Is San Francisco killing restaurants?

A friend alerted me to an interesting post on Michael Bauer's (our local restaurant reviewer at the San Francisco Chronicle) blog titled "Is San Francisco Killing Restaurants?" Mr. Bauer spoke with the chefs of Foreign Cinema, husband-and-wife team Gayle Pirie and John Clark, about the expenses of doing business in San Francisco. The post has also sparked a lively debate in its comments.

While out of self-preservation I won't touch Mr. Bauer's blog with a 10-foot wooden spoon, this topic is obviously the focus of my attention right now. I'm pointing it out on my blog, because I believe it may be of interest to those of you following my quest to open a restaurant in San Francisco. Frankly, it's a topic that should be of interest to anyone who goes out to eat in our city.

While the Foreign Cinema couple points out some *sadly* humorous expenses like a "candle tax" and a "tent tax" (neither of which I was aware of!), these are relatively minor. The two more significant expenses unique to San Francisco are the recently passed Proposition F, which mandates employers to pay for 5-9 sick days for its employees, and the Board of Supervisors' new universal health care requirement. When combined with San Francisco's recent minimum wage law, the owners of Foreign Cinema estimate that these new ordinances will add $260,000 to their costs!

You may be surprised to learn that, for the most part, I support the new laws and ordinances. I agree with what New York restaurateur Danny Meyer wrote in his new book, Setting the Table: the Transforming Power of Hospitality in Business: employees come first, even before guests. It is the responsibility of any employer to take care of her employees to the best of her ability. Happy employees, in turn, will provide better service to the restaurant's guests. [To learn more about Mr. Meyer's innovative "enlightened hospitality," I recommend Shuna's excellent report on her former employer's recent visit to the Commonwealth Club].

But whether or not I support the new ordinances is beside the point. They are the new reality for every restaurant and business owner in San Francisco, small and large. In case it was not already, San Francisco will now become the most expensive city in the country to operate a restaurant, higher than Manhattan or Chicago.

It makes me wonder what the hell I was thinking when I decided to open a restaurant in this lovely, though increasingly expensive, city....

So, do I think San Francisco is killing restaurants? Nah. Speaking for myself, I know the risks and costs of this business, and yet I still have decided to open a restaurant here. I know I'll be lucky if I make a dime. I want to open a restaurant simply because I like cooking and making people happy. It's what I do. And I love this city too much to even consider doing it anywhere else. Despite the expenses. That's what the hell I was thinking.

In any event, Mr. Bauer's post will give me (and hopefully all of my SF readers) something to ponder forget tonight while celebrating the arrival of this year's beaujolais nouveau at some Frenchy restaurant in the city. Perhaps Foreign Cinema?

Cheers, Michael Bauer, for raising this very important topic!

Food|and Drink|Restaurants|Opening Restaurant|San Francisco

Comments

[Dan Lyke]

Mr. Bauer's weblog seems more intent on stirring up controversy and the comment area so that he can convince his higher-ups that he's an asset to the web site rather than being a forum for real discussion and exploration, but I think this one's kind of simple: The price of eating out will go up.

If San Franciscans are willing to make cutbacks in other areas of their life so that they can continue to eat out, then restaurants won't go out of business. If San Franciscans decide to economize, then restaurants will either adapt by cutting back in places other than staff compensation (cheaper ingredients?), or go out of business.

It's not a completely closed economy, but it is fairly simple to look at the situation and see that something's going to get squeezed.

I think the more insidious problem is the one you gloss over: You didn't know about the "candle tax" or the "tent tax". As you develop your business plan, what other arcane hidden costs are lurking in there not because taxes are high, but because the structure for collecting them is byzantine. And if that structure is complex enough, than how much of doing business in San Francisco is about making sure that selective enforcement doesn't get you? I'd much rather trust my health and livelyhood to a system that's fair and open than to one that's prone to bribery or less obvious forms of corruption.

[Tana]

Seen this?

[Tom Walton]

Given what you're going through, I'd be happy to give you some suggestions regarding restaurant PR. I have 21 years of experience and am the foremost restaurant PR person in the greater Bay Area. Current clients include Gary Danko, Boulevard, Fleur de Lys, La Folie, Myth, Pres a Vi and Mantra (check the Web site listed below). All the best.

Tom Walton
Fortune Public Relations
2319 California Street
Berkeley, CA 94703
phone 510-548-1097
fax 510-841-7006
fortunepr@aol.com
www.fortunepublicrelations.com