Landmark Links April 17th – Rare Form


Lead Story….  Over the past year I’ve written several times about how restaurants are not the retail savior that they have been portrayed to be.  I believe this to be the case for several reasons:

  1. Restaurants are traditionally highly reliant on alcohol sales to make a profit.  Delivery services like Amazon Now and Uber Eats are causing margin pressures as people are dining out less.
  2. Rents are rising as are labor costs.  At the same time, food inflation has been relatively tame in recent years, meaning that restaurants in most markets have little room to raise prices without losing customers who will opt to eat at home.
  3. Competition has increased as more institutional dollars flood the space with intent to scale successful concepts quickly.  At a certain point, overcapacity becomes an issue and there simply isn’t a large enough customer base for everyone to survive.

Restaurant critic Steve Cuozzo of the New York Post wrote an entertaining story last week that illustrated how margin pressures are a very real issue at the high end as well as the mid and low tiers – and how some steak houses are responding by deliberately under-cooking steak in an effort to reduce waste.  From the NY Post (emphasis mine):

Both incidents reflected the new, medium-rare confusion. While getting an underdone steak has been a possibility for decades, what’s really given the phenomenon traction is that chefs are under bottom-line pressure to reduce throwaways that occur when customers say a steak is too well-done. An under-cooked steak, on the other hand, can always be salvaged with a touch more fire as my friend’s was.


Restaurateur Stephen Hanson says it’s mainly about money. Every cent counts when eateries are under unprecedented strain from high rents, high labor costs and brutal competition.

“If a customer says their steak is overcooked, it can only be thrown out,” says Hanson, the owner of Henry at Life Hotel who previously ran four steakhouses under the BR Guest banner, including the Strip House chain. So kitchens err on the rare side, knowing the dish can always be rescued with a minute or two more heat.

Tony Fortuna, owner of the always-buzzing TBar Steak & Lounge says he spends $34 to buy a 24-ounce, dry-aged cut of rib-eye, and, if one customer finds their steak overcooked, “we lose money on the whole table.”

That this sort of thing is happening in restaurants due to cost pressures is not surprising.  However, the fact that it is now happening at the high end is a bit more so.  Although under-cooking steaks is likely having some positive impact on the bottom line, I can’t believe that restaurateurs will be able to find enough of these sort of tricks to stay profitable if pressures from added cost and competition continue to build.  Also, I really hope that chefs don’t try this move with chicken.


Back Door: Big banks are getting back into the subprime loans that they swore off during the financial crisis by providing an increasing amount of money to non-bank lenders who then provide financing to risky borrowers.

Everything on the Table: China is now looking at yuan devaluation as a tool in their trade spat with the US.

Red Flags: Christine Lagarde of the IMF is warning that rising protectionism is resulting in increased risk in the global economy.


Breadwinner: Homes appreciate by an amount greater than or equal to minimum wage in almost half of the nation’s largest cities.  See Also: San Jose homes are increasing by a a whopping $800/day on average.  And: Silicon Valley’s astronomical housing costs are creating problems for startups.

Levering Up: Rising home prices, tight supply and higher mortgage rates make home ownership out of reach for many, pressuring lenders to ease credit standards See Also: More renters are giving up on buying a home.


Balanced Response: Bitcoin is a perfect example of the fact that, until there is a way to bet against an asset, its price will be set by the most upbeat buyerSee Also: How price discovery in Bitcoin, resulting from the beginning of futures trading brought prices back down to earth.

Pointless Question: Why “where do you see yourself in five years?” is a garbage interview question.

Gullible: A new study found that Millennials are more likely to fall for financial scams than older generations.

Chart of the Day



Gotta Hear Both Sides?  That a Louisiana bill to ban sex with animals passed in the state senate is not surprising – other, perhaps than the fact that it took this long.  What is surprising is that ten state senators actually voted against it.

NOPE: A Durham, NC restaurant is serving up a pasture-raised beef burger topped with Gruyere cheese, spicy chili sauce and an oven-roasted tarantula for $30.  I have been known to have a fairly adventurous palate but I would not go near this.

Wasn’t Me: Eight police officers in Pilar, Argentina were fired after 1,000 lbs of seized pot went missing.  They claimed that it was eaten by mice.  In possibly related news, there is reportedly a massive donut shortage in Pilar, Argentina.

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