SF Restaurant Leaders Sound Alarm on Industry Crisis at City Hall Meeting

In an hours-long City Hall hearing yesterday to address the state of SF restaurants, chefs and business owners described an industry experiencing death by a thousand cuts. Pointing to wide-ranging issues — hefty permitting fees and a slow inspection process; nearly insurmountable minimum wage and healthcare costs; employee-retention difficulties amid soaring rents and poor public transit options; and increased competition and costs from online delivery — restaurateurs pleaded with city supervisors to make changes, and quickly.

“We need to do something now, or we will be gone,” said Terrence Alan of 46-year-old Castro restaurant Cafe Flore.

One potential change discussed at the hearing would help Flore right away: Waiving the cafe’s yearly permitting fees for outdoor sidewalk seating, which rose from $2,365 in 2013 to $4,338 in 2018, according to Alan.

“Permit fees [are] the low-hanging fruit,” said North Beach Supervisor Aaron Peskin, who also called for streamlining the city’s complicated permitting process, which can sometimes entail duplicate inspections. “We need somebody who walks these people through the various steps,” Peskin said.

District 1 Supervisor Sandra Fewer, who chairs the Board’s Land Use Committee, called for the special restaurant-focused hearing. She and fellow Supervisors Matt Haney, Rafael Mandelman, and Ahsha Safaí agreed that fees and permitting should be addressed. But Fewer also gestured to several outside-the-box ideas, like dormitories for restaurant industry workers who can’t afford to live in the city full time, and “condo-izing” retail spaces, allowing them to be separately owned from mixed-use buildings to stabilize retail rents.

San Francisco’s 5,200 restaurants generate $4.7 billion in taxable sales to the city and provide 65,000 jobs in SF, restaurant industry veteran and Golden Gate Restaurant Association representative Laurie Thomas told supervisors in her remarks yesterday. But based on her numbers, garnered through Yelp, restaurant closures have begun to outpace openings by nine percent. “We’re seeing a troubling trend,” said Thomas, who owns Rose’s Cafe in Cow Hollow, but whose North Beach restaurant, Rose Pistola, closed in 2017 after 21 years in business.

“We’re all painfully aware of increased rents and inflexible landlords,” added Thomas, who suggested a tax incentive for landlords to rent vacant spaces. Thomas also proposed that restaurant owners be a part of the city’s process to address gross receipts and payroll tax reform: Healthcare spending requirements and minimum wages, which have leapt up 52 percent since 2012, make it difficult to stay afloat, Thomas said.

During a period for public comment, a parade of other restaurant professionals painted a troubling portrait of their industry. “My partners and I have started to consider new projects,” said Che Fico chef and partner David Nayfeld. “But we’ve started to see San Francisco as a non-viable market.”

The CEO of local Greek restaurant chain Souvla echoed those comments. “We do the same thing each time [we open],” said Charles Bililies. “We all know the permitting process intimately, and yet we continue to get tripped up.” Bililies implied he was unlikely to seek another location in San Francisco.

Kim Alter, whose Hayes Valley restaurant Nightbird opened in 2016, also described her difficulties surrounding permits. “I have a small restaurant, and it took two years to open — a good eight months [of it] for permitting,” she said. Her landlord accepted her “hundreds of thousands of dollars” in rent during that time as investment — otherwise she would never have opened at all.

Last year, Alter applied to expand her restaurant, but now she’s stuck in permitting again. A historic preservation society objected to a gate on her building, placed there by Alter’s landlord for the safety of the business. She and others described break-ins, street crime, and drug use as another crisis hurting restaurants. “I don’t even really want to expand anymore, even though it will double my business,” Alter said.

Castro District Supervisor Rafael Mandelman responded to Alter’s concerns in his concluding remarks. ”It is, I know, particularly galling to be nickel and dimed and delayed and fined by a government that seems unable to deliver the very basic public services residents and small businesses might expect as the precondition of their ability to operate successfully,” Mandelman said. “I share that frustration.”

As restaurant professionals begin to work with the city toward long term solutions, they’re forced to fend for themselves for the time being. Andrew Chun, an owner of bars like the Press Club and Schroeder’s — and until recently the restaurant Elite Cafe, which closed in April after 38 years in business — has one temporary solution. No more opening restaurants, which require more employees and generate less revenue. “We’ll only do bars,” said Chun. “And if we have a restaurant, it can’t be done in San Francisco.”

Correction: An earlier version of this story incorrectly stated the number of jobs provided by the restaurant industry according to the GGRA.