Back in 1925 President Calvin Coolidge was addressing an association of newspaper editors, safe to say his relationship to the press was a bit more friendly than the current occupant of 1600 Pennsylvania Avenue, when he said, “After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world.” Nothing has changed, other than everything.
We remain, at core, a capitalist society that has the same dreams, goals and aspirations as our forebears did in 1925, 1825, and 1776. The current crisis that is afflicting the world has historical equivalents and we can look to them, to see our future.
The world was in the midst of a recovery from the 1918-1920 Spanish flu pandemic and the emotional state of America was ebullient exuberance. That happens when people survive a great trauma. The 20s followed the Spanish flu and World War I, the 50s and 60 followed World War II, the Renaissance followed the Dark Ages and the Black Plague.
So what does that tell us? Survive.
Survive to fight another day. Survive to see the sun dawn. Survive to see business come back, people return to sociability and to enjoy the community and camaraderie of friends again.
I know it sounds very pollyannish of me to be singing “the sun will come out tomorrow” but it is too darn easy to fall into the dark pit of despair and see only the devastation. When this first broke I was panicked, not about the disease – there was little then or now I can do about that – no it was the business devastation that I saw coming.
As a divorce lawyer who represents mostly men, I also do a fair bit of business coaching/consulting with clients. I keep up with the latest business trends and marketing options. I delve deep into the finances with clients and know how razor thin some of their margins are, especially in the restaurant industry. I worked my way through law school fixing restaurants that were in trouble so I have had many an up close and personal experience with their business models.
The restaurant industry was being decimated (that’s one in 10 killed) BEFORE this shut down, thanks to the high fees that the delivery services are extracting from them. This past weekend an article made the rounds of just what GrubHub actually takes as a commission and in upcharges from a food company. Basically, they take 30-40% off the top, and then the restaurant owner can have their marketing expenses taken out as well. In the article the operator started with $1,042 in sales, paid $340 in fees to GrubHub plus a $231 fee for “promotions” and $131 in order adjustments, netting out about $376. That $376 was left to pay for food, labor, packaging, rent, insurance, taxes, utilities and in a fantasy world, profit.
Now GrubHub is not alone in this, they are not a lone bad actor, they’re no different in impact than UberEats, Postmates, Doordash and any of their competition. I am not trying to paint them as horrible, they’re a development of the stay at home, “bring it to me” mentality of so many of us these days.
But their impact is what is killing restaurants that cannot possibly survive in a city like Santa Monica, paying high commercial rent, only to have an additional 55% of their top-line revenue consumed by a delivery company. It’s just basic math. Using these services is convenient, and may be helping those people who drive for them a smidgen, but in the end, we’re killing the restaurants.
Then along came Covid-19 and what we’re about to see in the next 20-60 days is that many, many, many restaurants are about to go under. Which is bad for many of the owners who will be forced to file bankruptcy in order to start over in a year.
However, in all darkness there is light. My friend Andrew Smith owns The Bike Shop on Main Street. I stopped in there last week to have my bike repaired and tuned up. It hadn’t been out much, and when I started using it in the current crisis, found that it needed some attention. As I stood in the parking lot patiently waiting a socially distanced amount, I was one of half a dozen people who were dropping off bikes to be repaired, or picking up bikes that were coming out of the shop.
Turns out that people are finding it makes more sense to repair something than to throw it out and get a new one. The Bike Shop is open for repairs and is doing well enough in this current pandemic to keep the staff employed and occupied.
I want to encourage everyone to buy local, shop local, and examine the true path of the money. Ordering from your favorite restaurant is important, but do it in a way that benefits them the most, call them directly. Don’t use the easy app, there’s a reason that app exists, and it’s not to make the restaurants more money. Get your bike fixed, call Andrew or drop in and say I sent you.
Americans do love to be “producing, buying, selling, investing and prospering” but we have to do it with greater thought and care.
David Pisarra is a Los Angeles Divorce and Child Custody Lawyer specializing in Father’s and Men’s Rights with the Santa Monica firm of Pisarra & Grist. He welcomes your questions and comments. He can be reached at dpisarra@pisarra.com or 310/664-9969. You can follow him on Twitter @davidpisarra
