Charleston has an appetite for restaurants, but will they survive a recession?

Still hungry

It’s common wisdom that Covid-19 hit Charleston’s restaurateurs hard. So when local real estate broker Thomas Kennedy was putting together his quarterly Restaurant Report newsletter of who’s coming and going in the Charleston restaurant scene, he was startled to discover something: Headed into 2022, there were plenty of restaurant openings, but an unusually low number of restaurants folding.

“It was a head-scratcher,” Kennedy told City Paper recently. “It seems like restaurants would have been pretty badly hurt by Covid and it’s been a surprise that there were not more closings in the last year. With rising food prices, rising wages, staffing problems, lower employment, you would think restaurants would be shutting down. We haven’t seen it yet. It’s really weird.”

Susan Cohen, president and CEO of the S.C. Restaurant and Lodging Association, said Kennedy’s observations were “eerily consistent” with data from every county in the state.

“It was surprising to us because we kept hearing ‘closing, closing, closing,’ but there was a net gain in restaurant openings across South Carolina,” Cohen said.

Gaining restaurants

In 2020 at the height of the pandemic, Cohen said, Charleston County saw a net gain of 47 restaurants opening. By last year, that had risen to a net gain of 97 restaurants.

She said she believed that the restaurants already on the brink closed early during Covid, which left available restaurant spaces to be assumed by newer and more financially viable restaurant concepts that leveraged federal stimulus money. And later, those newer places were helped by heightened customer demand. In Charleston, Berkeley and Dorchester counties, restaurants received about $59 million in restaurant relief funds, she said.

Out and in: Charleston’s ever-growing restaurant scene doesn’t leave spaces empty for long, like where Bonny’s Hideaway (above) and Heavy’s Barburger (right) followed former eateries

Cohen added that loosened restrictions on carryout beer and wine during the height of the pandemic helped, too.

“Whether you like it or not, so many restaurants do serve alcohol and it’s a huge percentage of their profitability,” she said. “A lot of higher end wines or cocktails can easily add up to the cost of your entrée and it takes less time, and less staff, to serve you a drink than to cook you a meal.”

Pivots sustained entrepreneurs

Whether it was serving alcohol or providing takeout food, restaurants all seemed to do some form of pivot to stay alive.

Steve Palmer, of Indigo Road Hospitality, anticipates F&B challenges in the next year | Photo by Andrew Cebulka

“I think, like a lot of people, we tried a lot of different pivots,” said Steve Palmer, founder of the Indigo Road Hospitality Group. “We found that the food that people couldn’t cook at home was food they were interested in, like sushi.

“O-Ku had a very robust business. But Indaco didn’t, because Italian is a cuisine a lot of home chefs try to replicate. We didn’t wholesale say ‘to-go is a viable business for us,’ but we did it to keep staff busy and as much to keep minds busy, with the intention of moving forward, then carefully and gradually opening with limited seating and enhanced cleaning measures.”

Palmer said his restaurants had stops and starts as different staff members tested positive and restaurants had to shut and then reopen.

“The general wisdom is, if you made it through to last year, then you made it,” he said.

Outdoor spaces and weather helped, too

Tony Cuajunco, director of operations for Holy City Hospitality, utilized outdoor dining at his establishments during Covid | photo by Ruta Smith

Tony Cuajunco, director of operations for Holy City Hospitality (39 Rue de Jean, Vincent Chiccos, Virginia’s on King, Coast Bar & Grill, Victor’s Seafood and Steak and Charleston’s Smallest Bar), said his restaurants benefited from being able to open one of his five restaurants at a time and by owning Hutson Alley, where diners could eat outdoors.

“As it got safer and the staff felt more comfortable, we would take one table from outside and bring it inside,” Cuajunco said.

Outdoor dining weather and the tourism that comes with it helped Charleston, said Michael Shemtov, owner of Butcher & Bee and The Daily.

“Charleston really benefited from the weather,” Shemtov said. “I talked to a lot of people who rented homes in Charleston and came from large urban centers. We were not under the same kinds of restrictions as people up north. In Chicago, for example, they had a really hard winter in 2020 and it was brutal for them, no indoor eating and too cold for outdoors. We just had some wind at our back and a lot of [tourists] eating three meals a day out.”

Despite Covid’s trials — Shemtov closed his outpost in the Gibbes Museum and closed Mellow Mushroom on King Street and in Summerville, and Palmer closed The Macintosh — it brought opportunities as well.

Shemtov said the pandemic gave him the opportunity to close places that might not be working and to ask himself the tough questions, as well as to rededicate himself to the projects that brought him joy, which was not coming from serving late-night pizza to a college crowd at Mellow Mushroom.

Palmer, too, said some good came from Covid.

Michael Shemtov refocused his efforts on Butcher & Bee and The Daily after other restaurant closures | Rūta Smith file photo

“I really think that the best has been consumers’ appreciation for the restaurant workers and just how hard it is being in our business. I think not having their favorite restaurants for a while gave them a new kind of respect for what we do in our industry,” he said.

Still, some of the problems linger and the rosy forecast of restaurant openings may dim as a result.

“We had to figure out a business plan to adjust to new realities,” Shemtov said. “Labor costs are not going to go back down — nobody wants to move backward with their pay.”

Challenges in the near term

Palmer said the next 12 months will be interesting.

“We had a little golden period where restrictions were lifted and we weren’t feeling all the challenges yet. [But] this year has already been challenging.

“We spend 80% of our days on staffing issues. You hear about the quiet resignations but that doesn’t feel good when you’re the person trying to staff a business. I think we’re on the verge of a real recession in the next 12 months and you always see restaurants close during recessions.”

Cohen is only slightly more optimistic.

“Just recently, the National Restaurant Association did what we like to call the ‘misery survey,’ ” she said. “Some of that supply chain stuff is still going on. For [Charleston] Restaurant Week, restaurants couldn’t post menus because they wouldn’t know until the trucks came in what would be on the menu.

“There’s still an issue with takeout supplies. And staffing — very few across the board will tell you they’re fully staffed. I think we will see similar numbers next year [of openings over closings] but I think we are going to have a lot of restaurants that are managing to hang on by their fingernails.”