Tuesday, November 18, 2014

Why Are There So Few Chinese Buffets in Los Angeles?

People in Los Angeles may not be aware of it, but there aren’t a lot of Chinese buffets in Los Angeles when compared to other parts of the country.  Yes, there are probably a few dozen Chinese buffet restaurants in Los Angeles county.  But when one sees the numbers of Chinese buffet restaurants in other parts of the country and compares them on a per capita basis to Los Angeles, the differential is startling. 

Recently visiting Gainesville, FL, I passed a half dozen Chinese buffets in my half hour drive around town.  With a population of 120,000, that would project out to 500 Chinese buffets in Los Angeles, based on a population of 10 million in Los Angeles county.   Or about 10 years ago, when in Kilgore, TX, I saw three Chinese buffet restaurants in this town of 15,000.  That ratio would result in 2,000 Chinese buffets in Los Angeles, a number which likely would exceed the total number of Chinese restaurants in Los Angeles, which has a half million Chinese residents.

So why are Chinese buffets so relatively scarce in Los Angeles?  Offhand I can think of a few reasons.  First of all, to a large extent, a Chinese buffet is a lowest common denominator as far as Chinese food is concerned.  Many of these Chinese buffets are in cities having a small Chinese population, and where the local residents are not as sophisticated as to Chinese food.   As such, Chinese buffets are well suited to serve the types of dishes that unsophisticated diners are used to, like chow mein, fried rice and broccoli beef, and as such represent a higher percentage of Chinese restaurants in those communities.   Indeed, if you look at other locales with larger Chinese populations and a higher level of community sophistication as to Chinese food, such as San Francisco and Manhattan, you find that Chinese buffets are also not as common.     Also, buffets are part of the longstanding image that equates Chinese food with economical dining with their emphasis on low cost ingredients, which was one of the initial appeals of Chinese food to American audiences.    Less obviously, geographic areas with a higher density of Chinese buffets are also within the Fujianese restaurant worker diaspora, with an extremely large supply of willing Chinese restaurant workers and restaurant owners.

Still it’s surprising not to see more Chinese buffets in Los Angeles.  With a large Chinese population sporting a culture that both enjoys food and getting your money’s worth, one would expect to find a good number of Chinese buffets serving authentic Chinese food.  But while such restaurants do exist, there are but a handful of them.

Monday, November 17, 2014

Proponents Of Sharply Higher Minimum Wage Are Incredibly Naive

Here on the west coast a number of cities are talking about increasing the minimum wage substantially over current levels, with amounts of $15 an hour or more being bandied about.  The simplistic argument is that raising the minimum wage means minimum wage workers will have a lot more money to spend, boosting the economy.  However, somehow having earned a bachelors degree in Economics eons ago, I can tell you that things are not that simple. 

First of all, for the most part, businesses are conduits for costs, i.e., the prices they charge are equal to their costs plus a small profit margin.   While many people have this idea that business profits are a large percentage of how much businesses charge for their products and services, that is usually not the case.  For example, historically supermarkets earn a net profit of 1% to 2% (i.e., 1 to 2 cents per dollar of sales).  Restaurant net profits run 3% to 5% of sales, and averaged about 1% of sales during the great recession.  (And how many people know that in the entire history of the airline industry, commercial airlines have a cumulative net loss?)  The corollary to this is that a significant increase in the minimum wage will by definition be passed on in its entirety to consumers in higher prices.  So any increase in the minimum wage will in reality come out of your pocket and my pocket.

Of course there's nothing necessarily wrong with that scenario.  It might me worth it for you and me to help finance a higher wage for low paid workers.  But alas, things are more complicated than that.  In economics there's a concept of marginal utility.  Basically economic inputs, such as labor, are priced at how much they are worth, and there is a limit as to how much any particular economic input is worth.  And frankly there are a lot of jobs out there that aren't worth $15 an hour to the employer, so for these jobs raising the minimum wage to $15 will not raise that worker's pay, but rather will send him straight to the unemployment line.  If this sounds like economic gobbledygook, check out this article on potential changes in the fast food industry.  While McDonald's is one of the major targets of the $15 minimum wage advocates, the fact is that McDonald's is hurting with unprecedented declines in earnings.  And raising the minimum wage sharply will mean that technologies that didn't make sense with a $8 minimum wage will suddenly become a no-brainer with a $15 minimum wage.  Or how can a hole in the wall family owned Chinese restaurant afford to pay its dishwashers and busboys $15 an hour?  Maybe they can't and they'll be driven out of business with a higher minimum wage.

So as the old saying admonishes, be careful of what you wish for.

Saturday, November 1, 2014

Why Yelp Star Ratings For Chinese Restaurants Don't Fly

In my previous posting on the best Chinese restaurants in Los Angeles according to Yelp, I pointed out how the two highest Yelp ratings went to two hole-in-the-wall nondescript restaurants in mid-City Los Angeles that served Americanized Chinese food.  Granted that most of the really good Chinese restaurants in the region are outside of the city of Los Angeles, located in the many cities of the San Gabriel Valley.  But the fact is that Wah's Golden Hen on Virgil and Sea Dragon on Vermont  with 4½ stars each score higher on Yelp than most all of the Chinese restaurants in the San Gabriel Valley.  This is what I described as the comparability fallacy on Yelp, i.e., the people rating Wah's Golden Hen were a completely different group from those rating Sea Harbour in Rosemead, likely the best Chinese restaurant in the Los Angeles area.

But the fact is that people giving ridiculously high ratings to places like Wah's Golden Hen are only half of the equation.  The other part of the equation is that while the San Gabriel Valley has many of the great Chinese restaurants in the United States, the best of these do not have more than 3½ Yelp stars.  From my listing of the top 10 Chinese restaurants in the US, I rate Sea Harbour in Rosemead at #2 (and likely #1 in the dim sum category).  But it only has 3½ Yelp stars.  Numbers 3, 4, 5, and 6 in my national list, Elite in Monterey Park, and King Hua, Lunasia and Chengdu Taste in Alhambra?  All 3½ stars.      

This is not to say that there are no higher rated Chinese restaurants in the San Gabriel Valley.  Newport Seafood and Boston Lobster rate at 4½ stars, while New Bay Seafood garners 4 stars.  But all three of these restaurants are lobster specialists, which may well indicate that lobster is its own demographic when it comes to Yelp ratings.   And there are a number of other 4 star Yelp rated Chinese restaurants in the area, including the well deserved Savoy in Alhambra, but also in Alhambra the horrid Sam Woo BBQ.

So why are the ratings for many San Gabriel Valley Chinese restaurants lower than should be expected?  It's hard to say but a few things come to mind.   First of all there are low reviews from non-Chinese diners who may not know what to order, or who do not appreciate truly good authentic Chinese food.  There are people who downgrade for non-culinary reasons such as service (what do you expect at a Chinese restaurant?), higher than average price, or parking.   But what I think might be the hidden key is that while the Chinese food in the San Gabriel Valley is the best in the United States, it does not compare to Chinese food overseas.  As a result, I'm guessing many of the Chinese diners in the San Gabriel Valley are giving ratings when comparing to food they've eaten in Hong Kong, Taiwan, China, and other locales.   But whatever the reason, be aware that Yelp ratings for Chinese restaurants in Los Angeles are badly off kilter.