Back To Reality
By Andrew Zimmern
For anyone out there who doesn’t think that all politics are local or that any topics (beyond conventional food fare) are off base here on this page, I think you need to rethink your position. Food prices are skyrocketing. Forty percent of Americans are saying they are worse off than they were a year ago, and that was before the recent financial meltdown. Regulatory oversight of the agencies that are tasked with protecting Americas food systems of all shapes and sizes is nonexistent, and because of that, things are guaranteed to get worse before they get better.
If you think the recent milk and melamine scare, the California downer cattle abattoir brouhaha, or the recent salmonella and E. coli outbreaks won't get worse or occur with greater frequency, think again. Restaurants are going to be closing in droves. Credit is tightened to the point of asphyxiation, so not only are eateries going to see thirty- or sixty-day invoice plans go the way of the horse and buggy, short-term credit lines from local banks that have been used for years to make payroll numbers work when the slow snowy weekend coincided with the mandatory liquor payment are being phased out for customers with sketchy performance.
Recent polls indicate that casual restaurant consumers are fiddling while Rome burns when it comes to re-assessing their personal budgets. And around the water cooler, business diners and those that eat out more than once per week are talking about cutting back.
Want more? JP’s closed last week, and if a restaurant as universally liked and well priced, as that one was, is having a problem, then what does that say about the other restaurants that are hanging on by their fingernails? Yes, I know, I have often said that restaurants close because they don’t have customers, and that’s cold but true. Occasionally, however, there are circumstances beyond the control of simple restaurant economics, such as the road construction outside of JP’s. That makes it a local political issue; nagging DOT and city road delays, tax adjustments, etc., all impact what you eat, where you eat it, and how you eat it.
Mall Of America is recession proof in the sense that its numbers will always be high in terms of overall foot traffic, but individual entities there will fold in greater numbers throughout the next six months than at any other time in the last few years, I would think. So, too, the restaurant industry will survive, and people will still eat out, but concepts need to be easy to swallow for the ‘new poor’ that we are all fast becoming. Grabbing a bite of cheap Chinese food, a burger and a beer at Salut, or some pizza and a less-than-stellar glass of red are still going to be easy choices for some, but how do the Porter and Frye’s of the world stay in business? That being said, Manny’s has been packed every time I have stuck my head in the door at the W.
© 2008 MSP Communications, Inc. All rights reserved
A further point about jP's and the political reasonings behind it closing ,from Dara's column on Minnesota Monthly, from the man himself:
“The construction [endless, at Lake and Lyndale] finally got to us. With the economy, the construction, Minneapolis property taxes—after our first year, because the property had been redone, our taxes went up by three-thousand dollars a month. Nobody had budgeted for that. The construction was supposed to happen in one year, but they came back and started on Lake Street, and at some point you have to cut your losses.”
Insider made a point in the last thread about why this restaurant closed and questioned the economic management. I am going to respectfully disagree and will argue that the location, with the high tax burden and road construction, played as much a role in the closing of jP's as the people keeping the books.
Posted by: Danny B on October 8, 2008 at 5:08 PM
Great point from Danny B regarding the location of jP's and that playing as much of a role in the closing as people keeping the books. (and a sidenote -- this closing in particular hurts... the staff, the food, the atmosphere were all top notch and it's a big loss to all of us food lovers.)
The economics of opening and maintaining a restaurant are fascinating - and I freely admit I'm no expert but I've been a part of many openings and closings that have happened for all sorts of reasons over the last 15 years. A gigantic part of the equation is obviously location.
So here are some thoughts to toss out:
1) Why didn't an attorney provide advice on property renovations vs. property tax increases? Or was there no tax attorney at the table?
2) Did jP really have to do that huge renovation and rebuilding, which obviously put somebody's money on the line, or could he have gone the route of Woodman and found an existing space to fill? If jP opened in, say, the space Blackbird is in now, would he still be packing them in but with far less overhead? (and I don't know the details ... maybe he wasn't involved in the building renovation or ownership, but regardless the question is still valid). Wasn't this also the root cause of Five going down? And speaking of existing spaces, is anything ever going to happen with the Auriga space? And has anybody been to Rinata yet?
3) Yes, the Lake and Lyndale road construction lasted longer than planned and was a gigantic mess, but it had been known for years that it was going to happen. Fuji Ya came through. Even that sub-par tango place right on the corner continues to survive. Why did jP collapse?
I still think it comes down to business finances and the unwillingness of many small restaurant owners to seek competent professional advice from an early stage. But I'm really curious about the opinions others may have about this, especially our main local chefs that own their own places. There are only about twelve of you ...
Posted by: Insider on October 8, 2008 at 10:54 PM
Dude - your past rants on economics and Palin weren't talking about food or how they related to food - they were ... well just irrational rants. You were ticked off. That's fine but this is a food blog published by a local magazine. How in the world does your rant on Palin relate to skyrocketing food prices or JPs closing? It doesn't. Now if you were talking about McCains or Obama's policies and how they effect the food industry or how local Minnesota policies impact local restaurateurs (which to be fair you touch on occasionally) - hey - you may have something there! But you don't.
So please don't insult our intelligence by trying to connect your past off topic rants to the JP closings.
Posted by: yoshi on October 8, 2008 at 11:16 PM
yoshi: if you don't approve of this blog, why not start one of your own instead of posting snide, anonymous comments here? send us the URL and show us what you've got, under your own name. best of luck.
Posted by: wendy woodchipper on October 9, 2008 at 9:10 AM
Wendy
Your snarky comment back to yoshi would hold more weight...if it also wasn't a snide, anonymous comment. Pot=Kettle
Posted by: Jason on October 9, 2008 at 9:29 AM
Sad news about JP, yes, but he also gave his employees their last paychecks knowing that they would bounce (and they did). Talk about killing your reputation in a city that has loved you. If you're closing, always pay your employees before your bills. If nothing else, let them know you don't have the cash and you'll pay them as soon as you can.
Posted by: Agar on October 9, 2008 at 11:28 AM
Mr. Z's economics lesson is a good one to keep in mind and his prognostication is likely spot on. Time will tell. Even the group I hang with at local bars and restaurants is scaling back on drink orders and sharing more small plates vs. ordering a big fat dinner. We'll all be the fitter for it (let's hope). On that note, last night was at The Living Room in the newly refurbed W Hotel. Nice. A bit loud for casual conversation, but comfy and fairly decent service. The kobe beef and other apps were outstanding and very pleasant to look at as well. And, the place was really busy for a Wednesday after 5.
Posted by: Cgrothaus on October 9, 2008 at 12:58 PM
Insider: I went to Rinata a couple of weeks ago. I though the food was exceptional. I had the bruschetta and the Pappardelle with lamb ragu. The service was a bit green but not offensive. The décor isn’t the greatest, it was a little “do it yourself”. I’ll definitely go again for the late night happy hour. I think it’s $2 off everything.
Posted by: FoodEater on October 9, 2008 at 6:45 PM
Good and excellent work Mr. Zimmern. Keep pointing fingers and telling it straight. This is your forum after all.
Posted by: marina on October 10, 2008 at 11:14 AM
Andrew, do you or anyone else know who is moving into the space formerly occupied by Zander's Cafe? I saw some signs up the other day, but didn't quite catch the name.
Posted by: Rachael on October 14, 2008 at 11:21 AM
I thought Rinata was expetional and the decor was better then do it yourself. Food was reasonable and service very attentive!
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