CityÂ’s restaurant scene continues to expand
Minneapolis is seeing a boom in new eateries this year. The latest spots include Agra Culture in Uptown, Mattie’s on Main on the riverfront, Copper Hen Cakery & Kitchen on Eat Street and even a food bike called Geno’s Gelato.
More than 30 restaurants have opened in Southwest Minneapolis in the past year, with 10 more anticipated to open by year-end.
Restaurateurs and industry experts offered several explanations for the boom, including a recovering economy and more dedicated foodies waiting for tables.
An improving economy
More than 1,000 units of luxury apartments have opened in Southwest Minneapolis over the course of 18 months, with more projects in the pipeline.
Classic investors look at the demographics and see an opportunity, said Kim Bartmann, owner of Bryant Lake Bowl, Barbette and other restaurants.
“Money always fuels everything,” said restaurant consultant Tobie Nidetz, “and obviously money is out there ready to take chances on restaurants again.”
Dan McElroy, executive director of the Minnesota Restaurant Association, points to the consumer confidence index as a telling indicator. Based on an index of 100, it reached as low as 29 during the recession, and has now rebounded to 85 — a level of 90 is considered robust growth.
“A big part of the restaurant resurgence is people simply have more confidence,” McElroy said. “When people feel better, they eat and tend to go out more.”
Interest rates also remain low, allowing entrepreneurs more borrowing power. About a quarter of restaurant openings today are funded with the help of Kickstarter campaigns, he said.
Food trucks and farmers markets as startup incubators
Costs associated with opening a restaurant continue to climb, said Pat Weber, a local restaurant consultant. A commercial kitchen ran about $100,000 10-15 years ago. Today if you’re building a kitchen from scratch, you’re lucky to pay under a quarter of a million, he said.
“One thing food trucks do is allow you to prove your concept prior to a major investment,” Weber said.
The cost of a food truck launch is more affordable at $50,000-$100,000, he said, and allows restaurateurs to start gaining market share and a loyal following. Smack Shack, one of Weber’s clients, had several thousand Facebook followers before they opened the doors, he said.
Supply meets demand
“The average restaurant-going public is growing, and it’s definitely becoming more receptive to edgier cuisine and edgier concepts,” Weber said.
Restaurant concepts once only found on the coasts are more accepted here today, Weber said.
“We live out by Stillwater, and people are becoming very picky with wanting good food and wanting different food and expanding their taste,” said Tom DeGree, co-owner of Wilde Roast and Mattie’s on Main.
Dietary accommodations like gluten free, something Wilde Roast has long catered to, are now spreading to the suburbs, he said.
Everybody’s a foodie, agreed Danielle Bjorling of Copper Hen Cakery & Kitchen, who said there doesn’t seem to be enough restaurants to meet demand.
“Every place that’s awesome is super busy,” she said.
She was astonished to sell 1,500 cupcakes in the first four weeks of business.
A New York Times Magazine story published two years ago asked the question: “When Did Young People Start Spending 25% of Their Paychecks on Pickled Lamb’s Tongues?”
Local restaurateurs said they notice young people are eating out a lot, often in large groups, and often at the newest place in town.
“Anecdotally we know millennials visit restaurants more often, though they don’t necessarily spend more money per visit,” said Mary Chapman, director of product innovation for Technomic, a Chicago-based food research and consulting firm.
Restaurants and social occasions are a higher priority than older generations’ priorities, such as saving to buy a house, she said.
Clark Wolf, a New York-based restaurant consultant, said the U.S. is still far behind Europe in food spending. Europeans spend roughly 13-18 percent of their income on food, he said, while Americans typically spend 9 percent. Meanwhile, Americans spend a greater percentage on health care, he said.
“The younger generation is saying no, I want to eat good food now and have a nice time,” he said.
How Minneapolis’ restaurant scene compares to the nation
Nationally, relatively few restaurants opened in recent years, with growth at 0.7 percent from year-end 2012 to 2013, according to Technomic.
A few towns are seeing a boom in restaurants, however, especially in towns where the economy has come back and the housing market is improved, Chapman said.
Minneapolis appears to be one of those, as it’s recovered job numbers lost during the recession and the housing market improves. Other food boom towns include Columbus and the Phoenix area, Chapman said.
Wolf, the New York restaurant consultant, said he’s seen increased national interest in food and local ingredients.
“This is a completely national phenomenon, and you guys are at the end of it,” he said.
Wolf said that during the recession in 2010-11, more restaurants opened in the New York area than in the years before.
“That’s partly because people simply wanted to invest in something that would be there next Tuesday,” he said.
The talent in the industry
Many people interviewed for this story commented on the talent that’s increasingly concentrated in Minneapolis.
More students are coming out of local culinary schools, Weber said, and there are more top-notch chefs working in the Twin Cities.
“When I was working in the industry in the early 90s, there were only four or five chefs I wanted to work for back then,” Weber said. Today, when students ask where they should train, Weber simply asks what type of style they like.
Three James Beard award-winning chefs work in the Cities, including Tim McKee of La Belle Vie and the forthcoming Libertine, Alex Roberts of Restaurant Alma and Brasa, and Isaac Becker of 112 Eatery and Burch Steak.
Still a tough business
“With all this money out there, you’d figure I could find some of it,” said Nidetz, who is working to open Prairie Dogs, a Lake Street hot dog diner. “I figured this would be a layup.”
DeGree said banks are not lightening up on lending to restaurants. Mattie’s opened with the help of an additional business partner.
“It’s still really hard,” DeGree said. “For us to open wasn’t a standard bank loan, it’s a difficult thing still to get.”
Recently announced restaurant closures included several surprises: Rye Deli, Gray House and the Lynn on Bryant.
“Some restaurants last for 10 years in the loss column,” Nidetz said.
“Unfortunately the best cooking isn’t always the best money-maker in town,” Weber said. “Publicly-traded chain restaurants are making a lot of money — but is the food any better?”
One reason Minneapolis might be seeing so many independent restaurants is that chains are sensitive to the cost of paying wait staff a minimum wage in addition to tips in Minnesota, McElroy said. Companies like Chili’s and Applebee’s haven’t been adding many storefronts here, he said.
“The cost in Minnesota is significantly higher than other states,” he said, making it a less attractive market.
Sharing the pie
With all the new restaurant openings, the question of saturation inevitably follows.
“Every time a restaurant opens 200 seats, they’ve got to come from somewhere,” Weber said.
He said the competition is intense.
“You can’t get by with what you had five years ago. Even old-school, classic restaurants have to start competing,” he said.
Bartmann said her restaurants do notice a slowdown when a new hot spot opens up.
“It’s usually a short-lived thing, and it evens out,” she said. “The bar is getting raised. Everybody’s game is upped. It’s great because Minneapolis has world-class quality ingredients right at our doorstep, and we also have really talented chefs here.”
Weber said he’s optimistic that we have more room for growth.
“It’s happening nationwide, but there is sort of a vacuum here,” Weber said. “Places like New York are always at the forefront of culinary trends, but there is only so much room for growth there. … It’s a great time to be in the restaurant business. The public will continue to support independent restaurants more and more. There is plenty of room for everyone.”
Reach Michelle Bruch at email@example.com.