Business
Where every cent of $1 goes at one L.A. restaurant, explained
My industry has always been as difficult as it is magical. In the post-pandemic era, challenges are categorically higher.
The threat to restaurants during the pandemic was obvious; it was a given that many wouldn’t come out the other side. In 2024, restaurants are back! No, restaurants are dying! No, restaurants are (sometimes) busy! It is whiplash, day to day.
For many, including my restaurant, Botanica, solvency is more elusive than ever due to the elevated cost of doing business. Since opening Botanica nearly seven years ago, our labor costs have risen 40% for hourly workers and 25% for salaried management, the result of minimum-wage increases and market-rate pay increases. Our rent has risen 17%. Our sales, on the other hand, have grown only 2.3%.
Obviously, this creates a near-impossible status quo. In our industry, there are no mechanisms for alleviating costs other than trimming spending on goods and labor.
In other words: There is no way to balance the books without compromising the quality, vision and values that define a business like ours. There are no tax breaks on costly insurance policies or credit card processing fees. And if we were to pass the costs on to our customers, we’d be compromising the vision and values that make us what we are. It’s an absolute conundrum.
Our way of doing business is under threat. From frequent conversations with restaurateur friends (including my co-founders of Regarding Her, a nonprofit focused on female food-industry leaders), I know that what Botanica is navigating at the moment is far from unique.
Botanica co-owner Heather Sperling at her restaurant in Silver Lake. For many restaurants, “Solvency is more elusive than ever due to the elevated cost of doing business.”
(Michael Blackshire / Los Angeles Times)
Why does this matter? Neighborhood-oriented restaurants are vital to communities and economies. They are meaningful gathering spots and dependable local employers. They support numerous other businesses: cleaners, farmers, coffee roasters, winemakers, equipment technicians, etc. They’re small and personal, and thus are approachable and accountable in ways that larger businesses aren’t. They’re often run by owners and managers who care deeply about their people, their neighborhood and their impact — even more than they care about their bottom line.
I know this because Emily Fiffer (Botanica’s co-owner) and I are among these people. And, moreover, we’re friends with dozens of like-minded owners across L.A. and beyond.
Eating at a place like Botanica might feel indulgent. Dishes on the spring menu range in price from $14 for marinated bean toast $36 for Baja striped bass. But from our perspective, the purpose of our business is not just to provide a nice evening of beautifully prepared, local, sustainable produce and natural wine. Our goal is to run a business with the most positive possible impact on our community, economy and environment — a business that embodies what we call “nourishing hospitality.”
There’s an economic concept called “the multiplier effect,” which describes how the effect of spending is greater than the original money spent. While every dollar you spend ripples through the economy in some way, restaurants surely must provide among the best bang for your buck, so to speak.
So one day I sat down to try to calculate exactly how this works with our model, and I landed on a startling figure.
Of every $1 spent by a customer at Botanica in 2023, $1.005 went back out the door.
Of that, 86.7 cents went toward “the good stuff” — meaning people, businesses and causes that it feels good to be supporting; 53.2 cents pays for the livelihoods of 50 staff members (including insurance, benefits and hefty payroll taxes); 26.2 cents buys products from a sensational web of farmers, purveyors and makers doing ethical, sustainability-focused work, who themselves employ countless passionate individuals; and 7.3 cents pays for a cadre of small businesses in supporting roles: our cleaning crew, florist, laundry services, a cavalcade of local equipment repair people, the family-run supplier of our recyclable and compostable to-go and market packaging, and so on.
Two diners share a spread during tinned-fish happy hour at Botanica restaurant in Silver Lake.
(Michael Blackshire / Los Angeles Times)
The tinned fish display at Botanica. The restaurant also has a market stocked with house-made goods and products from local, largely women-owned businesses.
(Michael Blackshire / Los Angeles Times)
And then 13.8 cents goes to occupancy costs (rent, utilities and trash/recycling/compost pickup); administrative costs (office supplies, our accountant, various apps and tools essential to operations, phone and internet, etc.); and the cost of credit card processing — 3.1 cents I really wish we could spend elsewhere!
The national average profit margin for independent restaurants is regularly cited to be in the zone of 3% to 5% (sometimes higher, often lower). This profit is necessary for retaining staff (raises), reinvesting in infrastructure (endless property and equipment repairs), navigating snafus (a power outage can result in thousands of dollars in losses), and repaying the investors, often friends and family, who funded the venture in the first place.
Botanica closed out 2023 with a 1.19% profit — but not from restaurant operations; those were just slightly less than break-even. Our revenue was boosted by a handful of commercial photo shoots held at the restaurant on days when we were closed.
Granted, Botanica is a more labor-heavy model than many in our cohort. We are open for breakfast, lunch and dinner; we have a robust coffee/tea/bakery program, and the front of our space is a market stocked with natural wine, house-made goods and products from local, largely women-owned businesses. These are laborious undertakings that require substantially more staff (with specialized training, no less) than a dinner-only joint. But these elements of our business, costly as they may be, are the ones that make us an especially useful, multifaceted neighborhood spot.
Botanica is open for breakfast, lunch and dinner. Sperling drops by a table to chat with customers Zal Batmanglij, center, and Blake Holland, right.
(Michael Blackshire / Los Angeles Times)
All this is to say that a restaurant like Botanica — like so many other independent, owner-operated neighborhood restaurants across the country — exists, first and foremost, to nourish its people. Hospitality is innately altruistic, and the neighborhood restaurant is especially, preciously, precariously so.
I don’t have any grand solutions to propose, though I do believe that low-margin, financially uncertain businesses like ours will need structural support to continue to exist. That 3.11% of revenue that goes to credit card processing fees ($98,725 last year, paid to our point-of-sale system, Toast) would be a transformational addition to our bottom line. And I’d vastly prefer to reinvest some of the 4.89% that went to payroll taxes ($155,000 in 2023) into our team.
In the absence of legislated solutions, it comes down to the diners. Nearly 20 years ago, right as I was starting out in the food world, Michael Pollan introduced the concept of “voting with your fork” via his seminal book “The Omnivore’s Dilemma”; it’s his way of succinctly expressing the importance and power that your daily food choices can have.
Botanica’s marketplace also sells natural wines, along with its selection of house-made goods and local products.
(Michael Blackshire / Los Angeles Times)
A server prepares a drink at Botanica. Co-owner Sperling says that since opening the restaurant almost seven years ago, labor costs have risen 40% for hourly workers and 25% for salaried management.
(Michael Blackshire / Los Angeles Times)
I’ve been trying to come up with a corollary that relates to the restaurant world — “dining with your values” doesn’t have the same ring to it; my suggestion box is wide open! — as a way to convey what it means to support restaurants not just for the creative/buzzy/exciting food they serve but for the broader philosophy that informs their work and exponentially impacts their small corners of the world.
Because for us to keep doing what we do, we need your support — and your understanding of the positive ripple effect that your support has. I hope this encourages you to feel good about your next brunch/dinner/coffee/cocktail outing at a thoughtful, community-minded restaurant near you.
It means more than you may know.
Heather Sperling is the co-founder and co-owner of Botanica, a restaurant and market in Silver Lake, Los Angeles.
The Trump administration has been making headlines for taking steps to loosen restrictions around cannabis, including legalizing it for medical use. Now it is beginning an experiment that places cannabis even more squarely into mainstream health care: thousands of Medicare patients soon will be able to get CBD, a nonintoxicating component, for free.
“ONE in FIVE adults used it in the past year, and many say it improved their chronic pain enormously,” President Trump wrote on social media last month in a post cheering the program.
The aim is to gather real-life evidence showing whether CBD can improve patients’ quality of life and, by extension, reduce health care costs, administration officials say.
CBD products are already popular with some Medicare-age patients. A 2024 study in Clinical Gerontologist found that 14.3 percent of patients 65 and older had used them in the past year. Patients usually purchase over-the-counter gummies and tinctures to ease anxiety, insomnia and chemo-related nausea.
“Millions of older adults are already integrating cannabinoid products into their health care routines, yet the health care system has almost no infrastructure to understand what they are spending, why they are using these products, or whether these expenditures reduce other health care costs,” said Sasha Kalcheff-Korn, the executive director of Realm of Caring, a nonprofit group that conducts research and promotes cannabinoid therapies.
Despite Mr. Trump’s ebullient endorsement, many doctors worry about encouraging the use of unapproved supplements to geriatric patients, who typically have multiple medical conditions and already take many medications, some of which could interact with CBD products to detrimental effect. Still, their concerns would be eased somewhat, they say, if patients collaborated with doctors on appropriate dosing, which is another goal of the government initiative.
”I believe that CBD should be available to all seniors as part of their health care, recommended by a provider with knowledge of cannabinoid medicine,” said Dr. Melanie Bone, the director of medical cannabinoid therapies at MorseLife, a senior residence in West Palm Beach, Fla. “It may help with a number of ailments of aging, and has almost no downside. But CBD is not a panacea. The only way to know if it works is to try.”
What does research show about CBD for older patients?
CBD, or cannabidiol, one of the most prominent compounds in the cannabis sativa plant, is nonintoxicating and known for its soothing effects on the central nervous system. Many CBD products are made from hemp, a legal strain of cannabis that is rich in CBD and has only small amounts of the intoxicating compound, THC. The Medicare program restricts the amount of THC that can be in hemp-derived CBD to 3 milligrams per serving.
In recent years, CBD has become increasingly attractive to older patients. Results from studies are mixed to positive. But many of the doses evaluated contained more THC than those allowed by the Medicare guidelines. Most researchers have noted the need for more rigorous gold-standard trials.
Mr. Trump’s assertion that one in five adults use CBD products, many for chronic pain, which was also included in supporting documents for an executive order announcing the program, appears to conflate self-reported surveys and polls that broadly address adult use of medical cannabis or CBD.
But a chief benefit of CBD that some studies do underscore is that many seniors use the products to replace opioids for pain and benzodiazepines for anxiety and insomnia, which can have troubling side effects.
The new Medicare program mandates that the CBD be given to patients only by doctors, who regularly review their medical history and reactions to the products.
How does the program work?
One of the main goals is to learn whether CBD can help older people feel better enough to get off, or avoid starting, prescriptions for pain, nausea, sleep and anxiety. The hope is that CBD could help prevent more expensive medical interventions that those drugs can lead to. Opioids, for example, can prompt dizziness, constipation, overdoses and trips to the emergency department.
Only a small subset of Medicare recipients — those who participate in a type of health care network called an Accountable Care Organization — will initially be eligible for the benefit. So far, just five large groups have been approved to offer CBD. By January, 2027, CBD will be offered to patients in all 74 ACO groups.
The participating organizations have providers across an array of states, including Oklahoma, Texas, Wisconsin, West Virginia and Arizona. Currently, only patients affiliated with programs in New York and Florida patients have begun receiving CBD products, according to a spokesperson for the Centers for Medicare and Medicaid Services.
Those doctors must buy the CBD products up front, spending up to $500 per patient a year. They must agree to screen patients and products carefully, and collect real-time data on how the CBD affects patients.
They will not be directly reimbursed for the CBD. In the incentive-based structure, these groups receive a budget from Medicare. Those that come in under budget by improving patient quality of life and reducing costs, now additionally equipped with CBD as a tool, will receive a percentage of those savings.
Are there any obstacles?
Yes.
Late last year, Congress passed a measure that could remove from the U.S. market most CBD products, including those that doctors suggest for patients.
That is because many CBD products contain far more THC and other synthetic, intoxicating compounds than Congress intended in 2018, when it created the legal definition of hemp, to distinguish it from marijuana. Many of those amped-up CBD items, packaged to look like candy, have led to calls to poison centers.
In reaction, Congress placed severe limits on hemp last year that are set to take place in November. Under those restrictions, Cornbread Hemp, a Kentucky-based company with a contract to supply CBD for the new program, will not be able to do so, because its products’ THC content is above the new limits. A patchwork of bills introduced in the Senate and the House are trying to slow or rewrite what amounts to a looming hemp ban.
In his social media post last month, Mr. Trump urged Congress to act.
“Please get it done, and SOON,” he wrote.
Michele Hanisee has been doing everything in her power to expedite the arduous process of rebuilding her Altadena home.
But after navigating permitting delays, insurance stalemates and design flaws, there’s still one big unresolved issue that’s complicating her progress: sewage.
Hanisee owns one of nearly 700 properties in Altadena that’s never had sewer lines, instead operating for decades on now-outdated septic tanks or even more archaic and environmentally hazardous cesspools.
L.A. County officials — and many residents, included Hanisee — would like to connect these pockets of Altadena to the county sewage system.
But the cash-strapped county government said it simply cannot afford the estimated $70 million the new lines would cost. And although officials hope the county can eventually acquire state and federal funding for the project, the lack of certainty on the issue has left hundreds of fire survivors in a stalemate.
“Do I build [with] septic or wait for a sewer line?” said Hanisee, 59. She said this issue has been particularly frustrating as the county promised expedited rebuilding permits; “It doesn’t help much if they don’t expedite the infrastructure work,” she said.
It’s also a major financial concern. Several fire survivors in this situation told The Times that they feel torn between planning for an upgrade to county-run sewers, or just moving ahead with rebuilding and improving their onsite wastewater systems. Either option could bring hefty costs, particularly if the county doesn’t end up paying for the sewer line upgrade and it falls on residents. The worst-case scenario, many said, would be fixing up their septic system to meet current requirements, and subsequently having to pay for the sewer line installation and connection later on.
“How do you move forward when you don’t know how much money you have to spend on the build?” Hanisee said.
On Alpine Villa Drive, shown May 1, 2026, homes have mostly operated on now-outdated cesspool systems for sewage.
County officials say they are aware of the quagmire facing these residents, yet they have no timeline for — or guarantee of — a resolution on the issue.
“Everything comes back to money,” said Anish Saraiya, the Altadena recovery director for L.A. County Supervisor Kathryn Barger. “We have more than $2.5 billion worth of public infrastructure we have to rebuild, including these sewers.”
He said the county remains hopeful that Congress will come through with $16 billion requested in federal aid for the region’s recovery from the Eaton and Palisades fires, which could be used on the sewer project — but that hasn’t yet been allocated or even promised. His team also is exploring potential state funding or other outside money, he said.
But even if the cash were available tomorrow, Saraiya noted that the engineering and construction could be lengthy, and the project could be completed after homes that need it are otherwise ready to be occupied.
“There are a lot of uncertainties,” Saraiya said. “We feel confident we can secure the funding necessary to make sure that it’s not an obligation on homeowners, but that is a bit of a timing challenge.”
Michele Hanisee is trying to rebuild her home on Gaywood Drive as fast as possible. But she said it’s hard to move forward with looming uncertainty around her home’s sewage system.
Timing, however, is of the essence for fire survivors. Many say they can’t afford to lose momentum on their rebuild, concerned about losing contractors, rising construction costs or how additional delays could further shrink their already-dwindling insurance payouts for temporary housing.
Others feel completely stymied by this latest headache, which only builds on other unexpected costs and hurdles in an already complicated process.
“Will we be forced to go onto the sewer?” said Patricia Anderson, Hanisee’s neighbor, who still hasn’t decided whether she can or will rebuild. “And will we have a big expense for that? Those kind of issues are a concern.”
Patricia Anderson, 83, would love to rebuild her Altadena lot on Gaywood Drive, but the lack of clarity around potential sewage upgrades for her street has exacerbated the already overwhelming process.
About half of the 682 lots with on-site sewage systems — most of which are septic tanks — experienced fire damage or total destruction, according to county records. These systems, scattered across Altadena, “pose significant risks of groundwater contamination, surface water pollution and potential public health hazards,” according to a statement from the L.A. County Department of Public Works. But the department noted that replacing all of them at once is a large-scale project that “requires a level of cross-departmental integration that has historically been difficult to achieve in disaster recovery settings.”
So far, the county has funded technical planning for the sewer expansion, but environmental reviews, feasibility studies and securing resident permissions — as many of the affected streets are private — have not been completed.
Even though county officials hope to find a way to pay for a widespread sewer upgrade, they’ve also presented residents with an option to form small community improvement districts, or property tax assessment groups, to finance small portions of municipal sewer lines. About a dozen neighborhood groups are considering that option, but many fire survivors worry it only adds to their already-squeezed budgets; estimates of up to $70,000 per lot have been circling neighborhood group chats, if not more. The county’s estimate of the cost by parcel is actually higher: between $85,000 and $134,000, depending on a property’s location and topography.
But the idea of a fragmented sewer installation and residents footing the bill misses the context of this moment, said Morgan Whirledge, a new representative on the Altadena Town Council, which can pass along concerns or recommendations to Los Angeles County leaders, but holds no real governing power or spending authority. He is a fire survivor whose home previously ran on a cesspool system.
“This work presents an opportunity to coordinate,” Whirledge said, noting ongoing undergrounding of power lines by Southern California Edison and other widescale construction. “You don’t want to come rip a street up twice.”
The county’s Department of Public Works has said that residents rebuilding like-for-like, without major changes to the size or setup of their home, can continue to use on-site septic systems, if they’re in good condition. But any other rebuild requires additional testing and potential upgrades or expansions.
Morgan Whirledge surveys the initial stages of rebuilding at his Altadena lot on May 1, 2026, including where his outdated cesspool system still sits underground.
If residents are willing to take a gamble on the unfunded sewer expansion project, rebuilds can be approved “with the intent to connect later, even if the sewer installation isn’t yet scheduled,” the Public Works Department statement said.
Barger, Altadena’s most direct governmental representative, said she understands this is an issue “that can slow recovery if we don’t get it right.”
“My focus is on finding a path forward that gives residents clarity, avoids unnecessary costs, and ensures we’re rebuilding Altadena in a way that is sustainable for decades to come — not just patching together short-term fixes,” Barger said in a statement.
Some worry that 16 months after the fire, it’s already too late for that.
Hanisee is still waiting on her permits, which if approved, include plans to connect to a new county-run sewer, which she hopes isn’t too optimistic.
“There’s this huge unknown liability for people whose streets didn’t have a sewer line,” Hanisee said. “We just want to go home and also not be forced to sell and leave because of all these issues that are creating obstacles to rebuilding.”
Because she’s not building like-for-like, if she ends up needing to rely on her old septic tank, it will require additional testing and possibly an expansion or update, both of which would add more costs to her rebuild. She also worries that she’ll end up having to pay for the new sewage lines.
What once felt like quirks of their Altadena neighborhood — helping upkeep the road, running on a cesspool — “all these things … have turned into nightmares,” Whirledge said. “It’s this cumulative effect of these incremental cost increases and complicating factors. That can be a huge blow at a time when you’re already really vulnerable.”
He and his family transitioned from the cesspool to septic for their rebuild, while also building for the possibility of a future sewer line connection — a plan he realizes is cost-prohibitive for many fire survivors, especially when there’s still a real chance that residents have to fund the new sewer line.
Decommissioning his old cesspool and buying the new septic tank already cost almost $10,000, he said, and installation and testing could easily triple that. His insurance policy does provide some reimbursement for code upgrades, but he said it won’t come close to the costs the family is facing.
“It’s a lot of money,” Whirledge said, “especially for something you want to never have to think about.”
A worker pumps sewage from a portable toilet on the property of Morgan Whirledge, who is in the initial stages of rebuilding at his Altadena lot.
When Jensen Huang, Nvidia’s chief executive, joined the group of American business leaders traveling with President Trump to Beijing at the last minute this week, many took it as a sign that progress was in store for the company’s long-stalled sales in China.
But as the summit between Mr. Trump and Xi Jinping, China’s top leader, wrapped up on Friday, the fate of Nvidia’s artificial intelligence chips in China was no clearer than it had been before.
Even Jamieson Greer, the U.S. trade representative, seemed uncertain about Nvidia’s future in China, saying in an interview with Bloomberg News on Friday that it was up to Beijing whether Chinese companies would make more purchases from the American chip giant.
Last December, President Trump approved Nvidia, the world’s leading chip maker, to sell one of its most powerful A.I. chips, the H200, to China. But since then, the Chinese government has yet to greenlight any purchases, and no H200s have been sold.
Instead, Beijing has pushed Chinese companies to rely on homegrown technology from chipmakers such as Huawei.
Just before Mr. Trump met with Mr. Xi, China reached a milestone in its long-running quest for technological self-sufficiency. The Chinese start-up DeepSeek said for the first time that its latest artificial intelligence model had been optimized to run on Huawei chips.
Mr. Huang had long warned that this shift was coming. Soon, China’s A.I. companies will rely on Chinese hardware rather than American technology, eroding U.S. influence over A.I. development in China, he has predicted.
U.S. officials did not seem to push the issue during their trip to China this week.
The decision on whether to buy the H200 “is going to be a sovereign decision for China,” Mr. Greer said in the interview. “Obviously we think it could be helpful to them in the long run, but they’ll just have to make their decision on that.”
For years, Washington has used export controls to slow China’s progress in advanced technologies like A.I., and analysts had expected Chinese officials to air their frustration with those restrictions this week.
Despite Mr. Huang’s presence in Beijing, Mr. Greer said, the two sides had not discussed chip export controls at the meeting.
China was firmly committed to producing advanced chips at home and views the U.S. tech industry as a threat to that effort, he said.
“If we are ahead of the game, like we are on A.I. chips, sometimes they feel that can stop their own growth,” he said.
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