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> Presumably other restaurants are thriving?

Maybe some are, but a lot are not. From my experience the vast majority in SF only last a few years. I talked with a friend who lived in SF for 30 years and he said it's pretty normal to see restaurants regularly go out of business. Supposedly because renting the space is so insanely expensive. But there's always another sucker who thinks they can win this game.

Isn’t that true everywhere? A quick google turns up that 90% of restaurants fail in their first year and the average lifespan for the rest is only five years.

I think it’s because it has relatively low barriers to entry, is something a lot of people want to do, and it seems easy.

> Maybe some are, but a lot are not. From my experience the vast majority in SF only last a few years.

This is how the restaurant industry works everywhere. It's how most small businesses work.

> ...and it doesn't seem like restaurants are disappearing from SF...

Once they do start to disappear en masse the city will be a less desirable place to live in, rents will drop and restaurants will be able to move back in -- AKA the flip side of the law of supply and demand.

Right now there's a major imbalance with all the Silicon Valley folks wanting to live in the city causing the pricing structure to get all out of wack but eventually it will stabilize as these things tend to do. Just sucks if you're the one trying to keep a service oriented business running in the current market.

There are somewhat hard limits on the availability of labor though. I know a guy who owns a very popular and expensive restaurant that had to start closing one day a week because he couldn't find enough staff, and not because he pays them peanuts.

There are hard limits on the supply of skilled labor. Less on the supply of semi-skilled labor. The situation implies that some people will substitute less-skilled cooks for skilled ones. Hence the overall quality of SF restaurants will decline but restaurants will continue to exist - those dining out will simply choose the best of a less-good collection.

There is a market-clearing price where supply of labor equals demand for labor.

If your friend can't find enough people then the wage he's paying is less than the market-clearing price.

Doesn't matter if you or I think their pay is peanuts or not.

Even if that's true, it doesn't mean he or others can afford to pay it.

Has he tried raising the prices of his products? Based on the average rents cited in the article, and what the average tech salary is there, his customers may well be able to afford it.

With alcohol it's not that much cheaper than somewhere like Boulevard or Gary Danko, so unless he were to rack up some Michelin stars, I think the answer is probably no.

In a way I guess he is helping fix the problem by closing one day a week. If the supply of open restaurants go down and the demand stays the same, everyone will be able to raise prices.

When the market price of jet fuel increases, airlines don't cry that they can't find jet fuel, they pay the higher price and then they raise fares.

When the market price of coffee increases, coffee shops don't cry that they can't find coffee, they pay the higher price and then they raise prices.

But when the market price of labor increases, employers don't raise their wages, and then they say they can't find workers and can't afford to pay more.

Why is labor pricing treated differently from any other economic input?

> not because he pays them peanuts

Not paying peanuts still doesn't mean it's enough.

But if customers pay in peanuts and you have to offer staff cashew or macadamias to attract enough skilled employees, you might find you have a non-viable business.

Then charge customers more. If they won't pay more, your product might not be worth it and your business was never viable.

Anyhow, my opinion as someone in the restaurant business, the blogger's business had plenty of flaws.

> If they won't pay more, your product might not be worth it and your business was never viable.

That's what I wrote.

This is my general response whenever these types of articles appear. If your labor costs are insanely high, you need to raise prices. If people won't pay more for your products, you need to create better products worth more money, give staff equity and reduce profit, or shut down.

These types of articles are based on the assumption that we would like to continue having restaurants & the fact that they are (slowly) becoming economically nonviable is a social problem.

If rising prices reduced the demand so much that they become economically nonviable, then it means that we actually don't like having restaurants all that much, otherwise we'd pay.

Voting with your wallet is only one way of expressing a preference. San Francisco in particular also likes to vote with its votes. We may not care enough about restaurants to pay what they really cost, but by all accounts we’ll care enough to vote for a ballot measure that makes “big developers” and “the techies” pay for them.

Indeed, residents of Bay Area definitely like trying to vote away the microeconomics of supply and demand.

Dining out is substitutable. At some price level, people will simply eat at home. Already there is a transition to counter-service and take-out restaurants, which save on labor and rent, respectively.

I hadn't connected this before: all brick-and-mortar retail is descending the value chain. From JcPenney to Kohls to Wal-mart. From Applebees to Chipotle.

In Danville, we see restaurants closing all over the place. Their prices tend to be about 35$ per person with tax and tip for an average meal at a nice restaurant.

Prices are high enough now, where we almost never eat out anymore. Even at the movie theater, I skip the 8$ popcorn and bring some snacks in a bag.

> People need to go out to eat somewhere, right?

Not really. I haven't eaten from a restaurant or a takeout in four years, maybe a few times in the last decade. When on the road I sometimes eat ready made food from a supermarket, but mostly bring something home prepared. Restaurants are a convenience, a luxury even.

It isn't an austerity measure for me though. I enjoy the process and get most meals prepared by someone who really cares about what I want and is the world's leading expert on that subject.

You haven’t eaten from a restaurant in 4 years? You haven’t gone out to dinner or for a drink with anyone in 4 years ? Hmmm

That's right. Do you think something is wrong with me?

Not wrong, but several standard deviations outside of the norm.

You're very strange. What line of work are you in?

    If a country is governed wisely,
    its inhabitants will be content.
    They enjoy the labor of their hands
    and don't waste time inventing
    labor-saving machines.
    Since they dearly love their homes,
    they aren't interested in travel.
    There may be a few wagons and boats,
    but these don't go anywhere.
    There may be an arsenal of weapons,
    but nobody ever uses them.
    People enjoy their food,
    take pleasure in being with their families,
    spend weekends working in their gardens,
    delight in the doings of the neighborhood.
    And even though the next country is so close
    that people can hear its roosters crowing and its dogs barking,
    they are content to die of old age
    without ever having gone to see it.

While you're probably not this extremely content (maybe one std dev outside the norm, not several -- do you ever have dinner parties with guests at your place or a friend's place?), not everyone can live in such a manner, or even consider it. It's what I thought of when reading your comment, though.

>world's leading expert on that subject

I'm seriously not trying to poke fun but do you mean your mother?

Pretty sure they're talking about themselves.

oh duh

I may be the world's leading expert on what I want, but when it comes to food, I'm not actually the world's leading expert at making it...

It's his wife.

She argues they're managing by focusing on "me too" concepts like ramen, pizza or pasta shop that don't need staff of the same calibre.

OK, but that still doesn't explain why "me too" food should outcompete ethnic/specialty/niche food when workers at both kinds of establishment (not to mention the establishments themselves) are paying the exact same rent. Perhaps when eating at a restaurant gets so expensive, people opt to trade off food quality rather than e.g. doing less of it in the first place, or whatever else.