Construction Cluster#%$!

Last December I sat down to write about the state of the Shiba Ramen business, two years in. But as my last post explained, I dialed out for the past nine months, and I'm just revisiting this now. At this point, we're closing in on three years. A year and a half since we opened the second Shiba Ramen, and a year since The Periodic Table. Pretty unbelievable. Out of necessity, there haven't been any new projects in the works in 2018. I'd rather have something significant in the works, though, so I'm taking baby steps toward the Shiba Ramen franchise program. I want to be taking big leaps by 2019. Right now, I'm just wrapping my mind around it, but I'm getting ready to start drafting documents. I feel like a little work on Ramen Chemistry will motivate me. 

The franchise program has to be a major goal, because we want to focus on growing the brand and getting a licensing stream going. Especially that licensing stream, you know what I mean? In general, I'd much rather be building the concept than doing day-to-day maintenance or store-level operations. Not that I've done much in the way of operations, especially after the first year. This year, it's been mostly general counsel tasks, and some marketing and special events. I've always done all the social media for both concepts--Instagram, Facebook, and some website stuff--but my efforts have been increasingly insufficient. I'm just not focused on it enough. I'm not regularly in the stores, and I lack the ability to generate the constant stream of content needed to keep it fresh and interesting. It would be great to have the budget to outsource and build on the e-marketing program, but we're not there yet. You go to war with the army you have, not the army you might want. Donald Rumsfeld said that. I'm pretty sure I've used that quote on this blog before. It never stops being relevant.   

Great Food in Emeryville.  Pig in a Pickle opens soon.  C-Casa and Fish Face are recent additions. Chef Cat Li makes some incredible macarons at Oui Oui (photo credit Please come eat their food!

Great Food in Emeryville. Pig in a Pickle opens soon.  C-Casa and Fish Face are recent additions. Chef Cat Li makes some incredible macarons at Oui Oui (photo credit Please come eat their food!

The big story of the year has been recovery from the construction at Public Market Emeryville. What a shitshow that's been. From around March to December 2017, the road and parking in front of the market were turned into a gaping mud pit, when they rerouted the road to make space for a new parking deck and some retail spaces across the street. Continual delays pushed the construction into our winter busy season, by which point sales had deteriorated significantly relative to the prior year, despite our having raised prices. The parking landscape was constantly evolving through the entire period. Access was disrupted and the number of available spaces was insufficient at peak times. Signage and customer education were perpetually short of where they needed to be to maintain traffic.    

When the rerouted road finally opened in mid-December, the disruption actually got worse. The parking logistics changed (again), with barely any guidance for customers, and many of the access points still not open. The sole usable entrance to the main lot was indicated with unlighted 8.5" x 11" signs taped onto sandwich boards. Predictably enough, sales during what should have been one of the year's busiest periods got decapitated. In December 2017, we sold $20,000 less than December 2016, despite higher prices. We'd been looking forward to a robust winter season to get our cash situation back on track after a year full of our own construction expenses and disappointing Public Market sales. The whole episode really left us hurting when the (still ongoing) slow season hit in the spring.  

December 19, 2017.  The scene at peak dinner time during peak shopping season. 

December 19, 2017. The scene at peak dinner time during peak shopping season. 

And that's not the end of it. Concurrently with the road relocation, the complex added a parking deck with a ground floor grocery. for New Seasons Market, a Portland-based Whole Foods-type concept. The promise of an anchor grocery opening was huge, and was supposed to provide a boost to overall traffic at the end of 2017. Originally, New Seasons was slated to open in October, but the opening kept getting put off throughout the fall. Then in December, it was announced that New Seasons decided to pull out of the project entirely! New Seasons built a grocery store. Its signs were up. It had its shopping carts on-site. And then it decided not to move in. The company abandoned its entire expansion into the Bay Area. The store it opened in Silicon Valley earlier in the year apparently did a small fraction of projected sales, causing it to close that store, walk away from the Public Market project at the 11th hour, and pull out of two other projects at various stages of development. What a fucking disaster, right? So here we are in September 2018, and the they still don't have a new tenant lined up for the grocery space. The New Seasons signs are still up. Once they find a new tenant, who knows how long it's going to take for it to make the inevitable alterations to the space? I'll be surprised if a grocery is operating in September 2019.    

Last month, we got word of another twist in this woeful tale. The developers decided to call off building the parking/retail structure across from the Market because of cost issues. As far as we understand it, the whole purpose of moving the road was to accommodate this new structure. So, you ask, what was the point of all the headache and expense? If you come up with a good answer, we'd love to hear it, because we can't think of one. The silver lining is that the specter of construction will dissipate as the site gets converted into convenient surface parking this fall, rather than being torn up for another year. Other positives in the near future are the completion of around 300 new residential units at the edge of the project, along with the opening of a new playground and dog park. Most of those units are slated to start leasing in the next six months, and it looks like the construction is on track to make that happen. The playground is opening this month. Should help with traffic. 

Above Left.  So-called Parcel B shown in rendering, with lots of sunglasses-wearing customers walking toward the food hall, presumably to buy drinks at The Periodic Table. Above Right. Recent view of Parcel B, as it has looked for the bulk of the year. It's about to be paved. Photo credit

Near term, we're nervous about the continued dilution of the existing customer base as more restaurant and bar concepts open inside Public Market this fall. We've had the sense that customers are maybe, finally, maybe starting to come back after eighteen months of disruption. That's still a big maybe, because we've only seen real improvement for about a month, and don't have enough data to draw any clear conclusions. But three new concepts are opening in September, requiring hundreds more customers per day to maintain the existing (and totally insufficient, by the way, if the goal is to make money) per-tenant volume. I can predict with some confidence that all the needed customers aren't just going to magically show up overnight, so we're bracing ourselves for another setback. At least the rainy season is coming, hopefully earlier than it did last year. People eat a lot more ramen when it's dark, rainy, and cold. As I've said before, we pray to the rain gods at our house.

The whole episode has been pretty brutal for the Public Market tenants. These are largely small, family-run businesses without ready access to capital or debt. Most are single-location, or a very small (2-3 store) chains, and most of the owners work in the stores to varying degrees. Some of the newer concepts opened to dramatically lower sales than anticipated. Everybody has been limping along, Meanwhile, the City of Emeryville just raised the minimum wage for the third time since we opened in December 2015. It's no wonder we're charging $2.50 more per ramen than we were 30 months ago. 

The one thing I will say is that Public Market has an increasing amount of great food. We're pumped for Pig in a Pickle to open in a few weeks. Amazing barbecue concept from a former French Laundry chef, Damon Stainbrook. He's got a location in Corte Madera we checked out earlier this summer, and it's going to be a huge hit in Emeryville. He's already installed a giant meat smoker in his kiosk. C-Casa (gourmet tacos and Mexican fare) and Fish Face (poke from accomplished sushi chef Billy Ngo) both opened last year. Paradita does fantastic Peruvian street food. Hot Italian has my favorite thin-crust pizza. And a lot of charges from Oui Oui (macarons) and Mr. Dewie's (cashew ice cream) appear on my credit card every month. There are a bunch of other good concepts in the food hall, too, and Super Duper Burger just announced a lease for a full restaurant space. The food, at least, is cause for optimism.