Why Did Aqua and The Club Close? Emily Deming in Conversation with Downtown Restaurants

Emily Deming in Conversation with Local Restauranteurs on The Business of Restaurant Closures

Our collective ties to the restaurant industry (22% of Canadians’ first jobs were in the industry) and our necessarily personal relationship with food, give us, the public, a gut attachment to restaurants.

We love to eat at them and critique them; we are demanding and emotionally responsive to them in a way we are not with any other retail experience. But, no matter how much Top Chef Canada we watch, we have no idea what is happening behind the kitchen door.

As Todd Perrin of Mallard Cottage puts it, “Everybody has some connection to the restaurant industry. Everybody. But almost nobody has any idea what’s involved in doing what Restaurateurs do every day.”

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The Sky is Always Falling 

When Mark McCrowe closed his two celebrated and still popular restaurants last month, Aqua and The Club, speculation ran rampant. Some took the high profile closures as a sign of the end times for the downtown core.

As far as McCrowe’s personal decisions, “The owner and the bank are the only ones who really ever know what happened,” says Steve Vardy of Adelaide Oyster House. Every restaurant owner I spoke with agreed that there are as many reasons for a closure as there are restaurants closing. But all of these reasons seem to be threaded into the very fabric of the restaurant business itself.

Chef- or owner-operated restaurants have the thinnest of margins. No matter how hard it is to get seated on a Saturday night in August, just “flirting with our toes in the black each month” is a success according to Vardy.

When really “killing it” Perrin says the profits still hover at just 8-9% and it would be easy to lose even that margin (and your shirt) in just one bad week. Success is a form of steady maintenance, an endless pursuit of daily/weekly/monthly just breaking even and remaining in the black, and hopefully, after the summer season, having some cushion for the lean winter months and whatever crises arise: staff turnover, illness, equipment failure.

Our local chefs are, by all accounts, “killing it” on a national scale (Raymond’s has been Best Restaurant in Canada two years running, The Merchant Tavern and Adelaide are both finalists for EnRoute’s Best New Restaurant in Canada 2015, McCrowe himself won Chopped Canada in 2014).

While accolades may bring personal satisfaction and possibly more customers, they do nothing for the bottom line; they don’t pay the accountants, the plumber, the insurance, or the staff. “The sky is always falling” says Michelle LeBlanc of Chinched Bistro.

The Business Model for Small Restaurants is Broken. 

Perrin sums up what I heard over and over again, “The business model for small restaurants is broken. We do it because we love it.”

In this light, some closures are actually success stories. Andrea Maunder, who’s restaurant Bacalao was one of the first fine dining establishments in town, says that, to her, “For Bianca’s to close after 25 years is a success.” “Success” may not feel triumphant. It can feel sad.

But operating a business that runs on a model of daily oversight is exhausting. Vardy talked about the energy he expends on the line each day. He knows it is not ultimately sustainable. Yet his business model only works with him working the kitchen personally. He is not (despite the energy he exudes) getting younger.

So what happens when one pivotal person burns out? Or when tables lay empty due to burst pipes? Or when heavy snows or municipal infrastructure maintenance keeps people away? The red swallows the black for a week. Or more. And you close. 

But Our Many Restaurants are Competing WITH Each Other, Not Against Each Other

And what about filling seats? Is the market “saturated”? Are there enough of us dining out to support these businesses? Anecdotally, established spots have witnessed temporary dips in sales when a new place opens. But this effect fades quickly and everyone I spoke with has instead seen a progressive increase in tables seated.

This is significant because over the past five years the total number of restaurants in the downtown core has also increased. “Genre” or “ethnic” food (i.e wood-fired pizzas, Korean) has seen twice as many openings as closings. Slower growth has occurred in other categories (pubs, casual dining/cafes, fine dining/gastro-pubs), but none had a net loss. The diversity of our cuisine is increasing alongside the general growth.

To Jeremy Bonia (sommelier and part owner of Raymonds and The Merchant Tavern) the market itself is not an endemic resource but a broader geographic pool.

In his eyes, The Merchant Tavern is not competing with the other restaurants on Water Street but, collectively, the restaurants in St John’s are competing with Halifax and Montreal for the business trips, the tourists, and the conventions. He sees even the larger chains coming in to downtown (which operate with higher name recognition, and more corporate support) not as a detriment, but as “gateway” dining experiences that can be the first step in educating new customers who may then push farther down the block the next time.

 “We’re in a Transitional Phase. Five Years From Now, Mediocre Won’t Cut It.” 

Others in the industry disagree, seeing the influx of chains (second only to small scale ethic restaurants in rates of openings) as a real threat.

Nancy Brace, the Executive Director of the Restaurant Association of Newfoundland and Labrador (RANL) has worked in the restaurant industry for decades and holds the city leaders and its people responsible for the health, or failure, of the local food scene as we allow in (through development or patronage) the larger chains and franchises.

But she has also witnessed the incredible evolution, via rising expectations and competition, of the restaurant industry in St John’s and believes “It is in a transitional phase … five years from now, mediocre won’t cut it. You’ll have to go to a chain to get mediocre.”

Mark McCrowe agrees. “I’ve been part of the downtown restaurant scene since I was a teenager. Starting my career as a dishwasher and working my way up as most do. I’ve seen trends come and go both in food and in diners.

“The one thing that stands out to me is that more and more people want to eat out and are just generally interested in good food … back in the day you had to work for that shit. You had to seek it out. Now you see food everywhere and it’s amazing […] it hasn’t slowed down one bit, it just keeps on growing.”

And the Factors Beyond Control  

Restaurant culture has ramped up fiercely in the past 5 years, correlating to a relatively healthy economy in our province’s capital. Newfoundland currently has the highest median family income of the Atlantic provinces. But economic indicators do not point forever skyward. It is not in their nature.

With our GDP skewed towards mineral resources, and with oil prices dropping, will negative effects spiral down to the other industries, like health care and retail (our largest employers)? Will our restaurants start to suffer from smaller household budgets if not from “saturation”?

If so, this would be more than just sad for our palates as it could have a sort of negative reinforcement effect since 6.6% of Newfoundland’s workforce is employed specifically in the restaurant and catering industry.

Will our tourism and hard won national reputation keep us competing with the outside world instead of scrapping amongst ourselves? What crowds will the new convention centre bring in April? Who will be deterred by the dig along Water Street?

Whatever happens, our horizons have been permanently expanded by the exquisite flavour of the overall success of local restaurants. Individual closures are inevitable, and we are more aware now of what we lose each time.

With that in mind, let us go out this month and celebrate the vibrant bounty of what remains. Raise your oysters, house-cured bacon, and vegan dumplings to toast the chef-entrepreneurs who work so damn hard every day to sate our desires and keep afloat their dreams.

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