Downtown LA’s Once-Unstoppable Restaurant Scene Now Faces an Uncertain Future

In June, Emil Eyvazoff was deep in preparation. His Downtown restaurants 71 Above and Takami Sushi & Robata hadn’t served a single dish since mid-March, and he was shuttling the half mile back and forth between both businesses in anticipation of his July 13 reopenings. Chef Javier Lopez tested new recipes with staff at 71 Above, while chef Takashi Ota ordered seafood and produce from purveyors for Takami’s yellowtail carpaccio, lemon albacore rolls, and sea bass robata. Eyvazoff bought face shields for the staff and installed safety equipment like plexiglass, air purifiers, an ultraviolet germicidal light system, and ionizers inside the HVAC systems.

Over at Takami, ample outdoor seating made it less costly to implement new safety protocols. But still, he found the process and price similar to that of a grand opening.

Eyvazoff’s restaurants had not brought in revenue for three months, so he took a cautious approach to reopening. He considered doing takeout and delivery, but picking up from a restaurant inside the U.S. Bank Tower proved logistically challenging. Customers and delivery drivers would need to find parking, check in at security, then take two elevators before stepping inside the restaurant. While state and local officials implemented strict requirements to limit the spread of COVID-19 in restaurants, Eyvazoff waited.

“I didn’t pull the trigger to open immediately,” says Eyvazoff. “It felt like too much, too fast.”

That fast pace started a few months prior, when news about LA restaurants reopening came down the pipeline on May 29. LA County public health director Barbara Ferrer held a press conference to announce that Los Angeles’s dining rooms could finally reopen. “If you can operate under the directives”, said Ferrer, “then yes, the order goes into effect today.” This left businesses scrambling to order inventory and equipment, and to notify staff, but a day later, demonstrations against police brutality began. Eyvazoff watched fellow restaurant owners open dining rooms, only to temporarily close operations again while the city experienced unrest. After waiting for over a month, Eyvazoff was blindsided by California Gov. Gavin Newsom’s announcement on July 1.

Just before July 4 weekend, coronavirus cases rose in LA County. Eyvazoff watched his reopening efforts come to a full stop as Newsom toggled back California’s reopening plans and ordered the immediate closure of indoor dining in LA County, just six weeks after restaurant dining rooms were allowed to reopen. Dining was restricted to outdoor areas only. Though Takami would be able to proceed with a limited reopening, 71 Above would have to remain closed.

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Well before the onset of the novel coronavirus, Downtown operators like Eyvazoff dealt with complications unique to this neighborhood. In the early 2000s, before Downtown became an influential dining destination, office workers left work and abandoned the area at 5 p.m. Grand Central Market struggled to find its audience, and many buildings stood abandoned or in disrepair. The period between the mid-2000s and 2020 brought immense economic development to the area, making it a bona fide destination to live, work, and visit. But challenges presented by COVID-19 have triggered a neighborhood regression: Fewer tourists and a significant decrease in the number of Downtown workers due to office closures have led to virtually empty streets.

This has clearly impacted its restaurant industry, too: Six months of severely reduced sales, several prominent restaurant closures, and other local challenges have stymied the neighborhood’s explosive growth period. With most restaurants currently in survival mode, the community-minded initiatives that built Downtown into one of LA’s most dynamic areas appear to be largely absent in 2020. If conditions don’t improve and businesses fail to receive the support they sorely need, the coronavirus could undo the neighborhood.

Prior to March, Downtown’s nearly five-square-mile area was bustling. Vehicle and pedestrian traffic resembled parts of Manhattan, with concertgoers catching a show at the Staples Center in South Park, friends meeting for drinks at Angel City Brewery in the Arts District, crowds descending upon the one-a-month Art Walk for its latest installations, and couples enjoying homestyle Brazilian dinners at Wood Spoon near the Fashion District.

The path to the area’s modern growth and development can be traced to 1999, when players like Downtown’s Central City Association, Ced Moses, and Andrew Meieran took advantage of the city approving the Adaptive Reuse Ordinance, a change in regulation that incentivized developers to convert historic, abandoned commercial buildings into residential projects. The CCA has been advocating for increased business in DTLA since 1924. Moses is the force behind Pouring With Heart (formerly 213 Hospitality), and helped open key nightlife spots like the long-running dive Golden Gopher and upscale bourbon bar Seven Grand. Meieran opened the Edison, one of LA’s only bars with a strict dress code, which mixes specialty cocktails with dramatic steampunk-inspired decor.

Their efforts are well known. Even Eyvazoff credits this group with transforming Downtown by lending the support needed for restaurants and nightlife to succeed. Loyal Downtown residents were ready to support these businesses.

Kevin Bourque, a former longtime Downtown resident, recalls the cheap rent and plentiful parking. “LA in the early 2000s had a small-town-artist vibe. Rent hovered around $1.50 a square foot. I knew almost everyone every time I went to Groundworks [coffee]. I would be greeted by name at [the now-closed] Zip Sushi. There were always just familiar faces at art openings, social gatherings, parking was almost always easy. The streets were generally quiet at night, save for a few art openings or underground warehouse parties. Sci Arc opened in 2001 and added a bunch of architecture students to the mix, which was the first real injection of new blood besides weirdo artists and the homeless.”

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Until the number of COVID-19 cases drops, prompting a shift in regulations, Downtown clubs and bars are temporarily closed, unanchoring the area previously known as a hotspot for Los Angeles tourists. In 2019, 50 million people visited Los Angeles. The pandemic resulted in 22 million fewer visitors in 2020, according to the Los Angeles Times. LA’s estimated loss of tourist spending is approximately $13 billion.

When LA Mayor Eric Garcetti’s safer-at-home order began in March, Downtown restaurants also began to miss a captive audience: office workers who eat lunch, attend happy hours, and stay for dinner somewhere east of the 110 Freeway, south of the 101, north of the 10, and anywhere west of the 5 Freeway. With 34 percent of workers working from home six months later, research firm Gartner believes that 74 percent of organizations will ultimately shift some employees to permanent remote work. Without this essential demographic frequenting Downtown restaurants, business owners will have a hard time meeting the sales expectations they had before the pandemic.

The remaining Downtown workers and residents should be able to enjoy Garcetti’s al fresco dining program, which expanded restaurant seating on city sidewalks and parking lots. But with a few exceptions, eateries in the area, where parking and sidewalk space are exceptionally scarce, aren’t ideal for outdoor dining.

One of Downtown’s most troubling and unique issues is its lack of resources for unhoused residents. In 2019, the Los Angeles Homeless Services Authority announced that homelessness in Los Angeles rose by 16 percent, with approximately 36,300 people who experience homelessness on any given night throughout Los Angeles. Those numbers are especially high in Skid Row, where 13 percent of all homeless in LA sit adjacent to numerous Downtown restaurants, such as Sonoratown, Cole’s French Dip, and Comfort LA.

Marcus Christiana-Beniger owns Little Jewel of New Orleans, a Chinatown restaurant, with his wife, Eunah Kang. He is frustrated by the city’s lack of progress in assisting LA residents who are unhoused. “As business owners in Downtown, we’re on our own,” says Christiana-Beniger. “Protests are still happening down the street, so police have their hands full. You have to deal with people who are mentally ill, just released from jail, or dropped into Downtown from a hospital.” When friction arises between this community and diners, Christiana-Beniger has tried calling the Downtown Center Business Improvement District or LAPD, who usually don’t show up.

Up until 2018, both Christiana-Beniger and Kang lived and worked in Downtown, and they’ve watched the neighborhood transform into a central hub. Eddie Navarette, who owns FE Design And Consulting and lives Downtown, agrees with Christiana-Beniger about coexisting with a large and unsupported homeless population. “[DTLA restaurants] haven’t been able to take advantage of parklets because of the practicalities,” says Navarette. “The ladies at the Nickel couldn’t have a patio if they wanted to. There are aspects that Downtown has to deal with that no one else has to.”

Although there is a considerable draw to operating restaurants and bars in Downtown Los Angeles, with its major attractions, sports and entertainment venues, and convention center, the area has suffered prominent closures due to the loss of its customer base. Josef Centeno’s Baco Mercat and Ray Garcia’s Broken Spanish closed within three days of each other in early August. Both were celebrated, groundbreaking restaurants by longtime LA chefs. The pandemic made it difficult to serve diners on-site, and things like takeout and delivery weren’t enough to sustain them.

There’s also Italian stalwart Terroni, which is unlikely to reopen; it recently sold its furniture and equipment, and remains temporarily closed. And 31-year-old Patina shut down with little fanfare on July 30, laying off its longtime workers.

Some of Downtown’s restaurant-retention problems predate the pandemic. Downtown restaurants already assumed a higher rent burden due to the nature of the location and proximity to big venues. Higher rent attracts more customers. In 2019, the long-serving Cafe Pinot closed due to rapidly rising rent prices, while other popular Downtown spots found it difficult to hold on, with Mikkeller, Firehouse, and Simone all closing that same year.

Wonho Frank Lee

Wonho Frank Lee

In other parts of Southern California, some landlords have been dropping lease rates by as much as 20 percent. But Downtown property owners are still charging pre-pandemic prices for new and existing tenants. With fewer sales during coronavirus, the relationship between Downtown landlords and tenants could determine a restaurant’s survival.

The only subject in this story who agreed to share their landlord experiences with Eater was Barcito’s Andrea Borgen. Borgen believes Downtown’s rent situation, even pre-coronavirus, is unsustainable for landlords and tenants. “The rent does not reflect the reality,” says Borgen. “The rents do not reflect the situation on the ground. ... Based on conversations I’ve had with other businesses, none of the landlords really want to budge. The property values are overinflated as well. [Landlords’] fixed costs are incredibly high. All the speculation around DTLA has been exaggerated for a long time, and it affects everything.” Borgen suspects that for smaller or independent closures, it isn’t easy to walk away from an active lease without having to pay it back.

High rent isn’t unique to Downtown, but rates at $6 to $10 per square foot puts its average rent well over that of Koreatown or West Hollywood, where rates can drop as low as $3 to $4. According to real estate brokers, Downtown’s rates are higher next to places like L.A. Live and Bottega Louie. The guarantee of foot traffic is why restaurants choose to open in Downtown, but the appeal can become an expensive burden. Some real estate brokers are figuring out how to make a bad situation work for their clients who are landlords.

Eon I. Lew owns District Realty Group, a brokerage firm that focuses on Downtown properties. Throughout the pandemic, Lew found that most of his landlord clients are willing to work with restaurant tenants by proposing the following arrangements: Restaurants can apply temporary percentage rent structures where the restaurant pays their landlord a percentage of their net profits/sales or the actual rent, whichever is less, for a limited time. Landlords can also apply a temporary rent discount or rent abatement, or defer rent altogether to a future date.

Lew notes that restaurant owners have another option in short- or long-term subleasing, the equivalent of Airbnb, but for kitchens. In previous years, changes to leasing contracts were largely forbidden, but landlords have been more willing to allow tenants to convert their spaces into commissary kitchens for pop-up or delivery concepts.

As a last resort, tenants can find a replacement for themselves with a lease assignment. “This has been very common during the pandemic and involves marketing the space, finding a new suitable tenant, and obtaining landlord permission to assign the lease to the new tenant or negotiate a brand-new one so the current tenant is relieved of its liability to the lease,” says Lew. “We’ve been able to put some key money into tenants’ pockets while also satisfying the landlord.”

Landlords are more receptive to discussing remedies when restaurants are completely transparent about their financial situation, Lew says. Grand Central Market owner Adam Daneshgar is one who is seeking new solutions. By working closely with his tenants, Daneshgar’s goal is to get through this time with as few tenant casualties as possible. Thus far, the only GCM stand to shutter since March is Kismet Falafel.

“We go beyond the landlord tenant relationship — it’s more personal,” says Daneshgar. “Everyone is rooting for each other. It’s important that everyone’s success relies on everyone. But in March, April, and May things were really uncertain. July gave us time to rework and figure things out with each of our vendors and make that relationship solutions-driven. It wasn’t smooth sailing, but a smooth stepping stone for all of us.”

Opening a restaurant is a high-risk activity, especially during a pandemic. Yet a few brave souls started from scratch. Ria Barbosa partnered with Robert Villanueva and Tiffany Tanaka to open Downtown Filipino eatery Petite Peso on April 17, serving pancit, adobo, and lumpia filled with pork or Impossible meat. Downtown visitors might be waning, but Petite Peso has been able to ride out the pandemic’s rougher moments — and build its own momentum.

“We opened in the middle of everything,” says Tanaka. “It was surprisingly not as bad as we thought in the beginning. We had a lot of support and that was awesome, and then it dipped when we had the police cars burning in front of our place during the protests. It has been a rollercoaster.”

Business was going well enough to expand Petite Peso’s daytime menu to include dinner. Its online sales continue to increase, so the Petite Peso crew will eventually add more food products, clothing, swag, and pet food to the online store.

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Like all restaurants in Los Angeles, Petite Peso dealt with poor timing in the spring. The same day dining rooms were allowed to reopen, George Floyd’s May 25 death at the hands of Minneapolis police ignited protests throughout the country. LA was no different: Thousands of demonstrators flooded into Downtown seeking justice for Floyd and clashed with heavily armored police. Peripheral looting and vandalism caused massive damage to restaurants. Tanaka says police cars were burning in front of Petite Peso, while street closures, a public transit shutdown, and a haphazard countywide curfew made a difficult time worse.

Tanaka says it took a month to recover after the George Floyd protests and for customers to feel comfortable returning to Downtown. “We’re wading around to see what other opportunities might pop up outside of Downtown,” says Tanaka. “Our space is very, very small; we’re not that fancy. We find that comfort foods and foods that people can relate to are what people want.”

While Petite Peso found its legs in a short time, Borgen and others are shifting business models or minimizing operations. Adapting new strategies is something Borgen has done consistently over the years. During this iteration, Borgen changed her menu and lowered sandwich prices from $14 to $10 because she believes takeout prices should be lower than dining in. Barcito’s biggest change is her retail business with wine and beer sales.

“We’ve done a pretty hard and one of the more successful pivots into a bottle shop,” says Borgen. “A big part of the thinking was that we stepped back and figured this would last a very long time, and to figure out where we are and what we want to be. We’re basically doing retail at this point. Plus, there aren’t a lot of bottle shops in DTLA.”

And while Borgen sees a regular stream of customers, it’s still hard to make the numbers work. Her landlord charges $10,000 per month, her bare-minimum staff costs $10,000 per month, and she still provides health care for furloughed employees.

Even though Eyvazoff received a Paycheck Protection Program loan for Takami and 71 Above, he had to let some employees go when the funds ran out. Takami went from 81 workers to fewer than 50 employees. 71 Above remains closed, and those 115 workers do not have a job.

Grand Central Market is also figuring out new ways to bring customers to their vendors. “We’ve been thinking about the best way to manufacture traffic that brings Grand Central Market home,” says Daneshgar. “We developed our own independent delivery service to where you can order all of your GCM favorites in one order. A dedicated Grand Central Market employee collects your order and walks it to the delivery driver.” The new service began at the end of September.

Wonho Frank Lee

Amid concerns around homelessness, costly mandated safety guidelines, and an inability to take advantage of outdoor dining, Downtown restaurants could also use some political advocacy. But these businesses and residents currently lack representation on the Los Angeles City Council, as former councilmember Jose Huizar was stripped of his title in June. There is, however, a nationwide effort from restaurant owners and groups advocating for the passage of the Restaurants Act of 2020 — which would offer a more tailored approach for restaurant assistance beyond PPP funding with grants. That PPP money is evaporating quickly, and the loans weren’t a sustainable fix for restaurants.

Meanwhile, California Senate Bill 939 failed in committee on June 18. The bill would have protected commercial tenants and made it easier for businesses to get out of long-term lease situations, and was designed with restaurants affected by reduced-capacity requirements in mind.

Years ago, Downtown businesses heavily leaned on one another for support. Borgen cites the push during the mid-2000s for Downtown’s independent operators to come together, troubleshoot, and support each other as drivers of the neighborhood’s success. But in pandemic-era Los Angeles, she believes that businesses need advocacy outside of their inner circle. “Downtown certainly could use more resources and support groups, because its challenges — shuttered businesses, scant outdoor seating, and dwindling foot traffic — are so different than a lot of LA neighborhoods,” she says.

“Through all the community work from 2004 to early 2020, Downtown became this massive success story,” says Eyvazoff. “Every closure is a black eye for all owners in Downtown. Downtown was to become a mini-Manhattan. I still believe that. This will slow things down considerably, and I fear that.”

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