Boston restaurants need help because profits are shrinking and it is easy to hire help that will increase profitability.
Profits are shrinking because food prices, rents and utilizes are increasing substantially. Boston has also over built the restaurant industry so competition is much higher than it use to be.
One reason why food prices have increased in the past few years has been due to poor crop yields in California. The current drought in California is estimated to cost the agricultural industry $2.2 billion this year. Thus decreasing supply which will raise market prices of produce. In Boston, food prices edged up 0.3 percent and consumers eating away from home decreased 0.4 percent (Bureau of Labor Statistics, New England Information Office). From May 2013 to May 2014, the Boston food index rose 0.6 percent. Both grocery and restaurant prices were up 0.5 percent.
Boston commercial and non-commercial rents are up 3.2 percent and electricity in Boston has increased 9.2 percent from May 2013 to May 2014. Other Fuels and Utilities are up 4.2 percent however piped-in gas prices are down 1.4 precent.
The restaurant closures in Boston and owners observations lead to the conclusion that Boston has over build the restaurant industry. L’Espalier’s chef and owner Frank McClelland, stated ”Everyone on the street in Boston is hurting to fill seats because too many seats have been built,” McClelland said. “The Seaport has sucked the wind out of the city. Piccolo Venezia, an Italian restaurant at 263 Hanover St. in Boston’s North End, has shut its doors in 2013 after being in business for 32 years.
From May 2014, the following restaurants have closed:
— Asana, Boston (Back Bay), MA
— BoMA, Boston (South End), MA
— One of the Kind, Allston, MA
— Sal’s Pizza, Boston (Fenway), MA
— Sea Dog Brew Pub, Woburn, MA
— Centre Street Cafe, Jamaica Plain, MA
— Charlie’s Sandwich Shoppe, Boston (South End), MA
— The Creperie on Newbury, Boston (Back Bay), MA
— Gene’s Chinese Flatbread Cafe, Chelmsford, MA
— Jamjuli, Newton Highlands, MA
— The Metropolitan Club, Chestnut Hill, MA
— McMenamy’s Hamburger House, Easton, MA
— Moroccan Hospitality Restaurant, Malden, MA
— Rendezvous, Cambridge (Central Square), MA
— Spike’s Junkyard Dogs, Boston (Back Bay), MA
— Tastings Wine Bar and Bistro, Foxborough, MA
— Union Chowder House, Weymouth, MA
— Vinh-Sun, Boston (Chinatown), MA
— Haveli, Cambridge (Inman Square), MA
— Ma Soba, Boston (Beacon Hill), MA
— Milestone, Wellesley, MA
— Scosso, Peabody, MA
— Sonny Noto’s, East Boston, MA
— Viva Mexican Grill, Wayland, MA
Profitability can be increased by hiring a qualified restaurant consultant. Most consultants have an advanced business degree and industry experience and can focus on both revenue increases and cost reductions.
Operation Consulting Group, a Boston Restaurant Consulting Firm commented that “80% of Boston Restaurants can benefit from sound advice from one of our consultants. Our most recent client increased the average bill per customer by 21.5%, reduced expenses by just over $9,000, all while averaging about 4 to 5 more customers a day.”
Consulting fee’s are much cheaper than one might expect. Given the profitability increases, Consultants almost always pay for themselves. Clients can often make a guarantee of a successful relationship with a consultant by using a pay to performance fee structure instead of a fee-for-service. Fee-for-service is often the least expensive route because pay to perform averages about the first year’s cost savings.