With many restaurants operating on razor-thin profit margins, being on the fault line of local construction projects -- especially those that stretch over years -- can be a major blow to their bottom line. Some local restaurants are reporting drops in business of up to 40 percent -- and a few have even closed -- as they lose customers to a growing list of restaurants where parking is easier, traffic is lighter, noise pollution is minimal and debris is hardly an issue.
As restaurants swallow losses, community groups and developers are in various stages of acknowledging or addressing how much the work hurts surrounding businesses in the short term.
In other cities, restaurants and shops can apply for loans and are considered for tax relief. Yet Pittsburgh does not have plans that would help businesses taking a hit. In Washington, D.C., for example, business owners in the U Street neighborhood were eligible for no-interest D.C. Department of Small and Local Business Development loans during a streetscape rehabilitation project in 2012-13.
"The city has plenty of small business loans, including several that can benefit restaurants that may be renovating or relocating, but nothing that would offset the financial strain of construction,“ said the councilman for the 8th District, Daniel Gilman. ”It’s an idea that I’d seriously consider.“
Smallman Street construction
The midday-crowd at Lidia’s has thinned as construction takes a toll. A financial backer of the restaurant, Walnut Capital, is also behind the demolition and construction next door that started in April to create a 160-room Hilton Homewood Suites Hotel. It is scheduled to open in June 2015.
Construction has “definitely had an effect on business,” said Adam Greiner, general manager of Lidia’s. The restaurant is considering offering lunchtime valet service to ease parking issues for customers.
“As their landlord, we’re happy to say that Lidia’s renewed the lease in January and that she [Lidia Bastianich] is committed to Pittsburgh,” said Gregg Perelman, managing partner of Walnut Capital.
Ms. Bastianich has four New York restaurants and one in Kansas City. The chef, TV host and cookbook author is also the founder and president of Tavola Productions.
Mr. Perelman said Walnut Capital has boosted marketing efforts for Lidia’s during construction, including signs along Smallman and extra promotion elsewhere and on social media.
“We have good rapport with the landlord and the construction crew,” said Mr. Greiner, noting that work stops at dinner hour and, at lunchtime, workers head to projects on the far end, away from the restaurant.
The restaurant that’s been open since 2001 will make cosmetic changes in time for the hotel debut. “It gives everyone the opportunity to refresh before the hotel opens next door, which will provide major opportunity for them,” Mr. Perelman said.
As the summer wears on, restaurants may take more of a hit as people flock to outdoor dining, leave town on vacation or take advantage of the bounty of the growing season to eat at home. Yet Lidia’s remains focused on the long term. Mr. Greiner cited an era when after-work in the Strip meant late-night clubs rather than hotels, restaurants and shopping.
“We’re looking forward to having good neighbors,” he said.
A couple of blocks away, Eleven is not yet seeing an effect of the Smallman Street construction, said Bill Fuller, corporate chef of Big Burrito. But he fears the effect of a second project slated to begin within the month, the Schreiber Real Estate’s 59-unit apartment complex named 1100 Smallman, that will take at least a year to build. “If there’s going to be construction on both sides of us, that’s going to be a mess,” he said.
He cited last year’s work on the South Highland Avenue Bridge and its effects on Casbah, another Big Burrito restaurant, during the eight-month project. “It affected us less in the beginning, but by the end, people were sick of it,” he said.
As soon as the bridge reopened in October, “business improved immediately.”
Squirrel Hill tunnel and Brookline Blvd. rehabilitation
Last weekend’s closing of the inbound Squirrel Hill tunnel was a strain on Regent Square restaurants, including Istanbul Sofra, a new Turkish restaurant that opened in the former Alma space at Forbes and Braddock avenues in April. From 9 p.m. Friday through 5 a.m. Monday all of the Parkway East traffic was detoured up the narrow, two-lane road that runs through the Regent Square business district -- freezing the neighborhood in gridlock for much of the weekend.
“It affected us a lot,” said co-owner Adnan Pehlivan.
A few blocks south on Braddock Avenue, Keith Fuller’s Root 174 was also slow. “We were dead,” he said. The chef-owner of the restaurant said that closings due to tunnel construction in 2012 hurt his business eight months after he opened, with sales plummeting by 40 percent. Mr. Fuller said he saw a similar drop this past weekend compared to weekends when the tunnel has remained open.
The $50 million to $60 million renovation of the Squirrel Hill tunnel started in February 2012 and is scheduled to continue through this summer, with inbound and outbound lane closures weeknights and weekends.
Nearly 10 miles from Regent Square, the Brookline Boulevard reconstruction project that began in March 2013 and will continue through the summer involves fixing sidewalks, expanding curbs, replacing lights, repaving the road and planting trees. So far, three businesses have closed, blaming the slowdown on the construction, including Tisha’s Sunny Farms at 600 Brookline Blvd. and Isis Cafe at 815 Brookline Blvd. Isis was the city’s only Egyptian restaurant, which had opened a month before construction began.
And it’s taking a toll on businesses strong enough to remain open during the work. Nathan Mallory, owner of Cannon Coffee at 802 Brookline Blvd. as well as the vice-president of the Brookline Chamber of Commerce, said he lost $70,000 this year because of construction and that his business is down this year by 30 percent.
An upside of the construction, he said, is that existing businesses are updating their facades. But the short-term effects are that new businesses are wary to set up in Brookline. Between that and losing money, “it has been an absolute disaster,” he said.
Penn Avenue project
Over in Garfield, the Penn Avenue project has been clobbering restaurants. The project has been nearly 10 years in the making, a plan that includes a replaced road, curbs, sidewalks, benches, utility poles and landscaping.
The two-phase, $10 million project began in August 2013 and was supposed to be completed in December. Instead, the first phase will stretch through January 2015.
“We’re finding utilities that we didn’t know were there and utilities we knew were there but weren’t where we thought. So we had to adjust the plans,” Pat Hassett told the Post-Gazette in April. Mr. Hassett is Pittsburgh’s assistant public works director for transportation and engineering.
Spak Brothers Pizza at 5107 Penn Ave. said it has lost business, along with Pho Minh at 4917 Penn Ave. and People’s Indian Restaurant at 5147 Penn Ave.
“We have certainly seen an effect,” said Ryan Spak, co-owner of Spak Brothers. He said it’s hard to put a dollar sign on losses. “Honestly, I think it’s getting worse. I think people are avoiding the whole corridor like the plague.”
Aggie Brose, deputy director of the Bloomfield-Garfield Corp., said she has not received complaints from restaurants in the stretch. She cited People’s Indian Restaurant as “not affected,” because they haven’t registered complaints that would be addressed in bi-weekly meetings with Michael Baker Corp., the engineering firm chosen as the liaison between contractors, businesses and property owners.
And she said that Spak Brothers’ “loyal client base” has left the restaurant relatively unscathed.
Neither Kuldip Pabla, an employee at People’s Indian Restaurant, nor Mr. Spak concurred.
“It’s been almost a year now, and it’s been really bad, believe me,” said Mr. Pabla. He said both the restaurant and their grocery store across the street are suffering losses.
“We do have the best customers, but we’re definitely seeing a lot less impulse walk-in and drive-by business,” Mr. Spak said.
Phase two of the project will likely begin in the summer of 2015. It will tie up Penn Avenue from Evaline to Graham streets.
Ms. Brose said she hadn’t heard any talk of financial assistance for businesses affected by construction.
Though Salt of the Earth and Verde are a few blocks from the work, they said they are seeing a residual effect during this first phase.
“It certainly hasn’t helped,” said Chad Townsend, executive chef of Salt. He said the transition in the kitchen leadership has also caused business fluctuations. Mr. Townsend took over the kitchen from Kevin Sousa when he departed to focus on his Superior Motors, a restaurant that will open in Braddock in 2015.
Jeff Catalina, owner of Verde Mexican Kitchen & Cantina, had a more definitive answer. “It’s difficult to market lunch to the hundreds of people connected to Children’s Hospital,” he said, referring to the nearly 300-bed, nine-story hospital a few blocks west of Verde on Penn Avenue. “They’re so close, yet they don’t have a direct line to Verde. There’s no incentive to visit during lunch hour because of the detours.”
He acknowledged the rehabilitation project is “a necessary evil” and it helps that Bloomfield-Garfield Corp. has been “very communicative.”
But he’s seeing the effect the construction has had well into the dinner hour. And he’s anxious about the next phase.
“Our guests say that it’s a hassle for sure.”
Melissa McCart: 412-263-1198 or on Twitter @melissamccart.