Austin Hill

Did you hear the big news from the world of small business? Jewish delis are closing in both Los Angeles, and New York City.

The trend has been a long time in the making, especially in New York City where Jewish delis’s used to number in the thousands and now total less than one hundred. Yet the Los Angeles Times reported this “news” just this past week, and the details that the report included – and the details that were ignored– point to some far greater problems.

The article, written by Journalist Tiffany Hsu, notes that the decline of the L.A. area Jewish delis “seems to be accelerating partly because of health concerns over the schmaltz-spread fare...” This may very well be the case – certainly American adults are inclined to being more “health conscious” with their dietary choices, rather than less, and food categories of all types that are perceived to be un-healthy are probably headed for a declined in consumption.

From there, the article suggests that “skyrocketing” food costs have driven some delis out of business. That may be true, too, but what has caused that to happen? The article suggests that “mass exports” of food to Japan is the culprit on the price spike. The story also blames the decline of LA-area Jewish delis on “the recession,” “too much competition” from other restaurant sectors, and the notion that younger consumers “don’t understand delis and comfort food.”

It was only one small news story in the LA Times. But let’s think through some of the ideas in this news story – ideas reported as “facts” – and consider what they mean from an economic standpoint. Consider, for example, the notion of “too much competition.” What exactly does this mean?

Obviously the more competitive a marketplace is, the more difficult it is for any particular business entity to survive and thrive. But how do we know when the level of competition is appropriate, and when it is “too much?”

Americans are accustomed to fierce competition in other arenas – in sports, especially, and even in the arts and entertainment. Similarly, most of us would never say “my favorite team didn’t make it to the Super Bowl this year because there was too much competition in the NFL.”

But when it comes to local small businesses, we often succumb to this vague, un-defined notion that there is this magical amount of competition that’s “just right,” and if our favorite business can’t compete, then therefore there is “too much” competition.

Austin Hill

Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.