Two of my favorite dining spots are closing: Salud Tacos in Barrio Logan and Tip Top Meats in Carlsbad.
Also: Sammy’s Woodfired Pizza in Mission Valley closed, a baker’s dozen of Rubio's locations were shut down in San Diego… Red Lobster shuttered locations… and last year more than sixty other food venues went out of business locally…
San Diego’s Republican candidates for office know they can’t utilize many of their party’s red meat issues from other markets, so they’re taking up the cause of restaurant closures as a symptom of what’s wrong with the economy with Democrats running things.
Lost your favorite hamburger joint? Here’s the GOP version of that reality. Look for Gov. Gavin Newsom out front with a padlock and chain. Or Supervisor Terra Lawson-Remer complaining about health code violations. Or Mayor Todd Gloria enjoying a sidewalk picnic with overpaid wait staff.
Of course, if one follows these claims down to the level of things GOP office-seekers could actually do in the real world, it’s easy to see this as yet another “feel bad” issue for campaigns.
No, Carl DeMaio, your whine-a-thon at Fox News about the state's hostile business environment does not add up to “the end of Taco Tuesday as we know it!” And, no, Jim Desmond, “the fabric of our community” isn’t “being torn apart with small businesses and restaurants closing.”
As somebody who worked at every level in the hospitality industry over a period of three decades (from busboy to manager, hotel food and beverage director, to restaurant owner) I’d like to call bullshit on these mistaken analyses.
There are more restaurants opening in San Diego than closing. In fact, if you look at the 2023 end of year rundown at SanDiegoVille.com, there were about two startups for every shutdown.
San Diego is home to more than 8,100 venues selling food and beverages.
Using the Nation Restaurant Association’s metrics, only one in five restaurants survive for more than five years. A celebrity chef on a reality TV show proclaimed that 90% of restaurants fail in the first year. Nah, that’s crap.
As Restaurant Owner magazine puts it, there are many non-fact based assumptions when it comes to discussing the hospitality industry.
It seems everybody "knows" that restaurants fail at an alarming rate. Ask a banker, for example. She'll tell you "we don't make restaurant loans, it's too risky, they fail too often." Ask her to support her opinion with real data, and she'll likely say, "It's common knowledge."
Some restaurateurs are trying to sweeten the pot for employees, a daunting task when the core premises of their operations come from exploitative working conditions. “Everybody knows” becomes “Everybody Does It” in a industry built on exploitive labor and illusions presented in advertising.
Waffle House plans to increase pay for servers at its restaurants across the country over the next three years, with some workers likely to see raises of a few dollars an hour. This announcement isn’t coming from the goodness of owner’s hearts: it’s in response to worker rebellions, including walkouts.
The Union of Southern Service Workers, an SEIU-backed group, is organizing Waffle House workers around three demands:
Safety at work.
An end to unfair paycheck deductions.
$25/hour for all workers, cooks and servers.
***
Getting back to my favs closing, the reasons aren’t what those GOP business geniuses would have you believe.
Salud Taco’s shutdown is due to failed lease negotiations, according to a sign posted on the door; at least one community activist has implied the situation is actually about a greedy developer.
Tip Top meats (offering more food in one sitting than any reasonable human being could hope to eat & a fabulous retail section) is closing because its founder died a couple years back and his survivors no longer want to shoulder the burden.
Restaurant work is hard, demanding long work days and weeks. There’s not a lot of room for raising families or other activities contributing to a decent quality of life.
And don’t get me started on chain restaurants closing. Going bankrupt is just about a condition of doing business. Red Lobster went from one location (it was among the first “fast casual” restaurants), to being owned by General Mills, which spun them off to Darden, which sold the chain to Golden Gate Capital, which gave up 25% of the stock to Thai Union (their biggest supplier), and Thai Union took over the remaining interest in 2020.
Each owner took what they could in terms of value from those businesses until there was nothing left. The mythology about an all-you-can-eat shrimp promotion taking the company down omits the perilous situation its private equity buyers enabled.
From The Prospect:
To finance the purchase, Golden Gate imposed a sale-leaseback on most of the real estate, which went under ownership of American Realty Capital Properties. This real estate play has become common in private equity purchases of other retailers and even hospitals, because it gives the PE owners a quick injection of cash from the get-go.
“The retail apocalypse is all about having your real estate sold out from under you so that you have to pay the rent in good times and in bad,” private equity expert Eileen Appelbaum told Business Insider.
That was just the start of Red Lobster’s problems. Restaurants would become chronically understaffed, as the owners tried to slash costs wherever they could. The extravagant payments that the company made to its owners made it difficult for the chain to adapt in a changing restaurant business shifting away from casual dining.
Now Red Lobster is, according to the bankruptcy filing, entering into a stalking horse purchase agreement pursuant to which the remaining locations will be sold to an entity formed and controlled by its existing term lenders. In other words, flush out the debt, and start over with the same ownership.
Rubio’s, home of the original fish taco (unless you count roadsides in Baja), has already been through bankruptcy. This time around, they’re adopting GOP talking points, blaming their troubles on the California business climate. Increases in the minimum wage always get mentioned in these excuses.
Rubio’s ownership lies with private-equity firm Mill Road Capital, which acquired the company in 2010 for $91 million, a sale that transformed what had been a publicly traded company into a privately owned business.
And let’s take a look at where Rubio’s is headed. See if this sounds familiar…from the Union-Tribune:
Rubio’s said it plans to enter into what is known as a stalking horse purchase agreement to sell the business to an entity that would be formed and controlled by its existing lender. As part of that process, it will be filing a motion to allow other companies the chance to submit bids, which will be supervised by the court. It expects the sale to be completed within 75 days. The company noted that it will also be seeking court approval to continue operations, which will allow employees to continue receiving their pay and benefits.
Now, let’s take the bull by the horns, namely how people in the restaurant industry get paid.
First of all, tipping. Gratuities became commonplace in the US after the Civil War as a means for emancipated slaves to earn a living in establishments that paid them nothing. The restaurant industry has poured millions of dollars into lobbying elected officials to maintain an exemption from having to pay their workers a fair wage, over the years since the 1870s. When the original minimum wage act was passed during the 1930s restaurant servers and farm workers were left out of the deal.
When the United States moved into the trickle down economy, the minimum wage paid to fast food workers steadily lost its value. I carried a full course load in college and worked at Der Weinerschnitzel fifty years ago and was able to pay rent, groceries, and whatever it took to keep my 1962 Corvair running.
The services and support needed for people struggling with poverty have steadily disappeared during our market economy years. And the inclusion of increasing home value as opposed to union-level wages for economic advancement leaves most of us behind.
Now, as restaurant owners and Republican politicians are complaining about a $20 per hour minimum wage, a worker needs to earn more than twice that amount ($47.67) to afford the average monthly rent in San Diego
I get it. The way restaurant business operations are structured, there’s usually not room for decent wages. An entrepreneur won’t sell investors with a business plan requiring living wages for staff. I don’t think that’s the employees’ fault. Nor does the blame lie with the legislature, the voters (who consistently approve higher minimum wages), or whatever Democrat is being targeted by Republican candidates.
Like the problem of unhoused humans (of which the hospitality industry is a contributor and a victim) the solutions are systemic.
It’s proving to be virtually impossible to provide temporary housing in San Diego; no neighborhood will stand for it. Permanent low income housing is being chased out of the local market by ballooning insurance rates, directly attributable to climate change. And the consequences of extreme weather events are becoming more likely as people cling to a car-centric way of life.
Like I said, systemic. Big problems require big solutions. Working around the margins only delays the inevitable.
There are, in fact, restaurants that have adapted to live and even prosper with California’s business climate. I doubt that Carl DeMaio would eat in any of them regardless of price point, because being miserable is a way of life for him.
How do we change this paradigm? Stop voting for the status quo for starters. If you have to choose between overcooked chicken and truffled turds full of broken glass for dinner, don’t choose the poop. Recognize your contribution to the problems. Encourage activism. Advocate for “we,” instead of “me.”
Like it or not, we’re on the threshold of major changes in our society. Let’s figure the best ways to make them work for all of us, rather than the Elon Musks of the world.