Abbot Kinney/First Friday

We are disappointed to learn of the Abbot Kinney Merchant’s Association’s decision. Obviously, this affects the ability of our members to operate, limits consumer choice, and detracts from the overall experience of the event. We are also surprised to learn that the AKMA’s President has characterized our membership’s actions as something that people need to be ‘protected from’.  Our members have always held themselves to the highest levels of commercial conduct. Due to the nature of their business, our members are always very aware of the demands of the consumer.  Clearly, the growth and innovation displayed by the Association’s members indicate that they do an excellent job of giving consumers what they want and at a fair price. In light of our consistent efforts to cooperate with all stakeholders, we were particularly disappointed to not only to be excluded from any discussion and further to have been informed at the very last moment.

Because this situation is still developing and information is sparse, the Association cannot take a position or comment further on the closure. The Association will comment further as the situation unfolds.

Thanks

Matt Geller

Main Street Lot

The Tuesday night lot on Main Street has been a resounding success so far.  Every Tuesday 10 trucks park in the California Heritage Museum lot at 2612 Main Street in Santa Monica.   This event is both family and dog friendly.  Many of the customers bring blankets and picnic on the museum lawn.  The Victorian provides people with seating, and also serves beer, wine and mixed drinks.  If you’re in the neighborhood, get down there and check it out.

In addition to providing customers with great food truck cuisine, the event helps to raise money for the museum via rental fees.  The city issued permit that allows us to use the parking lot as a food truck lot expires in December, so we need to re-apply.  If you would like to send an email of support, please sent it to: calmuseum@earthlink.net.

Thanks

Matt

More on Regulations

This morning I read an interesting article on the Wednesday’s city council meeting.  http://blogs.laweekly.com/informer/2010/11/food_trucks_will_require_speci.php

In the article Bill Rosendahl says,”It is a work in progress, but overall, (I want to see) food trucksrespecting the brick-and-mortar restaurants.”  Council member Rosendahl has been instrumental in our discussions with the Transportation Committee which he chairs.  But, this argument is getting old, especially when it’s coming from a committee that purports to be dealing with “transportation,” not competition.

It’s an argument I hear often… “respect the restaurants.”  I can understand how a restaurant owner’s desire to have a potential competitor or industry “respect” their business.  But, would that same restaurant owner want their food purveyors “respecting” each other?  I doubt it.

What if Foster Farms said to the restaurant owner, “I’m sorry I can’t sell chicken to you that cheap because Farmer Jones sells it at 4 dollars a pound and he has more overhead than I do.”

Every restauranteur wants their suppliers battling it out for their business… Some will pay more money to large companies such as Sysco Foods because of their dependability and “held harmless” insurance that protects all of their products.  But, some want the option of paying less to suppliers that have no bells and whistles and may not even deliver…  Sort of like how some people don’t want a full restaurant experience and some people want to grab a bite to eat off of a food truck.

Imagine a world where competitors were expected to “respect” each other.  Maybe Apple would have “respected” Tower Records and Virgin Mega Store and passed on creating iTunes.  Maybe Direct TV would have “respected” Cable and let their monopoly continue.  Maybe, instead of competition we would have competitors carving out segments of the economy to control fully.  Oh wait… We had something like that in the early twentieth century… Standard Oil?  Bell Telephone?

As a policy, most food trucks steer clear of restaurants.  We’re not fighting for the right to park in front of any restaurant we want.  However, we are concerned that our City Government seems to want to limit choices for Los Angelenos.  The question we should be asking the City is: Are you trying to regulate food trucks, or insulate restaurants? If it’s the latter, the people of Los Angeles are not going to stand for it.

Competition is good… And the argument of unfair competition is a red herring in this debate.  If you own a restaurant, your real foe is ridiculously high rents and unfair city permit requirements (not the health permits from the county, those are important).

Matthew Geller

ELECTION- BETSY BUTLER

Get out there and elect Betsy Butler tomorrow. We need State representation to make sure that the food truck industry isn’t regulated out of existence on the State level. Betsy Butler is committed to working with this growing industry to provide fair and equitable solutions to issues that may arise.

Thanks
Matt

Email:

I email the SCMFVA attorneys often about issues pertaining to the food truck industry.  In this email Jeffrey was responding to my post about competition.  I liked his email so much I told our him that I was going to post on our blog. He begrudgingly agreed to let me.

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Matt,

I think it is important to note that the food trucks perform different functions than the restaurants.  Food trucks perform a more limited test market for a new concept.  They also perform a ground-laying function for new territory.  Why should an entrepreneur just ‘guess’ when he doesn’t have to?  Also, a food truck can survive when no one location could support a concept.  None of these things are natural functions for a brick and mortar – and prior to high-quality food trucks, people were forced to go that route.  The gourmet food-truck is an innovation.  Restaurant-quality cuisine can be created in a clean and safe environment.  The only thing ‘unfair’ would be for potential or existing restaurateurs to be deprived of a more effective delivery platform for use under circumstances when a traditional restaurant would be highly risky and unlikely to generate the same risk-adjusted returns.   Landlords with proven restaurant spaces have nothing to worry about.  The problem is that it costs a lot to find out whether they do.   Food trucks allow the entrepreneur to be freed of the shackles on one location and/or a major capital investment.  Most of them would rather run a brick and mortar and, in fact, over time, food trucks should lead to more, successful restaurants as tenants.  Their existence should also help restaurants increase their bargaining power and thus reduce rents by virtue of the fact that there is an alternative available.

The potential for landlords to lose some bargaining power is the reason they are fighting.  That nobody would feel sympathy for them is why they are trying to do so under the guise of ‘unfair competition’ for restaurants.  At the core of any restaurant is a chef with a concept.   There is no difference with a food truck.  Trucks and brick and mortar restaurants would like lower taxes, less regulation, and lower costs of operation.  Destroying food trucks will hurt restaurateurs in the long run – they should not want this.  They are only bound to brick and mortar so long as they have a lease!

Jeffrey D. Dermer

Attorney at Law

Dermer Behrendt

INTERN WANTED!

The SoCalMFVA is expanding and we need an intern.  We’re looking for someone who is VERY good with Google Apps, WordPress blogs and various social media sites.  This is an unpaid internship that requires 12 hours of work a week.  This internship may become a part time paid position starting in January.  The SoCalMFVA office is in Venice, but much of the work can be done from anywhere.

Duties:
Scheduling food truck lots and various festivals

Scouting new food truck lots

Answering member questions

New member outreach, sign ups and services

Office Administration

If you’re interested, please email your resume to info@socalmfva.com

Thanks
Matt

Competition

Every time I have a discussion about food trucks, the subject of competition, unfair or otherwise, comes up.  In my latest discussion on KPCC, I spent a lot of time talking about the ridiculous notion that LA should enact new regulations when they don’t even enforce old ones. Unfortunately, I wasn’t able to talk about some of the things I think are driving this push for new regulations.

It’s tough to run/own a restaurant in the City of Los Angeles.  Space is expensive, the regulations are daunting, permits are time consuming, parking requirements are impossible and customers are fickle.  Did you know that a liquor license from the state to sell beer and wine costs around $500?  However, the conditional use permit to use that license in the City of Los Angeles can run you up to $20,000 and take a year to get approved.  Additionally, that license will expire in five years and you’ll have to go through the conditional use permit process again.  Parking requirements can be impossible to meet so restauranteurs sometimes need to file for a variance, this variance will cost them another $5,000-$10,000.  Building and safety, public works, bureau of sanitation and the planning department are just some of the agencies you’ll need to get permits from.  My point is, the City of Los Angeles has never done anything to help restauranteurs succeed.  Why all of sudden are they crying foul because of food trucks?  If they’re so concerned with new competition for restaurants, why don’t they try to limit new restaurants from opening?

The answer is pretty simple…  Commercial real estate owners have been the gate keepers of food service for quite some time.  They have a space, they rent it to an aspiring or veteran restauranteur.  The restauranteur spends a lot of money making tenant improvements and pays a large sum per square foot.  If the restaurant succeeds, great.  If the restaurant fails, no problem!  Some new restauranteur will come in and do tenant improvements and pay the large sum per square foot.

The problem for commercial real estate owners/developers is that aspiring restauranteurs see  food trucks as an alternative to the traditional brick and mortar.  This coupled with the downturn in the economy has reduced the value of restaurant properties.  Food trucks do not typically compete with restaurants, as opposed to people bringing a lunch from home.  But, the food trucks are an easy scapegoat for what ills the restaurant industry.  Increased regulation, the economic downturn, and sky-high rents are the biggest culprits for the woes of restauranteurs.  So what is a commercial real estate owner to do?  Lower the price per square foot to better reflect the value of their property (all property has gone down in value)? Or, cry foul to the City and ask for regulatory protection.  Remember, commercial real estate owners and developers as a group are one of the biggest contributors to political campaigns in Los Angeles.

If the City really wanted to help out the restaurant industry, they could reduce permit requirements, expedite the permit process, reduce taxes and limit building/operating regulations.  I am not advocating for a reduction in food handling or preparation regulations that are handled by the County.  I just think non-food related regulations could be reexamined.

I applaud Councilmembers Alarcon, Parks and Krekorian of the Jobs Committee for passing their recent motion to look into ways to make the restaurant business more competitive without adding new regulations to the food truck industry.   The Jobs committee’s motion shows real leadership and out of the box thinking when it comes to addressing the food service industry.  The City should be encouraging consumer choice, not regulating it away.

If you get a chance please email a thank you to Councilmembers AlarconParks and Krekorian.

Thanks for reading,

Matt

Tomorrow, one of our attorney’s chimes in on the subject of competition