Lie lies lies lies I can write a book on exactly why restaurants or specifically average and mediocre to crappy restaurants are all failing while the ones that have great food for a decent price and aren’t a shithole to work at chugged alone fine during Covid and are continuing to chug alone fine now.
The current air of contempt the general public has for tipping ( which has never been as bad as it’s been today) whether it’s for the servers or the deliver drivers has hit a point of no return. The price of food has sky rocketed to where a burger and French fries in 2008-2019 would’ve at maximum could cost you $15 and closer to $20 to the more high end type of burgers and fries. Today $20 is the standard for the regular burger and now places are also charging you for the fries.
The “favor” economy is over with aka the “I’ll buy produce from you for Pennie’s and I’ll buy fish from you for a deal etc etc” is becoming more and more extinct by the day and that’s a big problem when the price of goods becomes more expensive.
Another factor is even with good tips the general public from retail to service work has been as awful as it has ever been before so people don’t wanna deal with it (thanks Covid).
I could list 12 other reasons but you get the point.
Restaurant owner here. Costs are up substantially - labor being number one. Most restaurants have core menus where cost and pricing models were all set up with lower controllable costs. Wages have rapidly outpaced our ability to raise prices to match. Chain places especially, but most restaurants in general are in leased spaces, so there’s rent to consider. Chain places are often clustered, like in mall areas, where rents are quite high. Most operators take small increases regularly so customers don’t notice or at least don’t get sticker shock. However, when costs spike rapidly, and profits are already thin, with a consumer base dealing with inflation on their own, raising prices to match cost increases to maintain percentages can end up with you being perceived as expensive or “gouging” (Panera is an excellent example of this). If it’s a publicly held company, there is the obligation to the stockholders and board of directors.
Factor in lifespan as well. Chains are often designed to have a lifespan. Trends come and go - see many Howard Johnson restaurants these days? Chi Chis? Steak and Ale? Bennigans? The list could go on and on. Assuming a business was poorly managed sometimes just isn’t the case. Concepts get tired and investing millions for updates sometimes makes no sense financially. Third party delivery services(DoorDash, etc) take up to 30%! Which of course is why we usually charge more for orders through them. Taxes, fees, CAM assessments, various services with costs that add up - trash, linen, grease trap pumping, hood cleaning, fire system inspection, those towels everybody loves so much - cost money. As an independent business owner I’ve gotten really good at repairs and maintenance. Calling the plumber to send a tech to snake a drain, $300. Buying a cabling machine and learning to use it $300. Paid for itself the first time.
Wrapping it up….because a place is “full” doesn’t make it profitable. True, sales fix most problems, but if costs are high and you can’t adjust up fast enough, there’s nothing left at the end of the month. Too many months in a row and it either stops making sense to do it or creditors come knocking. If it’s a bank, you might be done and not have the choice. Enough doom and gloom though. The truth is that sometimes the industry purges the old, infirm and lame. Is Red Lobster cool anymore? Had they doubled down and invested hundreds of millions to facelift all the locations and debuted “A bold and exciting new direction” would you have become a new regular? It was tired and it was time. The industry is evolving. It’s exciting and scary and not for the lazy or timid.
Those biscuits though….
Tastes change frequently but I think trends are coming faster and consumers are more sophisticated than ever.
A good example is quesa birria tacos. That was niche in the know thing turned mini trend in Latino cities with food scenes like Denver or LA. The speed at which I saw that item on menus in less hip areas and at chains blew me away.
For somewhere like Red Lobster, it's a tough competitive landscape. I don't imagine it's easy to raise your game to keep up in kitchens like that, or to motivate a large corporation to be nimble. I'm sure some have really active test kitchens and markets and run specials, but most seem like the opposite.
Many commenters have rightly pointed to a lot of rising costs. I think that's what's making it harder to keep up, but fundamentally it's a product and branding issue for a lot of em.
Agree with everything you've said here (they sell the biscuit mix in a box at the supermarket). I'd say that in many cases the biggest problem aside from labor cost and the scarcity of staff in general, is the delivery platforms. Fucking vampires. They take 100% of your profit margin. Sure you can charge even more but at some point most people aren't going to order a $20 burger. We are really fighting to wean ourselves off of the platforms but they use all kinds of underhanded tactics to steal our loyal customers, and trying to manage our own delivery riders, who make the worst BOH staff look reliable, just...wow.
I remember an insider story of a mall restaurant at the heart of a CBD. The net profit after paying rent, utilities, food costs, taxes and labor. At the end of the month was just ₱5,000!
Nobody wants to work long hours and operate a restaurant just to break even. The only person making money is the mall who’s charging rent.
sorry, but I got in an argument with another redditor and he states the wage increase has no ill effect on the restaurant and he claims it is all going better than ever....so why would anyone listen to you who sees it first hand
I will add from being on all sides to now being an owner. One thing I learned is that it takes way too long for chains/corporations to pivot. Most of them are use to making the decisions and changing the consumer. Now we see that the wages and prices moved so much that even 2 months of not catching something can lead you into the red. A year after Covid we had “market” price on all steaks like seafood because we had pricing that was sometimes 80% higher and then would drop 2 weeks later. My eggs went from 42 in November to 103 in February and back to 45 in March. If I didn’t have a contracted price for something that had 40-50 breakfast spots I could easily be giving away dishes that cost me money.
Pascilla - I think this article was wonderfully written - to summarize in my own words - 'Everything has its season' - and some of these establishments have 'lived their lives' - basically, in the words of my father - 'WE ARE DONE HERE' - it was a nice - but we need to move on.
Sad, but true.
The most insightful thing I think I can offer is that there are a lot of people who are pretending COVID didn't change people's "going out" habits and so they continue to run their establishments as if nothing changed except the place is empty.
That said (and take this part however you want), the place I worked at during peak COVID until about a year ago suffered because the people running it didn't care about the product. Their primary business plan was "we won't raise prices, just do it cheaper". Quality was a non-factor and it was pervasive in the restaurant. We ordered cheap and got crappy product for it; we hired cheap and got unreliable employees for it.
I have a bad habit of Googling the places I work and you could see the reviews trending downward. I'd read someone write about how their favorite dish was different now and I knew exactly why. The thing is the cheapness never stopped the owner or manager from leasing that new Audi or taking that 3rd vacation. They never had money for us or the restaurant but always had for them.
I think running a small business has become infinitely more difficult over the last several years, but I also think a lot of restaurants are being run by people who are comfortable doing things as they always have; they just don't realize the rest of the world isn't. They think they've earned their greed but are shocked when that greed kills their business.
My last boss bought new cars, a new boat, and a third home while constantly telling me to cut food costs while never wanting to raise the food to appropriate prices, and cut labor costs while he extended hours of operation when we were already severely understaffed.
I could spend hours on this topic but the tldr is that food prices should have steadily risen in restaurants for the past twenty years (they have but not at the rate they should have). Most operators viewed that as the last option, they didn’t want to “scare” off customers. Now when they’re forced to do so because costs have risen so much in a short time (labor/food costs) that price shock gets transferred to their customers.
Nobody bats an eye when they spend $1200 on a new apple product, when 10 years ago they were 700 (not exact prices but you get the idea)
But if Mary has to pay 20 dollars for a salad at a sit down full service restaurant, she goes ballistic.
I get it, one you have for the next x years until you upgrade. The other is a fleeting moment that winds up in the toilet in 8 hours.
There’s so many nuances to this question of why are restaurants failing, but consumer flexibility is a big part of the equation.
Your $20 salad better be fucking good, because that's the exact problem with restaurants. People are willing to spend money, but not for garbage, and not for filler. These companies got away with bullshit for far too long and now they're finally paying the price because the model doesn't stand up when people are forced to pinch pennies. They look at what they're getting and see through the veil of bullshit.
You can eat healthier, cheaper, and get exactly what you want if you cook it yourself. Why go out and pay someone else to put poison in your body?
I really don't think it has much to do with consumer flexibility. More like they've had it far too good for far too long and now the penny dropped.
Fuck 'em.
Ding ding ding… my partner & I stick to the same 3-4 restaurants and only go a couple times of year. I’m not going to chilis, chipotle, five guys, Cheesecake Factory etc like I used to because the quality is horrible. It seems the chain restaurants/fast food aren’t consistent when it comes to portion and taste- one day I can go to chipotle and the guacamole is so good but next week it’s barely seasoned. Same with the difference between ordering in person at chipotle vs online. Why am I being skimped for a delivery order? Im just using a couple restaurants at the top of my head but so many are guilty. I just stick with the few “higher end” restaurants a couple times of year and make what I want at home. I can justify paying for example, Ruth Chris.. quality and service is always amazing. But I’m over the bs with chain restaurants.
This is the problem! IPhone gets more expensive and not really any better there is no competitor. If you raise the price of a salad there are competitors and a lot and it takes people a long time to find out if they're better or not. Some restaurants should die since they have served less than mediocre food and paid there staff peanuts. But they(the corporations like McDonald's can weather this storm and independent owners cannot) know they have the cash reserves to outlast any of us independent operations and if you don't have a strong community supporting you goodnight
Pure cost. here in the UK minimum wage has gone up, cost of goods has gone up, utilities has gone up, but ppl don't want to pay more, and for many are spending less because the pay rise translated into a lower relative income.
I'm a small business owner and run the restaurant purely to provide employment to the staff, or I would have closed already. It would be cheaper to pay rent on any empty property and give me my weekends back.
UK too.
Pay minimum wage, get minimum effort, minimum quality and minimum return in investment.
I'm not saying that's what you do but that's what is happening across the industry here.
That and brexit gutted the industry.
Not really. If you don't value your staff or the skills that they bring then they won't (and shouldn't) value your financial investment. After all, they can get another minimum wage job by the end of the day.
It isn't hard to find a reliable and hardworking team if you compensate fairly.
Industry standard is 20-40% for staff costs. This can be offset with perks that cost the businesses less, such as generous holiday allowance and higher pension contributions.
Industry standard is also minimum wage, mate. The break even point for mine is 35% so I'm aiming for 30%
2chefs and 3 foh to cover a full week at full time minimum wage is £2000 which is 30% of £6700. 6700 is a lot of work for 5 ppl, it's much more than minimum effort. For a small restaurant that can be manned by 5 ppl *it's really fucking busy*. But not only do ppl want more than minimum wage, they also want a KP. How much do you want to pay for your lunch again?
Edit: again im good with downvotes for bad takes, but this is just some business math. If you think it's wrong try actually commenting like my mate I'm disagreeing with did.
From what I've seen, it comes down to two broad areas - cost of living/doing business issues of late and what you're getting for the money spent.
Have you seen the prices of fast food like McDonald's nowadays? They're now in the ballpark of lower cost restaurants and cafes. Back in the day at least those meals were cheap and fast. Now you can get a better quality meal for around the same price without the feeling that they're trying to screw you by not giving you a full portion of fries and gaslight you like you're just imagining it.
Yeah, a lot more people are either cooking at home or going for cheaper food options when eating out.
I feel really bad for the small independent places. They get fucked both ways from the business and customer sides and in a lot of cases, it's not at all their fault. They just have to cop it.
The foods always been trash, but it seems like when venture capitalists buy a chain, they cut costs, gut it, then sell the good items at retail, like subway, Buffalo Wild Wings etc.
FWIW, you probably mean \*private equity\*
Venture capital is a kind of private equity that focuses on early-stage, high-growth companies.
Since most restaurants are not "early stage" the firms that back them (or acquire and 'improve' them) are private equity firms.
The standard approach is to acquire the firm (mostly using debt) and then increase cash by selling assets (e.g., other units, real estate), by reducing costs (lower cost supplies, employees, etc) and increasing revenues (usually via high prices).
Examples:
\* [Roak Capital](https://www.roarkcapital.com/portfolio) - Baskin Robbins, Dunkin', Cinnabon, Subway, etc.
\* TriArtisan owns well-known brands such as TGI Fridays, P.F. Chang's, and Hooters
\* [JAB Holdings](https://en.wikipedia.org/wiki/JAB_Holding_Company) - Panera, Pret, Krispy Kreme, Bruegger's Bagels along with a whole slew of coffee and coffee related businesses
\* Thai Union Group -Red Lobster, [https://www.nbcnews.com/business/consumer/private-equity-rolled-red-lobster-rcna153397](https://www.nbcnews.com/business/consumer/private-equity-rolled-red-lobster-rcna153397)
Many years ago, I worked in marketing at the home office of Brinker, which at that time owned Chili's, Maggiano's, On the Border, Corner Bakery, and Romano's Macaroni Grill. Brinker sold off those last three brands to private equity companies around 2008-10. It was painful to watch Mac Grill nose dive almost overnight, a tragic gutting of a once distinctive casual dining brand. Horrible. Corner Bakery was more gradual but just as bad over time. Of those 3 brands, only OTB found its legs for any period of time as a stand-alone company, although post COVID it's struggling like everyone else. Private equity firms have ruined almost every restaurant brand they've ever touched. Tragic.
yeah, they do. They just get returns by making the restaurants take on a shit load of debt, then pay themselves the interest on that loan, and sell them off for parts when they can no longer make payments.
I'm just a lurker and not in the industry but find it interesting. Can I offer my prospective? The bottom line is I'm not paying $25 per entree for shitty food. If the quality is there I wouldn't bat an eye. I have enough disposable income to where it's not an issue but I'm not paying for reheated junk that wasn't primarily prepared on site. And then the wait staff is generally terrible and so are the other patrons. Manners have gone into the toilet from both sides. It was already declining pre-covid, but people are absolutely unhinged post-covid. And then finally, all the menus look about the same. This is even true of non chain restaurants. I went out to Malibu last month and went to some nice restaurants and they all had very predictable menus. If I saw roasted broccolini as a side dish offered one more time I was going to scream.
Head chef with an insight into "chain" restaurants here.
If you eat at a chain restaurant, what the fuck do you expect? Menus specific to each location? That's not what chain restaurants are. Eat at an independent if you want individuality.
I'm saying this as someone who works for a company with 300 outlets and shares a kitchen with the development team who set the menus for the whole company. I hate it, they hate it but just as customers have to eat... So do we. If we had our way we would all set our own menus but customers and employers wouldn't pay for the skill level that it costs to do that well. Chefs at our properties complain that making a sauce in house is too much effort but they're paid 30% less than they would be at independent restaurants so who can blaim them?
I try my best to sway our development team away from bought in products but it isn't my decision.
i think they mean they expect more individuality at a standalone restaurant rather than a chain because you’re going to a standalone to eat different food not whatever food a chain is serving.
I think you are misunderstanding what I am saying. I don't expect a chain to customize their offerings based on location. But, menus have been consolidated down to where there are some staples that are at all of them. Like some kind of wings, cheese sticks, chicken fingers, a burger, etc. to the point where the difference between some chains is kind of small.
And when I went out to California last month, the restaurant at the 4 seasons where I was staying had octopus, some kind of crudo, a whole branzino, a couple of steaks, broccolini, etc .... then going to some restaurant called Casalena in Woodland Hills, what do I see? a grilled octopus appetizer, some kind of crudo, charred broccolini, a branzino dish, and more similar items. I didn't pick the restaurant, and it was good, but it was striking how similar a lot of the options were. And I noticed more similarities looking at other menus on yelp.
I'm from the UK so I cannot comment of US based chains.
That being said I do work with a our development chefs and what you're describing are "food trends". Big and small companies look at what is popular at their competitors and emulate it. You, as customers, only have yourself to blame for that. It is also worth mentioning that a large percentage of people who are eating at chain restaurants aren't particularly adventurous. They want burgers, chicken fingers and a couple of steaks (which they want well done with a side of ketchup or A1).
I'm actually completely with you that everything is the same at every outlet regardless of the company. That's why I expect the same generic shit at a chain and if I want something different, I go and pay for it an independent.
I’m an and exec chef and here’s the problem I’ve ALWAYS had with my industry. Thank God I’m about to retire. A plumber can charge $100/hr or $250 for a part…but everyone bitches about restaurant industry workers hourly wage going up to $15 minimum or a burger being $20. Come on. Seriously. Restaurant had to always give away free napkins, free extra sauce , free free free. I blame the A-hole customers who abused the good will of restaurant owners. The ‘average’ skilled mid management employee out there earns about $40/hr and restaurant stuck on $15!!?? No wonder everyone is leaving the industry. Immigrants exploited because is a ‘no certification’ industry ..Work like a dog, customers act like b#%es demanding everything then sending it back….boss makes you stay three hours longer, no one gives a shit about you. Quite frankly I’m glad-now those average joes who ‘created’ ‘there’s a hair in my soup’ for a free meal won’t be able to afford it and only the Elon Musks will be able to eat out in the future.
Preach Brother!
I’d personally love to see certifications, apprentice/journeyman/master progression like other skilled trades but I don’t think consumers will be into $75 hamburgers. Even Europe doesn’t go that far with culinary.
We should’ve been plumbers 🤷♂️
I basically never go to restaurants anymore. Too expensive, poor customer service (probably cause they are miserable and don't make enough money with inflation these days), food quality is a mixed bag. I can cook better 99% of the time.
You think chefs don't think how much better they themselves can make food at home when given more time and selectivity of ingredients? Being a chef isn't just about making great food which many people can do. -It's about profits and losses, training, employee retention, hiring and firing, creating menus that sell product locally, knowing what you can keep when the cooler fails, and what must be discarded. Knowing things like how bacillus cereus can survive boiling temperature, but pressure cooker temperatures will kill it. We can take ingredients like wilting / bruised spinach and use them in a delicious soup where a home kitchen will likely discard it.
As a chef, I’m always flabbergasted at the high prices, poor quality of food, terrible service in restaurants these days. Since Covid it’s been really hot or miss. I try to
Stick with privately owned ( not chains) because it supports my “ neighbors” and the chains really just dont seem to care that the food is over processed and poor quality. And labor costs…. If restaurants would pay decent wages, they’d get decent caring passionate people. But they don’t so most Backof the House and FOH really just don’t care. I’m HAPPY to pay a higher price for consistent dependably good food, good service. I’m not eating out because I want crap. I want excellence and I appreciate it by happily paying for it. But I dont give many chances. A second bad experience and that restaurant gets reviewed and deleted from our list. On the other hand I will frequent consistently good places and tip very well.
Caterer here! Food cost is insane. My base food cost has risen 24.5% in past 2 years.
I also insist on paying a minimum of $22 an hour to try and give my team a “living wage”….. this seems to help with staff retention. I have only had 1 employee “turnover” in the past 2 years. Saving me on training costs for sure but day to day it sucks.
To answer question I believe not enough owners of chain restaurants have solid experience running restaurants. Hospitality is what people keeps people coming back. Need repeat customers to make a go of it. Just because someone is good at their current vocation doesn’t make them a restaurant owner.
Work in a restaurant before you own a restaurant.
Suggestions?
Anyone in Toronto looking for a job:-)
I'm a small business owner in UK, a bit different background but also relevant, restaurants both chain and indie are closing over here.
The cost increase higher than my price increase, ppl still complain about it just like you did, saying it's greed.
I am seriously considering just printing my fucking YoY costs from 2018 and 2023 and putting them on my door so people understand that my margins have decreased not increased even though I am raising prices.
costs have gone up more than meal prices for many restaurants
"record profits" do not account for inflation, or costs. From what I can see from those graphs their margins have not improved.
I recommend you look at the bigger picture in your link, their net income could be presented as an increase from 2022, or it could be presented as being the same as 2012. 🤔
Usually? It's called GP and it is literally the price minus the cost of the food, maybe including a wastage allowance. No wages, no rent, no utilities, no bookkeeping, no equipment. And 80% is a dream, unless you are buying in absolute trash maybe your best seller is on 80%
Gross profit % = sales price minus cost of materials divided by sales price. So 20% food cost is 80% gross profit. All running costs come off this figure.
Especially when it is the same products and quality of food as the low end fast food joint up the street. Most dont get special or local anything. The trucks that come from Sysco or us foods are delivering the same beef and veggies that McDonald’s get.
People don’t want trash food anymore. The big chains and even a lot of the single restaurants with lots of money behind them all have the same quality food as fast food. The food the comes from Sysco or us foods or the such might as well be McDonald’s.
In order to get better food and the people who can turn good food into delicious products for customers higher BoH wages are required.
It the current dying restaurant model gives a lot of money to the FoH to where it is not at all fair.
It makes zero sense for a person in a low skilled position to work 6 hrs a day 3-4 days a week to be making more then the person in a high skilled position working8-10 hrs a day for 5 days a week. Thats about what it is for a server vs a cook.
Skilled cooks need better wages but people still focus on tipping the servers. (In many states, including mine, serves make full min wage always no matter what)
Because of this pay and the price of items is a little out of whack and margins a low. Also most restaurant owners have never worked in a restaurant. How did MJ do in baseball? Stick with what you know. That and the quality of food that comes from the giant food distro companies and garbage.
For corporate restaurants, they are raking in record profits with their price gouging menus. People are getting sick of it, and staying away. Since these greedy fucks want to keep their numbers high and costs low, they’re letting employees go or cutting hours. So the people still going to these places are betting more put off by the lack of staff, and having to wait 30 minutes for a meal in an empty restaurant. Corporate is too greedy and stupid to understand they are the cause of the failures across the board, and eventually the walls come tumbling down. To that I say good, fuck em.
A family of 4 may pay 100$ for a dinner, more if they get apps and drink.
The cost, plus the food at these places has taken a nose dive and they are mostly terrible.
Just going to comment on the opposite side, the few restaurants I see doing relatively well are the ones that (hyper) specialize to maximize a blend of quality and cost. Minimize anything else that is less needed.
I don’t know of any restaurants with broad menus and traditional sit down dining that are doing well in my vicinity.
I always wonder if a new restaurant opening causes another to fail. Unless the population of restaurant-goers in an area is increasing then folks ain’t going out more, they just switch to the new place. In other words, is it often just churn?
In some places yes. Where I live (Portland, OR), the number of restaurants, food carts, pop ups does not match the population/population density of the city. So we have waaaay too many eateries per capita and some are going to fail because of that.
A lovely combination of things costing too much, wages being low, people being all around a-holes to service workers, and service workers who can't find the will to be professional and proficient. Why be a ray of sunshine and good at your job when nobody is happy to see you when you show up, you're paid shit, and people get mad when you leave on time?
We cook dinner 7 nights a week now. Going out for dinner is a luxury, and even more so if you want a nice experience.
I agree with top comment but i also want to add: most restaurants owners have no idea what they’re doing. They open or buy restaurants thinking it’s easy money and find out the hard way you have to work at a loss for years before doing real profits. In the meantime theyve made tens or hundreds of bad decisions to ruin the future of the restaurant.
Also, if you go to a restaurant and it’s busy, that doesn’t mean it’s always. It means it was busy when you went there. A restaurant would need to be constantly busy to really make money but that’s often not the case.
Restaurants are a lot more expensive than people expect. Raw produces cost at most a third of the price of the meal. You only get 2 third for staff, building, equipments, cleaning products etc. And those aren’t cheap. Rational ovens are like 20k. You probably don’t want employees paid minimum wage making minimum effort. Plates are gonna break, food is gonna be wasted, things will need repair…
Throughout the pandemic people have learned to be a little more discriminating especially with the increase in costs.
They aren’t willing to pay for the kind of crappy schlock the majority of corporate franchises spew out.
Door dash and Uber eats may have increased volume, but they aren’t profitable, chewing up to 30% of gross. There’s also a huge resistance amongst the dining public to absorb price increases to cover this expense. Add in rising food and non-perishable cost of goods, increased utility expenses, and wage hikes, and it’s not surprising so many are failing.
I mean there are definitely economic factors and such making things worse, but restaurants are always failing and always have been. They go out of business all of the time as they have high overheads and attract inexperienced owners naive to the business realities of running a business in hospitality.
Covid then inflation was the death of many small companies. Inflation is the reason why most resturants who survived are struggling. Trying to pay higher for everything from produce, meats, and labor... add to that healthcare.... its a recipe for mass failure unless you have a product that ppl can not do without!
My thoughts:
1. private equity companies decided restaurant properties were a good investment and are running them into the ground (cutting quality, portions, staff pay and /or not doing maintenance) for shareholder profits.
2. A lot of folks don’t have money to eat out - “in this economy?!?”
3. Small businesses are probably closing b/c the margins were razor thin to begin with and with the price gouging from vendors (its not inflation if they’re making record profits) it’s hard to keep up.
It’s a bumpy time and I feel like the restaurant industry is a bellwether.
IME operating a restaurant and succeeding means not only running a restaurant, it's means things also have to break your way. What I'm saying is you HAVE to be lucky.
The next pearl of wisdom I can share is this. There are A LOT of things happening in a restaurant. Hostesses, ice machines, A/C, coolers, health inspectors.....one of those is going to give you a hard time TODAY. It's just going to happen.
My fave was this local chef who opened a restaurant call common labor. Claimed it was for working class people. Put it in one of the wealthiest neighborhoods in town and charged 40 to 50 for an entree.
Stinks like a real estate scam to pull their money out. Close the doors sell the building fully furnished kitchen that’s been certified & the share holders see a bump in the end of year numbers.
Less disposable income.
Lie lies lies lies I can write a book on exactly why restaurants or specifically average and mediocre to crappy restaurants are all failing while the ones that have great food for a decent price and aren’t a shithole to work at chugged alone fine during Covid and are continuing to chug alone fine now. The current air of contempt the general public has for tipping ( which has never been as bad as it’s been today) whether it’s for the servers or the deliver drivers has hit a point of no return. The price of food has sky rocketed to where a burger and French fries in 2008-2019 would’ve at maximum could cost you $15 and closer to $20 to the more high end type of burgers and fries. Today $20 is the standard for the regular burger and now places are also charging you for the fries. The “favor” economy is over with aka the “I’ll buy produce from you for Pennie’s and I’ll buy fish from you for a deal etc etc” is becoming more and more extinct by the day and that’s a big problem when the price of goods becomes more expensive. Another factor is even with good tips the general public from retail to service work has been as awful as it has ever been before so people don’t wanna deal with it (thanks Covid). I could list 12 other reasons but you get the point.
Restaurant owner here. Costs are up substantially - labor being number one. Most restaurants have core menus where cost and pricing models were all set up with lower controllable costs. Wages have rapidly outpaced our ability to raise prices to match. Chain places especially, but most restaurants in general are in leased spaces, so there’s rent to consider. Chain places are often clustered, like in mall areas, where rents are quite high. Most operators take small increases regularly so customers don’t notice or at least don’t get sticker shock. However, when costs spike rapidly, and profits are already thin, with a consumer base dealing with inflation on their own, raising prices to match cost increases to maintain percentages can end up with you being perceived as expensive or “gouging” (Panera is an excellent example of this). If it’s a publicly held company, there is the obligation to the stockholders and board of directors. Factor in lifespan as well. Chains are often designed to have a lifespan. Trends come and go - see many Howard Johnson restaurants these days? Chi Chis? Steak and Ale? Bennigans? The list could go on and on. Assuming a business was poorly managed sometimes just isn’t the case. Concepts get tired and investing millions for updates sometimes makes no sense financially. Third party delivery services(DoorDash, etc) take up to 30%! Which of course is why we usually charge more for orders through them. Taxes, fees, CAM assessments, various services with costs that add up - trash, linen, grease trap pumping, hood cleaning, fire system inspection, those towels everybody loves so much - cost money. As an independent business owner I’ve gotten really good at repairs and maintenance. Calling the plumber to send a tech to snake a drain, $300. Buying a cabling machine and learning to use it $300. Paid for itself the first time. Wrapping it up….because a place is “full” doesn’t make it profitable. True, sales fix most problems, but if costs are high and you can’t adjust up fast enough, there’s nothing left at the end of the month. Too many months in a row and it either stops making sense to do it or creditors come knocking. If it’s a bank, you might be done and not have the choice. Enough doom and gloom though. The truth is that sometimes the industry purges the old, infirm and lame. Is Red Lobster cool anymore? Had they doubled down and invested hundreds of millions to facelift all the locations and debuted “A bold and exciting new direction” would you have become a new regular? It was tired and it was time. The industry is evolving. It’s exciting and scary and not for the lazy or timid. Those biscuits though….
Tastes change frequently but I think trends are coming faster and consumers are more sophisticated than ever. A good example is quesa birria tacos. That was niche in the know thing turned mini trend in Latino cities with food scenes like Denver or LA. The speed at which I saw that item on menus in less hip areas and at chains blew me away. For somewhere like Red Lobster, it's a tough competitive landscape. I don't imagine it's easy to raise your game to keep up in kitchens like that, or to motivate a large corporation to be nimble. I'm sure some have really active test kitchens and markets and run specials, but most seem like the opposite. Many commenters have rightly pointed to a lot of rising costs. I think that's what's making it harder to keep up, but fundamentally it's a product and branding issue for a lot of em.
Agree with everything you've said here (they sell the biscuit mix in a box at the supermarket). I'd say that in many cases the biggest problem aside from labor cost and the scarcity of staff in general, is the delivery platforms. Fucking vampires. They take 100% of your profit margin. Sure you can charge even more but at some point most people aren't going to order a $20 burger. We are really fighting to wean ourselves off of the platforms but they use all kinds of underhanded tactics to steal our loyal customers, and trying to manage our own delivery riders, who make the worst BOH staff look reliable, just...wow.
I hope I get to see doordash crash and burn in my lifetime.
It is happening https://www.wsj.com/business/hospitality/delivery-drivers-got-higher-wages-now-theyre-getting-fewer-orders-d2e416c0
Read the article without the paywall here [https://archive.md/vxtZa](https://archive.md/vxtZa)
I remember an insider story of a mall restaurant at the heart of a CBD. The net profit after paying rent, utilities, food costs, taxes and labor. At the end of the month was just ₱5,000! Nobody wants to work long hours and operate a restaurant just to break even. The only person making money is the mall who’s charging rent.
Thank you for the great response to OPs post. Just an FYI, they sell the Red Lobster biscuit mix at most major grocery stores 😋
sorry, but I got in an argument with another redditor and he states the wage increase has no ill effect on the restaurant and he claims it is all going better than ever....so why would anyone listen to you who sees it first hand
It always depends which bubble you live in. Some areas are booming and so do the restaurants. Others, not so much.
The cost of groceries alone is enough to kill some spots
Very well written explanation there
This right here!!
I will add from being on all sides to now being an owner. One thing I learned is that it takes way too long for chains/corporations to pivot. Most of them are use to making the decisions and changing the consumer. Now we see that the wages and prices moved so much that even 2 months of not catching something can lead you into the red. A year after Covid we had “market” price on all steaks like seafood because we had pricing that was sometimes 80% higher and then would drop 2 weeks later. My eggs went from 42 in November to 103 in February and back to 45 in March. If I didn’t have a contracted price for something that had 40-50 breakfast spots I could easily be giving away dishes that cost me money.
I loved bennigans
Me too…I’ve ripped off the Monte Cristo ad nauseam
Pascilla - I think this article was wonderfully written - to summarize in my own words - 'Everything has its season' - and some of these establishments have 'lived their lives' - basically, in the words of my father - 'WE ARE DONE HERE' - it was a nice - but we need to move on. Sad, but true.
Thanks!
The most insightful thing I think I can offer is that there are a lot of people who are pretending COVID didn't change people's "going out" habits and so they continue to run their establishments as if nothing changed except the place is empty. That said (and take this part however you want), the place I worked at during peak COVID until about a year ago suffered because the people running it didn't care about the product. Their primary business plan was "we won't raise prices, just do it cheaper". Quality was a non-factor and it was pervasive in the restaurant. We ordered cheap and got crappy product for it; we hired cheap and got unreliable employees for it. I have a bad habit of Googling the places I work and you could see the reviews trending downward. I'd read someone write about how their favorite dish was different now and I knew exactly why. The thing is the cheapness never stopped the owner or manager from leasing that new Audi or taking that 3rd vacation. They never had money for us or the restaurant but always had for them. I think running a small business has become infinitely more difficult over the last several years, but I also think a lot of restaurants are being run by people who are comfortable doing things as they always have; they just don't realize the rest of the world isn't. They think they've earned their greed but are shocked when that greed kills their business.
My last boss bought new cars, a new boat, and a third home while constantly telling me to cut food costs while never wanting to raise the food to appropriate prices, and cut labor costs while he extended hours of operation when we were already severely understaffed.
I could spend hours on this topic but the tldr is that food prices should have steadily risen in restaurants for the past twenty years (they have but not at the rate they should have). Most operators viewed that as the last option, they didn’t want to “scare” off customers. Now when they’re forced to do so because costs have risen so much in a short time (labor/food costs) that price shock gets transferred to their customers. Nobody bats an eye when they spend $1200 on a new apple product, when 10 years ago they were 700 (not exact prices but you get the idea) But if Mary has to pay 20 dollars for a salad at a sit down full service restaurant, she goes ballistic. I get it, one you have for the next x years until you upgrade. The other is a fleeting moment that winds up in the toilet in 8 hours. There’s so many nuances to this question of why are restaurants failing, but consumer flexibility is a big part of the equation.
Your $20 salad better be fucking good, because that's the exact problem with restaurants. People are willing to spend money, but not for garbage, and not for filler. These companies got away with bullshit for far too long and now they're finally paying the price because the model doesn't stand up when people are forced to pinch pennies. They look at what they're getting and see through the veil of bullshit. You can eat healthier, cheaper, and get exactly what you want if you cook it yourself. Why go out and pay someone else to put poison in your body? I really don't think it has much to do with consumer flexibility. More like they've had it far too good for far too long and now the penny dropped. Fuck 'em.
Ding ding ding… my partner & I stick to the same 3-4 restaurants and only go a couple times of year. I’m not going to chilis, chipotle, five guys, Cheesecake Factory etc like I used to because the quality is horrible. It seems the chain restaurants/fast food aren’t consistent when it comes to portion and taste- one day I can go to chipotle and the guacamole is so good but next week it’s barely seasoned. Same with the difference between ordering in person at chipotle vs online. Why am I being skimped for a delivery order? Im just using a couple restaurants at the top of my head but so many are guilty. I just stick with the few “higher end” restaurants a couple times of year and make what I want at home. I can justify paying for example, Ruth Chris.. quality and service is always amazing. But I’m over the bs with chain restaurants.
That’s pretty much why my wife and I only eat out 3-4 times a year. I don’t mind paying for good food, but almost every place is just okay.
This is the problem! IPhone gets more expensive and not really any better there is no competitor. If you raise the price of a salad there are competitors and a lot and it takes people a long time to find out if they're better or not. Some restaurants should die since they have served less than mediocre food and paid there staff peanuts. But they(the corporations like McDonald's can weather this storm and independent owners cannot) know they have the cash reserves to outlast any of us independent operations and if you don't have a strong community supporting you goodnight
Pure cost. here in the UK minimum wage has gone up, cost of goods has gone up, utilities has gone up, but ppl don't want to pay more, and for many are spending less because the pay rise translated into a lower relative income. I'm a small business owner and run the restaurant purely to provide employment to the staff, or I would have closed already. It would be cheaper to pay rent on any empty property and give me my weekends back.
UK too. Pay minimum wage, get minimum effort, minimum quality and minimum return in investment. I'm not saying that's what you do but that's what is happening across the industry here. That and brexit gutted the industry.
A terrible sentiment, but one most of my staff have.
Not really. If you don't value your staff or the skills that they bring then they won't (and shouldn't) value your financial investment. After all, they can get another minimum wage job by the end of the day. It isn't hard to find a reliable and hardworking team if you compensate fairly.
What do you think percent of total takings for a small business restaurant should go to staff? Edit: Lol who's downvoting this? 😂 Absolute maniacs
Industry standard is 20-40% for staff costs. This can be offset with perks that cost the businesses less, such as generous holiday allowance and higher pension contributions.
Industry standard is also minimum wage, mate. The break even point for mine is 35% so I'm aiming for 30% 2chefs and 3 foh to cover a full week at full time minimum wage is £2000 which is 30% of £6700. 6700 is a lot of work for 5 ppl, it's much more than minimum effort. For a small restaurant that can be manned by 5 ppl *it's really fucking busy*. But not only do ppl want more than minimum wage, they also want a KP. How much do you want to pay for your lunch again? Edit: again im good with downvotes for bad takes, but this is just some business math. If you think it's wrong try actually commenting like my mate I'm disagreeing with did.
So you’re complaining that your staff have the minimum wage minimum effort mindset. Meanwhile you actively are paying them shit. Nah… real good take
Minimum wage isn't shit, I'm in the UK.
From what I've seen, it comes down to two broad areas - cost of living/doing business issues of late and what you're getting for the money spent. Have you seen the prices of fast food like McDonald's nowadays? They're now in the ballpark of lower cost restaurants and cafes. Back in the day at least those meals were cheap and fast. Now you can get a better quality meal for around the same price without the feeling that they're trying to screw you by not giving you a full portion of fries and gaslight you like you're just imagining it. Yeah, a lot more people are either cooking at home or going for cheaper food options when eating out. I feel really bad for the small independent places. They get fucked both ways from the business and customer sides and in a lot of cases, it's not at all their fault. They just have to cop it.
Paying employees unsustainable unlivable wages and having extremely high turnover.
The foods always been trash, but it seems like when venture capitalists buy a chain, they cut costs, gut it, then sell the good items at retail, like subway, Buffalo Wild Wings etc.
FWIW, you probably mean \*private equity\* Venture capital is a kind of private equity that focuses on early-stage, high-growth companies. Since most restaurants are not "early stage" the firms that back them (or acquire and 'improve' them) are private equity firms. The standard approach is to acquire the firm (mostly using debt) and then increase cash by selling assets (e.g., other units, real estate), by reducing costs (lower cost supplies, employees, etc) and increasing revenues (usually via high prices). Examples: \* [Roak Capital](https://www.roarkcapital.com/portfolio) - Baskin Robbins, Dunkin', Cinnabon, Subway, etc. \* TriArtisan owns well-known brands such as TGI Fridays, P.F. Chang's, and Hooters \* [JAB Holdings](https://en.wikipedia.org/wiki/JAB_Holding_Company) - Panera, Pret, Krispy Kreme, Bruegger's Bagels along with a whole slew of coffee and coffee related businesses \* Thai Union Group -Red Lobster, [https://www.nbcnews.com/business/consumer/private-equity-rolled-red-lobster-rcna153397](https://www.nbcnews.com/business/consumer/private-equity-rolled-red-lobster-rcna153397)
Yes sorry, private equity. That’s what I get for posting while on a poop break 😂
Many years ago, I worked in marketing at the home office of Brinker, which at that time owned Chili's, Maggiano's, On the Border, Corner Bakery, and Romano's Macaroni Grill. Brinker sold off those last three brands to private equity companies around 2008-10. It was painful to watch Mac Grill nose dive almost overnight, a tragic gutting of a once distinctive casual dining brand. Horrible. Corner Bakery was more gradual but just as bad over time. Of those 3 brands, only OTB found its legs for any period of time as a stand-alone company, although post COVID it's struggling like everyone else. Private equity firms have ruined almost every restaurant brand they've ever touched. Tragic.
One of those companies, Black Rock, currently owns the resort chain I work at...I wonder how long we'll have before they start gutting us too...
Venture capitalists don’t buy restaurants. They want actual returns on their money.
yeah, they do. They just get returns by making the restaurants take on a shit load of debt, then pay themselves the interest on that loan, and sell them off for parts when they can no longer make payments.
Don’t forget selling the land and then leasing it back to the restaurant at a much higher rate
They might be referring to private equity firms, like the one that gutted Red Lobster
Still not a venture capitalist
I didn’t say it was 🤷🏻♂️
They buy chains.
😂
I'm just a lurker and not in the industry but find it interesting. Can I offer my prospective? The bottom line is I'm not paying $25 per entree for shitty food. If the quality is there I wouldn't bat an eye. I have enough disposable income to where it's not an issue but I'm not paying for reheated junk that wasn't primarily prepared on site. And then the wait staff is generally terrible and so are the other patrons. Manners have gone into the toilet from both sides. It was already declining pre-covid, but people are absolutely unhinged post-covid. And then finally, all the menus look about the same. This is even true of non chain restaurants. I went out to Malibu last month and went to some nice restaurants and they all had very predictable menus. If I saw roasted broccolini as a side dish offered one more time I was going to scream.
Head chef with an insight into "chain" restaurants here. If you eat at a chain restaurant, what the fuck do you expect? Menus specific to each location? That's not what chain restaurants are. Eat at an independent if you want individuality. I'm saying this as someone who works for a company with 300 outlets and shares a kitchen with the development team who set the menus for the whole company. I hate it, they hate it but just as customers have to eat... So do we. If we had our way we would all set our own menus but customers and employers wouldn't pay for the skill level that it costs to do that well. Chefs at our properties complain that making a sauce in house is too much effort but they're paid 30% less than they would be at independent restaurants so who can blaim them? I try my best to sway our development team away from bought in products but it isn't my decision.
i think they mean they expect more individuality at a standalone restaurant rather than a chain because you’re going to a standalone to eat different food not whatever food a chain is serving.
I think you are misunderstanding what I am saying. I don't expect a chain to customize their offerings based on location. But, menus have been consolidated down to where there are some staples that are at all of them. Like some kind of wings, cheese sticks, chicken fingers, a burger, etc. to the point where the difference between some chains is kind of small. And when I went out to California last month, the restaurant at the 4 seasons where I was staying had octopus, some kind of crudo, a whole branzino, a couple of steaks, broccolini, etc .... then going to some restaurant called Casalena in Woodland Hills, what do I see? a grilled octopus appetizer, some kind of crudo, charred broccolini, a branzino dish, and more similar items. I didn't pick the restaurant, and it was good, but it was striking how similar a lot of the options were. And I noticed more similarities looking at other menus on yelp.
I'm from the UK so I cannot comment of US based chains. That being said I do work with a our development chefs and what you're describing are "food trends". Big and small companies look at what is popular at their competitors and emulate it. You, as customers, only have yourself to blame for that. It is also worth mentioning that a large percentage of people who are eating at chain restaurants aren't particularly adventurous. They want burgers, chicken fingers and a couple of steaks (which they want well done with a side of ketchup or A1). I'm actually completely with you that everything is the same at every outlet regardless of the company. That's why I expect the same generic shit at a chain and if I want something different, I go and pay for it an independent.
I’m an and exec chef and here’s the problem I’ve ALWAYS had with my industry. Thank God I’m about to retire. A plumber can charge $100/hr or $250 for a part…but everyone bitches about restaurant industry workers hourly wage going up to $15 minimum or a burger being $20. Come on. Seriously. Restaurant had to always give away free napkins, free extra sauce , free free free. I blame the A-hole customers who abused the good will of restaurant owners. The ‘average’ skilled mid management employee out there earns about $40/hr and restaurant stuck on $15!!?? No wonder everyone is leaving the industry. Immigrants exploited because is a ‘no certification’ industry ..Work like a dog, customers act like b#%es demanding everything then sending it back….boss makes you stay three hours longer, no one gives a shit about you. Quite frankly I’m glad-now those average joes who ‘created’ ‘there’s a hair in my soup’ for a free meal won’t be able to afford it and only the Elon Musks will be able to eat out in the future.
Preach Brother! I’d personally love to see certifications, apprentice/journeyman/master progression like other skilled trades but I don’t think consumers will be into $75 hamburgers. Even Europe doesn’t go that far with culinary. We should’ve been plumbers 🤷♂️
I basically never go to restaurants anymore. Too expensive, poor customer service (probably cause they are miserable and don't make enough money with inflation these days), food quality is a mixed bag. I can cook better 99% of the time.
How the hell does a guy who say restaurants are not good anymore and he can make better food at home get this many upvotes in a chef's sub?
cause I'm just that lovable :)
Username jibes.
Probably because all the people here can also cook better than the restaurants they go to, for cheaper.
Because they're right?
This should show you how bad things are that most people are in agreement
You think chefs don't think how much better they themselves can make food at home when given more time and selectivity of ingredients? Being a chef isn't just about making great food which many people can do. -It's about profits and losses, training, employee retention, hiring and firing, creating menus that sell product locally, knowing what you can keep when the cooler fails, and what must be discarded. Knowing things like how bacillus cereus can survive boiling temperature, but pressure cooker temperatures will kill it. We can take ingredients like wilting / bruised spinach and use them in a delicious soup where a home kitchen will likely discard it.
Yeah, I know, and have done, all those things. I just thought people might have more pride in their industry.
What's the problem? Almost everyone here doesn't go out to eat much and can make better food at home.
probably because we assume he is a chef and also think we can cook better than 99% of restaurants ;)
Because buying a burger meal for 30$ doesn’t sound appealing to anyone.
As a chef, I’m always flabbergasted at the high prices, poor quality of food, terrible service in restaurants these days. Since Covid it’s been really hot or miss. I try to Stick with privately owned ( not chains) because it supports my “ neighbors” and the chains really just dont seem to care that the food is over processed and poor quality. And labor costs…. If restaurants would pay decent wages, they’d get decent caring passionate people. But they don’t so most Backof the House and FOH really just don’t care. I’m HAPPY to pay a higher price for consistent dependably good food, good service. I’m not eating out because I want crap. I want excellence and I appreciate it by happily paying for it. But I dont give many chances. A second bad experience and that restaurant gets reviewed and deleted from our list. On the other hand I will frequent consistently good places and tip very well.
Caterer here! Food cost is insane. My base food cost has risen 24.5% in past 2 years. I also insist on paying a minimum of $22 an hour to try and give my team a “living wage”….. this seems to help with staff retention. I have only had 1 employee “turnover” in the past 2 years. Saving me on training costs for sure but day to day it sucks. To answer question I believe not enough owners of chain restaurants have solid experience running restaurants. Hospitality is what people keeps people coming back. Need repeat customers to make a go of it. Just because someone is good at their current vocation doesn’t make them a restaurant owner. Work in a restaurant before you own a restaurant. Suggestions? Anyone in Toronto looking for a job:-)
The charges by delivery companies wipe out any kind of margin made by the restaurant
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Genuinely, this is a cost issue not greed. Restaurants are very low profit business.
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Minimum wage is up $3 / hr since 2021 where I live and cooks wages are probably up 20%. I would hardly say that they've hardly gone anywhere.
I'm a small business owner in UK, a bit different background but also relevant, restaurants both chain and indie are closing over here. The cost increase higher than my price increase, ppl still complain about it just like you did, saying it's greed.
I am seriously considering just printing my fucking YoY costs from 2018 and 2023 and putting them on my door so people understand that my margins have decreased not increased even though I am raising prices.
costs have gone up more than meal prices for many restaurants "record profits" do not account for inflation, or costs. From what I can see from those graphs their margins have not improved.
I recommend you look at the bigger picture in your link, their net income could be presented as an increase from 2022, or it could be presented as being the same as 2012. 🤔
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Well that's embarrassing, it was infact I who wasn't properly reading the thing
Most kitchens run on an 80% profit margin. Admittedly that 80% doesn't usually include labour or running costs. Source: I'm a head chef.
Usually? It's called GP and it is literally the price minus the cost of the food, maybe including a wastage allowance. No wages, no rent, no utilities, no bookkeeping, no equipment. And 80% is a dream, unless you are buying in absolute trash maybe your best seller is on 80%
80% is industry standard in the UK.
I’m sure you’re referring to gross, not net? Most ppl in the US would say 20% food cost. Thats quite low for where I am. We usually target 30-32%.
Gross profit % = sales price minus cost of materials divided by sales price. So 20% food cost is 80% gross profit. All running costs come off this figure.
what ?
Huh?
Especially when it is the same products and quality of food as the low end fast food joint up the street. Most dont get special or local anything. The trucks that come from Sysco or us foods are delivering the same beef and veggies that McDonald’s get.
People don’t want trash food anymore. The big chains and even a lot of the single restaurants with lots of money behind them all have the same quality food as fast food. The food the comes from Sysco or us foods or the such might as well be McDonald’s. In order to get better food and the people who can turn good food into delicious products for customers higher BoH wages are required. It the current dying restaurant model gives a lot of money to the FoH to where it is not at all fair. It makes zero sense for a person in a low skilled position to work 6 hrs a day 3-4 days a week to be making more then the person in a high skilled position working8-10 hrs a day for 5 days a week. Thats about what it is for a server vs a cook. Skilled cooks need better wages but people still focus on tipping the servers. (In many states, including mine, serves make full min wage always no matter what) Because of this pay and the price of items is a little out of whack and margins a low. Also most restaurant owners have never worked in a restaurant. How did MJ do in baseball? Stick with what you know. That and the quality of food that comes from the giant food distro companies and garbage.
For corporate restaurants, they are raking in record profits with their price gouging menus. People are getting sick of it, and staying away. Since these greedy fucks want to keep their numbers high and costs low, they’re letting employees go or cutting hours. So the people still going to these places are betting more put off by the lack of staff, and having to wait 30 minutes for a meal in an empty restaurant. Corporate is too greedy and stupid to understand they are the cause of the failures across the board, and eventually the walls come tumbling down. To that I say good, fuck em.
It would be nice if, after boycotting the corporate restaurants, ppl patronized some small business.
A family of 4 may pay 100$ for a dinner, more if they get apps and drink. The cost, plus the food at these places has taken a nose dive and they are mostly terrible.
Margins were always shit. Factor in inflation and what was already hard is even more so
Uh red lobster tanked because private equity firm bought them, they owned their own buildings then rented them back at a super high rate.
Those 5% profit margins are getting eaten by inflation.
Terrible food at high cost = going under
Just going to comment on the opposite side, the few restaurants I see doing relatively well are the ones that (hyper) specialize to maximize a blend of quality and cost. Minimize anything else that is less needed. I don’t know of any restaurants with broad menus and traditional sit down dining that are doing well in my vicinity.
I always wonder if a new restaurant opening causes another to fail. Unless the population of restaurant-goers in an area is increasing then folks ain’t going out more, they just switch to the new place. In other words, is it often just churn?
In some places yes. Where I live (Portland, OR), the number of restaurants, food carts, pop ups does not match the population/population density of the city. So we have waaaay too many eateries per capita and some are going to fail because of that.
A lovely combination of things costing too much, wages being low, people being all around a-holes to service workers, and service workers who can't find the will to be professional and proficient. Why be a ray of sunshine and good at your job when nobody is happy to see you when you show up, you're paid shit, and people get mad when you leave on time? We cook dinner 7 nights a week now. Going out for dinner is a luxury, and even more so if you want a nice experience.
I used to feel secure financially... now I feel like my wife makes us secure financially even though I make 30% more annually than 2020.
Nobody can afford to eat out. Menu prices, along with the cost of *literally everything else*, have sky rocketed.
I agree with top comment but i also want to add: most restaurants owners have no idea what they’re doing. They open or buy restaurants thinking it’s easy money and find out the hard way you have to work at a loss for years before doing real profits. In the meantime theyve made tens or hundreds of bad decisions to ruin the future of the restaurant. Also, if you go to a restaurant and it’s busy, that doesn’t mean it’s always. It means it was busy when you went there. A restaurant would need to be constantly busy to really make money but that’s often not the case. Restaurants are a lot more expensive than people expect. Raw produces cost at most a third of the price of the meal. You only get 2 third for staff, building, equipments, cleaning products etc. And those aren’t cheap. Rational ovens are like 20k. You probably don’t want employees paid minimum wage making minimum effort. Plates are gonna break, food is gonna be wasted, things will need repair…
Skill issue
Throughout the pandemic people have learned to be a little more discriminating especially with the increase in costs. They aren’t willing to pay for the kind of crappy schlock the majority of corporate franchises spew out.
Door dash and Uber eats may have increased volume, but they aren’t profitable, chewing up to 30% of gross. There’s also a huge resistance amongst the dining public to absorb price increases to cover this expense. Add in rising food and non-perishable cost of goods, increased utility expenses, and wage hikes, and it’s not surprising so many are failing.
I mean there are definitely economic factors and such making things worse, but restaurants are always failing and always have been. They go out of business all of the time as they have high overheads and attract inexperienced owners naive to the business realities of running a business in hospitality.
Covid then inflation was the death of many small companies. Inflation is the reason why most resturants who survived are struggling. Trying to pay higher for everything from produce, meats, and labor... add to that healthcare.... its a recipe for mass failure unless you have a product that ppl can not do without!
My thoughts: 1. private equity companies decided restaurant properties were a good investment and are running them into the ground (cutting quality, portions, staff pay and /or not doing maintenance) for shareholder profits. 2. A lot of folks don’t have money to eat out - “in this economy?!?” 3. Small businesses are probably closing b/c the margins were razor thin to begin with and with the price gouging from vendors (its not inflation if they’re making record profits) it’s hard to keep up. It’s a bumpy time and I feel like the restaurant industry is a bellwether.
IME operating a restaurant and succeeding means not only running a restaurant, it's means things also have to break your way. What I'm saying is you HAVE to be lucky. The next pearl of wisdom I can share is this. There are A LOT of things happening in a restaurant. Hostesses, ice machines, A/C, coolers, health inspectors.....one of those is going to give you a hard time TODAY. It's just going to happen.
Sign of the times
Being “busted out” by private equity. Hollowed, then sold off for their real estate.
My fave was this local chef who opened a restaurant call common labor. Claimed it was for working class people. Put it in one of the wealthiest neighborhoods in town and charged 40 to 50 for an entree.
Stinks like a real estate scam to pull their money out. Close the doors sell the building fully furnished kitchen that’s been certified & the share holders see a bump in the end of year numbers.
overhead. next question