Grim Outlook for Area's Restaurants as More Close

By Desiree Parker Thursday, July 15, 2010

Two years ago, Williamsburg Area Restaurant Association president Dean Canavos told Williamsburg city council that restaurants would be closing if things didn’t turn around. Looks like he was right.

On August 14, 2008 – before the recession began – Canavos, then vice president of the WARA, told council restaurateurs had slipping sales and rising costs, and that profit margins were shrinking quickly for many local business owners. “This is only going to have one outcome,” he said. “Restaurants old and new will start boarding up their windows and doors if this is allowed to continue.” See his whole conversation online on the city’s website; just scroll to “open forum.”

In the last year alone, several local restaurants have closed their doors, including New Town Coffee and Tea, Cheeburger Cheeburger, and Shackleford’s, a business that opened in 1999. Last week, Short Stop Deli and Market on Prince George Street closed after being open only a few months.

Cities Grille, a local favorite for years, will close shop at the end of the month. Karen Nolan, who owns the restaurant with her husband Bud, says the tough economy and lots of competition in the area are to blame for her business folding. It was a hard decision to make, she says, but she hopes people will continue to come in and have a farewell dinner in the next few weeks. “People need to eat; they might as well come to eat here one last time.”

Carmine’s Italian Market and Café will be closing in August, and owner George McLaughlin will be focusing solely on his catering business afterwards.

Jim Kennedy, owner of Dudley’s Farmhouse Grille in Norge and chairman of the James City County Board of Supervisors, is worried that he might be on the same path. Wednesday morning, he sent out an email to his loyal customers asking for their help.

After saying how sorry he was to hear about Cities Grille, Kennedy wrote, “I'm sorry to say we are in the same boat. If something doesn't happen soon we will be faced with closing Dudley's Farmhouse Grille.”

He goes on the say, “We need your help, call your friends, schedule a wine and dine group, or just come out for dinner or lunch. I love the restaurant, and all of you that we serve, and I realize times are tough for all of us. I don't like writing an email like this, but felt you, our friends and neighbors needed to know what we are facing. I hope to be able to serve you well into the future, and we need a big push.”
Kennedy told WYDaily that last winter was tough on his business, and the spring wasn’t great, either, except for May. Starting around the middle of June, business fell off a cliff, with some nights when no customers at all came to dinner.

The email was difficult to write, he says, but “I wanted to make one last effort to keep the doors open.” Thanks to the recession, banks are reluctant to lend to businesses and Kennedy says that has affected his ability to extend a line of credit to keep his business going.

“In 12 years, I haven’t ever had to say ‘I’m sorry I can’t pay’ to vendors. That’s how bad it’s gotten, though,” he says. “It’s heartbreaking.” If the restaurant closes, Kennedy will be out looking for work, he says.

Canavos says the recession has been tough on restaurateurs, but he doesn’t think that’s all there is to it.

“People don’t want to spend money in a bad economy, this is part of it,” he says, “but tourism [in the Triangle] hasn’t been robust for years… we told them this would happen before the recession.”

Local owners are getting hit the hardest because they don’t have a larger, national business to bail them out. “Locals don’t have deep pockets like chains do,” Canavos points out. “Chains are struggling here, too, but they can hang on.”

He sees the same trend in banks’ lending as Kennedy: “Banks don’t want to lend money because restaurants are high risk. Most don’t make it past the first few years…they’re the first to not get lines of credit or loans.”

There are lots of new restaurants in town, too, which are opening in new shopping centers, so there are “more businesses competing for the same pie. High Street and all the rest, locals just can’t support it [all].”

To keep themselves competitive, restaurants are offering more specials and discounts to drive local residents in, he says, but locals aren’t the only drivers for business. “We still need tourists,” says Canavos.

The localities may still be seeing a slight increase in meals taxes, but the taxes are on gross receipts and don’t factor in inflation, the higher costs for doing business or greater competition, according to Canavos.

WARA is doing what it can for its association members, from hosting evens like Iron Chef that draw attention to the variety of cuisine in the area to working with the Hotel Motel Association’s new tourist information center to attract tourists, but “this is not going to be a good year,” Canavos estimates.