Last October, Zeeland Street owner Stephanie Phares rolled the dice on a new dinner concept she hoped to incubate within her 35-year-old neighborhood eatery.
The idea was to use the space, typically dormant at night, to serve high-end soul food. Known as Beloved, the concept would give Phares a new revenue stream and a chance to turn a higher profit than that of Zeeland Street’s casual breakfast and plate-lunch business. Phares was inspired by a trend in larger cities, where one restaurant could play double duty as two separate concepts.
Reception for Beloved seemed strong at first. But over its first few months, numbers fell short of expectations. Then in mid-January, a seasonal freeze wiped out Phares’ refrigerator compressor. She got sick soon after, as did the chef consultant she had hired to run Beloved’s kitchen. Another winter freeze caused pipes to burst in the restaurant, which closed operations for a few days. Then, her freezer gave out.
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“I don’t know how many thousands of dollars worth of product I had in there,” she says.
Phares pumped the brakes on Beloved and returned to her bread-and-butter concept, Zeeland Street, to try to right the ship.
But it was facing challenges, too.
As for many restaurants, Zeeland’s customer counts have been down since an initial post-pandemic surge, while, at the same time, the cost of running the business has been soaring.
“I need 150 to 200 people to walk in here every day,” Phares says. “And we’re missing it every day, really, except for Fridays and Saturdays.”
Phares is still hanging on—in fact, Zeeland Street was just voted Best of 225’s Best Black-owned Restaurant. But popularity doesn’t mean immunity from struggles, proven by the volume of celebrated restaurants that have shuttered in recent months. Local institution Fleur de Lis Pizza shut its doors for good in 2022. Gov’t Taco, founded by media darling Jay Ducote, caused a social media stir when it shut down in November 2023. The Shed BBQ, last year’s Best New Restaurant according to 225 voters, closed in December—just 18 months after opening.
The list goes on.
No one has ever claimed the restaurant business, famous for its frenzied energy and slim profit margins, was easy. But now, restaurants are facing a perfect storm of challenges that some operators say are unlike any they’ve seen, including the COVID-19 shutdown.
After restrictions were lifted, business came roaring back, at least for a time. Patrons returned in droves to show support of their favorite eateries, and expanded the popularity of to-go sales.
“You look at 2021. I don’t know if we’ll ever see sales volumes like that in our lifetime,” says City Group Hospitality managing partner Stephen Hightower, whose restaurant group runs City Pork, Rouj Creole, Proverbial Wine Bistro, Beausoleil and others.
But by late 2022, he says, sales started to decline, while costs of food, insurance and rent were steadily rising. Meanwhile, diners began facing the realities of inflation and mounting credit card debt—consumer prices have increased by nearly 20% nationally since January 2020. Pandemic loans also dried up.
“I think you’re going to see attrition in the back half of this year for restaurants,” Hightower says. “We’re fortunate enough to have a loyal customer base, but it doesn’t stop people from not spending as much, and not going out to eat as much.”
And for small operators, uncertainty can spell doom.
Low traffic combined with rent that nearly doubled prompted Southern Cofe to close earlier this spring in Scotlandville, says owner Horatio Isadore, who had just renovated the space in 2023.
“I don’t mind paying the costs if I had a critical mass of people,” Isadore says. He’s now moved to Alexandria, Louisiana, and is taking a break from the business.
CounterspaceBR, an artisan bakery with locations in Bocage and Mid City, decided to close a third location in Zachary earlier this year one month after opening.
“Barriers that I couldn’t overcome just kept presenting themselves in Zachary,” says owner Sarah Joy Hays, citing overhead costs as the main challenge.
She says business has been hard, in part because she wants to maintain her brand as a specialty bakery that uses high-quality ingredients.
“Everyone’s costs are rising,” Hays continues. “There’s a limit on how much I feel I can charge for a cookie. We’re technically a luxury item.”
Indeed, it’s commonplace to hear diners complaining about the rising cost of eating out as surges in food and overhead have forced restaurants to raise prices, sometimes multiple times.
Louisiana Lagniappe founder and owner Kevin Ortego says he’s never seen food and insurance prices so high. It’s forced the fine dining seafood restaurant to jack up prices about 40% over the last three years, he says.
When he opened the Baton Rouge location in 1998, Ortego says he paid between $7,000 and $8,000 annually for commercial insurance. Now, he pays $27,000 a year. And nearly everything he uses to create his menu has also risen, from bacon to cooking oil.
Crabmeat jumped from $27 per pound to $38. Butter is up, too, from around $40 per 36 pounds to about $150.
“Except domestic shrimp … I can’t name you anything that’s the same price as it was three years ago,” Ortego says. “Where does it stop? That’s what I want to know.”
Restaurant group rundown
Independent restaurants are finding it hard to make a profit these days, but the pain is somewhat eased for concepts that operate within a restaurant group.
Multiple brands or locations managed by the same parent company benefit from economies of scale, restaurateurs say. Buying power is better. And by centralizing administrative functions, individual locations operate more efficiently.
“I think staffing is one of the places where it’s been most beneficial for us,” says Emelie Alton, CEO of Byronz Restaurant Family. “The ability to pull backup staff from another location if we have some holes pop up is really helpful.”
Onboarding staff can be time-consuming—and costly if new employees don’t work out, Alton says. Shifting around employees trained under the same system can save time and money.
Hufft Marchand Hospitality co-founder Nick Hufft says having a central office for payroll and product ordering reduces the management burden in each of the eight concepts the group operates in Baton Rouge and New Orleans.
“It allows (management) to focus on one thing and one thing only: making customers happy,” Hufft says.
A few of the related restaurants around town
Byronz Restaurant Family
- Bistro Byronz (Mid City and Willow Grove locations)
- Pizza Byronz
City Group Hospitality
- Beausoleil Coastal Cuisine
- City Pork (@Perkins and Jefferson Locations)
- City Slice Pint & Pizza
- Proverbial Wine Bistro
- Rouj Creole
- Spoke & Hub
Go Eat Concepts
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- Izzo’s Illegal Burrito (various locations)
- Lit Pizza (various locations)
- Modesto Tacos Tequila Whiskey
- Rocca Pizzeria
Hufft Marchand Hospitality
- Curbside Burgers
- Gail’s Fine Ice Cream
- The Overpass Merchant
Making Raving Fans Hospitality Group
- SoLou
- P-Beau’s
- Portobello’s Grill (Bocage and Jones Creek locations)
This article was originally published in the July 2024 issue of 225 Magazine.