High-end restaurant closures. Is this widespread?

[nickrey]

High-end Sydney restaurants seem to be dropping like nine pins at the moment.

Just this year we have had closures of Bilson's, Pier, Berowra Waters, Manly Pavilion, Cotton Duck, Bird Cow Fish, and Montpelier Public House amongst others.

We have also seen Becasse and Justin North's other restaurants go into receivership.

Is this phenomenon happening in other locations as well?

Are we seeing a rationalisation of fine dining to meet more limited discretionary budgets or is it representative of a shift towards more casual eateries?

What's happening in your area?

[Broken English]

The Becasse recievership was quite upsetting, I love that restaurant, I hope they can pull through.

[ChrisTaylor]

Shit. Didn't hear of these down here. Presumably mentioned in The Age's epicure section at some point but maybe I just ignored it. Didn't read it. Shame, really, altho' I guess it's the nature of the business. Maybe on some level it's reflective of the economy and all, but new places are opening all the time and some becoming quite successful. I suppose the market--Australia has a very small population, after all--can only support a certain number of restaurants. Somewhere like Pier, which has lost a fair bit of its reputation, might suffer even more from somewhere new that's got a lot of media attention and hype surrounding it. Maybe. And even for a place that's still held in high regard and has a bit of publicity attached to it--Becasse, say--I guess there's still the issue of a lot of competition. A lot. If you're running on a fairly thin profit margin, it probably doesn't take too many slow weeks to put you in a very difficult position.

[Twyst]

People are still spending money on fine dining in the US despite the economy. Restaurant sales are up 8% over the last 2 years despite the economic situation!

Edited June 23, 2012 by Twyst (log)

[barolo]

Yes, there has been a shift away from fine dining in Vancouver too. Lots of restaurants recreated themselves in a more casual format - remove the tablecloths, simplify the menu, dress staff informally, etc.

[Broken English]

Shit. Didn't hear of these down here. Presumably mentioned in The Age's epicure section at some point but maybe I just ignored it. Didn't read it. Shame, really, altho' I guess it's the nature of the business. Maybe on some level it's reflective of the economy and all, but new places are opening all the time and some becoming quite successful. I suppose the market--Australia has a very small population, after all--can only support a certain number of restaurants. Somewhere like Pier, which has lost a fair bit of its reputation, might suffer even more from somewhere new that's got a lot of media attention and hype surrounding it. Maybe. And even for a place that's still held in high regard and has a bit of publicity attached to it--Becasse, say--I guess there's still the issue of a lot of competition. A lot. If you're running on a fairly thin profit margin, it probably doesn't take too many slow weeks to put you in a very difficult position.

Becasse, where a few of my friends have worked (as pastry chef and chef de cuisine) for years, has apparently suffered from a rapid expansion (with the flagship, Quarter 21, Le Grand Cafe, Etch, Charlie and Co x 2 and the cooking school/providore) which when combined with the economy has hit them hard. I read that Luke Mangan was interested in becoming a partner, so hopefully that will go through.

I really think that it's not just Sydney, it's just seeing the worst of it at the moment. Bilson's, with its ludicrously expensive yet equally good $450 degustation was a risky move to be sure, and Pier lost a lot of shine when Grant King and Katrina Kanetani left. Jared Ingersoll's Cotton Duck was good, so I'm not too sure why that one went down, my father knows Jared socially though, I may ask him to find out.

[Julian Teoh]

Nothing of the sort happening here in Singapore. More and more high-end places are opening here, the most recent notable arrivals being Jason Atherton's Pollen and (in July) a restaurant run by some ex-El Bulli crew. This after Robuchon, Savoy, Tetsuya, etc. piled into the casinos.

There has been an sudden spike in the number of bistros, but quite a few of these have been opened by haute cuisine chefs "downsizing" for various reasons, such as the chance to own their own restaurant or lifestyle choices. Demand for these casual eateries is also on the increase, so I think we might be seeing the shift in mainstream consumer tastes much like we saw in Sydney in the early 2000s when bistro / brasserie was the buzz word. But short of a GFC repeat, demand for the high-end will always remain strong here, if nothing else due to the number of wealthy expatriates, the booming private banking sector and also the masses of overseas travellers barrelling in.

[Broken English]

I should add that, from what I hear, the closing of Manly Pavilion was due to the expected revenue from their function room, which through legal battles was never allowed to open, thus compromising about 50% of expected revenue, and so the bank foreclosed.

Edited June 26, 2012 by Broken English (log)

[adey73]

wasn't Montpellier Public House Matt Kemp's attempt at lowering customers average spend from Balzac,

And that didn't work for him either?

[ChrisZ]

A few days after Nick posted this, a number of articles on the same topic popped up in the Sydney Morning Herald. The links are here, for those who are outside of Sydney but interested:

Restaurants in recession

More to a restaurant than a chefs hat

Wahu

I've never worked in a restaurant - let alone run one - so I can't make much of a comment. I can suggest that being a great chef doesn't make you a great businessman, but I can also suggest that Australia's economy and wages are different enough from other countries to make comparisons difficult. An earlier article features comments from one of Australia's celebrity chefs on staff wages in Australia. My interpretation of his comments are that even the cheapest workers (ie wait staff) on a Sunday get paid $40 per hour. I'd be interested to know how that compares to other countries...

[Snadra]

According to http://www.fwa.gov.au/documents/modern_awards/pdf/MA000009.pdf, which I believe is the current and relevant award, F&B attendants get $15.96 to $18.58/hour (page 18) although I'm not sure what determines the highest grade. Penalty rates (page 36) range from 125% on Saturdays to 250% on public holidays (higher for casual staff). I would guess the $40/hour in that article is for kitchen staff, not most front of house.

Obviously these are pretty high wages for a low margin business. Many employers mitigate this on weekends by employing junior staff (lower wages), fewer staff and imposing surcharges on weekends and holidays.

Also, this is a business that is at the mercy of trends and fashion. In my circle of friends and acquaintances, those who eat out frequently in the eastern suburbs are looking for more casual and quirky experiences than they did a few years ago. They don't generally enjoy the 'big night' at a top level restaurant the way they used to, and these are people who have high disposable incomes and either no kids or nannies for them.

But these restaurant closures don't seem all that 'new'. My memory may be off, but this seems to happen in a cycle pretty regularly - if I had access to the last 15 years' worth of the Good Living supplement we could probably chart it. Doesn't make it any less unpleasant for those whose lives are affected by this though, and I really feel for them.

[ChrisZ]

Just following up with yet another SMH article, this one about Pilu. Pilu is at the end of my street and is considered to be one of the better restaurants in Sydney. I've eaten there a few times- unfortunately it's too expensive to be considered our 'local'- and I have always loved the food. It appears to be busy and unlike the restaurants mentioned in the articles above, Pilu does not seem to be in any financial difficulty.

I recall reading that a very general rule for restaurants is that the cost of the raw ingredients should be about 1/4 of the menu price - with the difference representing the cost of rent, wages and other overheads. The prices listed in the article above suggest that is (roughly) correct.