Is the Worst Over?
Things were looking grim for the restaurant business last January. The tanking economy seemed to reached its nadir during what is already the slowest dining month of the year (too many people feeling too cash-strapped or too stuffed to eat out after the holidays).
Everyone looked a little blue from all the extended breath-holding. There were anxious rumors — mass closings, a blighted dining landscape. I heard the word “bloodbath” a couple of times.
Well, not exactly nothing. Excelsior closed, but that wasn’t a shock to anyone–the restaurant had long seemed to struggle to find its audience (despite Eric Brennan’s fine cooking). The Dish, a South End neighborhood favorite closed up shop, and Marc Orfaly’s attempt to break the Restaurant L curse failed after just a few months.
But none of it was shocking, and nothing came close to reaching bloodbath proportions.
Which is why it was so alarming that week in late May/early June when three restaurants announced they were closing by July. Aujourd’hui, Great Bay, and Icarus; all award-winning, fine dining restaurants, gone from the scene. Was this a sign of the Armageddon we’d been waiting for?
I’ve been discussing this question with industry folks for the past few weeks, and the answer I’m hearing is, happily, “no.”
“It’s big news when a restaurant like Aujourd’hui closes,” says Michael Schlow of Radius, Via Matta, and Alta Strada, formerly of Great Bay. “You look at cities like New York and Chicago, and it happens all the time. We’re very fortunate in that we haven’t had many closings. We may not do the same gross revenues that other cities do per square foot, but we’re a fairly stable restaurant community.”
“I think those closings were a coincidence,” says Charlie Perkins, Boston’s best-known restaurant broker (and the agent who handled the Icarus sale). “We had been working on the Icarus deal for several months. It just took a while to get someone who had the financial wherewithal to do it. I think the group that owns the Four Seasons just wasn’t getting the return on investment they wanted. Hotels want to get out of the restaurant business and either bring in a celebrity chef or lease the space out to a chain.
“And why did Great Bay go out? Quite honestly, there isn’t a market for a fine dining restaurant in Kenmore Square. The lion’s share of the business is done by Eastern Standard. I think Great Bay was the wrong concept for the location.”
For its part, Great Bay said in a statement, that, given the economic climate, “the principals decided the best course of action was to close [the restaurant], rather than try to re-make it into something other than what it was designed to be.”
So that’s three coincident closings, but no proof of a meaningful trend. And, while restaurateurs are generally skittish about admitting to financial strains (dining out is a form of theater, after all), some were surprisingly frank.
“We were scared shitless in January,” Orfaly says. “Pigalle is only profitable six months out of the year. July, we lose money, and the other five months, we’re good if we break even. December has always been our workhorse. And this December we were down, like, 50 percent. But one thing restaurateurs are good at is getting creative, so we came up with our $40 prix fixe, and made sure we were still appealing to our regulars, and through that, we’ve actually been surprised. I started to feel less panicked at the end of January. And our numbers are actually up.”
That’s not to scatter rosepetals and unicorn dust on a still-struggling market. “Some people are doing great, and others are having a really hard time,” Orfaly says. Summer, despite its influx of tourists, can be a tough season for upscale restaurants (though, this being the Year of the Staycation, perhaps that will change).
But, on the whole, restaurants seem to be hanging in, because good operators know how to make do in tough times.
“They’re working harder than ever,” says Schlow. “The key is to make sure your guests don’t feel the impact of the recession. You make the alterations you need to make without the guests noticing — renegotiating with the linen company, renegotiating with the valet service. Not every restaurant can turn into a $19.99 bistro [Ed. note: Amen!]. We still need diversity in our city. We’ve really been making progress in the last 10, 15 years, and I don’t want to see that stifled.”