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Chain Restaurants Will Rule California

The state is killing off chains’ competition, paving the way for dominance


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“Cheesecake Factory and Olive Garden have enough money to weather this storm. Your favorite neighborhood bistro does not.”

Another thought on this whole thing about California not letting restaurant owners count employees’ tips as compensation they’re providing. If you’ve missed why this is a big deal, here’s the first story about San Diego’s beloved bistro Cafe Chloe closing. Here’s the second one where I make a detailed case against California and challenge the state to a fight on the upper field after school.

Basically, California’s policy will kill mom and pop restaurants, but chain restaurants will be fine. Cheesecake Factory and Olive Garden have enough money to weather this storm. Your favorite neighborhood bistro does not.

Before I start, let me clarify. I am not against chain restaurants. To blindly rail against chains strikes me as elitist, reactionary, and closed minded. Not all things are bad just because they’re big. Yes, the potential for badness becomes greater with every person added to an organization, but to lump all chain restaurants into the “bad pile” seems to me a worthless and wrongheaded exercise. There are good chains, and there are bad chains, just as there are good small business owners and bad ones. I've eaten at Chipotle, and probably will again.

Anyway.

Edwin Real, a longtime local food enthusiast—as well as a longtime acquaintance and antagonist of mine—read the stories and made a very good point on his Facebook group, Eating and Drinking in San Diego. He echoed my thoughts on how California’s actions will affect chain restaurants, but extended it to a scenario I hadn't considered. Basically it’s this:

Chains don’t like California’s decision, either. But again, they’ve got the bank account to ride this out. Mom and pops do not. So what happens? Mom and pop restaurants close. Which essentially means California is killing chain restaurants’ competition for them. California becomes Cheesecake Factory’s hit man, whacking one small competitor after the next with its policy. Chains absorb the mom and pops’ employees and their storefronts. They increase their market share, start to really dominate. Then, a couple years in, chains decide to throw their money into this fight against California.

Up against such big money, California gives in and decides to finally recognize tips as income. Boy, this would’ve saved a lot of mom and pop restaurants. But your favorite bistro gave up long ago and is now a Chipotle. Your favorite pho shop is a Jersey Mike’s. Your favorite mom went back to get her masters degree, and your favorite pop took a job selling software.

If I was the ruthless CEO of a chain who wanted to dominate a market at the expense of mom and pops, I might stay very quiet on this issue until enough moms and pops gave up. Then, once the annoying bistros and customer-sucking cafes had gone away, I’d throw my bank at California to get it changed. And I would rule the land.

This may be the moment, as once prophesied in the cinematic classic Demolition Man, where Taco Bell becomes the last restaurant standing.

I may get over all this soon. I may not. Please bear with me.

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