Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Saturday, September 16, 2017

Destination restaurants as a call for revisiting "Richard's Rules for Restaurant-Based Revitalization"

"Richard's Rules" dates to 2005 and originally was written in response to another post elsewhere discussing the value of "destination restaurants" to the revitalization of neighborhood commercial districts.

Interestingly, even then I disagreed about destination restaurants being the right anchor.  The basic point is that to get people to sample what had been neglected and underutilized neighborhood commercial districts, restaurants were key, but you had to focus on serving area residents, and develop them into repeat and frequent customers.

The Rules read pretty well today, although I have done some updates over the years.

-- "Richard's Rules for Restaurant-Driven Revitalization (updated)," 2005, is the basic piece, with five rules (below) and a list of elements denoting quality restaurants
-- "Revisiting Richard's Rules for Restaurant-Based Revitalization," 2010, discusses a couple restaurants which repositioned away from upscale to more "comfort" food, to better meet the desires of neighborhood consumers

The original rules:

*1. Relatively appealing cuisine that isn't too specialized; food that is attractive to a large number of people--Italian, Mexican, and "American," seem to work best. You want at least 100 customers/nite. These days Thai food is moving into this category.

2. Good food; it doesn't have to be stunning but it better be good. (Perhaps Mexican restaurants illustrate this point the best.)

3. Good, good plus, or better service; waiting isn't fun, and neither is dealing with a server that doesn't help you get what you want with a modicum (ideally none) of problems.

*4. Competitively priced; you can't have drinks at $8 or most of your entrees costing $13-$20. If your prices aren't competitive and maybe a little less expensive than the market, you won't get that frequent patronage that is necessary for your success. Pitchers of margaritas or sangria are good, maybe not pitchers of beer, which seem to attract a rowdier more alcohol-centered clientele.

*5. Nice interior; it doesn't have to be stunning or a $300,000 interior renovation, but it can't be threadbare, and it has to be appealing.

* -- updated as an "appendix"

In "Updating Richard's Rules for Restaurant-Driven Revitalization," from 2013 and "DC restaurants, location and equilibrium," 2014, I discuss restaurants more specifically in the context of commercial retail district development, and have these rules for that element:

1. Walkable neighborhoods adding population are key to DC's restaurant resurgence. (So driving neighborhoods lag in terms of restaurant and retail improvement.

2. Critical mass matters and supports a broader range of food options than was possible before.

3. Downtown and Georgetown are no longer the high point in area cuisine--neighborhoods are now supporting restaurant creativity.

4. Regionally-serving districts that are neighborhood-based, like H Street NE, 14th Street NW, and Barracks Row/8th Street SE/Capitol Hill, will support greater numbers of restaurants and more creative concepts than strictly neighborhood-serving districts.

5. Denser neighborhoods (Dupont Circle, Columbia Heights, U Street, etc.) will also support greater numbers of restaurants than less dense neighborhoods (Takoma).

6. Money (disposable income) matters. Emerging districts are still more risky and have fewer cuisine options than transitioning (and healthy) commercial districts.

7. Driving neighborhoods, like emerging districts, will continue to have a harder time attracting restaurants because of lack of density and parking options.

*8. Will the next wave in restaurant development be the addition of family-friendly restaurants?

*9. When restaurants shift their business model to late night music, you know their food business is failing.

*10. Chains aren't the wave of the future.

The rise of destination restaurants outside of the city core.  The rise of "destination restaurants" in DC, ranging from Rose's Luxury ("Rose's Luxury, the Best New Restaurant in America 2014," Bon Appetit) on 8th Street SE in Capitol Hill's Barracks Row Main Street district, Bad Saint ("Bon Appétit hails Bad Saint as the No. 2 best new restaurant in America,"Washington Post) on 11th Street NW in Columbia Heights, Himitsu (Himitsu, Timber Pizza Among Bon Appétit's 50 Best New Restaurants," Washingtonian) on Upshur Street NW in the Petworth neighborhood just off Georgia Avenue more recently, or Dupont Circle's Komi Restaurant ("Chef Johnny Monis - Komi Restaurant," Delish; "Here's Johnny!," Washington Business Journal, 2004) dating to before "when DC got hot" ("Restaurants in D.C. Are Moving Into Residential Neighborhoods," New York Times) or at least acknowledged, does call for a significant modification of the idea of restaurants as being key building blocks for:

(1) commercial district revitalization; and
(2) support of adjacent retail.

Establishments serving regulars/neighborhood residents have a more positive impact on commercial district improvement.  The original set of rules was focused on creating "neighborhood restaurants" serving neighborhood residents who were willing to eat at that particular restaurant multiple times per month.

Neighborhood residents have different interests from "foodies" visiting a high profile restaurant in a neighborhood with which they are otherwise unfamiliar.

Residents visit and buy from other neighborhood-based retailers, if not on the same trip to the restaurant.

Food tourists are unlikely to support neighborhood retail.  "Food tourists" choosing to eat a high profile restaurant are visiting the restaurant but not the place or what else is there.   Even if they become regulars at the restaurant rather than one-time customers, they are still not likely to explore the district beyond the restaurant.  They definitely aren't interested in extending their trip by shopping local retailers.

But the publicity value of destination restaurants can be leveraged.  Destination restaurants aren't good for developing complementary retail, but they do bring publicity to your commercial district ("Upshur Street has evolved into the best place to eat in DC right now," Washington Post).  And this publicity can be leveraged both in helping to attract new residents and in new development of businesses and new residential property. 

Although you have to be careful in terms of oversaturation of restaurants, as discussed in "DC restaurants, location and equilibrium," because ultimately there is only so much demand within a neighborhood, even if the restaurants are somewhat "regionally-serving," even if the definition of "region" merely means nearby neighborhoods without commercial districts or decent restaurants.

Conclusion.  In the words of Public Enemy, "don't [necessarily] believe the hype."

Update to points:

Original Rules

1.  Relatively appealing cuisineTake out "Italian."  Add "artisanal pizza."  American is pretty broad and has a wide range.

4. Competitively priced.  The definition of competitively priced has changed.  Price and cost matters less as average household income has increased and people spend more money on food "out of home."  These days, an $8 drink is run of the mill, and even entrees pushing $20 or more don't seem outlandish to many people, nor does a $13 burger served with potato chips, not French fries.

It's hard to get out of a restaurant spending less than $60 for two people, especially if you have an appetizer, multiple alcoholic drinks, and one or more desserts.  That being said, many parts of the meal aren't likely to justify the cost (to my "old way" of thinking).

Also see "It’s not your imagination. It is getting more expensive to eat out," Boston Globe. From the article:
A national report on the health of the industry, by the NPD Group, found that high prices are taking a toll, with business flat or down by 1 percent. The “weakness” started in 2016 when labor costs started to rise, analyst Bonnie Riggs said. “So they increased restaurant prices quarter after quarter to the point where consumers have said, ‘It’s not a good value, it’s cheaper to eat at home.’

But in Massachusetts customers aren’t — yet — staying away, according to Luz of the restaurant association. Business at the majority of his member restaurants ranged from flat over last year to up by as much as 4 percent, he said. But larger chains, especially those in malls, aren’t doing as well as local independents that focus on quality.

Indeed, much of the griping is triggered less by the price of a meal than by its perceived value. It’s one thing to pay $160 for dinner for two at a restaurant with ambience, groovy servers, interesting cocktails, and local, fresh ingredients. It’s another to pay $55 for two warm glasses of white wine and bland appetizers at a spot that screams “hotel lobby."
The advantages restaurants have is they are a "third place," plus people see eating out as entertainment, and fewer people can cook. But if the price-quality-value equation isn't positive, at least certain restaurants will lose out, and it does motivate some people to start to cook.

5.  Nice interior.  Should be "interesting" and doesn't have to be expensive.  Outdoor beer gardens are one example, but generally interesting interiors.  Interesting can mean polished concrete and funky chairs, it doesn't have to mean multi-million dollar renovations.

Industry Trends Points
8. Will the next wave in restaurant development be the addition of family-friendly restaurants?  It turns out the answer is sort of yes, sort of no.  The answer is the rise of restaurants that are more friendly to and accommodating of children, but we wouldn't call them a family restaurant in the classic sense of a Howard Johnson's, Hot Shoppes, or Big Boy/Frischs/Shoneys/Cracker Barrel.

Family-appealing restaurants may benefit from an "early seating" between 5pm and 7pm when restaurants tend to be empty, providing a nice boost to evening sales.

From the Washington Post review, "Little Coco’s previewed: Fit for a much younger crowd":
But one of the greatest needs this restaurant fulfills is that it’s a kid-friendly place that doesn’t serve chicken fingers. Little Coco’s is for families, and not just in the sense that they merely tolerate the presence of young diners. Our server seemed to delight in my friends’ two children — they are adorable, after all — which set their parents at ease.

“If you come in early, around 5 o’clock, it’s like Chuck E. Cheese in there. There are strollers everywhere,” Harvey says.
9. When restaurants shift their business model to late night music, you know their food business is failing.  In terms of dealing with some liquor license renewals in my greater neighborhood, I've come to believe that we need to change how we award and manage liquor licenses. 

Rather than treat every establishment mostly the same, establishments should be ordered according to "land use context," not unlike how the Smart Transportation Guide makes recommendations for roadway, roadside, and posted speed limits depending on land use and the nature of the district we need to do the same thing for liquor licensing, so that a one block commercial district embedded in a neighborhood is treated different from a regionally-serving commercial district.

We need to create a typology of commercial districts (the city has done this for the most part) and link the alcoholic beverage licensing process to this typology.  It would mean restrictions on hours of operation and music (with the possibility for an exception process) in establishments deep within neighborhoods, and looser rules in regionally-serving districts.

10. Chains aren't the wave of the future.  "Restaurant chains" aren't doing too well in DC. Some of the more upscale chains like Legal Seafood or Ruth's Chris Steakhouse succeed partly due to their familiarity or appeal to clients on expense accounts, middle market chains like Ruby Tuesday's haven't had much success in the city.

But "restaurant groups" are chains, just not national ones.  Local restaurant groups with multiple concepts drive a significant amount of a city's restaurant business.

In DC, think Neighborhood Restaurant Group ("Restaurant Hospitality 25: Neighborhood Restaurant Group," Restaurant Hospitality), Clyde's, Great American Restaurants in the Virginia suburbs, the Black Restaurant Group ("Black Restaurant Group is a top restaurant company," Restaurant Hospitality, Joe Englert ("Joe Englert: The Life of the Party," Washingtonian) are what we might call a kind of area or regional chain.  Similar groups operate in most major cities.

Restaurant groups have advantages over individual operators because of established relationships with vendors and financiers ("Financing A Top Chef," Eater DC), and expertise in developing concepts and outfitting buildings, working with regulators, etc.

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At 10:37 AM, Anonymous charlie said...

You've got a link problem in the post.

Placing this in context of your piece of developers giving away rent to restaurants now makes more sense.

What would be interesting is thinking about street as destinations and if there is a value chain here.

Upshur is a great example, or Cleveland Park.

Can the people that restates attract turn into retail and keep moving up?

Or are you stuck on low-rent (Adams-Morgan fear) forever.

Similar problems now on U st, 19th st and the Golden Herpes Triangle.

ANd this is a global problem (see Venice, Amsterdam, Estonia, etc).

That was my big fear on marijuana legalization in the District, has not come to pass yet.

At 1:34 PM, Blogger Richard Layman said...

yep. just noticed the link problem, will fix.

The other thing this leads to is something I intend to submit to the Zoning Commission for a text amendment, to require first floor retail when there is a construction change/use change.

A bunch of sites on Upshur are being converted to 100% residential, taking one story buildings and constructing up to the maximum height.

the thing is we need a system to help support the development and nurturing of retail. We don't have that. More on this later...

But they aren't required to keep retail.

We're in an odd position where some retail districts could be significantly strengthened with the strategic addition of new retail space, alongside new construction.

It requires a thumbnail plan for each district, plus a form of Cleveland's "Business Revitalization Overlay District" zoning. It doesn't specify so much, but requires consultation and coordination.

We don't do that here at the district scale in any case, even if there are commercial district or historic preservation overlays.

It leads to problems... especially when the market is hot and the "zoning arbitrage" opportunities for housing are present within commercial zoning.

At 3:28 PM, Anonymous charlie said...

also see recent brouhaha on dogs on restaurant patio.

Was walking up 14th the other day. Matchbox which falls squarely into your model was empty.

Front facing patios are very important.

Clearly not everything is 14th st.

At 1:28 PM, Blogger Richard Layman said...

I didn't write about it yet, and should have written about it in the context of this entry, but a few months ago there was a piece in the Post opining that while it appears that maybe we have too many restaurants, we actually don't.

I believe the article is wrong, we have too many restaurants.

At least judging by the emptiness of many, and considering they have to make money to stay open, pay people, etc.

A friend of Suzanne's was in town so we met them for drinks. We ate first, at another restaurant.

Went to Local16. It was between 7:30 and 8:30pm. Saturday night. We were the only table on the ground floor part of the restaurant. (There were a couple people at the bar.) Granted they have an upstairs and people were going to it.

But we walked by many restaurants on the way to Bar Charley and I was surprised by the relative emptiness. (Not Lauriol Plaza of course.)

The reality is that as much money people spend "out of home" on food, at the end of the day there is a ceiling.

... we were in NJ for a funeral this week, and the restaurants there seem to charge less than those around here. (They had the emptiness issue though too.)

We ate at a storefront taco place and the food was so much better and cheaper than what we got at Taco del Barrio recently. But TdB was much fancier on the interior than the "fast food" style of the Riviera Maya Restaurant. (which also had one of the hottest homemade sauces I've ever had in a restaurant).

And the challah French toast from Ridgedale Diner for three pieces was $4.95 (meat, eggs, hash browns are extra). It was very good too. Not artisan, but very good nonetheless.

sorry about the digression.

I guess the thing is that just like the transit network, there is a typology for restaurants, their intended audiences, the size of their retail trade area, etc.

Destination restaurants are like megachurches. They draw from the metropolitan area, tourists, etc.

Neighborhood restaurants, the kinds I discussed in the original Rules, draw from a tighter area and demographic.

Similarly, restaurants in commercial office districts, although again, that gets back to expense account vs. own money, bringing your lunch, and the predominance of "quick service" food as opposed to more formal dining.

At 10:09 PM, Blogger Richard Layman said...

apparently this is an issue in Toronto too:

At 6:10 PM, Blogger Richard Layman said...

This article in Restaurant Hospitality lays out a framework for considering restaurant groups creating destination restaurants at scale.

From the article:

Looking more closely at these companies, common themes emerge. The Curators are building or curating food halls. The Culture Mold Breakers are rethinking employment models and putting their people first. The Enduring Legacies are positioning for the future.

The Innovators are rolling out new hits. The Location Specialists are demonstrating prowess in real estate partnerships. Some are Recreating Casual Dining as we know it. And others are Communicators, capitalizing on various media platforms to change the way we think about food and dining out.

At 9:22 AM, Blogger Richard Layman said...

Decline of chef-driven restaurants:

I think there just isn't as much demand as there are "development opportunities."

e.g. this new place, Gravitas, that opened recently in Ivy City DC, only a tasting menu, $78 to $150, with wine pairing at + $40 - $70, I don't see how it can last. Are there enough customers out there so that they can get at least 100 covers/night, week after week?

At 11:37 AM, Blogger Richard Layman said...

+ this story in Boston's Seaport district. Obviously the proprietors took on way more than was feasible. Rent too high. Space too big.

Reiterating the points from the last piece and another one I wrote about tenant improvements/inducements.


At 12:36 PM, Blogger Richard Layman said...

An article by a group of restaurant lease consultants

on things to watch out for in terms of charges from the landlord:



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