Those who’ve worked around the local restaurant scene for years, or decades, have seen the constant stream of eateries that open in the area, and the many that close not long after.
Locals are typically eager to check out a new place, but how can you tell whether a restaurant will be able to sustain the numbers it needs to survive the first critical years?
It’s hard to say. One frequently cited study from Ohio State University found that 80 percent of restaurants close in five years.
“First of all, it is a risk,” said Bill Farriss (pictured below), owner of Farriss Hospitality, which has been offering restaurant equipment, as well as design and consulting services, locally for 25 years.
When he’s working with someone interested in starting a restaurant, they work together to evaluate an individual restaurant model’s chance of success.
“We look at a lot of different factors to make a more educated idea of how much of a risk it may be,” Farriss said.
He takes location, traffic flow, menu and concept into consideration – and has worked with everything from fine-dining restaurants to sports bars that have been successful. And others that weren’t.
Already this year, 79 new restaurant permits have been issued in New Hanover County, according to Alicia Pickett, an environmental health supervisor. In total, the county is home to more than 900 restaurants, including food stands and trucks.
Many food fans speculate on just how many eateries there are per capita in this area. According to a 2011 report from The Nielsen Company that ranked the restaurant growth index in markets around the country, the number of local restaurants is comparable to those in the Durham-Chapel Hill area and Asheville, but are supported by a smaller population. “It’s a fairly oversupplied market,” said Rob Shapiro, longtime owner of Sweet n Savory Cafe near Wrightsville Beach.
He said it’s necessary to always be innovating and changing to make the most of shifting demographics. In his time at the restaurant, the popular lunch spot had more competition as others opened close by. Since then, he’s grown the dinner service, expanded the wine list and added weekend hours to keep sales healthy.
For new places that don’t already have an established clientele, it can be trickier finding that niche.
Beer Barrio, which opened more than two years ago, is a Mexican eatery on a busy corner in downtown Wilmington. And now the owners are looking to open a barbecue-focused restaurant with an in-house brewery in New Centre Commons sometime next year.
“We had heard that if the food is good and the service is good, then people will come,” said Haley Jensen, co-owner of restaurant. “So we spent a lot of time on recipe development and finding good purveyors of quality food. And we listened to early feedback.”
Not taking the time to plan, for concept and business, can be an oversight.
“The big mistake that people make is that they go into the business underfunded,” Farriss said.
The cost of an upfit to prepare a restaurant for a new tenant can be $200,000 to $300,000, he said.
“I usually suggest that someone have two to three years of working capital after that.” It might be that long before a restaurant sees a profit.
Shapiro said this was part of the reason he recently closed the Epicurean Grille, a European-style restaurant which he opened earlier this year at the former location of The Pub at Sweet n Savory.
“I thought it could work,” he said. “And if I had more money to invest in it, it might have.”
While sales were growing, they weren’t growing fast enough. “I didn’t want to throw good money after bad,” he said.
For Shapiro, the restaurant business always brings new challenges.
“There’s no question that most restaurants are working off fairly small margins,” said David Swain, owner of Swain & Associates. “They need customers to come in every day.”
Because he knows how difficult it can be to make a restaurant a success, he said he usually offers profit- sharing lease agreements for those at The Forum, where part of the rent is based on a percentage of gross.
“I have found that a restaurant will provide a lot of what I’m looking for in a shopping center,” Swain said. “Having a few good ones attracts a lot of people. People will have good thoughts about having a nice meal, and they’ll have good thoughts about the shopping center. I feel like we are partners in this, and I want to help them succeed.”
During his 40 years of working with restaurants (and occasionally running them if the need arises), Swain has seen that successful restaurateurs must offer good food, but also do much more. They need to provide an experience, and spend many hours on the job.
“They have to coordinate a lot of people,” Swain said. “It’s a juggling act.”
Beyond that, there are other challenges. For Farriss, choosing the right site is critical.
“I’ve seen a place with great food and a bad location, it’s failed every time,” he said.
And he’s seen success with what he calls local micro-chains, some with several local sites and others that are Wilmington-based franchises, from Slice of Life to Chops Deli. “Shuckin’ Shack has been stellar,” he said. The seafood-and-oyster bar now has more than a dozen locations.
And while tourists can help area restaurants, most depend on locals.
“We are a vacation spot, but not like Myrtle Beach or Charleston, where people may go out to eat four or five nights a week. Most restaurants are looking for people who live here as their base,” Swain said.
Shapiro said a restaurant must do well during the 31 weeks of off-season. “What you make in the summer is great, but that can’t be all of it,” he said.
Jensen, Swain, Farriss and Shapiro all said they’ve had similar conversations with wannabe restaurateurs, who dream of quitting successful careers to open a restaurant –without understanding the business savvy and hard work that are required to make it a success.
“This isn’t a glamorous business,” Farriss said.