It’s that time of year — time for Andrew Heaton to peel back the onion on the economics of one of my wife’s favorite films.
It’s just… Perfect.
I have nothing against the “buy local” crowd, the foraging crowd, or the urban gardening crowd per se. I have no problems with people liking each of the concepts. My complaints and problems with each of the groups stem from absurd and cult-like adherence to each dogma as if it were its own religion, forced on others, or taken to the extreme.
While buying local might be worse for the environment in some cases, or more expensive than mass-produced items shipped from a distance, people should be free to pursue the best course of action they see fit. Even if it means more harm to the environment and their wallet. Urban foraging, provided you’re not stealing from your neighbor — like chefs in local-food-crazed Portland are doing — is a little weird, but if that’s what you want to do, fine.
This recent story I read in Bloomberg Businessweek is an extreme example in buying local, urban gardening and foraging craze — or as I call it, going Authentically Amish (with apologies to the local furniture store.) A half hour outside of Albany, NY is Earlton. Here, there is a restaurant with a five-year waiting list.
The restaurant with the longest waiting list, five-years to be precise, is a small, nondescript, 12-table basement located in Earlton, N.Y ., named simply enough Damon Baehrel after its owner and chef. Its guests come from 48 countries and include such celebrities as Jerry Seinfeld, Martha Stewart and Barack Obama himself. However what makes Baehrel’s restaurant the most exclusive restaurant in the world is not the decor, nor the patrons, some who fly overnight from Manhattan to pay $255 for dinner (before wine and tip), nor the hype (although all the advertising is through word-of-mouth), but the food, which is all cultivated, grown, prepared, cooked and served from and on the property, and where Baehrel is literally the only employee. “I’m the chef, the waiter, the grower, the forager, the gardener, the cheesemaker, the cured-meat maker, and, as I will explain, everything comes from this 12-acre property.”
By that math, if this restaurant is open five days a week, with 12 tables and two people at each averaging $255 a head, Mr. Baehrel is raking in close to $1.5 million a year.
Bloomberg notes that it’s about half that, but still:
This hyperlocal, hyperunderground strategy is paying off. Baehrel won’t provide exact numbers but says he serves a few thousand guests each year and generates annual revenue of at least $750,000.
For foodies, visiting the so-called “Michael Jordan” of the movement has to be a big treat. There are similar restaurant concepts here in Washington.
But it is a cautionary tale of foodie-ism taken to the extreme. A five year waiting list? Must be nice if your last name is Baehrel, but to those wanting to go to a nice restaurant, pay a more modest price, and not have to wait five years, it’s good that the market offers other options.
The world would look a lot more like this if the extremist-type locovores were able to impose their whims on the rest of us, but that’s not likely to happen anytime soon. More likely, the locovores wage smaller, more winnable battles. And what start out as suggestions often become requirements later.
If you are among the Manhattan elite and can afford to pay and wait for such food, I hope it’s worth the wait. And to some, I’m sure it is. Nobody should begrudge Baehrel his success in offering something that clearly has high demand.
As for me, I’m happy to get my corn from where it’s most efficient to grow corn, beef from where it’s best to raise cattle, and my high-fructose corn syrup from the plant best able to deliver a quality product to the Coca Cola bottler near me. Or Mexican coke with that cane sugar. Delicious imports.
So long as the market isn’t unduly inhibited by regulations, locovores and free traders should both be able to enjoy the fruits of the harvest in harmony.
The timing for Griffin Hammond’s documentary on Sriracha sauce couldn’t be better. More on that in a bit. This holiday season, I highly recommend this 33 minute documentary, which you can buy for $5 on his site. Put it on a flash drive, tape it to a Sriracha bottle, and give it to a loved one as a stocking stuffer.
My only complaint is that I wish it were longer and included the current fight over the ability of Huy Fong to sell its products.
Fans of the sauce will especially love the film, and those who can’t stand anything spicy will still find the story of it fascinating.
Hammond tells the story of one of America’s favorite hot sauces with a cult-like following from a societal perspective, from that of David Tran, the Huy Fong company’s founder, and from a historical perspective about the sauce’s origins in Thailand. Now, Sriracha isn’t my favorite hot sauce (it’s hard to pick one), but it was one I stupidly avoided at burger joints. I’m happy to admit I am wrong, because this sauce is wonderful.
Just the “how it’s all made” portion of the documentary, which is well-filmed and produced, would be enough to interest me. Hammond bills it as “The origin story of an iconic hot sauce, finally revealed.” He’s not lying.
Tran, the founder of the most known version of the Sriracha-type chili sauce (with a green cap and a rooster on it), came to the U.S. by way of Hong Kong after the fall of Saigon. As an ethnic Chinese man, he wasn’t really welcome in Vietnam after it went communist.
In 1980, he founded his company, selling his version of the Sriracha sauce in the Chinatown neighborhood in LA to local restaurants. The company’s name? Huy Fong — the name of the ship that saved him from communism and a society that didn’t welcome him.
He has never marketed his sauce, though fans appear eager to do so for him — including the webcomic The Oatmeal. Tran seems more interested in bringing his product to the masses.
Much success has come to David Tran and his chili sauce factory. His former factory was once a Wham-o factory that made frisbees and hula-hoops, but demand grew too much. So, in 2010, he arranged for a bigger factory — a few times the size of his old one — in nearby Irwindale. In 2012, he sold 20 million bottles of the stuff.
In the making of chili, during the fall harvest, the peppers need to be pureed and mixed with other inputs at the most ripe point, when they are red. So, for much of the ripe-times for these chilis, the Huy Fong plant excretes a delicious chili aroma. Then it’s aged and stored before it is bottled and sent out.
Irwindale’s citizens, fewer than 30 of the city’s 1,400 residents– including a city councilman’s son — complained about the chili odor. And because of this, the city sued, saying the smell of chili was a “public nuisance.” This, after Tran and Huy Fong installed filters not once, but twice in response to complaints. The South Coast Air Quality Management District visited numerous times, but didn’t cite Huy Fong for violations.
Tran won the first round, but on appeal, the city won — even though the judge said there was a “lack of credible evidence” tying health problems to the factory’s smell — on the public nuisance complaint. For now, it doesn’t matter that much until next fall, since the harvest is over. The fight, though, isn’t.
According to the LA Times, some of the closest neighbors to the plant, however, fail to see what the problem is:
Sal Hernandez, a 75-year-old former Irwindale councilman who lives on Azusa Canyon Road, just a few houses from the Huy Fong plant, said he has never noticed a smell. He said he was surprised the city went after the maker of Sriracha hot sauce so quickly and aggressively.
“It hasn’t bothered me yet. I haven’t had any effects from it, and I’m right next door to it,” Hernandez said.
A former reserve police officer who has lived in the city for more than 30 years, Hernandez said few people go before the council to complain about the smell from other factories in town – like the huge MillerCoors Brewery or a dog food manufacturer on Arrow Highway.
“Things we should go to court for we don’t, and for this thing, we’re taking [the Sriracha company] to court,” he said. “I’m surprised. They were praising this thing before they even came in. Everyone was praising it.”
Praising it, indeed. The city even went out of its way to attract those Huy Fong jobs, offering a really good loan for a small town that, when you think about it, is kind of nuts.
The LA Times reports:
Huy Fong Foods decided to locate its factory in Irwindale three years ago when the city offered a loan with “irresistible” terms: pay only interest for 10 years, with a balloon payment at the end.
Huy Fong took the loan and contributed $250,000 a year to the city of Irwindale each year as part of the deal, Tran said. The company then built a $40-million factory that at full capacity could generate about $300 million a year in sales, according to Tran’s statements.
But after complaints about the smell began last year, Tran said he began to get an “odd feeling” about the city’s behavior. In response, the company has taken out a loan with less favorable terms from East West Bank to pay off the city’s loan.
Could Irwindale be suffering from buyer’s remorse? Perhaps. The town with 1,400 people did offer to front a loan for Huy Fong similar to the interest only mortgages popular before the housing crash in exchange for jobs and commerce, which seems like a bad idea. Tran’s premonition led him to pay off the loan early, like some TARP recipients did in the wake of the financial crisis when the Treasury imposed special regulations on loan recipients.
Or is Irwindale angling for a settlement deal? Also possible.
The city could be taking action for all 20-some citizens who have a problem with the plant, though based on former councilman Hernandez’s comments, the city’s actions seem strange — like that of a spurned crazy ex-girlfriend.
One thing is for sure, taking loans from the government may save you money up front, but the special terms of the deal often appear after you’ve signed on the dotted line, as seems to be the case here.
Tran looks like he is taking this personally. He put up a big banner that reads “NO TEAR GAS MADE HERE” and hung it out in front of his factory. The sign gives the impression Tran plans to fight this in court, but the company is largely keeping quiet.
Los Angeles County, where Irwindale is located, has a higher than average unemployment rate — 9.5% as of October. Like the Dollar Shave Club commercial says, “I’m no Vanderbilt but this train makes hay” — Tran’s brought commerce to Irwindale, but do they really want this litigious NIMBY reputation? It doesn’t appear the city has put much thought to the trade offs such a lawsuit brings.
If Irwindale’s sudden and bizarre reversal weren’t enough for Huy Fong, the state of California has made matters worse.
According to a report by ABC News:
The Southern California-based maker of Sriracha has been told it can’t ship any more of its popular hot sauce to food distributors until next month because the state Department of Public Health is enforcing stricter guidelines that require a 30-day hold on the product.
Health department spokeswoman Anita Gore told The Associated Press on Wednesday that the 30-day hold is needed to “ensure an effective treatment of microorganisms present in the product.”
The move by the California Department of Health might be seen as suspicious by some, given the timing. But it appears that the regulation that went into effect wasn’t specifically targeted at Huy Fong.
LA Weekly reports that the 30-day requirement “has existed for years but that it was recently modified in a way that now applies specifically to Huy Fong’s hot sauces.” The Department of Health cited federal regulatory law as the justification for the change in their enforcement, despite the sauce being produced there for over 30 years. The regulations were changed in 2011, under the Obama administration, state that companies that deviate from the scheduled process for acidified food must “set aside that portion of the food involved for further evaluation as to any potential public health significance.”
California has stricter rules than the rest of the U.S. for guns, cars, and apparently, hot sauce.
One wholesaler is very unhappy, telling ABC News that he’s already received 30 angry phone calls — more than the total number of complaints in Irwindale — about the problems it’s causing. Unfortunately for consumers, they don’t have a city to sue on their behalf, only David Tran, Huy Fong Foods and his legal team. The delays, the wholesaler says, could cost him $300,000 in lost business.
Other cities’ officials are trying to lure Tran and his company to relocate to their city. One such place is Philadelphia. While it’s unlikely Huy Fong — which only uses one chili supplier — would ship its chilis across the country in an expedited manner to make their product there, nearby Arizona and Nevada might be a better fit.
In the film, Tran tells us that if people no longer like his product, he’ll stop making it. His product’s popularity isn’t the problem at present — it’s California, and Californians. David Tran waited a month on a ship to escape Vietnam, so Irwindale should expect no lack of patience from him.
I doubt Tran will go full Atlas Shrugged and deny foodies, hipsters, and hot sauce fanatics his great product. But its fans should take notice to see what the NIMBY crowd and regulatory overreach is doing to one of their prize condiments. Don’t expect any hilarious criticisms of regulatory overreach by The Oatmeal. Unless Tran wins in court, the price of Sriracha is set to rise, or the California label might be coming off the bottle.
At work today I noticed an interesting blast fax on our fax machine. “New Jerseyans Support Farming Initiatives” read the headline. It was from Farleigh Dickinson University’s Public Mind Poll and it was co-sponsored by the New Jersey Farm Bureau.
And according to this poll, 80 percent of New Jersey residents “support the continuation of public funding for the preservation of … farmland.”
Yes, you read that right. Public funding for preservation of farmland. Market forces be damned!
The reason? You guessed it. Buy Local!
According the poll, 77 percent of New Jerseyans say “they or a family member have purchased locally grown produce at a farm stand or farmer’s market in the past 3 months.”
To New Jerseyans, what does “local” mean? The poll tells us. 44 percent say anywhere grown in the state should qualify, while 17 percent think it should be within 30 miles of the store, and 13 percent think it should be within 50 miles. The remaining 24 percent were a little more liberal with their definition of what truly counts as “local.”
The poll went even further, asking whether New Jerseyans would be willing to pay extra for locally grown produce. Amazingly, 66 percent said they “would be ‘very’ or ‘somewhat’ likely to pay 10% extra” while 56 percent would be “‘very’ or ‘somewhat’ willing to pay 25 percent extra.”
New Jersey Farm Bureau President Rick Suydam closes the blast fax with this gem: “We always believed that New Jerseyans understood the importance farming has in the state and the collective results from this survey confirm that our residents fully support farmers and agriculture in the great Garden State.”
If it were true that residents “fully support” New Jersey farmers by choice, they wouldn’t need the public funding.
Update: A friend writes:
New Jersey also redefined what it considers “farmland” in the last year or so to increase their tax base and to stop suburbanites from selling tomatoes to their neighbors to claim tax breaks. (Farmland is taxed at a very low rate, much lower than homes or businesses.) They’re playing both sides of the fight
The resurgence of luddism is something that, while seemingly innocent, is frankly quite troubling. Neo-luddites take many forms these days — from the buy local crowd, the organic obsessed, make-work Keynesians to actual, straight up luddites. (I guess make-work Keynesians are sort of the same thing…)
As I’ve previously criticized the cult-like behavior of some buy local and organic folks, I’ll issue the standard mea culpa: Buying local or eating organic foods is just peachy in my book. Go for it. Go hog wild, but please don’t proselytize your lifestyle choices with clapatrap.
Go to the farmer’s market and buy “local” food from two states away. I’ll get food from Walmart that is even more local, and because they have economies of scale, it’ll be better for the planet than the F-250 that drove 500 miles with your kale (now with a free side of sanctimonious bullet points for lecturing!).
What bothers me about the neo-luddite cultists, aside from their lecturing, is that they don’t just lecture you about your choices, they often want policies to favor their choices.
Here’s a brief hypothetical look into what America would be like if some of these yahoos got cart blanche.
Garlic. Grown pretty much everywhere but Alaska. The U.S. ranks eighth in the world in garlic production.
Agriculture policies are changed, and no longer can you get garlic from Mega-Garlic, LLC. Your garlic now has to be locally grown, organic, and machine free.
This is what that would look like:
These are women peeling garlic in North Korea.
Throughout the rest of world, we have machines that do this. They’re pretty neat actually. They reduce labor costs and increase efficiency.
Even though I think that buying local for local’s sake is dumb, I realize that most people who love buying locally or people who love organic food (as opposed to that inorganic stuff we all normally eat) don’t espouse making their lifestyle choices mandatory for the rest of us. My example, North Korea, is a pretty extreme example. However, some people do think like that.
Many others propose watered down versions of this extreme, which is still pretty bad.
Every so often, I go to the local grocer and purchase a dozen or so English muffins, a package of Virginia’s finest breakfast sausage patties, a dozen eggs, and a few slices of American cheese.
Weeks later, half of the eggs are still there and so are about half of the English muffins. I throw them away, and it bothers me because while these items are not terribly expensive, I don’t like waste. Which is probably why I keep them there after they’ve expired. Sort of like a penance for buying improperly, Wilbur — Zuckerman’s Famous (and now dead) Pig — stares at me through his coin-shaped remains under cellophane.
Why do I even make breakfast? Sure, I could just toast the English muffins and throw butter on them, or toast some waffles and slather them with fake buttery syrup, but I want meat, egg, cheese and bread. Why? Because I’m an American. I want the whole deal.
The fact of the matter is, I shouldn’t be making breakfast. It’s not worth my time, because at the $30 or so an hour I make, I consider my time somewhat valuable. Sure, sometimes I feel accomplished getting up earlier to make coffee the old-fashioned way via the drip coffee machine I’ve had for 8 years, frying an egg on a skillet the way I learned by observing the cooks at Courtesy Diner in college while drunk, seasoning a sausage patty and putting it all together on a bun.
There’s a value to that, sure. An economic value? Why not? I’d give it the economic value of a dollar. Which is exactly how much it would cost me to buy a similar sandwich from McDonald’s.
I get a dollar’s worth of feel-good value making breakfast, so that means I start off at $1.00. Add in the ingredients, and I’m at $-1.50 or so, add in utilities (gas), I’m about at $-1.52. Add in the fifteen minutes of my time it takes to complete all of these tasks, and I’m at $-9.02.
That’s an expensive sandwich. And I haven’t even eaten it yet. (Don’t forget I have to clean the dishes!)
My calculus won’t work for everyone, some people value their time less, others will give the feel-good value of making breakfast more value. Others will make more efficient breakfasts, and others value a lack of calories more than I do.
For me, though, I’m happy to know that I’m just blocks away from places that can more efficiently and cost-effectively make this food for me, saving me time, money, and affording me more time for things I value more than cooking: work and sleep.
Note to self: don’t buy breakfast foods unless parents are visiting.
Assuming you are real (I’m guessing not), I wish you a Merry Christmas, even though your economic views are about as old and debunked as Santa himself.
P.S.- Nikhil, bringing back Christopher Hitchens would be awesome.
‘Tis the season to exploit seasonal holidays as a reason to promote economic nonsense and tell the many people who are employed by multi-national corporations (or national ones like franchises) to go fly a kite.
Because, according to “Locavores” anyone who isn’t employed by a local business or self-employed isn’t “real.” Right.
Remember kids, your neighbors who work for franchisees or even own franchises aren’t “real people” that support your community.
This holiday season, Bomble.com encourages you to shop for goods and services that provide you with the value you seek at a price you’re willing to pay, wherever that is.