The sorrows of the US restaurant industry


Yeah. It was partly just to say I’d eaten there, partly because it was the birthday of a lovely woman I was trying to date. Never did date her, but I did get the experience. And the menu.


I’m beginning to think that the United States has a massive real estate problem. A lot of problems seem to come back to “the rent is too high!” Or, more generally we have a capital issue (rent on machines, tractors, medical equipment). Someone is making fucking bank on like, every sector of our economy.

I appreciate this insight into the food industry from a business owners perspective. It confirms that the problem is higher up.


And the bill?


I’ve found that the number of people working in an average American restaurant - particularly waitstaff -
is rather high compared to most of the world. I imagine this has something to do with it.


Probably because they can afford to, when they don’t pay the waitstaff.


Luckily, it was split between the three of us who all wanted the experience and to give her a birthday present.


Could also be that Americans are rather… demanding. Of course that could simply be training from all the other restaurants having high staff counts.

That said, if we went the European approach, it would involve firing a fair number of restaurant staff so we could give raises to those who remained. Well unless you could somehow get Americans to accept a pre-added 15% service charge without balking.


Isn’t that what you get when they tack on that 18% gratuity for parties if 6 or more? Or does that not really fly in several parts of the country?


20% is my standard tip rate for any restaurant where i select from a menu and receive service. i have tipped as high as 35% on a few occasions when the service was exemplary. [quote=“Ryuthrowsstuff, post:19, topic:99152”]
I’ll never leave less than 5 bucks.

i am loath to leave a waitron with no money but i have encountered service and kitchen work so unabashedly awful that i have left no tip whatever on a handful of occasions. thinking back i can recall 4 times that has happened and in 3 of the 4 i did not pay for the so-called meal either. one time in particular our waitron took 40 minutes to provide a pair of appetizers neither of which were what we had ordered and both of which were cold. that was followed up by a continuing rainfall of incorrect items, incorrectly prepared items when the items were corrected (a “margarita” on the rocks made with drambuie instead of triple sec, 6 oysters on the half-shell served as fried oysters), when the main courses arrived each person got someone else’s order with a third person’s choice of side. at that point i asked to see the manager and when she arrived i asked if i could speak to her privately. she very rudely informed me that if i had anything to say worth listening to i could say it now and get it over with. at that point i used a firm, clear voice to describe the dining experience so far. her expression and body language told me i was boring her. when i reached the end of what i had to say she grudgingly allowed that i might have some grounds for complaint and asked what i thought it would take to make things right. at that point we had been there for 2 hours and i had no confidence in anyone working that night to do anything with anything approaching competence so i told her that all i could think of was that we receive no charge for anything that had been brought to the table and that we be allowed to leave while there was still enough time for us to go to another restaurant and have an actual meal. she called someone on her cell phone and told to us to go. that was easily one of the worst dining experiences i have ever had and i left no tip on that occasion. i won’t mention the name of the restaurant except to say that it caters to a similar market as capital grille.


That was more to say that if the amount of my bill means 20% is less than 5 bucks. I’ll leave 5 bucks at least.

I’ll absolutely tip less if there is a service problem, and potentially not tip at all. Though the circumstances for that are pretty extreme. And they have to be a problem with the server or bar tender (which was clearly a factor in your story). The one issue I have with that idea is many people have serious misconceptions about what’s under a servers control. And will often reduce the tip, or not tip. For things the server has no hope of having any effect on. I’ve seen people reduce the tip over food quality (server/barman didn’t cook it). Cause the room was too loud (that’s on the other customers). Because another employee did something. And so forth.

You seem to have it figured out though.


I second that. There’s clearly a lot behind it that’s not outwardly visible.

All of those are things that would never have crossed my mind when looking at the bill. Thank you for taking the time to explain and share that perspective. :slight_smile:


Yeah it’s one of those things that’s very basic. Restaurant management 101. But unless you’ve worked in the business, and in a capacity that you’re handling the bills, isn’t readily apparent.


More anecdotes: from an Oz perspective, $68 for two courses and wine for two people is about what you’d expect from a mid-tier restaurant here. A high-end place could easily double or triple that.

From the outside, the working conditions of American food workers are horrific, and the culture of commercial subservience created by tipping is repulsive. However, the constant presence of high-quality (in flavour if not nutrition) high-volume (typical American serving sizes are huge) food for astonishingly low prices was also quite striking.

America is an infamously large-waisted country, but given the food over there I’m amazed that anyone is still capable of walking at all. A week’s worth of calories at every meal.


Coming back on the subject: maybe I have underestimated the price of rentals in Europe. A German friend explained to me that the breweries in his city own a large proportion of restaurants and rent them under conditions of only serving the beer from that particular brewery, bought at a price which is markedly above retail.
In France, it seems that rent for restaurants and bars is way above other corporate rent prices. Apparently, the trick is that one needs a licence to serve alcohol and that is somewhat included in the price of the place. Coming to which: apparently there is a lot more money to be made on drinks than on food both in Germany and in France.
This aside, it was possible for some people I met to become really rich running a bar (they started in the 60s, I think), but it was lots of work. Frankly, I think it is relatively fair to become quite rich working your ass off, and it seems that running a bar/café/restaurant is one of this high workload + high risk + high reward jobs. Except that inflated rents or the corporate equivalent: franchise are a way to let the people running the place deal with the high risk and high workload part while transferring the high reward to the landlords.


What I meant was not to start a discussion on what is the minimum or reasonable tipping rate in the USA, but to point out that the tipping rate has increased during the years. And of course it has: there are plenty of reasons why the restaurant is enticed to pass some of their costs to tipping and there are not mechanisms by which the tipping rate could decrease (except government intervention): no restaurant will ever adverstise that the patrons could tip less.

Probably one of the reasons why the tipping rate has increased is that the restaurants are enticed to hire more waiters, since they don’t pay for them. The difference in the number of waiters between the US and Europe is striking. Of course, in Europe, one may get slower service. But if, in the US the waiter serves less tables in average, the cost will be spread on less patrons and will therefore be higher.

BTW: I am talking about average restaurants, not the multiple Michelin stars restaurants. The later need lots of people to bring the service that is part of their performance, wether they are in the US or in Europe. I am using the word “performance” as in a theater, because that is what it is about: not only the food, but a kind of “show” that belongs to the experience of eating there.


Which is a bummer … I think Black Star has the better food of most of the brewpubs. I think the main problem is the location. It’s on the suburbs transit line, but the only residence that is easily walkable from their location are the apartments right above them. And how many times can they eat at that one place? I miss that place and all its veg options.


That’s typical. Simply put alcohol will bear a higher markup in any given market than food would. Simply put people are willing to pay more for alcohol so we can include a higher markup. And the whole trick with breaking even in a restaurant is that you use high margin items to cover lower margin items. What’s important is not that every item has a given profit margin, but that the whole of the products you are selling average to a workable margin.

So for example my place has a hefty pizza take out business. I forget the exact numbers on what the pizza costs all in to make, throw in a box and send out the door. But people won’t pay too much even for good pizza (and ours is very good). We sell at around $18 bucks a pie, and they cost us more than 8 dollars to make. In the end profit off a given pizza is in the $2 range. Standard domestic beer costs us $.85 a bottle. We sell it for 5 dollars. There’s less time, staff, and logistics involved so the beer generates more profit out of its $5. Profit there is around $3. We make more off a shit beer than we make off the excellent pizza that brings people in the door. But that higher margin off the beer allows us to keep the price of the pizza below $20 dollars.

It is not. Not in the US, and I’d be willing to bet not world wide. People do get rich running restaurants. But that is relatively rare. You need very high volume of sales. The right location. And the right economy. Some one is working their ass off even in the bad failing restaurants. For the most part a successful restaurant will make a decent middle class to upper middle class income for a working owner. Or for a staffer or two (usually Chef and Manager). Doing better than that is a function of location, size, chance, and frequently owning your own building. And I’ve seen plenty of restaurants that have made their owners fist fulls of money that are absolute crap, and where the owner is an absentee investor. In fact some of the most successful guys in the business are casual chain restaurant franchisees. The kind of guy who owns the local Applebees.

People think restaurants make tons of money hand over fist. Because we mostly see and hear about those who have been very successful.

It is much more possible to make great money running a Bar, especially one that does not serve any food, because the overhead is much lower. There is less expense, less waste, less equipment, less staff, and you cut off the major margin sink that is food production. Average profits in pure bars are closer to 20%+ than the 10% average of restaurants as a whole.

But the major way to actuall have a profitable restaurant or bar business is to own more than one. The rule of thumb is this business is that a restaurant does not make money. Restaurants make money. With more than one location, and owning at least some of the properties. You get several things. You can take advantage of economies of scale unified ordering for the whole group allows you to bring wholesale costs on everything down. Food, liquor, equipment. Leading to higher profit margins. Multiple locations allow you to cover more bases in the market. Multiple pure bars generate much higher profits so they can offset lower margin casual dining locations. Which can subsidize and stabilize and profitable but unstable high end fine dining spot. Spreading advertising and marketing costs, insurance and payroll costs over multiple businesses makes them less of a burden on each individual location. And so forth.

This is why you see the huge spike is “fast casual” high end spots in the US. Like Shake Shack and the like. Those places have much lower overhead, and higher profit margins. So as the lynch pin of a restaurant group (together with bars) they can fund all sorts of wacky shit that wouldn’t be long lived on its own.


Perogies are expensive at 3.50 a bag, makes four meals. Still… That’s nearly three years’ worth of perpgies!


Making pierogies from scratch is like meditation for me. I love doing it, and I get pierogies to eat as an end bonus.


Chileans make a sort of perogie with meat, called empanadas. The shrimp ones are fantastic. We used to make ours with ground beef, boiled egg, raisin, onion. Basically Shepherds Pie: Portable.