A top Atlanta retail expert this week warned of all the new restaurant openings in the city and beyond.
“Watch out for food,” said Kristen Morris, regional leasing director for Jamestown, the Atlanta developer behind projects including Ponce City Market. Morris was a speaker at this week’s International Council of Shopping Centers' Southeast conference in Atlanta.
“I think it’s just a matter of time before we see a little bit of shakeout,” Morris said, especially with less strong operators who may lose their capital. “We’ve all been using food as our anchor.”
Morris was referring to the fact that many mixed-use developments have filled their retail space with restaurants as other categories such as soft goods are suffering due to the rise of e-commerce sales.
She added the amount of new restaurant openings could be reaching a saturation point.
Intown Atlanta’s food scene has been flooded with new openings in recent years with projects such as Ponce City Market, Krog Street Market and The Shops Buckhead Atlanta bringing dozens of new restaurants to the city.
As Atlanta Business Chronicle reported this summer, the growth has been rapid. Atlanta has added approximately 350 new restaurant spaces since 2008, according to data from the Georgia Restaurant Association.
Some Atlanta restaurants have already shuttered. That includes fine-dining restaurant 4th & Swift in Old Fourth Ward. And more recently, the Cockentrice restaurant and bar closed at Krog Street Market, although it was quickly replaced.
Other established Atlanta restaurants have seen slow sales growth in recent months.
According to new data from NetFinancials, a local CPA firm that each quarter surveys around 100 independent restaurants in metro Atlanta, third-quarter 2016 restaurant sales volume grew a lackluster 1.3 percent over the same period last year.
“Q3 2016 was an unsettling quarter,” said Robert Wagner, president of NetFinancials. “The stifling heat of Atlanta’s July and August played a part in reducing restaurant sales. Also, operators mentioned competition from newly-opened restaurants had a major impact on Q3 sales.”
In fact, 43 percent of restaurants in the survey reported sales declines for third-quarter.
Year to date, sales volume is up 2.2 percent over 2015 sales.
From 2010 to 2014, NetFinancials saw restaurant sales grow an average of more than 5 percent each year.
But in 2015, restaurant sales only grew 2 percent, with the last three quarters nearly flat-lining. NetFinancials had cited the flurry of new restaurant openings as creating “strong headwinds” for existing restaurant operators.
Amy Wenk covers hospitality, retail and restaurants.
Image source: Restaurant Plates, Marshall Turner