How Tech Billionaires Are Changing San Francisco’s Restaurant Industry

$2,000 meals are the new normal for Silicon Valley elites

Is San Francisco’s dining scene heading for a fiscal crisis? That’s the bleak outlook delivered by The New York Times this week, which chronicles the impact Silicon Valley tech billionaires are having on Bay Area fine dining. As Eater critic Bill Addison characterized it last winter, San Francisco has become America’s top fine dining destination — a place to "blow the bonus check, deplete the trust fund, ruin the credit score."

Echoing Addison’s sentiments contributor Daniel Duane writes that today’s Bay area restaurant now cater to the ultra-wealthy:

. . . for whom a $400 dinner does not qualify as conspicuous consumption and for whom the prevailing California-lifestyle fantasy is less about heirloom tomatoes than recognizing inefficiencies in the international medical technology markets, flying first-class around the planet to cut deals at three-Michelin-Star restaurants in Hong Kong or London and then, back home, treating the kids to casual $2,000 Sunday suppers.

According to chef Daniel Patterson of Coi and LocoL, the market has completely flipped the traditional path of up-and-coming chefs. In a different region ambitious chefs might make a splashy entrance with a barely profitable fine dining establishment and follow it with a profitable "mid-range" eatery. In contrast, "busy high-end places [in San Francisco] are doing fine because they have more ways to control their costs, but the mid-level is getting killed." The chef adds: "I’ve heard guys say they’re doing eight million a year in sales and bringing home less than 2 percent as profit."

Restaurant talent is also getting siphoned away by tech companies, says Gwyneth Borden of the Golden Gate Restaurant Association. Many restaurant staff are choosing to cater for the companies who lure new workers with the promise free food such as "all-day bacon and lobster rolls and tacos." This in turn hurts local restaurants who lose profits from lunch service. Meanwhile, labor costs are on the rise and mid-level restaurant workers are getting priced out of the real-estate market with high rents. "When the economy slows, who is going to survive?," Borden asks rhetorically. "We’re already seeing quicker openings and closings because restaurants open with so much debt."

According to Eater SF, there were more than 39 restaurant shutters in the area last spring and an ever-growing list this summer. Still, the future isn’t all doom and gloom. According to one recent survey by First Data, San Francisco’s restaurant scene in a period of rapid growth. In the face of rising labor costs and a shrinking pool of workers, companies are also responding with engineered solutions like a forthcoming robot burger restaurant and baguette dispensing vending machines.

• Dinner, Disrupted [NYT]

• Why The Bay Area Is America's Top Fine Dining Destination [E]

• Study: San Francisco Restaurant Growth Is Outpacing New York [E]

• All San Francisco Coverage [E]