Is the Tech Industry Killing Restaurants?
There have been whispers lately about a restaurant apocalypse. As prices continue to rise for diners and restaurateurs in places like the Bay Area and New York City, many are wondering if we will reach a tipping point where the financial reality of operating a restaurant, eating at one or working at one won’t be feasible for most.
The New York Times recently took these issues head-on in an article focused on San Francisco’s dining culture, one that’s heavily impacted by the local tech scene and its immense wealth: “Today, Northern California has been taken over by a tech-boom generation with vastly more money and a taste for the existential pleasures of problem solving,” NYT contributor Daniel Duane writes. Adding:
These restaurants must satisfy a venture-capital and post-I.P.O. crowd for whom a $400 dinner does not qualify as conspicuous consumption and for whom the prevailing California-lifestyle fantasy is less about heirloom tomatoes than recognizing inefficiencies in the international medical technology markets, flying first-class around the planet to cut deals at three-Michelin-Star restaurants in Hong Kong or London and then, back home, treating the kids to casual $2,000 Sunday suppers.
Meanwhile, midrange restaurants are “getting killed,” Daniel Patterson of Coi and LocoL explains. And employees at restaurants in the area are struggling to make ends meet. Housing has gotten so expensive there’s even talk of restaurant owners building dormitories for their employees.
Gwyneth Borden of the Golden Gate Restaurant Association tells Duane that “when the economy slows, who is going to survive? We’re already seeing quicker openings and closings because restaurants open with so much debt.” With Patterson adding, “The food has never been better and the business climate has never been worse and so we are speeding toward a cliff.”
As a result, chefs and artists in the Bay Area are turning their attention south to Los Angeles where rents are cheaper and it’s easier to open a midlevel restaurant. Chefs in New York are facing a similar struggle as those in the Bay Area, with the commercial real estate market making it virtually impossible to open without major investors.
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