Yelp: More than half of restaurants temporarily closed now permanently shuttered

https://mashable.com/article/yelp-restaurants-temporary-permanent-closures/

by pseudolus • 6 years ago

56 47 6 years ago

If you want to talk about economic justice and helping tear down barriers that disadvantage the poor and underserved, having a national strategy that targets businesses like restaurants would be a good place to start. Along with other similar industries. Restaurants are a big driver of entry-level and family-supporting jobs. As you can see, they're also the most vulnerable to insolvency.

It would be better than Congress doing the mindless easy thing and promulgating untargeted subsidies that larger corporate entities are the most talented at cashing in on. By the way, the amount of paperwork and disorganization of these stimulus implementations doesn't help the most short-staffed family businesses. But I would guess doing things properly and strategically takes work and judgement that we don't have right now.

SaltyLemonZest• 6 years ago

I'm not sure how much a better strategy could help, since most American restaurants teeter on the edge of failure even in a good year. Even if we tossed around enough aid to keep restaurant books balanced until the far off point when they can open at full capacity, how many restaurants would survive the reopening? (It's not an exact comparison, but something like 60% of restaurants fail within a year after starting.)

And how many restaurant owners are willing to put their life on pause indefinitely?

virtuous_signal• 6 years ago

Well this is sad.

It seems to me that this should have been avoidable - along with others like airlines and cruise lines saying they're going to go bankrupt. Why is hitting "pause" for half a year such a death sentence? As an individual, while I don't have a lot of money and my income is 0 currently, I've reduced expenses and could live off my savings for the next couple years. Why can't businesses do a similar thing -- is there some competitive advantage, in better times, that motivates businesses to keep almost nothing in reserves?

bluedino• 6 years ago

A lot of restaurants don’t really make much money

julianlam• 6 years ago

I imagine that many businesses do not retain earnings quarter over quarter because it can often be better invested in the company itself via expansion and such.

However, especially in the case of restaurants, their profit margins are very thin, making them susceptible to swings in business.

jeppesen-io2• 6 years ago

If you truly are in a position where you can have live off (non retirement I assume) savings for more than a year, you are in the tiny minority of the American population. Likely true for other countries.

And just like you, very few restaurants are in the position to put that much in savings. Running restaurant is crazy hard for all but the few top percent

Margins are thin. Competition is tough

switch11• 6 years ago

This is very easy to do when you are a person

When you are a company (I speak as having worked in a trillion dollar company, a $10 billion one, and running a startup right now)

1) Office leases which you can't get out of

2) Server costs and subscription services to keep the company running

3) Salaries for everyone

4) Marketing. This is a Catch 22 situation. You cut on marketing and earnings go down. However, money for marketing becomes scarcer and scarcer

5) If you have any debt you have to service

6) One time costs - Coronavirus CREATES costs also

* No one can plan for a Black Swan type event because it is a Black Swan type event

Also please keep in mind that it is a competitive situation

You can't be super careful with money if all your competitors are throwing it away

Think about what competitors of We Work, Uber, Tesla ($423 million in carbon credits + $1.49 billion Accounts receivable + taking $36 million out of Full AutoPilot Driving revenue in this quarter) have to do

Can they be conservative? No

They have to compete

Then this (CoronaBlackSwan) happens

Now no one has money and lots of companies die out

pmiller23• 6 years ago

A pandemic is not a black swan event:

Besides, the pandemic was wholly predictable—he, like Bill Gates, Laurie Garrett, and others, had predicted it—a white swan if ever there was one. “We issued our warning that, effectively, you should kill it in the egg,” Taleb told Bloomberg. Governments “did not want to spend pennies in January; now they are going to spend trillions.” [0]

Pandemics aren't some new thing. They've been happening probably since pathogens and parasites evolved, and they'll continue to happen as long as they exist.

---

[0] https://www.newyorker.com/news/daily-comment/the-pandemic-is...

nickcorona• 6 years ago

No, this couldn't have been avoided. You simply cannot shutdown the economy for four months and not have a disastrous outcome. Somewhere in the economy, people will feel the effect. All you can do is shift the pain from someone to another.

perl4ever3• 6 years ago

That doesn't make any sense. We can imagine a world in which going out to eat wasn't a thing, and there was no business for the pandemic to destroy. Same with haircuts and anything else that people are doing for themselves now.

There's no amount of pain that's conserved. It's caused by the fact that people changed behavior that others were relying on, but that's a contingent feature of actual history.

chrisco255• 6 years ago

Because you can't hit pause on your liabilities. Double entry bookkeeping doesn't give a care about your virus. Your liabilities are someone else's assets. A pause in business activity on the scale we're seeing causes a chain reaction. The restaurant can't pause rent or loans (and even if they could, that just causes other downstream effects for bank balance sheets who can no longer loan out as much because their reserves are tapped, etc), or pause utilities, and when the restaurant ceases to purchase food and equipment that causes downstream effects on distributors and suppliers who have to tighten their belt which affects their creditors, employees, and suppliers, which affects everything else. Many restaurants lease or rent their equipment. There are huge capital costs to starting a restaurant.

Businesses often operate on the margins, especially restaurants. They have to pull a lot of volume in order to make it selling food at $10-20 a plate. They maybe have 3% net profit margins, so they need to sell millions of dollars worth of food to make a decent income for the owners.

wahern• 6 years ago

This is the problem with everybody being leveraged to the hilt.

I suspect some small fraction of property owners, however, are unleveraged, absentee, and likely willing to grant rent forbearance for quite awhile. For example, older people holding onto real estate for their children, or who simply really like their tenant and are committed to the community. Restaurants lucky enough to have such landlords, or similarly situated landlord-restaurateurs, are probably counting their blessings right now.

We wouldn't have a very dynamic economy if everybody operated this way, but at least there's some heterogeneity to help us bootstrap things. No comfort for the huge number of people who have effectively lost their life savings, though.

1123581321• 6 years ago

If every business had that kind of margin saved up, everything would cost a lot more.

perl4ever3• 6 years ago

Running a restaurant has a great deal of intrinsic value for a lot of people. Even if you happened to only care about making money and security, you have to compete with all the people who will settle for bare survival. So the whole industry has to run on the ragged edge of survival at the best of times because most people are trying to live out a dream, until they become completely unable.

tonyedgecombe• 6 years ago

I sometimes think the same is happening in software.

bsder• 6 years ago

Well, it's also a case that some owners seem to be using this to "put a bullet in the shambling zombie".

The "Original Hot Dog Shop" in Pittsburgh, PA and "Threadgill's" in Austin, TX seem to have fallen to this.

It seems like the people running it were doing the work but were getting a bunch of grief from within the family. So, Covid gave them the excuse to shutter the restaurant and get it off their plate without causing huge intra-family strife.

jeppesen-io2• 6 years ago

For years and years the internet has been full of "something something is going to be the next economic disaster". Sometimes that's Obama or Trump elected. Sometimes it's high corporate or government debt.

Always thought they were along the lines of even a broken clock is right twice a day, at best.

But this, makes me worry for the first time

Axsuul• 6 years ago

It would be interesting to know how many restaurant closures there were around the same time last year.

kumarvvr5• 6 years ago

This pandemic has been extra hard on Restaurants.

In India, an alternative to dining out has emerged in recent years. These are called "Curry Points". (Perhaps they are called Delis in the US, I'm not sure)

See, Indian food is always a binary thing. As in, we eat a base item (Rice, pancakes like Dosa, Chapathi, etc) along with a curry. There are very few cuisines that consist of only one item. And most of them are from other countries. Examples are Noodles and Pizzas, etc.

So a staple Indian dinner is a bowl of rice, with two / three or more curries / gravys etc.

The "Curry Points" I have mentioned, simply sell the curries and gravies. They usually have about 20 different ones. People buy their choice, with each sachet costing about 10 - 20 rs ( 1 USD is about 80 Rs, so about 30 cents), go home, prepare rice or chapathis, which are very easy and quick to make, and have a decent dinner that does not cost an arm and a leg.

A decent dinner for 2 at a good restaurant in urban centers costs about 800 to 1000 (about 10 - 12 USD), but considering average household income in urban centers is about 40,000 Rs. (500 USD) per month , they are not suitable for daily visits.

A similar dinner for 2, with say 4 curries, costs about 2 USD. And that is including costs of rice / chapathis, energy costs, etc.

I don't know if this kind of model existd in the USA or European countries, but the businesses are very profitable. The store front is hardly 5 ft x 7 ft, costs about 4000 Rs. per month (about 50 USD Per month). Some store fronts are simply vans. Curries are prepared at homes and the storefronts are open for about 3 hours in the evening.

Perhaps this could be one answer to closing restaurants.

sowbug• 6 years ago

The US doesn't have nearly as many street food vendors as some other countries. I've never seen anything like a Taiwan night market, for example, where you might find one person selling green onion pancakes, cooked one by one on a griddle, for a price that's low even by local standards.

I wonder whether regulatory capture is happening, either intentionally or organically, by way of licensing, inspection, and food preparation rules that make it hard for anything smaller than a food truck to thrive in the US.

kumarvvr5• 6 years ago

In India, regulation is lax and enforcement is even worse.

However, I have found free market forces weeding out low quality ones. It's not a perfect solution, but it works.

Most of the food prepared in these curry points is usually fresh.

However, they offer a great way to have a sumptuous meal,with many varieties for very low cost.

Nasrudith• 6 years ago

There are often explicit permits for street vending of food along with inspection requirements and the permits often do rise high. Where there aren't permits there usually isn't the density to support it in the area chronically. Sanitation limits what can effectively be served without a sink and promotes disposability. There used to be ice cream stands about a century ago which had deposits on glass but well, several epidemics gave a very valid reason for the ban as popular as it was in hot summers.

Regardless there are always complaints about food standa or trucks anywhere from traffic to matters as petty as park service trashcan fill rate.

aaron695• 6 years ago

go home, prepare rice or chapathis

Off topic: This would be a huge cultural change. I have tried it a couple of times with rice, but to me it ruins the meal. I've never seen anyone else do it.

Reason for this culture might be cost of a meal to cost of rice (curries will have lots of good meat). Maybe other things like unwillingness to wait to eat or rice is culturally considered a meal more than a staple. (Buying a cooked chicken to have with bread at home is common). It is interesting. Breaking cultural norms is a way to make $

On Topic: Your idea is sound, the million $ part is fitting it to regulations (or getting around them)

kumarvvr5• 6 years ago

Regulations should not be a problem for a multiple of reasons.

1. For the rapidly expanding middle class, with much disposable income, focus has shifted to quality in the last decade. No longer are dingy kitchens acceptable.

2. Modern restaurants and take-out only kitchens (propping up to server customers of food delivery apps) use modern equipment and generally maintain good hygiene.

3. People are willing to spend a bit more for quality food and it shows in the markets. Cheap and dirty kitchens are being phased out.

4. For decades in the past, India had innumerable 'Tiffin Centers', where the primary target is the daily labourer or office goer, who goes to the center, orders a breakfast, stands on the side, eats it and leaves. In these kitchens, the full kitchen is always in view of the customers. There are no tables or chairs for people to sit, just raised platforms on which the plates are placed and food consumed. This culture of an open view kitchen is very prevalent in India, and is usually self regulating, quality wise.

noetokyo• 6 years ago

This system is actually being implemented in farmers markets in the US. I helps them as it makes people more willing to spend their money. One issue I can see from this is that it increases the rate of obesity. Which if you look up the areas where this does occur the obesity rate skyrockets in both men and female. Which would most likely worsen the obesity epidemic in america.

kumarvvr5• 6 years ago

I think it depends a lot on the content makeup of the food.

In India, in a typical meal with rice or chapathis (baked wheat flour), the base items form bulk of the food, weight wise. Curries and gravys are mostly garnishing. And there is a lot of spice and chili in most foods. So even among those who eat meat, the portions are relatively small. And milk, curd and milk derivative products are a huge part of the Indian meal.

In fact, in India, food is a carefully curated science, especially the traditional dishes. There are a lot of thumb rules for what to eat when, time of the day wise, day wise, day of the week wise, season wise and what not. The cuisine keeps changing.

For example, in the south, most evening dinners have a dish called 'rasam', which is just tamrind juice with tomatoes and a few spices. A very watery dish, where a litre of water is boiled with about 20 grams of tamrind. The reason it is usually taken in the night and during a heavy afternoon meal, is because it very much improves indigestion and constipation.

Indian scriptures give a lot of research on Food, Health, sex and spirituality.

Edit: Fasting is catching on in recent times in the west, but has been a staple part of Indian life since always. But it was never recommended for those whose life depends on manual labour, like farmers. They were always encouraged to take food, in good quantities every day. Lots of meat and sweets were recommended for the warrior class. Meat was forbidden for thise who are in knowledge work, like scholars, poets etc. This class had the most stringent food restrictions, because they essentially sit and think, and eating meat or drinking wine dulls a sharp mind.

InfiniteRand2• 6 years ago

Is this popular among the modern middle class these days? in my father’s generation eating out was seen as something working men did for lunch because they had to and was considered less than a proper meal at home

kumarvvr5• 6 years ago

Its really popular in my city, and its one of the biggest in India.

I have seen it in tier 2 cities and towns too.

nikolay• 6 years ago

Not only restaurants. A lot of people reinvented self-sufficiency: from doing their own hair, nails, to planting fruits and veggies in their backyards. There are many negative effects of the pandemic, worst of all, all the suffering, but also many positive ones as well.

ac29• 6 years ago

But, according to their data very very few restaurants were temporarily closed or permanently closed. The two most impacted cities were 7.9 and 8.2 closures per thousand (so, less than 1%).

I was under the impression restaurants were a sufficiently difficult business that new restaurants failed at a pretty high rate (a quarter withinin a year, half within 3 years, per this source: https://www.restaurantowner.com/public/Restaurant-Failure-Ra...). Given this, I'm not sure this <1% permanent closure rate is that unusual.

maerF0x05• 6 years ago

In california reopening moved our daily death rate from ~60ppl per day to ~90[1]

I hate to say it, but we all have to go sometime. Is smashing the economic means of the masses worth the lives of so few?

There are plenty of other economic vs. life preserving trade offs we make elsewhere, so clearly that's not a valid rebuttal.

When will we decide that the emotional response to Covid is not a rational one?

https://www.worldometers.info/coronavirus/usa/california/

dcrn2• 6 years ago

It doesn't seem right that one should be forced to go before it's "their" time as a result of the masses' inability to care about the collective health of their neighbors.

maerF0x05• 6 years ago

No one would force someone to expose themselves to that risk should they choose not to participate in the wider society. Your point would make sense if people were intentionally spreading the disease. (ftr i am against covid parties). But in this case for someone to get the disease they must choose to expose themselves to it (by going to a restaurant, by not sanitizing their hands before touching their eyes et al)

The point is that the freedoms/rights of the masses are being restricted for the benefit of few.

And to be clear I'm not saying that people should not be prudent whilst retaining their freedoms. It's prudent to wear a seat belt in a car, or a helmet on a motorcycle. Similarly it's prudent to wear a mask and sanitize hands and objects.

But to tell everyone they cannot drive because someone (not the driver) might die, or you cannot drive a motorcycle because it increases your chance of death over alternative means of transport has never been a rational argument. Yet we take similar arguments about covid19 as sufficient?

pengaru• 6 years ago

In california reopening moved our daily death rate from ~60ppl per day to ~90

~90 if you're using something like a seven day average.

Today and yesterday have both been >150.

There's a lot of latency separating actions like reopening and the consequences of that in terms of covid-19 deaths.

It could be weeks-months before large numbers of people even start taking advantage of the reopening let alone getting infected as a consequence, then more weeks to die.

maerF0x05• 6 years ago

As a followup it looks like the 7 day moving average is going up its ~110 now. I'm adjusting my perspective based on this new data.

Yelp: More than half of restaurants temporarily closed now permanently shuttered

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