San Franciscans Pissed To Learn Their Liberal Policies Caused A Wave Of Restaurant Failures

In a note that we'll file away under the definition of 'irony', Bloomberg wrote today that the fun-loving, free-spirited socialists of San Francisco are suddenly really pissed off that their liberal economic policies have resulted in a wave of restaurant failures, making it nearly impossible to find good food at an 'affordable' price. 

We would be pissed too...who could have guessed that artificially raising wages well above market supported rates would result in business failures?

On Thursday, the Michelin Guide announced its 2018 Bib Gourmand winners for San Francisco with only 67 restaurants on the list this year, a decrease from the 74 restaurants in 2017. Twelve restaurants in total dropped off, once you factor in some new additions. In 2016, there were 73 restaurants, and in 2015, 76 were on the list.


Restaurants that rate a spot on the Bib Gourmand list are defined as places that offer notable food at a reasonable price. Michelin specifically defines that as two courses plus dessert or wine for $40, not including tax or tip. A group of anonymous inspectors choose the restaurants. Bib Gourmand restaurants are not eligible to receive Michelin stars.


Some of the attrition on the 2018 list is due to places that simply fell off (or maybe even got promoted to the star list, proper), like Bistro Jeanty in Yountville, Bistro 29 in Santa Rosa, and Le Garage in Sausalito. But the alarming rate of restaurant closures in the Bay Area also accounts for the dip on the list, with spots like Bar Tartine and Mason Pacific in San Francisco and Scopa in Healdsburg wine country shutting their doors.

San Fran

So what was the catalyst that sparked the ongoing massive wave of San Francisco restaurant failures?  Well, Bloomberg figures it's the result of soaring minimum wages and health care know, all the things that San Fran liberals argue and protest for.

Factors like skyrocketing rents, minimum wage and health care have certainly taken a toll on Bib Gourmand-style restaurants around the Bay Area. More than 60 restaurants closed between Sept. 2016 and Jan. 2017, according to the East Bay Times. “We’re at this precipice where the model of the full-service restaurant is being pushed to the brink,” said Gwyneth Borden, executive director of the Golden Gate Restaurant Association.


Although ecstatic by the news of her Bib Gourmand, Brown Sugar Kitchen’s chef/owner Tanya Holland echoed the sentiment during a phone interview: “It’s so challenging to operate this kind of restaurant in the Bay Area right now” especially when it comes to staffing, she said.

Of course, as we pointed out back in January, a Thrillist article written by Kevin Alexander highlighted the demise of one independently owned restaurant in San Francisco, AQ, that shut down earlier this year for all the same reasons listed above.  When it came to minimum wage hikes, Alexander found that just a $1 per hour minimum wage increase reduced an independent restaurant's already thin profit margins by $20,000, or 10%.  So we imagine the $5 minimum wage hike that California just passed is probably slightly less than optimal for restaurant owners.

I should say before I go any further that all of the restaurant owners and chefs I've talked to are compassionate humans who support better coverage and livable wages, and seem on the whole progressive by nature, but restaurant margins are already slim as hell. There are no political agendas here -- they're just genuinely worried about how to afford to pay extra without radically changing the way they do business.


Let's start with the minimum wage. According to the Bureau of Labor Statistics, of the 2.6 million people earning around the minimum wage in 2015, the highest percentage came from service jobs in the food industry. Though the Obama administration's attempt to increase the federal minimum wage above $7.25 failed, 21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).


Considering that hour-wage workers are usually the lowest earners and the increase is essential to ensure they earn an actual living, this is the least controversial of the newer expenses and something almost everyone in the industry supports, in theory, but it doesn't change the fact that it's an additional cost that must be factored in. If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year. In AQ's best year -- a phenomenal year by restaurant standards -- that would have been nearly 10% of profits.

Meanwhile, when it comes to Obamacare, Alexander noted that AQ was hit with an incremental $72,000 of annual expenses in 2015 that didn't exist in 2012, which eroded another ~30% of the company's peak net income.

Then there's health care. For the better part of its history, the restaurant business was a health care-free zone, which is ironic, given this Bureau of Labor Statistics' description of the back-of-house work environment: "Kitchens are usually crowded and filled with potential dangers." With the introduction of Obamacare, most restaurant workers finally got the coverage they've needed for years through the employer mandate, but critics often talk about the strain it puts on small-business owners due to a puzzling and controversial element that defines "full time" as 30 hours per week, and not the 40-hour workweek used almost everywhere else (the Save American Workers Act proposes to move this back to 40 hours).


Though this mainly affects bigger restaurants with staffs of 50 or more full-time workers, independent sit-down restaurants still need to provide suitable coverage (meaning it has to be affordable, less than 9.5% of the employee's income) or face fees of $2K per employee. Consider AQ. Semmelhack told me that in 2012 they paid $14,400 for health care costs. In 2015, they paid $86,400. That's an increase of $72K MORE per year than 2012, or 29% of their best year's profit.

Then there are those pesky rental rates which have been driven ever higher by nearly a decade of 0% interest rates that have resulted in artificially high demand for "yieldy" commercial real estate.

In the restaurant world, rent always sucks. Unless you manage to play it perfectly, as a restaurant owner you're either moving into a sketchy or "emerging" neighborhood where the rent is cheap but few want to go there, or you're overpaying for an established 'hood and need to be a runaway success from day one. And even if you do manage to make it in the former type of neighborhood, your success often ends up pricing you out of the 'hood you helped revitalize.


In Miami, Michelle Bernstein's Cena by Michy helped rebirth the MiMo historic district but was forced to close this year, after the landlord attempted to triple the rent. And even Danny Meyer had to close and move Union Square Cafe in New York, which, since 1985, had served as one of America's culinary landmarks, when he couldn't rationalize paying the huge rent hike the landlord proposed.

What's next?  Is San Francisco going to tell us how mad they are that Obamacare is driving up healthcare premiums?


chubbar Neochrome Fri, 10/06/2017 - 20:29 Permalink

From looking at those pictures it isn't too hard to figure out how the restaurants can put out two courses and a desert for $40. Christ, there isn't a full bite of food between all 3 plates shown. I always get a kick out of a drizzle of some shit covering 3/4's of the plate that has a nibble of something sitting on the corner. Who the fuck are these retards trying to fool and what kind of moron falls for it?

In reply to by Neochrome

Mr. Universe Oldwood Fri, 10/06/2017 - 20:57 Permalink

I was a chef in SF, once. The pay was better but working in the city sucks. In fact being a working chef pretty much sucked as well. However I figured that out before I became an old man. We used to love to have dinner at my various friends places, and the chef's association Monday night dinners were legendary.The So Ma scene has gone to this in order to be profitalble, set up a truck on an empty lot next to 4-5 bars and sell crepes to the drunks late night. They do booming business. Don't sit on the couch...,-122.4132606,3a,60y,231.62h,83…  (350 11th st.)

In reply to by Oldwood

Billy the Poet EmeraldWI Fri, 10/06/2017 - 21:44 Permalink

You certainly put Rand in her place for something she never said. Bravo!Maybe you could come up with some new material about how terrible she was when she fled the nascent Soviet Union at twenty-one, cried tears of joy upon seeing America for the first time and through hard work and perseverance established herself as a screenwriter and world famous novelist in a language that was foreign to her.Born on third base and she thought she hit a home run.

In reply to by EmeraldWI

Mtnrunnr Billy the Poet Fri, 10/06/2017 - 22:47 Permalink

Her book, you know, the one that conservative non-economists use to justify their bullshit. We need citations now? I was unaware we were writing academic papers now? Those are scare quotes, because I'm boiling down her thesis for you. The context was the person's comment above my comment. her entire thesis is that normal people wouldn't survive without rich people. so we should worship them and produce their bullshit for them because if we don't they'll move away.

In reply to by Billy the Poet

Billy the Poet Mtnrunnr Fri, 10/06/2017 - 22:53 Permalink

Her book.Ayn Rand wrote many books. You can't even be bothered to learn a single title? I'm boiling down her thesis for you.I've read a number of Rand's works and so I don't need you to boil them down for me.  How many of her books which you can't name have you read? her entire thesis is that normal people wouldn't survive without rich people. so we should worship them and produce their bullshit for them because if we don't they'll move away.Rand spelled out the thesis behind the book you're likely talking about. It has nothing to do with your boiled down version. Here it is:"I pledge by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."If you disagree with this premise and believe that you should live according to my values rather than your own values then stay tuned and I will provide instructions to you for now on. Is that really what you want?

In reply to by Mtnrunnr

Hugh_Jorgan Billy the Poet Sat, 10/07/2017 - 11:02 Permalink

When a person is driven by the fallacy of "fairness" or "equality" of outcomes in life, you know they are very naive indeed and don't understand that those flowery ideals have a very ugly ending. Equality belongs in our Justice System, and there alone. The idea of fairness is a construct we use to teach children and should never leave the confines of one's home and family.

Better a stratified economic model with the ability to change your economic destiny in a free market (assuming you are motivated to a sufficient degree). You'll have poor people either way, it is simply a question if IN THE ENDGAME you want that to be 6%-10% of the population in poverty or 45%. (and PLEASE... do not trot out the flash-in-the-pan petro-utopias like Sweden and Norway who only have 6 million residents and massive state oil revenues; between immigration, oil industry vilification, and economic stagnation they have seen their socialist zenith and it is waning)

At the end of the day, "Poor" in a free market system is a state of mind. "Poor" in a socialist system is a statement of FACT. America is about to learn this the hard way.

In reply to by Billy the Poet

Jack's Raging … Miffed Microbi… Sat, 10/07/2017 - 03:10 Permalink

I didn't realize that you worked at a plasma donation center. That explains the cynicism. When studying biochemistry & molecular biology, I tried to get a job at such a place. I got turned down because the loser manager only hired hot chicks. I swear, every employee was >=8. I immediately became a paramedic instead. Didn't really change the volume of homeless drunks I had to deal with though.

In reply to by Miffed Microbi…

Billy the Poet Shrike99 Sat, 10/07/2017 - 08:51 Permalink

Just because you can't figure out how to provide valuable services at a good price doesn't mean that others won't. Call the Anti-Police: Ending the State's "Security" Monopoly   "How would things be different,” muses Dale Brown of the Detroit-based Threat Management Center, “if police officers were given financial rewards and commendations for resolving dangerous situations peacefully, rather than for using force in situations where it’s neither justified nor effective?” Brown’s approach to public safety is “precisely the opposite of what police are trained and expected to do,” says the 44-year-old entrepreneur.  The TMC eschews the “prosecutorial philosophy of applied violence” and the officer safety uber alles mindset that characterize government law enforcement agencies. This is because his very successful private security company has an entirely different mission – the protection of persons and property, rather than enforcing the will of the political class.  Those contrasting approaches are displayed to great advantage in proto-dystopian Detroit. “We’ve been hired by three of the most upscale neighborhoods in Detroit to provide 24/7 security services,” Brown proudly informed me during a telephone interview. “People who are well-off are very willing to pay for Lamborghini-quality security services, which means that our profit margin allows us to provide free services to people who are poor, threatened, and desperate for the kind of help the police won’t provide.” “Unlike the police, we don’t respond after a crime has been committed to conduct an investigation and – some of the time, at least – arrest a suspect,” Brown elaborates. “Our approach is based on deterrence and prevention. Where prevention fails, our personnel are trained in a variety of skills – both psychological and physical – to dominate aggressors without killing them.”…

In reply to by Shrike99

land_of_the_few Billy the Poet Sat, 10/07/2017 - 10:56 Permalink

Nice try, but I don't need to attribute anything. You probably shouldn't be blaming me for what many others have said, there is plenty analysis of her writing already, it's not like you have to dig deep or anything. Her own personal life, which she seemed unable to separate from her work life, was more than bizarre."After reading her next Rand novel, Atlas Shrugged, Kate became obsessed with heroine Dagny Taggart, an idealistic capitalist who conquers the railroad industry—and submits to the violent sexual conquests of three men along the way. “That was the big draw for me as a teenage girl,” says Kate. “It was my first exposure to pornographic kind of materials. But the really fucked-up thing was that I didn’t realize back then that those scenes were rapes.”…"By 1964, the 34-year-old Nathaniel had grown physically weary of the now 59-year-old Ayn. Still sexually dissatisfied in his marriage to Barbara and afraid to end his affair with Rand, Nathaniel began sleeping with a married 24-year-old model, Patrecia Scott. Rand, now “the woman scorned,” called Nathaniel to appear before the Collective, whose nickname had by now lost its irony for both Barbara and Nathaniel. Rand’s justice was swift. She humiliated Nathaniel and then put a curse on him: “If you have one ounce of morality left in you, an ounce of psychological health—you’ll be impotent for the next twenty years! And if you achieve potency sooner, you’ll know it’s a sign of still worse moral degradation!” Rand completed the evening with two welt-producing slaps across Branden’s face. Finally, in a move that Stalin and Hitler would have admired, Rand also expelled poor Barbara from the Collective, declaring her treasonous because Barbara, preoccupied by her own extra-marital affair, had neglected to fill Rand in soon enough on Nathaniel’s extra-extra-marital betrayal. (If anyone doubts Alan Greenspan’s political savvy, keep in mind that he somehow stayed in Rand’s good graces even though he, fixed up by Nathaniel with Patrecia’s twin sister, had double-dated with the outlaws.)""In recent years, we have entered a phase where it is apparently okay for major political figures to publicly embrace Rand despite her contempt for Christianity. In contrast, during Ayn Rand’s life, her philosophy that celebrated self-interest was a private pleasure for the 1 percent but she was a public embarrassment for them. They used her books to congratulate themselves on the morality of their selfishness, but they publicly steered clear of Rand because of her views on religion and God. Rand, for example, had stated on national television, “I am against God. I don’t approve of religion. It is a sign of a psychological weakness. I regard it as an evil.”…

In reply to by Billy the Poet

Billy the Poet land_of_the_few Sat, 10/07/2017 - 11:39 Permalink

You probably shouldn't be blaming me for what she was writing.Are you familiar with the literary product known as the novel? An author creates various characters, places them in interesting situations and details interactions which further the plot.If it is your contention that every character created by Rand is a representation of Rand herself then you must believe that she was concurrently a capitalist, a socialist, a theist, an atheist, an engineer, an executive, a scientist, a newspaper publisher, an art critic, an architect, a president, a social worker, a waitress, a composer, an oilman, a secretary, a mine owner, a pirate, etc.Do you also believe that Mark Twain was a white boy, a black slave, a widow woman, an abusive drunk, a con man, a gun fighter, a frog, an Anglo-Saxon knight, a medieval prince, Joan of Arc, President Grant, Satan and God himself? there is plenty analysis of it already.Yes, there are lots of folks who hate Ayn Rand and attack her for things they imagine to be true about her.It's very common for individuals to claim that they liked Rand in their youth as the woman in your link says but now they no longer do. The young reader hears the phrase "the virtue of selfishness" and believes that that justifies knocking down his younger brother and stealing his Fruit Loops. But that isn't the point at all.It's simply a manifestation of the fact that as young people they never really understood Rand and pursued their own misinterpretation of her works. When they grew older and saw the flaws in their own thinking and action they blamed it on Rand. How convenient.

In reply to by land_of_the_few

land_of_the_few Billy the Poet Sat, 10/07/2017 - 12:09 Permalink

OK, but it's also interesting that in her books there is heroic amounts of vigorous face-slapping, that the heroine clearly very much enjoys getting done to her, but in real life Rand herself was the one enjoying dishing out the vigorous face-slapping to men in general, lovers, ex-lovers, anyone within range she was trying to control basically.It seems she had rather complex obsessions about physical  control that don't necessarily appear in the works of say, Francis Fukuyama or Naomi Klein...

In reply to by Billy the Poet

Billy the Poet land_of_the_few Sat, 10/07/2017 - 13:09 Permalink

Yes, it is interesting up to a point but I don't think it invalidates the basic premise of Rand's philosophy. In the following interview she says that the pillars of Objectivism are that morality must be based on reality and that every person must be free to live by their own values rather than by the ideas imposed on them by others.In other words, Objectivism makes the world safe for subjectivity. As long as we agree on the reasonable and moral right of the individual who is minding his own business to live free of unwanted interference from others then we can each make the most of our own talents and opportunities.Isn't that a much more interesting subject for discussion than Rand's sexual preferences, real or imagined? I'm no fan of her open marriage with O'Connor but it has little bearing on my appreciation for her philosophical views. The 1959 Mike Wallace Ayn Rand Interview

In reply to by land_of_the_few