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‘Zombies’ in the Restaurant Biz May Falter, Panelists Say

A slew of restaurant closings are coming, predicted panelists at a Minnesota Shopping Center Association event last week, as soon as patrons use up their holiday gift cards.

“There’s a lot of zombies out there who are dead and they just don’t know it,” said Stephanie March, senior editor at Mpls.St. Paul Magazine. “February will be the reckoning.”

She cited labor as “by far” the biggest factor at restaurants today, along with the demise of fine-dining, white-tablecloth restaurants. She cited three prominent Minneapolis restaurants that closed last year—La Belle Vie, Vincent and Masa—and added the trends hold true around the country. Almost on cue, Brasserie Zentral, Russell and Desta Klein’s high-end restaurant in the Soo Line Building in downtown Minneapolis, announced over the weekend that its last day of service is January 16.

“People who were coming up and wanted to start a fine-dining restaurant, couldn’t” get backing, she said about chef/owners in the last decade or so, "so instead they started food trucks, or they took the burger and made a kick-ass burger,” starting restaurants that are “more casual and accessible.”

That’s true on the franchise side, as well, noted panelist Tom Kaiser of Franchise Times. Fast-casual brands are “putting a lot of pressure on the legacy chains,” from Famous Dave’s to Subway and more. “I agree there are a lot of brands out there that may not make it to 2017.”

The stakes are high, noted March, who believes increased government mandates for raised wages, scheduling certainty and more fail to recognize the impact that restaurants have on the economy. “The restaurant industry is the second largest employer in the United States, after the government,” she said. “The regulations the government has started to put on the industry, it’s all at once, as well. We’ve had growth, especially locally, but I think it will be slowing.”

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