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Experts: Nashville's Food Bubble Has Burst

Posted at 6:38 PM, Feb 27, 2018
and last updated 2018-02-27 20:37:39-05

According to food experts, Nashville's restaurant bubble has burst because there are too many restaurants and not enough customers.

"There are more restaurants than we got bodies to fill them and until demand equals supply, we're not going to see much growth in the restaurant industry," said Bonnie Riggs, a restaurant industry analyst with The NPD Group.

Nashville has become a hot destination for tourists and restaurateurs with 51 new restaurants expected to open in downtown, according to the Nashville Convention and Visitors Corp.

However, even a booming city can't prevent closures for both longtime and new businesses.

Most recently, well-known locations like Gerst Haus and Provence in Hillsboro Village shuttered its doors. Lulu on Jefferson Street also closed this month.

Riggs said there are 5,582 restaurants in Nashville as of Fall 2017. Overall, the number has dropped 2 percent compared to 2016. 

While the number may not seem high, it is a slight and first decline after a steady growth since 2011.

"Restaurants in major markets across the country are struggling to adjust to labor shortages, increased health care cost, rising food cost, steep rents and the expectations of today's consumer," added Riggs.

Out of 210 markets Riggs studied, only 18, majority of which are smaller cities, saw a restaurant industry expansion because of its population growth, business friendly market, strong community involvement and unique food.

In Nashville, there are 3,067 chain restaurants - a 2 percent increase compared to fall 2016. There were 2,515 independent restaurants (one or two locations) in the city - a 5 percent decline.

"The independent restaurant has the biggest challenge because they don't have the marketing clout of the chains," said Riggs.

Riggs said consumer tastes have changed and would want more of an 'experience' when going to a restaurant.

Staying relevant is important but it could be tough for older restaurants serving a changing consumer market. As of Fall 2017, there were 12,862 restaurants in Tennessee. 

"We still made 61 billion visits to restaurants in 2017. It's not that we're not going to restaurants, we're just not going as often and we have so many choices," said Riggs.