November 13, 2019
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Restaurant closings hint at a gentrifying Portland, but there’s more to it than that

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Portland's Old Port in 2018. A late summer surge of restaurant closings have reinvigorated talks of gentrification, as Portland citizens and restaurateurs adapt to an increasingly dynamic food scene.

Old-school restaurants are falling like dominos this summer, giving rise to a new Portland dining scene that barely resembles the one from the turn of the decade.

In the past four weeks, four popular Portland pubs and eateries have closed or announced plans to shutter within the coming days. The list includes Brian Boru Public House in the Old Port, Lolita on Munjoy Hill, Scattoloni Bakery in Monument Square and Silly’s in East Bayside.

What makes these closures surprising is that none suffered from a lack of business.

“I don’t think any of those were hurting from a profitability standpoint,” said Steve Hewins, CEO of Hospitality Maine, a nonprofit advocacy group representing the hospitality industry. “I just think the owners got tired.”

Hewins cites a workforce shortage as a primary source of restaurant owner fatigue. He says that the Portland food scene is “maturing,” and that talented chefs will inevitably find lower-cost locations in other parts of Maine, where there’s less pressure on finding a restaurant staff.

But that workforce shortage comes into tension with a service industry that has sometimes been resistant to raising employee wages.

Locals assert that the wave of sudden closures smacks of gentrification — which is fair, and also related to the workforce shortage. Rising rents have displaced the city’s typically younger ( and indebted) service-industry workers into suburbs like South Portland and Westbrook, making it hard for restaurants to retain staff, whose wages often depend on tips that can dry up in the winter months when tourism dwindles.

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On top of that, landlords are realizing that the booming “Portland brand” has skyrocketed the value of their real estate, leading some to sell. (That’s what happens when Bon Appétit names you Restaurant City of the Year.)

Tastes are changing too, in some cases to a point of redefining the restaurant experience. Portland diners are more willing and able to shell out for upscale establishments at higher price points, but they’re also splurging on exclusive pop-up dinners in spectacular settings, or grabbing from one of the city’s many food trucks.

Courtesy of Silly's via Facebook
Courtesy of Silly's via Facebook
Silly's restaurant in 2010. Owner Colleen Kelley announced that Silly's would close on September 1 after 31 years of operation.

When they’re not, they’re taking meals to go. According to a recent study, more than half of restaurant spending is projected to be “off premise” — in other words, through takeout or online delivery such as Grubhub or Doordash — or in Maine’s case, the locally owned delivery service 2DineIn.

With all these issues at play, it makes for a complex and dynamic food scene. Each of the four owners named a different reason why their eatery is closing. And in a way, each could be traced back to the g-word.

Colleen Kelley, owner of cult favorite Silly’s, which has been a fixture on Washington Avenue for the past three decades, posted on social media that she would “bow out of the hipster artisan neighborhood that she really doesn’t fit into anymore.”

What does “hipster artisan” mean? You’ll have to draw your own conclusions. What Kelley means isn’t exactly clear — especially since the restaurant’s aesthetic has always been one of the most colorful in the city — and requests for clarification were declined.

Kelley also took a jab at a newer model that at least one nearby restaurant has implemented that pays servers a flat wage, folding tips into the check into the end of the meal.

Kelley had been vocal during a citywide movement to raise the minimum wage, and the tipped minimum wage, for service industry workers, which she said impacted her ability to stay afloat. In public statements made on the Silly’s website in 2016, she advocated for a separate wage for “students/working papers/teenagers.”

In a statement to the Bangor Daily News last week, she said, “I am for the minimum wage, but I would appreciate a training wage [and] a 16- to 18-year-old wage.”

Wage concerns aside, the demise of Silly’s is a bellwether of change for East Bayside. One of the first to debut in the rapidly changing neighborhood, it was known for its affordable price point and heaping portions. The restaurant will close Sept. 1.

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Steven Priestley touches up a Guinness mural on the side of the Brian Boru Public House in Portland in 2015. He first painted it in 2004. The popular establishment closed on Monday after more than 25 years.

Where does wage fit in?

The Maine minimum wage was increased to $11 an hour in 2019, and will be raised to $12 an hour on Jan. 1, 2020.

This is a contentious issue. Restaurant owners and restaurant industry advocacy groups often cite the specter of too-high wages as a threat within the industry. Food-service industry workers are consistently among the lower income brackets statewide, so a higher wage is in their interests. But the restaurant industry constantly pushes back.

During a minimum wage push in 2013, the Employment Policies Institute, a conservative think tank, took out a full-page ad in the Wall Street Journal to drive the threat of automation home. Indeed, the tone is as if low-income food-service workers should count themselves lucky to have jobs at all.

“Today’s union-organized protests against fast food restaurants aren’t a battle against management,” said the ad. “They’re a battle against technology. Faced with a $15 wage mandate, restaurants have to reduce the cost of service in order to maintain the low prices customers demand. That means fewer entry-level jobs and more automated alternatives — even in the kitchen.”

The wage issue was the subject of a heated debate in Maine a few years back, when a referendum to abolish the tip credit for servers was passed and then quickly overturned. Maine law states that employers must make up the wages of workers whose declared tips don’t meet or exceed the minimum wage.

Hewins links a high server wage within the hospitality industry with the looming threat of automation already employed by fast food restaurants like McDonald’s.

“What ends up happening if you push [the wage] too far, not only do restaurants and hotels employ less people — because they’ll do that — but they’ll implement kiosks and different business models,” said Hewins. “You’ll have a nice restaurant where you go to the counter and order your meal.”

So Portland may be stuck in a bind. There’s a surge of new upscale restaurants attracting tourists and wealthy newcomers, but it’s displacing its stock of more affordable restaurants. The restaurants are so abundant that few are reliably busy enough for workers to make a decent income year-round. And a rising minimum wage — undeniably a good thing for a workforce that’s among the lower income brackets statewide — means some owners are tempted to lay off workers in the front and back ends of the house, which thins out the ranks of the restaurants that don’t have big profit margins.

The restaurants that survive will be those that can successfully attract the growing clientele of tourist diners willing to spend top dollar for a meal. For the rest of Portland, there’s always 2DineIn.

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Neil Reiter (from left) along with Stella and Guy Hernandez, as they prepare to open Lolita in April 2014. The restaurant will close Labor Day weekend.

Playground for the wealthy

The outcome of all these factors means Portland’s restaurant scene is transforming at a rapid rate, which isn’t very good for the people who made Portland’s restaurant scene what it is.

“Portland has become something of a Mecca of eateries of all kinds, and is getting some very much deserved national press,” said Andrea Swanson, who purchased Scattoloni Bakery from Foley’s Bakery in 2013. “Unfortunately, that has also meant that it is a more desirable place to be, and for the wealthy, a lucrative place to amass even larger fortunes, much to the distress, and dismay, of locals, who have spent their lives building this city what it is today,” she said.

Earlier this month, Swanson announced on social media that she would close Scattoloni’s operations in Portland and move to Biddeford.

Lolita owners Guy and Stella Hernandez, who reported on social media that Labor Day weekend would end the bistro’s six-year run in Munjoy Hill, will be leaving at the peak of their game. They said this summer was the restaurant’s best ever for revenue, but they have decided to focus on other priorities. It may be the most clear-cut case of owner fatigue of the bunch.

“We simply want to spend more time as a family,” Stella Hernandez said.

The Hernandezes leased the space from R&J Financial Partners LLC, and the prominent location seems ideal to capitalize on the influx of Airbnb guests in the affluent Munjoy Hill neighborhood.

Property value shake-up?

The City of Portland has hired Tyler Technologies CLT Appraisal Services, which has worked with the city’s tax assessor since spring, to revalue real estate. New property values will be implemented in 2021 and tax bills would be distributed to landlords in August.

It’s too soon to know the specifics of the reassessment, but the city expects a third of building owners will pay higher taxes, a third will pay lower and a third will pay the same as they do now. Those who can’t cover the cost of rent could be forced to adapt their business model, or close.

Or, those sitting on property that’s suddenly more valuable than they had realized may be encouraged to sell.

Hewins speculated that this could be the case for Brian Boru, located a block and a half from the Old Port and Commercial Street. In today’s market, the land the property sits on might be the most valuable asset of all.

 



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