Restaurant Closures Abound in 2013

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Chattanooga’s restaurant landscape is evolving at a rapid pace. So much, that some can’t keep up. While some establishments seem to flourish – Terminal Brewhouse, The Flying Squirrel, Taco Mamacita – others face uncertainty. Last year Chef Rocco of television’s The Restaurant claimed 90% of restaurants fail the first year. While not rooted in fact, his statement perpetuates the stigma that the restaurant business is volatile.

A joint study conducted by Cornell University and Michigan State University examined restaurants in three local markets over a 10-year period. They concluded the following: After the first year 27% of restaurant startups failed; after three years, 50% of those restaurants were no longer in business; and after five years 60% had gone south. At the end of 10 years, 70% of the restaurants that had opened for business a decade before had failed. Those are far different numbers than a 90% failure rate after the first year quoted by our television star chef. Another academic research study concluded that 81.4% of all small business failures result from forces within the control of the owners/managers.

Still, a restaurant’s fate is often determined before the first dish comes out of the kitchen. Location is the first key to success when planning. Commercial landlords know this all to well which is why restaurant owners must weight the additional cost for prime real estate versus the allure of cheaper rent in lower traffic areas. As downtown Chattanooga increases in popularity so does the cost of setting up shop. Read on to find out how much.

The body count of closed restaurants this past year seems particular high. Being a franchised restaurant was no guarantee of success either as evidenced by Sweet Peppers Deli, Qdoba and The Melting Pot shuttering their doors. The following list, while not indicative of why/how these restaurants closed, illustrates the volatility of the restaurant industry.

 

Fork & Pie Bar

Blacksmith’s Bistro

Steel Pan

Hixson Pike Diner

Sweet Peppers Deli

Northshore Lunch

Urban Spoon

Country Place Restaurant

Melting Pot

Hillbillys

Meo Mio’s Cajun

Fat Daddy’s Pizza

Market St. Tavern

Pasta Italia

Table 2

Niko’s

Qdoba’s

Crepe a Delic

Taco Sherpa

Pie Slingers

Soup’s On

Backyard Grille Out of the Blue

 

So how can a restaurant owner mitigate the risk? Here are a few things to consider. Build your fan base before opening your doors. There’s a noticeable difference between restaurants who market their place in advance of opening as opposed to those who just throw up a “Coming Soon” sign. Create some buzz in advance. Get people excited. Shift thinking from ‘this is just a restaurant’ to ‘we are building a brand’. Think like Starbucks by focusing on how to create the right atmosphere and customer experience.

Consider Taylor Monen. She and her husband Mike have successfully launched four restaurants in Chattanooga: Taco Mamacita in 2008 (with locations also in Nashville and Charleston) , Urban Stack in 2011 and Community Pie along with Milk & Honey in 2012.  Besides having great food, she attributes success to “delivering an experience from the food, to the decor of the place, and the customer service”.

But where a number of places get that wrong now the restaurant game has evolved to include a number of digital factors leading to success or failure. Monen said, “the Internet has turned that whole world upside down…because no one looks at a list of restaurants now and picks where they want to go…they go online and look at their website, they look at reviews, they look at all these different things that I can not control.”

The challenge, according to Monen, is to “create a brand that is both cool right now, and can be cool in five years, and can still be cool in 40 years”

 

Interested in starting up your own eatery? The location formally known as Blacksmith’s Bistro at 809 Market Street is available. Sign a five year lease and pay just $6,000 per month, or you can buy the place outright for $650,000.

If you think of any other restaurants that have closed recently, please list them in the comments below.

Jon is a Digital Marketing Strategist and Creative Media Specialist who has helped companies of all sizes with their marketing efforts. As a board member of the Chattanooga Technology Council, and is actively involved in covering the emerging business tech scene. Find him on Twitter @jonfmoss