Walk down West 25th Street in Ohio City today and you'll spot a dozen restaurants that weren't there as recently as four years ago. Ride your bike down Detroit Avenue in Lakewood and the story is pretty much the same, with nearly a dozen new restaurants coming online in just the past few years – and we're not talking Subway and Jimmy John's. The Flats East Bank just sprouted three sporty new spots, which join many more new downtown eateries. Zack Bruell is weeks away from opening his seventh Cleveland spot in nine years, giving Woody Allen a run for his money in terms of production.
"There are too many restaurants in Cleveland," is a common refrain. "The market must be saturated."
Despite knowing next to nothing about economics, I do recall something about supply and demand, which states that as consumers' demand for a product increases, so too does the supply. Conversely, when the demand for a product wanes, so too will the supply.
I wondered: Do these same laws of economics apply to the Cleveland restaurant industry?
"This whole generalization that there are too many restaurants in Cleveland I think is bullshit," says Steve Schimoler, who himself has a few new projects up his sleeve. "It's not like our customers are saying, 'I have too many choices!'"
Schimoler says that pretty much everything you learned in school (had you been paying attention) still applies to restaurants. That means securing the right location, knowing who your key demographic is, and supplying the right product for that demo at the right price point.
But given the sharp rise in restaurants, and the oft-reported decline in local population, aren't operators vying for a slice of an ever-shrinking pie?
"Yes, there's a spike in terms of new restaurants opening, and yes the population isn't increasing at the same rate," explains Schimoler. "However, if you look at downtown Cleveland, you are seeing an increase in people moving there. I'm also seeing a much wider net of customers now than when I opened Crop in 2007. I look at the reservations in Open Table and I see area codes from Atlanta, L.A., Chicago... people coming into town to do business at a corporate level."
Doug Katz reports observing the same expansion in demographics at his 12-year-old restaurant Fire Food and Drink. "With websites and travel shows, more people are coming to Cleveland to eat at a Michael Symon restaurant, and then they get here and see what else is around," he says. "Or they come to the Cleveland Clinic to see a doctor then go out to eat."
New trends and options like small plates, vegan and vegetarian food, and trendy ethnic dishes are enticing more local customers who perhaps didn't eat out so much before to do so now.
The clear winner in this ever-more-crowded landscape is us, the diner. Every chef and operator I spoke with regarding the topic of industry growth responded with similar sentiments about how stiffer competition results in a better product.
"The bar keeps getting raised – you gotta get better and better," Schimoler says. "You have to gain your customers' trust and keep it. Are half of the restaurants that opened in the last 12 months going to fold in three years? It's very possible. Restaurants that survived on the edge before all these new restaurants opened will close."
Now more than ever, say owners, restaurants need to be shrewdly conceived and cultivated at every stage of the process. Gone are the days of "build it and they will come."
"It's a different game than it was 12 or 15 years ago, when there were only so many good restaurants to choose from," says Katz, who recently added Katz Club Diner, Provenance and Provenance Café to his portfolio of restaurants. "You need to get an amazing deal on real estate, you have to watch your budgets very closely, and you need to be very conservative about setting up your business."
While stiffer competition is a boon for the diner, it isn't always paradise for the owner, who has to keep his or her business fully staffed with professionals.
"My biggest worry and challenge is the labor pool and what's available in the community in terms of staffing my kitchens and restaurants," Katz notes.
"Poaching," the unwelcome practice of soliciting a currently employed individual to swap allegiances, is becoming increasingly common, say chefs and owners. Also widespread is the migration of servers and bartenders from one new restaurant to the next to cash in on opening crowds.
When occurring at a high rate, both practices can hurt the diner's experience thanks to a near-constant pool of green staffers. The way to counter that, of course, is to offer more money, better benefits and a more lucrative (aka busier) workplace. More and more, the only employers able to offer such perks are the multi-unit restaurant groups, which save money in ways small operators cannot.
"There are definite economic advantages for restaurant groups, like shared resources that cover accounting, payroll and HR," says Schimoler. "Consolidated purchasing can mean the difference of two or three percentage points, which is huge."
Big name operators can make or break a new development project, which means they're often presented with the sort of sweetheart deals and favorable leaseholds that others would kill to secure.
So, does this mean that in the near future Clevelanders will only be dining in restaurants run by Zack Bruell, Doug Katz, Steve Schimoler, Eric Williams, Alan Glazen and Jon Sawyer? Does the rise of the restaurant group signal the death of the small, independent operator?
No, says Schimoler.
"If you're a mom-and-pop restaurant and you're happy with netting 50, 60, 70 grand a year, you can survive quite a while if you stay on top of everything."
Big or small, adds Schimoler, the same law of economics governs all restaurants.
"If you make a living in the restaurant business, you have to be resigned to the fact that your customer will ultimately decide your fate."
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