I am far from an expert on the Restaurant and Bar Business segments but as a long time resident of Chicago in various areas packed with these establishments from Wrigleyville to Bucktown to River North I am at least a frequent regular qualified to throw my 2 cents in. I hadn’t thought too much about the economics of this until I talked to a friend who recently opened two great pizza places where he is the owner about what you get when you buy a used restaurant.
You get nothing… you have to re-model and start over the food concept. And when you sell, the next guy does the same.
What makes a good restaurant as a business? There are a lot of variables and I am only speculating, but certainly timing and location are key elements. For instance you have the Twisted Spoke, a bar on Grand Avenue in what used to be a pretty sketchy part of town that is rapidly gentrifying, and they have the iconic “skeleton on a motorcycle” on permanent rotation in front. This bar has survived for a long time with a mix of hipster / biker cool, an astoundingly good drink / beer mix, and surprisingly good food and interesting / witty / iconic employees. I’d bet that back in the day this place was actually full of bikers but nowadays the crowd looked like the usual hipsters in plaid shirts. And don’t forget the enormous benefit of a rooftop – it astounds me how many bars / restaurants ignore the fact that Chicago people LOVE to sit outside during the few nice days that we receive every year and they drink like fish and eat until they can’t even move.
A River North restaurant, Sushi Samba, was enormously successful for many years in the heart of River North. We used to give a general description of where we lived as “near Sushi Samba” because everyone either went there or knew about it. The place is enormous with an upstairs that opened up in the summer and was packed with beautiful scantily clad people and cars lined up for valet parking around the block. But recently I walked right by and saw this…
Their furniture was being carted away and sold off and the restaurant was shut down. In recent months / years the crowds had dwindled as dozens (literally) of big new restaurants opened all over River North. I don’t know if they couldn’t keep pace or perhaps their real estate was so valuable that they were simply priced out of the market – depending on “air rights” you could build a multi-million dollar condo unit or even large building on that large space facing Wells. From my economic perspective they could have (or maybe did) sold out to someone else at the height and pocketed the money and let the other guy ride the popularity wave back down. Before it was Sushi Samba it was the Hudson Club which also was hugely successful and busy for a while long before I moved to River North. So perhaps it will become another huge successful restaurant, as well.
Cross Posted at LITGM