovated McDonald's is our "fast-casual" outlet. There was never many, and still is very few non-chain establishments.

Anyway, thanks for the read OP.

>And if this causes a good portion of current eaters to say SCREW THAT and start cooking at home

Or more likely turn to fast food and TV dinners

>Here in Flyover™ Territory the restaurant boom discussed never really came

Glad I'm not the only one confused by the "golden age of restaurants" line. One of the benefits of being out in the middle of nowhere, I guess. Not subject to all these fads.

I'm a flyover and what is this?

I didn't go from shit to shit, but I'll take this slow for you.

1) The Landlord doesn't actually need to know how much profit the restaurant is making because that is literally irrelevant to him
2) The Landlord sees that the restaurant is winning awards, pulling in hundreds of customers per night
3) The Landlord then increases the rent because he knows that the restaurant is doing well, therefore increasing the value of his property

At no point does the Landlord need to know, or even care, that the owner is only pulling in $250,000 after expenses.

not him but the Landlord can tell very easily that your business is popular, which is evidence that it should be profitable. Landlords sit on property until it is valuable then exploits it. That is how the right to property works.

He doesn't know, nor does he need to. That is why he is a landlord and not the food business.

Hell, half the time the increased popularity brings great land values, jacking taxes for the landlord. The tax person doesn't care if you aren't making profit, they see you are making money.

The problem of high costs stems from overpopulation and oversaturation of the service industry.

It's not expensive to buy a fillet of fish, prepare fresh batter, and some mushy peas with mint, and a slice of lemon.

But when you're competing with 20 other fast food places and restaurants in your town and need to raise prices, it overprices food. Organic "hipster" food doesn't have to be expensive.

It's basically people getting in to the restaurant business because they like food and think it's a good way to make money. Instead of coming up with a better or more original idea.

>"ambiance
*ambience

>Or more likely turn to fast food and TV dinners
Maybe with more wide-spread usage of advanced Japanese freezing tech it be as bad.
web-jpn.org/kidsweb/hitech/freezing_technology/index.html
foodmanufacture.co.uk/Manufacturing/New-freezing-technology-leaves-cells-alive-and-kicking
Also:
flash-freeze.net/proton.html#4
youtube.com/watch?v=hcUD73tQFbQ

Otherwise....

>I have an idea let's start a business
>But I don't know what kind of business to start
>I got it, I will sell food/make music/suck dick because everyone likes that
>What could go wrong

i can't wait to buy edison lightbulbs at restaurant equipment auctions

Oh fuck I work at a resturant like this, we do make good money though

Imagine having such absurd cognitive dissonance that you convince yourself, and your journalist friend, that your restaurant failing is a result of a system-wide economic disaster and not your own incompetence.

>Nothing wrong with GMO.
Not the user you're responding to, but eat it if you want to. Those who'd prefer to avoid it and are willing to pay extra to do so are free to do just that.
>The industry probably IS going to hallow itself out with food trucks, electronic kiosk delivery, & Greasy-Spoon/Hole-in-the-Wall joints surviving at the margins of the low-end as structural costs rise. That will leave only those extravagant super-expensive fine dining places around up market who can bear the increases and pass them on to their deep-pocketed clientele.
The high end will always hold up, because price insensitive customers will always be looking for the "right" spot to eat with their kind. But the independent mid tier restaurants are likely to begin suffering soon, and I don't think it's just because customers expect too much for too low a price. It's because those customers' priorities are about to start changing.

In the early 2000's chefs became the new rockstars, and the children of baby boomers went out to good restaurants the way their parents used to go see live rock and roll bands. And spending that kind of money eating out isn't that hard if you're single, employed and don't have a lot of financial obligations to suck up the money you earn (mortgage, children, your own business, etc). But the kids who were willing to see food as entertainment built the careers of guys like David Chang. Their parents cared more about organic and non-GMO, and they would prefer to shop at Whole Foods. But what they really wanted was the excitement of flavors you couldn't get anywhere else - house made everything put together in inventive dishes. And the popularity of restaurants where the care and creativity put into the food was more important than the decor or service changed fine dining. The crowd became younger, the room louder, the prices a little lower and "ooh, aah" food moments replaced seamless service in beautiful rooms.

(con'd)

But this generation for whom dining out is the new rock and roll is now getting married, buying houses and having kids. So guess what they're not doing so much anymore? Going out to eat. I don't know if there are enough willing younger diners to support the kind of dining out they popularized over the last decade or so. Because once they made it cool to move to the city and eat at the restaurants with inventive chefs what happened? Many of the cities with good food scenes simply got too expensive for the next generation of kids just starting out to even consider moving to. So they are about to become victims of their own success in places like NYC, for sure.

But in places where young people can make a living and not have to pay outrageous rent things are wide open for dining out to evolve. Maybe it will be what happens in New Orleans that we'll be talking about next decade. Who knows?

>current urban areas are in their own bubbles so non high end tier opportunities to grow will come from outside them

Get your logic out of here

There is percentage rent in commercial real estate where business pays percent of revenue and landlord is privy to your books

But you get what I'm saying. At the turn of the century young people could afford to move to the city as long as they could find a job, and a massive influx of them supported a new kind of restaurant culture, because that's what they spent their money on when they went out. But when these restaurants were no longer pioneers, but the places responsible for turning the neighborhood into a fine dining destination the rents go nuts. NYC's East Village is a perfect example. It went from being a kind of rock and roll neighborhood to a place with a bunch of Michelin stars in under a decade, and the rents pretty much tripled. No longer a place for pioneers.

Maybe there's a problem in cities but I live in an Illinois suburb and there's hardly any real dining around here. It's mostly just the usual fast food chains and a couple local greasy food joints. The one decent Italian restaurant near here gets insane business because there's not even any competition.

>Illinois suburb
If you're up North, you can always just drive into Chicago if you want an actual meal. If you're Central or Southern, why don't you move?

t. Peoriafag who wants to leave

Nice artcile OP

The restaraunt industry historically had the least skilled employees that were made up of immigrants and alcoholics. It was always looked down upon and had low paid jobs. You couldnt become rich working in a restaurant.

Than the Food Network came along and made chefs celebritys. Now we are seeing the restaurateurs that were raised on the food network.

These restauranteurs are learning its a hard business. Tied together with idolized millenials that think everyone deserves a living wage.

Restaraunts will continued to be stripped down to the basics to save costs

I'm in the south suburbs, Chicago is an hour from me and there's no chance in hell I'm spending that much on gas and tolls just to visit a restaurant in the murder capital of the world. And I'm not really in a position to move because beyond the restaurants, everything else here is fine.

Fuck em. I'll continue to eat at decades old Mexican and barbeque dives that don't cater to hipsters, soccer mom trends and the health conscious. If I wanted something healthy or higher brow I wouldn't be going out to eat in a restaurant in the first place, I'd cook it myself.

Sarcasm user, I actually agree.

The most "successful" / "prestigious" cities which were once pioneers are so successful that only the most extravagant cliente that survive in a traditional means. The food trucks will have their lunch niche, but the competition will only grow more fierce.

The mid market will have to placed in cheaper areas.

It has the spill over effect of why people do not want to spend more. Their own costs are going up.

I go to Chicago all the time, and I've never worried about getting shot, because I don't venture into crime-ridden neighborhoods or try to buy heroin.

Precisely because it is the only game in town is why it is doing well. Which is good! That's how growth happens. However, if suddenly there were three competitors for that price point/ cusine / clientele I wonder if it would stay successful, which the OP stated. But unlike OP I do not that is anyone but the owner's fault. One of the responsibilities with the job.

That's hardly a bubble

South-west burbs are where all the murders are, you dingus. There and the far south side, like 95th.

This.
I live in what is touted as the "Farm to Fork Capitol of the US". There's restaurants everywhere, of all kinds (because we also have the second most diverse population in the US, just in front of NYC and just behind Oakland).
But, as far as fine dining or even merely upscale dining, there's only a small handful of restaurants I'll go to, because they make good food, excellent food, at prices that you would normally expect.
I don't want to eat your "grilled cheese eggs benedict" for $16 (and that's not even from an expensive place). Pic related. If I want to get funky with simple foods, I can easily do that at home.

i live in a gentrifying area

before gentrification i used to eat out all the time because, although fewer in number, there were lots of interesting, economical places to eat that served things i am unable or unwilling to prepare myself

now there are about 10x more places to go but i don't often eat out anymore because there is literally nothing of value

all the good places have peaced out and shit hipster meme crap is everywhere

last time i went out i got overpriced, overcooked fried chicken, bland slaw and some shitty undercooked potatoes

it's a fucking joke

>The mid market will have to placed in cheaper areas.
But the mid market has always been a bitch in the US. This guy sums it up well for most places The fact that good restaurants suddenly appeared in some places that were within reach of the less than rich was amazing. But it was part of turning those cities/neighborhoods into places only the rich could afford. That's kind of a thing in cities - the transitional times are the most exciting, for better and for worse.

I don't know where the next interesting trend in food will come from. But if chef driven places are going to remain out of reach for most people it might be immigrant joints, like it traditionally has been in this country. I still live in New York, and find myself eating at immigrant run joints more than chef driven places these days. It's partially economics - better bang for the buck.

The best restaurants I've ever been to take something simple, elevate it, and execute it perfectly.

It's people like myself and my spouse who are going to be supporting them. Us Gen Xer's who's kids are finally grown and we can do what we like again. We may be the generation of cynicism, but we're not much at all like the Boomers, we still like going out and experiencing new things, particularly restaurants. We regularly spend hundreds of dollars a month going out, to both fine dining, and new pop ups, and ethnic places, just to try new things or eat extravagant meals. We're the ones they should be looking toward. That said, some of the trendy shit (like cereal milk as just an example) I can do fucking without. But in general, I'll try any kind of restaurant, at least once or twice, to see what it's all about.

That, in it's essence, is exactly what a great restaurant should be.

You're responding to a fellow X'er. But I had a career peak that lined up with the EV/LES boom in NYC. So I'm already back to cynicism.

It's understandable if you're an hour away, but don't make ridiculous excuses. I hope you get stuck in traffic trying to get out of the Portillo's drivethru.

>So I'm already back to cynicism.
Lol, it doesn't take long, my friend. We're doing great now, and have been for awhile, but I'm always waiting for the other shoe to drop and then go right back to being a cynical asshole full of schadenfreude and loathing.

I prefer eating eating the fresh prepared food from grocery stores than restaurants on days when I'm too lazy to cook.

>Often cheaper
>Can be a bit healthier than typical fast food and readg to eat as quick as fast food too.
>No tips
>No overpriced drinks
>Still minimal amount of clean up compared to cooking yourself.

A lot of grocery stores even have real chefs cooking the prepared food now. Grocerants are getting so popular they're becoming major competition to real restaurants.

businessinsider.com/millennials-are-abandoning-restaurants-2016-6

I definitely think delis/bakeries at higher-end groceries will become a larger competitor to traditional restaurants. Along with take and bake items like pizzas & pastas or salads. Since they typically own the building and because selling ready-to-eat food isn't their main source of revenue (not that groceries' margins are any better than full-service restaurants) they can keep prices in check.

Don't forget, decor changing every season, "rare" local foods, and apparently giving your customers endless alcohol drinks. I expect to pay for alcohol, never have I even heard about endless mimosas until this article.