If a business - any business whether a takeaway restaurant or a food hall or a white table cloth sitdown - cannot scrape by for more than a few weeks without steady revenue, wouldnt you say they are in a highly saturated niche or a highly saturated location or both or that they don't serve anything distinctive whether its their food or the experience, that couldnt be replaced by any other Joe Homecook with comparable resources?
Why is that restaurateurs deserve a special shake when your local HVAC guy does not, especially when the margins are so thin probably because they cant charge a premium for their offerings as they don't offer anything distinctive or compelling?
Most businesses operate that way for the same reason Starbucks doesn't check your ID every time you go to the counter to pick up a coffee. It's cheaper to just make another coffee in the rare scenario someone takes someone else's cup than to slow down everything. It is the optimal happy path that leads to far more productivity.
My comment was calling into question the viability & competitiveness of most restaurants that cannot weather a sudden change of fortunes. They are not be confused with long-lived, well-run and meticulously managed restaurants that stand the test of time because they offer something compelling. Most restaurants don't fit that bill and never had those ingredients baked into their DNA, to begin with.
Peter Thiel has opined on this in splendid detail:
In 2001, my co-workers at PayPal and I would often get lunch on
Castro Street in Mountain View, Calif. We had our pick of restaurants,
starting with obvious categories like Indian, sushi and burgers. There were more
options once we settled on a type: North Indian or South Indian, cheaper or
fancier, and so on. In contrast to the competitive local restaurant market,
PayPal was then the only email-based payments company in the world. We
employed fewer people than the restaurants on Castro Street did, but our
business was much more valuable than all those restaurants combined. Starting
a new South Indian restaurant is a really hard way to make money. If you lose
sight of competitive reality and focus on trivial differentiating factors—maybe
you think your naan is superior because of your great-grandmother's recipe—your
business is unlikely to survive….
The history of progress is a history of better monopoly businesses replacing
incumbents. Monopolies drive progress because the promise of years or even
decades of monopoly profits provides a powerful incentive to innovate.
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Peter Thiel Will Not Be Opening A South Indian Restaurant In Silicon Valley
Mobile friendly quote (don't use code formatting for quotes):
> In 2001, my co-workers at PayPal and I would often get lunch on Castro Street in Mountain View, Calif. We had our pick of restaurants, starting with obvious categories like Indian, sushi and burgers. There were more options once we settled on a type: North Indian or South Indian, cheaper or fancier, and so on. In contrast to the competitive local restaurant market, PayPal was then the only email-based payments company in the world. We employed fewer people than the restaurants on Castro Street did, but our business was much more valuable than all those restaurants combined. Starting a new South Indian restaurant is a really hard way to make money. If you lose sight of competitive reality and focus on trivial differentiating factors—maybe you think your naan is superior because of your great-grandmother's recipe—your business is unlikely to survive….
> The history of progress is a history of better monopoly businesses replacing incumbents. Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate.
Starting a restaurant because you think your great grandmothers naan is superior is not dumb.
Neither is it dumb to start a restaurant because you love feeding people, or a bike shop because you love repairing bicycles, or <insert any other scenario>.
As long as you know what you’re getting into, it’s a perfectly honorable way to live your life and there are ways to make it work.
EDIT- at least there were ways to make it work during non pandemic times. I hope we will see an upswelling of these types of businesses in the wake of this, although you couldn’t pay me to take bets on a timeline.
Not necessarily to get rich, but to be around for long enough to even offer your food to enough people that will appreciate the superior taste, nutrition and craft that went into all of your offerings.
If you are having to seek alms just to pay the bills or resort to charity to even sustain yourself as a restaurant, there is something fundamentally wrong with the makeup of what you offer. Simply put, far too many people think they have what it takes to run a restaurant. Their abilities and resourcefulness cannot match their over sized egos.
Why is that restaurateurs deserve a special shake when your local HVAC guy does not, especially when the margins are so thin probably because they cant charge a premium for their offerings as they don't offer anything distinctive or compelling?