econlife - A Tale of Two (Very Different) Restaurants by Elaine Schwartz

Used to be that a restaurant was where we talked, and ate, and relaxed. Maybe we had some wine and good food. At Prune, in Manhattan’s East Village, our dessert could have been the sugared black plums on warm buttered toast (pictured above).

In this three-year-old image of Prune, you can see it was tiny and cramped…and diners loved it:

Now Prune has closed, maybe forever, maybe not. But in Midtown, Junzi remains opens. Let’s look at the difference.

Two Restaurants

Prune

Days before Prune closed on March 15, its owner saw her revenue cascading. It slid from Saturday’s $12,141 to Thursday’s $2,093. Hours after the owner decided to shut down, so too did the city. Gathering her 30 employees, she knew she could not afford her payroll, sales taxes, rent.

As Gabrielle Hamilton explained, in her 20 years in business, she had survived 9/11, Hurricane Sandy, and the Great Recession. But the coronavirus was different. Her dining recipe had brought success until we started to worry about social distancing.

She said she thought about take-out, an app, and a delivery service. But her style was too different. Yes, she has 10-year lease so reopening is a possibility. But her side-by-side 24 inch tables will no longer work.

Junzi

On West 41st Street in Manhattan, Juntzi Kitchen is open. No longer serving the tourist or office crowd at lunchtime, its fast casual Chinese food is ready for delivery. When Yong Zhao realized he needed to tweak his business model, he stocked up on larger takeout containers. Instead of single portions, he prepared larger family friendly meals. He had a chef streaming heating directions to all who ordered a three-course dinner. His logistics facilitated Grubhub deliveries and customer pickups.

In 2019, Junzi looked like this:

Now, the tables are gone and Yong is planning for the future.

His friends in China tell him that they seat parties of three or less at every other table. Diners have an app tied to their national ID number that tracks temperatures and contacts. A sign in front documents the establishment’s cleaning schedule, health stats, employee data. Yong’s plans could be similar.

Our Bottom Line: Land, Labor, and Capital

Called the factors of production, land, labor, and capital are the ingredients in every good and service recipe. Only months ago, a restaurant’s land, labor, and capital depended on the owner’s vision. People like Gabrielle Hamilton wanted a cozy establishment with her own kind of cooking. Her 30 employees included servers, bartenders, and a sous chef. Her tables, her stoves, and the chefs’ treasured knives would be in a list of her capital. As for the labor, they formed a sort of family. Regular customers became a part of the group. They produced 14 services, were open for 7 days, served brunch and lunch. Now she has to decide whether to change her land, labor, and capital if she reopens.

But the owner of Junzi is ready to change his.

My sources and more: While the NY Times Magazine took a close look at Prune in 2017, Planet Money told the Junzi story in a recent podcast.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - What You Might See on a Ghost Flight by Elaine Schwartz

Airplane seats can be a problem, even when a plane is empty.

So Korean air decided to place all of the emergency medical supplies and agricultural goods it was transporting to Ho Chi Minh City in its Airbus 330-300 cargo hold.

Where are we going? To the ghost flights that are carrying cargo.

Ghost Flights

Whether it’s Delta in the U.S., Lufthansa in Germany, or Turkish Air, ghost flights are the new normal. Because passenger volume has evaporated, freight makes sense. In a Boeing 777, the baggage compartment can hold the equivalent of 33 Toyota Corollas. One American flight between Dallas and Frankfurt had no paying customers, just goods that included military mail and machine parts. During the return flight, the size of the cargo almost doubled.

American Airlines provided this partial image of its 777-300 cargo hold. Great for baggage but not freight, the hold is divided into smaller sections:

As a relatively insignificant slice of revenue, freight on a passenger jet is nothing new. Now though, it makes sense to carry much more. Fuel is cheap, pilots are paid whether they fly or not, and freight rates have increased. Furthermore, one condition of U.S. stimulus aid is that airlines keep flying.

Still, many cannot. The number of stored planes has soared:

Our Bottom Line: Land, Labor, Capital

As economists we could say we are just talking about the factors of production. Flying freight rather than passengers, airlines need to reallocate their land, labor, and capital.

The massive change in land, labor, and capital surely means that airlines like Korean Air and American, will just use their cargo hold.

My sources and more: Thanks to fivethirtyeight for alerting me to the air freight carried by passenger planes. From there, PopSci, FlightGlobal and Wired had all the details.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.