FUNDAMENTAL ATTRIBUTION ERROR

Posted in Rants on December 1st, 2014 by Ed

A restaurant near my house went out of business recently. This is not at all an uncommon occurrence – turns out that it is very difficult to operate a small business profitably in a city where nobody has any disposable income. The owners announced the closure on social media and indicated that they may try to re-open across the river in East Peoria, a miasma of strip malls resulting from a "planning" strategy of handing out tax abatements to every national chain store and franchise restaurant on Earth.

The announcement degenerated into a rant about the unreasonable cost of doing business in the city; essentially, the owners were prevented from making a profit by the onerous licensing and sanitation requirements imposed by local laws. This is a very common complaint when businesses fail and, although this makes me kind of a terrible person, it always amuses me. It would seem to me, with all the ignorance of a non-business owner, that if other businesses are able to stay open with the same requirements and the failed business was making so little money that paying for licensing put it under, it probably wasn't a very well run business. The worse their business does, though, the more their rhetoric sounds like right wing anti-government boilerplate.

Perhaps it is the government's fault that this business failed. Or perhaps, as I humbly suggested to my friends who lamented its failure, one might consider:

1. The business opened right next to the university campus on May 1, exactly nine days before the summer break began and the entire campus emptied out. As the location – literally called "Campus Town" – is in an area of the city not regularly visited by the non-student population (As with most cities, white flight took most of the population and wealth to the outlying areas in the 80s). So, respectfully, that was pretty goddamn stupid.

2. Lunch specials (most of the business in this area is daytime, since the area gets stabby at night) ran about $10-14 with tip. This might not seem expensive to people in a real city but here it is a serious liability. Central Illinois is the land of the shitty chain buffet – people want to pay very little and eat like pigs. The food at this failed restaurant was excellent and far better than the other options in the area, but college kids and Central Illinoisans are cheap and it's hard to stay open when you're surrounded by a half-dozen other restaurants selling $5 lunches. Cheap shit does well here, whereas better but more expensive food struggles to sell. If the owners didn't realize that before opening (a nearby Indian restaurant just went under in the Spring) they didn't do much research.

3. The restaurant also made the mistake, usually fatal in Central Illinois, of serving "ethnic" food, in this case Middle Eastern-type cuisine. While falafel and shawarma are not particularly foreign in most of the country, these are not well known here in the mid-1990s. Successful ethnic restaurants here tend toward cheap, crappy Mexican and cheap, crappy Chinese takeout. I'm not saying that people in the city would be totally unwilling to try "new" kinds of food, but certainly the owners were taking a risk here in the land where Ranch Dressing and American Cheese On Everything is standard operating procedure.

4. The costs of doing business imposed by the city – taxes, licensing, fees, etc. – are not exactly a mystery. You don't have to answer three riddles from a mythical beast to learn about your fixed costs. If they were shocked to learn that they needed a license to operate a restaurant or how much it cost, that points to poor planning. I suppose local governments could spring surprise new requirements on businesses, this place was hardly open long enough.

5. It opened in the dreaded Place That is a New Restaurant Every Nine Months location. This is well recognized as a negative in the bar and restaurant industry.

I don't know the intimate details of the life and death of this business. All I am suggesting is that there are quite a few potential red flags, certainly enough to suggest that perhaps the biggest problem is not that the city charges too much for the necessary licenses. Small business owners and other Job Creators tend to be an anti-government lot, and there is no doubt some justification for that. I'm sure any business owner could cite examples of rules and requirements they consider burdensome or frivolous. That said, it certainly is disproportionately popular as an excuse for the failure of businesses to profit or profit as handsomely as the owners think they should. We all love having someone else to blame when things go down the shitter, but how often does that explanation hold up to scrutiny?