Chain Reaction

In Eat, February 2017 by Christa GalaLeave a Comment

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Southern Living named Raleigh among the “Top 10 Tastiest Towns in the South,” and last year Zagat named us #19 in its “26 Hottest Food Cities.” Independent restaurants are flourishing, and national chains are knocking. The great news: national chains can be allies to local businesses, especially in affluent downtowns like Raleigh, Austin and Denver, says national restaurant industry expert Darren Tristano.

“The better the economic area, the better the chains and independents will work together,” says Tristano, president of Technomic, Inc., a research and consulting firm that specializes in data, trends and forecasting. “A good trade area is critical to success—entertainment venues, sporting arenas, movie theaters. The other part that’s key is having the right economic demographic—the middle upper income group, whether it’s retired boomers moving back to the city or being around the right corporate environment that gives you a large number of workers.”

High-end chains like Capital Grille and Seasons 52, both owned by Darden Restaurants, were eager to join Raleigh’s vibrant and much-talked-about food scene. Capital Grille is one of the top-ranked steak houses in the nation, and it opened last year in the new Bank of America Tower at North Hills. Surrounded by dozens of businesses, the restaurant serves both a corporate and local clientele.

Managing partner Joseph Butler says feedback has been fantastic. “Since arriving, our neighbors have welcomed us with open arms to an already sophisticated dining scene,” he says. “We look forward to welcoming many new faces in the coming months.”

At Crabtree Valley Mall, the newly opened Seasons 52 offers an usually diverse wine list—serving more than 100 bottles and 52 by the glass; the move created more than 100 jobs. While newly opened J. Alexander, located just behind the mall, is part of a collection of boutique restaurants based out of Nashville. The company chose Raleigh for its first North Carolina location and also hired approximately 100 full and part-time employees.

“The change with chains is that they’re looking at this business in a way where they’re adapting locally,” Tristano says. “It isn’t a one-size-fits-all. They’re going into a market; they’re using local architects. They’re building stores that don’t necessarily follow a cookie-cutter philosophy.”

Tristano has seen chains use local artwork and photography—or local materials—for interior elements. These days, chains also want to share more details when it comes to the bottom line. Also, national chains are often more local than consumers think.

“Chain restaurants are typically owned locally and run locally,” says Tristano. “The people who are there represent, in most cases, 25 to 30 percent of the restaurant sales through their labor and expenses. Often, you’re supporting local distributors, suppliers and farmers. I think many people forget that restaurants are about a 5 percent profit margin, and most of the money is spent locally.”

Still, it’s all about the experience. “It’s always going to come down to quality, value, execution, service; those things are always important,” he adds.

Of course, the relationship between larger corporations and local businesses can at times be rocky, and it can play out in the press and on social media. In September 2016, 1010 a burger chain owned by actors Mark and Donnie Wahlberg, announced it would open its first North Carolina location in January in The Hudson building, which formerly housed the Oxford. The area is ripe with potential diners, but the Oxford has been shuttered for more than a year, leaving those who live in the building with fewer options.

The Downtown Raleigh Alliance was excited, tweeting: “#MarkyMark is feeling those #goodvibrations in #downtownRaleigh! We showed Wahlburger’s the space where the Oxford used to be, and they’ll be opening next year!”

In an N&O article published shortly after, several independent restaurant owners weren’t as happy. “I think it sort of sucks the soul of out downtown,” said Van Alston in the article; Alston has owned Slim’s downtown since 1999. 

Now, spring is here; Wahlburger’s is not. But Kelvin Dumas, the commercial broker with Colliers International who put together the deal, said Wahlburger’s will open this quarter. The delay is due to rollouts of other southeastern Wahlburger locations, not pushback from independents.

Still, the push-and-pull between national chains and independents is not new; it spans across all industries—and cities—when it comes to urban development.

“Generally, a healthy business mix will have both locally-owned businesses as well as chains to serve different types of users with varying preferences,” says Danny Vivenzio, communications manager with the Downtown Raleigh Alliance. “We do most of our work with the former and want to see downtown always maintain a strong local business core, even as we see more national chains potentially move into the area.

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