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Restaurants aren't high-profit businesses by and large. As Peter Thiel observed, in order to make significant profit margins, you need something monopoly-like.

by beat 12y ago

Restaurants aren't high-profit businesses by and large. As Peter Thiel observed, in order to make significant profit margins, you need something monopoly-like. In perfect competition, profit is impossible, and near-perfect competition like restaurants drives profits very low. Cachet restaurants offering singular experiences can get that monopoly of uniqueness to a certain extent, but it's very difficult and requires operating at an extremely high level of art. So basically, if you want to compete on price, welcome to racing to the bottom, and competing directly with the likes of Dominos and McDonalds. At tiny margins, economies of scale become extremely important. In the case of this story, by bringing a world-class chef like David Chang in (see the first season of Mind of a Chef to grok his greatness), they're going for an upscale market - people who really care about eating. Those people will always be outnumbered 100:1 by people eating wretched disgusting crap at Subway. That's where the quasi-monopoly comes in - not just delivering food, but delivering the kind of food a mind like David Chang can create, at lunchtime prices and convenience. So Maple isn't competing with Domino's. They're competing with fine-dining lunches.

acconrad 12y ago
Right but Dominos and McDonalds are all terrible food that isn't healthy. And only Dominos delivers. If my neighbor can cook my rice and beans for $0.30 USD / serving, or $3 for a basic salad (spinach, serving nuts, beans, olive oil, vinegar), I'd pay $1-5 to have that delivered to me. How does that not keep up with profits? I mean what's shocking to me is that families across the country make these basic meals that seem clearly too basic for restaurants to make. But most families (especially poorer ones) just don't have time to make the food, but they want something cheap, so they resort to fast food - when I'm sure they'd be fine with spending the same (or less) on a rice and beans dish instead of a big mac.
- sfeng 12y ago
  An AirBnB for food seems like an interesting idea. Making it hyper-local (i.e. in the same building in NYC) would eliminate the delivery need, and you could market hard to one building at a time to get enough people on board. It seems the problem would be the health code requirements.
  - CPLX 12y ago
    This exists and is called seamless and predates Airbnb by many years.
- beat 12y ago
  To an extent, it's already being done. I mean, look at taco trucks. I don't know about your community, but they're common as dirt around here. They're tasty and cheap. But you still need a market, and need to cover costs. Can you generate enough customers to keep the kitchen working at maximum efficiency? Ingredients aren't the only cost, or even the majority cost. Yesterday, I took my daughter out for a very fancy lunch at a fine-dining place which would probably rate a Michelin star if Michelin ever visited us in flyover country. My rabbit spaetzle was $13, and her crab tagliatelle was $15... not a whole lot more than the cost of Olive Garden. And both were flawless, nearly magical, unlike Olive Garden pasta (alas, no unlimited breadsticks). Let's look at this another way... who is your customer when you're competing on cost? You're trying to underprice below the dollar menu at Burger King. That's very hard. Whereas for professionals, the difference between an $8 meal and a $12 meal is just no big deal. You can see this with restaurant chains - most have certain economic zones. You won't see a Noodles & Co in a poor neighborhood, and you won't see White Castle in a rich one.

by beat 12y ago

acconrad 12y ago

Right but Dominos and McDonalds are all terrible food that isn't healthy. And only Dominos delivers. If my neighbor can cook my rice and beans for $0.30 USD / serving, or $3 for a basic salad (spinach, serving nuts, beans, olive oil, vinegar), I'd pay $1-5 to have that delivered to me. How does that not keep up with profits? I mean what's shocking to me is that families across the country make these basic meals that seem clearly too basic for restaurants to make. But most families (especially poorer ones) just don't have time to make the food, but they want something cheap, so they resort to fast food - when I'm sure they'd be fine with spending the same (or less) on a rice and beans dish instead of a big mac.

sfeng 12y ago
An AirBnB for food seems like an interesting idea. Making it hyper-local (i.e. in the same building in NYC) would eliminate the delivery need, and you could market hard to one building at a time to get enough people on board. It seems the problem would be the health code requirements.
- CPLX 12y ago
  This exists and is called seamless and predates Airbnb by many years.
beat 12y ago
To an extent, it's already being done. I mean, look at taco trucks. I don't know about your community, but they're common as dirt around here. They're tasty and cheap. But you still need a market, and need to cover costs. Can you generate enough customers to keep the kitchen working at maximum efficiency? Ingredients aren't the only cost, or even the majority cost. Yesterday, I took my daughter out for a very fancy lunch at a fine-dining place which would probably rate a Michelin star if Michelin ever visited us in flyover country. My rabbit spaetzle was $13, and her crab tagliatelle was $15... not a whole lot more than the cost of Olive Garden. And both were flawless, nearly magical, unlike Olive Garden pasta (alas, no unlimited breadsticks). Let's look at this another way... who is your customer when you're competing on cost? You're trying to underprice below the dollar menu at Burger King. That's very hard. Whereas for professionals, the difference between an $8 meal and a $12 meal is just no big deal. You can see this with restaurant chains - most have certain economic zones. You won't see a Noodles & Co in a poor neighborhood, and you won't see White Castle in a rich one.