Indian Gastropub Adds Spicy Twist to Downtown LA Buzz

“The most badass chicken tikka out there,” that’s what Badmaash LA, Downtown Los Angeles’ revolutionary Indian Gastropub, offers. Mention Indian food and the natural instinct is to think of a staid restaurant with faded red carpeted floors and sitar-music.

Enter Nakul and Arjun Mahendro, the two Canadian Indian brothers who started Badmaash. Serving traditional indian food icons with an innovative twist, the brothers have brought subcontinental flavour and western favourites to Downtown LA (DTLA) while taking advantage of the area’s economic upswing.

“We wanted to create a cool restaurant with great food and a fantastic atmosphere,” says Nakul.“Something that pays homage to our past but departs from the traditionally drab Indian restaurant. We want to redefine the indian dining experience as a whole.”

image Walk into Badmaash and it becomes instantly clear what the brothers are talking about. The familiar overwhelming buffet-style dishes are replaced with portion sized plates paired with a selection of hand-picked artisan beers. The LCDs blaring Bollywood songs are gone, swapped for a cool, silent Indian classic projected on the large wall. A set of Warhol-like portraits of Mahatma Gandhi wearing coloured aviators lines the wall.

Debuted in May 2013, the two ‘americanized desi boys’ have turned Badmaash, the Hindi word for ‘badass,’ from a risqué and somewhat idealistic concept into a veritable business. Almost a year later, the buzzing eatery, has put the figurative spice back into the subcontinental cuisine.

Badmaash’s location in Downtown LA, I found out from Nakul, puts it at the start of more than just a culinary revolution. The brothers entered the Downtown market just as it began gaining speed. In 2000, the Median Sales Price for DTLA hovered between $150K and $200K. After a steep decline during the recession worsened by its own micro-housing bubble, DTLA rates climbed back to almost $550K by end 2013. 

Median Sales Prices are steadily rising as the economy recovers and Downtown becomes more popular

Median Sales Prices are steadily rising as the economy recovers and Downtown becomes more popular

Debuted in May 2013, Badmaash has managed to evade most of the economic instability. Today investments in Downtown LA are “sound and growing” stresses Nakul. But business has not always been easy. The brothers’ previous Toronto-based restaurant, Jaipur Grille, felt the effects of recent economic turmoil. The restaurant group that worked with Jaipur Grille, Nakul explains, had to accept significant losses and dramatic dips in business.

Indeed, though many industries worldwide slipped into decline after the 2008 Wall Street Crash, few were as hard-hit as the restaurant industry.

According to data released by the Federal Reserve and the Bureau of Economic Analysis, overall consumer spending dropped dramatically from 2008 through 2010. In addition, a comparative analysis by Beacon Economics details how taxable sales for the City of Los Angeles, which bottomed out in the Q2 of 2009, saw a 18.6% decline from peak to trough. A triple hit, lowered consumer spending complemented by heavy job loss and the inherent increase in available time to cook, meant few people were inclined to eat out.

Consumer spending dropped dramatically during the crisis. Restaurants suffered significant losses in 2009 in particular.

Consumer spending dropped dramatically during the crisis. Restaurants suffered significant losses in 2009 in particular.

In my conversation with Nakul my questions about the economy’s impact required little elaboration. With spending reduced to bare-necessities, eating out became a luxury most could no longer afford. 

More interesting, however, was his positive outlook.

“This is an extremely great time for the U.S. and an event better time for Downtown LA,” he said. “Everyone is look to Downtown LA as the next great American city.”

In the last few months, publications like GQ have written about Downtown LA, painting it as a crossroads of innovative cuisine, alternative shopping, and an edgy, somewhat nostalgic culture. It was interesting to hear about the area’s rise from someone with an on-the-ground perspective. Nakul explained that Downtown LA is growing rapidly, just less noticeably.

Traditionally, the Downtown economy is restricted mostly to the daytime, catering to the office workers that file in and out of its high-rises each day. By night, its derelict and supposedly ‘crime-ridden’ streets make for a disheartening vision.

Yet, as Nakul points out, the area is rapidly changing. According to a survey by the Downtown Center Business Improvement District, there was a 6% rise in Downtown’s population between 2011 and 2013. More than 92% of people reported they ‘lunch out’ at least once a month. Notably, 93% of permanent residents (i.e. not employees or visitors) dine out at least once a month. Finally, close to 68% of respondents said they wanted more mid-level restaurant options.


Asked what the increase in population might mean for Badmaash, Nakul underscored that heightened demand means more supply must be created.

“The more people that move here, the more demand for eating options. The more restaurants that open up, the better” he said. At such an early stage there is still ample opportunity and room for expansion without the risk of market saturation, it seems. 

Nonetheless, Downtown property rates have “skyrocketed,” according to Nakul. With the openings of establishments like the Ace Hotel, Downtown’s micro-economy is certainly on the rise.

Economic indicators notwithstanding, I realised from my conversation with Nakul that Downtown’s business environment is actually much more promising for small businesses than that of its West LA counterpart.

The saturated, unfamiliar, and expensive market of Beverley Hills or West Hollywood is hardly conducive to starting an unconventional restaurant concept, especially without financial backing.

“In Hollywood, the chairs alone were $1000 a piece. It would have completely changed our business. In Downtown, we found ones for $100,” Nakul highlighted to me.

Interestingly, though Downtown’s low-cost economic environment made it easier, the City of Los Angeles’ policies, as other interview posts have mentioned, left much to be desired. 

Nakul described the process of opening a restaurant  in LA as “very bureaucratic, almost inaccessible.”

More importantly, he emphasised the need for more support for starting small businesses, particularly in a budding micro-economy like that of Downtown LA. Support from the Downtown Business Improvement District helped push through a lot of Badmaash’s permits. Beside this however, Nakul stressed the need for a city- or country-wide program to provide micro/local economic stimulus through support of small businesses. Assuaging the need for capital through long-term loans,while lowering the barriers for entry are essential if Downtown is to continue growing, he said. 

“Restaurants can become a sinkhole of money, a purveying nightmare,” he explained. “Access to capital is extremely important and any restauranteur knows that initial capital investment has to be really small, making funding and low costs all the more crucial.”

All in all, my interview with Nakul of Badmaash LA was enormously interesting and illuminating. As mentioned, Downtown is often said to be ‘on-the-rise,’ but this is only gradually becoming evident. This aside, Badmaash’s and Downtown LA’s burgeoning success points to the ability of unlikely, written-off economic environments to be a huge hotbed for small business success. Could this be extended to entire economies? Who knows…

BaadmashLA is located on 108 West 2nd Street #104 in DowntownLA. Be sure to visit if you’re ever looking for a fantastic place to eat!

The Few. The Proud. The Unemployed.

Economic indicators are crucial to helping determine the state of the economy. As we are unable to physically or literally see the economy per se, economic indicators allow us to not only confirm economic trends (lagging indicators), but they also enable to help us predict future patterns and cycles.

While economists mostly rely on economic indicators such as a nation’s gross domestic product, unemployment rate, or consumer price index, there are also more unusual and unconventional indicators which may illustrate an economy’s state. An economic indicator that I found particularly interesting was the Marine Advertisement Intensity Index. The concept is simple: The more intense in nature the advertisements for the Marines were, the weaker the job market – and subsequently, the economy.

The Marines – as well as any branch of the U.S. military – offers many benefits in order to make enlisting more desirable and appealing to potential new recruits. According to the Marines’ official website, a Marine can enjoy “full health coverage, access to on-base medical facilities, free on-base housing, monthly housing allowances, low-cost mortgage loans and educational funding.” Furthermore, Marine families are also offered additional amenities, including healthcare, day-care and counselling. During an economic recession, these benefits and the promise of job security can seem especially appealing to high-school graduates who may feel that a potentially high college loan is unjustified – especially if the prospects of a future job are uncertain. In contrast, during times of economic prosperity, more high-school graduates are likely to go to college – therefore lowering the number of new Marine recruits.

The intensity of Marine advertisements is then reflected in the amount of people who enlist. In 2005, the Marines’ advertisement “The Climb” sought to recruit new members by invoking feeling of patriotism, pride, and accomplishment. The advertisement depicts a lone young man climbing a cliff without any equipment. While he struggles, images of Marines in full dress uniform, helping young children, and working together under a waving American flag are superimposed on the cliff-face encourage him to climb on. At the end, the advertisement emphasizes teamwork and duty in order to convince young men to enlist. In 2005 the economy and the job market was booming – however at the same time, it was a tough year in terms of Marine recruitment. The advertisement sought to recruit all who were willing – evident in its highly emotive, patriotic advertisement.

In 2008, however, saw the Marine Corps not only meeting but exceeding recruitment goals for the next three years. Furthermore, 99% of the new recruits were high-school graduates – up from 95%. Subsequently, the 2009 Marines advertisement, “America’s Few,” depicted a very different lifestyle than the one shown in the 2004 advertisement. In “America’s Few,” three men are shown enduring the rigorous challenges of boot-camp training, including but not limited to, running through intense obstacle courses, undergoing intense physical training, and bracing brutal, unforgiving weather. This grittier, perhaps more realistic depiction of military life illustrates a change in mentality – with more people willing to sign up, the Marines have the luxury of choice and can afford to be pickier in who they recruit.

U.S. Annual Unemployment Rate


When looking at the data, there is a clear correlation between unemployment rates and the number of new recruit. In 2004, the U.S. unemployment rate was 5.5%. In 2009, however, this rate soared to 9.3%. (U.S. Bureau of Labor Statistics.) The number of new recruits in 2004 and 2009 fiscal year were 36,794 and 42,226 respectively. (Marine Corps. Times, U.S. Department of Defense)

The trend seems to have continued, with the Marine Corps accession rate dropping to 32,215 in 2013. (Department of Defense) At the same time, their numerical accession goals have dropped – perhaps in anticipation of a slowly recovering job market. Does that mean we can expect – assuming unemployment rates continue to drop – not only fewer recruits, but also recruits who are not as strong as the recruits of 2008 or 2009? It is interesting that in an unstable economy, more and more Americans are willing to endure not only arduous physical military training but also the possibility of warfare and violence in hopes of securing a better future – just a glimpse into the desperation that the Great Recession created.

Say Yes to the Dress (Please)

I was a sophomore in high school when the 2008 financial crisis happened. As naïve teenagers, my friends and I were more concerned with the upcoming Homecoming Dance rather than the stock market crash.

My mother, Judy Kim, owns a small dress store in LA’s historic Java Market (so I guess you can say every girl in school was jealous of me). Fall is traditionally a hot season because of high school dances (i.e. Homecoming, Winter Formal), but profits suddenly declined after the crisis.

“After 2008, people just weren’t spending,” Judy says. Since beautiful dresses are a luxury, Judy’s small business has been effected largely by cyclical shifts in the economy.

“Most of our customers were blue collar folks. Even so, we had parents who came in every week for months to pay off a 500 dollar dress for their daughter’s Quinceañera. As the recession got worse, more and more customers would beg for a refund. Some people just stopped showing up and did not pick up their phones.”

Judy had to make changes in sales tactics in order to make up for the loss during the recession. First and most obvious, she cut prices. Instead of the normal 50% return, the store now had a mark-up of 30%. The store is now constantly having a sale, but customers are always haggling the price more than ever. Judy came up with the idea of selling all-inclusive packages to entice customers. For example, a Quinceañera set can include: customization of a dress, a headpiece, and a pair of gloves with the girl’s initials embroidered on it.

The store also reduced the amount of employees. One summer, Judy taught herself how to use a sewing machine, and started doing alternations on the dresses herself. She taught me how to use Excel so I could record sales and calculate the commission of each employee. During the past tough years, everyone in my family was expected to contribute.

One glaring factor that contributed to Judy’s decline in sales was that her specific target consumer demographic experienced the hardest hit during the recession: the Hispanic population. “In the Fashion District, Jewish people own many of the buildings, and Koreans work in wholesale. Many stores employ Hispanics, and majority of the shoppers in the area are also Hispanic.”As a first-generation Korean American, Judy is not completely fluent in English—in fact, she is more fluent in Spanish. Located in Downtown Los Angeles, Judy’s store caters to a high Hispanic consumer base, which explains why there are three main types of dresses at her store: wedding, prom, and Quinceañera.

The Hispanic population in Los Angeles is almost 5 million according to a 2012 report by the US Census Bureau. According to a 2010 congressional report released by the Congress’ Joint Economic Committee, Hispanics have been named as the group that has experienced the hardest hit during the recession. The report showed that the Hispanic unemployment rate was only slightly above the overall national unemployment rate in 2006, when my mother’s dress shop was enjoying considerable profits.

However, by 2009, the rate soared to 13.1%, around 3 percentage points higher than the national rate. The disproportionate impact on the Hispanic community is partly due to the housing bubble’s impact on the construction sector. Information from the report also suggest unauthorized immigrants may have experienced the most impact in employment.

The decrease of disposable income has caused customers to be incredibly price conscious. Judy’s biggest competition has been online retailers. Start-ups like “Rent the Runway” allow users to rent a dress for a much cheaper price. Since dresses are not exactly necessities, people who are looking to save money find renting a wedding or Quinceañera dress is an economically smarter alternative than buying one and never wearing it again. Many of the dress stores have closed down, but Judy does not plan on giving up anytime soon.

“In this business, it is all about standing out. We are constantly trying to find a way to offer our customers something they cannot find anywhere else, including the internet.”

One huge advantage Judy has had over the years was that her sister is a fashion designer. Another secret weapon of hers is that her brother also has a dress shop, not too far from her own. Having the support of her family has been her greatest asset. The Kim siblings actually had plans of starting a retail website. However, my mother still has one huge reservation.

“Social media scares me. One bad review can kill your whole business, and kids are mean these days!”

Amazebowls: a refreshing insight into the trendy food truck industry

Amazebowls – acai bowls topped with fruit and granola

Desmond Ng is the co-founder and owner of “Amazebowls,” a trendy, popular food truck that can usually be found situated on the outskirts of USC. Contrary to the stereotype, Amazebowls doesn’t sell the stereotypical greasy street fare one might expect; instead, this bright purple truck offers customers fresh and tasty acai (ah-sigh-ee) bowls, topped with fruit and granola. Described by Ng as a “healthy alternative to ice-cream or sorbet,” these vegan and gluten-free treats offer health-conscious students a delicious replacement to the usual fast food options offered at USC.

Amazebowls was founded in August 2013 by Desmond Ng and Bryan Leong after the two came across the concept in Santa Barbara. “I pretty much fell in love with them,” Ng admitted. “However, when I came back to LA, I realised that hardly anyone was selling it. Places that did sell it were either too expensive or not that good at all. So I started making them at home, and my friends told me that if I wanted to start something with it they’d invest in it. So we tested it out at SC – we trialled it at a couple of different events like Taste of Downtown LA, KXSC-fest, Springfest, Study Nights… and the response was really positive.”

One of the most difficult obstacles for a small business is finding initial capital – whether that be through loans, investors, or one’s own savings – especially in the current economy. According to Gallp Inc., 28% of small businesses indicated that they were less optimistic about their business’ future going into 2014 than they were going into 2013. While Ng was fortunate enough to have two close friends who were willing to invest in him and the product, he too struggled to initially start his business. “We wanted to start a store, but we couldn’t find a good location at a good price,” said Ng.  “A food truck was our next best option.”

As Amazebowls is a relatively new business, it hasn’t had much time to adapt to the ever changing economic cycles. Furthermore, its main customer base – USC students – doesn’t seem, at least in the short-term, too frugal about spending their disposable income. “We haven’t really been affected so far from the recession,” said Ng.

However Amazebowls still had is main share of challenges. Ng lists the factor of uncertainty as one of the biggest challenges in running his business. “It’s [the food industry] very competitive,” explained Ng. “We have to do a lot to make ends meet – even though we get a lot of sales, the costs are really high. The costs of running the truck, wages, running costs, etc. It all adds up.” Furthermore, the recent opening of “Nectar,” a juice bar on campus serves as another competitor to Amazebowl, targeting a similar audience.

While Ng doesn’t have to pay rent, owning a food truck offers a different set of challenges. “Sourcing a food truck is not cheap, and a lot of people don’t realise how big the expenses are,” explained Ng. “Also, a lot of things are just out of our control. It’s not like a store where things are fixed and people can deliver to you – we only have a certain amount of space in the truck and we have to restock every day. It takes a few hours for us to get all our supplies. It can also be difficult finding parking. If we don’t find parking in the morning, we can lose crucial hours of business which cuts into our profits.”

Amazebowls is also heavily affected by the weather and the seasons. “The weather definitely affects our business – even more so because we’re a food truck. People don’t like coming to food trucks when it’s cold,” said Ng. “We also definitely felt that there was less business after big holidays like New Year’s and Christmas – people had spent too much during that  time and were not as willing to go out as much to eat.” Furthermore, the colder weather has not only decreased their customer base but also increased costs. For example, since the summer, the price of strawberries – a main fruit in the acai bowl – have gone up dramatically, further affecting Amazebowl’s profit margins.

A major concern which has not only Ng but other food truck and small business owners worried is the possibility of minimum wage going up. “Right now, we’re reworking our cash flow just in case minimum wage goes up,” explained Ng. “That’s a big thing. A lot of food truck owners that I speak to are worried that the increase in minimum wage will affect their businesses. Basically you’ll have to either raise your prices or absorb the losses – and that eats into your profit a lot.” When asked whether Ng will resort raising prices if wages do go up, Ng showed reluctance. “I’d rather not,” he admitted. Instead, Ng hopes to be able build a larger, loyal customer base with aggressive and clever marketing techniques so that profits maintain high.

In the future, Ng hopes to be able to expand Amazebowls into an actual store – however the challenges that come with that are immense. Rent is a main factor, with the average price per square foot in Los Angeles increasing 13.8% from last year to $428. “A lot of food trucks try and get into stores and they end up being unsuccessful,” said Ng. “We did a lot of research, and it’s a lot easier for a restaurant to get a food truck than a food truck trying to become a restaurant. We have to do a lot more research, and wait for both us and the economy to be in a good place.”


Tuhao, let’s be friends!

Tuhao, a Chinese word, has been getting very popular since last September on the Internet. BBC magazine translated it as “nouveau riche”, someone who comes from a poor peasant background, and has made it rich quickly – but  doesn’t quite have the manners or sophistication to go along with it. “Tuhao, lets be friends!” has become one of the hottest topics in China.

According to National Bureau of Statistics of China, GDP has increased 7.7%  from last year, which is higher than the predicted number 7.5%. However, that is the lowest increase since 1995.  International trade also decreased from  2012. A famous economist, Nouriel Roubini said to CNNMoney last week that  50% of China’s economic growth comes from the government.  That’s not sustainable. Honestly, China could be called as a big Tuhao with its GDP increase, but most Chinese people are not even rich with 38,420.38 RMB GDP per capita. China is experiencing an inflection point now. The magic “8” growth rate helped some people to be very rich fast and then they started to invest all over the world. As we know, investments, exports and consumption are three supporting elements for China’s GDP increases.

“Tuhao” style investment- Vineyards buying

A Chinese businessman who just bought a vineyard in France died in a helicopter crash after his vineyard tour with his son, according to The Wall Street Journal. Vineyards investments unveiled because of the news. Chinese businessmen bought more than 60 vineyards in the past five years. The Chinese population consumed about 156 million 9-liter cases of wine in 2011, placing it in fifth place among the top wine-consuming nations worldwide, according to Vinexpo’s study. It also predicts a 36% increase in wine consumption in China vs. 9% in the rest of the world, a 54% rise from 2011 to 2015.

“Tuhao” style investment- Luxury shopping

According to United Nations World Tourism Organization in 2013, Chinese travelers became the world’s biggest spenders, shelling out about $102 billion overseas. It predicts that by 2015, total Chinese spending abroad will exceed total global luxury sales. The reason that so many Chinese travelers buy luxury goods from outside country because its extreme high import duties, which add up to 60% to the original price in China, according to Quartz. Therefore the rich Chinese people prefer to travel outside China.

“Tuhao” investment- Expensive houses

china-tourism-luxury-versus-global-luxuryAccording to the National Association of Realtors, Chinese are now the second-largest foreign buyers of homes in U.S., accounting for $7.4 billion of sales in the 12 months ended March 2011. Because of the housing bubble in China, more rich people choose to investment homes in U.S.. Most of them probably concern about China’s political instability, inflation, food safety even pollution.

“Tuhao” investment-Venture Capital

The China’s top political advisors discussed reform in science, innovation and technology last December, which put forward proposals on the management of investment for scientific and technological development…building an environment for promoting innovation, the transformation of scientific achievement, according to Xinhua news agency. At the same time, more U.S. tech startups hope to find investors from Chinese and start their business in China. Chinese venture capital firms backed 28 U.S. companies in 2011, nearly double the number two years earlier, according to Dow Jones VentureSource. China’s magic growth, large population and government’s desire set a stage for more deals between China and U.S. technology companies.

“Tuhao” China has developed so fast these years. I think it’s the time to slow down and wait for the people.














Read China’s politics and economy from Macau

A research team from Reuter’s posted a pair of charts (see Figure 1 below) with nearly paralleled curves back in 2011 which suggests that Macau’s gaming revenue tells a lot about China’s economy. The curves reveal not only how China’s collective wealth has grown, but also where that big chunk of money is going, given the fact that many managed to legitimize shady income amid the buzz at the world’s new casino capital.

China’s GDP boom since around 2003 has created new wealth among heads of national conglomerates as well as regional manufacturing-oriented powerhouses. Some city officials – the likes of Bo Xilai and Liu Zhijun – also took their share from doing “favors” to businesses cutting deals for government contracts. Whatever their day jobs may be, these people are the “high-fliers” when they land at Wynn’s VIP room in Macau. And change in Wynn’s gaming revenue often suggests tweaks in the Chinese government’s grip on its economy and its mega rich.

Figure 1. Macau Gaming Revenue and China GDP
Macau's gaming  revenue vs. China GDP
Chinese high rollers made up nearly two thirds of Macau’s gaming revenue, not out of their love for throwing dice, but because they saw Macau a good fit for money laundering, according to an article from The Economist. With enough help from an apt junket, a corrupted government official who has taken bribes in yuan can readily swap his filthy money into Macanese pataca at a gambling table. A billionaire who has cut corners to get rich and wants to elude future scrutiny when political tide changes can turn most of his fortune into foreign dollars and hoard them better. In some other cases, the rich simply don’t want to put his money at home.

These are the main players in China’s economy, and the way they’ve chosen to do with their money reveals two things: a) a big chunk of the new wealth has left China instead of being reinvested into sustainable economic activities; and b) there is a trust issue between China’s nouveau riche and Beijing because the latter still has authority to crush someone’s property for no solid reason.

When China’s new leadership laid down rules in early 2012 to crack down on lavish spending and its more recent rein in corruption, we’d expect them to have an impact on Macau’s gaming revenue much as they did to the sales of foreign luxury brands. The cynical ones on social media, however, said the new measures would always be staying just on paper.

If we check Macau’s gaming revenues for answers, it presents a different story, as world-class alcohol makers and watchmakers took hit from Beijing’s gift crackdown.

China’s inflation-adjusted GDP changed less in 2013 than a year earlier, going upward by 7.2 percent and 10.3 percent respectively (see figure 2 & 3 below for real GDP calculation).

Figure 2. China GDP Annual Growth Rate 2006-2013
Figure 3. China Inflation Rate 2006-2013China's Inflation Rate 2006-13
During the same period, however, Macau’s gaming revenue kept climbing in two consecutive years despite a slowdown in China’s economy. The number went up first by 13.5 percent in 2012, and again by 19 percent one year later, according to Yahoo News and The Wall Street Journal. Meanwhile, there has been a flurry of Chinese tourists touring and buying real estates in the U.S. The rich folks may have sped up transferring their money outside China as Beijing’s new leadership tightens its grip.

Tatsu Ramen-not a traditional fast food restaurant

ramenStarting with 50,000 dollars, Ryu Isobe has operated his ramen restaurant for one year and eight months. He and his partner are planning to open another one in Hollywood area this year.

“This time we will spend 700,000 dollars to build a fine place for my ramen restaurant,” Isobe drank a sip of coke and continued. “I lived in United States for 11 years. I always want to open business or doing something related to Japan. I’m a Japanese.  You know, there are so many ramen restaurants in Japan but here there is not that much,” said Isobe.

According to a report from National Restaurant Association, driven by a stronger economy and historically high levels of pent-up demand among consumers, restaurant-industry sales are expected to hit a record high of $683.4 billion in 2014. There are 17 ramen restaurants in Los Angeles.

When you enter the ramen restaurant, you will find three iPads for self-ordering and self-payment. You just need to hold your receipt and wait to be seated. The high-tech mechanism attracts a lot of young people.

“We only have 29 seats but we could serve 700 people one day during weekends…every customer spends around 15-20 minutes…most of them are college students…sometimes you can see some 30+ customers and even high school students,” said Isobe.

Born in 1988, Isobe graduated from USC business school in 2011. However, he didn’t choose to jump into the ramen business right after graduation.

“I spent almost one year to find a great location…I think that’s one of the most important elements for my business…and also I want to make my ramen taste unique,” said Isobe.

Isobe learned to cook ramen all by himself. He said that he wants to make ultra-specialized Hakata-style tonkotsu, whose preparation is more rigidly structured than most medical practices, a Tokyo-style fusion.

“You can find ramen restaurants in Japan every where and they all taste much better than here…especially the tonkotsu,” said Isobe.

According to abc News from Jan 2012, economists were forecasting even more sticker shock in 2012. The price of just about everything — fueled up bond. From gasoline — caffeine to breakfast is filling up. However, it didn’t stop Isobe opening his first restaurant in May 2012.

As we know, during the recession, consumers spent less on luxuries such as dining out. However, when they did visit restaurants, they purchased lower-priced items. Moreover, consumers have become increasingly health conscious over the past five years, according to PR Web.

“I actually wasn’t impacted by the price or recession. People always need to eat and my ramen only costs around 10 dollars per bowl…we put all ingredients in ramen…it is not expensive,” said Isobe.

Isobe’s ramen restaurant is not the first one on Sawtelle Blvd, but it must be one of the hottest restaurants. He gets lots of emails for franchising every week, but he never replies.

“My goal is to open my ramen fast food chain restaurants all around US as Panda Express. I think we need real fast ramen food,” said Isobe.

As a new comer, Isobe didn’t spend any money on marketing his ramen restaurant. On the opposite, he put more attention on training waiters and designing ordering system.

“All my employees are Americans…they don’t speak Japanese…I spent a lot of time on training them to be a great waiter…I created simple rules for them to follow such as when to add water for customers…I taught them step by step,” said Isobe.

According to a report on restaurants from IBIS world, the single location full-service restaurants industry has bounced back after a slowdown due to reduced consumer spending during the recession. In 2009, revenue declined 0.9%. Over the five years to 2013, IBISWorld estimates industry revenue will grow at an average annual rate of 2.3% to $137.5 billion. Revenue is expected to continue its upward trajectory in 2013, growing an estimated 3.1%.

Isobe never makes a loan from banks nor accept any angel investments. He has a partner to work out all money issues together. Even though Isobe’s ramen restaurant wasn’t impacted by recession economy, he’s still facing challenges. The biggest one is labor.

Another report from U.S. Bureau of Labor shows that California is one of the nine states with highest unemployment rate, which reaches 8.5%. Last year, Gov. Jerry Brown endorsed a bill that would raise California’s minimum wage to $10 an hour by January 2016. Employers countered that a substantial jump in the minimum wage could be disastrous for small businesses, particularly the state’s 87,000 restaurants, according to LA Times. It makes even harder for Isobe to find appropriate employees.

The gains remain below what would be expected during a normal post-recession period due to a range of challenges. However, the restaurant industry will remain the nation’s second-largest private sector employer with a workforce of 13.5 million, according to National Restaurant Association.

“The biggest challenges I’m facing is labor…I hired 40 people in total…it’s really hard to find perfect employees now,” said Isobe.












The Price of Labor

At Advanced Cleaners on the corner of Vermont and 29th, price tags have remained unchanged for 8 years for one reason: it serves Trojans, or, USC students. The owner, Hertsel Mofarrah, adorns the storefront as if it were an alumni house. Much of its red counter is covered with snapshots of USC life, and most words left on the photos were addressed to Aunt Ruby, the front desk sweetheart lady who left the job half a year ago when she turned ill.

Ruby’s successor, Urania Blanco, is from El Salvador, the smallest and the most densely populated country in Central America. She rushes out from the rear of the store when the doorbell rings, collects the dirty pieces, and numbers each one of them before putting them in a to-go basket. In the afternoon, Mofarrah comes in and picks up the batch. He sends the clothes to Royal Cleaners on Robertson Boulevard, and drops them off again at his USC cleaner a day later. The shirts and suits have been properly cleaned and pressed. Blanco does a last shave and hangs them in order on a conveyor.

Mofarrah runs both cleaners, but he hasn’t become his own chauffer until the USC business took hit of the recession in 2008. He used to have a line of seven workers at Advanced Cleaners attending to every step of the dry cleaning process. When business turned sour amid the larger economic downturn, the full-fledged crew was reduced to nothing but one receptionist at the counter. He halved the 1,800-square-feet place, leasing the other part out. The machines were also removed. At what later became Mofarrah’s main storefront on Robertson, he had to let go of two people that year to survive the national crisis.

But he says the profit is still shrinking mainly due to a rising cost of labor. Five years into a sluggishly rebounding economy, 70 percent of his business revenue still goes into offsetting expense in climbing wages, chemicals and utility. “The minimum wage has gone up, and my guys don’t settle for the minimum wage because the dry cleaning business relies on trained professionals with rich experience,” says Mofarrah.

He hires five people at Royal Cleaners, where a dry cleaning machine and other amenities are stationed. When a customer brings in a pair of pants for dry cleaning, it goes to the spotter first. The spotter, who gets paid $14 an hour to remove all types of stains using the right chemicals, holds the most lucrative position of all five employees. The tailor has the second fattest paycheck. The whole team has enjoyed raises in the past few years, says Blanco, who worked among them before being transferred to the location near USC.

When Gov. Jerry Brown signed into law the bill that would raise California’s minimum wage to $10 an hour by 2016, it left workers upbeat and small businesses worrisome. While the raise comes in two phases in the next two years, the 25 percent hike would push California to be on top of every other U.S. state in terms of minimum wage and is estimated by the L.A. Times to deliver extra money to around 2.4 million Californians.

For Mofarrah, the USC branch of his laundry business seems self-perpetuating once he bought up the place in 1998. Costs are easily contained now that there is only one employee. And the utility fee is just a tiny fraction of what he pays at Royal Cleaners, where rent has also climbed up by five percent each year. To fulfill a daily task of cleaning 500 pieces, from both storefronts, he now pays a monthly of $1,000 for gas, and another $1,000 for water and electricity. Even the price of plastic bags has doubled from 5 years ago, he says, and the government ridiculously charges him $7 per gallon when its people comes in to collect barrels of chemical waste. The price tag was $2 fifteen years ago.

In response, Mofarrah raised the price for dry cleaning by an average of 50 cents at the end of last year — at Royal Cleaners only. The price for dry-cleaning a pair of pants climbed from $5 to $5.5. But USC students still get the old price of $5, or 50 cents less on discount. “We know it’s hard for students to spend a lot on laundry, so we keep the price low,” the father of a USC Medical School alumnus says.

Mofarrah’s USC business receives about 150 pieces every day, and handles the cleaning of theater costumes and marching band uniforms. But summer strikes him as a truly bleak season for his laundry business because 80 percent of Advanced Cleaners’ customers will be gone. “The students are home, and there is nothing,” he says. Blanco became so bored last summer that she made a pair of crochet stool covers in her free time at work, in red and yellow. They are now part of the store’s USC flair.

China’s Increasing Concerns of a Property Bubble

Despite all the policies that the Chinese government has enforced to cool house prices in China, especially in major cities like Beijing and Shanghai, prices continue to rise, causing the property bubble in the country to expand.

Home Price Change

As shown in the graph, home prices have been increasing dramatically over the years, especially around 2005 and 2008. It slowed down a little bit after 2010, when the government started interventions and set strict real estate market policies to cool the market. For instance, in my home city, Suzhou, a fairly economically successful city in China, the newly-enforced real estate market policies in 2011 stopped many people from purchasing their new houses. If you are purchasing a new house as a resident in Suzhou and it’s the second house under the name of your family, you need to make a minimum of 60%-70% down payment instead of the original 30%-40%, with higher taxes issued and higher interest rates for loans. One family is limited to two properties in Suzhou. In major cities like Beijing and Shanghai, the market policies are even stricter. This explains the slowdown of the house price rise or even drop in China around 2011.

However, even though the real estate market seems to be under tight control of the Chinese government, the house prices in China started to rise again. According to China’s National Bureau of Statistics, China experienced a 0.8 percent rise in average new housing prices across China’s 70 major cities in August 2013 and a 0.7 percent rise in September 2013. That was the “ninth-straight monthly rise on an annual basis.” (On an annual basis, the house price rise was 9.1 percent as of September 2013) The national average new house prices continued to rise 0.5 percent in November 2013 and 0.4 percent in December 2013.

The situation is even worse when applied to individual cities in China. Beijing had a year-on-year increase of 16.3 percent in average new housing prices in November 2013, and 16 percent in December 2013. For major cities in southern China, Guangzhou had a year-on-year house price increase of 20.7 percent in November 2013 and 20.1 percent in December 2013. Even though there was a slowdown in the increase of house prices (and it was the first one in 2013), the situation is still horrible, differing from what the government expected; house prices in China are still kind of out of control, thus causing the property bubbles.

China has experienced great GDP growth over recent years. However, China’s dramatic economic growth has been a result of the government’s policy to spur exports, instead of consumer spending, which indeed indicates the purchasing power of people in the country. China’s economy is growing and expanding rapidly, and so is the wealth gap in China. Fewer residents, especially in major cities in China, can afford to purchase their own houses, while wealthy people are not quite influenced by such government policies and continue their huge investments in real estate as usual. Even though the Chinese government hopes to utilize market policies to cool the real estate market, it doesn’t seem to solve China’s problem of a property bubble. In spite of China’s ambitious economic development plan for the following years, the Chinese government really needs to take a step back to rethink about how to actually make the house prices under control, resolve the problem of property bubble and thus to realize healthier economic growth, and ultimately, to benefit its people.


Price of fresh produce might increase due to severe drought in Califonia

Harry’s Berries Gean Family Farm, an organic fresh produce grower, plans to increase some of its products’ prices in next month if the record-breaking severe drought facing California prolongs this year.

Jennifer Gean, the owner the 27-year-old organic produce firm, projected a one-dollar-per-three-packs uptick next month for most of the organic berries her farm produces because the water price has gone up significantly for the past year resulting from the third straight year with below normal rainfall in California.

“As a berry specialty grower, we are very much depending on the water supply. Last year, it might probably be OK, but if the dry situation continues, we have to start very worrying, “ said Gean.

In effect, the firm has increased its products’ prices from time to time in the past few years.

“Last year, it went up a dollar because of related-overheads increase like fuels and supplies. Another thing is that we pay a much competitive rate to our employees. They are very well trained and hard-working. That does add to our overheads as well,” said Gean.

But according to Gean, the multiple price increases do not affect the farm’s revenue even though in financially difficult times because of its good reputation, combined with people’s perpetual willingness to eat healthy.

“Despite the sluggish economy in recent years when people have to be a little frugal out of necessity, they are still willing to pay it because of the quality. A good thing for us is we are in food industry and we are doing fresh produce. It the last thing people will save money on. We have royal customers to support us regardless of we having to increase the price and they continue to shop. It is a long-term investment to health,” said Gean.

Despite the deepening drought plaguing California, not every organic farm has experienced price fluctuation resulting from severe water shortage. Organic Santa Babara Pistachio Company is one of them.

Mary Mills, a worker at the farm, said the prices of the companies’ pistachio are pretty much stable in the past two years.

“The water shortage does not affect pistachio because pistachio trees do not require much water as other trees. But most of my neighboring famers are struggling. They drill the wells and they have to drill deeper and deeper, and they have to invest a lot of money on that. Then they will have to increase the price to make up for the investment,” said Mills.

Compared with economic cyclical shifts, many farmers say, their business is far more dependent on weather factors. Many of them rather use their own properties than taking out loans from the bank except in financial woes.

“We take our small business loans and things like that. We will have to plant out strawberry every year and new plants are big investment. If we have a not good financial year, we will have to resort to borrowing. But for the most parts, we tried to save up enough thought the year. We make more during those peaks of the seasons in the summer and save for the winter,” said Gean.