AQ to Shutter This Month, Joining the Mid-Market Massacre

AQ will close this month, signaling a painful fall from grace after years of accolades from the likes of James Beard, The Chronicle, Esquire, and Bon Appetit. Thrillist announced the closure in a dramatic feature on the restaurant bubble that they claim is about to pop, with AQ as exhibit A.

Though Thrillist points to “rising labor costs, rent increases, a pandemic of similar restaurants, demanding customers unwilling to come to terms with higher prices” as all the reasons cited for this closure, the numbers point to financial issues. Despite bringing in more money in revenue each year, AQ’s net profit kept going down. Specifically, it grossed $250,000 with an 8.5 percent margin when it opened in 2012, but by 2015 was only making $40,000 in net profit, with a 1.5 percent margin. That’s due to a number of factors, the biggest of which was paying health care and labor costs for its employees. Beyond rising costs, people simply stopped going to AQ. At its peak, the seasonally-focused restaurant was serving 240 people per night, which in 2016 went down to 100 covers a night.

With those numbers in mind, owners Matt Semmelhack and Mark Liberman will be closing the restaurant this month. What started as a highly-heralded restaurant (and longtime Eater Essential) when it opened, popular for its oft-changing fare and focus on seasonality, will end alongside a rash of closures in the same neighborhood.

In 2016, the Mid-Market/SoMa area claimed Volta, Cadence, Oro, Bon Marche (another of Semmelhack’s restaurants), Merigan Sub Shop, El Capitan, Citizen’s Band and Pinkie’s Bakery. Restaurateurs have been struggling to maintain thriving businesses in an area that empties out after work and is not always a pleasant or safe place to visit after dark.

According to the Thrillist piece, several buyers are currently interested in the AQ space (including a pizza restaurant), and parent company Mercer Restaurant Group will focus on Fenix, the only of its restaurants that is still open in San Francisco. Liberman plans to leave Mercer to open his own restaurant, according to Inside Scoop. Stay tuned for more details on AQ’s closing date.

• There’s a Massive Restaurant Industry Bubble, and It’s About to Burst [Thrillist]
• All Coverage of AQ [ESF]
• AQ plans to close this month [Inside Scoop]