SPARTANBURG — Despite recent restaurant closures in downtown Spartanburg, the long-term outlook in the city for dining options remains optimistic.
Economic pressures continue with the escalation of rents, rising food costs, staffing shortages and increases in liquor liability insurance rates. With the most recent restaurant closure — Nacho Taco at North Spring Street — there are five Mexican-style restaurants downtown. The restaurant opened in 2017, ending its seven-year run Feb. 24.
It’s not unusual for 50 percent of restaurants to close less than two years after opening. Nacho Taco was able to surpass this average statistic. In early 2024, another downtown restaurant announced its closure.
The building that formerly housed The Tulip Tree restaurant in downtown Spartanburg is up for lease. The restaurant closed in early 2024.
The Tulip Tree on West Main Street first opened in November 2020 featuring casual fine dining with Southern cuisine. A for lease sign is now displayed in the building’s window. Other restaurants downtown have weathered the most recent economic storm, including Delaney’s Irish Pub next door to the former The Tulip Tree location. Delaney’s is celebrating its 21st anniversary in Spartanburg this year.
“As you know the restaurant scene is always volatile,” said Brian Greene, Delaney’s owner. “With rents higher downtown restaurants are more susceptible. Restaurants get exposed more quickly downtown and don’t have much time to work out issues.”
Greene said Delaney’s current lease was signed before the pandemic. He said any leases signed after the pandemic are much higher. In late 2022, Greene purchased Gerhard’s Cafe on East Main Street in the city. It’s been a popular locally owned cafe for years. The rent for Gerhard’s Cafe is 30 percent higher than the previous lease agreement. Delaney’s in the meantime has enough sales volume to absorb rising costs, unlike some smaller restaurants.
“A lot of places are still locked into leases they had before the pandemic,” Greene said. “Signed leases over the past three years have gone up. There is so much inflation going on and landlords are tying leases to inflation rates and the Consumer Price Index. You used to never have leases like that before.”
Allen Smith, OneSpartanburg President and CEO, told The Post and Courier there’s no need to be alarmed about restaurant closures since the sector always experiences “ebbs and flow.” Payroll cost increases and high inflation are factors in the industry, he said.
Liquor liability insurance a drag on industry“We are seeing the restaurant industry up against a perfect storm,” Smith said. “A drag right now on the industry is the liquor liability insurance issue.”
Greene said the cost of Delaney’s liquor liability insurance has increased from $15,000 to $60,000. He said smaller restaurants serving alcohol with lower sales volume wouldn’t likely be able to survive in the market with higher insurance premiums for liquor liability. He expects additional restaurant closures downtown over the next year.
“I think you will see one or two more close but the long-term prognosis is good with all the new development we are going to see downtown,” Greene said. “In three years we are going to be much more stable.”
Smith agrees.
“It’s a sad thing to see any restaurant close but I think in Spartanburg the future of restaurants is incredibly bright,” Smith said.
“A lot of people remain bullish about our market with ongoing population growth. There are people outside of the market interested in opening restaurants in Spartanburg sooner than later.”
Some restaurants downtown have evolved into a different business model to meet rising costs. Bar 1884 on Magnolia Street first opened in early 2018 and changed its space to private party and private dining only in late 2023.
Bar 1884 at 118-B Magnolia St., Spartanburg opened in 2018. The business model changed in late 2023 to host private events and dining only.
Susan Cohen, South Carolina Restaurant Association president and CEO, said the increases in liquor liability insurance costs have had the most impact over the past two years.
“The liability insurance is so expensive right now and people are having a hard time covering it,” Cohen said. “When you add this on top of other expenses it becomes a critical mass and most restaurants can’t absorb it.”
Cohen said restaurants hit the hardest across the state include independent family-owned businesses. In most cases, restaurants have opted not to raise prices for customers, she said. They have worked to absorb costs without transferring costs to customers.
“Unfortunately, a lot of businesses that are closing are more of the independent uniquely operated that have been in communities for decades,” Cohen said. “They can’t make ends meet.”
