Friday, November 3, 2017

Food Glorious Food

One of the heroic stories in Nashville is the one behind Slim & Huskies pizza and now their new Rollout store. Located on the emerging Buchanan Street in North Nashville where Jefferson just a few blocks south was the historically based district this is the new Nashville. The boys who run and created their pizza and in turn shop hire all local residents, encourage them to walk and in turn build a community that has been decimated for decades.

 This is where we are confused about the issues that we call segregation but in turn embrace "International" districts of largely Asian entities and industries. And the same with Latino areas that have a continental air. The two that come to mind is Chinatown in San Francisco and the Mission District that while are popular tourist destinations were/are thriving communities for immigrants in which to live and work.  Same with Mulberry street in Manhattan.  But thanks to Gentrification the reality is that they are now changing and in turn losing their affordability and diversity. That happened to Jefferson street as it runs adjacent to Germantown and its increasingly whiter and higher prices. Head up north a couple of blocks it is being attempted on Buchanan. North Nashville does not have long until it too faces re-branding and in turn a change of color.

Food is the number one small business that many can own. Then there are franchises of larger well established fast food chains or other businesses that enable an individual to build a business without building a name. Ace Hardware is one such franchise and here in the Nashville area many shut down in the Eastern region when the owner failed to sell his stores. Ace had to intervene to save at least one store and in turn the others are closed. With that goes jobs and local shops that build community and accessibility without having to drive to a big box store. I recall when I worked at an Ace and the owner viewed himself as possibly opening a chain of urban Aces throughout Seattle. That failed and it is now closed as it sat too close to the shadow of Amazon and their push for growth. Rents and salary's cannot be paid when business is an average of $10 bucks a sale. I tried to warn him that he needed to understand sales per square foot and operating costs, looking at sales in time frames to staff accordingly but he was having none of it, another rich kid with dreams of delusion. I ended up going back to Substitute Teaching full time as hours and morals got cut and I left hat in hand feeling bad watching dreams tank. Few of the people who worked there were happy from day one  and the turnover within the first six months reflected it.  Without a decent staff then it is just a store to buy batteries as when one thinks hardware one thinks knowledge.  And as the owner had never worked in retail, never worked in hardware, no experience in anything even remotely connected but this is the tech and investor trade, they just know everything about everything.

And I saw this with the fitness joint across the street. The owner had delusions of grandeur and in turn chains of Rain fitness throughout Seattle. He too overextended and could not compete with the much bigger push in fitness which too has seen evolutions of change that change and in turn glut the market.   He did non competes with staff, threatened lawsuits and tried integration with even Amazon and in turn had to sell some of his gyms.  We have how many Ballet bar gyms? Intense fitness?  Soul Cycles?  Hot Yoga?  The parallels are not lost here.  The women who owned a chain of Barre's in Seattle sold three of them right when I left Seattle as they were losing money, working 60 hours a week and exhausted.  They own two now and they are much happier and saner.  There comes a point when dreams of grandeur are ones of delusion. 

Sound familiar? Donald Trump comes to mind.

Our local rag, The Tennessean, and our weekly, The Nashville Scene, have page after page on restaurant openings and reviews with each new opening akin to a christening. When I think of that I think of the Titanic and well we know how that turned out.

Restaurants be they franchises or chains or single shingles have success rates that vary upon region, the economic climate and in turn trends in food. The Restaurant Industry attempts to put forward a financial analysis that of course Wall Street uses to push or pull endorsements. We have seen their trends from Real Estate to Health Care and we know how well those worked out. Sort of like the Titanic, no?

And when I read this article (below) I was not surprised. One of the big issues not addressed is the rising tide issue of wages and health care. Most businesses are like the ones profiled, one person, one idea and they work the line for hours at a time. The fast food industry which relies on a patterned protocol are utterly different. The staff works the absurd minimum wage with no fixed schedules and the new trend of non-compete clauses built in a shitty hourly work-to-hire agreement so where one slings the fryer should be irrelevant but with few competing for said jobs that is the reasoning behind that. Fast casual is just one step above the drive through but they have faced their own serious health issues that once plagued the fast food industry. Jack-in-the-box vs Chipolte is a good example.

Then we have chains that much like the ones here throughout Nashville. Large investment groups that open a series of restaurants that have a chain feel but not and in turn are more flexible to industry changes and can fold up shop or change themes on a dime. The hospitality industry is huge here in Nashvegas and what few get that the second the joint offers table service and has a back of house the wage structure changes to the much LOWER federal minimum wage for food servers at least $2.13 per hour be paid to employees that receive at least $30 per month in tips. If wages and tips do not equal the federal minimum wage of $7.25 per hour during any week, the employer is required to increase cash wages to compensate.

So hence the limited service concept, where you order at a counter, the food is brought to you by a kitchen server who also prepares the food and in turn washes the dishes. Go to any "restaurant" here in Nashville that is the dominant food store and some have dishwasher/busser but they share duties with the barista's and order takers who do the beverages and handle customer orders. It was something I had never seen before until I moved here but that is I suspect a cultural regional feature it is a blend between Panera and diner. It is odd but I am used to it now. I asked how much they earned and almost all make one to two dollars above minimum wage with tips. And for the record Southerners are known for not tipping. **For the record, I am a baby boomer, a woman, a Democrat and not Southern. I tip. Well not on Lyft as frankly when I am directing them and we are going a five minute ride where half the time I feel uncomfortable I don't. But then with women drivers I almost always do. Sexist maybe?

So when you go out to eat forget the farm to table bullshit that is out of the average Americans price range and in turn interest, they are obsessed with quantity over quality and if they can somewhat combine the two then okay then! But trends in food can lead to over saturation and in turn decimation of those who were there all along just not as cool and in turn cannot front the operating costs that the new kid in town has fueled by all that new money. Gentrification comes with the food business and that marks the beginning of the end of the hood. Tastes change and so do those who live nearby. Then comes the accusation of cultural appropriation and in in reality there is some truth to that but also it is about money, who gets the loans and the funds and that is about access. Remember accessibility and availability are not the same. So while I applaud the team and Slim & Husky's who are keeping in real and locating their second joint in Antioch in another largely black hood, they are few and far between. That is the key to success and building community, if it is good they will come but will they stay. That is another issue all together.

I quit eating out quite awhile ago. One as a woman I felt odd and hence fast casual would be a good fit. No. I do takeout and or delivery as now we can open that up thanks to the MANY MANY services that also glut the market.  Postmates, Delivery Dash, Uber Eats which too cannibalize the market to the point of extreme.  In Seattle we had Amazon Prime delivery and I loved it.  But again there is a point of where one asks: When is too much, too much? 

Thanks to Wall St., There May Be Too Many Restaurants

OCT. 31, 2017

PLAINFIELD, Ill. — The way Marcus Mooney saw it, he wasn’t just selling hot dogs — he was selling experiences.

In addition to the classics — a cheese dog and a chili dog — his restaurant, Frank’s Night Out, served hot dogs topped with more exotic ingredients, like a “Surf & Turf Dog” featuring crumbles of garlic-basted Maine lobster.

But the hot dog experiences Mr. Mooney offered were just one choice among hundreds for hungry motorists seeking a quick, inexpensive meal on this restaurant-laden stretch of Illinois Highway 59. His sales dropped. After opening his restaurant in 2013 and putting in seven-day work weeks, Mr. Mooney shuttered it last year.

“There becomes a point where there’s too many choices,” Mr. Mooney said recently. “The more restaurants that opened up, the more it took away from business for us.”

After a prolonged stretch of explosive growth, fueled by interest from Wall Street, experts say there are now too many fast-food, casual and other chain restaurants.

Since the early 2000s, banks, private equity firms and other financial institutions have poured billions into the restaurant industry as they sought out more tangible enterprises than the dot-com start-ups that were going belly-up. There are now more than 620,000 eating and drinking places in the United States, according to the Bureau of Labor Statistics, and the number of restaurants is growing at about twice the rate of the population.

That trend is evident on a more local level here in the sprawling suburbs southwest of Chicago, where the population is growing fast, but the number of restaurants is growing even faster. Twenty years ago, Mr. Mooney would have been competing against about 600 eateries in the region; by the end of last year, that number had more than doubled.

“Everybody thinks their brand has what it takes to succeed in the marketplace,” said Victor Fernandez, an industry analyst with TDn2K, a Dallas-based firm that gathers data on the chain restaurant industry. “You look at a location that looks good, but everybody is looking at the same place and they all come in, and the result is you get oversaturation.”

The glut of restaurants has increased the pressure on individual restaurant owners. Industry sales are up nationally, but growth has slowed to the lowest rate since 2010.

Customers continue to spend a large share of their food budget in restaurants, but they’re spreading the money across a larger number of establishments, so profits are split into smaller individual pieces. Yet the industry — particularly chain restaurants — continues to expand, a strategy that both masks the problem and makes it likely that more places will falter.

Sales at individual chain restaurants, compared with a year earlier, began dropping in early 2016, analysts reported. A majority of restaurants reported sales growth in just four of the last 22 monthly surveys from the National Restaurant Association. Before that, most restaurants had reported growth for 20 consecutive months, from March 2014 through October 2015, the survey found.

As Americans work longer hours and confront an ever-growing array of food options, they are spending a growing share of their food budget — about 44 cents per dollar — on restaurants, according to food economists at the United States Department of Agriculture Economic Research Service.

But while consumer demand contributed to the restaurant boom, it was changes on Wall Street that really fueled the explosion. Chains like Del Taco, Papa Murphy’s and others began attracting money from private equity firms, and banks like Wells Fargo and Bank of America saw lending opportunities in the restaurant industry.

Those developments complemented each other well. New fast-food investors wanted to rely less on owning restaurants, and offloaded many company locations to eager buyers who came with bags of cheap money from the banks. The investors could then count on a steady stream of franchise fees and royalty payments — buffers against overall sales declines if, say, the market ever became oversaturated. And they didn’t have to worry about actually operating the restaurants.

Franchisees pay for the right to operate a McDonald’s or a Subway, following rules that dictate everything from what type of taco to sell to where to buy iceberg lettuce. They take on the risks and costs of running the restaurants, in exchange for the marketing muscle and name recognition these big companies provide. While every Dunkin’ Donuts or Taco Bell may look the same, dozens and sometimes hundreds of independent owners can operate most of the restaurants within a single brand.

But some franchisees say they’re being pressured to open too many stores as food companies push for new revenue streams. Buying an existing restaurant, for example, may mean agreeing to build 10 new ones.

“They want us to sign aggressive development agreements,” said Shoukat Dhanani, the chief executive officer of the Dhanani Group, which owns hundreds of Burger King and Popeyes restaurants. “I didn’t see that even five years ago.”

The shuttering of restaurants could have a major impact on the labor market. Since 2010, restaurants have accounted for one out of every seven new jobs, and many restaurateurs complain that it has become increasingly difficult to hire and retain workers. In Muscogee County, Ga., a former textile center, the Labor Department reported an overall decline in employment of 2,000 jobs since 2001 — but a gain of 2,700 restaurant jobs.

Those positions could be in jeopardy if sales continue to fall and force more restaurants to close. Over the summer, the parent company of Applebee’s announced it would close more than 100 locations. In 2016 Subway, the nation’s largest fast-food chain by location count, closed more locations than it opened, the first time in its history that had happened.

“Year over year, we are seeing chain restaurants grow at twice the rate of overall population growth,” said Mr. Fernandez, the TDn2K analyst. “We believe now there are probably too many restaurants and too many brands.”

In this business environment, restaurant owners are often risking their personal fortunes when they open a Pizza Hut or create their own idea for a restaurant, like Frank’s Night Out.

Melissa Arcache also plowed her life savings into her dream of running a successful restaurant. She now owns three branches of Bahama Buck’s, an island-themed frozen dessert chain decorated with surfboards and novelty mileage signs listing the distance to Bermuda and the Bimini Islands, in the Houston area.

Even before Hurricane Harvey hit Texas, Ms. Arcache was struggling. Sales in August were down 10 percent from last year, and business fell further after the storm. She looks at all of the competitors opening up shop nearby and wonders what she can do.

She said she doesn’t have a Plan B.

“This is what we’re going to make work,” Ms. Arcache said during an interview at her store in Houston, which was recently vandalized, leaving behind dents in the walls she has yet to patch up. “This is what’s going to feed my future kids and hopefully get them through college,” she said.

Mr. Mooney also put his life savings into his restaurant, Frank’s Night Out, only to see it fail. His personal life suffered, too — he was married when Frank’s opened but divorced by the time it closed.

He now works as head chef for a company that owns a brewery and restaurant in the same strip mall where Frank’s Night Out was located, and passes by his old restaurant on his way to work.

Transformed into a beef and gyro shop, the new establishment sells one of the items he created, a hot dog wrapped in bacon and topped with macaroni and cheese, lettuce and tomatoes. It even has the same name — the “Deep South Dog.”

At first, Mr. Mooney said, he felt relief when he looked in and saw few customers. “It allows you to think that the failure of it was not you,” he said.

But nine months later he’s rooting for the new restaurant to succeed.

“Now it’s kind of like, oh, man, I’m glad people are going in,” he said.

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