labor costs: pizza parlor redo

My wife and I went out for pizza in the rural Pennsylvania community where we live part of the year. No more sit-in dining, so we got take-out. We spoke with the owner about how business is going.

He said that he was unable to find service staff for his dining room–a condition that has been common in this area for several years. In fact, locally-famous Kundla’s barbeque closed, ostensibly for the same reason, three years ago.

More important, the combination of pandemic and labor shortage caused the owner to take a hard look at how his business worked. He concluded that even in the best of times in the past the dine-in business did little better than break even–but took up a lot of his time and energy. Virtually all his profits have always come from take-out/delivery. So he decided to stop doing dine-in, renovate the now-vacant space and locate his wife’s beauty salon there.

I have no idea how generalizable this one conversation is. But it has stuck in my mind. That’s mostly because the pizza is good and the owner is young, intelligent and enterprising. In his case, he might have been willing to continue the legacy dine-in business as long as it wasn’t making an out-of-pocket loss. Opportunity cost didn’t enter the discussion at all.

Now it has.

I get that many restaurant workers are the 21st-century equivalents of 19th-century mine/industrial workers, putting in long hours doing physically demanding tasks for little pay. My guess is that we’re not going back to the status quo ante in restaurants. But if it turns out that owners are constrained, or think they’re constrained, by an inability to raise their prices to cover increased costs, and if others are as close to breakeven as my pizza guy, then maybe we’re about to see a revolution in the way this industry functions.

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