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Comment by deadmetheny | Hacker News Reader

This isn't hugely surprising - margins for restaurants are extremely thin, so the eventual end game at this rate is for establishments that are extremely expensive and able to actually pay their workers decently to be the only choice available. Upping the minimum wage for them is really just going to result in speeding up the process (you cannot extract blood from a turnip, after all) and putting more people out of work even faster. Something's gotta give here, and it's unfortunately probably not going to be the people who were living and working in SF before the tech boom.

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If SF is so ridiculously expensive, it makes every kind of sense for restaurants to raise their prices accordingly.

The only reason for restaurants to have paper thin margins is if there are too many of them. That will probably change once their waiting staff disappears.

I'm preeeety sure each and every restaurant owner is keenly aware of how their business will fluctuate if they change prices. This is their livelihood after all.

Knowing a few people in the restaurant biz, no, many of them are very bad on the business side and big on the passion side.

I own a foodservice business and it tends to be a mixture of both. You're not going to be able to run an establishment without at least some business acumen, but everyone who's ever worked in the industry is fully aware that the pay is complete shit in terms of effort expended. So, as a result, owners pretty much have to be very passionate about the industry in order to even contemplate opening their own place to begin with - and this is here in the Midwest, God help anyone who wants to open something in a major coastal city.

I don't doubt it, but that doesn't change the basic analysis. If prices are too low to live on, that means supply is too high. Restaurants try to stave off the inevitable by underpaying their staff, but in the long run, a shortage of staff is not going to save their business.

And honestly, if people can afford to pay sky high San Francisco prices for everything else, they can also afford to pay them in restaurants.

As a small business owner, I'm sometime feel emotionally paralyzed to raise prices.

I notice that a lot. My accountant was way too cheap in my opinion, and I told him that. After years, he finally raised his prices recently, and I thanked him for it. He needs to eat too. Same for the guy who remodeled our house. He has no time for all the work he's got, but he doesn't want to raise his prices, despite working for half the rate I work for.

Don't be afraid to charge what you're worth and what your customers can afford.

(My clients are mostly banks. I know they can afford me.)

I's really interesting that people are willing to pay outrageous sums in one area (e.g. rent) but then are not willing to pay more in other areas (food). I am not sure how these imbalances happen.

With rent, there are no other options. With food, one can always cook at home when the extra cost no longer seems worth it.

Rent has less elasticity than food.

The problem is the cost of rent for individuals and businesses. Asides from housing costs, SF's cost of living is pretty standard for a city (a little higher than most, but depends on the area). There just are not enough housing units in the Bay Area. Worse, the new units entering the market tend to be mostly market rate, with a few "affordable" units thrown in.

Raising wages will never fix the problem. SF needs to build up or change laws to deincentivize people from living there (e.g. higher taxes on high-income tech workers). The latter has other issues associated with it, but would at least encourage the decentralization of tech talent to other parts of the country.

It doesn't solve the overall problem, but it can solve this particular one; if they pay enough, waiters will be able to displace some existing renters and/or be willing to travel from even further away.

> the eventual end game at this rate is for establishments that are extremely expensive and able to actually pay their workers decently

That's not the end game, because there is an endless supply of low paid labour willing to commute hours to work. Especially if the tips are better.

The places will be expensive, no doubt, but labour will capture a very small proportion of the hike, with the rest going to capital like brand and real estate owners.

The tech elite seems willing to cling to these sorts of market-mediated fair world falacies, because they refuse to acknowledge their own position in the capitalist society.

I own a foodservice establishment. Labor is absolutely our biggest expenditure immediately after rent. Additionally, that "endless supply of cheap labor" still needs to be reliable enough and able to actually show up, plus costs in hiring and training and all of that sort of thing. This isn't coming from some webshit programmer, this is what I see every day.

Of course. But is your business in the center of a major metropolis and as a consequence of that, pais for labour a multiplier proportional to other costs in the area, like rent and services? I doubt it, you might have higher costs but you don't pay 3x the average waiter salary.

Look at Sweden and Denmark. There's very little table service. The future is not decent wages, it's less service. And I don't see that as a problem. Other than very high end places, there is almost zero value add to a waiter. On the contrary, waiters being excessively nice and pandering so they can get a big tip is a big negative in my book.

If housing doesn't expand, prices would just presumably spiral upwards until waiters are paid as much as average tech workers and only the mega-rich can afford to eat out.

Who is the turnip, in your analogy?

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