Why the Restaurant Industry is the Most Important Industry in Today’s America

2015. Is this the year of the restaurant? Not in terms ‘cool new openings’ but in recognizing and achieving potential impact on the country as a whole.

Restaurants have always played an essential role in the business, social, intellectual and artistic life of a thriving society. Think of the cafes of Paris in the 20’s; the three martini lunches of the 50’s and 60’s; we’ve sketched world changing ideas and planned revolutions in restaurants. Elvis’ first Las Vegas contract was written on a restaurant tablecloth.

The major events of life, personal and professional, are celebrated in restaurants. Acquaintances become friends around a table in the safe and controlled environment of a restaurant. Individuals become lovers across a restaurant table, sometimes.

Restaurants are more important than ever. At the tail end of 2014 the influential restaurant blog, Eater, published a round-up of the 60+ restaurants that opened in Boston just this past fall. The writer covered everything from Five Guys, a rapidly expanding quick service burger joint, to Cafe Artscience, a hybrid restaurant/lab/gallery space in Cambridge.

At the end of 2014 The Boston Globe also published a series of articles indicative of the growing importance of restaurants. It was an entire series of articles about the restaurant industry and the subtext can be summed up by this sentence in the final article:

Restaurants today lie at the heart of 21st-century American life. These employers aren’t headed overseas; for the foreseeable future, millions of Americans will wait tables, cook food, or wash dishes for their livelihoods.

The unaddressed question in both pieces is the same: WHY? Why did more restaurants open this fall? Why are restaurants at the heart of 21st century American life? Why are restaurants more relevant now than they have been at any other time in history?

In a nutshell: Urbanization, Digitization and Globalization. We’re all getting pretty familiar with these terms. These are the three dynamic and interactive forces reshaping the nature of our world at the atomic, subatomic and galactic levels. You can’t see a force. You can see the results all around you every day.

Beyond the basic purpose of restaurants to provide food and drink, restaurants have, historically, fulfilled a human need for connection and shaped social relations. In 21st century American life restaurants occupy an increasingly important place in shaping our overall economy and the nature and makeup of our cities.

Urbanization

82% of Americans now live in cities, almost double what it was 100 years ago.

Geoffrey West, a theoretical physicist who has done fascinating work on the scientific model of cities, believes that cities deliver value to inhabitants by facilitating human interaction. “If you ask people why they move to the city, they always give the same reasons,” West says. “They’ve come to get a job or follow their friends or to be at the center of a scene. That’s why we pay the high rent. Cities are all about the people…”

As more people move to cities, living spaces are getting smaller and that high rent is getting stratospheric. In San Francisco and New York, officials are considering overturning laws that set a floor of 400sf for apartment size; sometimes to as low as 200sf. Living affordably in many cities means living with tiny kitchenettes and without dining or living room space. West’s ‘facilitation of human interactions’ happens in restaurants with greater and greater frequency. Restaurants are the shared kitchens and dining rooms of densely populated cities.

Digitization

You can’t eat megabytes of data or go out to eat online.

We may be in a digital age but restaurants operate in an analog world. The digital revolution has not disrupted the industry as it has film, music, retail, etc. Technological advancement has been slow and incremental. Even the most impactful technologies have done little to alter the standard operating procedure of restaurants or the guest experience. Why?

Since we learned to harness fire almost 2 million years ago, existence has been centered on the hearth. Harvard primatologist Richard Wrangham argues that everything that defines our species- anatomically, biologically, socially- can be traced back to cooking food. Communion around food is at the core of religion, family, relationships and almost all of societies pillars. “It’s part of who we are and affects us in every way you can imagine” Wrangham states.

Wrangham takes the evolutionary biologists long view but we’re not so different from our ancestors. We go out for reasons far beyond sustenance and biology. We are seeking connection, edification, and validation when we go out to eat. If anything, the more of our lives we live online, the more we crave the things the dining table provides.

Although the restaurant industry itself remains unchanged by digital advancement, the industry is hugely impacted by the disruptions digitization has brought to other industries. We’ll see later how the dominance of Amazon in online retail has changed the landscape for restaurant entrepreneurship.

Globalization

“These employers aren’t headed overseas”

Think of your favorite neighborhood restaurant. Now imagine you heard they were doing reservations out of India, prepping in the Midwest and serving at their current location. That would be odd, right? Well most industries work this way.

To understand how the restaurant industry is unique in a globalized world, it’s helpful to imagine your neighborhood spot as comprised of two components: a manufacturing facility-the kitchen, and a sales and marketing space-the dining room. The last 60–70 years have seen the geographic uncoupling of manufacturing and sales. For most industries it became economically indefensible to build and sell things in the same location. We’ve grown accustomed to the formula ‘Make things on cheap land with cheap labor and then sell them where people actually live’. It’s this rule, and the technological advancements that have made it possible, that has driven many jobs overseas.

This formula, however, does not work for 95% of restaurant operations. Sure, there is some processing of foods that happens upstream in the supply chain but for most restaurants raw product arrives in the morning, gets prepped during the day and sold in the evening. To do otherwise often comes at the expense of quality and a more discerning guest has a lower tolerance for this sacrifice. Restaurant work is nearly impossible to offshore or outsource meaning it is one of our last, truly durable American industries.

First published here: Why the Restaurant Industry is the Most Important Industry in Today’s America

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