Will Our Plates Ever Be Too Full?
While retail brick and mortars have taken a hit nationwide, the restaurant scene in Southeast Louisiana continues to thrive. The question is, how much can we sustain?
In the years post-Katrina, the popularity and rise of restaurants as retail anchors has become big business for New Orleans.
While the city has long been known for eating, drinking and good times, New Orleans has experienced a flood of positive press on this front recently, not least of which was The New York Times naming New Orleans its top travel destination of 2018, particularly calling out the city’s full roster of restaurants and eateries as a big part of why visitors should make the trip.
And why wouldn’t people come for the food? New Orleans consistently ranks at the top in this category. Last year alone, the city topped lists by Travel and Leisure (No. 1), U.S. News & World Report (No. 2), and The Washington Post (No. 4) — among many others — as a top city for foodies.
This past April, an episode of “The Simpsons” even showcased the city via a love letter montage of recognizable restaurants and New Orleans cuisine that have made the city a food destination and that has translated into big dollars. Tourism and hospitality is the city’s largest industry, with numbers consistently breaking records, reaching nearly 11 million visitors in 2017.
Old School vs. New School
Restaurant owner Mark Latter straddles the line between old and new. Latter owns Tujague's Restaurant, an old-school institution that opened in the French Quarter in 1856 (the city’s second-oldest), and Bar Frances, a new wine bar and eatery that took its place on the revived Freret Street in 2016.
Being at the helm of two very different restaurants can be a challenge, but it’s one that has its rewards on both sides.
“It’s very different having a brand new restaurant and a very old-school restaurant,” he said. “At Tujague’s, you can’t really play with the menu, which I call ‘Creole Old School.’ It’s not what people want when they come to Tujague's. At Bar Frances, it’s the complete opposite. The chef can play with the menu; anything is possible. If our chef sees some great fresh lamb, for example, we can just add it to the menu. We print the menu at least once a week. It’s always changing.”
The surrounding neighborhoods and the people that live and work in each play a big part in the tradition of and feel of both restaurants, and it’s the regulars that make each one unique.
While many New Orleanians have faced the problem of the influx of Airbnb, and the possibility of short-term rentals changing the face and nature of the city’s beloved old neighborhoods, Latter has not seen an impact on his restaurants.
“Airbnb has not been a problem for Tujague's because they aren’t allowed in the French Quarter,” he said. “For Bar Frances, Airbnb has actually helped, and I have seen that at many Uptown restaurants. Before, people would only have been staying downtown. They might have never been to restaurants Uptown, so having some in the neighborhood has actually been good for us. We’ve seen a big uptick in out-of-town customers.”
When asked about other challenges, Latter notes that for every challenge, the city’s restaurant scene maintains a resilient response.
“The biggest concern has been competition, but there’s always a lot of competition in New Orleans,” he said. “We may have already hit the bubble, so to speak. There were a lot of restaurants that closed last year. But for every two restaurants that close, four more open up in their place. New Orleans is the No. 1 destination. New Orleans is the place to be these days.”
In the midst of a changing economic landscape in which retail nationwide is struggling thanks to buyer preferences moving more and more to online shopping, what makes the restaurant business a bulletproof industry for the city, according to commercial real estate agent Jack Eglé of Beau Box Real Estate, is the perfect recipe of the intangible experience that dining provides mixed with a higher profit margin for landlords, topped off by synergistic relationships with other retail businesses in the area.
“Both locals and visitors enjoy our restaurant industry and come here to enjoy it,” said Eglé. “Restaurants are Amazon-proof businesses. You can order a pair of shoes online, but you can’t have a dining experience that way.”
Beau Box is currently working with developers on several developments under construction or in the planning stages all along the Magazine Street corridor that are ideal for restaurants, an area that Eglé said is drawing investors and restaurateurs from larger metropolitan areas.
“We are seeing investors who are looking at New Orleans and seeking out local restaurant partners,” he said. “They are seeing opportunity here. The potential for growth and profit is on par with a city such as, say, Boston, but the rents are much less, so why wouldn’t they look to invest here?”
Egle noted that having a restaurant tenant as part of a larger build-out is crucial for other retail.
“Restaurants drive retail and serve as an anchor,” he said. “Something that we work on for all of our developments is good synergy. That means a space may have a retail space, a restaurant and office spaces that feed off of one another. Tenant spaces will interact at different times throughout the day.”
While, for example, one development may include four or more different retail spaces, he said, it might also include a café, a yoga studio, a wine bar, a restaurant and office space on the second floor in order to provide consistent traffic in the early morning, throughout the day and into the evening. The result is the maximum use of space for both tenants and the landlord.
UNIQUE CITY, UNIQUE CHALLENGES
In a historic city celebrating its 300th birthday, the unique list of challenges for developers and restaurateurs can be long and range from fragile infrastructure to renovations to older buildings to finding reliable staff to navigate City Hall and work within the constraints of the HDLC (Historic District Landmarks Commission).
“It is so important to find a good architect, a good kitchen planner, a good landlord. Eglé said. “If you do your due diligence, then all these factors will come together to make a space that is well planned and will work,” he said. “The small details are what make a space work for a restaurant. Planning on where the trash pick up and storage will be. Planning for plumbing, exhaust and vents. From a landlord’s perspective, you don’t want a lot of turnover, so it’s better to be well planned.”
Stan Harris, president and CEO of the Louisiana Restaurant Association (LRA), agrees that planning and time are part of the best preparation for both local restaurateurs and outside investors who may not be familiar with the particular rules and regulations of New Orleans.
“Someone seeking to develop a restaurant in New Orleans needs to spend a little time understanding the somewhat unique challenges and the timelines to develop a restaurant here,” he said. “The Comprehensive Zoning Ordinance (CZO) addresses many questions. However, if one seeks to serve alcohol there may be neighborhood meetings required or if it is a quick-service operation, an overlay district may prohibit drive-through windows. There are also rules specific to performance of live music. In the Vieux Carré area, the Vieux Carré Commission may be another approval step to navigate."
Harris noted that other cities with historic areas can have similar challenges and New Orleans processes are far from insurmountable, but they do require understanding the steps and patience during the approval process.
In addition to building, renovation and development challenges, Harris also sees the challenge of staffing as an even bigger and more complicated issue that restaurateurs consistently face.
“Finding qualified people at all levels [is the biggest challenge],” he said. While wages, he said, have “grown significantly,” the city still struggles with having a workforce that is “work-ready.” As a result, the LRA is working with statewide officials and the New Orleans Culinary and Hospitality Institute (NOCHI), currently in development, to help with staffing and the issues restaurateurs face each day. NOCHI will provide training to restaurant and hospitality workers on all levels and is set to open in early 2019.
“We are hopeful that NOCHI will help to fill some of the workforce development challenges with the support of the governor’s office, the New Orleans Convention Center and the Louisiana Workforce Commission,” said Harris. “While competition and access to capital have always challenged industry growth, today’s need for quality staff at all levels, including management, is limiting financial opportunity.”
Restaurant growth has ballooned in the years post-Katrina, despite a population that is still building back. The number of restaurants has grown from nearly 800 in 2006 to the current 1,550, according to online food and restaurant editor Tom Fitzmorris’ New Orleans Menu statistics. This increase is in contrast with a population that still has not recovered to its pre-Katrina numbers – 484,674 before the storm, versus 407,940 in 2017.
Fast Casual On the Rise
City Greens has created its own New Orleans niche, providing healthy, locally sourced ingredients with an emphasis on convenience and flavor since 2012. Three locations later, co-founder Abhi Bhansali credits good business practices with the company’s success.
“We came back to New Orleans a couple of years after Katrina because we wanted to be part of the renaissance,” he said.
“Much of what we have built comes from taking a look at best practices from our experiences living in New Orleans, New York and Washington D.C.”
Fast casual provides prepared to order food, with fresh ingredients and counter service for convenience and speed. New Orleans, with its growing group of young professionals and tech businesses, was a good fit, according to Bhansali.
“We noticed that there was a void of healthy foods. If people wanted healthy food, they would have to wait; if they wanted convenient food, they often had to sacrifice health. We wanted to bridge that gap,” he said.
Success for City Greens was a combination of good business and timing, with a menu of fresh ingredients grown at their own farm in Florida specifically for its restaurants.
“We provide well-sourced, natural food with a focus on transparency, using best practices,” Bhansali said. “There was a wave of post-Katrina people coming that brought their tastes and trends with them. The demand was for healthy food, but that must be convenient.”
As the flagship location became successful, Bhansali and his business partner looked at expansion. With growth, the next challenge for City Greens was one that was unexpected, yet vital – creating a consistent business practice that would translate from one location to the next.
“When we built our first restaurant, the process was organic. Our team came together, our food was consistent, we made everything in-house,” Bhansali said. “As you scale up, you begin working with different teams in different locations, and growing can become a challenge. You want the overall experience to be consistent from location to location. We had to learn how to take that organic experience and make it procedure, without overthinking it and losing all the fun. Our dining experience should be consistent from one place to the next for our customers.”
In the end, City Greens’ success hinges on providing healthy food that tastes great and is convenient.
“Health and convenience go hand-in-hand these days,” Bhansali said. “Time is the resource we’re trying to put back in people’s pockets.”
WILL THE BUBBLE BURST?
A common question among developers, restaurateurs and investors remains: How much growth can the New Orleans dining and hospitality industry sustain?
For Harris, the answer is not easy.
“When you consider the number of visitors to New Orleans, this helps to support many of our better-known restaurants including those in the traditional tourist areas,” he said.
But what about the smaller, neighborhood-centric establishments?
“As neighborhoods have grown, opportunities to create restaurants closer to where the community lives have developed,” Harris said. “And while there may be zoning or other considerations, customers appear to be increasingly frequenting dining areas where they find the location most convenient.”
Neighborhood restaurants that provide that intangible experience have long been standard to the character of the various locations in New Orleans. From the French Quarter, Garden District and Uptown, Mid-City to Lakeview, locals love the little restaurant, whether fine-dining or café, that they can call their own.
While the CBD and Warehouse Districts both have traditionally had restaurants that have catered to New Orleanians working in the area, a new wave of residential renovations have drawn young professionals looking for their own neighborhood joint in the area.
“Nationally, I think we are seeing a trend of people moving toward the center of cities,” Eglé said. “A new influx of professionals and tech jobs have people moving into the downtown area. People want to be able to walk or bike to work and play. Rents are higher Uptown, and lower downtown. I am seeing the Warehouse District take off as people are moving downtown. There is so much potential and growth and opportunity.”
Beau Box Real Estate is currently marketing retail space on a stretch of Magazine Street that has been overlooked for some time commercially. The Kalorama development will soon anchor the corner of Girod and Magazine streets with retail and restaurants, providing new neighborhood experiences and shopping opportunities for people living nearby.
Harris said a bubble appears to have formed in the past five years, and, yet, the city continues to support growth, noting the seasonal financial struggle that restaurants face as a decisive factor of whether or not that business succeeds.
“It appears that our current level has stayed somewhat consistent for the past few years,” he said. “It is doubtful we will ever see the growth that occurred post-Katrina, however it isn’t impossible.”
LeBlanc + Smith’s roster of restaurants and bars — which includes Meauxbar, Barrel Proof, Sylvain and Cavan — continues to grow. The newest offering, Longway Tavern, opened on Toulouse Street in mid-May.
“In my opinion the restaurant business is doing OK,” said owner Robért LeBlanc. “We’ve been talking about and reading about how the bubble is about to burst. But I still hear about more restaurants opening rather than closing.”
LeBlanc does note that the business of opening a restaurant has changed in the past decade, with the point of return coming later than in the days just after Katrina, adding a note of caution for new restaurateurs to stay the course with patience. There has been a paradigm shift with so many restaurants opening,” he said. “There is more competition. We need to pay restaurant workers more, and we should. We need to be more patient [when opening a new restaurant.] It used to be with Sylvain and restaurants after Katrina, from say 2005 to 2010, you could recoup your investment in a year and a half. Now it just may take a little longer.”
On a positive note, LeBlanc looks ahead at the long game. New Orleanians and visitors alike love to dine out, and if you take your time, create a neighborhood place for people to celebrate, the investment can pay off.
“The good thing is that New Orleans is a long-term prospect,” he said. “People get to know your restaurant better, you gain patronage. Not to sound cliché, but you have to let it age like a fine wine. It only will get better with time.”
Setting the Scene
Restaurant design can be as important as cuisine in creating an experience worth coming back for.
Robért LeBlanc, owner of LeBlanc + Smith restaurant group, has helped to design some of New Orleans favorite neighborhood taverns, including Cavan, Sylvain, Barrel Proof and Meauxbar. For LeBlanc, creating a mood and selecting the right environment go hand-in-hand in forming a restaurant experience that will bring diners back night after night.
“We design a setting that makes people feel excited, something that they might not see at home, and yet, at the same time we want people to feel like they are at home,” he said. “We find great old buildings and we don’t get in the way of it being magical. We want an environment that feels a little bit lived in. We want people to be comfortable, not be afraid to laugh too loudly, to drink their whiskey, whatever it is.”
LeBlanc says the tradition of restaurant building in the city is long and storied, with an emphasis on good times.
“The old-guard restaurant approach in New Orleans — places like Galatoire’s, Commander’s, Clancy’s — is that dining should be fun,” he said.
Approaching dining as an experience is the key to bringing customers back, not only to the restaurant itself, but also to the city, creating a food destination that visitors refer to again and again.
“Not all cities approach dining in that way,” he noted. “In many places, people go out to have fun somewhere else, say a comedy show or the theater, and then dine. In New Orleans, we expect our dining to be the main event. It’s an experience that maybe we all take for granted because that’s the way it is here.”
LeBlanc + Smith has built a unique resume of restaurants, all of which the team approached somewhat backward.
“Everything for us starts with the building,” LeBlanc said. “We never start out with a plan, we just keep getting presented with these great spaces. We never decide, ‘We’re going to have an Italian restaurant.’ We find a space and decide what fits with the building.”
While the historic nature of renovating a restaurant in New Orleans is appealing, the endeavor itself, said LeBlanc, is complicated.
“You have to keep in mind what you’re getting with an older building. The more beautiful the building, the more maintenance there usually is,” he said. “The history of the building is the starting point and the most important part in the beginning. We start with the history of the building — what stories were told there. We don’t see it as an effort. We want to honor the building, but in a 21st-century way that New Orleanians can enjoy.”
DID YOU KNOW?
Restaurants/Hospitality By the Numbers
10.45 million visitors
In 2016, New Orleans “was host to a record 10.45 million visitors, who spent an additional 12 percent on the city’s famous restaurant scene than the previous year.”
Source: March 2018 Eater.com article
3,350 new positions
Leisure and Hospitality gained 3,350 new positions over the last year — the highest of any industry in the New Orleans metro area.