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Chains R Us 

Conventional wisdom nothwithstanding, chain stores and restaurants find it easy to locate and thrive in San Francisco. Tara Shioya explains why pretending otherwise is bad for the city.

Wednesday, Oct 22 1997
More than a dozen eateries cram the busy commercial stretch of Castro Street that runs immediately south of Market, but these days much of the neighborhood's dining activity buzzes around two new restaurants near the corner of Castro and 18th Street, Wrap Works and Fuzio.

Small and smartly furnished, these newcomers fit the profile of the Cute Neighborhood Eatery. Wrap Works is a casual, counter-service establishment that sells gourmet burritos and smoothies. Five doors up the street, Fuzio serves what it describes as "universal pasta" and salads in a more sedate, sit-down atmosphere.

The two restaurants have different looks and offer different menus, but they have common roots. Wrap Works and Fuzio are both owned by the people who brought you "Fresh Mex," Chevy's Inc. -- which is owned by J.W. Childs Equity Partners, a Boston-based investment group with a $430 million portfolio.

San Francisco has been good to Chevy's, which currently has nine restaurants in the city. Another Wrap Works, at Ninth Avenue and Irving, is expected to open soon. And business looks so promising that the company has plans for another four restaurants in the near future, including a 7,000-square-foot Chevy's at Van Ness and Golden Gate early next year.

All this in the city that supposedly hates chain stores.

In any city, at any time, there exists an overarching ethos, a philosophical orientation that colors the way residents think and feel about the place they call home. Even in San Francisco, this most allegedly unconventional of cities, a conventional wisdom prevails.

In the broadest possible strokes, this mind-set can be described as "progressive," a term suggestive of everything from a near-automatic mistrust of things corp-orate to an almost Pavlovian defense of The Oppressed.

When it comes to defending the integrity of the city's cherished neighborhoods, this common mind-set becomes particularly rigid and particularly harsh. A newcomer to San Francisco quickly learns the drill: Chains are bad, independent businesses are good.

A closer look at the business reality of the city, however, reveals that the belief that San Francisco hates chain stores -- hates them enough to make the city inhospitable to them -- is a myth. San Franciscans may talk about loathing evil corporate chain retailers, but the fact is that chains are flocking to the city, and they are thriving here. Locals may lament the demise of neighborhood character, yet they shop for groceries at the mega-Safeway at Potrero Center, where more than a dozen chain stores occupy what had been a new-car lot.

San Franciscans seem to genuinely want their city to remain distinctive -- S.F.'s daily newspapers produce a steady torrent of stories to that effect -- but at the same time the city's populace seems to crave the convenience and ease of chain-store America. So, many residents live a paradox, clinging to the unsubstantiated belief that some magical barrier will protect neighborhoods from chain invasion, even as the chains keep coming, and even as the San Franciscans who say they hate chains keep drinking Starbucks and eating Fuzio.

This clash between myth and reality might be seen as just another charming facet of San Francisco's quirky nature, if the ramifications of this factual disconnect were not serious. But serious they are. By adhering to the myth that it is a chain-hating bastion of neighborhood activism and small, local businesses, San Francisco has failed to make the hard decisions about development -- the very decisions that must be made if the city is to avoid becoming the accidental agglomeration of upscale marketing plans that it claims to abhor. By believing in a myth, San Francisco is allowing its worst fear to become reality.

In a Keynesian-clear example of demand-driven supply, San Francisco has seen a marked increase in retail and restaurant chains over the last 10 years. It is an influx that seems to follow class lines and an astounding shift in the city's demographics.

Fifteen years ago, the Marina District was a quiet family neighborhood. Today, the area is dominated by young, single professionals. Along the three blocks west of Fillmore, Chestnut now boasts 38 chain stores and restaurants -- and about a dozen independently owned businesses. Commercial space -- $1.75 per square foot before the 1989 Loma Prieta earthquake -- now leases at $3 to $4 per square foot, per month.

Even the Haight-Ashbury, supposedly the city's least commercially driven quarter, has seen the arrival of the Gap, Z-Gallerie, and Spinelli coffee. Yuppies have replaced hippies; hippies, in many cases, have become yuppies.

Anyone selling anything, both nationally and internationally, drools at the very mention of the San Francisco market. After Washington, D.C., San Francisco has the highest disposable income and the best-educated population of any city in America.

With the Silicon Valley boom, San Francisco's middle class has swollen by the tens of thousands in recent years. San Franciscans don't make house payments, they rent; they work at well-paying jobs; they eat out. They don't have kids. They spend money. Economists have found that American consumers have become bored with traditional shopping centers. Instead, they prefer to shop in neighborhood locations, a trend that makes San Francisco and its celebrated neighborhoods a prime destination for businesses.

"San Francisco is a retailer's dream," says Lynn Sedway, an economist with the Sedway Group, a San Francisco consulting firm. "Retailers have discovered that neighborhoods, with their density and high volume of foot traffic, are ideal."

The chains are focusing on the city's most economically appealing neighborhoods -- the Marina, the Haight (Upper, not Lower), Union Street, the Inner Sunset, and Noe Valley. And that focus has real economic motivation behind it: High-earning newcomers and rising rents have pushed what once were considered modest but "nice" neighborhoods far, far upscale. And as the neighborhoods "move up" from middle class to the upper middle and above, they increasingly reflect upper-middle-class tastes and spending habits.

Annual median household incomes in the Bay Area have increased from $28,000 to $47,000 since 1985. San Francisco's upper-end neighborhoods reflect similar jumps, with median incomes now around $40,000 in areas like the Inner Sunset and Noe Valley.

About The Author

Tara Shioya


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