It's been a rough, rough year for restaurateurs around the country and the local region, and as January draws to a close we have a somewhat shocking estimated tally of how many Bay Area restaurants have decided to shutterin the last five months either voluntarily after many years in business, due to increased headaches and decreased profits, or those that were forced to close after just a few short months or years. The East Bay Times puts the number at "upwards of 60," and discusses the turning point I've already reported on in these pages that is forcing some newer restaurants away from full-service dining toward a counter-service model. (Also of note, a quarter of those closures are Pasta Pomodoro locations.)
While the restaurant industry has always been defined by tight margins and labors of love, we've been reporting on the recent spate of closures, many tied to the end of the year, with some anxiety. It's been reported widely and often how long and hard a slog it is to get a new restaurant open here, particularly in San Francisco proper where building inspectors take no prisoners, building codes are complex, and virtually anyone in any neighborhood can stall a project on the basis of a variety of objections. Add to that the especially high cost of doing business in SF, with a mandated, rising minimum wage that does not exempt tipped employees, as well as mandated health coverage, plus historically low unemployment and fierce competition for experienced staff, and you have an industry that is frustrated by having to raise prices on dishes and potentially lose customers because of it.
Gwyneth Borden, executive director of the Golden Gate Restaurant Association, tells the EB Times, "We’re at this precipice where the model of the full-service restaurant is being pushed to brink."
It's a refrain that's been widely echoed in the media, via restaurateurs, and it's not SF's problem alone. Thrillist published a three-piece series over the new year that concluded with an article asserting that "there's a massive restaurant industry bubble" nationwide, and it's "about to burst." One of the primary sources quoted in the piece was AQ owner Matt Semmelhack, a first-time restaurateur when he burst on the local scene five years ago, but who's now been chastened by having to close his two biggest restaurants in quick succession Bon Marché after barely a year, and his flagship AQ, this month, after just over five years.
Thrillist noted that Portland chef Andy Ricker, who took his Thai restaurant concept Pok Pok to New York several years back, shuttered his Sen Yai noodle joint in Portand citing "soaring rents, the rising minimum wage, and stereotypical ideas about 'ethnic food' as 'cheap food'", in speaking to Portland Monthly. Even major New York restaurateur Danny Meyer was forced to relocate his famed Union Square Cafe last year after his landlord jacked the rent.
Then there's the issue of competition. Every city in the country has seen a culinary boom in the last ten years, and there's a certain similarity that pervades many of the nation's hippest dining spots housemade ketchups and patés, craft cocktails, bare wood tables, Brussels sprouts with bacon. The fickleness of diners combined with a boom in restaurants here in the Bay Area, concurrent with the tech boom, probably spells disaster for many newer eateries that haven't established a very loyal clientele, or received such hyper national attention (ahem State Bird Provisions) that every foodie tourist makes sure to stop there.
And then there's the FOMO backlash problem (sometimes called JOMO) of too many people deciding to stay in, order from Munchery or UberEats, and watch Netflix something that's also impacting urban nightlife here and elsewhere. It's become way too easy to eat well at home and entertain yourself, and especially in San Francisco where so much of peoples' incomes goes toward rent, you end up with too many restaurant seats empty and too little money coming in where it counts, from the profit-heavy bar.
As New Orleans chef James Cullen tells Thrillist of the current trends, "It's self-flagellating chef martyrdom at its best. Chefs all want to make their own charcuterie and bake their own breads. And if you're wildly talented and you're making exceptional stuff, great. But most chefs know in their heart they can buy it from a local butcher or baker and it'll be at least just as good, but they're too proud. And so you've got these kitchens putting in just as much labor as fine-dining spots, but not charging nearly enough to make it worth their while." (See also the first piece in Thrillist's series, about why "The Hot New Food Town" mythology must die, and all these trends with it.)
Arguably, for some of the restaurants that closed in SF over the last five months, there was just a failure of location calculus and too much optimism in the previous couple years about how much new tech wealth was being spent on eating out. In-house cafeterias at the bigger tech companies have been cited as an issue, but that mostly kills the lunch business. And in a city where we now have one restaurant for every 100 people about 7,600 restaurants total in our approximately 49 square miles a correction like we're now seeing was inevitable.
Regardless of all these recent trends and impacts on restaurants' bottom lines, this has never been an easy industry, with most restaurants shuttering within their first year, and only 30 percent of those that do survive year one making it past the three- or five-year mark. The Zunis and Boulevards and Gary Dankos are the exceptions to this rule, and even they can outstay their welcome just look at Fleur de Lys, which had a star chef and decades of accolades, and closed in 2014, or Berkeley's Cafe Rouge, which called it quits in December after 20 years largely due to staffing troubles, and the owner's exhaustion with them.
It's true, however, that if you have restaurants you love, you should show them some love on the regular this year, because it's going to be a rough road for everyone for a while.
Previously: Is SF's Golden Age Of Restaurants Seeing Its Sunset?