Low-end eateries proliferate in The City 

Sipping a coffee or grabbing a sit-down snack in San Francisco could soon become more convenient.

Ambitious baristas, yogurt aficionados and sandwich sellers are seizing on falling commercial rents and vacant storefronts in the wake of the financial meltdown in late 2008.

The number of applications filed with The City to open cafes and low-key eateries in spaces previously used for offices or stores soared 50 percent during the 15 months that followed the September 2008 credit freeze, compared to the same period before the meltdown, an Examiner analysis of Planning Department data found.

One of the permit applications was for a yogurt shop that is planned to open downtown this month in a vacant Montgomery Street storefront that “wouldn’t have been available two years ago,” proprietor Jason Hui said.

“It was always my dream to own my own business,” said Hui, who left his job as a bank branch manager in March and has no business or retail experience. “I feel like I have enough experience from banking.”

Many of the 31 applications filed during the past 15 months to convert storefronts into cafes and small eateries were in San Francisco’s residential neighborhoods; the 21 similar applications filed before the credit freeze were more heavily clustered around San Francisco’s northeastern quadrant.

The number of applications filed to convert storefronts and office spaces into full-service restaurants, on the other hand, was the same before and after the credit crunch: 20.

Meanwhile, 388 eateries opened in San Francisco last year, while 377 were shuttered, San Francisco Health Department data shows. The data covers restaurants, cafeterias, soda fountains and clubs.

That contrasted with the previous two years, when eatery closures outpaced openings.

The average size of eateries in San Francisco has been falling since 2001, according to Kevin Westlye, executive director of the Golden Gate Restaurant Association.

“People are becoming a little more conservative and they’re looking at smaller restaurants in the neighborhoods,” Westlye said.

Westlye linked the spurt of applications to open small eateries to several recession-induced phenomena: The high unemployment rate, low commercial lease rates and popularity of low-cost dining.

“Some of these people may have had a corporate job that was eliminated, so they were given a severance package and they’ve always wanted to have a cafe or a yogurt shop,” he said.

Converting an office or retail space into a restaurant is a costly undertaking that involves filing exhaustive paperwork with The City, according to Louise Dawson, a San Francisco restaurateur-turned-consultant-turned-restaurant broker.

“The minute you do full cooking, you have to put a hood in and go up to the roof,” Dawson said. “In a three- or four-story building, you’re talking $50,000 to $100,000 right off the bat.”

But turning such a space into a sandwich shop or cafe is far less expensive than converting it into a diner where food is cooked.

“It’s easier to take over a traditional retail space and convert it to a cafe if you’re just doing sandwiches, salads and coffees because it doesn’t require a hood. It doesn’t require a lot of the same building permits to transform that space,” Dawson said.

But many of the eateries will fail, particularly those in the neighborhoods where foot traffic is less heavy than it is in the Financial District, Dawson warned.

After racking up $2,504 in city permit fees, Planning Department documents show a hopeful sandwich store operator recently withdrew his application to set up shop in a Cow Hollow neighborhood Pierce Street storefront.

“In [some] neighborhoods, I honestly don’t know how a lot of them make it,” Dawson said.

 

City Hall works to simplify its applications

City officials are working to ease one of the most time-consuming — and costly — impositions that plague founders and owners of eateries.

The San Francisco Office of Small Business is embarking on a project to streamline the process of filing and paying for permit applications, many of which are required by different city departments, Executive Director Regina Dick-Endrizzi said.

“We’re definitely going to be working to smooth the process for restaurateurs,” she said.

Board of Supervisors President David Chiu, a former Small Business Commission member, said he is working with the office in an effort to make city government easier to navigate for small businesses.

“Ideally, a business will get a bill once a year from one department that lists out a small number of fees that they have to pay,” Chiu said.

Restaurant broker Louise Dawson said such a change would have “an incredible impact” for eatery operators.

 

Paying the price


Estimated costs to convert storefronts to small eateries:

Office space at 4675 Mission St. turned into a cafe:
$30,000 plus $1,137 in city fees.

Retail store at 2045 Irving St. turned into a yogurt shop:
$50,000 plus $3,091 in city fees

Vacant space at 1161 Mission St. turned into a cafe:
$80,000 plus $7,706 in city fees

Vacant retail store at 101 California St. turned into a yogurt shop:
$110,000 + $8,488 in city fees

Retail store at 195 Fifth Ave. turned into a cafe:
$20,000 plus $2,147 in city fees

Vacant retail store at 101 California St. turned into a yogurt shop:
$110,000 + $8,488 in city fees

Beauty shop at 5017 Geary Blvd. turned into a cafe:
$15,000 plus $921 in city fees

Office space at 1143 Taraval St. turned into a cafe:
$9,000 plus $1,188 in city fees

Source: San Francisco Planning Department

 

Change in trends


Applications to convert storefronts into new uses before and after the economic downturn:

BEFORE
July 2007 to September 2008
21 Cafes
20 Restaurants
3 Bars
5 Fast food

AFTER
October 2008 to December 2009
31 Cafes
20 Restaurants
5 Bars
3 Fast food

Source: Analysis of Planning Department records

 

Open and shut case


388 San Francisco eateries that opened in 2009

377 San Francisco eateries that closed in 2009

303 San Francisco eateries that opened in 2007

490 San Francisco eateries that closed in 2007

* The Department of Public Health defines an eatery
as any establishment that is licensed to serve food

jupton@sfexaminer.com

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