If your New Year’s resolution is to support local restaurants, the options just got fewer.
Recently, four notable restaurants and bars near downtown have announced their closure including Crave Eats. Drinks. Nightlife., Red Lion Pub, Suki Yaki, Brgr House.
“I think there are more to come,” Philip Stanton, owner of Brgr House in Kendall Yards, said.
Six years ago, Stanton opened Park Lodge in the premiere location, adjacent to the Centennial Trail, looking over the Spokane River.
A year ago, he tried something new and opened the gourmet hamburger restaurant and bar at the location. It lasted just six months.
In response to the recent closures, Stanton said: “I can’t say I’m surprised. I feel like that’s just the way things are heading.”
Spokane County hosts nearly 900 restaurants and roughly 540 operate in the city of Spokane, according to the Washington Hospitality Association.
The trade organization was formed after the Washington Restaurant Association and the Washington Lodging Association joined forces in 2016.
President and CEO, Anthony Anton, said closures can happen seasonally and not reflect trends across the industry.
“When you’re dealing with that many individual businesses, I’ve learned to not overreact to six or seven closures,” Anton said.
The trade organization collects detailed data and surveys from businesses owners in the industry but are lagged by about six months. So, Anton said he is not worried about the closures until he can see the data.
However, industry has trends that do worry him, like how some 40% of restaurants did not receive COVID relief; meaning they have been carrying debts from the lockdown.
And for those businesses that were lucky enough to receive relief funds, they must begin paying them back to the federal government, which is simply an insurmountable task.
“If you’re one of those restaurants that has hundreds of thousands of dollars of debt, and you’re facing four years of no profit and not being able to pay off loans,” he said, “the time has come to close before the bleeding gets any worse.
“We were anticipating that last wave of COVID-related casualties for small business,” Anton said. “How big or small that is, we don’t know.”
The recent closures come after months of financial hardship for Washington restaurants and bars in an industry known to operate at the narrowest profit margins of all types businesses.
During the first quarter of this year, Spokane restaurant-and-bar sales were up 13% compared to 2019, before the spread of COVID.
“But the inflation rate from 2019 to 2023 was 20.3%. So if Spokane restaurants had kept up with inflation, their sales would be right around 20%,” Anton said. “They’re only at 13%, which means their sales haven’t kept up with the increased costs of labor, food and other things.”
Owners sound off
Jacob Miller owned Crave Eats for more than 11 years before closing last month.
Now, he is looking to sell the business located at 401 W. Riverside Ave.
Miller said labor costs grew too high to overcome. Before closing, labor comprised around 35% of his total operational costs.
“When I started, it was 12%,” Miller said.
Currently the minimum wage in Washington is $15.74 per hour and has increased every year since 2016, when it was $9.47, according to the Washington State Department of Labor and Industries.
Next year, it will be $16.28 per hour.
Miller also pointed to the high cost of buying and selling liquor in the Evergreen State.
According to the Tax Foundation, Washington applies the greatest excise tax on distilled spirits, at $36.55 per gallon.
Washington law aside, inflation has affected everything in his business, he said.
“I mean, why does my latex glove go from 5 cents to 27?” he asked.
Despite his landlord offering to help him with rent charges, Miller said there was no choice but to close.
“Rent isn’t bad at all. That’s just 5% of my costs,” he said. “I could have lowered my business insurance, workforce and every price I could without messing with quality, and I’d still be underwater.”
Stanton echoes similar concerns. He said his business concept, using raw ingredients to make gourmet burgers, isn’t feasible.
“The labor increases are a necessity for my employees because the cost of living is higher now, but the cost on the businesses for doing a concept that has a lot of labor is tough,” he said.
Stanton said he would have to make food that is more prepackaged to survive.
“I don’t think I can do restaurants like I used to do because I can’t make ingredients from scratch and make it all work out with what’s needed to pay the workers,” he said. “My prices can’t keep up.”
Stanton hopes to open another restaurant in the future but with a smaller staff.
“It has to have a concept where you only have a couple employees where everyone’s kind of doing a bit of everything,” he said.
This is a restaurant model Adam Hegsted, one of Spokane’s most prolific restaurateurs, has begun implementing.
“You can’t hire a 15 or 16-year-old kid to do dishes for $16 per hour anymore,” he said.
Instead, he hires more skilled workers for a few more dollars an hour. “They do a little prep, dishes and other stuff. The lower level positions like bussers, hostesses and dishwashers have gone away.”
Hegsted owns and operates Gilded Unicorn in downtown, Baba in Kendall Yards, the Yards Bruncheon in Kendall Yards, and Francaise in the South Perry District.
In August, he closed his Spanish tapas restaurant, De Espana after just more than a year of operation.
Located at 909 W. 1st Ave., he said it is more difficult to operate a successful restaurant in the downtown area than in neighborhood locations.
“We tried to open De Espana to create a destination restaurant because that’s what’s needed downtown,” he said. “But we just weren’t in a position to continue to take losses.”
To survive downtown, Hegsted said a restaurant has to be a destination location. This means customers travel to downtown, specifically to dine at a restaurant.
“Gilded Unicorn (located in downtown at 110 South North Monroe Street) took about two years of losses to get it to create that destination,” he said.
If a restaurant has not reached destination status, it is important to be located near retail shops or parks that further incentivize patrons to enter downtown and experience the characteristics that come with it, according to Hegsted.
Shannon Allert, general manager for the Red Lion, said the lack of nearby retail contributed to the historic Spokane bar that has been open since 1959 closing its doors last week.
“Nobody likes to wade through six guys asking for change and cigarettes just to get in here,” Allert said.
Anton, of the restaurant association, said one of the most pressing concerns for restaurant owners is crime.
“Historically, it’s never really made our top 20, but now it’s everyone’s number one or number two issue,” he said. “It’s either higher costs or dealing with crime.”
Emilie Cameron, president and CEO of Downtown Spokane Partnership, is making efforts to ease the burden on downtown restaurants.
One of her efforts is to usher in more retail shops around the downtown area.
“Spokane is absolutely a destination for retail for hundreds of miles in any direction, frankly. But at the same time, there’s always a need for more,” she said.
When Allert dines, she and her friends rarely choose downtown. But if they do, they choose Twigs Bistro and Martini Bar in the mall because they feel safer.
“We want to activate downtown beyond River Park Square,” Cameron said.
This includes attracting retail “all the way to the west and east ends where you traditionally have had a lot of bars and restaurants,” she said. “That’s what makes a downtown successful – a really strong mix of tenants.”
Miller said his downtown location would have greatly benefited from better lighting in the area. Cameron said she understands.
“We were able to award close to $30,000 in grants to local small businesses and property owners to make facade improvements and the majority of that was focused on lighting,” Cameron said.
Though her organization faces persistent challenges to repair outlets and light fixtures that often are vandalized, she is hopeful.
“When you’re a restaurant or small business, and your supply-and-labor costs are going up and at the same time your traffic is going down – it creates a problem,” she said. “But the reality is, in the long term, we are optimistic. Especially in downtown Spokane, we have a mix of ingredients that create unmatched opportunity here.”
Restaurant owners are optimistic, too.
“The restaurant industry ebbs and flows even with as many closures that have been happening. With them comes good opportunities for new ideas,” Hegsted said. “Even with as many closures that have been happening in Portland and Seattle, you see a bunch of new restaurants and some of them are a little more quirky.”
Miller is still working to sell his restaurant but he is hopeful it can return.
“All the closures are sad but it’s also a potential transition period,” Miller said.
As for his space, he hopes the next owner is “someone local and intelligent. Someone who can bring it back to a memory-making, good-time-having place it’s always been.”