Trouble in Restaurant Paradise?

Spilky: “There are simply too many restaurants, and the market is hitting a saturation point.”

SAN DIEGO—There are a number of compounding reasons why the restaurant business as we know it is under attack, so restaurant owners will need to look ahead and make changes to their business models, Location Matters’ president and principal Mike Spilky tells GlobeSt.com. In a recent company newsletter, Spilky said to expect “more closing restaurants to come, more inventory of commercial properties for sale” in the San Diego market.

Spilky added that the restaurant market peaked in San Diego six months ago and that the average consumer would be surprised to know that most of his favorite dining spots are likely breaking even, losing money or turning very small profits, with the exception of some very high-volume operations, the next “it” place or tenants holding down grandfathered leases with exorbitantly low occupancy costs. Others that are successful understand the value of entering undeserved trade areas and the power of limited competition. Restaurants are now more than ever increasingly forced to modify their overall business model to stay alive.