Mobile’s flagship restaurant is closing down. Spot of Tea, located at 310 Dauphin Street in downtown Mobile, has closed its doors after 30 years in business. It becomes the latest small family-owned restaurant to shut down in a wave that has swept over the industry across the country.
Why Is Spot of Tea Closing?
Restaurants nationwide, especially non-chain restaurants, have been struggling for some time. Spot of Tea had issues with the health department, including plenty of drama, but those issues were likely exacerbated by the current brutal business environment that restaurants face.
Restaurants are low-margin businesses. They don’t make a ton of profit on each item sold. As a result, they usually create low-paying jobs. This makes it hard to attract good employees. Staff issues have plagued restaurants since time immemorial, but they have worsened in the past few decades as the cost of living has risen dramatically.
The pandemic took these issues and magnified them. On top of that, supply chain problems caused inflation to skyrocket, forcing restaurants to further raise menu prices. Rising fuel and shelter costs are pinching consumers’ pockets. Many have had to cut dining out from their budget.
I don’t have access to Spot of Tea’s financial records to know how much this affected their particular business, but these factors affected all restaurants to some degree. Their pressing issue seems to be with the health department, but in a better business environment, they may have been able to overcome those issues.
Too Many Restaurants?
I worked in the restaurant industry for many years, and there is another problem I’ve noticed for some time that doesn’t get mentioned enough. There are simply too many restaurants out there, particularly chain restaurants. The number of restaurants serving the same niche has exploded, and that is a big reason so many continue to struggle.
Think of how many restaurants in Mobile alone serve fried chicken. Now don’t get me wrong, I love fried chicken just as much as the next guy. But the market is saturated. At one point Saraland boasted Hart’s Fried Chicken, Church’s Chicken, KFC, Foosackly’s, Goldfingers, and Zaxby’s. All that for a town with a population of around 16,000.
Another example is the generic chains like O’Charly’s, TGI Fridays, Applebees, Chilis, and a host of others. These restaurants have broad menus without any sort of specialty. We’ve already seen most of the O’Charlys in the area close down, and other chains are sure to follow.
The problem with having so many chain restaurants is that we do not have the workforce to supply the low-wage labor they require. You can’t say nobody wants to work when the unemployment rate is less than 4% and unemployment claims are at record lows. Everybody and their grandma is working!
Market Correction
This is America, where you are free to open any type of business you desire. However, success is not your entitlement. Too many chains have opened their doors in recent years, and in my opinion, we are in the beginnings of a market correction for the restaurant industry.
In the North Mobile area, I believe any further restaurants that open are destined to further. The market is overloaded. The rare exceptions would be Chic-Fil-A (another chicken restaurant!?) and perhaps a steakhouse because the area is lacking one. Anything else is going to struggle amongst the sea of restaurants that already exist.
Another restaurant is likely to take Spot of Tea’s spot if it fails to reopen. In downtown Mobile, it may stand a chance. But the downtown scene has gotten quite competitive in the past decade or so. Another generic chain is likely to fall victim to the ongoing market correction that the industry is enduring.