2019 proved to be a hugely successful year for real estate development here in the Vancouver – Clark County area. There was, however, an event right at the end of December that symbolizes how challenging it is for our local restaurant operators, even during periods of growth. That event was the closing down of Tommy O’s at Eighth and Washington.
Tommy O’s has been a very visible a successful member of the downtown core restaurant scene for more than 25 years, and in many ways helped encourage and emboldened others that it was possible to be successful. His focus was local, his offerings unique, and his personal attention and presence developed a strong loyal following.
There was mention that the opening of the Waterfront had played a role in eating into his sales volume. Surely the Waterfront Development had an impact. As with all things in business and economic development there are a host of factors that contributed to his demise.
First, let’s discuss the reality that as an “Independent Operator” in today’s dynamic restaurant marketplace there is a never-ending series of challenges. Restaurants are infamous for being hard on both people and on their physical facilities. They are expensive to build out, usually need locations that have high rent and require 70 to 80 or more hours of operation.
The Independent Operator is not able to generate the same purchasing power on his wholesale purchases as a chain restaurant and ends up having reduced margins. If they decide to operate with higher prices to keep margins within a range that allows them to remain profitable, they risk losing volume. It is a very narrow path they must walk.
There is of course the issue of wages. As much as we all feel we’d like our restaurateurs to pay their staffs well, weas the dining public make decisions on where to eat based on the menu pricing levels. Within our state we have made the decision to have automatic escalating wages each year. Our Independent Operators are at a severe disadvantage in how they can adapt to this never-ending increase in their costs. Larger chains can invest in technology that creates efficiencies; they can ramp up the marketing to increase customer counts; they can spread their increased costs over a larger customer base, and generally have a larger reserve of working capital.
It has been more than just the Waterfront that has changed the nature of the downtown dining scene the past five years. Here are a few new competitors who have taken small bits of the downtown market: Heathen Brewing Feral Public House, Mighty Bowl, The Smokin’ Oak, Tap Union Freehouse, The Grocery, Pacific House, Jorge’s Tequila Factory, Sushi Mo, Little Conejo, Nonavo Pizza, Amaro’s Table and Warehouse ‘23.
Yes, the population base has grown in downtown. We’ve become more attractive to Portland diners and tourists, and more Clark County diners seem willing to drive into downtown. But the restaurant marketplace is dynamic. Consumer tastes and preferences for both food and ambience are always a moving target and clearly the above list reflects that. Clark County residents always storm the new restaurants for the first six months to a year, which can create a sales “cliff” for an existing operator. These can result in disruption of staff continuity as the staff seek out the new opportunities.
A combination of lower margins, less working capital and a few months of a sales cliff can put an Independent Operator into a significantly challenged financial position.
Let’s make a concerted effort not only to celebrate and enjoy the new additions to our Waterfront but keep our longtime restaurant operators top of mind and in our dining rotations.
Finally, Tom Owens, we have high regard for you as an operator, and as a pioneer of the modern-day downtown Vancouver restaurant scene. Thank you for your efforts.
Jim West is a commercial realtor with Wise Move Real Estate. You can reach him at or read his blog at jim@jimwestcommercialre.com.
