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| Google employees dining at Charlie’s Cafe at the company’s headquarters in Mountain View, Calif. Google and other tech behemoths are luring restaurant workers with higher wages and more perks.Brooks Kraft/Corbis, via Getty Images |
PALO ALTO, California - It wasn’t so long ago that the aroma of
Moroccan spiced food and wood-oven pizzas wafted out to a downtown street here
from the open-air patio of a once popular eatery called Zibibbo.
Today that patio is behind locked doors, obscured by frosted
glass. The pizza oven is gone. The formerly crowded bar has been converted into
a start-up space of a dozen engineers, their bikes and whiteboards. After 17
years in operation, the restaurant closed in 2014. The space is now an American
Express venture capital office and a start-up incubator.
All told, 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.
Silicon Valley restaurateurs say that staying afloat is a
daily battle with rising rents, high local fees and acute labor shortages. And
tech giants 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.
This is leaving a void between the takeout cuisine ordered
on iPads at a counter and $500 meals at high-end restaurants.
“Restaurants as we know them will no longer exist here in
the near future,” said Howard Bulka, a chef and owner of Howie’s Artisan Pizza
in Palo Alto and another restaurant in nearby Redwood City.
With razor-thin profit margins, restaurateurs find they can’t
increase wages much. Paying a livable wage is a struggle in Palo Alto, where
the average one-bedroom apartment rents for $2,800, the same as in New York
City. Workers have also been driven out of surrounding towns that were
previously affordable, like Cupertino and San Jose, where demand from a new
influx of tech workers has driven up the average cost of a one-bedroom
apartment to more than $2,500.
The cost to lease space in downtown Palo Alto, according to
the city’s planning department, is now $7.33 a square foot, up more than 60
percent from four years ago.
Palo Alto requires restaurants to pay fees for things like
sidewalk improvements, tree maintenance and parking. Restaurants that lease
1,000 square feet or more must provide four private parking spaces or pay an
in-lieu parking fee of $63,848 per space, for a total of $255,392 — the highest
such fee in the country.
“From an operating
standpoint, it’s crushing,” Mr. Bulka said. “There’s just not enough
profitability in this. Period.”
Understaffed “fast casual” restaurants — frozen yogurt,
cupcake and tea shops; and salad stations where customers order from the
counter — have replaced older mom-and-pop restaurants. Other newcomers are
well-heeled chains like Nobu, the global sushi empire that announced plans to
open a restaurant in Palo Alto, and Sweetgreen, the salad chain start-up that
can offset the costs of doing business in Palo Alto with sales from its other
locations.
“We’re competing more for staff than we are for guests at
this point,” said Craig Stoll, a James Beard Award-winning chef and co-owner
with his wife, Annie Stoll, of Delfina.
The Stolls own four restaurants in San Francisco and two in
Silicon Valley. They have not been able to fully staff their Silicon Valley
locations since they opened about two years ago.
In the last year, the Stolls have lost several of their best
servers and their director of operations to Twitter and Airbnb in San
Francisco. To compete, the couple has been increasing pay and perks as much as
possible, but they say they still often have to close off entire sections of
their Silicon Valley restaurants simply because there is not enough staff to
service them.
Recently, they have resorted to hiring their 14-year-old
daughter and her friends to step in. “We’re breeding our own work force at this
point,” Mr. Stoll joked.
On Palo Alto’s main street, adult-size robots, with screens
featuring real people speaking from their homes in Bermuda or Kansas City,
greet pedestrians and escort them into a Beam robot shop, which is unstaffed
and empty save for the other robots selling themselves.
“We joke that we’re all going to end up like Beam robots,”
said Mr. Andrade, of Vino Locale. “It’s only a matter of time before someone
hands them a tray.”
