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America restaurant bubble is about to pop vol: the end of another golden age

post #1 of 94
Thread Starter 
https://www.thrillist.com/eat/nation/american-restaurant-industry-bubble-burst

Interesting read about what we all knew was coming with people wanting to open up cool shops that mimic from the original shop.

I would like to provide a small location myself for those to taste delicious meals but not forced to open a restaurant to do so.

People should get back to supporting the locals and mom and pop shops.
post #2 of 94
I'm not sure about the conclusion that the reason for restaurants failing is the cost of labor. They skim over the fact that rent is killing them. To me that's the biggest difference between business now and 20 years ago - you can't just borrow a little money and open up a small business, work hard and expand - because you're paying way too much of your turnover in rent so that someone can sit at home and profit from your efforts. Just because they bought a building when it was cheap doesn't make them more deserving. It's not going to get better either - it's hard for folks nowadays to start a business mainly because of that.

He mentions that in the part where he talks about the lease expiring and then tripling the rent - but to me it's the most important reason, and screwing us all over.

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post #3 of 94
Quote:
Originally Posted by kdawg View Post

I'm not sure that the conclusion that the reason for restaurants failing is the cost of labor. They skim over the fact that rent is killing them. To me that's the nicest difference between business now and 20 years ago - you can't just borrow a little money and open up a small business, work hard and expand - because you're paying way too much of your turnover in rent so that someone can sit at home and profit from your efforts. Just because they bought a building when it was cheap doesn't make them more deserving. It's not going to get better either - it's hard for folks nowadays to start a business mainly because of that.

Yup we jus sat down at the table and the houses and hotels been up since the 70s. Just tryin to stay outta jail at this point. Waiting for a bank error in my favor
post #4 of 94
The arrogance of some of these owners/chefs are also contributing to the bubble bursting. For instance, there's a spot in DC called Shaw's Bijou. Opened with a lot of fanfare in November, I think. Dude had the audacity to charge $185 per person, not including drinks, taxes, or tip. Dinner for two would EASILY exceed $500. The owner got slammed by the press, amongst others. Long story short, they slashed prices in '17. By a lot.
post #5 of 94

saw this happen to a place i really liked in DC, Domku, in Petworth...shut down due to rising rent...

 

however, when i think about my dining patters/preferences, it really IS fast-casual/takeout, or if going out, its typically whatever the bar serves...

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post #6 of 94
What places are replacing these restaurants that get shut down? Other restaurants that can afford the expensive rent.
post #7 of 94
Thread Starter 
Quote:
Originally Posted by JJs07 View Post

The arrogance of some of these owners/chefs are also contributing to the bubble bursting. For instance, there's a spot in DC called Shaw's Bijou. Opened with a lot of fanfare in November, I think. Dude had the audacity to charge $185 per person, not including drinks, taxes, or tip. Dinner for two would EASILY exceed $500. The owner got slammed by the press, amongst others. Long story short, they slashed prices in '17. By a lot.
Yeah I remember reading about dude in the express saying that he plans to give back to the community by stopping at local schools to teach culinary. ohwell.gif

Crazy for him to think he could do that with his first restaurant after being on tv.
Quote:
Originally Posted by shogun View Post

What places are replacing these restaurants that get shut down? Other restaurants that can afford the expensive rent.
Just a newer hip spot thinking they can afford the rent but only providing the same menu of food you can get a few blocks away.
post #8 of 94
A lot of the time they don't get replaced, a totally different business takes over. Depending on the location a trendier, casual high profit restaurant that can foot the bill like a Buffalo Wild Wings, Chipotle etc... will move in.
post #9 of 94
This is the main culprit
Quote:
21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).

In CA, startng 1/1/2017, it's $10 an hour. Add to that cost... US Govt mandated health insurance coverage, overtime laws, workers compensation insurance, and payroll taxes.

$10 becomes closer to $15 an hour just to hire a dish washer... and in less than 6 years... Min Wage in CA will be $15.
Quote:
If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year.

^ For the next 6 years, that business has to deal with increasing minimum wage so the 20k will no doubt will be additional 100k+ by 2023. No business can survive that type of increase in cost unless you increase the prices on the menu and even with that, most businesses won't survive. The days of opening a small mom/pop business and having to hire employees full time are going away as most businesses are now focusing on temporary workers so they don't have to hire.
post #10 of 94
I didnt read the article but i have noticed the raising trend of "high end food courts". Pretty much a developer develops a cool trendy space and then reseraunts rent space in the development/building. So its a food court but with real resteraunts and fast casual type spots. Saves the businesses money because all they do is make the food and you pick it up and it gives individuals an avenue to discover new food.
post #11 of 94
Just seems like terrible management or terrible food

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post #12 of 94
Thread Starter 
With that method it comes with the cost of low experience employees unless the owner is able to pull from a nice group of temporary workers with those set skills
post #13 of 94
Thread Starter 
Quote:
Originally Posted by LuckyLuchiano View Post

I didnt read the article but i have noticed the raising trend of "high end food courts". Pretty much a developer develops a cool trendy space and then reseraunts rent space in the development/building. So its a food court but with real resteraunts and fast casual type spots. Saves the businesses money because all they do is make the food and you pick it up and it gives individuals an avenue to discover new food.
Union Market here in DC is a good option for that but not sure how much to rent your selected space.
post #14 of 94
Quote:
Originally Posted by Suberzat1 View Post

Union Market here in DC is a good option for that but not sure how much to rent your selected space.

In major cities though rent I assume is high as hell but for the business owners its probably still cheaper than having to get their own buildings and dealing what comes with that. I wouldnt be surprised if the businesses didnt need an alcohol license because the owner of the building obtained it, but I dont know how that kind of stuff works.
post #15 of 94
Quote:
Originally Posted by kdawg View Post

I'm not sure about the conclusion that the reason for restaurants failing is the cost of labor. They skim over the fact that rent is killing them. To me that's the biggest difference between business now and 20 years ago - you can't just borrow a little money and open up a small business, work hard and expand - because you're paying way too much of your turnover in rent so that someone can sit at home and profit from your efforts. Just because they bought a building when it was cheap doesn't make them more deserving. It's not going to get better either - it's hard for folks nowadays to start a business mainly because of that.

He mentions that in the part where he talks about the lease expiring and then tripling the rent - but to me it's the most important reason, and screwing us all over.

This is the reason a lot of established restaurants in my area are going out of business and forced to close, all I hear is how the landlords are raising the rent like crazy

Really sad the spots I've seen close down the last few years
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post #16 of 94
Quote:
Originally Posted by JJs07 View Post

The arrogance of some of these owners/chefs are also contributing to the bubble bursting. For instance, there's a spot in DC called Shaw's Bijou. Opened with a lot of fanfare in November, I think. Dude had the audacity to charge $185 per person, not including drinks, taxes, or tip. Dinner for two would EASILY exceed $500. The owner got slammed by the press, amongst others. Long story short, they slashed prices in '17. By a lot.

There's a couple of spots my girl had on her list in that $200+ each range that end up closed. I was never that wild on going anyways, just seems wrong to gouge that much.
post #17 of 94
Restaurants around me don't last long at all. It's always about the rent.
post #18 of 94

Yeah some of my friends that work or own restaurants complain about rent. Never heard them complain about labor costs. Expect when the topic of minimum wage rising to $22 comes up. 

post #19 of 94
Quote:
Originally Posted by Zyzz View Post

This is the reason a lot of established restaurants in my area are going out of business and forced to close, all I hear is how the landlords are raising the rent like crazy

Really sad the spots I've seen close down the last few years

Established restaurants should be able to open up in a different location though. Clientele will usually follow em.

Landlords have to raise the rent based of business sense. I don't know any owner that refuses to make more money by keeping the rent as is even though there are countless other applicants looking to lease the building. It's the landlord's fault for pricing out it's lease based of fair market value? If anything this is the result of poor management by the Restaurant for not extending the lease prior to it ending or pursing a longer lease initially.
post #20 of 94
Quote:
Originally Posted by Mark Antony View Post

Quote:
Originally Posted by JJs07 View Post

The arrogance of some of these owners/chefs are also contributing to the bubble bursting. For instance, there's a spot in DC called Shaw's Bijou. Opened with a lot of fanfare in November, I think. Dude had the audacity to charge $185 per person, not including drinks, taxes, or tip. Dinner for two would EASILY exceed $500. The owner got slammed by the press, amongst others. Long story short, they slashed prices in '17. By a lot.

There's a couple of spots my girl had on her list in that $200+ each range that end up closed. I was never that wild on going anyways, just seems wrong to gouge that much.

On top of it all, the dude that runs Shaw's Bijou wanted to have a "members only" bar. The pretentiousness makes me sick.

I'm not sure of the prices, but there's a spot that's supposedly REALLY good in the city called Rose's Luxury. They don't take reservations for groups smaller than 6, but you got folks waiting to get in about 3 hours before the doors open.

The fast-casual/Chipotle-method is the way to go. I see more restaurants (Cava, Bebop, etc.) adopting this philosophy of serving food.
post #21 of 94
Many of the good Asian and Latino restaurants that couldn't afford rent any longer in SF have disappeared from the city and have been replaced by trash white-washed restaurants that charge double/triple for the same type of food and lure in customers with a nice or hipster decor. The new restaurants can survive because all the Midwesterners with no taste buds have moved into the neighborhoods and do things like pay $10 for a garbage banh mi sandwich, when you can get the real thing (which tastes 100x better) for $3-4 in the South and East Bay.

I literally never go out to eat in SF anymore, even though I still live only 20 mins away after moving out.
Edited by SFC415 - 1/3/17 at 10:11am
post #22 of 94
I've been to some amazing restaurants in deeper out spots like purcellville, VA or Frederick, MD. That will probably be the next wave with the affordable leases. Anything close to DC will hurt your pockets.
post #23 of 94
Quote:
Originally Posted by SunDOOBIE View Post

Quote:
Originally Posted by Zyzz View Post

This is the reason a lot of established restaurants in my area are going out of business and forced to close, all I hear is how the landlords are raising the rent like crazy

Really sad the spots I've seen close down the last few years

Established restaurants should be able to open up in a different location though. Clientele will usually follow em.

Landlords have to raise the rent based of business sense. I don't know any owner that refuses to make more money by keeping the rent as is even though there are countless other applicants looking to lease the building. It's the landlord's fault for pricing out it's lease based of fair market value? If anything this is the result of poor management by the Restaurant for not extending the lease prior to it ending or pursing a longer lease initially.

No offense but if put it this way, you have a good job and good a great place and your paying an ok price for where you live and the housing market is booming and all of a sudden the bank or your land lord says you know what we're gonna raise your mortgage or rent by double...

I know with a business it's different but still just because it's established means they have the means to up and move? Not sure

But a restaurant I know of was a great local spot that was packed and family oriented and was in the same location for about 20+ years then the landlord decided to increase the rent by a lot! Ended up closing down and a new big time pizza chain took over the spot and opened up, guess what, closed down in a year because the location was terrible, the whole strip is actually pretty bad

Funny how that works, when a business in thriving in a ****** location and ****** strip no one visits other than for a business, now what is that landlord getting 😂
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post #24 of 94
Quote:
Originally Posted by JJs07 View Post

On top of it all, the dude that runs Shaw's Bijou wanted to have a "members only" bar. The pretentiousness makes me sick.

I'm not sure of the prices, but there's a spot that's supposedly REALLY good in the city called Rose's Luxury. They don't take reservations for groups smaller than 6, but you got folks waiting to get in about 3 hours before the doors open.

The fast-casual/Chipotle-method is the way to go. I see more restaurants (Cava, Bebop, etc.) adopting this philosophy of serving food.

Rose's Luxury is incredible. I think it won "Best New Restaurant in America 2014". And, while it may seem like it would pretentious/expensive, it isn't. Real cool experience, we ordered a few apps and a few main dishes, and the waitstaff kept bringing us additional food that the chef thought would go well with what we ordered (for no additional charge). I think for four people, with drinks included, our bill was around $250, so its definitely not cheap, but definitely not stupid expensive.
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post #25 of 94
Quote:
Originally Posted by DocWatson View Post

Quote:
Originally Posted by JJs07 View Post

On top of it all, the dude that runs Shaw's Bijou wanted to have a "members only" bar. The pretentiousness makes me sick.

I'm not sure of the prices, but there's a spot that's supposedly REALLY good in the city called Rose's Luxury. They don't take reservations for groups smaller than 6, but you got folks waiting to get in about 3 hours before the doors open.

The fast-casual/Chipotle-method is the way to go. I see more restaurants (Cava, Bebop, etc.) adopting this philosophy of serving food.

Rose's Luxury is incredible. I think it won "Best New Restaurant in America 2014". And, while it may seem like it would pretentious/expensive, it isn't. Real cool experience, we ordered a few apps and a few main dishes, and the waitstaff kept bringing us additional food that the chef thought would go well with what we ordered (for no additional charge). I think for four people, with drinks included, our bill was around $250, so its definitely not cheap, but definitely not stupid expensive.

The prices aren't bad at RL

My family had a table (group of 6+) booked, but had to cancel at the last minute. I definitely want to hit it up before summer.

But like @Mark Antony was saying, there are some DOPE places in the metro area, outside of the city. I'm actually heading up to Marshall, VA to go to Field and Main...who would have thought? laugh.gif
post #26 of 94
Quote:
Originally Posted by Zyzz View Post

No offense but if put it this way, you have a good job and good a great place and your paying an ok price for where you live and the housing market is booming and all of a sudden the bank or your land lord says you know what we're gonna raise your mortgage or rent by double...

I know with a business it's different but still just because it's established means they have the means to up and move? Not sure

But a restaurant I know of was a great local spot that was packed and family oriented and was in the same location for about 20+ years then the landlord decided to increase the rent by a lot! Ended up closing down and a new big time pizza chain took over the spot and opened up, guess what, closed down in a year because the location was terrible, the whole strip is actually pretty bad

Funny how that works, when a business in thriving in a ****** location and ****** strip no one visits other than for a business, now what is that landlord getting 😂

Yeah it sucks but it happens when you're in business. We had this old school burger joint and about 20+ years there at that spot in a great location by the beach in So Cal. During the weekends a gang of classic cars would have meet ups there. Then the prices on their menu started skyrocketing probably due to the rising cost of operating a restaurant by the beach, and more and more people stop going there cause of the price per Yelp reviews. Then a couple years ago it finally closed down and a Popeyes Chicken replaced it. Every time I drive by that Popeyes... it's dead so yeah stories like yours and mine are becoming more and more common. Landlords are just doing what they been doing which is charging fair market value.
post #27 of 94
RIP Carnegie Deli.
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post #28 of 94
Quote:
Originally Posted by SFC415 View Post

Many of the good Asian and Latino restaurants that couldn't afford rent any longer in SF have disappeared from the city and have been replaced by trash white-washed restaurants that charge double/triple for the same type of food and lure in customers with a nice or hipster decor. The new restaurants can survive because all the Midwesterners with no taste buds have moved into the neighborhoods and do things like pay $10 for a garbage banh mi sandwich, when you can get the real thing (which tastes 100x better) for $3-4 in the South and East Bay.

I literally never go out to eat in SF anymore, even though I still live only 20 mins away after moving out.

I've been saying this for years....the proliferation and appropriation of ethnic cultures by American chefs is the problem.  

This culture vulturing of Viet/Mexican/etc cuisines is sort of like gentrification when the yuppies start moving in.  It's a sign that things will never be the same.  
They steal the food culture, charge outrageous prices (but they can, because their clientele will eat it up), and never contribute or donate anything back to the culture they stole from.  

Then, when the fad runs its course, all that's left in the wake are closed restaurants.  I don't feel bad at all.  

 

I called out so many "celebrity" chefs in Chicago on social media, and none of them even had any type of replies to my inquiries.  They'll continue to pillage other ethnic cultures and won't give a damn thing back as per the usual. 

 

I'm talking to you RICK BAYLESS, STEPHANIE IZZARD, ANDY RICKER, etc. 

post #29 of 94
this what happens when you gentrify entres
post #30 of 94
Small businesses 9/10 are not closing doors because of minimum wage being increased fairly. Its because they POS building owners That bought the strip for 400K are charging the businesses double, triple, and sometimes quadruple the rent than previous years. So many mom and pop places around me are closing doors and not a single one has said it's because now they have to pay their employees $2 more an hour. its because their food sucks, they can't afford rent anymore, or they're deciding to retire
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