The impending closing of the venerable Faneuil Hall institution Durgin-Park has shed a harsh light on a growing crisis Boston restaurants face under pressure from skyrocketing rents, rising costs and rampant competition.
Michael Weinstein, CEO of Ark Restaurant Group, which owns and operates Durgin-Park, this week said the restaurant will close on Jan. 12 because fewer customers are coming through the doors and costs have risen.
Manager Kenneth Thimothee said the state’s new minimum hourly wage, which rose from $3.75 to $4.35 for tipped workers and from $11 to $12 for other employees, is partially to blame. And Durgin-Park will not be the only high-profile restaurant that will close this year, said Bob Luz, president and CEO of the Massachusetts Restaurant Association.
“We’re going to have a number coming up in the not-too-distant future,” Luz said, although he declined to say which ones.
“It’s a confluence of a number of things creating an environment where it’s nearly impossible for restaurants to remain profitable,” he said. “Ninety-five cents of every dollar that comes in the door goes out to pay expenses. The rents are crazy, the cost of doing business is skyrocketing, and there’s more restaurant seats in the marketplace than ever before.”
Many restaurants have moved to Boston’s Seaport District, leaving behind those in older places like Faneuil Hall, he said.
“With the development of the Seaport, there’s been a proliferation of restaurants there,” said Jim Malinn, general manager of the Union Oyster House, which was built in 1826 near Faneuil Hall. “There’s more competition, so it keeps you on your toes and makes you put your best effort forward. But I think the novelty of the Seaport is balancing off now.”
If so, it could be because of soaring rents there, one expense the Union Oyster House hasn’t had to worry about because its owners also own the property, Malinn said.
Sal Lupoli opened Salvatore’s Restaurant in the Seaport District in 2003 and sold it three years ago, with the new owner shuttering the eatery last year.
“Rents in the Seaport have risen about 400 percent in the last 10 years. How do restaurants keep up with it? They don’t. It’s really tightening the noose for small restaurants,” Lupoli said. “We don’t have the ability to continue to raise prices on our menus. The public won’t stand for it.”
Durgin-Park will not be the first venerable Boston restaurant to close or be put up for sale in recent years. L’Espalier in the Back Bay closed on Dec. 31 after 40 years in business. Jacob Wirth Co. in the Theatre District was put up for sale last year.
Lupoli predicted that more restaurants in prime locations will turn over because as their leases mature and will be replaced by restaurants that are part of large chains.
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