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Unless you're a really special restaurant with significant differentiation capabilities and people come to eat at your place irrationally, here's a tip: Restau

Unless you're a really special restaurant with significant differentiation capabilities and people come to eat at your place irrationally, here's a tip: Restaurants are never the ones making the money. They enable others to make money. Usually, landlords. And generally, be cautious about going into a business where people want to do it because it's their passion. It means you're going to competing with people who are willing to work for nearly $0 because it's their passion.

kyuudou 7y ago
People get food trucks instead to get around this. At least until that becomes a thing rentiers monopolize, too.
sneak 7y ago
So, this is a refutation of one of the author’s points: either you differentiate, or is is unskilled labor (and the iron law of wages is nipping at your toes). It’s possible to differentiate purely on marketing and not just food alone, too. But it’s madness to expect to make your money on volume in the restaurant biz and make any significant money without double-digit location counts and significant capital reserves; too many other giants can squeeze you without a thought (eg the McDonalds $1 value menu the author also cites). Nobody’s “in” to paying >$10 for döner kebap. You have to differentiate a lot more than that; unlike me (and edge case) most people will not pay $25 to scratch the itch of the intense periodic lust for dönerfleisch.
- kevingadd 7y ago
  "either you differentiate, or is is unskilled labor" I don't think this assertion holds up, especially if you look at other industries. A car mechanic doesn't have much room for differentiation beyond "I can service more car brands" and "I'm cheaper" or "I'm faster". Anyone can match your offering as long as they can balance the trade-offs involved (sufficient resources, etc). That doesn't make being a car mechanic unskilled labor - doing car repairs properly and efficiently requires a lot of practice and training. Similarly, if I'm a bank there's only so much differentiation I can offer. Different financial services and interest rates or stuff like that, sure, but at the end of the day I just store people's money in accounts and provide loans. That's basically all I do, and any other bank can do it. A bigger bank has the ability to do it better (due to their resources and regulatory capture) no matter how much I differentiate myself, and since it comes down to policy in many cases another player can just come in and copy all of my policies. None of this means that working in banking is "unskilled labor". The tendency to call people like chefs or line cooks "unskilled labor" is disgusting. Being a line cook or a chef in a high-pressure restaurant environment is REALLY HARD and takes tons of practice and training.
  - mtrower 7y ago
    > The tendency to call people like chefs or line cooks "unskilled labor" is disgusting. I don't think this is disgusting. I don't believe it's meant to imply what I believe you think it implies. It sounds to me as if, in your life, this term "unskilled labor" may be used as a slur --- is this the case? It is not the canonical intent behind "skilled/unskilled labor" terminology. "Unskilled labor" means you don't spend years on preliminary education before you can even enter the job market. It means you can hire a person with no prior training or pertinent education and expect them to be able to succeed given a reasonable training program and work ethic. Compare this to "skilled labor" where entry into the field is gated upon higher education (or perhaps apprenticeship). I'm not disparaging line cooks. As you say, it's very high-pressure, and experience and drive are critical to competency in such an environment. PS. I do also agree that "differentiation" and "skilled/unskilled labor" are orthogonal concepts.
  - neutronicus 7y ago
    Regardless of their skill, they're competing with the general, unskilled population, who are overwhelmingly capable of, if disinclined towards, cooking their own food or eating packaged food.
  - sneak 7y ago
    Sorry, I was totally unclear. Either you differentiate, or you can expect to be paid like unskilled labor (which is what undifferentiated cooking results for sale pays), which is always very close to zero (thanks to the iron law of wages). Simply expecting people to pay more for what amounts to an undifferentiated near-commodity product is a pipe dream so long as anyone out of work can be taught to work a grill in a couple days.
- deathgrips 7y ago
  The iron law of wages was based, among other things, on Malthus' demographic theory. Modern economists are highly critical of it. Supply and demand are sufficient to explain the wages of cooks and dishwashers: anyone can be trained in a couple weeks to be a minimally competent cook or dishwasher. The labor supply is roughly equal to the number of people who need any kind of work.
alephnan 7y ago
There’s also lower barriers to entry which makes the landscape more competitive
mprovost 7y ago
That's a good observation about landlords. Often if you find a local "ethnic" restaurant that's been there forever and is run by a family (typically Chinese/Indian/Thai/etc) they own the building or at least the space for their restaurant. That means they can stay in business basically infinitely (well, until now) without worrying about rent increases. But this is a different model than most trendy restaurants where the owners are not interesting in buying a property outright - those are seen as an investment not as a steady income for a family.
kinkrtyavimoodh 7y ago
I don't think the passion argument is that valuable. For a LOT of people programming is their passion. Yet they command some of the highest salaries. The labor market doesn't care about passion. It will settle where it needs to based on demand and supply.
- zhoujianfu 7y ago
  I think he's saying the passion factor will increase the supply. I think the same thing happens some with programming, it's just a lot fewer people have the passion (and ability?) than for cooking food. The same thing happens with teachers, nurses, firemen, police... I think the reason they generally don't make more money is many people have a passion for doing those jobs (ask ten kids what they want to be when they grow up), but they aren't super difficult, so there's a large supply.
  - deathgrips 7y ago
    >The same thing happens with teachers, nurses, firemen, police Maybe there's something different going on there since government salaries don't respond normally to market supply and demand. Perhaps a better way to track the true value of those jobs is by looking at private sector counterparts, such as security contractors or teachers at private schools.
    - Leherenn 7y ago
      Also, as far as I know (that would depends on the country, but I believe it is generally true), those professions (except for teachers) can't go on strike too much, they have to keep a minimum service running, which vastly limits their negotiating power.
  - veggieburglar 7y ago
    They aren’t super difficult? Teachers, nurses, firemen, and police officers would like to have a word with you. Programming may be mathematically complex and difficult to learn, but it does not corner the market on difficulty. Try adapting a teaching curriculum for online learning for fourth graders, working 16 shifts in an ICU during a pandemic while trying to keep people safe, planning and organizing a response to statewide wildfires, or de-escalating complex interpersonal issues dealing with crime, safety, and mental illness on the daily. Do any of those sound easy to you?
econcon 7y ago
It can also be seen in porn where porn prices are always falling because so many people passionately create free porn.

kyuudou 7y ago

People get food trucks instead to get around this. At least until that becomes a thing rentiers monopolize, too.

sneak 7y ago

So, this is a refutation of one of the author’s points: either you differentiate, or is is unskilled labor (and the iron law of wages is nipping at your toes). It’s possible to differentiate purely on marketing and not just food alone, too. But it’s madness to expect to make your money on volume in the restaurant biz and make any significant money without double-digit location counts and significant capital reserves; too many other giants can squeeze you without a thought (eg the McDonalds $1 value menu the author also cites). Nobody’s “in” to paying >$10 for döner kebap. You have to differentiate a lot more than that; unlike me (and edge case) most people will not pay $25 to scratch the itch of the intense periodic lust for dönerfleisch.

kevingadd 7y ago
"either you differentiate, or is is unskilled labor" I don't think this assertion holds up, especially if you look at other industries. A car mechanic doesn't have much room for differentiation beyond "I can service more car brands" and "I'm cheaper" or "I'm faster". Anyone can match your offering as long as they can balance the trade-offs involved (sufficient resources, etc). That doesn't make being a car mechanic unskilled labor - doing car repairs properly and efficiently requires a lot of practice and training. Similarly, if I'm a bank there's only so much differentiation I can offer. Different financial services and interest rates or stuff like that, sure, but at the end of the day I just store people's money in accounts and provide loans. That's basically all I do, and any other bank can do it. A bigger bank has the ability to do it better (due to their resources and regulatory capture) no matter how much I differentiate myself, and since it comes down to policy in many cases another player can just come in and copy all of my policies. None of this means that working in banking is "unskilled labor". The tendency to call people like chefs or line cooks "unskilled labor" is disgusting. Being a line cook or a chef in a high-pressure restaurant environment is REALLY HARD and takes tons of practice and training.
- mtrower 7y ago
  > The tendency to call people like chefs or line cooks "unskilled labor" is disgusting. I don't think this is disgusting. I don't believe it's meant to imply what I believe you think it implies. It sounds to me as if, in your life, this term "unskilled labor" may be used as a slur --- is this the case? It is not the canonical intent behind "skilled/unskilled labor" terminology. "Unskilled labor" means you don't spend years on preliminary education before you can even enter the job market. It means you can hire a person with no prior training or pertinent education and expect them to be able to succeed given a reasonable training program and work ethic. Compare this to "skilled labor" where entry into the field is gated upon higher education (or perhaps apprenticeship). I'm not disparaging line cooks. As you say, it's very high-pressure, and experience and drive are critical to competency in such an environment. PS. I do also agree that "differentiation" and "skilled/unskilled labor" are orthogonal concepts.
- neutronicus 7y ago
  Regardless of their skill, they're competing with the general, unskilled population, who are overwhelmingly capable of, if disinclined towards, cooking their own food or eating packaged food.
- sneak 7y ago
  Sorry, I was totally unclear. Either you differentiate, or you can expect to be paid like unskilled labor (which is what undifferentiated cooking results for sale pays), which is always very close to zero (thanks to the iron law of wages). Simply expecting people to pay more for what amounts to an undifferentiated near-commodity product is a pipe dream so long as anyone out of work can be taught to work a grill in a couple days.
deathgrips 7y ago
The iron law of wages was based, among other things, on Malthus' demographic theory. Modern economists are highly critical of it. Supply and demand are sufficient to explain the wages of cooks and dishwashers: anyone can be trained in a couple weeks to be a minimally competent cook or dishwasher. The labor supply is roughly equal to the number of people who need any kind of work.

alephnan 7y ago

There’s also lower barriers to entry which makes the landscape more competitive

mprovost 7y ago

That's a good observation about landlords. Often if you find a local "ethnic" restaurant that's been there forever and is run by a family (typically Chinese/Indian/Thai/etc) they own the building or at least the space for their restaurant. That means they can stay in business basically infinitely (well, until now) without worrying about rent increases. But this is a different model than most trendy restaurants where the owners are not interesting in buying a property outright - those are seen as an investment not as a steady income for a family.

kinkrtyavimoodh 7y ago

I don't think the passion argument is that valuable. For a LOT of people programming is their passion. Yet they command some of the highest salaries. The labor market doesn't care about passion. It will settle where it needs to based on demand and supply.

zhoujianfu 7y ago
I think he's saying the passion factor will increase the supply. I think the same thing happens some with programming, it's just a lot fewer people have the passion (and ability?) than for cooking food. The same thing happens with teachers, nurses, firemen, police... I think the reason they generally don't make more money is many people have a passion for doing those jobs (ask ten kids what they want to be when they grow up), but they aren't super difficult, so there's a large supply.
- deathgrips 7y ago
  >The same thing happens with teachers, nurses, firemen, police Maybe there's something different going on there since government salaries don't respond normally to market supply and demand. Perhaps a better way to track the true value of those jobs is by looking at private sector counterparts, such as security contractors or teachers at private schools.
  - Leherenn 7y ago
    Also, as far as I know (that would depends on the country, but I believe it is generally true), those professions (except for teachers) can't go on strike too much, they have to keep a minimum service running, which vastly limits their negotiating power.
- veggieburglar 7y ago
  They aren’t super difficult? Teachers, nurses, firemen, and police officers would like to have a word with you. Programming may be mathematically complex and difficult to learn, but it does not corner the market on difficulty. Try adapting a teaching curriculum for online learning for fourth graders, working 16 shifts in an ICU during a pandemic while trying to keep people safe, planning and organizing a response to statewide wildfires, or de-escalating complex interpersonal issues dealing with crime, safety, and mental illness on the daily. Do any of those sound easy to you?

econcon 7y ago

It can also be seen in porn where porn prices are always falling because so many people passionately create free porn.