Small Business

Does Wichita have too many restaurants?

Donald Lawson gathers kitchen equipment at an auction for Premier Catering. Since summer, the national restaurant industry has faced falling customer traffic and sales. A number of chains have gone into bankruptcy, sold themselves or closed stores.
Donald Lawson gathers kitchen equipment at an auction for Premier Catering. Since summer, the national restaurant industry has faced falling customer traffic and sales. A number of chains have gone into bankruptcy, sold themselves or closed stores. The Wichita Eagle

Ever spent a Friday night paralyzed by the decision on where to eat out?

Mediterranean, burgers, Mexican, Chinese, sushi, barbecue. So many choices, and every week a new restaurant or two opens with a splash — as others quietly close.

With the number of restaurants in Wichita approaching 1,000, is it possible that we’re reached the saturation point?

If the national scene is any indication, the answer may be yes.

Since summer, the national restaurant industry has faced falling customer traffic and sales per store. A number of chains across the country have gone into bankruptcy, sold themselves or closed stores.

Locally, a picture of the overall health of the restaurant industry is less clear, but one indicator — the number of restaurant workers in the Wichita area — has been flat since June 2015 after robust growth in the previous five years.

The fierce competition is certainly a terrific thing for customers. It means more kinds of food and more convenience, and it keeps prices down.

“How can there be too many?” asked Jason Bell, who was on his way to lunch recently at River City Brewing Co. in Old Town.

But some restaurant owners say the competition is killing them. While others – presumably the more successful ones – say no, of course there aren’t too many restaurants. They say they’re doing just fine by having the right food and atmosphere to pull in the crowds.

Local businessman Alex Harb doesn’t think there are too many restaurants. He just opened the Meddy’s at 21st and Greenwich Road.

(FILE VIDEO - OCTOBER 3, 2016) Wichita Mediterranean restaurant Meddys, near 21st and Greenwich. (Denise Neil / The Wichita Eagle)

His first Meddy’s, at Harry and Rock Road, is doing well, he said, because it offers something unique – Mediterranean food, but with all fresh ingredients and preparation.

Not another pizza place or burgers and fries, honest to God.

Alex Harb, Wichita restaurant owner

His advice to those wanting to open something: “Not another pizza place or burgers and fries, honest to God,” he said. “Bring in something new and interesting.”

On the other hand, there’s Bud Palmer.

Palmer owns Palmer Auction, which is the last stop for a dead restaurant. Once or twice a month, he said, he drives to a closed eatery in the region with his crew to sell off a roomful of range hoods, drink machines, bread plates and bar stools.

He has seen a lot of restaurants go under. He says the Kansas Star Casino has hurt a lot of mom-and-pop restaurants with its subsidized food.

There’s not a restaurant or tavern in the city of Wichita that can make any money.

Bud Palmer, owner of Palmer Auction

“There’s not a restaurant or tavern in the city of Wichita that can make any money,” he said.

Cortez faces the future

The Cortez Restaurant, 344 W. 29th St. North, opened in 1985, and it feels like it with its adobe look and yellow-and-purple paint scheme.

It’s a homey place, owned by Enrique and Mary Cortez and filled with regulars dining on cheese-smothered burritos and enchiladas, with sides of beans and rice and a nest of chopped lettuce.

Enrique’s uncle owned Felipe’s on West Central, and both he and Mary had worked there. One day, Enrique Cortez informed his wife they were also now in the business.

“I was nine months pregnant,” Mary Cortez said. “My husband came home and said, ‘I need your car keys and the title of your car. We just bought a restaurant.’

“I’m like ‘What?’ 

Their daughter Victoria, born soon after that, is now 31 and has worked as a waitress at the restaurant since she was 14.

In the 1980s and 1990s, people would sometimes be lined up around the fountain at the entrance waiting to get in. Enrique Cortez said the restaurant had sales of $35,000 a week.

But business isn’t what it once was, Enrique said. Nowadays, it’s closer to $10,000 a week. On Tuesdays, the restaurant is open only three hours, for lunch, because there isn’t enough dinner traffic.

They have the building up for sale and want to move to a smaller, higher-traffic location on the far west side, somewhere north of 21st Street and west of Ridge Road.

Mary Cortez blames the sheer number of chain restaurants that opened on the city’s prosperous edges.

“It used to be there was a gas station on every corner. Now it’s like there’s a restaurant on every corner in Wichita,” she said.

Supporters of Olympic boxer Nico Hernandez packed Cortez Mexican Restaurant on Wednesday to watch Nico win his third straight match in Rio. (Travis Heying/The Wichita Eagle)

“A lot of people are going to the chains and forgetting about the family-owned restaurants, and people used to come to the north side and the south side. Nowadays, people are just going more east and west to eat dinner.”

The Cortezes are too young to retire, so, Mary Cortez said with a sigh, if you can’t beat them, join them.

You got to go where the money’s being spent. It’s either east or west.

Mary Cortez, Wichita restaurant owner

“If you’re going to make money,” she said, “you got to go where the money’s being spent. It’s either east or west.”

Real trouble?

The industry nationally is certainly in some kind of a financial funk, but exactly why is up for debate.

In September, for the fourth month in a row, same-store sales and customer traffic were down from the year before. A number of chains have gone out of business, gone into bankruptcy, closed stores or trimmed spending.

This includes the Fox & Hound chain, which was once based in Wichita and had a location at the Waterfront, and Logan’s Roadhouse.

According to the National Restaurant Association, restaurant executives are feeling the most negative about their industry in four years.

The term “restaurant recession” has been used by industry executives and analysts since the summer, and there is a lot of disagreement as to whether it’s real – and what’s causing it.

The most pessimistic theory is that the falling number of customers is an early sign of a national recession. Bruce Grindy, economist for the National Restaurant Association, doesn’t believe it.

In a piece he wrote for his organization’s website, he notes that total restaurant spending nationally through the summer was up 3.3 percent from a year earlier. He thinks the decline in traffic and sales per store is temporary and will be over by early November – the result of “the vitriol coming from the U.S. presidential campaign.”

Local perspective

Jim Stevens, an Applebee’s franchisee in Wichita and elsewhere in the region, has seen a sales decline in his own restaurants and noted that the collapse in oil drilling in the region has tamped down a lot of discretionary spending. Plus, he said, there may be too many stores, particularly in his segment, called casual dining.

“I wish I had the answers,” he said. “But I think we just keep trying to give the best service and quality that we can, and hopefully it will come back.”

Wichita State basketball players Ron Baker, Fred VanVleet and Evan Wessel star in restaurant chain Carlos O’ Kelly’s new commercials.

Jon Rolph, president of Sasnak Management, owner of Carlos O’Kelly’s, agrees with all of those theories and adds a few of his own.

The price of groceries, which has fallen since last year, makes cooking at home more attractive, he said. He added that the rising cost of labor, caused by tighter labor markets, is squeezing owners.

And, for the big chains, the large amount of debt taken on to buy the chains in years past when growth was good may be hobbling many of the owners now that growth has slowed.

Rolph also has a bit of a warning: The financial challenges may not get any better in the coming year, just different.

The price of food is at a low ebb these days. It’s helping many restaurateurs remain solvent because their customers are resistant to price increases.

The price of food is headed back up next year, say industry executives. For restaurateurs already in trouble, that will compound the high labor costs.

“You will see a lot more people hurt,” Rolph said. “And the higher-leveraged players will declare bankruptcy.”

It will mean a further shake-out in the industry, he said.

Over the next five years, Rolph said, he sees a split developing in the industry between those who invest in giving customers what they want and those who don’t. That’s why, he said, he has moved Carlos O’Kelly’s to making its food entirely from scratch and has increased training for the wait staff.

As a result, he said, the chain is seeing growth year-over-year, unlike the segment as a whole.

“We’ll see the overall number of restaurants stay the same,” he said, “but there will be more separation between those in tune with the marketplace and not over-leveraged, and those who are struggling with debt payments and struggling to deliver value.”

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