2 restaurant closures in San Diego: What this says about the industry

 

September 4, 2019

What’s up with San Diego? When a pair of well-loved, highly regarded restaurants shuttered their doors without warning, customers were left wondering why.

When you look at the elements of each eatery, both share a potent recipe for success. Brooklyn Girl was founded by a pair of restaurateurs with decades of experience under their belts. It opened to glowing reviews and enjoyed high traffic in its first year of business, serving up fare that promoted sustainable ingredients and a high emphasis on quality.

Urban Solace was described as one of San Diego’s “foundational restaurants and favorite brunch spots,” and had a reputation for serving up innovative flavors and emphasizing quality. Yet their announcement on social media just hinted at larger troubles. “It has been an uphill battle for quite some time now, and it’s just time to move on,” it stated.

What happened in San Diego, and why does it matter? If you look at the pressures and problems facing the industry, it becomes a little clearer why even restaurants that are doing all the right things face these tremendous challenges.

Rising costs: Wages and property prices are rising across the board, forcing operators to pass costs along to their customers’ checks. Unfortunately, the rising price of dining out is outpacing gains in consumer wages, according to reports by the U.S. Department of Labor. Over time, price hikes will force diners to make different decisions about dining out. That can mean skipping the appetizer or round of drinks, searching online for deals, or eating at home. But in the end, higher prices will cut into profits.

Less loyalty: The fine diner settling on a handful of neighborhood favorites isn’t a thing anymore. Restaurants like Brooklyn Girl and Urban Solace tick off all the boxes of a stellar dining experience any foodie would desire. They used high-quality ingredients and delivered big on exciting flavors, hip atmosphere and stellar service. But today, it’s not always enough to inspire a return visit. That’s because rather than return, the diner would prefer to visit someplace new and have another food adventure. With an increasing number of cities like San Diego earning (well-deserved) reputations as a destination for high-quality dining, success can be a double-edged sword. This points to the need for operators and owners to never take any traffic surge for granted and underscores the importance of finding new ways to get diners back in for a return visit.

The high price of delivery: While the popularity of delivery apps is driving new opportunities to reach more customers, the service comes at a cost for restaurants. In addition to the delivery fee charged to customers, restaurants are paying commission fees that range 15-30% per transaction. With razor-thin margins and other pressures, the decision to participate in a delivery service isn't entirely attractive to owners and operators.

Team staffing: Most telling of all is San Diego's latest unemployment figures. At 3.3% as of June 2019, the pressure is on restaurant owners and operators to sharpen their pencils and come up with better wage and benefit offers their talented staff can’t refuse. If they don’t, they’ll move elsewhere. In the meantime, finding replacements also comes at a cost, even if you don’t offer a pay bump. That comes from looking at time and money spent on recruiting, along with losses in productivity as new hires get up to speed.

The closure of two well-regarded, high-quality eateries in San Diego didn’t happen in a vacuum. Their challenges are our challenges. That underscores the need to not only make every bite worth their dollars and calories but discover new ways to entice customers to return.

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