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|Articles - Nov/Dec 2012|
|Monday, November 05, 2012|
Page 3 of 4
On a Monday afternoon in September, Kurt Huffman is eating an heirloom tomato salad at Imperial, one week after the restaurant has opened. The owner of ChefStable, a restaurant incubator and investment group, Huffman has a stake in some of the city’s most talked-about venues: Ox, Lardo, St. Jack, Ping and Grüner. Not all have been successful. In September, one of his venues, Corazón, located in the Twelve West building downtown, closed after three months.
“The labor model was completely out of whack,” says Huffman, noting that Corazón, which tried at once to be a high-end Mexican restaurant and also do $3 tacos, ground its own masa for tortillas and hand-diced the salsa. Even in a DIY food city, there are limits. Huffman observes. “Nobody hand-cuts their own salsa. That’s ridiculous.”
For restaurants, labor is typically the biggest cost and the most difficult to manage. Unlike most states, restaurant owners in Oregon are also prevented from factoring in tips as part of staff pay, which can add to labor expenses. The absence of a so-called “tip credit” law means an Applebee’s in Florida can net about 7% more than an Applebee’s in Oregon, says Huffman. Although independents and chains alike are affected, chains typically factor the tip credit into their business model, says ORLA’s Hamilton. It’s one reason why Oregon is home to more single-owner operators and fewer chain restaurants than other states.
Tip credit aside, Huffman says Portland’s food and beverage regulations are generally favorable to the industry and are key to understanding why so many people open restaurants in Portland. Like many proprietors, Huffman singles out as particularly important the low cost and relative ease of obtaining a liquor license. In Portland, an annual license runs about $400 a year. In Boston, a private sale license costs about $40,000; in Idaho, $70,000.
“They give them to almost everybody,” says Huffman, referring to Oregon licenses. “All you have to do is have food alternatives.” Portland also has among the most permissive regulations in the country for opening a food cart. And, of course, there’s no sales tax in Oregon, a factor that helps sustain local restaurants.
The city and state help boost the industry in other ways. Capitalizing on a nationwide food renaissance that has been under way for years, Oregon Tourism Commission offices are championing culinary tourism, with specific campaigns touting Portland’s independent restaurants. For the past eight years, for example, Travel Oregon has run an “Oregon Bounty” advertising campaign, featuring chefs and other food professionals from around the state. More recently, 66 restaurants participated in Dining Month, a Travel Portland campaign that offered three-course meals for $25. Multiple restaurants saw record-breaking sales, and a follow-up survey suggested that about 30% of diners were tourists, says Courtney Ries, consumer marketing manager for Travel Portland.
In a city lacking major tourist attractions, individual restaurants have already developed an out-of-town following. Naomi Pomeroy, the chef/owner of Beast, a high-end, fixed-price, French-inspired restaurant, says about 75% of her customers are from elsewhere. Recently, a couple celebrating their 18th anniversary flew in from Chicago just to eat at the restaurant.
Beast is located in a restaurant cluster in the NE Killingsworth neighborhood, one of many community restaurant districts that tell another story about the rise of Portland dining. Or, as Pomeroy puts it: “Part of Portland food culture is people want to go see those cute little neighborhoods.”
So closely entwined are Portland neighborhoods and restaurants that the story of the industry’s boom could be written as a narrative of local neighborhoods, a narrative in which new restaurants serve as a catalyst for neighborhood revitalization, which in turn attracts more restaurants and customers.
That virtuous cycle has been fueled in part by the Portland Development Commission investing substantially in the local industry. Between 2007 and 2012, the city agency loaned about $1.8 million to 22 dining establishments, including $50,000 for Grüner and $60,000 for Bunk Bar. Private-sector developments are also playing a role. Historically, developers have shied away from restaurants, mainly because banks consider them high risk, says Kevin Cavenaugh, a local developer. He recently completed Ocean, a $1.6 million “micro-restaurant” complex in Northeast Portland featuring food-cartstyle venues from some of the city’s leading restaurateurs. Portland builders are at the forefront of recognizing the value of dining establishments as tenants, he says. “I can think of no better way to give a building instant pop than adding a restaurant.”
That pop is well understood in the hotel industry, says Machado, who, a few years before the opening of Imperial, inked a beneficial deal with the owners of the Hotel Modera that made Nel Centro the house restaurant. Over the years, the onus of quality has shifted from the hotel to the hotel restaurant, he says. “It used to be ‘A’ hotel and ‘B’ restaurant. Now it’s ‘B’ hotel and ‘A’ restaurant. It has to do with the business traveler, who is looking for conviviality, action, quality in where they’re staying.”
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The Office of Economic Analysis announced that Oregon is currently enjoying the strongest job growth since 2006. While this resurgence has been welcome, the lingering effects of the 2008 “Great Recession” continues to affect Oregon businesses, especially with regard to estate planning and business succession.
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