Actual Cafe & Victory Burger owner Sal Bednarz made the final decision to close his neighborhood establishments back in December sending a ripple of sadness across the North Oakland and Emeryville communities. Sal may have given up on trying to make his business work, but he hasn’t given up on Oakland. Sal has since turned his advocacy efforts and knowledge to helping other small businesses through his involvement with the Oakland Small Business Task Force.
The plight of Sal and Actual are not unique, and restaurants in particular are undergoing a very tumultuous time. “The core issue is an untenable cost of living” notes KQED Bay Area Bites writer Shelby Pope in this article Here’s Why 2016 Was Rough For Bay Area Restaurants. “It’s simply too expensive for someone to survive in the Bay Area on a sous chef, dishwasher or server salary–an issue that contributed to Oakland’s Actual Cafe and Victory Burger recent closures.” It appears our ongoing Bay Area housing crisis has put a squeeze on not only workers, but businesses and the consumer.
Oakland’s D4 Councilmember Annie Campbell Washington took a leadership role to preserve Small Businesses in her city and helped create the Oakland Small Business Task Force that Sal sits on (something Emeryville Council has flirted with for over a year but never followed through on). “I believe small businesses and artists are what make Oakland Oakland in many ways” she notes in this Facebook public post. This Committee has put together their preliminary summary and recommendations in the above presentation and will reconvene later this month.
We caught up with Sal to dive deeper into the challenges that small businesses are faced with and hopefully provoke our own Emeryville policymakers to take action to preserve our remaining neighborhood establishments … before it’s too late.
The E’ville Eye interview with Sal Bednarz:
EE: Your decision to close seemed abrupt to most. When did you realize that your businesses might not be sustainable longterm? Was there a “tipping point”?
SAL: I had considered closing a couple times before, but up until the final decision I felt like I had more possible solutions to the basic problem of the business not making money. I spent most of 2016 exploring different ownership structures, time sharing, partnerships, and considered outright sale of the business. At the end, the business’s cash reserves had been depleted, and the things we were trying were not showing enough promise to trust that we could achieve a necessary turnaround. The process of making the final decision happened during just a couple days prior to the announcement.
TL;DR: too many things went wrong, and too few went right.
EE: You alluded that you made some personal “missteps” that contributed to the demise of your businesses. Can you elaborate?
SAL: Like any business, it would have been great to know then what I know now. No need or desire to elaborate further. Maybe I’ll write a book about it someday.
EE: Many of the negative reviews I’ve read about your businesses are based on price (some on service which may validate your difficulty in hiring experienced, workers in positions of responsibility). Do you think most patrons understand the correlation between serving quality, organic, local ingredients, paying fair wages and the resulting menu prices?
SAL: Nope. And it doesn’t actually matter when those customers literally can’t afford to pay what it costs to produce that product. It’s the job of the business to balance the quality of the product with the cost to produce. We couldn’t have made the items we served cheaper, but we could have done a different menu which produced a less expensive product. Again, hindsight is different from foresight.
EE: When Measure FF rolled out, Oakland Mayor Libby Schaaf held a press conference with you and Chris Hillyard of Farley’s Cafe where she made a plea to the community to support local businesses. Did she or the City of Oakland follow up with any incentives or programs to help small businesses? Is there anything that our local governments could do better to mitigate the impacts of these mandates on small businesses like yours?
SAL: Minimal concrete action by City of Oakland so far. Annie Campbell-Washington did sponsor the creation of a Small Business Task Force at Oakland Council, and the Task force (of which I’m a member) has been meeting since early November, and delivered a report to the Mayor at the end of last month.
I hope that City Council follows the recommendation of the Task Force, and embodies a permanent Small Business Commission – this will create a platform which will help City government and others working on behalf of small business in Oakland to create strategy, maintain focus on important initiatives, etc. The Task Force will also recommend some organizational changes within City government, a new focus on collecting/consolidating/analyzing data about small business, and a PR campaign benefiting small Oakland business.
EE: Oakland Restaurateur Chris Pastena noted recently on hoodline.com that he would not open any new restaurants in Oakland “until the city gets a better understanding of how to work with small businesses.” noting “If you don’t put the focus on small businesses, then we’re going to end up with big box stores”. Do you agree with him that we’re heading toward a climate where chains thrive and small businesses struggle if we stay this course?
SAL: Yes – I’ve said so publicly. I’ve also repeatedly said that we’re building too many restaurants in Oakland, and that restaurant/bar development is rapidly outpacing customer growth (including residential, office, and tourism).
EE: You were supportive of Oakland’s Measure FF but withheld support of Emeryville’s MWO mostly because of the pace. Give us a snapshot of how an independent restaurant needs to adjust every time the minimum wage goes up $1 in terms of total payroll, raising your menu prices, or the additional business needed to offset these increases (We’ve read that every $1 increase in labor reduces restaurant margins by as much as 10%)
SAL: Minimum wage is not the only factor at play. Wild increases in residential rent, low employment, and rapidly growing competitive forces are all important. The combination of all these forces is difficult for any retail business to navigate, and the speed at which these things have changed (and continue to) means that many businesses (like mine) don’t have enough time or resources to adjust.
EE: Academic Studies, Labor organizations and even some fast food businesses have advocated that raising the minimum wage to $15 has a nominal impact on menu prices and actually boosts business because it creates more customers with disposable income. Do you think this paradigm applies to small businesses like yours?
SAL: Not immediately (see my answer above). These macroeconomic forecasts take time to unfold, and assume normal conditions in other areas. Also, just because the average menu price doesn’t increase much doesn’t mean that all businesses can afford increasing costs.
EE: What advice do you have for other small businesses in the region that are experiencing similar challenges and trying to hang in there?
SAL: You are not alone. Every small business owner I speak to is suffering from these forces. Some will be able to make it through, some won’t. It’s only you who can decide on which side you fall.
It is not a personal failure to walk away from a business which, in the end, won’t make it – don’t let your business destroy your personal finances.
If you are going to stick it out, you’ll need to stand up to certain customers who make a lot more money than you do as a small business owner, and who will complain because these conditions will force you to raise prices, and possibly simultaneously reduce your product or service offering. This won’t be an easy transition, and the criticism will be demoralizing. Make sure you have a hobby that makes you happy. Also, maybe have a spouse that can support you while your business is losing money, or investors willing to write you checks to keep you afloat. Just in case.
EE: We know your first order of business is to sell Actual Cafe & Victory Burger. Have you had any inquiries and what type of business do you think might thrive in this location?
SAL: I’m in contract with a great buyer. Fingers crossed that the process will unfold smoothly.
EE: What’s next for Sal? Will you stay in the restaurant business?
SAL: No restaurants for me in the near future. As I said, I’m a member of the Oakland Small Business Task Force, and I’m hopeful that I can find a way to work on behalf of small businesses across Oakland and collect a paycheck doing so.