National Restaurant Consultants analyzes rising real estate costs and the trend cycle of Denver dining
For years now, we’ve watched the Denver Boom morph this city’s neighborhoods and culture, pushing out even into the surrounding areas. The driving force behind much of the change–socially, culturally–begins with a shift in real estate. As cities grow and change, the real estate markets dictate how people live, work, and play; and it also drives how business is and should be conducted.
Recently, Colt & Gray, a Denver mainstay in finer dining, which also offered specialty cocktails and a butcher, announced that it would close before 2020, after a decade-long run. In urban areas, it’s not unusual for restaurants to fall into and out of step with whatever is trending or “of the moment”. However, ten years is no short amount of time to find celebrated success, only to bring it to a close.
Located off of Platte Street on the northwest side of downtown Denver, Colt & Gray was situated in one of the hottest neighborhoods in this last decade. Other small businesses and restaurants have come and gone as the skyscrapers, apartments, and co-working spaces climb higher into the sky above what onces was a smaller commercial district. The appeal of the neighborhood is the neighborhood itself, first and foremost, home to other desirable restaurants, bars, shopping, and high-end convenience. There is also easy access to the interstates, public transportation, and the business district of downtown.
So when a popular restaurant finds success in a booming area of town, why does it close after ten years?
“Real estate,” says National Restaurant Consultants CEO Richard Weil. “Lease rates throughout the country continue to rise along with many overreaching lease language. Operators both with new leases and renewals are facing the challenges of being able to stay under 10 percent occupancy costs.”
It costs money to be seen, to be in the hotbed of what’s happening–and that’s on top of what it costs simply to be in business.
“There other key factors relating to the rising costs of doing business,” Weil continues, “Ranging from wages, to lease rates to even the cost of ‘refreshing’ a restaurants interior with new wall coverings, lighting, and staying at the top of the mind of food goers.”
For restaurants, it begs the question: are you in the business of running an eatery or are you in the business of staying relevant?
“The food service and hospitality industry does require attention to details beyond the menu,” says Weil.
However, he adds that it’s less about trend management and more about good business, best practices, and sticking with what works and keeps guests coming back.
“We work with hundreds of clients throughout the country as a ‘refreshing set of eyes’,” Weil explains, making the point that sometimes you need an expert from outside the trend to really put things in perspective. “Our Operations Analysis produces thousands of dollars in savings for every client we work with, and we offer detailed reviews on lease negotiations, prime costs, vendor agreements, internaal operations, and much more.”
Some restaurants will come and go. Such is the nature of the business cycle, and especially in growing cities, people can be fickle. Still, business is business and a restaurant consultant can help keep your business within that mentality. If you’d like to speak to National Restaurant Consultants about an Operations Analysis or any other concern, contact us here.