Trends: Restaurant Closures

According to Food Sheikh, closure are the natural selection vital to the F&B industry's evolution

Zahira.
Zahira.

In some ways, Tahir Shah was the poster child for Dubai’s independent foodpreneur. Starting Moti Roti as a pop-up operation bringing fresh, cool, Pakistani food to the people of Dubai,  Shah was like a travelling salesman. Farmers’ markets, local events, Ripe market, even international events like the Formula One — you name it and Moti Roti had been there.

From there he upgraded to a food truck and founded TruckersDXB. After a quick Restaurateur of the Year nomination, he finally built himself a small bricks-and-mortar store in JLT. His dream was being realised — a relatively healthy summer business gave enormous hope for the rest of the year and the future beyond.

On a quiet Wednesday night in December, Moti Roti in JLT was buzzing with people. Roti wraps and parathas were flying out of the kitchen and lassis and iced teas were being blended and passed around under the watchful eye of the proud Shah. There was chatter and laughter, life and character. It was precisely how he imagined it to be.

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Except for the fact that this was his closing party.

Business levels had never improved from the summer, cash flow was becoming a problem, and Shah and his partners made a decision to cease trading. Shah's money ran out long before his grit and determination did.

Five years after his dream began, it was over. However, here’s the thing: like many driven and passionate restaurateurs, it’s never really over, and I get the impression from Shah that he’s just getting started. You can find him at his new venture, thefoodfounder.ae, where he’s available for coffee and industry advice.

Restaurant closures happen all the time, and for many reasons. Some restaurants are so awful that they should be closed. Some seem to have all the right boxes checked and still can’t make it — like Moti Roti or even, arguably, Zahira.

Others, that seem to have deep, healthy roots with years of business behind them, also close down, perhaps unable to keep up with the constant market changes or unwilling to change themselves. Places like Round Table Pizza or Frankie’s, both having a respectable run of solid business, ultimately turned out the lights. 

Some restaurants close despite being at the very top of their game. ElBulli could have operated for years to come; it had only 8,000 seats available, and yet had more than two million requests every year. However, Ferran Adria felt his elBulli “had completed its journey as a restaurant”.

So, what makes a restaurant successful? It’s a difficult question and if anyone says they have all the answers they are probably lying. You can do a billion things right and overlook a simple U-turn sign on the street outside that means no-one ever comes in.

We all know that, unfortunately, many restaurateurs confuse concept with menu. A restaurant concept is not just a menu, some recipes and standard operating procedures. Rather, it covers a location, a marketing strategy, a service style, design, ambiance, price point, a defined position in its competitive set, and, equally as important as the food itself, a long-term strategy and commitment.

Reflectively, Shah has a list for improving restaurant success – a wish list that he has scribbled down in the back of a Moti Roti-branded notebook. It’s a good list, very sensible and pragmatic. Interestingly, what this list doesn’t cover are any of the above considerations — all of Shah’s wishes are concerned, ultimately, with finance.

He wishes it wasn’t as expensive to start a business here; it can cost you as much as a downpayment on a house just to get permission to start a restaurant. Already you are handicapped before you even open, he explains.

He wishes it was easier and cheaper to acquire talent. He wishes there was a labour pool of decent hospitality part-timers who could pull a few shifts without needing a contract and all the expense that goes with it.

Finally, he wishes there was an open dialogue with landlords to talk candidly about how crippling the rents are for the business. He wishes he could understand the landlord’s pain points and gain insights into why they have to charge so much.

Shah talks about this list with no bitterness or anger, but with optimism and a sense of hope for the future. Dubai is a nascent city, he says. So this is just the beginning.

When the writing is on the wall, restaurateurs usually have a couple of choices. Some choose to go through a process before closing their doors – they exhibit their final throes, if you will. Those desperate to hold on to some kind of pulse and future follow a similar pattern.

The process usually starts with dramatic menu changes in an attempt to appeal to a wider audience. This means they will probably add burgers and avocado to the menu. Then there is the quick refurbishment to offer something different to the guest. This often involves some paint and a few Edison light bulbs.

Then they discount like crazy, offering ridiculous food and drink prices in the hope that those attracted by AED49 (US $13.34) all-you-can-eat-and-drink lunches are suddenly going to become loyal and premium paying patrons. A further roll of the dice is that they will then either open for breakfast to improve day sales or close for lunch to reduce payroll costs. Finally comes the afterthought: shisha – the final nail in the coffin before the fridges are emptied. Unfortunately, I have seen little evidence that any of these actions actually offer long-term solutions.

For others, closure is immediate and seemingly without warning – but it provides a release, relief from sleepless nights and constant worry. 

All restaurants close eventually — there is an inevitability to it. However, these closures are all part of the culinary circle of life. Without closures, there would be no success stories; without failure, there would be no innovation or progress; without something ending, nothing else would begin. Closure is inescapable, and it happens to the very best in our industry. As I type this, Danny Meyer, one of the most successful restaurateurs of our time, is closing Green River, the Chicago Michelin-starred restaurant.

Colin Clague had to close Q’bara before finding massive success with Rüya, and is now busy launching international locations. Even the formidable Marco Pierre White has a hat-trick of closures here in Dubai, with Frankie’s recently closing its doors in JBR after a decade of memories and music. Closures create dialogue; dialogue creates change. 

According to Dubai Statistics Center, over 4,000 trade licences were cancelled in the first three quarters of 2017 — that’s twice as many as in 2016. There is no doubt that 2017 was a telling year for many businesses in Dubai. 

Detailed data on how many of those cancelled licences were restaurants was not available, unfortunately. However, what was interesting was that there were three times as many new licences issued in the same period. Over 15,000 new commercial licences were issued in Dubai in the first three quarters of 2017. That optimism has to be a reflection of the market sentiment somehow. 

There is an abnormal resilience and, perhaps foolhardyü confidence that surrounds the F&B industry, not just in Dubai, but across the globe. 

Whether it is optimism, dogged persistence, passion or arrogant self-belief, there seems to be a specific gene in all restaurateurs that drives reinvention and rebirth.

Busaba Eathai has closed down at the beach but has promised to re-open in a new location. The people behind Morah at the JW Marriott have also promised a re-invention after it closed its doors, and Michael Mina has fired his Firebird Diner and is relaunching with Mina’s Brasserie. Dragonfly in City Walk was also scuttled but will resurface in a licensed location sometime this year. 

Back in 2009, when the whole world was suffering from the global financial crisis, there was a natural culling of businesses that were unable to remain competitive. Yes, there were a few innocent victims that had to close through no real fault of their own, and some that remained open only because they had deep pockets, but for the most part, there was a righteous and correct readjustment of the market, and many would agree that it needed to happen. 

The lead up to that crisis was where everything got out of hand. F&B franchise deals were being signed under laughable expansion promises, with all signatories knowing full well the chances of achieving those openings were virtually nil. Franchises were being awarded to unproven operators whose only competence was a big cheque. Operators were entering into unsustainable lease contracts, turning a blind eye to outrageous forecasting just to keep up with the market fervour. Naïve enthusiasm, irresponsible decision making, and unregulated capitalism created chaos. 

Here we are in 2018, again facing economic uncertainty, again facing potential closures, but it feels different this time around. Talent has remained, and experience is prevalent. Lessons have been learned and the market has matured. There is more caution and common sense. There is a different set of challenges now, but this feels more like the real world. Consumers are dealing with a defined tax for the very first time. Landlords are facing pushback from tenants. Suppliers are expected to support the industry. Government officials are being asked to help. In some ways, we are in a much better position today than we were 10 years ago and maybe even in a healthier place than the golden years of the 2000s.

Shah taught me a word, which I think will be the word of the year for many restaurateurs in 2018. The word is jugaad. The Oxford English Dictionary definition is a “flexible approach to problem-solving that uses limited resources in an innovative way”. However, it seems much more than that. Jugaad is a new way to think constructively and differently about innovation and strategy. It’s a way of maximising resources. It is about businesses adapting quickly to unforeseen and unfavourable situations in an intelligent way. It means thinking in a frugal and flexible way. However, most importantly, jugaad is about encouraging, perhaps even demanding innovation and an entrepreneurial spirit — something that the F&B industry is well-versed in. 

For every restaurant closure, there is a slight adjustment to the F&B tapestry, an unperceivable acknowledgment of change, which collectively and over time creates a new landscape of fresh innovation and quality. 

For every Round Table Pizza, there is a Freedom Pizza, for every Quick burger there is a Salt burger; for every Harry Ghatto’s, there is a Lucky Voice; for every Chickenow there is a Super Chix; for every Café Rouge, there is a Bistro Des Arts, and for every Rivington Grill, there is a Maine Oyster Bar. 

Whatever the reason for closure, let us at least acknowledge every restaurant’s contribution to the city we know, be thankful for the progress they helped us all make, and celebrate what is allowed to thrive in their absence. 

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