It's Still Much Cheaper to Open a Restaurant in Los Angeles Than in New York City
Living in Los Angeles these days is an exercise in figuring out how much longer you can afford to live in a city that gets more expensive by the nanosecond. That's true of regular residents and it/s also true of restaurateurs. A few years back we could gloat about how small projects such as Alma could open in Los Angeles when they never could afford to do so in New York or San Fransisco. These days, Alma is at a swank hotel and it seems far less likely that anyone with similar (low) funding and (high) ambition could make a go of it here.
But a recent story from The New York Times shows that L.A. is still a far less expensive place to run a business than New York, and in many ways it's got San Francisco beat as well. It's a tough comparison to make, especially when it comes to real estate — there's hardly a square inch of Manhattan that wouldn't be considered a worthy place for a business, whereas L.A. has large areas where real estate is relatively cheap given the underdevelopment of the neighborhoods. But even so, the article makes a strong case for our relative affordability.
In Manhattan and parts of Brooklyn, the article reports, restaurant real estate averages around $120 a square foot, whereas in West L.A. (chosen because it is the most expensive part of town for commercial rentals, negating some of the comparison issues I mention above) the average is $54 per square foot. Surprisingly, San Francisco’s central business district is even cheaper, at $45 per square foot.
Where L.A. really becomes cheaper is when you look at labor costs, although the figures are downright depressing when you think about the poor cooks in town trying to live on the wages cited. From the article:
The federal Bureau of Labor Statistics reports that annual mean restaurant wages in New York City in 2015 were about $49,000 for a head chef, $28,580 for a cook and $29,290 for a server. In San Francisco’s much smaller labor force, pay was about the same for a head chef, $31,120 for a cook and $32,040 for a server. Wages were lower in Los Angeles: $40,740 for a head chef, $25,300 for a cook and $27,570 for a server.
The New York Times also found that ingredients cost less on the West Coast, especially when California produce is in season.
I doubt any of these numbers are going to sound promising to aspiring business owners, despite the fact that New York is far worse. Especially because of one telling figure: Since 2008, L.A.'s restaurant real estate prices have risen by 11 percent. New York's prices rose 8 percent in that same time frame. Things are getting pricier faster, and the market shows no signs of slowing.
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