Phila. restaurateurs open new places, defying the recession

Reduced rents, investors looking to park cash, and a dose of good old-fashioned optimism are fueling a surprising string of new restaurants here, despite the recession's battering.

And if you listen to the city's restaurant leaders such as Stephen Starr and Jose Garces, there's much more to come, and some dining niches are still untapped.

Indeed, three significant restaurants will open in the city this week alone to grab a slice of holiday business. From A to Z: Avenida, a family-friendly Latin concept in Mount Airy; Sampan, a sexy pan-Asian restaurant-lounge on South 13th Street; and Zama, a Japanese restaurant near Rittenhouse Square.

That is not to say that all is rosy in restaurant land. Many existing places are feeling the overall decline in check averages as people order less, said Ron Gorodesky, a restaurant consultant.

In sum, he said, there is also more supply than demand. That is borne out locally, as the Center City District counted 680 food-related businesses in August, a 4 percent increase over 2008 and a 29 percent increase over 2005. Ramped-up competition has spurred a record number of restaurants to join the next Center City District Restaurant Week, scheduled for Jan. 17-22 and Jan. 24-29. At other times of the year, many restaurants inside and outside the district have begun offering similar discounted, fixed-price meals to drive traffic but not necessarily boost profits.

Nationally, the picture won't brighten at least through the first half of next year, said NPD Group, a market-research firm, in a report this week. It has noted five consecutive quarters of traffic declines through September.

Yet, the state of the economy seems to be working in some developers' favor. In Philadelphia, rents have dipped slightly, said Laurence Steinberg, a retail broker with Michael Salove Co.

Greg Dodge, who with his partners is investing in three projects (Zavino, a pizzeria-wine bar opening Dec. 26 at 13th and Sansom, and 2010 projects in Washington Square West, Cafe Maurice, a brasserie, and a reconfiguration of Doc Watson's), said he found that landlords are offering less complicated terms.

"They're more interested in the productivity of the building," he said, explaining that they want quality operators so they don't have to keep searching for new tenants.

This situation worked in Alex Plotkin's favor. Plotkin, owner of Chops steakhouse in Bala Cynwyd, signed an agreement to take the space that until July was Oceanaire on Washington Square. He said he obtained the lease for a fraction of what Oceanaire had paid to outfit it. Chops Too will open in February, he said.

Dodge believes that Philadelphia has become a hot restaurant town because of its comparatively reasonable real estate prices and because of the talented workers drawn here by such people as Starr and Garces.

"At some point, these people have to grow," he said.

Michael Schulson (Sampan) and Hiroyuki "Zama" Tanaka worked for Starr. Steve Gonzalez (Zavino) worked for Marc Vetri.

A little frugality helps. Tanaka said he kept costs down at his new restaurant Zama - his dream after 20 years working for others - by buying fabric for the seating on Fourth Street in Queen Village and not from some fancy shop in New York.

At Sampan, near 13th and Sansom Streets, Schulson and investors worked within a budget of $250 a square foot - $50 to $100 a square foot below previous norms.

Marc Vetri is going even simpler for his trattoria Amís, opening at 13th and Waverly Streets in mid-January.

Then there are Starr and Garces. "We've seen a slight increase that's given us hope, but I'm not sure things will stay better," said Starr, who is planning at least five new properties in Philadelphia and one in New York City in 2010.

Garces has said he will keep growing as well. He has three projects slated in Philadelphia for next year.

Many existing restaurants are nervously watching December business.

Gorodesky, whose company Restaurant Advisory Services works with new and existing restaurateurs, said holiday bookings were off. Nation's Restaurant News this week quoted a survey of human-resources executives that found that only about 67 percent of employers planned to hold a year-end celebration this year, down from 81 percent last year, according to BNA, a publisher of business news.

The drop might break some operators. "You're a squirrel," Gorodesky said, not the first to compare restaurateurs to woodland creatures. "You collect all your nuts for the winter because you know it will be slow from January to Easter. If you don't have nuts, your ability to get through the winter is in question."

Poor-performing restaurants also create a negative trickle-up effect, says Gorodesky: "They'll go to the landlord and ask for a break. The landlord has the choice of giving them a break or losing the tenant. Then he goes to the bank or an investor, and says the same thing. It goes up the ladder. I'm concerned with what's going to happen in January."

January, for the record, is slated to see the opening of R2L, a blow-out project from Daniel Stern on the 37th floor of Two Liberty Place. Stern also recently opened a pub called MidAtlantic in University City.

Restaurateurs Stephen Starr and Jose Garces are planning to bolster their stables in 2010.

From Starr:

A reopening at Blue Angel/Angelina (706 Chestnut) with a concept to be determined.

A Greek restaurant on the site of his now-closed Tangerine (232 Market St.).

A restaurant, possibly Mexican, at 2013 Chestnut St.

A branch of Stella Pizza in Center City (and possibly Chestnut Hill or the Main Line).

From Garces:

A "farm-to-table" restaurant at the Cira Centre, next to 30th Street Station.

A tentative plan for a sausage-and-beer spot at 13th and Chancellor Streets; lease is not signed.

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