The restaurant industry has been complaining for years that its business model is unsustainable—but despite all the complaints, it’s carried on as usual. But maybe, just maybe, the pandemic is going to change things.
During the summer, restaurateur Tim Niver (Mucci’s, Saint Dinette) cryptically tweeted that the business had to reinvent itself. I called him to ask him what he meant and if he really had the nerve to do it.
To be clear, Niver is not your typical libertarian restaurant owner. He’s worked on all sides of the business, paid his dues, and is about as woke and social justice-minded as any owner in town. He does not breathe the rarefied air of celebrity chefs and other industry royalty, whose prominence leave them, by and large, insulated from the harshest realities of the business.
Niver’s mantra right now is as dour as it gets. “Everyone knows there’s no margin in it. We’re making 2 to 10 percent [operating margin],” he says, “and if I’m not making 10 to 20 percent, why am I doing this?”
“I can’t attract [this current generation of] young people into a business selling ‘passion.’ Not when it doesn’t provide retirement or health care. I can’t attract investors,” he says.
An owner-operator like Niver (investors are perhaps the real owners) works 70-hour weeks until their knees are shot at 50, or they realize they have no college savings for their kids or retirement savings for themselves—and then they get out.
Niver envisions all sorts of changes, including an end to happy hours (unprofitable), lunch service, and late-night hours. He also sees price increases and service charges to replace tipping. It’s already happening around town—not to provide so-called equity to workers, but to add an extra few percent for businesses that price their product below cost, because Americans expect it.
Pre-pandemic, the culprits were labor shortages, wage laws that drove up costs by nearly a third in less than a decade, rising urban rents, and an array of other dings like the growing cost of managing electronic payments.
An owner-operator like Niver (investors are perhaps the real owners) works 70-hour weeks until their knees are shot at 50, or they realize they have no college savings for their kids or retirement savings for themselves—and then they get out. He hopes there’s a different way.
The question is what are the limits of possibility? Thought leaders like Gavin Kaysen and Andrew Zimmern talk about the industry “professionalizing” and providing wages that turn short-term jobs into careers, but what I hear from most operators is something diametrically opposite. They’re talking about getting control of spiraling costs and right-sizing their operations to fit what customers can spend.
Blue Plate Restaurants has spent the pandemic making its operations as lean as it could get them. Co-founder David Burley sees the future as fewer jobs, fewer amenities, and less service. “Margins have declined annually since 2014,” he notes. “We’ve trimmed out all the fat now. There won’t be a staffer to open doors for guests. We’ve shifted from cloth to paper napkins. Our menus are on your phone. I used to have a culinary team.” Now all his restaurants run the same menu.
In the short term, restaurants continue to hope for a federal bailout of some sort, but it clearly will not happen before the election. By spring, many will be gone, especially the ones owned by people like Niver, without reserves of capital, that were perhaps marginally profitable before the pandemic. Niver foresees a “roaring ’20s” environment for the survivors.
The one caveat: We’ve heard many of these things before. But there’s always a landlord and a chef and a guy with a concept eager to deploy the same old model in service of the dream of being in the restaurant business. Best practices and sustainability have no hope against the allure of a sexy bar, a buzzy dining room, and the energy of 2,000 square feet full of people having fun.
To the great minds advising restaurateurs like Niver to walk away from onerous leases and concepts of another era, he notes that “walking away is not an option for most of us”—not with personally guaranteed leases and the damage to reputation that would ensue. So it’s not surprising it all feels like
“I have definitely gotten low,” Niver says. “It’s always been a roller coaster, long before the pandemic. I want to change the model so the lows aren’t so low.”