Competition, high costs mean some restaurants suffering slump
[Note to some on this thread
This post is NOT talking about a nonexistent Bennigan's in Danville Illinois - But this is ground zero in Florida, so I suppose that Florida, Phoenix, Milwaukee, Boston, and places like that should be discounted too in lieu of the all important OJ rise in the wake of a tropical storm hit. Mish]
Monday, September 04, 2006
Ron Costello remembers the good old days when patrons crowded his Italian restaurant in Jupiter's Abacoa Town Center for dishes made from cherished family recipes.
But he's not talking years ago. He's talking about last summer.
"There are tough times," Costello says. Business is off by 20 percent at his Costello's Trattoria.
Summer is always slow for South Florida restaurants, but some eateries are feeling the effect of a wider money squeeze.
For many, this is the summer of their discontent — when gas prices, insurance premium hikes and, yes, even Tropical Storm Ernesto, have converged to cut sales.
In the past few months, a number of established eateries have shut down, from Red Fire Grill in Palm Beach Gardens to Chuck & Harold's in Palm Beach to Tsunami in West Palm Beach to La Vieille Maison in Boca Raton.
Two heralded new restaurants — Atrium, an Italian eatery in Abacoa, and Galipette, a posh Wellington establishment in the former Palm Beach Equestrian Country Club — closed within months of opening.
Nationwide, business at casual-dining chains such as Chili's, Applebee's and Outback Steakhouse has dropped by as much as 5 percent in the past year. One publication has already called this "the worst slump since 1991."
"I think it's the perfect storm," says Ron Paul, president of Technomic, a Chicago-based restaurant consulting firm.
More choices, more competition
Of course, for every trend, there are hot spots that buck the trend. Just try to get into Rosa Mexicano in Downtown at the Gardens, which had waits of more than two hours during its recent opening weekend. Or the beer-centric Yard House eatery, also at Downtown, where sales are nearly 35 percent above projection and wait times can run as long as 90 minutes.
"We're developing a good following," says General Manager Drew Minervino.
Other success stories: The stylishly chic Bova in Boca Raton and the calorie-conscious Seasons 52 in Palm Beach Gardens and Boca. (At Bova, they've been booking as far as a month ahead for a Saturday night reservation.) And some established places, particularly in southern Palm Beach County, have held their own. In Boca, J. Alexander's, New York Prime and Houston's all were said to have waits of 45 minutes to two hours on some nights.
But when new restaurants develop a loyal base, it means others are bound to suffer. And these days, there are lots of new restaurants — to the point of saturation in northern Palm Beach County, industry insiders say. At Downtown at the Gardens alone, there are also an upscale steakhouse (Strip House) and an innovative Japanese restaurant (RA Sushi) and a tapas bar (The Grape), among other eateries.
Plus, a dozen more restaurants are slated to open at two more Gardens outdoor malls, the nearly completed Legacy Place and the still-under-construction Midtown (also known as the Borland Center).
This affects restaurants throughout the region. CityPlace has a Cheesecake Factory, for example, but now so does Downtown at the Gardens. (Boca Raton's Cheesecake Factory has been open even longer.)
Michael Ignatowicz, general manager of City Cellar in CityPlace, estimates that 4,000 to 6,000 diners are opting to eat on Friday and Saturday nights at Downtown at the Gardens instead of CityPlace. Ignatowicz has seen his sales decline 2 percent this summer. But he can't complain too much: His restaurant group also has an eatery at Downtown at the Gardens called City Kitchen.
"The weekends are fantastic," he says of sales at the Gardens location.
Restaurants hurting; diners get deals
But for others, the competition can be stifling.
"Everybody is cannibalizing each other," says Kirk Wrigley, who owned the recently closed Red Fire Grill in Palm Beach Gardens.
Wrigley adds that while he did hold on to many of his regular patrons after Downtown opened, he noticed they were coming in less frequently — say, once every three weeks instead of once a week. "I just saw the writing on the wall."
Drastic times mean deals for diners.
Some restaurateurs, such as John Spoto of upscale Spoto's Oakwood Grill in Palm Beach Gardens, have launched new early bird menus. His new 5 to 6 p.m. value menu — nothing is more than $25 — has "made a big difference," Spoto says.
Costello's Trattoria offers discount cards to employees at the nearby Scripps Research Institute.
At Bennigan's, specials include a $2 discount off popular menu items on Monday and Wednesday nights.
"Those are now the best days in sales," says Clay Dover, Bennigan's vice president for marketing.
Restaurants need the sales to combat rising prices. In South Florida, the cost of real estate is an issue.
Most restaurant owners lease space from landlords, who are asking for higher and higher rents, given what they paid for the land.
Richard Lackey, a veteran restaurant broker, says that along PGA Boulevard, commercial rents have soared from $30 to $50 a square foot in the past three years.
And gas prices hit restaurants, too.
"Food service is one big engine, and it basically runs on diesel fuel," says Wayne Hoeye, director of purchasing at the Florida-based Beef 'O' Brady's chain.
One telling example: Hoeye estimates that gas prices have boosted the cost of French fries $1,000 this year for each Beef 'O' Brady's location.
'There's so much money in Florida'
Still, new restaurants keep coming.
At least a half-dozen will open in downtown West Palm Beach — CityPlace and Clematis Street — this season. Nearly every restaurant that's closed in recent months is to be replaced by another: Galipette in Wellington will become a restaurant run by the team behind New York's venerable Tavern on the Green. Red Fire Grill in Palm Beach Gardens is giving way to an eatery by veteran restaurateur and nightclub owner Rodney Mayo.
For all the signs of gloom and doom, South Florida remains a desirable locale, with a growing base of patrons.
"There's so much money in Florida, it's unbelievable," says Angelo Morinelli of Cucina D'Angelo, who came to Boca Raton after decades in the business in New York.
There's another factor, too: Every chef is apt to believe he or she has the formula for success — in spite of the odds. (Even in the best of times, the failure rate of restaurants in the first year is 25 percent.)
That's what makes the restaurant business a cousin to show business, says Ron Paul of Technomic, the consulting firm.
"The restaurant industry is not short of people with egos."
palmbeachpost.com
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Of course, if you want (and I expect some do want) one can look at the trendish stylish posh new flash in the pan restaurants and and make judgements off that.
Mish |
