San Francisco

San Francisco's Chain Store Restrictions Targeted Starbucks. They're Now Screwing Over a Local Burrito Joint.

Family-owned burrito chain El Farolito will have to change its branding or pick a new neighborhood to open up its 12th location if it wants to avoid being ensnared in the city's restrictions on "formula retail."

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Well, that's a wrap. San Francisco's restrictions on chain stores will stop a local burrito business from opening another location unless it makes sufficient changes to its signs, menus, or other branding materials.

On Thursday, the San Francisco Chronicle reported that the city's Planning Department had ruled that El Farolito—which has been serving up its "Mission-style" burritos since the 1980s—can't open its planned 12th store in San Francisco's North Beach neighborhood.

That's because the city's "formula retail" restrictions prevent businesses with 11 or more locations from opening in some of San Francisco's designated Neighborhood Commercial Districts—including North Beach.

There was an open question of whether El Farolito—whose owners have 11 locations throughout the Bay Area—met the definition of formula retail, which turns on whether a business has standardized menus, signage, facades, employee uniforms, color schemes, interior décor, or trademarks.

(A business is considered formula retail if it has two or more of those features standardized across at least 11 locations.)

El Farolito's owners had argued in a document submitted to the Planning Department that several of its locations were called El Favorito. Their planned North Beach location would only be the ninth El Farolito, and thus under the formula retail threshold.

A Mission Local article from August pointed out that some of the El Farolito–branded locations had different signage as well.

That apparently wasn't enough to clear the high hurdle established by the city's exacting chain store restrictions.

"Given the code's prohibition of formula retail uses in North Beach, this new El Farolito would not be allowed," Dan Sider, the Planning Department's chief of staff, told the Chronicle in an email.

The department, per the Chronicle article, did tell El Farolito's owners that if they made sufficient changes to one of their locations, "such as changing the menu or the signage, it would no longer be considered a chain," making an opening in North Beach possible.

That, however, raises the question of whether the city's formula retail restrictions violate the First Amendment's free speech protections. Whether or not a business can open a new location in the city hinges on the words it has on its signs and menus.

"The government doesn't have the right to be the speech police and to say lawful businesses can't open because they don't like how they describe themselves," said Robert Frommer, an attorney with the Institute for Justice, to Reason earlier this month. "A burrito by any other name is just as tasty."

El Farolito may not have to make a federal case out of its sign to get permission to open its 12th location. Neighborhood activists have already started a movement to amend the city's formula retail restrictions so that smaller family businesses like El Farolito aren't tripped up by this red tape.

"We should reshape these outdated rules to help fill empty storefronts and allow small businesses that are growing, but are not yet truly chains, to open in North Beach and neighborhoods across San Francisco," reads a petition started by local activist Danny Sauter.

Some of the city's politicians are also getting on board, with Supervisor Matt Haney saying, "El Farolito and Starbucks shouldn't be treated the same."

The El Farolito case is a good example of how the city's regulation of small businesses comes with all manner of unintended consequences. Fiddling with definitions until "actual" chain stores are prohibited but beloved local businesses can operate freely is going to be a difficult, near-impossible task (and one that will likely require a ballot initiative to implement).

Even if you can clearly distinguish between the El Farolitos and Starbucks in the city's code, that's likely going to require an even lengthier, more exacting definition of "formula retail" that will, in turn, require more paperwork from businesses applying for permits.

One other alternative would be for the city to stop micromanaging which businesses can operate where and what they can look like. That would probably require giving more freedom to entrepreneurs and customers than the city's current leaders are comfortable with.

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  1. El Farolito and Starbucks should be treated the same: let the customers decide how many locations will exist.

    1. I’d be willing to bet that El Farolito was part of whatever “local restaurant association” got these restrictions enacted. Hoisted by their own petard…fuck ’em.

      1. OK, you just totally made that up out of thin air, but, sure, “Fuck ‘em” based on pure speculation.

        1. As Overt says below, they benefited from this law, and to argue now for anything less than full repeal is just pulling the ladder up beneath them. They have been hoisted on their own petard.

          1. Or, you know, maybe they were busy running their restaurants and ignoring politics.

            1. Quite possible. But, they can’t just ignore away the fact that their competition has been artificially stifled by city regulations.

              1. Although to be fair, they’ve had to put up with a lot of regulations just to be doing business there.

                That city is so micro-managed its insane.

                Side note: I recently spent a weekend in SF and was amused to see that many places were window advertising for Trummer Pils. I couldn’t help but seeing it as Trumper Pils, and would have asked the bar tender for a glass of “Tumper Pils, please” if I drank.

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            2. “Or, you know, maybe they were busy running their restaurants and ignoring politics.”

              This asshole knows nothing about the food service industry in SF, or for that matter, most any major city.
              If you choose to open a restaurant, you have no option but to deal with politics.

          2. They have been hoisted on their own petard.

            The phrase was coined by French troops in the trenches of the Great War. A petard being a grenade, the phrase describes the result of failing to throw a grenade up and out of a trench and it rolling back down to where the thrower is crouched. It exemplifies suffering the consequences of a perfectly good plan that is poorly executed.

            That is not the case here. El Farolito just wants to expand the trenches without having to open up the field.

            1. Thank you for that bit of history.

              Merde!

            2. The phrase was coined by French troops in the trenches of the Great War.

              No, it wasn’t. The phrase appears in the second quarto version of Hamlet, dating to more than three centuries before the trenches of the Great War existed.

            3. Actually, it dates back to Shakespeare’s Hamlet in 1602.

        2. I’d be willing to bet you don’t understand the meaning of the phrase “I’d be willing to bet”.

          I don’t usually pile on when everyone calls you a mendacious idiot. Maybe I was wrong though.

          1. Don’t really care what a person thinks about me who would say “fuck ‘em” to the owners of a chain of restaurants who are being victimized by bureaucracy.

            In this commentariat, it is way too common of an occurrence for conservative commenters to just make random shit up and act like it is true, with zero evidence.

            1. You’re right Mike, supposing that a large local chain of restaurants would belong to the local restaurant trade group is just too far a leap.

              I expect the rest of your posts to be properly sourced or I’ll be calling bullshit.

              1. Dude, it wasn’t your assumption about the existence of a trade group that is never mentioned, and then on top of that El Farolito’s owner’s membership in said assumed trade group. It was your saying, “Fuck ‘em”, that I find highly objectionable.

                My posts are always properly sourced, so go ahead.

                1. It was your saying, “Fuck ‘em”, that I find highly objectionable.

                  And there is your tell, White Friday. Oops.

                2. I just had a fragment of blueberry skin come out my nose, I laughed so hard at “My posts are always properly sourced.”

    2. That’s the thing I have the most trouble understanding: why do these damned fools not understand that we, the people, are the kings of commerce. If we, the people, don’t like a store, we don’t patronize it, and it changes or goes out of business. Goes right along with all voluntary trades are good by definition, so why do statists not just leave we, the people, alone?

      And yes, I understand that statists hate individualism, hate the idea of we, the people, making up our own minds. But politicians are too damned stupid to actually think this through and arrive at their conclusion logically. They have only knee-jerk visceral reactions against individualism, and that is what I do not understand.

      1. It’s because we’re too stupid to know what’s good for us so they have to protect us from making the wrong decision.

      2. I agree that the regulations are very wrong, but it isn’t statism that is motivating them. In their minds they are fighting for individuals against gentrification and corporatizion.

        1. Yes; but what prevents them from seeing it all the way through? I understand people who hate big bureaucracies because I am one of them; bureaucracies exist once a company gets too big for everyone to know and rely on everyone else, individually, somewhere around 50-100 people. But if they can recognize that a small business is trustable because it is run by people, not bureaucrats, why can’t they recognize that customers are even more trustable?

          Statists seem to think that either government paychecks endow their recipients with wisdom and knowledge not available elsewhere, or that only the wise and knolwedgeable will want government jobs. If they think also that small businesses have a wisdom and caring that big businesses don’t, why not also recognize that individual customers care even more about themselves than small business owners?

          1. I honestly cannot explain their thought processes. The only insight I have is that San Francisco can be quite an echo chamber where nobody they interact with challenges them with a different point of view.

        2. “In their minds” Now there’s the problem. Who or what gives them the right to fight for anybody but themselves? Personally I think that the law is wrong.

          1. “Who or what gives them the right to fight for anybody but themselves?”

            The regulations suck, but they were passed by elected representatives at some point. The majority of San Franciscans actually vote for politicians who come up with this stuff.

            1. One vote every 2 or 4 years is not “voting for” anybody or anything. It would be like one vote for which store everybody will shop at for the next 2 or 4 years, and everything — food, clothes, entertainment, cars, houses — must come from that store.

              1. True, if the patter weren’t decades old by now.

        3. You’re making random shit up and acting like it’s true, with zero evidence.

          1. Sure. I lived in the Bay Area for a long time and knew many, many people there.

      3. It’s short sighted but it serves everyone’s interests perfectly.

        Politicians get to stand up to the big chains and collect a hefty contribution from the local restaurant association plus it’s what their gentrifying constituents want.

        Residents get to “keep” the flavor of their community by only allowing small local businesses into their community and they get to say they’re anti-gentrification (no new businesses to fill all those vacant storefronts but it beats having a McDonald’s in your neighborhood)

        Local restaurants get to keep competition out.

        Big chains won’t make enough from any of these locations to warrant making a big donation to several council members and all of these rich NIMBYs will just drive to some other neighborhood to get their whipped caramel macchiato.

        Everybody wins….except freedom. But when did a collection of politicians, NIMBYs, trade groups and large chains ever care about that?

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  2. Didn’t we already have this article a couple weeks ago?

    In any case, El Farolitos got to 11 restaurants because of these rules that they want changed. They could afford rent and avoid competition from national chains precisely because of these rules, and as a result it was easier for them to become this successful. If that is what you want for your city, it ain’t libertarian, but at least it seems to be working.

    Nevertheless, now that they have become successful, El Farolitos- like all good rent seekers- wants to pull the ladder up behind them. At 12 restaurants, they are a big chain now. They have the deep pockets, scaled operations and cash reserves to muscle out competition from smaller startups and they seem to be ok with that.

    I have no problem with getting rid of the rules all together, but modifying the rules some small amount is just a mechanism for a wealthy business owner to use the government to stand in the way of ALL competition, whether big or small.

    1. Yes, but the hearing hadn’t been held yet. Now it has, and it’s as stupid as predicted.

    2. Since there’s no evidence that El Farolito ever supported the rules, are you saying that they should have utilized resources to change them when they weren’t yet affected, otherwise they’re somehow guilty of something?

      1. Whether they supported the rules or not, they benefitted from them. And to advocate for modification of these rules rather than a full repeal is to pull the ladder up behind them.

        They should be arguing right now for a full repeal, or they should shut up and accept that the rules that allowed them to succeed at large competitors’ expense will allow a smaller business to succeed at their expense.

        1. They have met the enemy and the enemy is them!

        2. The existing rules will not allow them to tacover a larger share of the market.

          1. There’s always tamale, errr, mañana.

          2. That’s nacho father’s free market politics, that’s for sure.

        3. Whether they supported the rules or not, they benefitted from them.

          That’s the thing about ethics in politics. If you have to cheat to win because everybody else is cheating, then it is not unethical to cheat. But once you win, you have an ethical obligation to no longer cheat.

          The problem is that no one ever stops cheating.

      2. Stifling competition is indirect support.

  3. Maybe the North Beach location could be signed as “El Fuck the SF Planning Department Burritos”?

    1. They might get ACLU backing for that First Amendment case!

    2. I would drive up just to dine there.

      1. I’ll admit, I would make an effort to go there if I was in the area.

  4. El Farolito is paying the wrong graft.

    1. Nope, they paid it to get this passed. Now they’re going to have to pay again to get an exemption and they don’t feel like they should be squeezed twice.

      1. okay. change paying to past tense.

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  6. forget it, jake. it’s san francisco town

  7. Starbucks is a west coast coffee shop with a literary motif.

    The lesson is that they don’t want things that people have proven to like.

    My town is different. They really don’t like the start up restaurants because they too often fail.

    They let in the big chains, but they strongly prefer the “local” chains that have a proven business model. They’d let El Farolitos open as many locations as they wanted.

    1. And then I’ve seen cities like San Jose, CA where the redevelopment agency actively kills local businesses and brings in big chains because they seem to view them as more legitimate and prestigious.

  8. I think I ate fairly often at one of their locations, on Mission just S. of Ocean Ave.

    Got food poisoning once. Spent the evening retching into a harbor in S. San Francisco.

    That said, there’s really no reason to think they ever lobbied for the bill. The opposition to chain stores in SF doesn’t require astroturfing. The Woke locals just posture that way,

    1. Exactly. I’m not sure why NR=NR is so convinced he _knows_ that El Farolito’s owners backed these regulations, when there is no evidence of it.

    2. So if they change the name of that one joint you visited to The Vomitirium are they good??

  9. What gives SF the right to ban certain businesses it doesn’t like?

    If you don’t like taco bell, don’t eat there. But that’s never enough for the left. They have to stop *you* from eating there too

    1. Progs, that’s why.

  10. What gives SF the right to ban certain businesses it doesn’t like?

    If you don’t like taco bell, don’t eat there. But that’s never enough for the left. They have to stop *you* from eating there too

    1. Because once upon a time a city banned a business and no one pushed back. So all the other cities said “Gosh, we can do that too!”

      Remember, shit like this didn’t start in leftie San Francisco. Shit like this started with the first town decided to ban bordellos out of pressure from the puritans on the right.

      1. Nope.

        In one instance, you are restricting a specific type of business while allowing others in the same line to continue.

        In the other, all businesses of that type are banned.

        Try again.

  11. Lefties forget that Starbucks was a local coffee shop in leftie Seattle frequented by leftie consumers who mistook the “French” in “French Roast” for being leftie like France. Nowadays Starbucks is considered an icon of the capitalism run amok.

    Conservatives know better because every year Starbucks renews its war on Christmas by not coming out with sufficient green seasonal cups.

  12. If you do business in San Francisco, you get what you deserve.

    1. And like Tony’s syphilis, it sticks with you for years.

  13. The state of CA (or parts of the state) voted against rent control and the government clamping down on freelance work but would support all kinds of anti competitive measures like this and higher taxes and BS green measures. Meaning the state’s legion of progressive foot soldiers are fine with leaving leftist plantation if their OWN bottom line is affected.

    10 years ago, I might have been bothered by the gamestop stock rebellion. Now, I say game on. I fully expect this burrito joint’s 12th location to be denied and properly labeled as a chain if the owner fails to make its case. If it’s not fair for them, then it’s not fair for Mcdonalds.

    I’m aware that most businesses had no dog in the zoning fighting and aren’t political. But if they want to skirt the law by playing around with signs and menus in the 12th location, they’ve become part of the problem. It’s no different from LA exempting the Emmys from mask rule, while all the servants still wore them.

    I’m no longer interested in functioning as a lobbyist for the oligarchy. Meaning if Amazon supports free college, free healthcare, free housing and unlimited migration, I won’t buy their BS line that “oh no, you can’t tax US to fund those things, it’s bad for the economy”. As of now, if CA wanted to pass soda taxes or passed unionization for certain chains, I may just not vote or even vote yes. I won’t protect coke from new taxes after saying insane things like “be less white”.

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  15. Yes, but the hearing hadn’t been held yet. Now it has, and it’s as stupid as predicted..

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