Is the US Restaurant Recession Becoming Structural?

“Flat sales” are now a “welcome change.” The New Normal.

National restaurant data and anecdotal evidence has been piling up. “T Vogel,” a commenter on WOLF STREET, put it this way:

My wife and I make almost 30k more than the median family income in my town (northern CA) with no kids. Our rent just went up by 1k a month – landlord selling – starter houses are selling at 500k.

We are not spending a dime more than needed. I plan to skip our weekly night eating out now.

They’re not the only ones to skip restaurants. Costs are going up, not just of restaurant meals, but of life in general. Incomes are lagging behind. And consumers are adjusting…. That’s what a Reuters/Ipsos opinion poll of more than 4,200 U.S. adults confirmed today.

One-third of the respondents said they were eating in restaurants less often than three months ago. The poll was conducted in the second half of January. Of them, 62% cited cost as the primary reason.

Restaurant prices have been rising. The price index for “food away from home,” a subcategory in the Consumer Price Index, increased between 2% and 3% every year since 2012. In January, it rose 2.4% year-over-year. Those price increases are cumulative, and they add up after a while.

It’s not just that eating out is getting more expensive; it’s that stretched households are pushed by price increases elsewhere to divert some of their limited means from eating out to other expenditures.

Yet grocery stores aren’t reporting blockbuster numbers either, Bob Goldin, partner at food industry strategy firm Pentallect, told Reuters. “There’s more splintering of the food dollar, and the pie isn’t growing,” he said. “Where you spend has changed more than the amount you spend.”

The national averages, as seen from the restaurant’s point of view, bear that out.

In its most recent Restaurant Performance Index, the National Restaurant Association lamented “soft same-store sales and customer traffic readings” in December, which kept the Current Situation Index (tracking same-store sales, traffic, labor and capital expenditures) in contraction mode for the third month in a row:

  • 42% of operators said their same-store sales declined year-over-year.
  • 47% of operators said their customer traffic declined year-over-year.

This sort of data has been coming out for a while. It got to the point where TDn2K titled its most recent Restaurant Industry Snapshot: “Flat Sales, Welcome Change for Restaurant Industry in January.”

And more specifically:

While same-store sales growth was flat (zero percent) in January, it represented a welcome break from the ten consecutive months of negative sales growth experienced by the industry through the end of last year.

These flat sales were a function of slightly higher per-person average spending and fewer people going to restaurants: same store traffic was down 2.5% monthly and 4.1% on a rolling three-month basis. As the report put it: “Although still negative, this was the best month for the industry since last May.”

On a two-year basis, same-store sales were down 0.8% from January of 2015.

There were some winners in January, with growing same-store sales: Upscale casual, family dining, and quick service. Casual dining “was able to achieve flat results in January,” hallelujah, thus breaking a streak of 13 months in a row of falling same-store sales.

And there were some losers with same-store sales declines, according to the TDn2K report: fine dining and fast casual.

You get the idea: It’s been so tough out there for restaurants that any sort of flat spot or even a smaller down-tick in the averages is welcome news for the industry. And it looks like it’s becoming a structural feature of the US economy, though not nearly as bad as the downward spiral of brick-and-mortar retail.

This of course contradicts the theory or hopes that millennials – who are said to prefer splurging money on “experiences,” such as eating out, rather than on products, such as clothes – would pull the restaurant business out of its funk.

That said, you wouldn’t necessary know this by walking around San Francisco. Yelp lists nearly 8,000 eating establishments in the City, many of them recent creations, including 500 cafés and 3,000 delis. A lot of the places are packed. Some can be impossible to get into on a Friday or Saturday night without a reservation days or weeks in advance. Others are nearly impossible to get into no matter when or what.

But then other restaurants are nearly empty. There has been a slew of recent restaurant closures, amid talk of a big shakeout, including something called the “Mid-Market Massacre” in an area around Market St., where restaurant after restaurant closes, done in by exorbitant rents, not enough traffic, too much competition, a finicky public that might have lost interest, and insufficient sales. So yes, it’s tough out there, even in San Francisco, in what must be one of the toughest businesses on earth.

This is why a real estate insider thinks the era of “aspirational pricing” is over. Read…  Luxury Home Listings “Overpriced by a Third?”

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  95 comments for “Is the US Restaurant Recession Becoming Structural?

  1. ALBERT CHAMPION says:

    yes, the restaurant business in houston is in disarray.

    i have cash and am old enough to tire of cooking for myself.

    most nights, i am the only one in any restaurant i choose.

    some take care of me very well, because i am a regular.

    others, where i was a regular, aren’t getting it.

    rude waiters, lackadaisical management.

    conversing with the management of one of my regular joints, they want to remodel the place. thinking that will stimulate more business. i told the manager to save the money. that the issue is not one that a remodeling will resolve. in fact, unless the joint has a friendly banker, it will just exterminate his restaurant faster.

    he didn’t want to hear it, but the problem is dpi. and in the hydrocarbon-oriented houston economy, it is declining at the moment. and no reconditioning of the joint will remedy that reality.

    in fact, i said to him, hold on to your cash. this is not the time to think that spending it on a remodeling will enlarge the number of your weekly covers. the issue is not the color of the tables. the lighting. it is the money in the pockets of your marketplace.

    he looked at me like a steer going to slaughter. he wasn’t understanding the oil and gas industry in houston.

    i fear that a joint i have frequented for some years will bite the dust because it isn’t understanding the dynamics of household dpi.

    • CrazyCooter says:

      Yup.

      Old timers see the cycles – boom and bust – but the young’ns don’t get it until it takes a 2×4 to their heads.

      The old wisdom shared with me is 5 to 7 years on a crash/down cycle, which we are a couple years in already. Plenty of time to wallow …

      My company just killed a several year in planning nat gas project – due to low oil prices as best I can tell (they said that – but layered on other reasons which I sort of see as derivatives).

      What cash giveth, cash taketh away.

      Regards,

      Cooter

  2. Pavel says:

    I am hardly a typical case (single male, late 50s, decent income, constant travel) but my own behaviour has changed a great deal lately. Whereas I used to dine out often, now I am just as likely to cook a simple (but fingers crossed tasty) meal at home. I could afford to eat out every night and there are many restaurants near me. However:

    –Except for the better restaurants I don’t trust the food quality
    –I prefer to eat organic when I can; much easier to do so by cooking at home
    –I don’t like dining on my own unless the restaurant is casual enough
    –so many restaurants (esp in London & NY) are dreadfully noisy. They are much better in other countries (e.g. France and Japan)
    –frankly it’s depressing going to restos and seeing tables full of people staring at their damn phones
    –the prices, of course!

    It depends on the city and customs of course (if service is included e.g. and local taxes). In one city I visit frequently a $30 meal can become $40+ after various taxes and an 18% or 20% tip is included. Often I could have the same meal at home for a fraction of that price (and with better wine!

    Anyone who is concerned about finances should just stop eating out frequently. Starbucks-style coffee is even more ridiculous. In NY recently I went out for two coffees and two breakfast muffins when staying with a friend. After tipping the baristas the bill was $15. For coffee and muffins!

    /end curmudgeonly rant. Thanks for a terrific site, Wolf.

    • Crock says:

      In a city of Tashkent, which I was passing by last month, I was staned by the price of ‘cafe Americano’. $8 frickin dollars. Have to add that it was at the airport. But still… They make about $200 a month. Starfucks- eat your dirty laundry!

      • Frederick says:

        Airport food and drink is always outrageous Starbucks across from my apt in Warsaw is around three Euros but I go to a great little coffee shop around the corner for less than a Euro for a great cup of latte Starbucks is just a fad a place to be seen as a teenager and show off that you can afford it No thanks

        • Kent says:

          Starbucks is popular in the US because most of the country has never had access to decent coffee (except in a few major cities). Much of Europe has had great coffee at little shops for a long time. I’m always surprised to see that Starbucks has any following in Europe other than American tourists.

        • Maximus Minimus says:

          Starbux started offering coffee in NA which was better than tepid brown water in mom-and-pap eateries. Now, many other brands popped up in urban areas, and Starbux is bottom of the barrel – yes, a place to hang out for teenagers and self-preening showoffs.

        • CrazyCooter says:

          When I lived in Dallas, Torrafazione did a few pilot stores and I got hooked on the quality of their products.

          Amazing.

          They were bb gun distance from a starbucks.

          I won’t carry on about the quality of their coffee, mochas, pastries, and such – it was just stellar.

          Eventually they decided (for whatever reason) that the franchise wasn’t going to work – and sold out to … Starbucks.

          This was my earliest experience with the horrible quality of common American chains – and you have to have a reference point – and when I started learning to do a lot of common things for myself.

          I bought a Saeco fully automatic machine (ups and downs but overall I was happy), whole beans in bulk, and saved a boatload of money in the process.

          These days I just stock my suitcase full of Trung Nguyen coffee when we visit the wifes extended family. The price in VN dong is unbeatable and it takes me well over a year to drink a suitcase full (which so far hasn’t caused problems in customs).

          I use a Bialetti percolator.

          Regards,

          Cooter

      • Tom says:

        In US, most people, except for morning perhaps, go to Starbucks or coffee shops in general because they are lonely and need to have other people around. Many go year after year to hook up with someone. I used to go to Starbucks and work on my laptop for about 6 month.

        Then there was a moment of Eureka! I looked at the regulars, specially middle aged ones and honestly got really scarred. I saw myself looking exactly like them in 15-16 years, and sitting there hoping to hook up with someone in a coffee shop. I did go there to work, but at the same time, I was there for socializing with others.

        I suddenly found it pathetic to go to coffee shops to socialize and hook up with others. And it actually doesn’t work in any case, and so you are just wasting your time.

        Now, I stay at home and work; far more productive, far more relaxing.

        • Tom says:

          Oh, I forgot, and far far cheaper. But the saving in productivity and relaxation at home outweighs is far greater than the saving in the actual money spent. And I even have the bonus of knowing that my coffee is 100% clean.

        • Craig Jones says:

          We transferred to Nashville due to career and I was blessed with a new group of friends – all met at the Nipper’s Corner Starbucks. We still stay in touch, even though I now reside in Colorado.

          In my instance, anyway, Starbucks is still a great place to meet new friends. You just have to put yourself out there (as would be the case at anyplace where people gather).

    • Dan Romig says:

      As a coffee addict, I do not understand the Starbucks-style coffee. People in my neighborhood line up and wait to buy their ridiculously overpriced cups in a drive through line. Three bucks for a cup of java???

      When I wake up, I hand grind my beans in a ceramic burr grinder and use a cheap, but functional coffee maker to brew excellent tasting coffee right in my own kitchen. Shakopee Minnesota’s Cameron’s Coffee has a fantastic selection of beans for $7.99 a pound at my Cub grocery stores!

      • Frederick says:

        Waiting for coffee in a drivethru should be illegal How insane is using precious fuel idling in line for a beverage Only in the states would anyone do something that absurd

      • Maximus Minimus says:

        Yes, your coffee must taste great, but you are not part of a group culture.

      • NotSoSure says:

        It’s hard to make America Great Again if you grind your own coffee. You always want to contribute to the bottom line of some big corporation. Remember our economy is 70% consumer driven.

        The choice is either Make Coffee Great Again or Make America Great Again. You can’t have both.

    • Drew says:

      Up until 3 years ago between my wife and I were going to Starbucks – at least – twice a day. On weekends we would make a run at least once a day and pick up goodies for the kiddos as well.

      Then we reduced to ‘about’ once or so a day. Then we reduced the weekend trips and held to once a day max. Then we reduced to once a day – coffee only – no goodies.

      Last year we completely cancelled any further Starbucks trips. All coffee now is made at home.

      Changes were – mostly – due to the increase in costs and decline (to us) of the quality/value of the goodies. Not necessarily on our dpi.

      And to round this out – yes we also decreased our restaurant purchases as well. Not necessarily on our dpi but again on our experience on quality/value.

    • ru83 says:

      Good point…..food quality is going down.

      I saw a show on TV and it was about Sysco. Sysco Corporation is an American multinational corporation involved in marketing and distributing food products to restaurants, healthcare and educational facilities, hotels and inns, and other foodservice and hospitality businesses.

      They were going around to Resturants selling their genetically engineered and cheap food products to restaurants. Telling restaurants that they can improve their bottom line using the Sysco factory pre-made food products instead of making things from scratch.

      • TheDona says:

        Regarding Sysco: you would be shocked at how many high end restaurants use their pre-made stuff now. I run into the same Sysco rep from time to time at some of my favorite hole in the wall joints and he said it is rampant. These overpriced fine dining places just add a “signature” garnish on top.

  3. interesting says:

    This is similar to what I am seeing in Europe.

    We relocated recently to Budapest, which is now being promoted as an up and coming city within Europe. Gross average income here is 900 euros monthly. GDP was reportedly up a “steaming” 2.7% YoY in Q4 2016. Meanwhile, the stock market is up 47% YoY (133% since 2015). A 700 sq ft apartment in the city will run you over 100K EUR and those prices are up at least 33% over the last two years. Dinner for two without drinks at a mediocre restaurant might cost you 15 euros.

    For privileged expats and the well-connected, the city is comparatively cheaper than other overpriced nosebleed European cities (i.e. Paris, Geneva) and they are spending money at the ‘elite’ restaurants. But,. I don’t see much room for prices to increase here without many restaurants going out of business and there seems to be a lot of competition for expatriate dollars.

    • RepubAnon says:

      I suggest that this also explains the drop in the world trade figures. Most world trade is in consumer goods – as more money goes to the 0.1%, and less money goes to the rest of us, we stop buying stuff. This means that demand for goods drops – causing in turn a drop in the world trade in goods.

    • raoul says:

      interesting comments, thanks. I have been thinking a bit about Hungary lately.

      Not to hijack this thread, but have you any insight into medical tourism in Hungary, specifically dental surgery? I have read online that a single implant including abuttment and crown is on the order of ~1K USD, about one third the cost where I live in the USA.

      Thanks, Mr. Richter for a great site.

      • Frederick says:

        Anything medical or dental related is absurdly expensive in the states I had a root canal done in 2006 in Warsaw by the recent dental school graduate for 200 USD In NY my dentists friend wanted 1200

      • Tom says:

        Please don’t bring your implicit advertising here; and if you do, then at least cover your tracks.

      • CrazyCooter says:

        I live in Alaska – and we have some of the highest medical costs in the US (and the US is a train wreck).

        Folks here, as best I can tell, go to Mexico in the winter for dental (US folks have passport cards – sort of a passport ID that isn’t a passport – to move between CN-US-MX).

        I do mine in VN when we visit in-laws. No way in hell I would fly to Europe for something like that. Happy so far with prices and service.

        Regards,

        Cooter

  4. Jack says:

    I agree with Pavel. I/we are retirees, just returned from Florida. Meals that last year were $40 for the 2 of us were closer to$60. Meals that last year were $14.95/ plate were now$22+ per plate. Stayed with friends in two places for 2 nights each and took them out to eat as a thank you and the bill for 4, with tip, $150.00! Last year in a similar restaurant, the bill did not reach $100 tip included.
    Even my wife, who is blind to restaurant prices,commented that the prices were expensive.
    Back home now and we have started eating out for lunch once or twice a week and bringing leftovers home. Fortunately, beautiful wife is a superb cook and she now wants to cut this waaaay back and cook more and better at home. And yes better wine and far cheaper cocktails– and we are not poor by any means.

    • Pavel says:

      Thanks, Jack.

      My own example was at the low end of the scale, of course — a single person at a decent but casual restaurant in a large city.

      I have gone out (many times) with a good friend in NY when I visit and it’s easy for us to spend $200 or more (depends on cocktails and wine, mainly) for dinner. Now these are damn good restaurants with great food, but it’s pretty insane when one thinks about it.

      It’s so easy to save money when one wants to. A young friend of mine is an IT worker in a UK hospital — she spends about £5 per workday on Starbucks-style coffee (2 cups/day). 25 quid per week for coffee! I get packets of filter coffee and make it myself, each one costs 20 pence. :)

    • cdr says:

      Jack,

      I agree about the cost of food while traveling. We always try to use nicer hotels with kitchen areas so we can bring in a couple of meals. I detest having to pay for all means while out of town. Some nicer places serve a decent breakfast for free, too. We won’t stay at a hotel that does not have a free breakfast unless there’s a great trade off in the mix.

      Also, and this is probably only a little responsible since so many people would rather be fat, sit around and take a pill than get healthy naturally … Lots of food is not really very good for you. Maybe people are wising up?

      I lowered my triglycerides from OMG to normal and my cholesterol from high to mostly OK through exercise and eating better. My BP went normal along the way and I lost weight to normal, too. No pills. In my case, carbohydrates were the villain, not eggs and butter. I found out the hard way that a lot of dietary advice from pros isn’t very good. The old you get high cholesterol by eating cholesterol is horse cr*p. For me, I eventually found out that something called glycemic load was key. All diabetics know about it, fortunately I’m not one of them. Look it up.

      • Kent says:

        As a diabetic, you are absolutely right. Once I started eating low carb meals, I lost 20 pounds and my blood sugar is normal. And I’ve kept the weight off like a teenager. Don’t even have to try.

        • Frederick says:

          I’m 63 and weigh 170 lbs 6 ft 2 five pounds heavier than when I graduated HS in 72 Hard work , love to hike and bike and eat healthy Stress test this year Normal and I eat everything Steak meatballs Kielbasi etc etc

    • JayCeezy says:

      The way a man speaks about his wife, speaks volumes about the man. She sounds like a wonderful woman, and you must be a great guy to pull a top-shelf mate.

  5. Al Loco says:

    For the first time in awhile my wife and I hunkered down to prepare for a move into a better school district for our 3 young boys. We have been dreading it for years since we have been stuck in our underwater property since May of 2007 (ugh). Cutting out the restaurants has been the single most significant change in our spending and we lost weight too. Granted we did eat out 2-3 times per week but a family of 5 will cost at least $60 with tip even with kids meals. Nicer places that we really enjoy like Yardhouse is $100 easily. Looking back we feel there has been zero quality of life reduction and it feels good to be disciplined. Too bad there are no deals in real estate right now.

    • cdr says:

      Al,

      Good point. To add to it, most people never notice how those costs accumulate, and probably are just beginning to now. Hence the decrease in the numbers eating out.

      For example $5 / day for coffee and junk * 5 days a week * 50 weeks = $1,250, after tax. Assuming a fictional tax load of 30%, it takes $1,785 of pre tax earnings to pay for a little junk food every day. Yum.

      • M says:

        Bingo! – Some of the most valuable advice I ever got in the financial area of life!!
        Multiply the regular expense (which seems small) by the annual REAL cost. Such as the example given – For example $5 / day for coffee and junk * 5 days a week * 50 weeks = $1,250, after tax. Assuming a fictional tax load of 30%, it takes $1,785 of pre tax earnings to pay for a little junk food every day. Yum.
        Now – is it worth it?
        If you do that for all your regular expenses, I suspect you will stop falling for all the little “leaks” that drain your financial life of all it’s potential…

        • Kent says:

          After the downturn in 2008, we went without pay raises for a few years. So as I cut back on frivolous spending, I annualized it and called it a raise. A good mental trick.

    • Paulo says:

      When my kids were young we went out to supper once per year…the last day of the school year. It was fish and chips. If we wish to eat gourmet meals we cook our own. Breakfast? Fresh eggs from the chickens (yolks bright yellow/orange), toasted home made bread, fresh juice, and our own spuds if we want them…why on earth would I buy breakfast out? Do you see the swill passed off as breakfast? Lunches? The same.

      My wife and I are doing just fine, financially, and the kids are now grown and living their own lives so we could eat out as often as we wish. But…. the only meals we do like to buy would be called pub food by most. There is a local oceanfront (7 table) restaurant that makes the best broiled burgers and fries I have ever had. We go about twice per month; any more than that it is no longer a treat.

      My son-in-law used to grab a coffee and donut from Tim Hortons every morning. I told him that if he banked that money for two years and packed a thermos it would be a down payment on his first house. He did…and it was. We are putting on a new roof this summer as well as a post/beam addition.

      Saying, “No”, works every time.

      regards

  6. Meme Imfurst says:

    Do you know why “they” put brakes on cars? Nope, wrong. “They” put brakes on cars so you can go faster and drive more wreck less. Wonder why car prices keep going up? Think about the above.

    For sometime Wolf has been pointing out what should be obvious, the underling cost fundamentals are going faster than the brakes can keep up. That leads to one outcome, a crash.

    When you have rents for both businesses and homes skyrocketing, insurance doubling along the entire coastal and inland waterways for miles inland, municipalities driving up taxes and business fees (to pay for overpaid retiring civil servants in many cases) as well as pie-in the-sky unnecessary projects, and on and on, how con anyone honestly be surprised the prices ‘asked’ in a restaurant or any business could stay down? HOW?

    I know people who took out loans on their homes to keep their restaurants open, and for what? Everyone of them lost their homes to uncontrolled greedy increased costs. Now they are faced with the same problem again, how to keep the restaurant open.

    Fads, some places are fads…food stinks, but the I-have-to-be-seen folks go there to be seen, and they guilt ride their friends to follow. Wolf, you just described what is happening in S.F. and that same thing is happening in 1,000s of places. I see plain as day in South Florida, Savannah, Atlanta, Orlando, and they must be many many more.

    The restaurant owner is faced with squeezed profits. Something like Starbucks, has the back up money flow by selling stock to you and your mutual fund. There in lies the big difference.

  7. r cohn says:

    This article is symptomatic of pressures on discretionary spending.
    Unless real incomes start moving up for the vast majority of people(not the top % 5),then these pressures will just continue

    • cdr says:

      And doing this would be rather easy, but many would complain about the fix since it defies the notion that the government should provide free stuff for all, especially for those who are already well off.

      The fix … raise interest rates and end QE while reducing central bank balance sheets.

      Your interest expense is my interest income. With rates this low, I have no interest income so, therefore, I spend less. The people who benefit from low rates are people who perform junk investing, not investing that produces jobs. If rates were higher, project selection would have to cover interest expense. Many of these project would produce jobs. High Fed balance sheets that reinvest in retaining the balances help mess things up my managing rates low.

      Simple fix, but lots of screaming babies won’t allow it to happen quick or easy.

      • Kent says:

        “Your interest expense is my interest income. With rates this low, I have no interest income so, therefore, I spend less. ”

        But if rates go up, then my interest expense goes, therefore I spend less.

        ” If rates were higher, project selection would have to cover interest expense.”

        With rates low, shouldn’t good project selection lead to higher profits and investments while simultaneously allowing for poorer projects?

        • cdr says:

          You would think low rates equals profits for all but that has proved to be not true. It’s become profits for those who can game the system. If you have higher rates you make sure the NPV of the project is high before you begin. In the past, higher rates were just fine; people made money. Today you have bogus theories that support screaming babies who demand free money and will say anything to get it.

      • Smingles says:

        “Simple fix, but lots of screaming babies won’t allow it to happen quick or easy.”

        Roughly 1/3 of Americans have NO savings at all.

        Another 1/3 of Americans have between $0 and $1000 in savings.

        How much do interest income will they generate on their negligible savings? Almost nothing, even with high rates. And that’s while totally ignoring the liability side of the equation– most of these people rely on debt to get by. Raise rates, rate interest payments.

        Rates going up is not some panacea.

  8. Petunia says:

    We rarely go out, but occasionally ordered pizza. Not anymore. A few months ago the $40 Dominos Pizzas arrived 2 hours later and one was half eaten. So we don’t order pizza anymore.

    When we do go out, 50% of the time, the food will be unimpressive or just plain bad. There are now a lot of places I no longer consider when going out. But since our town is getting 18 new restaurants by April, I still have a lot to chose from.

  9. James C. says:

    I lift and run so eating out is a no-no for me. Fast food hates guys like me. I eat like beets in a can for breakfast and boiled eggs for lunch. Aldi is my shopping place right now, way cheaper than walmart or other groceries. Whey protein is another good friend of mine. Eat,Lift,Train,Die!

    • Wolf Richter says:

      Even better: you can buy fresh beets (red, yellow, other colors, from large to small) and learn how to cook them – it’s easy. And they’re so much more delicious than the canned stuff. Also, you can sauté or cook in other ways the greens that come with the beets (both the leaves and the chopped stalks). They’re delicious. You get two veggies for the price of one :-)

      • Paulo says:

        Or, even better you can grow your own. We cook them on baking trays and freeze them after we eat the fresh greens and small ones. My Ukranian wife then makes borscht during the winter. Potato leek soup?mmmmm

        And if you garden and work you don’t have to ‘lift and run’ to stay fit. :-)

        Of course you would have to move from the city.

        • RD Blakeslee says:

          “Of course you would have to move from the city.

          Been there, done that.

          We have fresh eggs, local beef and chicken, fruit, veggies and even lettuce in mid-winter, from the cold frame.

      • Justme says:

        Last time I checked at an otherwise inexpensive local produce market, 5 beets in a bundle cost something like $3. How to you find fresh beets that cost no more than the ones in a can? If carrots cost 75c/lb, should beets cost 4x that?

        • Wolf Richter says:

          Some thoughts…

          Five large beets with greens could be 2-3 pounds. How many beets do you fit into a can? 1? 2? I have no idea. Just wondering. So the thing to do would be to take them out and weigh them and find out.

          But you pay extra for quality. So I don’t know. We buy them mostly at the local grocery store (choice of organic or classic), and they’re more reasonable. They’re also “local” because SF is an hour from the Central Valley (on a good day), and most our seasonal stuff comes from there.

          The other thing is – and that’s personal: I always hated beets because I always had beets from the can. Then one day, I had my first fresh beets in a salad at a nice restaurant, and it was an eye-opener. So I wouldn’t eat canned beets even if they’re free.

        • R2D2 says:

          Wolf: Exactly the same thing happened to me with regard to beans. Whenever I had beans at home, it was canned beans, and I had to add so much salt to make it taste like something. Then one day a gf of mine cooked beans at home without adding any kind of salt or spice, and it blew me away.

          I always had stayed away from beans because I thought they are tasteless unless you add so much salt to it. Now, there is no way in hell that I would touch canned beans. I don’t know what the hell they do it to process it, but it seems as if they deliberately pull the taste out of those beans when they can them. Or maybe they plant them the same way that they fatten up cows so that they would grow fast, and thus tasteless.

    • Ace says:

      You just hit on what I was going to say. Places like Aldi and Save-a-Lot are going to be the big grocery chains in the not too distant future. They’ve already been getting press down here in Tampa as people are coming to grips with stagnant wages and a worthless dollar.

      Me and the Mrs. are DINK’s who could be considered upper-middle class and even we shake our head in disbelief ever time we visit Publix, a nice store for sure, but priced a bit on the high side. My wife will occasionally hit Aldi, Target or Walmart but the Publix is more convenient.

      As far as dining out, we go out once or twice a week on weekends but always bring lunch to work. When we dine out it’s always at locally owned restaurants. We get good food pretty much everywhere we go, so I judge the restaurant on how well they make a mixed drink. Nothing worse than paying $10 for a mixed drink that has no booze in it.

      • andy says:

        My parents keep saying Aldi will push every other grocer out of business. Can’t invest in it; as any great business it’s privately owned.

        • Dan Romig says:

          The German Albrecht family owns both Aldi and Trader Joe’s.

          Land O’Lakes is a member-owned Ag coop in Arden Hills MN that is privately owned, but I sure would like to own stock in it – if I could.

          CHS Inc is also an Ag coop in Inver Grove Heights MN, but they have publicly traded stock; CHSCP is the ticker symbol. As I type, the share price is $30.44, and a $2.00 annual dividend. This one I can and do own!

      • Sporkfed says:

        Publix tends to pay more and put cashiers and baggers on most of the registers.
        They are also employee owned so I will shop there since they aren’t draining the local economy.

      • Shawntay says:

        There’s a place in SF bay area called ‘Grocery Outlet’ which sells discounted groceries. I think they get things from other chains that aren’t selling well. But you can get great deals.
        They even have a ‘healthy’ and organic section. Out of curiosity, I went into a snooty grocery called ‘The Market Hall’ (think Whole foods prices on steroids) and was amazed to see an organic ice cream 1 pint for $10. I had just seen this same ice cream at Grocery Outlet for $3.99. I didn’t buy it before because I’d never heard of it, but I went back that night to get it discounted since I knew some yuppie in the city would be paying $10 for what I purchased for $4 WINNING! Anyway add great discounted prices to great wines and its our #1 grocery choice. And we are a couple making well over average income without any kids.
        I tend to think in terms of “How many hours will I have to work to purchase this and is it worth it?” Most times the answer is, no.

        Discount groceries and farmers markets are the way to go!

  10. Kasadour says:

    Restaurants here in Portland Oregon are also suffering. I walked into an Applebee’s during peak dinner hour and the place had about five tables out of 50 or so, occupied. Even the food carts are suffering. There is barely any price difference between the food carts and a conventional restaurant.

  11. ft says:

    My stepson is a restaurant worker in Fremont CA. A year ago they had people lined up outside waiting for a table. Now he’s been cut back to part time. Not good.

  12. HudsonJr says:

    I know in both the dot com bust, and ’08 recession you could see the hit on American-style food chains in advance. At peak, the middle of the road chains would be packed with a wait in the evening even weekdays. On Friday it might be 60 to 75 min wait.

    Then at some point you would go on a Friday night, and walk right in, and suddenly think “What’s going on?”.

    I’ve since moved somewhere cheaper, meal is usually ~$40 for a family of 4 including a beer for mom&dad…so I am not sure it will hit the same.

  13. TJ Martin says:

    If you think restaurant prices are high now and people like us [ Boomer OWMNB’s upper middle class – no kids – no debt ] are eating out less .. just wait . Assuming our ‘ so called ‘ president gets his way spending billions to deport illegal immigrants not only will the available workforce for the restaurant business diminish drastically .. but the prices will increase massively when they can no longer depend on cheap and compliant .. not to mention hard working labor .

    FYI; The same will apply to the hotel/resort industry . Which is why every time Trump raises the illegal immigrant banner I say … you first Mr Trump !

    [ Not one of Trump’s properties , restaurants or businesses named or owned uses USCIS/ICE’s E-Verify when hiring or afterwards … hint hint ]

    • interesting says:

      too bad, if you have to reply on illegals to run your business then your business model is wrong…..end of story.

      give me a break with this illegals crap.

      • d says:

        √++

      • ru82 says:

        I have to agree with you “interesting” Life was fine and prices were not ridiculous before this country had a lot of illegals and their cheap labor.

        • Tim Milder says:

          When was that exactly? When we used cheap imported labor from Ireland, China for decades prior to 1950?

          Don’t fool yourself.

        • ru82 says:

          I said illegals….not imported labor. There is a difference. I think the people you are referring to were here legally….paying taxes.

      • Frederick says:

        Thank you for saying what I was thinking

      • TheDona says:

        I have to disagree. America was built on this. In the Colonial 1600s land owners were rewarded land for bringing over European Indentured Servants (5-7 years as slaves in return for a boat ticket) who were the sweat labor to expand. It came to pass that permanent slave labor was more cost effective…need I say more on that.
        Still huge recruitment of lower cost labor from Europe in 1800s and 1900s to build railways, work in factories, farm, provide craftsmanship (furniture building, etc.), cook, wash clothes and clean houses. Chinese for railway and mining. The first exclusion on immigration based on race was on the Chinese and that ban lasted for 10 years.

        There will always be an underclass and cheap labor to be exploited by the wealthy. It is the American way.

    • RD Blakeslee says:

      There are no illegals in any of the towns around here.

      Service is good, food is good.

      THERE ARE NO LARGE CITIES NEARBY.

  14. VegasBob says:

    I live 25 miles south of Tucson, AZ. I sometimes go to a local diner in Tucson with a group of friends on Friday night. The diner is very reasonably priced, usually packed, and we usually have to wait to be seated, but last Friday night we were seated immediately.

    I still cough up the money to go to restaurants because I have cancer and just don’t have the energy to both cook and clean up the dishes. But I fill in with a lot of frozen meals as well.

    My grocery shopping dollars are mostly distributed among the 3 large grocers in the area south of Tucson – Safeway, Fry’s (a Kroger chain) and Walmart. Occasionally, it’s a treat to go up to Basha’s or Sprouts in Tucson.

    The price differentials between the chains are often quite noticeable. For example, I like to snack on raisins, and the price for a 20 oz tub of nationally branded raisins is $4.99 at Safeway, $6.29 at Fry’s, and $3.62 at Walmart.

    Though I have a favorite store and a least favorite store, I am careful to comparison shop, take advantage of weekly sales, and load online coupons to my shopping cards.

    Also, I buy some items in quantity at one of the big box warehouse clubs in Tucson simply because the retail chains are often not very competitive on staples such as meat, cheese, eggs, butter, etc.

    My objective is to buy the best quality food I can at the best prices I can find for the dollars I spend on food.

  15. Smingles says:

    As I understand it, in the bubbly cities (SF, Boston, NYC, Seattle, etc.), consumer expenditures aren’t the problem, or aren’t the biggest problem.

    By far, the biggest problem is real estate costs. Rents are obliterating revenues, even in restaurants that are seeing strong demand and are able to sell high priced plates. You can only fill so many tables a night, and you can only raise prices so high.

    The other big problem is a glut of new restaurants. Wolf, you alluded to this: “That said, you wouldn’t necessary know this by walking around San Francisco. Yelp lists nearly 8,000 eating establishments in the City, many of them recent creations, including 500 cafés and 3,000 delis.”

    This creates two problems for restaurants. (1) with all the new restaurants, demand is being far outplaced by supply. And (2) restaurants are seeing a serious shortage in qualified workers, particularly chefs. This necessarily drives up wages and costs.

    So restaurants in many cities are facing a shortage of good employees, rising employee costs, rising rental costs, and fewer customers.

    Oh, and it’s worth mentioning the explosion in popularity of food trucks. Just more competition for traditional dining.

  16. Kye Goodwin says:

    There’s a theme here. Something like: In our time, for many, its better to get organized to be “poorer” than to keep struggling to get richer. One advantage: the benefits to the individual are certain. They don’t depend on general economic growth, which seems to have mostly gone away.

    • RD Blakeslee says:

      Exception: It’s really not a “poorer” lifestyle!

      It can encompass plenty of man-made goods and services, but they are generated independently of the macro economy (read: “international money credit and banking system, allied with the international corporatocracy).

      The benefits to the individual are, indeed, certain!

  17. interesting says:

    here’s my take on restaurants.

    My kids and I used to frequent this awesome little Mexican place for lunch and the Salmon special was 9.99…..until January 2016. there was a Min wage increase that January and the price when up to $12.99…until this January. Now the price is $14.99 and we’ve found another place to eat.

    When i asked why, I got the min. wag increase bullshit but what i think is really happening is the restaurants are gouging, they KNOW they can use this min. wage bullshit to jack up the prices to nosebleed levels and the lunch at $9.99 was a pretty good deal but at $14.99 fuck’m. I’ll eat somewhere else or not at all.

    The brat and i discussed this and it’s my opinion that the place is just seeing how far they can push things but at some point people will stop coming and the price will once again come down.

    • NotSoSure says:

      It reminds me of this country I like to go to frequently. Between 2014 to now, prices keep increasing and when I ask why they always say it’s because of “oil price”.

      People don’t support minimum wage, etc. But the reality of the free market is, prices go down when there’s a demand shock, but when the market turns up the workers get squeezed because the owners just eat up all those surpluses. That’s capitalism in practice.

  18. RF says:

    Beginning in the early 90’s there was a huge build-out of middle-tier chain restaurants all over the country. Ruby Tuesday, Applebees, Texas Roadhouse, Olive Garden, etc. My own anecdote as a millennials with a young family is that my peers and I are not frequenting these places. The food is awful. You can find better meals in the pre-made dinner section of your grocer’s freezer. The employees have tattoos and peircings and are generally not clean people, no matter how nice an area you are in. It’s a weird dichotomy to have trashy servers in a place with such sterile corporatist decor.

    Instead of going to these places my wife and I tend to go out less, and then opt for locally owned places that serve freshly made dishes. Yes it is more expensive, but I’d rather go out once a month to a nice place than go out three times to O’Charley’s.

  19. Chris Wagner says:

    On a trip to Switzerland, we had a $ 1xx dinner bill. No alcohol, nothing outlandish (for 3 adults). Next time, I will strictly buy food and drinks at the supermarket!!!

    People adjust to economic realities. In Thailand where there are wonderful eateries serving delicious cooked meals for like $ 1.50 with free water the restaurants like Sizzler are often 8 x more expensive. Afterwards, one tends to regret the expense TBH.

    In Germany, a supermarket chain will offer ready-to-warm up luncheons. there is a huge demand for affordable food.

    Recently, I flew EUROWINGS from Bangkok to Germany. No food, not a single pack of peanuts. Next time, I will be prepared and have plenty of peanuts :p

    The restaurants at my condo village in Bangkok have been dying. It’S painful to watch that. Many decorate to a high standard, then stand there all day long and I would be surprised if they could earn the rent, let alone pay themselves $ 50 for their time. Something bis has been happening and it’s a global issue!

  20. David says:

    In the mountain states there has been a consolidation of suppliers to restaurants. The food is fair at best at most establishments. The price goes up regularly. We have plenty of means and ate out quite often but stopped a few weeks ago. No more getting screwed for us.

  21. Hobart says:

    There is a yearly summary of ‘new franchise’ business starts somewhere out there. It would be great if you could publish the numbers for 2016.

    Everything feels peakish, but I see no stop in the cheap money, so maybe it’s me.

    Seeing alot of mega sales at the malls, price cuts at even the supermarkets. Happened in the last two weeks.

  22. Bobber says:

    My family has plenty of discretionary funds but we now prefer to lay low at home. We probably spend no more than $40 a week at restaurants as a family of four. Restaurants are pretty boring unless you are meeting some friends.

  23. Sabbie says:

    The East Bay Times recently put out a good piece on the Bay Area restaurant massacre. Top of the list was labor cost and shortage. And of course rents, corporate cafeterias, and lack of disposable income.

  24. Doug says:

    The closures just keep coming: “Bloomin’ Brands — parent company to the Outback Steakhouse, Carrabba’s, Bonefish Grill, and Fleming’s Steakhouse chains — announced it would close dozens of locations.”
    https://consumerist.com/2017/02/21/dozens-of-outback-steakhouse-bonefish-grill-carrabbas-restaurants-closing/

    • Frederick says:

      Great news There are WAY too many of those mediocre places Maybe they can reopen south of the border where their former employees will be relocating to shortly

  25. T vogel says:

    T Vogel here
    Was going to add – to my original comment – that we also have a bunch of tdi settlement money and were planning to buy a new car but have since nixed that idea – it will all go into savings and paying off our little bit of debt. The only real desire I have is for Japanese wood planes so my extra spending goes to my wife’s homeland. We have essentially dropped out of the consumer life style and feel better for it.
    T

  26. Maximus Minimus says:

    I like to watch cooking shows with some celebrity chefs, but would never follow the recipes they feature. It is a veritable how-not-to-eat-to-stay-healthy. I came to believe it is not that difficult to make tasty meals as long as you do not mind to use too much salt, sugar, oil, cheese, butter, or spices. Stay away from restaurants and eateries if you want to live a healthy life.

  27. PrototypeGirl1 says:

    Better be careful with all this healthy talk, I was thinking yesterday that infowars got kicked off ad roll for their political talk and I’m sure that was part of it but last night he was talking about how they made 3.2b selling supplements last year, I don’t think the medical or pharmaceutical world want us to be healthy. Is it a coinsidence that Google also removed 140,000 links to natural news the same day, or that over 30 natural health doctors mysteriously died in the last year or so? I doubt it.

  28. Ehwak says:

    I see a lot of complains of how expensive it is to eat out. Yep, even fast food is expensive, forget other places

    *A sit down place where they
    -Plate portions are smaller
    -Appetizers cost as much as dish cost not too long ago
    -Add up 4% plus to the bill for some expenses.
    -Now want 25% tip

    Try going to five guys and buy food for two… that will be $30
    Or McDonald’s even.

    I no longer eat a places that charge extra % for whatever. It’s not my job to pay for benefits or other things for employees. I am early 30s

    Think is expensive now… Just wait till the $15/hr is enforced across CA.

    Maybe Wolf will know how many restaurants are failing in SF Bay because of expensive retail space, expensive insurance for employees, expensive stuff. This is in SF where few families live and plenty of singles with no kids make tons of money that can spend on social night outs.

  29. ambrose bierce says:

    Anecdotally you will never understand this. You must consider how these businesses come to be financed, franchised on wall street, and how when they do fail (PF Changs) they simply go private. The game is rigged, but like all Wall Street bubbles this one will pop, and it have nothing to do with demographics (people still need houses that bubble popped anyway)

  30. Pete says:

    For Outback: the reason we quit going to Outback was tiny portions. For a $50 dinner for 2 it ought to be more than a snack, and better than a McD’s 1/4 pounder. It wasn’t. Outback went from great to just plain sad.
    For all the lunch time burger chains : the reason we quit going was WaWa, like their computerized screen, like the variety, like vegetables on a sandwich.

  31. Lotz says:

    We went to San Francisco last year and of course the misses wanted to dine at the nice tourist trap restaurant overlooking the bay right at the marina. It was a great experience with the bread bowl clam chowder but the best laughs were the Sysco jokes !

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