(continued from the previous post)
And Cooped Up points (as a follow-up to an earlier post) to an article in Saturday's edition indicating that Indy is increasingly becoming a city of chain restaurants, as they can better weather the sluggish economy.
While sales slump under the sour economy, competition from chains grows stiffer as new restaurants continue to open in Indianapolis. Nearly six out of 10 local restaurants are chain-owned, significantly more than in similar cities across the country [average: 43%].
More broadly, the lack of restaurant entrepreneurs points to a state and local culture that doesn't like risks, said George Geib, a history professor at Butler University. [The Star has written about that phenomenon in previous editions.]
That inclination seems ill-suited for the rough-and-tumble restaurant world. The barrier to entry is extremely high, Delaney said, in a city where a 2,000-square-foot restaurant can cost $500,000 to start. Launching an 8,000-square-foot, upscale restaurant can exceed $2 million.
"That's a chunk of change you're paying out," said Craig Huse, owner of St. Elmo Steakhouse.
Local developers also want sure-bet tenants -- something hard to come by in the restaurant industry. According to the Restaurant and Hospitality Association of Indiana, 27 percent of eateries fail within a year and 60 percent within five years.
Those figures lead most banks to avoid lending to restaurants. And it leads developers to look for recognizable names and proven concepts. Chains fit that bill.
"The developers want names," Huse said. He recently started discussing a second restaurant concept with developers, but talks might derail because Huse won't use the St. Elmo name on a new restaurant. "Frankly, they're not interested in someone who doesn't have huge name recognition."
This is disappointing news indeed. One of the things that appealed to me about the city, when I was considering takign a job that would require me to move up from my beloved home town of Louisville, was the number of independent restaurants.
Alas, with two young daughters, my wife and I don't dine out all that much, and hardly ever in upscale eateries. So I must admit that we aren't doing much to keep the locals in business. Sad indeed.