Residents of Los Angeles were thrilled to spot the taco cart from Villa’s Tacos making an appearance during Bad Bunny’s Super Bowl halftime show.
This eatery boasts three locations across the city, and locals take pride in their achievements.
However, it’s uncommon for street vendors to transition into permanent storefronts, largely due to local governmental challenges.
In a recent announcement, Los Angeles County revealed plans to acquire new equipment to give out “free” to street vendors.
Yet, these “free” carts are financed by taxpayers, including businesses that have to contend with such vendors directly.
Some argue that it’s just how capitalism works—any solid restaurant should be able to compete with a small hot dog cart nearby.
The reality, though, is a bit different. It’s not simply a large restaurant up against a tiny vendor. On one side, you have restaurants facing hefty taxes and fees, and on the other, you have nimble vendors sidestepping those regulations.
In California, businesses contend with various taxes—state income tax, sales tax, unemployment insurance, and disability tax. These are layered on top of federal taxes like income and unemployment, plus Social Security and Medicare taxes.
Restaurants in other states can deduct server tips from their taxes, which isn’t allowed in California. If a restaurant adds a mandatory tip for a large party, the owner must also pay taxes on that tip.
Additionally, Los Angeles has its own sales tax, pushing the total above 9.75%. Business taxes here are also a percentage of the revenue.
If a restaurant operates in a city or county-owned facility, it has to pay what’s likened to a property tax, even though they don’t own the real estate. Liability insurance for government property is another cost restaurants shoulder.
There are also extra occupancy taxes for businesses in the city, plus an “unsecured property tax” for equipment on government land.
Finding ways to keep afloat, restaurants must also pay for health and fire department licenses, along with fees for serving alcohol and some foods. Disposal and sewer connection fees add more to their burden.
While restaurant taxes and fees continue to rise, street vendors benefit from not facing similar costs for facilities or rent. They have no requirement for hot water or restrooms, and now they can get their carts free from the county.
Many vendors hire few employees or operate under the table, avoiding unemployment insurance and workers’ compensation—which contrasts with California’s licensed restaurants, where staff are among the highest-paid in the country.
Every business in California grapples with challenging laws, plus the threat of frivolous lawsuits. For instance, there’s a law that allows employees to sue if they feel their workplace isn’t adequately protected from harassment.
Local restaurants, particularly during the pandemic, faced the strictest restrictions, while street vendors enjoyed more freedom. The surge in delivery services, often charging restaurants hefty fees, has only added to their struggles.
Fires in areas like Palisades and Altadena forced entire communities to evacuate, leaving traditional restaurants struggling under high rents, while vendors could relocate to more favorable spots and at lower costs.
Looking back, my father started his first burger stand in LA in 1977 after immigrating. He opened three more in a short timeframe.
Back then, it took about $50,000 to start a new business. Today, connecting a new restaurant to the sewer system costs around $20,000 alone.
According to him, opening a new restaurant now requires about 500,000 yen.
The truth is, state and county policies often don’t support immigrant street vendors effectively; many find themselves trapped in small businesses that barely scrape by, limiting their potential for building wealth.
Nothing is genuinely “free” here. Before the push for equality targets the wealthy, it risks undermining the aspirations of small immigrant owners and could detract from LA’s vibrant restaurant scene.
So, while I enjoy Villa’s tacos, the cart seems to serve better as a halftime show prop than a thoughtful business initiative.
