Category: Commentary/Editorial || By

Nobody asked me, but ...

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Two popular restaurants in the Christy Park section of the city --- almost directly across Walnut Street from each other --- closed recently in a span of a few weeks. That has people, including a few city council members at last week's meeting, asking, "What does it mean?"

In my opinion? It means the restaurant business is a hard one, even if you have a good location and good food. The continued popularity of reality shows such as "Kitchen Nightmares" would seem to be proof of that.

Actually, running any business is a hard one --- even this little ol' website, which has never yet covered its own modest expenses. (It's supposed to be a non-profit corporation. That's my excuse, and I'm sticking to it.) But the restaurant business would seem to have a few unique challenges.

In the case of Tiger Town Pizza, according to a legal notice recently printed in the Daily News, the owner has filed to liquidate the company under Chapter 7 of the U.S. Bankruptcy Code. According to documents filed in federal court in Pittsburgh, the restaurant, which opened in 2007 and closed in late December, owes creditors (including other local businesses) $121,177 and has $65,700 in assets.

In the case of Chick's Grill, located across the street, the closure is apparently the result of a dispute over a new lease between the restaurant and the property's owners. No plans to reopen in a new location have been announced as yet.

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I'll confess to having liked Tiger Town a lot, having eaten just about everything on their menu at least once, and having recommended it to many people. (My wife, who lived in Memphis for a while and knows her barbecue, swears that Tiger Town's cooks had "the touch.")

But good recipes and even an arguably good location --- at the intersection of two state highways, Route 48 (Long Run Road) and Route 148 (Walnut Street) --- can't insulate a restaurant owner from business realities. According to research from Ohio State University, about 60 percent of restaurants fail within three years. Another restaurant consultant expands that, and says 75 percent fail in five years.

That's less than the "90 percent" rate commonly quoted, but it's still pretty high.

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Why do restaurants fail? Several authors cite under-capitalization --- a lack of money in the bank or lines of credit available to meet expenses.

Dick Williams, a restaurant consultant who works for HVS Food and Beverage Services, says big banks don't like to lend to restaurants because of the supposedly high rate of failure. As a result, he says, restaurants run on ultra-tight budgets and can't afford to get good advice. They make educated guesses instead.

"Without traditional lenders, there is no process in place to prevent would-be restaurateurs from blundering into a financial disaster," Williams writes, adding that research isn't a sure-fire answer, either. "Even McDonald's doesn't get it right 100 percent of the time," he says.

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You, too, can make some educated guesses on the kinds of risks that restaurant owners face. Their product is highly perishable --- in most cases, it has a usable life of maybe an hour, after which it can't be sold. Their raw materials ingredients are highly perishable as well. It's not like a hardware or clothing store, which might be able to store unsold merchandise. When restaurant food isn't sold, it's trash, and you're almost literally throwing money away.

And unlike, say, a hardware store, the business is much more dependent on customers' whims. People don't have to eat out. In fact, when times are bad, they don't. It's one of the first expenses people eliminate.

Several studies I read cited food costs and taxes as the biggest expenses that get restaurants into trouble. According to bankruptcy documents, Tiger Town's biggest creditors include Dravosburg-based Jordan Banana Co. at $50,689 and the Internal Revenue Service at $42,000. The restaurant was grossing between $634,000 and $691,000 per year.

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Chick's Grill is a different case. According to the restaurant's Facebook page, Chick's, operated by Bethel Park-based Tim Cassidy Catering, closed Feb. 3 after its owners declined to sign what they called "an outrageous lease." (According to county tax records, the building is owned by the parent company of nearby Tri-Star Ford.)

Actually, that location has kind of been snake-bit since it opened. Originally built by Monroeville contractor Thomas Cousar as the "Tube City Brewhouse," the restaurant crumbled with the rest of his Capco Construction empire when he was found guilty of defrauding the U.S. Defense Department, the University of Pittsburgh and PNC Park of some $1.1 million.

But if you're a restaurant owner, running on a tight margin, and your rent is suddenly going up ... well, that comes directly out of your profits, and you can see why you might decide to get while the getting was good.

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So, from these two closures, do I conclude that the McKeesport area's business climate has suddenly gotten worse? Well, it's no secret that the business climate hasn't been great in McKeesport for 30 years.

But a year ago, Bottom Dollar built a store in the same section of Walnut Street as Chick's and Tiger Town, across the street from a then-new RiteAid, and a MedExpress is coming to that stretch of street in the near future.

Tillie's, just around the corner, celebrated its 50th anniversary last year. And the mere fact that someone wanted to raise rent is not a bad sign for the business climate.

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I don't like to run around painting smiley-faces on bomb craters, but there are a few other encouraging signs. Last year, Zak's bike shop moved back into the city from Versailles. Eat'n Park is clearing land along Lysle Boulevard for a major expansion of its restaurant.

Speedway is building a convenience store in the East End (unfortunately, forcing the eviction of another restaurant that I like, Di's Kornerstone Diner). And after a long delay, work has resumed on a new shopping center on the former site of PB&S Chemical, behind Tiger Town.

So I wish the business climate was better. And I could even argue whether more should be done by private and public groups to encourage entrepreneurs in the Mon-Yough area. I'm just not willing to draw conclusions from the closure of two restaurants on Walnut Street.

But I am willing to wish both restaurants the best of luck, and I hope they get back on their feet. Because thinking about this has made me hungry for some barbecue right about now.

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