More than a dozen restaurants across Penn’s campus have closed in the past two years.
From pricey rents to citations from the Philadelphia Department of Public Health, there are a range of issues that have caused eateries in University City to shut down less than a decade into operation, even though restaurants typically sign leases for 10 year terms.
Most recently, it was announced that a range of upscale food and beverage chains including Goldie, Kensington Quarters, Pitruco Pizza, Little Baby’s Ice Cream and The Juice Merchant stalls are slated to replace the six restaurants of the fast food court on 34th and Walnut that closed in June 2017.
Harvest Seasonal Grill and Wine Bar and Doc Magrogan’s Oyster House, both owned by Dave Magrogan closed in 2017 and 2016, respectively. Harvest permanently ceased operations after five years in April 2017 after closing briefly because of health department violations in 2016 and a fire in January 2017. Doc Magrogan’s shut down in 2016 after four years of citing expensive plumbing problems.
“They struggled a little bit financially, then we [Harvest and Facilities and Real Estate Services] mutually agreed to terminate the lease as a result of that. The fire, I think, may have been the impetus,” Penn’s Executive Director of Real Estate Ed Datz said. FRES is working with the Michael Saloff Company, a real estate broker that represents the University, to evaluate replacement proposals that best meet the community’s needs.
Assistant Professor of Real Estate at Wharton Benjamin Keys said the national boom in urban retail was a reason why rent prices have been increasing, preventing smaller eateries from long-term survival.
“The broader gentrification of West Philly is going to lead to landlords believing that they can command higher rents,” Keys said. Large chains are usually the only eateries that can afford the rents and and manage the “notoriously risky” food business.
Expensive costs associated with maintaining health codes have also led to closures.
Mad Mex, originally Mad 4 Mex, opened its University City location in 1997. But after the Philadelphia Department of Public Health closed it down over summer 2017, the owners announced the permanent closure on Facebook due to prohibitively expensive costs associated with meeting cleanliness standards.
“It’s hard to bounce back from those negative perceptions,” Keys said.
Capogiro, which was formerly on 3925 Walnut Street, opened in May 2009, and closed permanently in September 2017 citing unaffordable rent less than a year after the Philadelphia Department of Public Health temporarily closed it in 2016. The space has been leased but the Radian, which owns the property, declined to state the identity of the new business.
Rising rents also limit the variety and creativity of restaurants on campus.
“You get less experimentation," Keys said. "You get more restaurateurs with a proven track record, but you may get less creative and less entrepreneurship and less opportunities for those just starting out."
Even though eateries around Penn seem to change frequently, the ratio of food and beverage locations to other fixtures like clothing stores has remained consistent over the past five to 10 years, Datz said.
He added that when it comes to determining what eateries to include on campus, student interest is an important factor. Because Penn students enjoy coffee shops, FRES is partial to leasing them, Datz said. There are over eight coffee shops on campus, including United By Blue, which tripled in size this year, Saxby’s, HubBub, Dunkin' Donuts, Metropolitan Bakery and Cafe, and Starbucks.
“We look for people appreciate the fact that coffee is the business, but the ability to sit and study… and have free internet is part of the decision making,” he said.
In addition, despite the swath of closures, the number of restaurants around campus is not likely to decrease. CBRE, the world’s largest real estate and investment firm, named Philadelphia as America’s Great Food City last month, and reported millennials in downtown Philadelphia spend 44 percent of their food budget eating out.