Charleston is seeing a wave of restaurant closures. What’s causing it?

CHARLESTON, S.C. (WCBD) — It is no secret Charleston is home to many delicious restaurants — even being named one of the best food destinations in the country. But despite the rankings, the city has not been immune to restaurant turnover.

In the last month and a half, at least eight local bars and restaurants have closed their doors for good. Some shut down before their first anniversary, while others said goodbye after decades in the community.

Cru Café closed on Sept. 28 after 23 years of serving the Lowcountry. The restaurant’s owner, John Zucker, announced the closure on social media. “Restaurants are living, breathing things. They thrive when they have the people to support them. And right now, the industry is in the middle of a storm that we just can’t fight anymore,” he wrote in the post.

Staying open for decades in the community is no easy feat in an industry constantly churning. Data from the National Restaurant Association shows around 60% of restaurants fail within their first year and nearly 80% close within five years.

Jennifer Ferrebee, who owns Verde alongside her husband, has seen the changes firsthand as they opened their first location in 2011 on King Street.

“We have seen every different retailer, restaurant, we’ve seen every changeover on King — it’s such a different landscape,” she said.

Throughout their 13 years in business, they have endured many challenges like every other restaurant owner — including rising costs of food and rent. In 2023, high prices and changes in dining habits brought on by the pandemic pushed them to relocate from their flagship location on middle King Street to a smaller space on upper King.

“When we opened on King in 2011, I think we had 50 seats in the dining room and that would just be a silly waste of retail space now,” Ferrebee said. “Obviously post-2020 the amount of to-go orders has just increased and our amount of dine-in has decreased — and that’s across the board in all restaurants.”

Some restaurants in the area that are unable to adapt to the changes are facing a more difficult fate.

“You’ll have restaurants that pop up, become super popular, something changes whether it’s internal or external and then they may go away — but it’s the life cycle of retail,” explained Will Sherrod, a retail broker at NAI Charleston.

He said the low inventory of commercial space is fueling rising rent prices. In turn, business owners are facing further obstacles.

“Landlords don’t necessarily don’t have to give a lot of incentives to get tenants in there because there’s not much space to compete with,” he said.

In addition, many restaurants and bars in South Carolina are also taking on another unique hurdle — rising liquor liability insurance rates.

A 2017 law mandates businesses serving alcohol past 5 p.m. to carry at least $1 million in liquor liability insurance. It was passed to ensure victims of alcohol-related incidents receive proper compensation. However, the change has resulted in steeper rates for business owners.

“Next to rent it is our biggest expense,” said Todd Miller, owner of Community Crafthouse. “Fast forward to October of this year, we got our renewal policy and it more than doubled from $17,000 to almost $40,000.”

This has become another factor in the perfect storm that is shrinking profit margins for business owners.

“I would say probably around 10 different clients that we as an agency have lost because they can’t afford the premiums,” explained Ben Hebel, a producer at KSA Insurance.

When it comes to solutions, Hebel believes state-level changes could prevent more establishments from going out of business.

“Reach out to some of the other states that don’t have this issue,” he said, “Reach out to insurance carriers that will have this conversation with us and see what we can do to make this a level playing field.”

In the meantime, as other economic challenges persist, local retailers may need to get creative to stay profitable.

“I think basically your retailers are just going to have to adjust to what these rates are nowadays,” said Sherrod. “Hopefully we can find the side streets maybe pop up and have more opportunities for local flair.”

On the other hand, it’s not just up to the businesses. Consumers can also play a major role in helping keep the doors open by supporting their favorite spots.

“Educating yourself about which restaurants are locally owned and continuing to support those as much as possible is important,” Ferrebee said.