Daniel, and his partners, were quoted as having blamed the closing on the “perfect storm” of economic factors, which they have been unable to overcome, and certainly I can empathize with restaurant and bar owners who have had to deal with the new HST, and the tougher drinking and driving laws that have recently come into place.
Everyone knows that the profit margins in restaurants are low, and in particular if your restaurant’s food to liquor ratio is quite high. At least if you are serving higher percentages of liquor, beer and wine, you have the benefit of higher yield from beverage sales to at least somewhat offset the low profit margins from food sales, but if the majority of your sales is food, good luck.
The other friend of the successful restaurant is volume. If you can turn the restaurant over two or three times an evening, the majority of the days that you are open, and assuming a decent average check as well, you are doing well.
Regardless, some restaurants will make it, and some will not. As I sited in my previous post; “Opening Soon – Are You Crazy?” 80% of all new restaurants do not survive past their second anniversary, but these two restaurants had several good years under their belt at this point.
I believe that they were doomed to failure for another reason – a failure to adapt from what was “fine dining” to what a truly memorable dining experience has become.
People are no longer looking for white table clothes and fine linen napkins as the definition of the environment of an exceptional dining experience. In fact, I would argue that in many, many cases, the sight of an overly formal “dining room” can be enough for people to turn around and promptly exit stage left in search of an alternative location. Who hasn’t been turned off by finding themselves in an overly formal room, where you feel like you need to be in a suit and tie and that whispering is the only form of acceptable conversation over dinner. The serving staff looks like they have just come from the opera and everything about the restaurant screams pretentious.
What people are looking for are any one of a number of variations of a simple common theme; good, fresh local ingredients, prepared and presented in a unique and captivating manner by knowledgeable and friendly staff, highlighting and celebrating the region where the restaurant is located. Sure, the setting plays a role, but not one of pretentiousness, but rather a clean, warm and inviting room where people feel truly welcome and comfortable to settle in for a while, to enjoy the company of their friends and family in an environment where the food is the star, not the room. It’s about the experience.
That’s the formula for sustainable success in the restaurant business today. The time for table clothes and stuffy rooms where you feel like you need to pass a social status test in order to enter is over. Special occasion restaurants, as many of these tend to be, are not sustainable. If it takes an anniversary or other special occasion, for everyone to feel the need to dress up to go out for dinner, that won’t be enough to keep people coming through the doors, and your days are numbered.
Fail to adapt and you face extinction.
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