> Restaurant and delivery dining are highly elastic in general
Elasticity of demand depends on whether or not there's readily available substitutes. If you're a mid-end restaurant, you can be replaced easily by fast-casual concepts (food quality doesn't differ much from fast-casual to casual full-service). However if you're high end, your competitors will be other high-end restaurants, with the same staff and space constraints as you. This is why in higher-rent markets such as NYC, Tokyo, London, Hong Kong, high-end restaurants flourish.
> there's no rule saying that a given type of restaurant has to be viable at any price point.
Of course not. But in a dense, urban, high-rent area, there's likely a model that does work.
> maybe mid-tier restaurants with lots of staff are just an inefficient use of valuable urban space
They are. Rent is your main fixed cost, staff is your main variable cost. COGS matters, but you need a product to sell in the first place, and every restaurant brings in similar products. Having too much staff and too much space is a recipe for disaster.
> San Francisco-area households spent $4,487, or 50.3 percent, of their food dollars on food at home and $4,431 (49.7 percent) on food away from home. In comparison, the average U.S. household spent 56.3 percent of its food budget on food at home and 43.7 percent on food away from home.
In San Francisco, households are spending a higher percentage of their (already higher) income on food away from home than other Americans.
Anyhow, in my experience, restaurants fail because there's a lot of shitty restaurant owners out there. Not knowing their demographics, costs, labour situation, etc..., qualifies them as being a shitty restaurateur.
Elasticity of demand depends on whether or not there's readily available substitutes. If you're a mid-end restaurant, you can be replaced easily by fast-casual concepts (food quality doesn't differ much from fast-casual to casual full-service). However if you're high end, your competitors will be other high-end restaurants, with the same staff and space constraints as you. This is why in higher-rent markets such as NYC, Tokyo, London, Hong Kong, high-end restaurants flourish.
> there's no rule saying that a given type of restaurant has to be viable at any price point.
Of course not. But in a dense, urban, high-rent area, there's likely a model that does work.
> maybe mid-tier restaurants with lots of staff are just an inefficient use of valuable urban space
They are. Rent is your main fixed cost, staff is your main variable cost. COGS matters, but you need a product to sell in the first place, and every restaurant brings in similar products. Having too much staff and too much space is a recipe for disaster.
To conclude, here's some statistics for you concerning household expenditures on food: https://www.bls.gov/regions/west/news-release/consumerexpend...
> San Francisco-area households spent $4,487, or 50.3 percent, of their food dollars on food at home and $4,431 (49.7 percent) on food away from home. In comparison, the average U.S. household spent 56.3 percent of its food budget on food at home and 43.7 percent on food away from home.
In San Francisco, households are spending a higher percentage of their (already higher) income on food away from home than other Americans.
Anyhow, in my experience, restaurants fail because there's a lot of shitty restaurant owners out there. Not knowing their demographics, costs, labour situation, etc..., qualifies them as being a shitty restaurateur.