Thursday, November 5, 2020

The Cambrian Implosion

You likely come here for surprising opinions and contrarian analysis, and this posting is more surprising/contrarian than usual.

Surprise comes from (and leads to) reframing, and my reframings sometimes can make me appear unsympathetic. Either 1. I'm stone-hearted and unable or unwilling to properly say the standard platitudes, or 2. I opt out of all that because I feel like I'm being more helpful by sharing fresh, lithe, surprising shifts of perspective.

Spoiler: it's #2.

Rolling in Dough

I once held a public potato chip tasting in a computer retail store in midtown Manhattan, where a small-but-toxic element of jerks seized the opportunity to shoplift.

I apologized profusely to the owner, who waved it off. "Shrinkage is expected," he said. What he was saying was that this was simply a cost of doing business, but what it really meant was that his business was so profoundly profitable that money could be left on the table. And it struck me that this was not normal.

The restaurant business is the high point of abnormal profitability, which is why restaurants are ubiquitous. Consider the proposition: any slob able to churn out bread covered with canned tomato slop and mucous cheese (plus: rent and equip a location) can charge dollars for a couple pennies worth of ingredients, oven heat, and labor, and make quite an excellent living so long as he doesn't completely mess up.

This explains why 95% of restaurants are so awful. Given that awful ones print money, there's no reason not to be awful (as I once wrote, Adam Smith's invisible hand reaches for lousy chow).

Yet despite the foolproofing, the restaurant business is notoriously volatile. A huge percentage of new operations go out of business in their first year. This makes us figure it's a tough business with slim margins, but, no, it's an easy business that makes gobs of cash for clueless slobs. So how to resolve this contradiction? Why do places go out of business so frequently if it's all so easy?

Here's the reason. It's such easy money that imbeciles are attracted, many so lavishly incompetent and greedy (petty enough to shave corners off a wheel) that they can't follow even a foolproof forumula. Also: work's involved, and humans have trouble actually doing stuff.

Just because a field is highly competitive doesn't mean it's hard. This can be seen in many realms, perpetually throwing talented, diligent people off-guard and psyching them out. They falsely assume a high failure rate means you've got to be fantastic, but there are few realms in human society requiring bona-fide excellence. You just need not to be a total nincompoop - plus actually do stuff (and, often, cajole others into doing stuff). For many slackers and fuckups attracted to easy money in the restaurant business, that is an impossibly tall order. And this accounts for the high failure rate.

So long as you can get the thing done without accidentally slicing off your own arm or getting stuck en route because you glimpsed cupcakes in a window and wasted hours slobbering with your nose pressed against the glass, you're good to go. It's a dauntingly high bar if you're a cretin, and a disquietingly low one if you're not. I'd ask you to read The Shallow and Self-Defeating Illusion of Competition, but you likely won't click that link (because that would require doing something). So, here, I'll kindly vomit the sundae cherry down your expectant throat:
Explaining how to break into TV comedy writing, one of Craig Kilborn's writers sums up the situation:

There aren't many jobs. Less than 100 total talk show jobs, maybe another 50 asundry game show jobs.

And there are lots of people trying to get those jobs. We are a nation of 250 million or so. Of whom probably about 25 million think they can be comedy writers. Of whom maybe about 25,000 actually pursue a comedy writing career. Of whom probably 15,000 or so do some standup and even move to LA or New York.

That's the layout of the comedy talk show occupation. You have a huge morass of people trying to get a few comedy writer jobs.

Is there any hope, you ask? From the scenario I've set so far, you wouldn't think so. But there is a rub, and here it is:

Most of the people applying for these very few jobs... suck.
It's all just a shaggy dog story, this whole life on Earth. It's not so hard to succeed. Just be a notch better than ridiculously self-defeating, stupid, and greedy, and possess the rare ability to actually do stuff. The most stringent barriers and competitive battlegrounds function as coarse filters to remove absolute slobs.

We realize this, subconsciously. This answer is blowing in the wind; glimpsed in jokes and aphorisms. Woody Allen once noted that "80 percent of success is just showing up." In the food world, which is nearly foolproof, this is especially true. And that brings us to the story of Duane and Biff (whose names I made up, fwiw).

The Sensationally Easy Triumph of Duane and Biff

A pie shop I know closed permanently in April due to the pandemic. And what makes me crazy is that I've hankered for pie this whole time. What does a person crave under adversity? Comfort! And what's more comforting than pie?

This business should have been rocking. But that's our view from out here. From their view in there, Duane and Biff had a formula; a workflow. And it was disrupted. And, since they were capable only of rotely following formula, they were gobsmacked. As helpless as upturned bugs, they just stopped coming to work.

Duane unlocked the place every day at 5 and started making dough. Biff came in at 8 and arranged the wares, mopped the floor, and opened the cash register. And as customers arrived, Biff, with his signature attitude of thinly veiled contempt - and the brisk efficiency of a sow on a hot day - sucked up money and emitted pie. There was never any value added to the enterprise, nor did there need to be. A nickel's worth of ingredients and another few pennies of oven heat, labor cost, and rent/insurance money, produced a $22 pie, and that was the entire proposition. Why on Earth would customers be greeted cheerfully? Why would captivating new flavors appear? Why adjust the egg wash, hone the sugar balance, or explore evolving market opportunities? Why would ANY DAMNED THING outside this stupid, plodding, formulaic workflow ever be considered when the stupid, plodding, formulaic workflow produced great big wads of cash - just so long as Biff didn't actually attack the customers and Duane didn't save a penny per metric ton by switching to veterinary grade flaked coconut?

Duane and Biff felt elevated by such choices and self-restraints. Not-totally-sucking was their source of pride. Other operators might shit in the food and shortchange customers and run out of pie early, but they had standards. And as highly successful businessmen with six figure incomes, Duane and Biff would take umbrage to any critique of their complacency and lack of imagination. "WE'RE FUCKING GENIUSES," they'd bray; "JUST LOOK AT ALL THE MONEY!"

I once explained that since a chicken is basically a biological device for pecking endless grain, you just need to set up your Skinner box (a process systematically rewarding a particular behavior) to feed the chicken, which will never stop responding in the way you've trained it to. Nor will it want to. It never wises up to the game. Blessed with the result it most seeks, it doesn't ask deep questions. The chicken thinks it's just killin' it.

For years, Duane and Biff figured they were killin' it. But then the pandemic hit, and despite my desire for yummy pie in my quarantine den, they were unable to muster the imagination or the gumption to contrive a way to connect my desire with their endeavor. They froze, baffled, waiting for the Skinner Box to start working again. And now their shop's gone forever.

The Duanes and Biffs of the food industry have been getting killed. And some very small number of them were good. Even without imagination or gumption, a diligent touch and refusal to cut corners can deliver quality. Top-notch Duane/Biff-style operations are worth knowing about. But such places had been coasting for years, and nothing lasts forever. If you can make a killing selling sand castles at the beach, thank your lucky stars, but don't be shocked and indignant when the tide comes in.

At the other extreme are the survivors; the super-geniuses who managed to hire some kid to deliver, or figured out a new distribution model and modified their offerings to suit it, circulating word to customers about their exploits. These people remain in business, though it's no longer a money machine.

Not all these survivors serve good food (plenty of competent, smart restaurateurs don't give a damn about food quality - or they give a damn but don't have a clue about conjuring it up), but, for the most part, those who can pivot are the ones with the spare bandwidth required to pursue higher-level aspirations such as deliciousness.

Receding into a Tight, Mean, Self-Defeating Crouch

Much structural rot in the restaurant industry was exposed by the pandemic. Even at the public-facing level, we've seen how rigid and limited many of these operations actually are, and also how untethered they'd become from their mission of serving those who patronize them. Foundational considerations of hospitality have proven to be a thin veneer swiftly abandoned as things get rough.

For months I've strained to keep tabs on a slew of restaurants which exist like Schrodinger's cat - in a weird twilight state of open-closedness. You know the ones. Their latest Facebook posting is happy-talk from June or July, but you can rake through their website, their Instagram, and even peer into their front window without ever figuring out their current Deal. If you can get someone on the phone, you'll be told "We're re-opening next Tuesday". But, no, they won't.

Why are they so opaque? Well, they're sad. Duane doesn't know how much dough to make, and Biff can't figure out how to install plexiglass over the cash register. It's all just way too much, so when it comes to keeping you, their loyal customer, in the loop, well, if they need you, they'll let you know (not really; mostly they'll just resume mulishly doing their thing and figure you'll somehow hear about it).

I've spent countless hours trying to get information so I could help out and support and spread word about favorite places, but communicating with customers would be a task, and these guys exist to bake pie/take money, not do loosey/goosey crap like "spread word" or "reach out".

I've seen places go belly-up with nary a word, or continue to operate without offering a clue as to their particulars, because our customer concern and curiosity are vastly overshadowed by their operator angst and confusion. Making dough while spruicing up the back patio for open-air dining requires 130% of their capacity, so there's nothing leftover for posting a note on their door or social media page. Remember: they went into business for an easy moron jackpot, so we're wanting them to act smart even though you can't expect damaged people to self-repair to accommodate you.

Fervidly Repelling the Solution

I wrote, in Slate, back in 2000, about a wonderful little restaurant called "Bo" that never caught on despite the mighty efforts of chef/owner Maria. As crowds failed to materialize, Maria just kept improving until every bite was pure magic. She kept getting better up until the very last customer (me) took the very last bite and Maria had to take the sign down.

I've eaten in something like 30,000 restaurants, and been a regular in maybe 800, so I've watched countless places go out of business. And I was deeply moved by Maria's diligence because hers was not the normal course. Most places decline when they have trouble. Food quality slides (corners get cut, less is prepared fresh, expiring ingredients are kept on-hand longer), and waiters get pissy serving sparse rooms. I've seen this phenomenon over and over, and it always shocks my dining companions. If the place desperately needs customers, why are they treating us and feeding us so poorly?

Here's what's going on: they're mad and sad about the lack of customers, and you're there, so they're mad and sad at you, even though you're their potential salvation. That's it. Simple as that.

It's far from the only example of human beings counterproductively putting their emotions first, nor is it the only indication that many people are of poor character (they discard their values as stakes raise...even when those values are their sole hope for reversing misfortune).

Pandemic Darwinism: Herd-Culling

I'm sorry for the turbulence and suffering. I'll miss the better Duane/Biff operations. And I recognize that the most savagely entrepreneurial operators will find fiendishly clever ways to assert yet greater dominance, leaving us with more useless garbage to need to photoshop off of our chowhounding window screens (the cliché of "pandemic crap" may take on fresh meaning).

But I see the broad arc of all this as unsurprising and non-tragic. The herd was due for culling. The easy jackpot finally dried up - sandcastles smashed by incoming tides - but the industry will shuffle itself and interesting, innovative new places will emerge. Space is being cleared for new shoots to bloom with deliciousness. As a faithful chowhound, I'll be eager to suss out this new treasure.

Sanity Checks and Caveats

1. As I said, babies have been lost amid bathwater. I grieve for the good places. So, quality Duane/Biff operations: I mourn for you, and was proud to have tried harder than anyone to support and evangelize you.

2. Duane and Biff have families. I don't lack sympathy. And I recognize that their jobs - as grindingly blinkered as they plied them - required hard work and fortitude. This conditioned them to feel they'd earned their enormous good luck. But mulish head-down work has never been lavishly rewarded, historically. Duane and Biff had it way easier for way longer than they had any right to expect, and no one's entitled to eternal status quo, much less a miraculously lucky one. Again, selling sand castles ahead of the tide is precarious.

3. Some operators have diligently tried to innovate, and shared with customers (helping us to help them), but faced obstacles that couldn't be beaten even with creativity, smarts, and hard work. I'm very sorry for such people, their families, and their communities. If you're one of these genuinely good guys who truly cared about quality and customers, and who tried valiantly to pivot and innovate - then you already know I'm not talking about you. You also recognize that I am speaking truth about the industry, as a whole.

It's Not All Going to Hell

I was in Manhattan this week, where I saw tons of people eating tons of food in, from, and around tons of eateries and vendors. Pretty much every creative channel of commerce was on display, aside from the traditional model of squeezing bodies into tight indoor spaces. Clever innovation provided a glorious display of resourceful adaptability. COVID-19 is not fatal to restaurants. It's just culling those unable to adapt.

And while I'm far from saying anything like "good riddance", I acknowledge that the coasting lasted far, far longer than the industry deserved. Complacency left them ill-equipped to handle turbulence. Whereas most industries expect stress tests (and this expectation keeps them agile), restaurant owners felt immune from such peril, and their failure of imagination led to the inevitable winnowing of a great many sluggish, outdated, sclerotic operations (as well as a few agile and diligent ones, per caveats above).

Sacrifices to, and Blessings From, the Goddess Kali

Conditions always change in this world, and the constant churn fuels creativity, perpetually scraping out at least a small, flimsy foothold for Quality.

As I wrote here, the Hindu goddess Kali, known as the goddess of destruction (remember those depraved cultists in "Indiana Jones and the Temple of Doom"?), is poorly understood.
She gets a bad rap. What she actually is is the goddess of creativity. But to those who tenaciously cling to status quo, her bottomless thirst for change and the immense energy she wields in empowering the world's ceaseless churning represent all that is destructive, dangerous, and deathly. She's the very root of all our fears because, being infinitely surprising, over time she breaks absolutely everything.


plam said...

Interesting; I have no first-hand experience. But this reminds me of your AAPL investment formula to some extent..

Jim Leff said...

You mean that one day the music will stop and my easy money will dry up?

Hey, I expect it. My expectation is that at that point the stock won’t plunge to zero; it will just fail to spring back to loftiness, sluggishly remaining more or less at the depressed price I bought it at. So if upside is reaping excellent profit and downside is remaining-at-par, it’s a worthwhile bet (heads I win, tails we draw).

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