Connecticut restaurants are struggling financially because of the high cost of business, but trying their best not to pass the cost onto customers.
But industry experts say it’s a tough line to walk during these “challenging” times of inflation.
“You just can’t raise your prices over overnight and expect to be OK,” said Leon Lopez, owner and CEO of Salsa’s Southwest Grill and Bar, which has seven locations. “It’s tough because everything’s keeps going up.”
Restaurant closures are being announced weekly on Facebook in the last year and some establishments have done it more quietly, greeting customers with a sign on their locked door .
In one recent example, Jimmy Seas Pan Pasta, which is popular on Martha’s Vineyard and puts a unique spin on pasta by mixing it with fresh ingredients and serving it in a frying pan, opened in Avon last year and said in June on Facebook that it was closing.
After 54 years in business, gem of CT restaurant to close. It was, ‘absolute best,’ customer says
Those who have managed to stay in business aren’t as profitable as they were before the pandemic, according to restaurateurs and industry experts.
Scott Dolch, president and CEO of Connecticut Restaurant Association, said it’s a complex issue — a combination of increased costs and changes to the way people dine following the pandemic.
Dolch said 97 percent of Connecticut’s full-service restaurants are independently owned, the highest percent in the country.
While that’s an “incredible stat,” it’s also “a scary stat,” he said.
“It’s a tough time right now for these restaurants…I try not to say it’s doom and gloom, but I have my antennas up.”
Dolch said he’s “optimistic” and the association is helping and advising restaurants on resources every day.
“I do think our industry is going to find a way and pivot and be successful,” Dolch said. The only way to do it is to generate business, he said.
More and More Dolch said he gets calls from owners who say they are staying afloat, but haven’t taken a paycheck in months.
He said restaurants run on a 3 to 5 percent business margin.
“These margins are getting thin and being squeezed,” Scott said.
He said the Connecticut Restaurant Association doesn’t keep statistics on closures.
Those in the business say the cost of rent, labor, insurance, utilities, food and other expenses have skyrocketed. Finding dependable workers is also an ongoing problem, they say.
It’s tricky business, industry experts say, because raising prices too much can drive customers away, so instead they’re absorbing the costs, which cuts profits.
Grocery prices are up 14 to 16 percent, Dolch said, but if menu prices go up too much, people will decide to eat at home.
Restaurants need customers and ways to generate business, he said.
“The cost of doing business in Connecticut. Is out of control,” said Carlos Mouta, owner of Parkville Market in Hartford and an experienced restaurateur.
The market is an “incubator” space of 22 stalls where restaurants get a start.
Mouta said he’s had to raise rents to pay his taxes and advises renters to cut portions, rather than raise prices, noting our society is “overweight,” anyway.
“I think there’s an excessive amount of restaurants closing,” Mouta said. “We’re all struggling in our industry.”
Mouta said the price of groceries in the supermarket is so high that for an individual it’s cheaper to eat at a place like Parkville Market for $5 to $10 per meal.
While all categories of restaurants are taking a hit financially, there are two categories that have fared better than others post pandemic, because “people are consuming food differently than in 2018.” Dolch said.
One type doing better than others is fast, casual dining where customers have the option to grab and go quality food, such as at Doro Marketplace. Consumers want fast service and “a robust take-out plan,” Dolch said of the national trend.
That’s a generational preference and lifestyle change brought on in part by the pandemic because of remote working, he said.
Dolch said 73 percent of food sold at fast/casual restaurants sell is eaten off premises. People are also eating at all different times as opposed to doing the once standard lunch or dinner hours.
The other category that’s faring relatively well is fine dining where customers go to have an “experience,” he said.
Those restaurants who have suffered the most are casual, full-service, and independently owned.
“That’s where I lose sleep at night,” Dolch said.
Also closing recently have been some iconic places in business for decades who have no apparent successor to take over and figure the new profit margins aren’t worth the long hours and work.
Jeannette Punsoni Dardenne, Owner of INGroup Creative Marketing and Eat IN Connecticut , which does public relations for restaurants, said those iconic places were built using the foundation of lower costs.
“If no is one there to carry on the legacy they say, ‘We’re on the brink, so we’re going out,'” Dardenne said. “If you’ve been in the restaurant business for a long time you say, ‘let’s have our weekends and nights back.'”
Viron Rondo, owner of Viron Rondo Osteria , a fine dining experience in Cheshire, said the market changed after Covid and outdoor dining is a “must.”
“It’s very different than it used to be,” he said. “We stayed ahead during pandemic because of outdoor dining. We have one of the biggest outdoor seating areas in the state.”
Rondo said his 6,500-square- foot outdoor seating area with a bar, gardens and Mediterranean landscaping, was built before the pandemic in 2019, a stroke of luck. During Covid he missed fewer beats than others because the seating was already there.
He said they bring new dishes and cocktails to the menu regularly so that guests get that special “experience.”
“When you come to this place, you feel like you’re on vacation,” Rondo said. “We’ve been blessed.”
Phil Barnett, co-founder and co-CEO of Wood-n-Tap , said sales have been consistent because his restaurants provide good value, but their are cost challenges. His group owns 10 restaurants, nine in Connecticut, and will open another in Groton.
“The cost of doing business right now is very challenging,” Barnett said. ” “It’s (costs) going through the roof.”
He said those in the business are “constantly” talking about the state of the industry and looking for solutions, including by appealing to the legislature.
Barnett said restaurant owners don’t want to see other restaurants fail because competition, the basis of “capitalism” is healthy.
“It pushes everyone to do better,” Barnett said.
Dolch said different areas have their own unique challenges.
For instance, local traffic has disappeared in Hartford because so many people are working remotely.
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