The Tech Industry Is Killing Restaurants in Silicon Valley

Palo Alto restaurant (Jun Seita / Flickr / CC / Cropped)
Jun Seita / Flickr / CC / Cropped

The tech industry in Silicon Valley has disrupted the restaurant industry, thanks to high rent and higher minimum wages.

“Restaurants as we know them will no longer exist here in the near future,” Howard Bulka, a chef and owner of Howie’s Artisan Pizza in Palo Alto, and another restaurant in nearby Redwood City, told the New York Times.

According to the Times, “more than 70,000 square feet of Palo Alto retail and restaurant space were lost to office space from 2008 to 2015, as the tech bubble drove demand for commercial space downtown.”

Rising rents, heightened food costs and acute labor shortages continue to plague Silicon Valley. The New York Times points out that the problem is exacerbated by the fact that “tech behemoths like Apple, Facebook and Google are hiring away their best line cooks, dishwashers and servers with wages, benefits and perks that restaurant owners simply cannot match.”

Understaffed “fast casual” restaurants like frozen yogurt, dessert and tea shops are reportedly replacing the older, mom-and-pop restaurants, the Times points out. It’s reportedly only the well-established, corporate-level restaurants and chains like Nobu (known for sushi) and Sweetgreen (a salad venue) that can afford to lose money in Silicon Valley due to their profitability elsewhere.

The Times notes that several blocks down from another Palo Alto dining venue, the family-run Vino Locale wine bar, JC Andrade, said it lost its previous chef to Facebook. The owner reportedly said that despite increasing pay for his workers and offering a 401(k) program, he has to plead with his 15-year-old brother to pick up shifts.

Rising minimum wage costs, a cause championed by the left, have also hurt small businesses. Furthermore, the average rent for a one-bedroom apartment in Silicon Valley is approximately $2,800, placing rents at the same level as New York City. Many workers have been forced to move to neighboring towns because they cannot afford to live in the cities they work in due to techies who are better able to afford rents driving up the costs.

Palo Alto’s planning department reportedly places average rent there at $7.33 a square foot, a figure that the Times notes is up by more than 60 percent from four years ago.

While the advent of technology has introduced some useful and helpful inroads in the dining sector, as well as providing a new customer base, it is also adding to fears that someday robots will replace the majority of human staff. And those “help wanted” signs posted in the windows of restaurants will no longer be necessary.

Follow Adelle Nazarian on Twitter and Periscope @AdelleNaz


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