Is The Restaurant Apocalypse Upon Us Now?

 

The retail store apocalypse shows no signs of abating. More than 4000 stores are scheduled to close in 2019, up 23% from last year. But the bad news doesn’t stop there: it is starting to look just as bleak for restaurants.

 

In NYC our mayor and his cronies have made it increasingly difficult for independent restaurateurs to keep their doors open.

This past month has been especially brutal for restaurants in my neighborhood.

  • Three relatively long-lived restaurants closed within a two-block radar. One is being newly advertised for “retail” use –who thinks that’s going to work?
  • Eater LA has also recently noted several high-profile downtown restaurants closing.
  • Even Starbucks is closing 150 locations – 3 times more than in a typical year.

FYI, one sure-fire sign that a restaurant is about to go belly-up is that yellow sandwich-sign from Spacious.

  • Free co-working at restaurants has turned out to be the kiss of death.
  • Every time I’ve seen that sign, the restaurant is dunzo within a few months.
  • Most recent example is Esther & Carol on the Bowery.
  • The above pic is from Spring Street Natural on Kenmare. Ate there once, not amazing. Doubt they will make it thru the summer.

 

Read on below for what might end up being the restaurant industry’s savior: Cloud Kitchens, which for numerous reasons are taking the country (and the world) by storm.

 

Shared kitchens (i.e. Cloud Kitchens) for food delivery-only restaurants

One particular restaurant near me has been out of business for a year but had an Uber Eats sign on the door and was listed on Seamless.

  •  The Uber connection is important.

Apparently, you can take the boy out of Uber but you can’t take Uber out of the boy!!

  • Travis Kalanick’s new startup is CloudKitchens.
  • It’s rooted in the fact that restaurants are harder to maintain and run and that more people are routinely ordering food for delivery. This concept has huge potential in the States.

 

 

  • Kalanick is currently taking his concept to China where cloud kitchens are booming.
  • Per TechCrunch: China’s food-delivery market is worth $37 billion dollars, with 256 million people having used online food ordering services in 2016. The number is expected to grow to 346 million this year.
  • The big player in China is Panda Selected. Its kitchens are typically 5,000-square-feet in size and can accommodate up to 20 restaurants in each space.

 

Bottom Line.

Restaurants are undergoing the same kind of seismic disruption that retail stores have gone through over the last decade. The cost- and hassles –  of opening and running full service restaurants is overwhelming, especially as local governments ordain everything from how owners can schedule their workers to NOT allowing restaurants the efficiencies and safety of going cashless.

Expect restaurants to increasingly opt for fast casual concepts that are service free, specialized, and inexpensive.

I am also very intrigued by the Cloud Kitchen concept. It perfectly addresses the confluence of trends we’re seeing from co-sharing to e-commerce to on-the-go eating to at-home delivery.

And finally, if you have favorite restaurants and want them to stay in business, please support them by eating out more often!!

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