Meat and two
Running a restaurant has become a tougher gamble.
A few years ago, Baton Rouge was having a moment in food. New local restaurants were opening with confidence, personality and something to say. Now that momentum has slowed, pressed by high fees, changing habits and margins so thin they barely count.
Why it matters: Running a restaurant has become a tougher gamble, even for experienced operators. The numbers no longer work the way they used to.
In 2017, Baton Rouge’s restaurant scene felt unusually alive. Brad Watts opened K Street, part of a wave of more creative local concepts. That same year, Cocha, Eliza and Curbside Burgers also opened.
“There were a lot of very cool and interesting places that opened,” says Watts, now owner of Cecelia and River Room, and board member of the Baton Rouge chapter of the Louisiana Restaurant Association.
What changed: Covid did more than interrupt the business. It changed the economics.
Food and labor costs rose, and the profits that remained after the pandemic got shaved down even further.
One of the biggest pressures is less visible to customers: credit card fees. Watts testified to Congress recently that three major card issuers dominate the market, helping keep processing fees high even as technology has made transactions easier and cheaper to handle.
The rough math is ugly. A card company can take about 4% of a sale, Watts tells RedEye. Many restaurants after Covid are left making about 5% profit.
“The old knuckle buster is gone,” Watts says, referring to the old manual credit card machines. Cash is rare now, and convenience comes with a cost to the operator.
The shift in customers: The habits changed, too. Watts says younger diners are less likely to keep alive the old rhythm of happy hours and late dinners out. Instead, many go straight home.
“They check on a pet. They all have pets. They put on their stretch pants and order DoorDash.”
The delivery problem: That does not mean delivery apps are saving restaurants. For many operators, the fees are punishing. Watts wants no part of it at Cecelia. If people want his food, they have to come downtown for it.