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The Economics of Generosity: A Homeless Man’s Advice to Restaurateurs

Cross-posted at Huffingtonpost.com

If you want your restaurant to prosper, give free food to the homeless. This is according to the anecdotal evidence put forward by my homeless friend Yehuda. Yehuda has been on the streets for five years in Los Angeles and can can’t shake a heroin addiction. He lives on small change from kind souls … and restaurants. Yehuda once had a thriving window dressing business and a million friends. Today he depends on people’s leftovers and meals from generous restaurants for his fare.

Yehuda taught me this important lesson when a recently opened, kosher-certified, national franchise shut down, much to the surprise of the neighborhood. The story followed an arc that Yehudah had seen before.

Yehudah began approaching the new fast-food sandwich shop that had opened on his regular stretch of road. They were generous with Yehuda, offering him a sandwich as much as once a day. The food went a long way to sustaining him, and a few other homeless Jews who call Pico-Robertson home.

The new gleaming store was packed the first few months. But as time went on, the crowds became thinner. Eventually, the free sandwiches became less and less frequent. The worse business got, the more they resented him. Soon they stopped giving him food. Within months the restaurant had closed its doors. A successful national franchise, on a popular restaurant block, with special kosher certification, was now a thing of memory.

If this were one isolated case, it would not prove anything. But it was not.

Over the course of these five years, Yehudah has seen other restaurants come and go. The same pattern of generosity followed by hostility accompanied the downfall of all those restaurants. There was one place that chased him out with a broom — they were closed within a month. It didn’t matter that Yehudah warned them against treating the homeless this way. He warned them that their tight fist, would be their downfall. But who is going to listen to a junkie homeless man for business advice? Nobody it seems.

One of the businessmen that didn’t treat Yehudah well, who subsequently opened a new shop after his latest one failed, began to see that Yehudah had a point. He started giving Yehudah food every day. Whenever Yehudah stopped by, he was sure to walk away with something fresh to eat. Yehuda said the business was booming.

I went to check this out for myself.

Passing by this establishment for the last six months, I can attest that the place is thriving. Customers line up for food. They run out of product all the time. The owner is happy, and the business, even in these times when small restaurants are really hurting, is thriving.

Restaurants often chase the homeless away, instead of inviting them to the backdoor for a warm meal. We, the customers, loathe their pan-handling when we are trying to have a coffee with friends. We resent them for interfering with our plans to go and get something to eat, and for making us feel guilty. Let someone else give them a hand, I have heard said too many times.

Prosperity is not deserved, but is a blessing bestowed by God. The Torah teaches that when a person puts out his or her hand, it is a commandment to fill it. Therefor it is not surprising that the Torah’s economic principles can be a lesson to us all. Generosity begets blessing.

Hopefully, someday soon, our MBA students will learn about the economics of generosity, and restaurants that want to have a fighting chance, will adopt Yehuda’s simple business plan.

Follow Rabbi Yonah Bookstein on Twitter: www.twitter.com/RabbiYonah

3 Comments

  1. themicah

    1/21/2012 at 2:35 am

    I think the symptom and cause here are backwards. It’s not that treating the homeless well will magically make your restaurant do better.

    Rather, if your restaurant is doing well, you’re more likely to be in a generous mood (and less likely to care about losing a dollar of revenue here and there). Once the novelty of that new kosher franchise wears off and business stops booming, it becomes a harder decision to give things away. And subconsciously you want to blame everyone but yourself for your failure, so the scuzzy homeless guy who makes the occasional intolerant customer feel uncomfortable is not as welcome as he once was when there was a line around the block whether or not he hung around.

    • themiddle

      1/21/2012 at 2:11 pm

      Themicah makes good sense. I think the fault line is one of faith here. Does doing the mitzvah always get you the business success you seek? I think you can be a good person and not always be generous with the homeless when you’re running a business. Those free sandwiches may be free to the homeless person but they’re not free to the restaurant owner. The restaurant owner also has to consider whether his customers will feel comfortable eating their paid-for meals around someone who is homeless. It’s not a question of bias, but guilt (“How can I feed myself and my family this well while others around me are in such trouble”) but that may be enough to drive customers away since they aren’t coming to the restaurant to feel guilty.

  2. Mike Darnell

    2/18/2012 at 4:18 am

    For the past year I’ve made it a habit to give the smallest bill I have in my wallet to the 1st beggar I meet on the street. Adopting this as a ritual has taken the dilemmas listed by the good Rabbi Yonah out of the equation – I don’t pass judgement, I don’t ponder, I don’t rationalize.
    All i do is take out my wallet. find the smallest bill, and hand it over – simple.

    Being secular and a cynic to boot, it nearly irks me to have to report the outcome of the above.
    I’ve noticed a change in my life – it got better. Much better!

    No matter how distraught or stressed I was before, the moment I’ve done my little charity for the day all the anxiety disappears and is replaced with a sense of well-being and happiness. I immediately remember how lucky I am to have a family that loves me, a roof over my head, etc. –

    Every time I give 20-100 THB* I feel like a $1,000,000 – how’s that for ROI?

    Being a pragmatist I’m even more impressed by the very tangible impact I’ve discovered my charity has on my success – You see, usually when I’m out-and-about town it’s because I’m going to a meeting with an existing or potential client, and the simple truth is that entering these meetings with the confidence and sense of well-being my charity helps me achieve is working out well for my business – and it’s so much cheaper than coaching or psychotherapy!

    * – I live in Bangkok : )

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