Urban living and restaurants and liquidity

Last night I had dinner at Alfanoose, a small Mediterranean joint off Broadway. I had hummus and salad with pita bread, and had also brought along a falafel sandwich which is now sitting in my fridge and is likely to get consumed today for breakfast. Excellent stuff. Absolutely brilliant. And not expensive at all – ten bucks for the hummus and salad, and six for the sandwich. Considering that USD = 10 INR according to the Idli index, this is extremely reasonable, insane value for money.

I have been intending to write this post for ages, about how one of the best positive externalities of urban living is restaurants. When you are living in a desolate area, with not too many people around, there is no option but to cook your own food. Even if you live in a village ora small town, the number of people who are willing to eat out will be small, which means it makes little business sense for someone to open a restaurant there. You are likely to find a handful of them, but the lack of competition will mean that you can’t really trust quality.

There is a network effect in restaurants. Some people don’t eat anywhere but at home, and some don’t cook at home at all. However, there is the large middle ground of people whose consumption of restaurant food varies directly with quality and liquidity. And these two concepts are inter-related – the bigger the town is, the greater the required supply of restaurants which means more competition and thus higher quality. And higher quality leads to higher demand (more fence-sitters converted) and the virtuous cycle goes on (of course, population and the fact that some people don’t like to eat out limits the boundaries of the cycle).

Another thing is that the larger a town gets, the greater the liquidity of the food market in there, there is more variety. If you remember Bangalore in the 1980s, when I was growing up, there was one standard type of restaurant. Where you would get cheap idli and dosa and a few other standard snacks, and a few “north indian” items at meal times, and every time you wanted to eat out you had to go with one of these. And you would have noticed how with the growth in the restaurant market in the 90s you got more variety.

What makes cities such as London and New York such foodie havens is their size, and also that culturally people here are more inclined towards eating out than in other places such as India. This leads to insane liquidity in the market, and as I explained above that leads to more variety, and so you get more niche food. And when you have cities as large as New York or London, what you get is full-fledged liquid markets in cuisines that are everywhere else considered niche!

So because of liquidity in otherwise niche markets, in each cuisine you will find various kinds of restaurants. Like yesterday I had awesome hummus at this self-service place! While in a place like Bangalore to get any kind of hummus you’ll have to go to a fine dining place and spend a bomb.

Another thing I realized is that when liquidity is thin it usually occupies the top end – like how in Bangalore you get non-Indian stuff only in high end fine dining places. But I suppose I’ll write about that in detail some other day

4 thoughts on “Urban living and restaurants and liquidity”

  1. More than the liquidity, its the diversity of people which contributes to variety of cuisines. Manhattan would have ppl of more than 100 nationailities residing or working there.
    In Europe many cities have excellent eating joints and cafe/restaurent culture, people eat out all the time but there is very little variety in cuisine.

  2. “insane value” yella swalpa over guru. You can get a tasty full meal for 10 bucks da. Even by Idly index its on the higher side. But on the other hand, I am not sure of how much food prices have gone up in India in the last 3 years.

    I second duke on the reason for variety of cuisines.

  3. FTR, $10 for hummus and salad and $6 for a falafel sandwich is quite overpriced by NYC standards. The standard falafel sandwich at Mamouns (New York’s finest falafel restaurant) is $2.50 and hummus and salad (with pita) should not cost more than $5.

  4. About your point about getting non-Indian stuff at only high end places – another factor which makes something a delicacy in a given region is not just its quality in that region, but also ubiquity and cheap rates. Waffles in Belgium are not only soooper awesome, they are also really cheap and are available by the roadside. I’m sure you can find good vada-pav in NY, but nowhere at the cost (price + cost of locating a restaurant) of Bombay.

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