The disruption of Silicon Valley’s restaurant scene | Hacker News Reader

The disruption of Silicon Valley’s restaurant scene

nytimes.com

67 pointskanamekun69 comments

There's nothing specific to tech about this. In any place where rents increase more than 60% in a few years, whether that increase is caused by tech or anything else, lots of restaurants aren't going to make it. The same is true for many other small businesses with small profit margins, such as indie bookstores, for example.

On the other hand, I pass through downtown Palo Alto every weekday, and I see plenty of open restaurants. Many are able to succeed. It's not like the area is a wasteland of tech offices with private cafeterias. There are more people in downtown Palo Alto eating and drinking now than at any time in the past.

> There's nothing specific to tech about this

Other users pointed this out as well, so we took the explicit reference to tech companies out of the title above.

I wonder how the zillion Ramen shops in central Tokyo stay alive. The rents there are horrendous, and the noodles are fairly cheap.

I've wondered the same thing about some of the tiny shops in the center of town here. They sell cheap phone covers and whatnots that I can't imagine bring much profit.

Could it be that these places have existed for a long time and rent protection keeps the rent down?

The only other explanation I can think of when it comes to some of these shops/food joints is that they're used for money laundering or something like that.

>They sell cheap phone covers and whatnots that I can't imagine bring much profit.

Those things actually have really high margins.

However, high margins does not necessary means high profit.

We have plenty of these setups in our weekend markets, and I don't really see them selling these in high numbers. Actually, most of the time, the shops are empty but they are there, every weekend selling the same items.

Is it possible that those running such establishments just live off less money?

That's a good point. Most of these establishments are family-run as well, which I imagine is significantly cheaper than hiring employees.

The rent is not horrendous. New york, London and other big cities have much, much higher rent than Tokyo.

And Ramen in Tokyo is considerably more expensive than in Osaka or Kyoto.

Tiny spaces.

Tokyo rent is actually not very expensive compared to rent in other major cities. It is a result of permissive building policies. Other major cities that struggle to control housing costs should look to Tokyo as an example of how to do things right.

Like a lot of Silicon Valley's problems, this really comes down to unreasonable height restrictions. When you have to choose between a 3000 sq.ft. restaurant and 3000 sq.ft. office space, the offices can pay better.

If the city would let people build large office towers they could put restaurants on the ground floor and this choice wouldn't have to happen.

The city's usually just responding to property owners lobbying to restrict the supply of their scarce asset in order to maintain/drive up its value.

This is what's going on in London (note that the list of supporters including property-owning associations, property developers and hedge funders):

http://www.skylinecampaign.org/

Politically it's easier to throw sand in the wheels of new projects than it is to propose new projects, which is why this remains an effective way of lobbying.

I don't think that's an accurate description of the situation in London. There is almost unbridled development at the moment. It's going to markedly change how the city looks and feels. That's what people are reacting against.

Give London residents a choice between 400 pounds a month off their rent+reducing shop/restaurant prices and avoiding high rises changing the "aesthetic" and I'll guarantee the outcome of that poll.

This is not driven in any sense by democracy. Quite the opposite.

Are there any credible development projects I can support that will reduce my rent by £400/month?

Not right now. Sadiq Khan seems completely comfortable talking about the housing crisis and not doing anything about it, and he's pretty much the only one who can.

If they announced (credibly) that they were going to build 75,000-150,000 new council housing units each year, house prices and rents would start to plunge.

If that were to happen they would have to be high rises and would be fought by the skyline campaign.

Sadiq Khan couldn't credibly announce that he was building 75,000-150,000 new council housing units each year because the money's just not there - that would cost tens of billions of pounds a year and his entire budget is only 11 billion (spent mostly on public transport and policing). It's also outside his area of responsibility; housing is handled by borough councils in London, and they don't have the money either.

A single "hedge fund founder" = "hedge funders"?

This is a very broad accusation, but certainly most hedge funds I know are based in Mayfair, where almost all property is owned by the Duchy of Westminster. Of the top of my head I don't know any hedge funds who own their own office space in London (I'm sure they must exist).

Hedge funds as a group would almost certainly be able on average to lower their rent if there was more property development.

It isn't about whom they rent their offices from. It's about what they have in their portfolios.

Some context:

http://sf.curbed.com/2016/8/23/12603188/palo-alto-mayor-hous...

The mayor recently made news about wanting to stifle job growth, as it far outpaces what he believes is acceptable housing availability:

> Burt: Palo Alto’s greatest problem right now is the Bay Area’s massive job growth. Cities are still embracing huge commercial development with millions of square feet of office space they can’t support. They’re chasing their tails. We started reining in office growth and put a cap on it. And then we began expanding housing in our downtown areas, which we’re in the process of.

What's funny is that the mayor himself is a CEO of a tech company headquartered in Palo Alto downtown. Some of the things he says are infuriating ("We don’t want to turn into Manhattan"...as if PA were anything close to Manhattan) but as I understand it, he was the more pro-housing/growth candidate in the mayor race:

http://www.paloaltoonline.com/news/2016/01/04/burt-returns-t...

> The two votes mean that the council's top two leadership positions will now shift from members with the heaviest slow-growth residentialist leanings to ones with less predictable voting records. While Burt has played a leading role in the council's recent adoption of an office cap, its efforts to preserve retail and its reform to the "planned-community" zoning, he had also split from the residentialists in supporting several recent developments, including mixed-use projects at 101 Lytton and 441 Page Mill Road (Holman and Schmid had opposed both).

Mayor Burt's not pro-housing. He's just the least anti-housing of the anti-housing majority on the city council.

"It is a story playing out across Silicon Valley, where restaurateurs say that staying afloat is a daily battle with rising rents, high local fees and acute labor shortages. And tech behemoths like Apple, Facebook and Google are hiring away their best line cooks, dishwashers and servers with wages, benefits and perks that restaurant owners simply cannot match.

...

That may not be an issue for tech workers with access to free, farm-fresh cuisine in corporate cafeterias, but for everyone else here it is leaving a void between the takeout cuisine popping up around Palo Alto — picture bento boxes ordered on iPads at a counter — and $500 meals at high-end restaurants."

I consider the Bay Area as being affected by a Dutch disease phenomenon, meaning that all industries are crowded out by the one that has a comparative advantage, and that products and services that are not easily transportable undergo significant price and wage inflation.

First world problem.

Palo Alto's University Avenue has enough good restaurants. Some are not obvious. Gyros Gyros has excellent fish platters and kabobs. There are several decent Chinese restaurants. Paris Baguette is OK.

It's interesting that Palantir is leasing all the available office space. That's unusual, but not unheard of. In the early days of Autodesk, they at one point had leased most of the office space in Sausalito. The city council was unhappy about this, so Autodesk moved to San Raphael where they could lease large office buildings.

I noticed yet another rug store opening on University Avenue recently. Someone must need an investor visa. The guy who owns most of the rug stores used to lease the upstairs to startups in exchange for equity. Now he's a venture capitalist.

Are these restaurants just not that good to start with? If they were good, couldn't they increase prices and then increase wages they offer to staff?

The article implies that the fast casual $10-15/person places are doing fine. My impression of PA is that the fancier $30+/pp places are also busy. It's possible there's simply less demand for the places at a price point in between (although there's not really evidence of this in the article).

The market sounds a little imbalanced. If they were competing with other restaurants then that would be an option. But they aren't competing with other restaurants. They are competing with companies that give the food away free to their employees. Those companies can afford to pay the chefs, and kitchen staff more because they don't make money selling the food. They make money on high margin digital goods. The market will only sustain so many $500 a meal restaurants. The casual dining restaurants, which sound like the hardest hit, can only increase their prices so much before they price themselves out of the market.

This seems way more extreme than the general problem. I live in a city that does not have any problem supporting a variety of great restaurants from low to high end. It sounds to me like possibly the people who are being hired away from the tech companies are benefiting. I think it's still an ethical issue as this situation is obviously hurting restaurant owners and people who don't have the money for the super high end. That's a shame.

Zibibbo was excellent - bite your tongue!

The article is oddly silent on food truck competition. Food trucks avoid real estate costs, most employees, and are given free rein to compete with brick-and-mortar restaurants, even to the point of being allocated parking right on the same block in some cases. The result was easily predictable.

I would never want to open a brick and mortar shop of any type, but I have this weird desire to build an automated food truck. A tablet on the side with big plexiglass windows so you can see the simple process internally building your food (sandwiches or burgers). Maybe I've been spending too much time here in Japan :-)

Automating food is harder than you think. I agree though - that would be amazing.

Open a food truck! It's a relatively low risk thing compared to opening a restaurant. Still a lot of work though your idea reduces that quite a bit. :-)

Food trucks would be the lower end though. The article focused on the medium end that the average person might go to for a good dinner with a decent ambience without breaking the bank. That's a reasonable thing that most people do to relax at least occasionally. Sure, OK, it's a first world problem but that's not sufficient reason to dismiss a problem as trivial. It's not the biggest problem that needs to be solved, either. :-)

It's hard to imagine why anyone outside Palo Alto would care about the food scene in Palo Alto. As far as food goes, Palo Alto is a provincial backwater that just happens to have a few decent restaurants due to the unlikely concentration of rich people in the area. The continued cultural desertification of the peninsula and the south bay (there wasn't really ever much culture there to begin with) is yet another effect of the tech monoculture dominating the socioeconomic ecosystem.

The result of this is extraordinarily poor service at some restaurants. And some restaurants are downright scary. Business is brisk at most places that I've been to - quality of food and service seems to have little to do with how much business they do. Some places have fantastic service and great food. For the most part, I think it really is a matter of competing for the right employees. Chains don't do well in the area outside of the Stanford Shopping Center. (For instance, I stay away from Cheesecake Factory even though I really like them outside the area).

I find it strange that the New York Times would print something about Palo Alto restaurants. I'm sure the same scenario exists in several areas of NYC. High rents make it tough to bring in good employees for service jobs. At least PA has a student body to work with.

Do Stanford students really work part time jobs? I'd always imagined even the poorest of them to be scholarship and student loaned up enough to be able to not too.

I don't think such a utopia exists. There are plenty of working students.

This is basically what should happen.

I'm also unsure what relation tech has to it.

Either restaraunts/etc pay enough to make it possible for people to live there (and in turn, people living there pay for those things), or they close, eventually causing people to stop deciding to live in those parts (eventually helping to bring prices back down)

It happens right now that tech is a major industry in the area can afford to pay those people enough to live there.

But it's also probably true that people would not like PA as much if every restaurant closes.

So, .....

This is the same as the cities having trouble attracting police/firemen/etc because they can't pay enough.

Either the people living there will pay more, or they'll be okay with no police/firemen, or they'll decide they don't want to live in a place with no police/firemen, which will help bring prices back down.

That's not what happens.

What happens is that the policemen, firemen, and restaurant workers commute from areas where it is cheaper to live. It's been that way in Palo Alto for a while, and it certainly has not caused any downward pressure on prices.

Sure it is.

"But in recent years, many police agencies across the Bay Area have seen a decrease in applicants. Some say the area's high cost of living is partly to blame as job seekers move to other parts of the state to start their careers."

They only commute if the cost of doing so is worth it. When they can find reasonable jobs that provide the life they want elsewhere, they stop :)

The expensive area police hiring has dropped dramatically (SF, etc) when the less expensive areas have seen increases in ability to recruit (San Mateo, etc).

It's only when the less expensive areas don't need police that you see increases in hiring elsewhere. Even then, they are still having more and more trouble hiring over time.

This is beside the point. This is what you wrote:

> Either the people living there will pay more, or they'll be okay with no police/firemen, or they'll decide they don't want to live in a place with no police/firemen, which will help bring prices back down.

That has not happened. Every place in the Bay Area has sufficient numbers of police and firemen. There is no place that has run out of them. Trouble hiring is not the same as no hiring.

Furthermore, there is no evidence that trouble hiring policemen and firefighters causes downward pressure on housing prices, which is what you said should happen.

Yeah but does their life suck because they have to commute this insane distance every day to get to work? Yes, they are willing to do it because they need to eat but that does not sound like an ideal situation where all the low and mid income jobs have to be filled by people who commute from outside.

What's your point?

My point is that nobody addresses the costs that the decisions the market very well. It's glossed over. It used to be a fire fighter or, say, teacher could live pretty near work. Now in certain places they have to drive ungodly distances each day. Those are costs to many individuals and there are substantial costs to society too. It's not just a matter of saying it's a solved problem, we can put out fires pretty quickly when they happen. It'd be a worthwhile exercise to be more open to the real pain that the market's decisions inflict on people at times. I'm not saying I have a solution to that or that I know what's best for anyone. But making some people life worse as part of the process of making other people's life far better, isn't something that should be dismissed out of hand. It is an act of courage to face something at least a little bit, pain caused to other human beings.

"That has not happened. Every place in the Bay Area has sufficient numbers of police and firemen. There is no place that has run out of them. Trouble hiring is not the same as no hiring. "

[citation needed]

This is literally not true.

See, e.g, san jose, which is drastically understaffed: http://www.nbcbayarea.com/news/local/Recruiting-a-Priority-f...

San jose is not only at something like half force, they know it will drop even further before they can make it better. You can google the numbers exactly if you want them, but they are really bad.

It's been getting bad for years: http://abc7news.com/politics/sjpd-facing-tough-time-recruiti... " The city has some serious catch-up to do with officers already working overtime to handle patrol needs.

The challenge for San Jose police is that more officers are leaving than being recruited, as other cities continue to offer higher pay and better benefits. That makes it difficult to keep the ranks at full authorized strength of 1109 officers.

When you factor in disabilities and military leave, the department is roughly 200 officers below that. And it's expecting to lose well over 100 sworn officers this year from resignations and retirements. "

(Note: Can't handle patrol needs, expected to be down 300. IIRC, they are actually down significantly more than that down. They literally can't handle patrol needs right now at all, even with overtime)

...

" The outlook of catching up is not looking good. A new police academy class starting Tuesday has a capacity of 60. The city made 29 job offers. But five took jobs elsewhere and one was a no-show. That will mean the class will have 23 recruits plus one who was previously hired. "

(note the timing of these articles has shown that what they are doing is not helping)

Let's go with another place:

http://www.sfgate.com/bayarea/matier-ross/article/Understaff...

"O'Connor points the finger at chronic understaffing - caused by the department's failure to fill 400 vacant positions - for requiring some firefighters to put in hundreds of hours of OT a year. "

400 vacant positions does not sound like "sufficient numbers" to me.

etc

You keep making handwaving assertions to support your point, while i am providing actual data.

Please provide actual data. I have shown they often have 30-40% under what they are supposed to. This has gotten worse as housing prices have increased. That is not "sufficient". You cannot handwave this away as simply saying "it's trouble hiring".

As far as i know, plenty of places in the bay area that are expensive do not have sufficient numbers of police, firemen, or paramedics. They are having significant trouble recruiting precisely due to cost to live vs pay. The places that are not expensive are not having these problems.

If you want to argue this is simply not true, please provide any evidence instead of just saying "no, you are wrong".

You wrote that people would have to choose between having no police and firemen, and having low housing prices.

You did not say "fewer" police and fireman. You said there would be none. It's clearly a ridiculous thing to say, and no matter how high housing prices get, it's very unlikely to become true. I'm not sure why you would try to defend such a silly and extreme statement. The existence of a single police officer disproves it.

You also said that lack of police and firemen would cause downward pressure on housing prices. That's also untrue. If you think that has happened, it is your job to provide evidence for it, not my job to provide evidence to refute it.

You can nitpick all you want about whether the numbers indicate a sufficient amount of police or not. That's moving the goalposts. You said there would be none, and that is untrue. You have no evidence that this has affected housing prices. So I can indeed just say "you're wrong," because the burden of proof is on you, and you haven't met it.

"You wrote that people would have to choose between having no police and firemen, and having low housing prices. "

That was write after writing "This is the same as the cities having trouble attracting police/firemen/etc because they can't pay enough."

So, first, yes, i did essentially write about "fewer", and you are just ignoring that part.

I also can't possibly see how one would assume i was being literal in the sentence you quoted in light of that (reading your other comments on hacker news, you don't seem to do that elsewhere)

Since that doesn't make a lot of sense, i'm just going to assume you simply have no evidence, and instead of saying "you know what, you might be right, maybe i should reevaluate", you've chosen to just instead be super pedantic.

That's kind of sad. I was hoping you actually had any data to back up your counter-argument, because i'd really like to see the other side of this.

You wrote "no police/firemen," not "fewer." It's not "super pedantic" to use the plain, obvious meaning of words.

Furthermore, it's not reasonable to expect people to read what you "essentially" wrote. People read what you actually wrote.

That sucks for those people. It must be acknowledged that it sucks. There are costs and there are benefits to everything. It'd be good to note and acknowledge the costs. I get the feeling that a lot of people talk about the market like it's a religion or spiritual force and that all that happens with its guidance we must embrace.

But the article says and, we've heard this from other sources many times, that restaurants have very slim margins even in pretty good conditions. It's not so simple to say pay enough and so on. Or maybe you really saying if an industry has to pay below a living wage by so much then it's not even worth it? And if all the half decent restaurant closes does the area start to slide toward entropy with boarded up shops and decay?

Rules and regulations create market imbalances and no change later is possible because of special interests lobbying. Population is later brainwashed into blaming free market and "evil" corporations. Such a life in socialist dystopia. At least SV is not Venezuela and they really have first world problems. Just remove all the permits to build housing and the problem will go away in a few years. Of course special interests who already extracting very nice rents of their properties wouldn't like that.

Are the staff that are hired away from the restaurants better off in a substantial way to off set the damage done to the restaurant owners and non-tech industry people. Yes, I do think it is an ethnical issue even though the market's involved. :-)

I'm not sure what you're asking. The staff that are hired away are presumably better off in the matter of ready cash, which is perfectly reasonable. Ethics in job choice are important--you probably shouldn't take a job supporting a CIA hit squad even if the pay is great--but poor restaurant choice, while unpleasant is hardly a human-rights issue.

What I mean is are the costs of the tech industry disrupting the restaurant scene worth benefits. I get that it isn't a problem specific to tech. My city, with a vibrant tech scene, also has a vibrant restaurant scene but the situation described in the article is extreme. It's the sort of thing that could strain a city in a few ways from hurting the middle class to boarded up shops and decaying neighborhoods.

So is it reasonable to ask is worth the damage? It's a reasonable question to ask.

I guess what I'm trying to get at is that choices the "market" made are viewed almost with a sacred reverence by a lot of people. They'll even call you a socialist if you question anything about it. I'm no ethics expert either by studying or being ultra ethical in practice, but I think it's worth it to at least discuss the implications when the market makes a decision that hurts people. It doesn't follow that I'm a socialist. Reading between the lines and categorizing things is useful but it requires a bit more sophistication to be able to adjust those filters and focus on what they're saying not what you perceive as the sub-text. (Note, by you and I don't mean you as in the person I'm responding to I mean a more general "you" as in all of us as I'd like to be more skilled at resisting the default as well)

Article is behind a paywall. Anyone got a precis?

EDIT: Not sure why this was downvoted? I thought it was reasonable to ask for a short summary of the article seeing as I don't have a paid subscription to the NY Times? Or are people who don't want to spend the cash simply excluded from the conversation with no recourse?

I believe if you search for the article title in Google, and click on the link, you can avoid the paywall.

Disclaimer: I work for an Alphabet company.

I've used http://archive.is in the past to get around paywalls.

Click on 'web' and then the first link Google offers you.

Enable cookies before clicking on the title link.

NYTimes only redirects to a log in prompt if you have cookies disabled.

This is because our impotent tech elite have failed to even solve the first issue they've organized to solve, housing!

We should ask for new elites, it's always been ok to ask for new elites when they've failed. They literally installed a foreign elite everywhere they went who did not know the local population and always brought negative externalities with them.

The tech elite managed a feat that not even the financial elite have, they managed to get the locals to hate them everywhere they've moved in!

I really like the formula! (Performance = Potential - Interference)

This reminds me of two recent things, and one older thing.

A) http://killsixbilliondemons.wikia.com/wiki/Meti's_Sword_Manu... "You must strive for attachment-non-attachment when cutting. Your cut must be sticky and resolute. A weak, listless cut is a despicable thing. But you must also not cling to your action, or its result. Clinging is the great error of men. A man who strikes without thought of his action can cut God."

B) I've been playing a lot of Holopoint, a VR archery game that keeps you in constant motion. I notice I do much better when I loose arrows without paying that much attention to the result of the shot... if I've started slow enough to get into the proper rhythm.

C) I've heard about a study on pottery student. One group was told they would only be judged on the best pot they produced; the other was told they would only be judged on the quantity of pots produced. In the end, the quantity group also produced the best pots.

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