Marketplace - The future of dining

Episode Date: May 20, 2024

Fast-casual sit-down restaurant chains have a lot on their plates right now. They’re unpopular with Gen Z customers, struggling to maintain reasonable prices and can’t compete with made-to-DoorDash options like Chipotle. Meanwhile, at the other end of the restaurant spectrum, reservations at trendy spots are hot tickets in resale markets. Also in this episode: The Port of Baltimore hopes for a return to normalcy, Texans gear up for a sweltering summer and homeowners in extreme weather-prone areas turn to state governments for insurance.

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From American Public Media, this is Marketplace. In New York, I'm Kristin Schwab and for Kyra's Doll, it's Monday, May 20th. Good to have you with us. Let's start our journey today in Baltimore, where it's been nearly two months since the container ship, the Dolly, struck the Francis Scott Key Bridge, ending the lives of six construction workers

and upending the lives of many business owners. Well, today, workers finally moved the Dolly out of the waterway, a key step towards fully reopening the port of Baltimore. So does this mean business there will eventually go back to normal? Marketplace's Stephanie Hughes takes it from here. Stephanie Hughes Sugar, cars, tractors, and containers full of other goods are big items for Baltimore's port. And Scott Cowen, president of the Baltimore

Chapter of the Longshoremen's Union, expects that cargo to start rolling back in. Longshoremen move cargo on and off ships, and about and about 1800 of them have been out of work for the last eight weeks. But Cowan says now, we've got a good looking ship schedules for the next month or two. Parts of the port still feel empty, including the trans-American warehouse. Owner Craig McGraw says many of his clients decided to ship to other ports like Norfolk and Savannah while Baltimore was inaccessible. And he worries that business won't return. If everything's going well at the new port, are they going to turn around and come back

to Baltimore to go through that whole process again? But Baltimore has some advantages. It's farther inland than any other port on the East Coast, which means if cargo arrives here, it doesn't have to travel as far inland to get where it's going. University of Maryland Supply Chain Management Professor Phil Evers says he thinks that'll bring a lot of shipments back. Phil Evers Simply because it's typically a lot cheaper to move a container by water than it is by either truck or rail.

Lauren Henry It's not just containers that are coming back, but passengers too. Cruise ships are returning. Carnival announced it has a ship coming into the port within the next week. It had also moved its Baltimore operations to Norfolk. Evers says there are some positive things that could come out of the disaster. He says as they steady rebuilding the bridge,

they could look into creating one that allows for a wider shipping channel. So you could have more traffic coming in and out. Evers also says any new bridge would likely be state of the art in both design and construction. That means engineers could think about how it might withstand impacts in the future. In Baltimore, Stephanie Hughes from Marketplace. Red Lobster used to advertise that it was where America goes for seafood. But apparently

a lot of Americans are going somewhere else. The chain is filed for bankruptcy, saying its customer count has dropped 30% since 2019. Red Lobster says it plans to keep most locations open, but it has an uphill battle. Because as Marketplace's Daniel Ackerman reports, inflation and changing consumer tastes are making business difficult for casual dining restaurants. Kids these days, says Cornell University's Alex Suskind, they're part of casual dining's problem. Most young folks, like you know I have some Gen Z children, and they would be like oh yeah that's where grandma goes to eat.

Red Lobster, Chili's, Outback Steakhouse, and other casual sit-down chains have been around for decades. Some diners, young and old, have come to see them as wallpaper restaurants, says Steven Zagor at Columbia University. You're not a trend maker. You just sit there and people recognize you as being a good old friend without an awful lot of excitement. Flashy promos can get customers through the door, like Olive Garden's Never Ending Pasta Bowl or Applebee's $1 margaritas. But Zagor says they can backfire too, as in the case of Red Lobster's money losing all you can eat shrimp deal. People are putting literally shrimp in their pockets,

and I have seen that. Speaking of takeout, casual chains had trouble pivoting there when the pandemic shutdowns hit. When they lost their dining rooms, they lost their core business model. Sam Okus is editor-in-chief of Nation's Restaurant News. When they lost their dining rooms, they lost their core business model. Sam Okus is editor-in-chief of Nation's Restaurant News. He says even though some diners have returned to restaurants,

More and more consumers would rather press a button on their phone, have it sent to their doorstep. And that market is already crowded with cheaper order at the counter spots, like Chipotle and Sweet Green. Burritos and salads just travel better than shrimp in a pocket. I'm Daniel Ackerman for Marketplace. Wall Street today, a little meh on this Monday.

We'll have the details when we do the numbers. It's only May, and Texas is already under a heat advisory. Temperatures in parts of the states may get as high as 115 degrees this week. By now, residents have learned to keep an eye on the reliability of the state's electricity grid. They'll also, of course, keep an eye on their electricity bills. Because even though they live in the country's energy capital, it doesn't mean low energy prices. Marketplace's Elizabeth Troval walks us through it. At a Cracker Barrel southeast of Houston, I catch up with Robin Wright. Yes, like the actress. Except she has way more money.

Wright works here in another restaurant six days a week to support her and her 12-year-old granddaughter. She makes her money stretch, and that means this summer being careful not to crank up the AC. I haven't turned my electricity below 74 degrees in years because I can't afford to pay the bill. I just take all the covers off. But I really would rather it be really cold and snuggle under the covers. Wright knows how to adapt to extreme weather. She lost power for a week during the 2021 Texas freeze and evacuated her home for nearly a month after Harvey. So we adapt by wearing almost nothing inside the house.

And that's all we can do. In 2022, Texans paid twice as much for electricity compared to pre-pandemic prices, according to the Dallas Fed. And prices have stayed volatile. Ed Hirsch, who teaches energy economics at the University of Houston, says that volatility has to do with how power plants in Texas get paid. Only when those power plants are putting electricity into the grid is the only time they make money. And he says plants actually make more money when electricity is tight. Other grids are more cautious.

They pay for capacity, meaning how much energy they might possibly use. There's more of a cushion, if there's a cold snap or heat wave. Peirce compares it to paying for the fire department. Nobody likes paying for extra capacity, but think about it, we don't use fire departments all day long

and we pay to keep them around. But Texas takes a deregulated approach. That means when there's sudden demand for extra electricity, prices go up 10, 20, 60-fold. That's bad for consumers during extreme weather. But in the past, this leaner approach has meant cheaper bills. Energy consultant Doug Lewin. Texas did experience very low prices for quite a while. But when the catastrophic freeze of 2021 knocked out electricity across the state, it was a wake-up call. Now, more money is being spent on capacity to give more of an energy cushion. But it's ad hoc. The deregulated structure of the Texas energy market is the same.

That sort of leads to the worst of both worlds, frankly. Lewin isn't convinced the grid is actually more reliable and But you definitely end up with this higher prices. So what is Texas to do when the weather is getting hotter and more people are moving in? Some people say the state needs to build more natural gas power plants to come online when demand spikes. Lewin says Texas needs to address energy demand, like improving energy efficiency.

That needs to be brought into the market, both for reliability, because high demand is one of the biggest risk factors in whether or not we're going to have blackouts, and to help lower bills. Bills that will continue to weigh on low-income Texans this summer. There are programs that can help. One is run by the nonprofit Baker Ripley in Houston. Desiree Davis runs the utility assistance program. The need for the program, the assistance far outweighs the amount of funds that we have. Some requests for aid come after power has already been shut off.

Last summer, Baker Ripley helped 34 households get their lights back on. In Hot Summer Months, Davis says electric bills can increase 25 to 50 percent. It can be especially tough for those on a fixed income. When I was a customer service representative, was a senior that I still work with to this day, that she literally was considering taking her own life because she was struggling to pay her energy bill. She says many have to choose between keeping the power on or paying for their meds or food.

In Houston, I'm Elizabeth Trowval for Marketplace. Music Daniel Ackerman was telling us earlier about how some restaurant chains aren't doing so hot. Well, on the opposite side of the coin are restaurants so popular that a whole reservation resale market has popped up to capitalize on eager diners. Just like ticket scalpers are driving up the price of concerts, restaurant scalpers are demanding hundreds of dollars to simply get a seat at many popular eateries in big cities. Adam Isco wrote about these third party sellers for The New Yorker. He joins me now. Adam, welcome to the program. Kristen, thanks so much for having me. It's great to be on the show.

I feel like this is totally anecdotal, but I feel like it's harder to get a reservation these days, whether it's a fine dining restaurant or a buzzy burger joint. What's changed about the way we actually get a table? Well, I mean, I think reservations have always been sort of tricky in New York and in other places. You know, they've always sort of held a cultural currency. You know, it was very hard to get a reservation at the Four Seasons in the 60s or less, circa in the 80s or per se in the 2000s.

But I think today, as you point out, things are pretty crazy. They're very different. And a big part of that, I think, is that there's an entire secondary market to buy and sell reservations online. Yeah. So say I want to make a reservation at a buzzy place that's been booked for weeks. What are those new ways? What are my options? I want to make a reservation at a buzzy place that's been booked for weeks. What are those new ways?

What are my options? So, what we see when we log in to OpenTable or to Rezzy, when we're trying to get that hard to grab reservation, is not really a reflection of reality. These sort of buzzy, trendy restaurants in New York or LA or wherever we are, are only listing a fraction of their tables online. And this is not entirely new, right? Restaurants have held back tables for celebrities and for VIPs and for big wine spenders

and for friends with a manager, you know, you name it, forever. But the tables that we do see were likely to only see them for a few minutes. And after a few minutes, a bot or a table scalper, they grab the reservation and then they sell it back to the highest bidder online. Who are these scalpers?

Are they refreshing, you know, the reservation page like the rest of us? Yeah, I mean, they call themselves mercenaries, they call themselves hustlers on a website called appointmenttrader.com. So you have, you know, an Ivy League college sophomore using a bot to make a reservation. And you also have industry insiders, hotel concierges, bartenders, matredes, line cooks, in some cases risking their jobs to sell reservations. One of the more interesting stories that I heard was about these college kids from affluent families who are borrowing their parents' Amex black cards,

telephoning the Amex Centurion concierge, having them book a hard to get table, and then reselling that reservation online. Oh, wow. So people are going to really extreme lengths to make reservations, but then to sell them online. I guess that means things are pretty profitable. How profitable is this market? You know, last year, Appointment Trader sold almost $6 million in restaurant reservations, but the hustlers, the mercenaries, the table scalpers, they're making a lot of money too. I talked to one student at Brown University who said he's making between $70,000 and $80,000 a

year selling reservations. Right now, if you were to log on to get a 5 o'clock to-top at Fort Charles Prime Rib in the West Village in New York, the going price is $410. And that's before you even sit down for that $130 dry-age bone-in rib-eye steak. Yeah. Well, a lot of the restaurants you talk about are sort of elite, trendy, higher-priced restaurants, but are restaurateurs worried that this reservation resale business might trickle down into more average or casual dining? Yeah, I mean, you know, I think one really important caveat to all of this is that it

all really depends on where you want to eat. There are perfectly good tables at perfectly good restaurants all over town where it's not all that hard to get a reservation. I mean, I think there's an astounding amount of eateries in New York, something like 25,000 restaurants. What we're talking about here are the really hard to get into buzzy spots that are coveted by a certain group of folks that really want to go out to eat for a special occasion or a date night or whatever it is. I think it just sort of remains to be seen whether or not this will trickle down into those other 10,000 restaurants. We'll just have to see. So there's an element of data sharing here between these apps, and some reservations can actually track, say,

how much you spend on wine. How are restaurants and these companies are collecting data thinking about that? You know, high-end restaurants have always taken notes on their guests, whether they're writing in your profile that you're a HSM, a Heaviset Man, or a WW, a wine whale, if you spent big on wine. But now, as you mentioned, these digital reservation platforms are helping restaurateurs keep track of much more about us as diners. How often we visit, how big our tabs are, do we just sort of sit there at a nice table with a single cup of soup between the two

of us? So I do think that we have a sort of a new model emerging, just like other aspects of our economy with restaurant reservations. Adam Isco wrote about reservation scalpers and brokers for the New Yorker. Adam, thanks for chatting. Thanks for having me. Appreciate it. ["Jingle Bells"] Coming up.

We will always give you a Christmas bonus in some way. A promise is a promise, no matter how early it's made. But first, let's do the numbers. The Dow Jones Industrial Average fell 196 points, half a percent, to finish at 39,806. The Nasdaq climbed 108 points, 7 tenths percent, to close at 16,794. And the S&P 500 ticked up 4 points, just under one tenth percent, to end at 5308. We heard from Stephanie Hughes about business at the Port of Baltimore. Let's check in on some boat and shipping related stocks.

Carnival Cruise Lines, which operates 27 cruise ships around the world, swelled 7.3%. Shipping company Matson, based in Honolulu, Hawaii, lost 9.10%. $35.5 million! That's the final price paid for Andy Warhol's artwork Flowers at a Christie's auction last week. Another florally themed piece of art, Georgia O'Keeffe's Red Poppy, went for $16.5 million at the same auction. Bondspell, the yield on the 10-year T-note rose to 4.44%. You're listening to Marketplace. My name is Lee Hawkins. I've been a journalist for over 25 years. On my new podcast, What Happened in Alabama, I get answers to some of the

hardest questions about how things came to be for many black Americans and the truth that must come before any reconciliation can happen. I investigate my family history, my upbringing in Minnesota, and my father's painful nightmares about growing up in Alabama. What happened in Alabama is a new series confronting the cycles of trauma for myself, my family and for many Black Americans. Listen now. Hey, everyone, it's Rima Grace, host of This Is Uncomfortable. If you're looking for some good recommendations on books to read, well you should join This

Is Uncomfortable's Summer Book Club. Every other week in our newsletter, we'll share a new book that'll make you rethink your relationship to money, class, and work, while also featuring an interview with the author or an expert on the topic. Plus, when you join, you'll be entered in a giveaway where you could win some This Is Uncomfortable merch. Be sure to check it out. Sign up today at marketplace.org slash book club.

This is Marketplace. I'm Kristin Schwab. Wildfire season is just around the corner in the western part of the United States, and each year it gets harder for homeowners to buy insurance as more insurers limit their coverage in disaster-prone areas. Dozens of states have safety net plans to fill the gaps. California's is called the Fair Plan. It's supposed to be the home insurance of last resort, but now it's the only option for a growing number of residents. Scott Rod from KPBS in San Diego has more. Paul Felber is showing me around his two acre property in East San Diego County. It's lush and green after this

year's winter rainstorms. So I'll just come down in here and I'll take out the stuff that I don't want so that I can weed whack all around it without taking this out and I'll just leave it there." The 72-year-old retiree doesn't just maintain his yard, he's trying to transform it. What I really wanted to focus on was trying to restore as much as possible a native plant community on this property. There's a certain Zen ritual to it all. Yank out the non-native mustard and star thistle plants. Nurture the budding penstemons and California lilacs.

Come next year, he'll do it all over again. And Felber says that's not the only challenge with his property. I live in a high-fire risk. In fact, I live in an extreme high-fire risk area. Felber has cut back much of the flammable vegetation bordering his home and spent more than $60,000 to harden it against wildfire. But home insurance companies weren't impressed. In the last five years, the Felbers were dropped by two different companies. Nobody else was available to insure our property so I

ended up on the California Fair Plan. That's the plan for properties that otherwise can't get insurance. I'm paying about $5,500. That's way more than the $1,500 yearly premium he paid several years ago. It's an increasingly familiar story in places threatened by climate-fueled disasters. Safety net insurance plans in Florida and North Carolina have ballooned in recent years due to hurricane risks. In California, where wildfires are getting more extreme, the number of Fair Plan policies has tripled since 2018 to more than 375,000.

It's been a tremendous increase in a very short period of time. Victoria Roach is president of the Fairplan. She testified this spring before a committee in the state assembly. Victoria Roach, President, Fairplan, California There's not a lot of options out there for people and so instead the Fairplan is quickly moving to be the first resort for a lot of people. The Fairplan is a state mandated insurance pool run by insurance providers that do business in California.

But it's costly for homeowners and doesn't provide comprehensive coverage. So the idea has always been to move people back into the traditional insurance market as quickly as possible. Still, these days, many homeowners find themselves stuck on the safety net plan for years. The growing fair plan is really what keeps me up at night. Ricardo Lara is California's insurance commissioner. It puts the highest risk properties into one pool. That means a bad wildfire season could destroy many homes on the fair plan, triggering an

avalanche of costly payouts. And that could drain the plan's financial reserves. Lara says this scenario would further destabilize the state's insurance market. Getting people off the Fair Plan and back into a competitive market is one of my top goals. Lara has proposed a plan that would require insurance companies to write more policies in fire-prone areas.

Though there's a trade-off, the state would make it easier for those companies to raise rates. Lada believes the reforms will bring more competition and predictability to California's shaky insurance market. But Felber, the retiree outside of San Diego, says he'll believe the change when he sees it. It leaves me hanging out in the wind while from my perspective, corporate America and government try to come to some agreement, which usually, in my experience, takes a long time.

While he waits, Felber's yard will keep him plenty busy. After all, the invasive catsear plants this year have been especially stubborn. In San Diego, I'm Scott Rod for Marketplace. We've been taking the economic temperature across the country today, starting in Maryland, then moving to Texas, also California. We'll head now to North Dakota to check in with one of our retail regulars, Ashley Morgan. She owns Unglued, a gift shop in Fargo, North Dakota. The retail side of our unglued life has been great, actually. And it's honestly been unexpected because last year in 2023, we moved into a new marketplace and we really didn't know

what we were doing. And if it was going gonna work out, but this last year and this year to date have been like blowing out of the water how it was when we were downtown actually. So when we moved our shop into in 2023 to this new marketplace, our sales just increased with us moving there. And so that's really allowed us to increase some of the wages that our crew has. And as we add on more positions, like we can start them at a larger base pay. It was just this past month we gave everyone basically it was like a, it would be an 8% raise. And then at the end of the year too, we expect to be able to do more of like a bonus,

because I kind of live in the Christmas vacation world of National Lampoon where I'm like, we will always give you a Christmas bonus in some way on the retail side at least. So summer events definitely drive up our revenue as well. They are a ton of work. So I'm definitely learning to appreciate the labor costs of putting on literally any event. And so we're kind of tracking that a little bit more closely too, because with events, you'll have this like huge spike of cash flow. But with our type of event, that's all very craft and supply heavy and instructor heavy, that goes down pretty quick.

And so we do have a lot of cashflow, but it doesn't necessarily stay with us. So we're trying to be more smart about it and evaluate it better to make sure that we're actually charging appropriately for events. For the longest time, I was not paying myself very much at all. And I used to be a nurse. And I'm finally getting closer to my nursing wage that I had 12 years ago before I started Unglued.

And that has really, for us, has allowed us to pay off more personal debt that we racked up when our shop failed super hard in Sioux Falls. And so we are finally focused on that first. But I can't live without traveling. And so it's also allowing for us to do even small trips and probably a bigger one this fall. I think this fall will be the time that we actually do it to kind of celebrate. That's Ashley Morgan in Fargo, North Dakota. Remember, we can't do this series without you. Tell us about your economy at marketplace.org slash my economy. This final note on the way out today, it's another sign that consumers are near their

inflation breaking point. Saw this in Reuters. Target says it's cutting prices on thousands of basics, things like milk and diapers, as shoppers pull back on spending. And it's not the only name trying to lure people in with deals. The same Reuters story says McDonald's is considering launching a $5 meal deal. The burger chain first started selling its dollar menu right around the early 2000s recession. Our daily production team includes Andy Corbin, Elise Hassan, Maria Hollenhorst, Sarah Leeson, Sean McHenry and Safria Terenzio. I'm Kristin Schwab.

We'll see you tomorrow. This is APM. Hey everyone, it's Rima Grace, host of This Is Uncomfortable. If you're looking for some good recommendations on books to read, well you should join This Is Uncomfortable's Summer Book Club. Every other week in our newsletter, we'll share a new book that'll make you rethink your relationship to money, class, and work, while also featuring an interview with the author or an expert on the topic. Plus, when you join, you'll be entered in a giveaway where you could win some This Is Uncomfortable merch.

Be sure to check it out. Sign up today at marketplace.org slash book club.