The Monetary Future of Restaurants

Today’s top food story: http://www.nytimes.com/2015/05/27/business/dealbook/hormel-foods-to-buy-applegate-farms-for-775-million.html?ref=business

Once again, not in the Food section of the paper where the lead story bemoans the coming closure of the lovely and exclusive Four Seasons restaurant.

No, the Business story reported that Hormel is buying out Applegate.  Hormel, which owns Spam and Skippy brands, is moving to organics.  That’s diversification, and a wise move!  It’s a reflection of the current and future way people eat here (and globally).

On the high end, there are restaurants that do not profit much, but serve as assets in hedge funds.  The two best known examples are 11 Madison and Noma.  Neither restaurant makes as much as a fast food franchise, but it’s pretty cool if you’re a billionaire to own a big share rather than a McDonald’s.

Noam Gottesman, for example, who made headlines this week in his marriage in Florence, Italy, which was attended by Beyonce and Jay Z, owns 11 Madison.  I’m not saying who owns Noma, but I know him well.

Anyway.

Anyway, the profits come from Spam and Skippy, not from the organics.  Not yet.  What will happen, I bet, is that the prices for organic products will get even higher; the standards by which a product is considered organic will become diluted; and, the organic products that are the cheapest to produce will dominate while those that have lower profit will disappear.

 

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