The COVID-19 pandemic put strains on Lincoln restaurants, but as restrictions lifted, a majority of new restaurants that opened are locally owned.
The trend of local restaurants outpacing the opening of chain restaurants has been occurring in the city since 2018. And it’s a trend that may become the new normal, according to restaurateurs and commercial real estate agents.
Of the 26 new restaurants that opened in Lincoln in 2021,16 were locally owned and 10 were national chains.
The trend was even more stark in 2020, when only 18% of new restaurants were franchises.That year, 24 locally owned restaurants were opened with only five new chain establishments. And the year before that, in 2019, 21 new local restaurants opened, compared to only nine chain restaurants.
One reason for the recent stronger showing by locally owned restaurants is that their owners are more nimble, said Erik Hustad, a restaurant industry veteran with 20 years of experience who owns Ground Up Restaurants, which operates Honest Abe’s.
“The barrier for entry on opening an original concept is also much lower than that of a franchise,” Hustad said. “When you open a franchise, you typically need a fairly large sum of money and have to play by the rules of the franchisor, whereas an individual looking to set out on their own path can bootstrap a concept with very little capital and a lot of creativity.”
And for local owners who pay attention to their customers, the benefits can be great, Hustad said.
“Lincoln has been a pretty good market for most of our restaurants,” Hustad said. “There are always challenges in figuring out what the local population wants and is willing to try, but if you pay attention and aren’t afraid to make changes, it’s something that can be navigated fairly well.”
During the pandemic, franchises may have been pulling back, investing in decorating and remodeling, instead of opening up more restaurants, said Robin Eschilman, a Lincoln commercial real estate agent.
“Some of them (franchise restaurants) were pivoting during the pandemic and doing different things rather than opening new stores,” she said. “So, that makes it easier for a local person with a dream to go in and get space that maybe ordinarily, a franchise might have grabbed.”
Eschilman and her husband, Ted, who own Eschilman Real Estate, have been keeping close tabs on Lincoln restaurants since 2014. They organize and run the Grow Lincoln radio program and podcast that is hosted on KLIN. A feature of the show focuses on restaurants.
Their tracking system provides a unique perspective of the Lincoln restaurant scene. From their data, the trend of local restaurants leading the charge in openings could continue into the 2020s, whereas beforehand, that wasn’t the case.
In 2018, the number of new local restaurants and chains were deadlocked at 50-50; a trend that is much different then in past years where franchises outnumbered new local restaurants.
According to the Eschilmans, many national retailers began to pull their stores out of malls, resulting in more malls closing around the country. With many franchise restaurants located in malls, many of those restaurants had to either close or relocate due to malls closing around the country. NBC News reported that more than 9,300 hundred stores closed in 2019, a 63% increase from the previous year.
According to the Eschilmans, the situation for all restaurants could have been a lot worse in the height of the pandemic if it weren’t for the Paycheck Protection Program. That is a loan program that originated from the Coronavirus Aid, Relief and Economic Security (CARES) Act. It was originally a $350 billion program intended to provide American small businesses with eight weeks of cash-flow assistance through 100% federally guaranteed loans.
That act was instrumental in keeping thousands of local businesses afloat during the pandemic including in Lincoln, according to the Eschilmans. In fact, it was an enormous help for Hustad and his restaurants..
“The PPP was very helpful in getting our business through the pandemic,” Hustad said. “It’s hard to say how things would have turned out had we not received that assistance.”
And even with the assistance of the Paycheck Protection Program, it has still been a hard year for Hustad and his business.
“The pandemic has certainly made operating a restaurant more difficult,” Hustad said. “Guests and employees alike have been much more cautious and lots of new innovations have had to be utilized to make it work.”
But despite the challenges that he has faced, Hustad still believes that Lincoln is a great market and a place for local restaurants to thrive if they find the right audience for their food.
“Lincoln has been a pretty good market for most of our restaurants,” Hustad said. “There are always challenges in figuring out what the local population wants and is willing to try, but if you pay attention and aren’t afraid to make changes, it’s something that can be navigated fairly well.”
