RESTAURANTS
“These are tough times, tough times,” said Bonnie Riggs, NPD Group’s restaurant industry analyst. “This is the biggest drop in 20 years,” she said of the overall national decline.
The tough times might also be just what the industry needs, as restaurant numbers have outpaced population growth in the U.S. for a long time, according to John Gordon, principal of Pacific Management Consulting Group and a restaurant analyst.
“It’s not all bad,” Gordon said. “There are just too darn many restaurants.”
Over the past decade, the rise of fast-casual concepts such as Chipotle and Five Guys have added thousands of restaurants across the country, but there hasn’t been much of a culling among the rest — until the past few years.
Subway, one of the largest chains, has closed hundreds of stores in the past year and
has hinted at many more closings to come. Bob Evans and Bravo Brio, two locally based chains, have also closed stores as their financial health waned in recent years.
Restaurants have also lost traffic as the gap between the price of eating at home — groceries — and eating out has risen sharply, and options such as meal kits have given consumers even more reason to skip dining out.
“The problem has been that we have more supply than we have demand,” Riggs said. “I think we are beginning to right the ship.”
Alshough some chains, such as Bob Evans, Bravo Brio and Applebees, have waffled in the face of competition and changing consumer habits, chains on the whole are holding their ground. Small independent restaurants are the ones leading the wave of closings, both nationally and in central Ohio.
Iconic local dining spots such as the Florentine, Haiku and Alana’s Food and Wine, along with others like Double Comfort and the
Chintz Room, have bowed out. Wendy’s, meanwhile, is planning to add about 1,000 stores in the coming years.
“Independents often don’t have the capital or backroom business operations to weather competition,” Gordon said. “Scale also helps the chains as well on purchasing, sharing costs and obtaining real estate.”
Gordon surmises that real estate is often an issue for independents, and it can be a good or bad thing. Lease costs have become very high in popular neighborhoods. Columbus’s Short North is one such place.
Mary Lyski closed Double Comfort last year after her rent went up 50 percent.
“It is so hard to keep independents open with high, high rents,” Gordon said. “It’s a killer, particularly in center cities.”
Because many independent restaurants are family enterprises, retirements and changes within the family also play a role in closings.
The Japanese Steakhouse on North High Street across from the Greater Columbus
Convention Center closed last year when the owners retired. It was replaced by a fast-growing chain, Fuzzy’s Taco Shop.
Sometimes, a good deal is too hard to pass up.
Paul Liu closed Haiku after a 17-year run in the Short North when a developer, looking to build a 10-story mixed-use project, agreed to pay $4.1 million for the halfacre parcel in the heart of the Short North at the intersection of N. High Street and Hubbard Avenue.
“As owners, we have a bittersweet feeling about this move,” Liu said when the closing was announced. “But in the end, it is for the greater good.”
Family-run restaurants, like other businesses, are often hard to pass along to subsequent generations.
“It was time,” said Nick Penzone, who managed the kitchen at his family’s Florentine restaurant, which closed after 71 years. “It was time to branch off and do something new.”
Penzone now bottles and sells the restaurant’s sauces.
Other factors have tempered restaurant growth as well.
“There are so many options available, now that restaurants need to figure out how to compete in what is becoming a new marketplace,” Riggs said.
“Consumers are strapped for time, and convenience is driving behavior. Look at (the popularity of) meal kits and the Instant Pot,” a newly popular quick-cook home appliance.
Riggs believes the loss of restaurants will continue, much as retailers big and small have been paring store counts for several years.
Central Ohio isn’t alone, either. In the more than 200 markets that NPD surveys, just 18 showed growth — including obvious boom towns like Phoenix; Austin, Texas; and Las Vegas, Nevada.
“It’s a very challenging market,” Riggs said. “That’s the story just about everywhere.”