Competition and Concern in Downtown's Restaurant Market

Café Pinot, which for quarter century served diners out of an inviting space at the Central Library's Maguire Gardens, closed in April.

The news hit the Downtown Los Angeles dining scene like a flurry of powerful punches from a championship boxer: In the space of a week, three landmark institutions shut down.

Café Pinot, which had graced a spot next to the Central Library for a quarter century, closed on April 25. Church & State, an Arts District fixture for a decade, shuttered two days later (a promised quick reopening after it was sold has not yet led to a return). On April 29, Traxx in Union Station shut down, ending a run that lasted more than 21 years.

Those were not the only notable recent departures. Roy Choi’s Far East Plaza-revitalizing Chego shut down on April 30. Just last week, Charles Olalia’s praised bite-sized Filipino restaurant RiceBar served its last meal. The Seventh Street spot closed on Friday, May 31, after Olalia opted not to renew the lease.

It’s a series of big hits for the local restaurant industry. It also leads to a question: Are these the first signs that Downtown’s red-hot dining scene is preparing for a long cool down, or is the spike of noteworthy closures simply a coincidence of timing?

Nick Griffin, executive director of the Downtown Center Business Improvement District, thinks it’s the latter. Griffin said that despite the rash of closures involving legacy establishments, the local restaurant market is strong and growing, as evidenced by the number of new businesses champing at the bit to serve Downtown diners.

“It’s kind of a natural ebb and flow of a restaurant market, and this is not too far away from what we’re seeing in markets like New York and Chicago,” Griffin said. “People want to be here, and I think we’re seeing the result of that.”

In the case of Church and State, Traxx and Café Pinot, Griffin said that it’s natural for long-running businesses to move on and for newer concepts to take their place. He said that doesn’t mean that the older establishments “failed” in a traditional sense.

“They have a good run, and then they move on to a new, fresh idea,” Griffin said.

Indeed, the departure of some notable restaurants is counter-balanced by the arrival in Downtown of a group of highly touted projects, many in locations that were once overlooked. Diners have flocked to new offerings such as the massive Manufactory at Row DTLA in the Industrial District, and to David Chang’s Majordomo on the outskirts of Chinatown. Ori Menashe and Genevieve Gergis’ Bavel has also drawn a steady stream of diners to a once quiet part of the Arts District.

Then again, being highly anticipated doesn’t guarantee success. Simone, a project from lauded chef Jessica Largey, opened on Hewitt Street in the Arts District to fanfare last September, then shuttered seven months later. It returned to service May 18 under a new name, Duello.

A Smaller Piece of the Pie

Yasmin Sarmadi has experienced the swells of the Downtown dining scene. She opened Church and State, on the ground floor of the Biscuit Company Lofts, in 2008, when the Arts District was still a sleepy, largely overlooked neighborhood. Sarmadi married former Patina chef Tony Esnault and they opened the fine dining French establishment Spring in the Historic Core in 2016.

Yet Sarmadi has left Downtown. She and Esnault closed Spring in 2018, and after selling Church and State, the pair is working on a new Orange County restaurant, Knife Pleat. She said that the number of restaurants in the Central City is outpacing the residential base that supports the establishments.

“The market is very saturated,” Sarmadi said in a recent interview. “The market in L.A. in general is very saturated, but other areas have denser residential populations than Downtown, and while Downtown has certainly come a long way since we opened Church and State, it’s still nowhere near other neighborhoods.”

Elizabeth Peterson-Gower, founder of EPG, a Los Angeles land use consulting firm that specializes in helping restaurants and bars open, echoed Sarmadi’s sentiment. She said getting more people into Downtown residences is paramount to supporting both new and older dining establishments.

Peterson-Gower’s wish could be realized, as Downtown’s housing stock is expected to continue to expand. According to a market report from the DCBID, more than 5,000 units are now under construction, and when completed will boost the residential inventory to 51,765 units.

Yet Sarmadi is quick to point out that an increase in units does not automatically mean a boon for the market, as dining habits are changing and people are spending more of their income on housing.

According to an April report from the Federal Home Loan Mortgage Corporation, the average person would need to make $53,600 to afford a one-bedroom apartment in Los Angeles. Yet the average income in the city sits around $44,000.

Sarmadi also noted that Los Angeles’ traffic concerns play a role in diners’ decisions to come to the Central City for a meal, placing a greater reliance on people who live here.

“When we opened Church and State almost 11 years ago, people were regularly coming from Palos Verdes, Orange County, and certainly from West L.A. on a regular basis,” she said. “But people just don’t do that anymore.”

Staying Current

Another issue for local restaurants is dining trends. Downtown, like many communities, has seen a shift in preferences — for instance, crowds that once flocked to white-tablecloth establishments still have a taste for well-prepared food with a high price point, but might be more apt to patronize places with a less formal and more relaxed dining room aesthetic.

When that coincides with competition from a new arrival, the result can be fatal. After Traxx closed, owner Tara Thomas cited the opening of the Imperial Western Beer Co., also in Union Station, as a major factor in her decision. The day after serving her last meal she told Los Angeles Downtown News, “Only so many cocktails could be sold in a specific site plan.”

Peterson-Gower said it is increasingly important for restaurateurs not only to have expertly prepared food, but to research the trends of a market if a business hopes to succeed. In Downtown, she said, that can mean everything from having health-conscious menu options to dog-friendly dining spaces.

Peterson-Gower would know. In addition to her consulting business, she and her husband Tony Gower last spring opened Clayton’s Public House in the Spring Arcade Building (its predecessor, Royal Clayton’s, had closed in the Arts District in 2010). In the effort to connect with current crowds, Clayton’s Public House has approachable price points, a craft beer selection and frequent events like trivia nights.

“You have to be aware of the movement around you,” Peterson-Gower said. “You have to stay fresh while staying true to your concept. But you also have to make sure that the quality of your product stays good.”

Sarah Meade, who refashioned her railroad-themed Arts District bar Westbound into Here and Now last year, agreed that to compete in this market, one has to know what’s moving the needle. She observed that a number of restaurants have tapped into the “pop-up culture” that has arisen over the last few years.

But Meade also was quick to say that a group of new restaurants can be complementary instead of competitive. She said that Here and Now has benefited from the foot traffic sparked by newcomers such as Bavel, and that some patrons might learn of her establishment while waiting for a table down the street.

“Where we’re at, the more spots that open up, it’s going to help us,” Meade said. “Whatever we can do to make this feel and function more like a neighborhood is going to be helpful.”

One thing that people can be sure of is that more spots will arrive. Only time will tell whether they sink or swim.

sean@downtownnews.com

©Los Angeles Downtown News 2019