Business Update with Mark Lacter

Are restaurants in Los Angeles better than those in New York?

L.A. area cab companies say they're losing business to ride-sharing services like Uber, Lyft, and Sidecar that use smartphone apps to connect passengers and drivers.

Mark Austin Thomas: KPCC business analyst Mark Lacter, how are city officials dealing with this?

Mark Lacter: L.A. officials agree with the cab operators - they've issued cease-and-desist orders to the upstarts (basically telling them to knock it off).  But, no luck so far - the services are still here.  Frankly, it does seem a little reckless for people to be getting into the cars of total strangers - unlicensed, unregulated strangers, I might add.  But, these services have become popular in certain parts of town and among certain kinds of customers - many of them in their 20s who like the idea of an alternative to driving their cars, especially late at night.

Thomas: The cab drivers say they these services are basically just bandit cabs.

Lacter: In some ways they are, but they're also part of a generational divide that has younger Angelenos are looking at L.A. in different ways than their parents.  They're more likely to be living in Hollywood or downtown, they're not able or even interested in owning their own home - which might explain why they're not moving to the suburbs - and they're also more likely to be using mass transit, or riding their bikes to get around.  You know, ridership counts for public transit have been going up, especially for the Expo Line since it was extended to Culver City - and there will be a further extension to downtown Santa Monica in the next couple of years (that could be a real game changer for how folks on the Westside look at mass transit).

Thomas: So, this is the broader context for these ride-sharing services…

Lacter: …which, by the way, are a lot cheaper than taking a cab (there's no meter and passengers can pay as much or as little as they like).  That's not exactly the greatest way to make money, and - of course - we are just talking about a tiny fraction of L.A. residents; most folks still rely on passenger cars.  All that said, this is an interesting idea for Los Angeles (any new idea for dealing with L.A. traffic is interesting), and it would be a mistake not to take it seriously - it could be an attitude change for the overall economy.

Thomas: Speaking of change, several notable restaurants have closed up.  Is there a changing of the guard here, too?
 
Lacter: Well, possibly - the Empress Pavilion, one of the bigger names in Chinatown over the past 20 or so years, is gone.  Also, Tom Bergin's, the Mid-City watering hole where I personally spent any number of Happy Hours over the years has closed (the place has been around in various iterations since 1936).  On the Westside, you have Jerry's Deli which has closed its locations in Westwood and near the Beverly Center.  Now, restaurant closings happen all the time - it's a tough way to make a living, and even a successful place can be done in with a big rent increase or higher food costs or just the general economy.  But, it's interesting that new restaurants in L.A. keep popping up.

Thomas: What do these openings and closings mean for the local economy?

Lacter: Well, local employment has skyrocketed - as of May, L.A. County had almost 320,000 jobs in the restaurant business, which is an increase of 37 percent from 2000.  Now, these are not great-paying jobs.  Many of them are barely over minimum wage, and health care coverage is rare (that's been a sticking point with the new Obama health care regulations).  But, compared with other major cities, it's fairly easy to get into the restaurant business in L.A.  Rents are cheaper, there's easy access to quality ingredients, and because of the region's ethnic diversity, you're able to specialize within basic cuisines.

Thomas: So, what's the better restaurant town - L.A. or New York?

Lacter: Well, a New York-based food writer for the Huffington Post got his colleagues all bent out of shape by picking L.A., especially if you want to spend under 20 bucks for dinner.  Now, I generally hate these coastal rivalries (except, maybe, in the cases where we seem to be winning), but dining out is one of the things that economists look at when assessing an area's quality of life.  So, maybe it is a big deal.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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