Austin’s Impending Restaurant Bubble (Part 2)
Last week I talked about the major shifts happening in the restaurant industry here in Austin and all over the greater US, with the hollowing out and eventual transformation of the restaurant industry. In this Part 2, I wanted to highlight the “light at the end of the tunnel” per se, and talk about the innovations happening in and for the industry.
High end chefs are now gravitating towards lower price / lower cost fast casual restaurants to keep up with the new economics of running a restaurant. For example, Chef James Holmes closed down Olivia in 2016, a high end farm to table restaurant on South Lamar (Top 10 Best New Restaurant from Bon Appétit in 2009), and opened in its place the take-out and delivery focused chicken joint called Lucy’s on the Fly. Although this closed down again in April 2018, he’s opening up another location in Whitestone.
Philip Speer (former director of operations for the Uchi Restaurant Group) opened up a coffee/breakfast trailer named My Name is Joe Coffee Co in February 2017, donating a portion of their sales towards Serenity Star Recovery’s donation-based restaurant Comfort Cafe (Smithville). He also opened up a great French/American bistro diner menu spot in March 2017 called Bonhomie (named a Top 20 restaurant in Austin last year). The trailer closed in March 2018 due to Speer wanting to focus on more fundraising, and Bonhomie unexpectedly closed in May 2018 (no reason announced). However, Speer continues on to a new project downtown, which all we know now is that it will feature a cocktail bar and garden lounge.
High end restaurants like Emmer & Rye and Dai Due embraced the trend and opened up fast-casual ventures in downtown Austin’s new food hall, Fareground. The founders of Odd Duck and Barley Swine embraced it as well, opening up an “everyday” more casual restaurant called Sour Duck in May 2018 to round out the trio of restaurants in their portfolio.
Some tech innovation is coming as well into the industry to help them make some extra cash while providing much needed services to consumers. There are apps, like Luluapp, Louie, and Rockaloo, that directs tourists and other weak-bladdered individuals to bathrooms nearby, with price sometimes based on the “niceness” of the bathroom, and restaurants get to keep 65% of the fee! Another startup called Bagbnb is helping bars and restaurants make a little cash by storing people’s bags before and after their stays in Airbnbs. There are startups like BuffetGo that allow consumers to buy cheap leftovers at very discounted prices from restaurants at the end of service
Reset, our startup, is another example of a way restaurants can help offset some of their cost burden, by opening up their space they’re already paying for to support the remote working community during the day for half the price of a traditional co-working space. Reset also helps restaurants with marketing, which many restaurants don’t have the budget for, helping them promote their brand and grow awareness amongst the sometimes noisy growth of Austin’s restaurant scene. We thought it was going to be tough getting restaurants to partner with us, but a lot of them are finding the idea refreshing and are looking forward to trying it out. It also gives our customers another way to feel good about using our service, as a cut of every membership fee goes to helping our independent restaurant partners out.
On the other side of things, there’s a startup in Denver called the Food Corridor that helps restaurant and commercial kitchens utilize their back of the house space when it’s not in use. They started it to help local food startups reduce their costs and have a space to start out, and it also allows the entities with the large kitchens to offset costs partially. With the costs to build out a kitchen like that being anywhere from $50k to $500k, it helps reduce the barriers for startups, and allows places like schools churches, and bakeries to make a little more money on an asset that remains unused in a large part of the day. The founder stated that she hoped Food Corridor would become something similar to the AirBnb for sharing kitchen space.