Jun 1, 2022 - Food and Drink

Rising costs close Perch restaurant

The outside of Perch restaurant building.

Perch restaurant building. Photo: Ned Oliver/Axios

Higher costs and a withdrawal of financial backing forced restaurant Perch to close after more than three years in business.

Driving the news: The Scott's Addition, Pacific-inspired seafood restaurant closed abruptly at the end of service Saturday night, chef and co-owner Mike Ledesma confirmed to Axios.

  • Ledesma said high food, rent and labor costs — plus post-pandemic changes in dining habits — were all driving factors behind the closure.
  • But ultimately, he said, his business partner and the financial backer of the restaurant, Kris Collo, made the call. Collo didn't respond to a request for comment.

The big picture: The closing of one of Richmond's hottest restaurants is indicative of the pain restaurants are feeling across the country as inflation drives up prices and the industry struggles to bounce back from a pandemic-era labor shortage.

Zoom in: Ledesma said the challenges of running a full-service restaurant are worse now than during the pandemic.

  • The fixed costs restaurants pay for things like rent, utilities, liquor, labor and food are all way up, with food and labor costs both up about 17% nationally year over year, according to the National Restaurant Association.
  • Some items, like butter, are up 38%, Ledesma said.

The catch: In normal times, businesses would pass those rising costs on to the consumer, but restaurants are still struggling to bring diners back after the pandemic.

  • Plus experts expect restaurant spending to slow as consumers grapple with inflation.

What they're saying: "I feel for everyone in this industry. Everyone's feeling the heat," Ledesma said.

Not helping: Most restaurants, including Perch, haven't been able to return to their pre-pandemic operating hours because of continued industry staffing shortages. Leisure and hospitality employment is still down by 1.4 million — or 8.5% — from its pre-pandemic level, Axios' Emily Peck reports.

  • Perch went from seven days of service before the pandemic to five once it could reopen fully — and never found the staffing to add lunch and brunch back.

What's next: Ledesma said he's trying to help his 40 laid-off staffers find new gigs and has gotten plenty of queries from other owners desperate for the help.

  • His fast casual restaurant, The Coop, is still open for business.

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