How to Handle a Restaurant Closing

Closing a Restaurant,

The restaurant business is volatile. Recent studies have shown that the majority of independent restaurants will close within one year of opening and, for those remaining in business past one year, 70 percent will close in three to five years. No matter how long a restaurant has been in business, when it closes, it’s generally newsworthy.

But beyond the headlines, what actually happens when a restaurant closes?

“Even though the restaurant ends, it takes about one to two months to really close up shop,” says Liz Hult, office manager at Ward 6, a neighborhood restaurant on the east side of St. Paul, Minnesota, that closed in June. “What’s going to happen to the building? Our staff, vendors, if people will come and pick up product, changing locks, securing the building.” Hult went on to describe a litany of items, from linens to beer kegs, most people don’t think about when a restaurant closes.

But, she says, the first and most important thing to focus on is the grieving process.

“Closing a restaurant is a death. Restaurants have a natural life—a concept, a conception, a birth—and you go through rough times. You see the wear and tear on the building and there’s a time when it’s right to say goodbye. For everyone involved, you have to go through the stages of grief and get through that.”

When Ward 6 opened in December 2012 it quickly became a popular neighborhood destination in an area of St. Paul that was sparsely populated by restaurants. The owners, Eric Foster and Bob Parker, had many years of experience in the restaurant industry, lived in the area and saw opportunity for growth.

he restaurant attracted a devoted following and many of the employees hired when the restaurant originally opened remained for many years. “The loyalty was incredible,” Hult says. “Clientele as well. We didn’t have an age group, it was people from all walks of life, very diverse. We saw people through dating, getting married, having kids and the restaurant even sent flowers to the funeral of a regular. I think the staff will recover faster than a few of our regulars; we were really their family.”

Despite the popularity of Ward 6 and its loyal clientele, its owners weren’t able to keep the doors open. Why? The challenges were many.

“The Minnesota challenge, of course, is seasonal,” Hult says. “If there’s a snowstorm on a Saturday night, if you have a patio or don’t have a patio. We had a burglary on Christmas, so we were closed for the holiday in 2016. We also went through an insurance audit and a state audit in 2017 and that takes additional time, money and paperwork. We did well on those, but when you’re looking at every penny and not expecting it, it hurts.”

After struggling financially, the owners of Ward 6 knew they were heading into a slow summer season and made the difficult decision to close their doors on June 3, 2018. They told staff members in person and asked that they not share the news until the official announcement was made on Memorial Day. The restaurant remained open for one additional week.

“I think it went down as the busiest week in our business,” says Hult. “We had already stopped ordering and we actually had to make a few orders that week just to get through. It was so emotionally draining, the staff did such an excellent job, everyone showed up and worked hard. People made money, but it takes a toll. They knew they weren’t going to have a job soon. Our customers came in with love and support and their own sadness.”

From conception to death, the journey of Ward 6 illustrates kind of a “best case scenario” for the lifespan of a restaurant. But it’s not a typical path. Most restaurants fall into the majority who don’t make it through the first year.  

After a long career in restaurant management, Zach Saueressig was presented with the opportunity to open his own restaurant at Southdale Mall in Edina, Minnesota. Z Italiano, a casual pasta, pizza, salad and sandwich joint, was the only non-franchise restaurant in the mall. Saueressig spent one year opening the restaurant but was only able to keep the doors open for six months.

“We had some really strong advocates, they were amazed the guy who owned the place was actually there and waiting tables,” Saueressig says. “It meant something to people that we were family-owned; it seemed so unconventional.”

Saueressig remains proud of his business plan for the restaurant and the high Yelp rating Z Italiano maintained and says it was a great reflection on how the operation and its staff connected with its customers. But, ultimately, the challenges became too many.

“There are a lot of things to think about on a daily basis; it’s never just about one thing. You need to have an incredibly wide bandwidth—staff members, products, service, cleanliness, a lot of regulatory things, make sure you’re applying proper tax percentages, insurance, licensing,” he says. “It’s a popular misconception that people who own businesses have a lot of money. A lot of small businesses start when someone stuck their neck out. One day of the mall being closed due to bad weather, signage at the mall where people couldn’t find us, the décor—that reverberates.”

Saueressig funded his restaurant himself and with investments from family members and it quickly became clear he could not keep going back to them for additional infusions of cash. “I couldn’t guarantee it was going to turn around. I knew I was going to lose money for people and just said, ‘We need to close.’”

The closure of Z Italiano was covered briefly in the local press, but its end was relatively quiet. The recent sudden closure of long-standing St. Paul neighborhood bistro and local beer pioneer The Muddy Pig, on the other hand, generated a community outcry and left many with questions about their shuttering abruptly after 16 years in business.

“Why close? It was not our decision, our landlord made it for us,” says Mark van Wie, co-owner and founder of The Muddy Pig. “We did not know The Muddy Pig was closing until about 3:30 that afternoon [June 5, 2018] when our landlord told us he was unwilling to work with us anymore. We were a little behind on rent—nothing new these days in the business—and we thought we could work something out. We tried to convince him to let us go through the weekend to sell our inventory and generate the cash to pay everyone, but he was not willing to talk about it.”

van Wie said he struck a deal with the landlord to close immediately and walk away in return for the landlord covering the last payroll, but the landlord did not follow through.

He and his partner also owned the Pig & Fiddle gastropub in Edina, Minn. That restaurant closed in July 2017 after five years in business.

After some initial outcry by former employees of The Muddy Pig, it appears everyone was paid and received their final tips. But several former employees of Pig & Fiddle claim they never received their final paychecks.

“We could see things were going south on us [at Pig & Fiddle], so we lined up a buyer,” says van Wie. “He was going to reopen the space with a new concept and everyone would have kept their jobs and received their full pay. But at the last minute our landlord shot down the deal and the business was done. We ran out of cash completely. I personally put every dollar I had into keeping the Pig & Fiddle and The Muddy Pig open as long as possible. Paying my mortgage? Nope. Taking a salary? Nope. Everything went into the businesses. I know the employees will never understand, but we did everything we could to preserve their jobs and keep paying them. It just didn’t work out.”

van Wie was nostalgic and melancholy about the closing of The Muddy Pig. “It was the neighborhood gathering spot. It really became a Cheers situation where everyone knew your name,” he says. “So many people have reached out to us telling us how much they are going to miss their favorite pub.”

When it came to the challenges his businesses faced, he listed many.

“Along with Summit Brewing Company, we kicked off the craft beer thing in the Cities, which ultimately led to the opening of over 100 breweries and their tap rooms in Minnesota, all of which were direct competition for us,” he says. They also had a difficult time finding staff, dealt with rapidly rising costs, taxes and insurance, buying out a former business partner and overall poor business performance. “The cost of doing business is way more than most people realize unless they have run a small business.”

After closing two restaurants in the course of one year, van Wie said his best advice is simply to try not to close in the first place.

“The restaurant is your life. You worry about it 24 hours a day,” he says. “You sacrifice everything to make it work and the last thing you want to do is watch it die. How could you prepare for it?”

His list of items to address when a restaurant closes included everything from getting rid of walk-in coolers down to the salt shakers and notifying just about “anyone who had any contact at all with the place.”  

When one chapter closes, the inevitable question is, “What happens next?”

For van Wie, the future is still murky. “What’s next? Not retirement, we are broke,” he says. “Either start a new business of some sort or go to work for someone else.”

After Saueressig closed Z Italiano, he started a food service recruiting business and is working his way to building himself and his family back up financially.

Foster, co-owner of Ward 6, still owns the building and is currently making decisions about the future of the historic space. “I think there will be a restaurant there again,” says Hult.

Because, in the circle of restaurant existence, after death comes new life.