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>(it's actually a bit worse than an ideal competitive market for participants, because there are usually lots of unsustainable competitors selling below cost an

>(it's actually a bit worse than an ideal competitive market for participants, because there are usually lots of unsustainable competitors selling below cost and losing money.) This sounds like the problem. Shouldn't the government do something about these anticompetitive practices? I don't think a good economy involves "charities" driving the restaurant business to extinction.

likpok 9y ago
I think you're assuming that the restaurants intend to be selling below cost. Running a restaurant is one of those businesses that everyone seems to think they can do. A somewhat common problem on Kitchen Nightmares was owners who didn't know how much they were spending on labor or food.
sokoloff 9y ago
There are many Walter Mittys out "playing restauranteur" and no, I don't think the government should be in the business of telling people they're bad at business and stopping them from doing it. It's not like the local restaurant of the day is going to dump food on the market in mass quantities hoping to create and exploit a monopoly later.
opportune 9y ago
It's actually caused by the structure of the restaurant industry itself. Almost all restaurants, even ones that become successful in the long term, lose money for the first few years. It's not the huge restaurants trying to price smaller ones out (although I'm sure this happens), it's amateur restauranteurs trying to break into the industry.
dragonwriter 9y ago
> This sounds like the problem. Shouldn't the government do something about these anticompetitive practices? You mean, government should prevent owners from subsidizing operating costs as they try to establish and scale a business? Even if government wanted to do this in general (which would destroy Silicon Valley), how would it ever enforce it against millions of local small businesses, many of whom are doing it not out of deliberate strategy but simply out of lack of business skill? And, more importantly, how do you do it without creating barriers to entry that are themselves anticompetitive in a way which is much more consumer hostile?

likpok 9y ago

I think you're assuming that the restaurants intend to be selling below cost. Running a restaurant is one of those businesses that everyone seems to think they can do. A somewhat common problem on Kitchen Nightmares was owners who didn't know how much they were spending on labor or food.

sokoloff 9y ago

There are many Walter Mittys out "playing restauranteur" and no, I don't think the government should be in the business of telling people they're bad at business and stopping them from doing it. It's not like the local restaurant of the day is going to dump food on the market in mass quantities hoping to create and exploit a monopoly later.

opportune 9y ago

It's actually caused by the structure of the restaurant industry itself. Almost all restaurants, even ones that become successful in the long term, lose money for the first few years. It's not the huge restaurants trying to price smaller ones out (although I'm sure this happens), it's amateur restauranteurs trying to break into the industry.

dragonwriter 9y ago

> This sounds like the problem. Shouldn't the government do something about these anticompetitive practices? You mean, government should prevent owners from subsidizing operating costs as they try to establish and scale a business? Even if government wanted to do this in general (which would destroy Silicon Valley), how would it ever enforce it against millions of local small businesses, many of whom are doing it not out of deliberate strategy but simply out of lack of business skill? And, more importantly, how do you do it without creating barriers to entry that are themselves anticompetitive in a way which is much more consumer hostile?