Inside these restaurants, it’s evident that the forces making this one of the most expensive cities in America are subtly altering the economics of everything.
SAN FRANCISCO — Souvla, a Greek restaurant with a devoted following, serves spit-fired meat two ways: in a photogenic sandwich or on a photogenic salad, either available with a glass of Greek wine. The garnishes are thoughtful: pea shoots, harissa-spiked yogurt, mizithra cheese.
The small menu is so appealing and the place itself so charming that you almost forget, as a diner, that you have to do much of the work of dining out yourself. You scout your own table. You fetch and fill your own water glass. And if you’d like another glass of wine, you go back to the counter.
Runners will bring your order to the table, but there are no servers to wait on you here, or at the two other San Francisco locations that Souvla has added — or, increasingly, at other popular restaurants that have opened in the past two years: RT Rotisserie, which is roasting cauliflower a few blocks away; Barzotto, a bistro serving hand-rolled pasta in the Mission District; and Media Noche, a Cuban sandwich spot with eye-catching custom tilework.
Inside these restaurants, it’s evident that the forces making San Francisco one of the most expensive cities in America are subtly altering the economics of everything. Commercial rents have gone up. Labor costs have soared. And restaurant workers, many of them priced out by the expense of housing, have been moving away.
Restaurateurs who say they can no longer find or afford servers are figuring out how to do without them. And so in this city of staggering wealth, you can eat like a gourmand, with real stemware and ceramic plates. But first, you’ll have to go get your silverware.
“Souvla was the beginning of this whole new onslaught of things that in every single way look like a full-service restaurant — nice décor; good wine list; tasty, healthy foods. It’s much more chef- and ingredient-driven,” said Gwyneth Borden, executive director of the Golden Gate Restaurant Association. “But it’s ‘take a number and go to a table.’ ”
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She regularly hears from restaurateurs considering the model, who want to create the Souvla of Mexican, the Souvla of Italian. (Souvla is apparently to Bay Area restaurants what Uber is to gig-economy startups.)
Restaurateurs have taken a model familiar to taquerias and fast-casual, cafeteria-style places like Sweetgreen and Chipotle Mexican Grill, and pushed it further up the fine-dining food chain. Call it fast-fine, they suggest, or fine-casual. Or counter service “in a full service environment” that includes $11 cocktails and $22 pan-roasted salmon.
Such hybrid restaurants are spreading to other high-cost cities, and they fit what analysts say is growing demand for more flexible dining options. But here, the extreme economics have rapidly made the model commonplace.
San Francisco’s tech riches have fed demand for restaurants — and some wealthy tech workers have decided they would also like to be partners in a restaurant, opening up more investment. But as those highly paid workers have also driven demand for scarce housing, the city has struggled to keep lower-wage workers afloat.
On July 1, the minimum wage in San Francisco will hit $15 an hour, after incremental raises from $10.74 in 2014. The city also requires employers with at least 20 workers to pay health-care costs beyond the mandates of the Affordable Care Act, in addition to paid sick leave and parental leave.
Despite those benefits, many workers say they can’t afford to live here or to stay in the industry. And partly as a result of those benefits, restaurateurs say they can’t afford the workers who remain. A dishwasher can now make $18 or $19 an hour. And because of California labor laws, even tipped workers like servers earn at least the full minimum wage, unlike their peers in most other states.
Enrico Moretti, an economist at the University of California, Berkeley, estimates that when housing prices rise by 10 percent, the price of local services, including restaurants, rises by about 6 percent. (The median home price in San Francisco has doubled since 2012.)
So burgers get more expensive as houses do. But even wealthy tech workers will pay only so much to eat one. “If we were to pay what we need to pay people to make a living in San Francisco, a $10 hamburger would be a $20 hamburger, and it wouldn’t make sense anymore,” said Anjan Mitra, who owns two high-end Indian restaurants in the city, both named Dosa. “Something has to give.”
If customers won’t buy $20 burgers, or $25 dosas, and the staff in the kitchen can’t be cut, that something is service. “And that is what we did — we got rid of our servers,” Mitra said.
In December, he opened a counter-service version of Dosa in Oakland. The new restaurant serves cardamom- and fenugreek-spiced cocktails. But there’s also a self-service water station, and a busing station for diners inclined to clear their own tables. (If they aren’t, an employee will do the job.)
Charles Bililies had worked in fine-dining restaurants for years before he opened the first Souvla in 2014. By then, restaurateurs were already fretting about the city’s employer mandates and housing costs.
“We can sit around here, and we can complain and whine and moan,” Bililies said. “We can be very negative about this. Or we can sort of turn this on its head and see an opportunity.”
At Souvla, there is no oversize menu board above the counter, no service line where your food is assembled before your eyes. Behind the counter sits a shelf of wineglasses for the all-Greek wine list, touches that make the place feel plausible for a dinner date.
At the original Souvla, the counter is just inside the front door, so a line invariably spills onto the sidewalk, a neat marketing trick that also means the restaurant wastes little of its rented space on waiting customers.
The model and the small menu are conducive to takeout, which produces more than half the revenue at this location. The restaurant has just 40 seats, but averages more than 900 meals a day, far more than a full-service restaurant could manage in the same space.
For restaurateurs, counter service makes fine dining — or something like it — profitable. To economists, it makes sense. David Neumark, a professor at the University of California, Irvine, who has studied the minimum wage, recalled a trip to Norway where nearly every restaurant he and his wife visited relied on counter service.
“I said, ‘Well, duh,’ ” Neumark said. “It was so clear there.” Norway has among the highest median wages in the world. So parts of this story are not new. “Economic history is filled with ways that we have figured out how to do things with fewer workers, and ultimately that’s what makes us richer,” he said.
Innovations in farming machinery or microwave meals, for instance, freed people to be more productive, and better paid. But that is not entirely what is happening here. Restaurants haven’t developed a way to serve meals with less labor. They’ve gotten customers to do the labor they had been paying employees to do.
There is something innovative in reprogramming diners to decouple fine food from full service. But the fact restaurants have to do this speaks to deep fears here of what the Bay Area will look like if certain classes of workers can’t afford to live here.
“It’s really sad,” said Jennifer Sullivan, who worked for years as a server in the area. Twenty years ago, she moved from Chicago to Oakland, where she rented a $750-a-month studio apartment and waitressed her way through college. She fears that story would not be possible in the Bay Area now.
“I’ve even had dystopian future visions of buses full of labor that come from the outskirts of these really wealthy areas,” she said.
A few blocks from the original Souvla, at celebrated modern French restaurant Jardinière, chef Traci Des Jardins said her labor costs, including taxes and health care, now eat up 43 percent of her budget.
When she opened Jardinière in 1997, they were 27 percent. (Bililies said Souvla’s percentage is in the mid-20s now, even with paid vacation and retirement benefits.)
Des Jardins has experimented with raising prices, but she said customers simply spent the same amount in different ways, skipping a second glass of wine, or ordering two appetizers instead of an entree.
At one of her other restaurants, she now serves lunch as counter service.
“I enjoy doing what I do, and we support a community of people here,” Des Jardins said. “But the economics are pretty rotten.”
Souvla, on the other hand, is planning to expand beyond the Bay Area, starting with New York. Bililies said he wanted to occupy “iconic streets in iconic neighborhoods in iconic cities.”
The strategy, in other words, is to go to precisely the places with rotten economics.