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More Dirty Speculation

Another Raleigh site, once again, is reporting rumors of additional downtown business demises in the wake of the Riviera’s recent closing. At the Independent Weekly’s blog, the floor manager and chef of one of downtown’s best restaurants flatly deny the rumors.

Why sites feel the need to publicize the possible demise of specific downtown’s pillars is beyond me. Recent reports of a popular downtown retailer having empty shelves is only going to invite potential customers through big-box competitors’ doorways. Regarding restaurants, the natural reaction to rumored woes is to avoid the place. Nobody likes being in a dead restaurant serving possibly not-so-fresh food. The result of these errant stories is to fulfill their own prophecy. Is that what other sites really want? If so, the “nonoraleigh.com” domain is available.

Wasn’t the $221 million convention center supposed to fix all of downtown’s woes? Weren’t the $9 million Fayetteville Street project and the $60 million Marriott supposed to make downtown the best area in Raleigh? I’m being facetious, of course (I really like downtown’s improvements), however to blame “the economy” is an exercise for the lazy. As of this post, two expensive restaurants (and soon-to-be- third) have recently opened at Crabtree, and people are still waiting for tables at the Cheesecake Factory and P.F. Chang’s.

Where is the talk about closings of Ruth’s Chris, Coquette, Vivace, Rey’s, An, Bonefish, Firebird’s, Outback Steakhouse, Shabashabu, The Melting Pot, Twisted Fork, Portabellos, Cafe Tiramisu, Bloomsbury Bistro, Porter’s, Frazier’s, Glenwood Grill, Evoo, Taverna Agora, and Michael Dean’s? Surely these, which are all on the price level of the rumored downtown restaurants, are feeling a crunch. Some of them may not even make it through this market slump. However, doesn’t it stand to reason that their failure rate should be the same as downtown’s if “the economy” is the source of the problem? If the failure rate is indeed higher in downtown than in other parts of Raleigh, then perhaps the lack of a billion dollars of downtown investment (much of it being forced public money) is not what was holding downtown back after all.


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  • Chris Said:

    We also need to keep in mind that most new restaurants fail, even in good economic times. (I thought I read somewhere that the failure rate was in the 70-80% range.)

    It’s a tough, tough business no matter the location.

  • Dana Said:

    Can you define “new”? The Riviera was over two years old, and just as old as several of the surviving outlying ones I mentioned. One of the restaurants mentioned as failing in the rumor article at another site is well over 10 years old.

  • Matt Said:

    I feel like I have to comment on this as someone who works in the foodservice industry (though not at a restaurant, for what it’s worth). I can say with confidence that the economy IS the major reason that many of these restaurants are closing. There are any number of studies that show people eating out less, which combined with the huge increase in food cost over the last few years means that everyone is feeling a squeeze.

    As for the other restaurants you listed, the grand majority of those are at least partially supported by a well-funded parent company. It is easier for them to stay above water than the independently-owned one-off restaurant. They also have parking lots, which are obviously somewhat difficult to come by downtown, especially for free. If the average joe is going to eat out, is he going to go to Crabtree, or drive downtown and pay $4 for parking before he even walks in the door?

    One other thing to keep in mind: Almost universally, during good times, restaurant owners love to live high on the hog, and they spend money like it is water. Then when things get tough, all of a sudden the sky is falling.

  • Dana Said:

    16 of the 25 I mentioned are locally owned. While some of them are tied to local restaurant groups, I would venture to say that these local groups are not able to absorb a couple of bad months like P.F. Changs and the Cheesecake Factory can.

  • Ron T Said:

    As for Riviera, I was sorry to see that go. More because I liked the owners, than the restaurant. It was “fine” but I usually forgot it was there when thinking of places to go. Nothing to draw me back in. From what I recall reading, most restaurants fail within the first 3 years. So that could be a rule of thumb for new.

    I realize you don’t want to further the rumor Dana, but I am very curious as to which restaurant you are referring to as being rumored to close.

  • Tom Said:

    All I can say is “Bring Back The Spectator”! The Independent (in my eyes), is pathetic. My point, their news seems to be opinion rather than fact.

    Also, if you looked at their news throughout the elections, they sounded like a bunch of radical far left socialist nuts.

  • Al Said:

    The problem with downtown (raleigh and durham) in general is that there is no “stroll district.” If I am going to get down there and park, I want to stay for awhile. After you eat, where do you go? Unless you want to go to a bar, then that’s it.

    Glenwood South is a little better, but it is still no stroll district.

    I think that is what draws people to Crabtree and Streets of Southpoint. There is somewhere to walk around, even if you don’t want to go shopping, at least you can “stroll” and feel safe.” I was very sad when I saw Southpoint built where it was, there was no reason they couldn’t have totally revamped downtown Durham into a shopping area like that. The downtowns I have seen with the most vitality usually have large amounts of shopping and reasons for people to come at night and on weekends. The convention and performing arts center helps, but I think shopping would help more. Downtown Portland, OR is a great example of this.

    I bet restaurants in CH/Carrboro are fairing better for this reason. It is as simple as having somewhere safe to nice to walk around before/after dinner.

  • Brittany Said:

    In regards to the other “Raleigh site”, this is a site that often discusses restaurants failing before they can even open the door, or as soon as they get open. This doesn’t necessarily come from the authors but the comments.

    So, consider the source.

  • Dean Said:

    I couldn’t agree with Dana’s position any more. I truly do love the other site (and frankly, there’s no reason not to mention it — but I’ll leave that to you), but it was completely irresponsible to suggest a place may be closing. I receive a ton of information that places may be struggling, but I don’t turn around and report that on my blog. To do so, even from a little site like mine, would cast a shadow on a place. It’s irrelevant whether the rumors ultimately turn out to be true, as promoting those rumors can only accelerate a place’s demise. Mere rumors should never be news.

  • Matt Said:

    Even local restaurant groups are often able to better absorb the bad times. Think about it like this — if you are investing in the stock market, are you not much more at risk by holding just one stock vs. holding, say, twelve? If you hold one stock (or restaurant) and things go south, you are screwed, but by holding 12, you are somewhat insulated from that individual loss.

    Upscale dining is getting hit especially hard all across the country. Citing the success of a restaurant like P.F. Chang, which has been wildly successful all over the country, and using that as a basis to suggest that the economy is not a reason for restaurant closures is ignorant.

    Downtown Raleigh is far, far from perfect, but blaming the location for the restaurant closings and positing that blaming restaurant closings on the economy is “lazy” is silly. I drive all over the Carolinas for my job, and I can tell you that restaurants are in fact failing all over the place, including some that are well-run, as well as others that honestly had no business being open in the first place.

    In regards to going after what I assume is New Raleigh for posting about some coming restaurant closings, I think it is a little absurd. Neither one of those restaurants are going under because of a blog post. Anyone that has stepped foot in either restaurant in the last 6 months has at least had an inkling for “when, not if” for the closing of either one.

    Finally, just to set the facts straight from an earlier post — 90% of non-franchise restaurants close their doors within 5 years. That number is obviously moving north.

  • Subway Scoundrel Said:

    Sorry Dana, I have to disagree. To say if one uses “the economy” is “an exercise for the lazy”, I have to say you must be in a recession proof business….or have not seen it yet. (BTW, I cancelled my dentist appt today because I will wait until next near). I can see the business I am in slowing down and it is a $20B WW business a year and which was booming just last quarter. We see our customers killing budgets and holding on to see what direction the economy takes. If it goes down one more quarter, you will see employees slashed with no abandon. So maybe some people don’t think it is that bad, just wait another month. If people are not already laid off, they are worried they will be. Even myself, who eats out 2 to 3 times a day has slowed that down and I am fully employed. I thought I was OK but in the last couple of days I have realized that with a bad quarter, many people around me including myself could be walked out the door. That means less people with insurance, less money to spend and not much outlook for a job until things turn around.

    For those other restaurants you mention, who knows what shape they are in and if they did not have the big corp behind them, where would they be.

  • Dean Said:

    To me the issue is not whether certain restaurants are struggling or if the economy is to blame. The problem with the story is that it’s based on rumors from sources “close to the restaurant.” How close? The owners? The chefs? Waitstaff? I know the owners and chefs of both restaurants, and they have always shared their concerns with me. They’ve told me their plans were ambitious, their spaces were large and expensive, and that there was no certainty for success. And they’ve shared information with me about how they’re doing from time to time. They’ve never told me anything that was off the record, but I use discretion in what I report. If someone told me they were going to close, I’d quote that individual. If a member of the management team told me they were struggling, that’s simply not newsworthy. And if a sous chef or a waiter gave me some dirt, well, I’d just file it away, like I do with the dozens of other “tips” I get.

    There is no doubt that the economy is hurting the industry, but this type of “Death Watch” journalism is irresponsible at best, as it certainly doesn’t help the restaurants in question.

  • Ryan Said:

    To answer the question of restaurants failure rates, study have shown that within a 3 year period of opening 57% of franchised establishments close and 61% of locally owned restaurants do as well. Much lower than the 90-95 rates previously thrown around. With that said Owning and maintaining a restaurant is one of the hardest things you can do. Location is the #1 reason people either make it or they don’t.

  • Dana Said:

    Like I said…where are those closings of comparable restaurants in other parts of Raleigh – as of RIGHT NOW? While there may be some down the road (and I did specifically mention this), there is a big discrepancy between the performance of restaurants in downtown and outside of downtown, especially downtown proper. For example, Varmintbites is reporting that Coquette served 300 customers at LUNCH yesterday.
    While local groups may have a bit more insulation, it isn’t like Urban Food Group has such a hit in Vivace that they can cover shortcomings of the other 3. I still named PLENTY of locally-owned, one-stop shops that are not the focus of this speculation.
    What’s lazy is for people like the owner of Riviera to simply blame the economy. I guess he never got the message that his restaurant just wasn’t that good.

  • John Said:

    The city should have spent the Fayetteville St. money on bringing more housing downtown instead of creating a ceremonial double dead end road. Not that I am totally against the idea of the road, I just don’t think it should have been prioritized as the centerpiece of the downtown plan. Think about it…How ironic is it that the road opening is now celebrated each year (Raleigh Wide Open) by closing it to traffic. Does anyone else think this is odd and mildly amusing?
    It’s only with new residents that the central city will be able to blossom. The resulting vibrancy of more people living downtown will pique the interest of potential convention bookings, local visitors, etc. While some are hellbent on making downtown a destination, it would be better served as community first.
    Case in point: Take a look at what’s happening in the Glenwood South area. Despite the downturn in the national housing market, new condos are being occupied and a very large urban apartment complex is about to open. In addition to the hundreds of residents that live there already, these projects will more than double the foot traffic at local establishments. This foot traffic and energy cause more people to be interested in the area which causes more development. While there were some streetscape improvements in the area several years ago, it’s the housing that was the real catalyst to making that area happen. The same needs to happen in the CBD if it ever wants to obtain that special vibe it desires.

  • Kathleen Said:

    we love to dine out! Usually 3-5x/wk for dinner. Our favorites in downtown are Mo’s Diner, Cafe Luna & the Big Easy.However, the last time we went to Mo’s and also Luna, we were accosted by (what is the PC word) BUMS. The City of Raleigh had a problem when Fayetteville Street was a Mall & still has a issues with Fayetteville Street & Moore Square. There is also a problem at the end of every off ramp that the Mayor & RPD are not dealing with….BUMS, derelicts & panhandlers. Can the skweegie people be far behind?
    If you don’t feel safe, you won’t go to the restaurants,& there will be no foot traffic to other businesses & strollers after closing.

  • Matt Said:

    Hi John, my fiance and I just relocated to Raleigh and were very interested in living downtown. The condo prices are just completely out of whack in this city. Minimum $300k, and then tack on $200/month for HOA dues. I’m sorry, but Raleigh is not a city that can command those kinds of prices. We also looked at homes in Mordecai, and it was more of the same. $330 for a 1,300 sq ft home in a neighborhood where 30% of the houses look like they need to get knocked over? Are you kidding me? We ended up moving to Crabtree for $100k less. The 10 minute commute isn’t too bad for the price.

  • Jenna Said:

    I have to agree with Dana. A disproportionate number of recent restaurant closings have been downtown. Yes, the economic slump matters. There are now fewer dollars being traded for restaurant meals. That means that some restaurants will cut back or fail – it’s a very competitive industry, as many people mentioned above.

    However, we should expect the worst restaurants to fail – those with bad food, bad service, poor accounting procedures, too much debt, etc. High rent downtown might be a part of the reason that more restaurants downtown have failed (or are rumored to fail) than have those outside of downtown. But I doubt that high rent can explain everything. If restaurants with good food, good service and sound management are failing, then Dana’s right to ask the question: what gives about downtown?

    Also, yes, totally unprofessional to report rumors. Demoralizing for staff, too, regardless of their veracity.

  • TSnow27604 Said:

    I have to disagree. Is this and the “other” site for news or propaganda? If someone knows something and doesn’t report it because it doesn’t fit their agenda, then what good is that? That sounds like the Bush administration’s approach and they just got the boot. Anonymous sources are used all of the time. Who’s to say that 5 different people didn’t independently confirm what they reported? I mean, that’s extreme but just because someone didn’t offer their name doesn’t make it not true. Look at Yancy’s. They denied closing up until the day they closed. Was it wrong to report their problems? And yes I think it is very safe to say that the downtown Raleigh economy is in bad shape (at least when compared to other areas) and the evidence is given here. Riviera and these other 2 are downtown while as far as we know, other restaurants in other parts of town are doing OK. And finally why do we need to look at this reporting as a damaging thing? Someone name actual evidence that shows that restaurants do even worse when trouble is reported. I read the article and the reader responses said that at least the lunch is really good so I was thinking about showing some support and checking it out. Is that bad?

  • Chris Said:

    Dana, as for other non-downtown restaurants failing, I give you:
    1805 Prime
    Prime Only
    Gianni and Gaitanos at 222 Glenwood failed before it started.

    Heck, Armadillo Grill failed in Wake Forest.

  • Isaac Said:

    Is 1805 closed? I know it has looked pretty empty for a while. My wife and I actually went not long after it opened, being fans of Michael Dean’s, and it was one of the most disappointing dinners I can remember. Even the water was tepid.

  • Jason Said:

    I love me some Oxford gastropub. Hope they stay around!

  • Myles Said:

    Amen to this post, Dana!

  • Chris Said:

    To continue my list:

    The Grape
    The George (and before that April & George’s).
    Cody’s Chinese Bistro
    Bamboo Cafe (@ Triangle Town Center)
    Don Murray’s BBQ
    South (and whatever it was named before that)

  • Dana Said:

    You are comparing Don Murray’s and their numerous “B” sanitation grades to Fins?

  • Dean Said:

    For what it’s worth, even Eater’s restaurant “Deathwatch” has been suspended in light of the economy’s collapse: http://eater.com/archives/2008/11/on_the_matter_of_the_deathwatch_and_times_like_these.php#more.)

  • Ernest Said:

    I don’t know how much I can contribute in this discussion, but with my ~17 years of restaurant experience I think I can shed a little light, although nothing too revealing.

    First of all, restaurants, just like any other business, may fail for different reasons, and they may fail no matter what the status of the economy.

    Second, restaurants may fail for the following reasons:

    1) Bad and/or inexperienced management: Many times the upper management feels comfortable and loses control of things.

    2) Bad staff: Hire the wrong people and next thing you know is that you lose faithful customers, get bad reviews and even bad sanitation grades.

    3) Bad quality of food: This is a no-brainer. Couple this with high prices and failure is guaranteed.

    4) Bad investments: Many new restaurants overspend in order to create or imitate an upscale environment. From equipment, all the way to the table cloths, they spend too much. Unless you cater to the rich folks, stay down to Earth and improve as business improves.

    5) Financial troubles (not related to the economy): High rents, expensive materials, high-interest loans, loss of business due to bad service, bad bookkeeping, etc.

    6) Location: Some people bet the farm because they build on expectations. For example, if you believed all the hype that TTA created over their regional rail vision and invested on building your business near a future station and inside a low-density area, you may find yourself in trouble these days. If you open a restaurant near a lot of competition, then you take chances. If you offer expensive food in a low-to-middle class area, you may also risk a lot; very cheap food in well-off neighborhoods could be risky, as well.

    7) Slow service: Either the kitchen gets backed up, or the waiting staff takes too long to serve the customer. Sometimes it is a matter of a bad system being in place. There are waiters who do not accept help and don’t want others to run their food.

    8) Environment: There are places where you can’t even hear the person next to you. Or, the smoking section is too close to the non-smoking section and the ventilation is not good. Sometimes, people let their kids take over and the latter create a chaotic situation, making it hard for other customers to enjoy.

    9) Accommodations: A restaurant may not be advertised as kids-friendly, but families with little kids may choose that place, anyway. If high chairs are not provided, that restaurant becomes less desirable. What good is opening a restaurant near Marbles museum (Moore Square) and not anticipate families with kids on Saturdays, during lunch?

    Speaking from my own experience, I have seen people stop coming to our restaurant because their food took too long and the waiting staff didn’t communicate the problems with them. That is a rare case, but it happened in the past. Also, some people expect lower prices, although the restaurant where I work is affordable. Sometimes it is bad customers that drive me nuts. They come during busy hours (i.e. Fridays around 7pm) and they don’t want to wait for 10 minutes :(

    Regarding places like Riviera – I will miss it, too – we need to be realistic. The population in DT Raleigh is simply not there to support such destinations. Don’t you wonder why so many establishments do not open for dinner? Can’t blame them. As a city, we spent so much money for some decent projects, but where is the ROI? RBC Plaza and Charter Square are good, but until fully occupied how will the local businesses continue to operate after business hours? Even Glenwood South is not immune, regardless the growth.

    As for blaming the economy, there is truth in both sides. If you are fully employed and changed your dining patterns, it is strictly based on speculations, not that you cannot afford going out. Unless your employment depends strictly on the general state of the economy. For example, if you are a real estate agent, you have reasons to spent conservatively, at least until the market picks up a little.

    Tom, you said:

    “All I can say is “Bring Back The Spectator”! The Independent (in my eyes), is pathetic. My point, their news seems to be opinion rather than fact.

    Also, if you looked at their news throughout the elections, they sounded like a bunch of radical far left socialist nuts.”

    And I say: AMEN TO THAT!!! The Independent is anything but independent. Too blind and too subjective.

  • David Said:

    I never understood The Independent name? Independent of what? Not economically, not personally, not with them espousing everyone get on the gov’t dole.

    I guess the key to the argument might be twofold:

    How good is the “rumor” info, and does it negatively impact the restaurant? If it’s not true, and you are damaging an establishment, then you might be liable for irresponsible misstatements. It goes back to blogs in the first place. Many are very sophisticated and operate more or less like news gathering agencies, checking and verifiying sources. Others are not so stringent in their standards. Is NewRaleigh? I’m not sure.

  • cat Said:

    Dana, just because you didn’t like Riviera doesn’t mean that you should call the owners lazy for blaming the economy for the restaurant closing. There were plenty of people, myself included, that enjoyed it. Also, I don’t recall having read that they blamed the economy only. They have mentioned management issues, decreased traffic, increased cost in food and not wanting to pass it on to the consumer, etc. I always found their waitstaff knowledgable and friendly and their food was really good, in my opinion. Yes, you could say that they closed because not enough people loved their food enough to keep coming back but I don’t think you should call the owners lazy for citing a major reason for their closing.

  • David Said:

    I enjoy the food ana atmosphere of Riviera when I went (as well as the younger set that kept walking in and heading upstairs to the club). I just felt it was a little isolated and probably not immediately thought of as a place to go. I never forget the Chili’s survey showing the Number 1 reason people go there is they can’t think of any other place to go.

    On another note, I had reservations at Bella Monica and still had to wait 30 min. for a table, inside or out. Lesson:
    Established restaurants are going to be better off than ones trying to make it in that first 0-5 year window; and most people still seem to have a healthy chunk of disposable income, despite what they hear the economy is supposed to be like.

  • abbey Said:

    Amen, Dean!
    If you can’t quote the owner, then you should keep your mouth shut. Rumors are not news, this is just proving that there are people out there with too much time on their hands that don’t have enough action in their own lives. They have to stir up something…such a shame.

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