Will Fast-Casual Restaurants Save Mid-Market?

Welcome to Hot Takes, the Eater SF series that addresses burning topics on the minds of restaurant industry workers in the Bay Area — from their perspectives. This week, The Market’s chef Mario Tolentino has some thoughts on Mid-Market, specifically why so many restaurants are struggling in that area.

Here now, Tolentino offers his take on why some restaurants failed and what needs to be done to make the neighborhood thrive.

I’ve been in the restaurant industry for 20 years, and in that time, this is the most competitive food scene yet in San Francisco. I’ve never seen anything like it. With the openings and closings left and right, it's tough out there. You never want to see anybody fail, but perhaps having six full-blown dining establishments [Cadence, Oro, Bon Marche, Dirty Water, The Perennial, Alta] in one and a half blocks might have been a little saturated for an emerging neighborhood like Mid-Market. With two restaurants closing just months later, that is a reality.

Let’s be honest. Mid-Market still has a ways to go — the amount of general traffic in the area has increased and created a different dynamic on the sidewalk — but you still see chronic homeless drug users. Because of that, people aren’t coming here on the weekends, and in the restaurant business, if you don’t have that Friday and Saturday night rush, it’s difficult.

I think there was also a miscalculation a few years back when tech companies announced they’d be moving in. If I were an operator and I saw that Uber, Twitter, et cetera, were all coming in, you’re thinking you have X amount of people in two blocks that are going to need to eat and drink every day for lunch and dinner. But I don’t think a lot of restaurants that opened anticipated the fact that these companies were going to provide so much for their employees, which may have altered what their projections would have been. So if you don’t have something unique and different that these employees don’t get offered at their commissaries inside of their work, then you really need to have something to draw them away from those perks of having all that stuff for free.

That’s what we’re focusing on at The Market. I came in to change the model to a food hall concept modeled after Chelsea Market in New York City, which is one that brings “best in class” local small businesses. We provide subtenants the opportunity to enter an emerging community in a space that requires much less capital than a traditional brick-and-mortar and has steady foot traffic. We also provide help with accounting and staffing through the Delancey Street Foundation and Goodwill. In return, we either charge rent or a percentage of the profits (which is the same model as the Ferry Building), and terms depend on the footprint of the space and business needs.

Now that these changes are in place, our business is growing all the time. Where before we were trying to bring in crowds, now we have to do crowd control. This model is working. In an area perceived as sleepy and impossible to run a successful restaurant, we have about 3,500 transactions a day with 5,000 people walking through daily. Our peak times are from 11:30 a.m. to 2:30 p.m. for lunch and 6 p.m. to 8 p.m. for the after-work crowd stopping in for happy hour food and drink specials.

The majority of our clientele comes from neighboring businesses and nearby residences — we’re targeting the surrounding businesses that don't offer those types of food perks for their employees. That’s the reality of it in terms of customers’ day to day dining: Because their time is limited, they need to be able to grab something, eat it, and go back to work. That’s why we’ve been successful. We’re constantly looking at what our customers want at specific times.

I think the future of the restaurant business, especially in Mid-Market, is the fast casual style that can operate in a smaller footprint with lower start-up costs and fewer employees. That’s why these businesses inside The Market are thriving — because that model works. Change is inevitable, and the way people perceive it and deal with it is the tricky part. Given how volatile the restaurant business is, especially with the current real estate market in SF, we have to adapt, and that’s how I propose this change.

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