By Sal Bednarz, owner of Actual Cafe & Victory Burger

Oakland Chinatown has a long history, dating back to the California Gold Rush, and was created in the face of open anti-Chinese sentiment and institutionalized segregation.  It was a close-knit community of Chinese merchants and workers who maintained much of their imported culture as an isolated and largely self-sufficient unit.  Although times have changed somewhat, some of this insular character remains. This means that, in many ways, Chinatown feels separate from the rest of Oakland.

So I’m happy to have recently connected with Carl Chan, who sits on the board of the Chinatown Chamber of Commerce. I reached out to him after I was interviewed for a TV piece about Chinatown restaurants struggling with the cost increases related to minimum wage, and he was very open about the challenges facing Chinatown today, of which increasing wage is just one (and might be the tipping point in some cases). Since that piece ran, it’s become clear that the story didn’t paint a complete picture, so I thought it would be good to take a hard look at this myself.

Here’s what I learned from talking to Carl:

Economic conditions in Chinatown are, in general, not following the trends in surrounding neighborhoods. Although the Port, Old Oakland, Uptown, Downtown and the Lake Merritt areas are booming in various ways, Chinatown is struggling.

Many restaurants and other merchants in Chinatown have found success over the years by competing primarily on price: They’ve found ways to sell a very similar product for a bit less, and gain price-sensitive customers and market share. This has led to an environment in which some are afraid to raise prices, knowing that there are others who might hold theirs low and aggressively pursue taking customers from their now-more-expensive competitors, even at the expense of a short-or medium-term financial loss.

Although there are some businesses which are really unique and have dedicated customers who will likely accept a higher-priced offering, those who primarily use price as a weapon are in a precarious position. Put another way: those who lived by the price cut might die by the price cut.

In addition to this already-challenging competitive environment, there are some other factors weighing on Chinatown: Chinese in surrounding cities have, over time, built restaurants and stores in smaller numbers, close to other pockets of Asian residents. Pacific East Mall and the surrounding businesses in Albany are a great example of this phenomenon. This means that many customers (Chinese or otherwise) are commuting to Oakland Chinatown less than they might have in the past.

Also weighing on Chinatown: the Port workers strike of this winter delayed key shipments of supplies for Chinese New Year. Like Christmas outside Chinatown, Chinese New Year sets the tone and pace for certain businesses for much of the year. Some perishable items spoiled while ships waited to dock, and the late delivery of non-perishables really hurt the Chinatown retail season.

All this is happening along with increasing food costs, increasing costs of real estate and other cost pressures that we face all over Oakland.

So, when faced with another substantial cost increase, some restaurants and merchants are deciding that they need to make more drastic adjustments. Some are changing their hours, some are closing altogether, but many are still deciding how they’ll manage the transition.

A worry that I hear (and that I think is valid) is that once a $12.25/hr wage becomes normal, the conversation will inevitably shift toward a $15/hr wage, which has been an anchor point in minimum wage conversations for the past year or more. Businesses are worried that once they navigate the first transition, they’ll be facing down the second, and might be in a worse financial condition than now. This is encouraging some of those businesses to think even harder about just shutting their doors.

An aside on this topic: Conversations are starting to develop about building a regional minimum wage strategy that balances the need to support low-wage workers against the stability of the local economy as we do so. I’m in favor of such a strategy, and I hope to see something concrete come from this effort. I’ll have more on that in my next piece.

Speaking for myself, I think of Chinatown as an Oakland resource that I don’t want to lose. I appreciate the cultural and economic contributions of merchants and immigrants of all sorts into Chinatown over generations. I think Oakland would be culturally much poorer without a strong Chinatown community.

But it’s clear that some things will have to change in Chinatown to adapt to new realities. Businesses which were already struggling to make a profit might just not be able to adapt quickly or effectively enough. As much as I’d hate someone to say this about my own business, it’s true: If the business is beyond saving, it’s best to cut losses and live to fight another day. But that cold economic fact doesn’t give any space to the discussion about the community impact of a significant number of businesses making this decision at the same time, and that’s got some folks (including me) worried.

It’s apparent that some Chinatown businesses might need to find other strategies to differentiate themselves. Rather than using price as the primary means to compete, they may need to focus on service and product instead. They might need to use different marketing strategies to reach non-Chinese customers, but need to do this carefully so they don’t alienate their Chinese neighbors.

Customers in Chinatown, as elsewhere, need to be educated about the realities of these low-margin businesses. If you trust in the economic forecasts which were used to support the arguments for increasing minimum wage (as I do), then these customers will see increasing wages as a result of higher minimums, and an increase in disposable income. But it takes time for these effects to manifest. Workers need to feel the effect of higher wages over a period of time before getting confident in their ability to loosen their spending habits, and rushing the process could break stuff and hurt people.

I’m doing what I can to help Chinatown restaurants by offering my experience and that of my Oakland restaurant peers to help those restaurants make good decisions. I’m also committed to helping spread the word about why I care about Chinatown and why I think other Oaklanders ought to do the same.

This piece is part of that word-spreading effort. There will be other parts.

We’re working together to get additional support from Oakland politicians, putting pressure on banks to loosen lending to small businesses and/or write down interest rates on current commercial debt, and identifying other resources that can be brought to bear.

This feels like the beginning of a long process and a significant shift in Chinatown.

So what can you do? Visit Chinatown. Remind yourself that it’s full of interesting restaurants and eat at your favorites. Tell the staff that you’d support them even if they raised their prices a bit. Let them know what you appreciate about their menu or service: It’s really hard for service businesses to get good feedback, especially when customers and owners/staff run in different social circles.

And remind yourself: Oakland is an exciting city because of the variety of experiences that can be had here. We don’t want to give in to the pressures that lead to the paving-over of those experiences, regardless of the purity or merit of the motivations behind them.


This is the third in a series of pieces discussing minimum wage as it impacts Oakland restaurants. Click here for parts one and two.

Editor’s Note: This piece reflects an individual opinion and is not a reported story from Oakland Local. Oakland Local invites community residents to share their views about events and issues in Oakland. For guidelines, see: http://oaklandlocal.com/guidelines.

For more information on posting to Community Voices, see The word on Oakland Local’s Community Voices posts.

3 Responses

  1. Rjack

    While everyone is voting for and rushing to raise wages, businesses are raising prices and hoping not to close up when they do. Remember you voted for it, now it is time to pay the new prices.

    Reply
  2. elizabeth

    3-parts to this series already and still no voice of the worker. The restaurant owners have spoken, but they’re not really the one’s dealing with the change (tip-vs-no tips), are they. When is OL going to feature a piece on the actual effect on the actual workers? And, it should NOT be written by a restaurant owner. That’s just ridiculous.

    Reply
  3. G

    Sal’s callous “let the business fail” conclusion is ridiculous. How would he feel if people around his business said that about his cafe, and it actually failed? Sal, what would you do then?

    Playing with economics is not a matter of liberal politics. Saying things like “businesses should focus on product and service” is a joke. Why? Because studies show over and over that consumers pick price over “product and service.” Know why Amazon is succeeding?

    I suspect those of you who advocate on behalf of workers at the expense of “capitalist small business owners” have steady jobs and paychecks, maybe from a medium to large size firm. You know NOTHING about mom and pop shops. Let’s NOT patronize Sal’s business. I think he’ll sing a different tune.

    Reply

Leave a Reply

Your email address will not be published.