A Hospitality Professional's Thoughts On Why Independent Restaurants Are Shutting Down

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The business model for independent restaurants is under threat.

At least, that’s what Andrew Rigie, executive director of the NYC Hospitality Alliance, believes.

“Successful restaurateurs are just as laser-focused on their restaurant’s financial model as they are on the food,” says Rigie, in his latest op-ed for "Forbes."

Rising labor and rental cost are leaving a very thin profit margin for restauranteurs in an already slim-margin industry. Because of these factors, “...it is easy for a busy restaurant’s margin to dwindle to 5 percent, or less,” says Rigie. Not to mention when a restaurant gets hit with unexpected costs.

Chain restaurants appear to be on the rise as independent restaurants survive off of low-profit margins or close shop. Rigie quotes a “decline of 8 percent” of independent restaurants in New York City in the past four years and believes this and other market pressures have led to the rise of restaurant groups.

Restaurant groups differentiate themselves from chain restaurants by operating multiple high-quality, individual concepts under one umbrella company, rather than many of the same. Another segment on the rise are fast casual restaurants with many seasoned and new chefs entering the space to carve out a piece of the pie.

“The restaurant industry is evolving, and there’s a strong argument to be made that there are more high-quality restaurants around the country now than ever before,” says Rigie. “Ironically, it’s occurring during a time when achieving financial success in the restaurant industry is more challenging than ever.”

In the commentary of the hospitality professional, he urges everyone to dine out often to support local, mom-and-pop, independent restaurants. Also, Rigie asks government officials to “reduce regulatory burdens...abolish fees… [and] limit major financial liability in minor lawsuits” to prevent heavy penalization of employers who make “small mistakes.” He even asks for permission for servers and kitchen workers to share gratuities to help reduce wage inequality.

Do you agree with Andrew Rigie’s proposed solutions? Read more on “Forbes.”