Local restaurant owner explains why so many San Francisco eateries are closing

SAN FRANCISCO (KGO) -- A recent story by ABC7 News about the string of restaurants closing in San Francisco generated a lot of response.

So we wanted to look into this issue deeper. What's going on that's hurting local restaurants?

We sat down with Stacy Jed, the co-owner of Bluestem Brasserie and the president of the Golden Gate Restaurant Association, to get her take.

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According to Jed, historically in San Francisco, there has been an equal number of restaurant openings and closings every year. But that's no longer the case.

"About two years ago, we started to see this trend starting where we're seeing more closings than openings," Jed explained. "We're on track for nine percent less openings than closings. And we don't know what 2019 will bring."

The Golden Gate Restaurant Association looked at numbers from Yelp and found that last year 325 restaurants in San Francisco closed versus 298 that opened. They anticipate this year there will be even more closures, despite what's considered to be a strong economy.

A factor in these closures is changing eating habits and the rise in food delivery services, however, restaurants owners like Jed are quick to point out there's more to the issue.

LIST: Historic Bay Area Restaurant closures

To start, Jed explained, opening a restaurant in San Francisco is in and of itself challenging.

"If you're opening a restaurant, you have an average of 22 permits you have to file and pay for," she said. "Then once you get your doors open, the cost of labor and healthcare have really dampened the sustainability of restaurants in the city."

Over the past five years, minimum wage has gone up $1.00 every year. Jed explained that when an employer adds in benefits it comes out to roughly an additional $1.30. For Jed, who has 90 employees, that has translated to an additional $30,000 a month increase to her bottom line of labor.

"So for each year of dollar increase, $30,000 increase, cumulative $60,000 increase, cumulative $120,000 increase," she said, "And you start to do the math, if you're not bringing in more income, you're at a net zero gain."

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Additionally, retail stores closing has also impacted many restaurants, which lose foot traffic if they're surrounded by empty storefronts. And there's a labor shortage. People can't afford to live in San Francisco.

"It's a compounded issue. We have not only rising costs to the business translating to reducing hours for them to be able to work, but we also have a rising cost in our rent, we have rising cost in food costs, we have rising cost in the rent our staff are able to live here," she said. "So everything has increased, and it's just making it unsustainable."

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