You may have heard the term “peak oil.” It’s the theory that mankind has (or soon will) reach the point where global petroleum production falls even as the population increases.
But have you ever heard of “peak restaurant?”
No, it’s not that bar-and-grill that burned down at Augusta Exchange over the summer – that was Twin Peaks.
“Peak restaurant” is my theory that the business of eating out may have topped out. It came to me after learning that the number of restaurant establishments has been on a slow decline since peaking in 2014 at 638,000.
The question is, why? Do we eat out less these days? Are we buying more meals prepared at grocery stores? Is online food delivery really starting to catch on? Has the “foodie” craze encouraged people to stay home and learn how to operate that thing called a stove?
Or did the restaurant industry simply overbuild during the past couple of decades?
That last one is my supposition, especially when I see the beating that middle-of-the-road chain restaurants have taken in recent years.
Take casual chain Ruby Tuesday, which earlier this month was acquired by an Atlanta-based investment firm NRD Capital Management for less than $3 a share (which is $30 per share below its peak in 2004). The chain recently had to close 95 restaurants, though none in the Augusta market; the closest one to shut down near us was in Greenwood, S.C.
Brinker International, owner of Chili’s, is trading near its lowest levels in almost five years. Shares of DineEquity, which owns Applebee’s and IHOP, are down more than 40 percent this year. The Buca di Beppo chain shuttered its Augusta Mall restaurant at the first of the year.
Logan’s Roadhouse has filed for bankruptcy protection. So has Buffets LLC, the owner of Ryan’s, which closed the last of its two Augusta-area restaurants this past year. Also insolvent is Ignite Restaurant Group, which owns Joe’s Crab Shack and Macaroni Grill (the latter of which, ahem, also burned down at the Augusta Exchange).
And last but not least, for the first time ever the Subway chain last year closed more restaurants than it opened.
Clearly, something is going on here. And it could be that more people are eating at “independent” establishments, i.e., places that aren’t part of a big regional or national chain.
Restaurant consulting group Pentallect forecasts indie restaurants will grow by 5 percent by 2020, but chains to grow only 3 percent.
That’s not to say being “local” will guarantee success. Restaurants are not the easiest businesses to operate. Just look at a handful of the establishments that have disappeared this year alone: Big Daddy’s Express, Bird Dog Grille, Shangri-La, Walton Way Deli, Armando’s Grill &Pizzeria, Garden City Steak and Grill, The Cotton Patch, Silla Cafe, SideTrack Bar &Grill and Stanleo’s.
Bottom line: People have so many dining options these days that restaurateurs must be firing on all cylinders at all times to survive.
Good food but bad service?
Great service but high prices?
Low prices but bad location?
Say goodnight, Gracie.
WHAT ABOUT STORES?: Could America be over-retailed, too?
You might get that idea from The Counselors of Real Estate’s recent annual convention in Chicago.
It was there that Ralf-Peter Koschny, a director at German commercial real estate firm Bulwiengesa AG said America’s overabundance of per-capita retail space was as much to blame for its industry’s slump as online shopping.
“In the U.S., there are 25 square feet of retail space per person,” Koschny said.
“In Europe, it is half that. See the issue?”
A study by Cowan and Company estimates the U.S. has 40 percent more shopping space per capita than Canada, five times more than the United Kingdom and 10 times more than Germany.
Another threat to retail is the graying population. Households headed by people age 65 or older spend just half of what households headed by those 40 to 54 years of age.
A panel of real estate futurists said there will likely be a “complete transformation of the retail footprint in North America,” with the key to survival being location- and demographic-appropriate tenants as well as “proactive reconfigurations of mall space to entertainment venues and service providers.”
IF YOU LIKE YOUR MORTGAGE, YOU CAN KEEP IT: The housing slump is becoming more of distant memory. The keeper of the nation’s largest multisource property database said third quarter foreclosures reached an 11-year low, with default properties in the metro Augusta area falling 0.16 percent from the third quarter of 2016.
The firm, California-based ATTOM Data Solutions, noted it was the fourth consecutive quarter in which U.S. foreclosure activity has fallen below prerecession averages.
Total U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – during the quarter was 191,824. In metro Augusta, the number of foreclosure properties numbered 259.
“Legacy foreclosures from the high-risk loans originated between 2004 and 2008 have largely been cleared out of the distressed market pipeline,” ATTOM Senior Vice President Daren Blomquist said in a statement.
Among 217 metropolitan areas with at least 200,000 people analyzed in the report, the highest foreclosure rates during the third quarter were in Atlantic City, N.J. (one in every 150 housing units); Trenton, N.J. (one in 234); Cleveland, Ohio (one in 275); Fayetteville, N.C. (one in 283); and Columbia, S.C. (one in 284).
BUT MY ACCOUNTANT LIKES IT: Georgia may be the No. 1 state in which to do business (at least, that’s what state officials are always saying), but it has the nation’s 14th worst state tax code, according to a national watchdog organization.
The Tax Foundation’s recently released 2018 State Business Tax Climate Index puts the Peach State at No. 36 on the “most competitive tax code” list.
The Index ranks states based on their tax structures, not how much they actually tax. States whose complex codes distort business decisions tend to rank low, while states with transparent and neutral tax codes score high. Wyoming, by the way, was No. 1. New Jersey was No. 50.
Georgia scored well in corporate and property tax structures, at No. 10 and 23, respectively; but tanked on unemployment and individual income tax structures, at No. 38 and No. 42, respectively.
As for next-door neighbor South Carolina, it was ranked No. 37 overall – or exactly one spot behind Georgia.
MY DOWNLOAD IS FASTER THAN YOUR’S: The good news about broadband service in metro Augusta is that more than 90 percent of the public has access to at least one provider. The bad news is their download speeds may be slower than people in other markets.
A recent report by broadband database BroadbandNow.com said the fastest download speeds in Augusta clock average around 78.91 megabits per second, slower than the top state average of 87.01 mbps and the national top speed of 106.76 mbps.
The metro area’s average download speed, which is what you and I are most likely to encounter, is 32.16 mpbs, or 21 percent slower than the state average and 32 percent slower than the national average, BroadbandNow.com says.
“If a community wants growth, high speed internet is key,” the report said. “Broadband internet access is critical for communities that want to participate in the modern economy.”
The report suggests the market is well served, with only 10 percent of area residents having no access or only one provider to choose from, compared to the national average of 38 percent. Nearly 20 percent of metro residents have at least two provides to choose from.
The market’s two largest most widespread providers, Comcast’s XFINITY and AT&T Internet, cover 93.6 and 87.3 percent of the region, respectively. WOW!, formerly known as Knology, covers 71.3 percent of the market.
More than half of the 26 internet providers in metro Augusta specialize in business internet services, such as Level 3 Communications, Birch Communications and Windstream Business. Read the full report at: https://broadbandnow.com/Georgia/Augusta.
SPEAKING OF BROADBAND: AT&T recently announced it has expanded its 1-gigabit service to Grovetown and other parts of Columbia County. Metro Augusta is one of 57 cities nationwide where it offers the ultra-fast, 100 percent fiber network.
What does 1 gig get you these days? That’s 25 songs in 1 second, or a 90-minute HD movie in half a minute.
“A growing number of people are streaming content directly from their devices, and interacting with family and friends through live videos,” Stan Shepherd, AT&T’s local director of external affairs said in as statement. “For these reasons, we’re continuing to expand the availability of our fastest internet speeds to more Augusta area communities.”
Reach Damon Cline at (706) 823-3352 or firstname.lastname@example.org.