Rental by the Meal

IMAGE: Drawing by Will Prince for the New City Reader Food Issue; data supplied by Marion Emmanuelle of award-winning restaurant designers AvroKo.

Stuck in a rut, and with his thirtieth birthday imminent, Paul Carr, the son of hoteliers, escaped it all by spending a year living in hotels. Somewhat predictably, his experiences led to a publishing deal, and the resulting book, The Upgrade, is excerpted in today’s Observer.

After noting that such semi-permanent hotel dwelling was once relatively common (apparently, nearly three quarters of New York’s upper and middle classes called a hotel room home in 1856), Carr explains that long-term hotel living, done right, can cost less than a year’s rent on a London flat. In his informative introduction to getting the best deal out of the hotel business, he points out that “a hotel bedroom is a highly perishable commodity — if it hasn’t been sold by the end of the day, it’s gone forever.”

Of course, this insight also holds true for a restaurant table (and an opera ticket, an airline seat, and so on).

IMAGE: Drawing by Will Prince for the New City Reader Food Issue; data supplied by Marion Emmanuelle of award-winning restaurant designers AvroKo.

In other words, each spot on an eatery’s stain-resistant leather banquette has a shorter shelf-life than a perfectly ripe peach, its revenue-generating potential transmuted into financial drain every minute it remains unoccupied. Seen in this light, the restaurant floor is a terrifyingly volatile property market, packed with listings whose half-lives clock in at an hour or less (even high-end restaurants frequently expect to turn tables once during the dinner shift).

The particular economic logic of the dining table market is, of course, written into a restaurant’s business plan. As Alan Stillman, the founder of T.G.I. Friday’s, explained in our conversation last November:

The restaurant business does come down to real estate, though. A restaurant owner is renting or sub-letting you a piece of real estate for the evening, and how long you sit there and how much you spend determines whether they’re going to be successful or not.

Indeed, the space/time value of each dining chair can be calculated to the penny. A recent survey by lastminute.com found that every five minutes of seat occupancy at London restaurant Hakkasan carries a price tag of £6.17, for example, while the same rental period at Midsummer House in Cambridge costs £5.80 a head.

Although much restaurant design writing focuses on fashions in décor and lighting, from taxidermy to Edison bulbs, a dining room could thus perhaps be more accurately read as a landscape encoded with invisible information, its contours shaped by local health codes, server use-paths, and financial fluctuations.

New restaurant reviews could include a handy by-the-meal seat rental calculation alongside their descriptions of the chalkboard menu; in addition to nominating signature dishes, critics could recommend tables based on both value for money and traffic flow. If house prices were the standard dinner party conversation topic of the twenty-first century’s first decade, perhaps seat rental will be the restaurant chit-chat of the next…

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3 Comments

  1. Brian O
    Posted June 15, 2011 at 11:35 am | Permalink

    Adam is right — the comparison is not completely accurate. Hotels are actually selling the space of the room along with a bundle of amenities and services related to staying in that room. The rooms are rented by the night and therefor once a night has ended, each room-night has expired and can never be sold again. This reflects the high fixed-costs of a hotel.

    A restaurant’s business also has a spatial element — there is a fixed cost of rent, utilities, debt repayment, insurance, etc. that is inherent to the space and expire daily. For this the per-minute “rent” might be useful.

    The other cost elements of the restaurant are based on product cost (food and beverage) and labor cost, all of which are variable and do not “expire” at the end of the day. Unsold dry goods, wine, even fish or fruits can be used again the next day. For these items one calculates the cost of goods sold, not a time-based rent. For labor one tries to set standards based upon potential income or numbers of guests and scales employees to meet this. There is a certain fixed cost, but a good manager will watch things closely enough to make a difference at the end of the year.

  2. Danika Frisbie
    Posted May 26, 2011 at 7:42 pm | Permalink

    I would argue that the dollar value of space/time (or the price of renting “real estate” in a restaurant per hour) is already reflected in the cost of dining at a given restaurant. Those who chose to dine at a high-end restaurant often do so with the intention of spending time (longer than an hour) thoroughly enjoying a fine meal with others–and they pay for it. Contrarily, a local diner may serve the purpose of grabbing a quick meal for the family on the way home from work, and is not as expensive. Furthermore, the drive-thru components of fast food establishments offer need not offer ANY real estate for use, and is among the cheapest food in America. The cost of “space rental” seems to be intrinsically built-in to meal costs of given restaurant given the combinational attributes of the quality of its food and labor/time used to prepare and serve it.

    Also, I think it would be culturally disintegrating to charge rental-fees by the hour for space in a restaurant. If anything, families and friends should be encouraged to seek engaging meals with each other and well-thought food.

  3. Posted May 24, 2011 at 1:27 am | Permalink

    Surely a restaurant is different from a hotel or a plane in that you are also being served a commodity which could be reused in some form at a later date if not consumed at that moment.

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