No investors, no restaurants. The days when cooks and families could open storefront restaurants and hope to get by aren’t over yet, but they represent in the restaurant industry a quaint and totally outdated business model. They either: Won’t last; will serve a loyal, local group and have to work sixteen hour days six days a week; or, they will be bought out by those who see ways to monetize their efforts.
The biggest growth in the restaurant industry are the franchises: Heavily capitalized with extremely well thought out and well organized business models, smart marketing plans, and uniformity in what is purchased (wholesale) and sold to customers. That is: Buy low, sell high.
Then, too, there are the wonderfully idiosyncratic restaurants with high prices, dinners going at a minimum of about $175 a couple, drinks at $17 a pop, and wine at $9 a glass.
Where were we?
Investors. Right, investors.
These days the investors aren’t the guys from the old days. Back in the day, a small group of businessmen would put together some money and buy “shares” in a local place. They’d go in on Saturday nights, throw their weight around, and go home happy.
Nowadays, the top restaurants are owned, flat out, by hedge funds. They are no more and no less than assets. That won’t change, and in fact it’s likely to develop further. There is money to be made, and the restaurants need the investment. It’s chump change for a big hedge fund, has enormous cache for the investor, and it’s a fun way to show off to friends.
You didn’t stop buying CD’s when the record companies were monetized, or stop buying books when companies were turned into assets. And you won’t stop eating out.
So maybe it’s worthwhile to look deeper into the ties between the 1-4% who control the economy and the food we eat and celebrate. What is the influence of capital on dining?