2019 Local Food Industry Crystal Ball

This time of year is quiet for us, I typically give the rest of the writers a much-needed break while I sit back and plan the next year. Each year I try to combine market trends, credible rumors I hear, and emerging patterns I see in the industry to get a sense of what we can expect the upcoming year. My confidence level on each of these varies greatly, but here is what I am looking for in 2019.

Swing back toward very casual dining 
A lot of the big openings over the past few years have been in the upper end of casual/lower end of fine dining. Spots like Petit & Keet, Sauced, and others have dominated the big openings. About halfway through 2018 that started to slip and there was a swing back the other direction. In 2019 I expect that swing to come in full force. As I will predict later, I think profits are going to be hard in 2019, going very casual helps with profit margins, increased dining frequency, and decreased acquisition cost.

I think we could even start to see some local places ramp up on the drive-thru and delivery heavy game. Allowing for easier access to customers by either reducing the barrier to dining (drive through) or eliminating it completely (delivery) helps with customer growth. The negative is that it reduces brand loyalty, but that will be something to worry about in 2020.

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South of 630 eateries will grow
This will be a big year all around for the area south of 630. I hope to see a major renewal in the area, and I am not just talking about SOMA, although it will thrive. With the new mayor who has an interest in the historically underserved areas of the city, mostly the south and southwest areas, there should be a resurgence in those communities.

I think by the end of 2019 we will be looking at the beginnings of a few of new business corridors, possibly along Wright Ave, 12th street, and Asher, that will kickstart some serious growth. These areas serve a vital part of our city that is long overdue for a growth period.

At least one major, long-standing restaurant will close
This is the easy one. Looking back at the trends we have had at least one major, unexpected, long-standing restaurant shut the doors every year. There is not always a rhyme or reason to it, sometimes it is financial, sometimes it is owners just being tired of the grind. What I’ve found is that no place is off limits, and nothing is ever completely safe. I have a few predictions here that I’ll keep to myself, but suffice to say I am confident on there being at least one, maybe multiple.

More than one will change hands
However, all is not lost. The big trend starting to happen is long-standing and popular restaurants changing hands rather than closing. A lot of this has to do with economics. It cost a lot to open a restaurant and there are no certainties. The odds are greatly improved with an existing restaurant where you can project out the cash flow well.

This has happened at an increasing rate over the past couple of years. Spots like Graffiti’s, Kemuri, District Fare, and Town Pump all changing hands. Any of these from the closing category above could quickly slip into this area when rumors increase and someone would rather spend the money acquiring a spot rather than building from scratch.

At least one major restaurant will move
This one I am less confident on, but there seems to be talk of a few places outright moving location. This is either due to landlord disputes, in need of a larger spot, or moving to greener pastures. There is enough chatter that I believe we will see at least one major spot announce a move this year. It is not that unheard of, Oceans and Arthurs did it in 2018, but still a rare thing to do.

Farmers’ markets continue to decline
One of the things that surprised me in 2018 is how low attendance has been on the once popular farmers’ markets, both from consumers and vendors. There seem to be several factors contributing to this, most of it is just a declining fad that led to the original popularity, and the other is economics and the increasing stability in distributing locally grown crops.

The Hillcrest market especially seemed to be hit hard this year. There are no major indicators that this will change, it is a trend that is going to continue until something changes the dynamic.

Net loss on local restaurants
If the trends continue, 2019 will be a net loss for the number of local restaurants after a slight gain in 2018. There are several factors in this, the real geeky answer though is the unstable US economy will lead to lower consumer spending overall. Arkansas was sheltered by and large during the last recession, this one we will not get so lucky. Due to decreased trade, Arkansas will be hit as hard if not harder than other states. Less money flowing means fewer restaurants making a profit.

This obviously factors into my feeling that casual, lower price point restaurants will rise. But it will not be enough to break even on the number of spots, and certainly not enough for a revenue growth year. It could be a rough ride, and we will likely lose a couple that in any other year would have easily survived. Restaurants that are not open for change and are not as good at engaging customers will be the worst hit.

Trend of closing ambiguity will get worse
Speaking of closings, the biggest disturbing trend I saw in 2018 was the way restaurants ended or at least came close. There were multiple occasions where we heard a place was closing from management only to have them come back and say they were really staying open, often only to actually close after all. Not to mention the whole “closed for remodeling” BS that has happened multiple times only to have a place never reopen. Honest communication helps for the next spot.

The other thing restaurants have to do is control the information. I specialize in business communications, I even spent part of my master’s degree work in crisis communication. If you are closing, say you are closing. If not then control the information quickly. The case with Donuts and Deli downtown, for instance, there was an ownership split. One owner (the one leaving) communicated the other didn’t and planned to reopen. Once it is out that a place is closing it is hard to come back from that.

Multiple major openings from experienced restauranteurs
Yes, it will be a bad year for restaurants, however there should be some growth with the restaurant establishment. There are major rumblings by way of rumors, real estate inquiries, and actual confirmation from places that they are looking to add a new concept or location.

Expect the other factors listed here to come into play. Casual focused and potentially south of 630. One or more of these will absolutely setup the next wave of restaurants in Central Arkansas.

At least 2 new breweries announced or opened
Consider this, as hot as the craft beer scene is in Little Rock, the last real brewery opening was Rebel Kettle in March 2016. A few factors why that will change: Little Rock has trailed slightly behind NWA in terms of the craft beer scene for many years and NWA recently saw a major expansion in the market. There are a number of highly talented individuals setting at down positions in other breweries that are talented and knowledgeable enough to open their own. There has been enough growth in craft consumption to easily justify more than one opening. Finally Josiah Moody is back in town and if someone doesn’t give that man a brewery I may do it myself.

2018 was all about expansion, as literally every major brewery except Diamond Bear has or had some expansion in the works to fill the growth in the market. Many of these fought against more breweries. It will not hold in 2019, we will get at least 2 announced. I am not so sure both will ever open, but they will get announced.

Still, the first craft brewery in Central AR will close
Despite the growth, I think we will have our first major craft brewery close in the Little Rock area. Yes, I have some ideas and no I am not going to say yet. The brewing scene has been mostly sheltered across the state, not abiding by the same closure rates as restaurants.

Keep in mind, restaurants do not only close because of lack of money. There are ownership disagreements, spending issues, talent loss, among other things. Look at Bike Rack in NWA, there is more infighting than any restaurant could survive. They just happen to be well funded and the owners will push out fractioning parties. The same is not always the case in other breweries. I think the loss will hit someone in the beer industry this year.

Renewed interest in food trucks
Finally, I think food trucks are going to make a comeback. I’ve been down on the food truck market for the last couple of years. After the peak in 2016, it has struggled since. There were only a few quality trucks remaining going into 2018, and the outlook seemed fairly bleak.

In my opinion, food trucks represent the startup economy of the food scene. Without a healthy startup economy, the scene will start to slow and eventually decline. Yes, the economy is going to play a major part in the 2019 decline, but also the lack of new businesses that capture updated models and trends taking their place will turn a neutral growth year into a down year.

Trucks are starting to show all the signs of making a comeback. I think spots like the Railyard will help bring a renewed interest in food trucks once it warms up a bit. This will lead to a slowly stabilizing truck scene where people have dedicated spots to go get food instead of hunting around 20 different Facebook pages to find out where a truck is on any given day.

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2019 Local Food Industry Crystal Ball