Restaurants moved to Amazon's buildings in Seattle to make big bucks, but they are finding it harder than expected to turn a profit.
When Amazon chose downtown Seattle for its massive urban campus, John Schoettler, Amazon's vice president of global real estate, wanted to create a thriving "18-hour" neighborhood.
To some extent, Amazon has succeeded. In a decade, nonstop development has transformed Seattle's South Lake Union and Denny Triangle from a sea of parking lots, car rental agencies, motels, and warehouses to gleaming office towers and luxury real estate.
Restaurants, gyms, cafès, and even medical clinics have moved in, drawn by Amazon's ever-expanding workforce and the promise of high-salaried residents due to move into the thousands of newly-built luxury apartments.
But for many of the neighborhood's new businesses, things haven't turned out exactly like they hoped. For one, they can't get customers in during non-work hours, at dinnertime and on weekends.
"The worst thing is having an empty restaurant and then trying to keep your staff motivated and energized," local restaurateur and chef Josh Henderson told Marketplace.
On a recent visit to Seattle, we checked out the so-called "18-hour" neighborhood.
Over the last decade, Amazon has transformed South Lake Union and its surrounding areas, Belltown and Denny Triangle. Each of those pins on the map is an Amazon office.
Amazon has nearly 40,000 employees in Seattle, with plans to grow to 55,000 in the near future. Amazonians are everywhere downtown.
Amazon's offices are spread across more than 33 buildings and 13.6 million square feet of office space in the area. This is Day 1 Tower, one of four towers that will form the heart of Amazon's urban campus by the time its completed.
Sources: GeekWire, SF Gate, CNBC
With so much real estate, Amazon has become one of the biggest landlords in the area, dictating what businesses rent its spaces. For its part, Amazon has rented out to local businesses and avoided chains.
John Schoettler, Amazon's vice president of global real estate, has said the company wants to turn South Lake Union and Denny Triangle into an "18-hour district" for Seattleites. This dog park, next to Day 1 tower, is open to the public.
Source: The Seattle Times
Businesses flocked downtown to capitalize on the Amazon workforce and the crop of luxury renters, but business has yet to show up as promised.
As of August, the company rents out space to 32 businesses, with 24 of those being restaurants and cafès. Most of the restaurants are run by locals. Assembly Hall and Tanakasan are run by famed local chef Tom Douglas.
Source: Tom Douglas
Amazon's workforce has created a booming lunch crowd. A fleet of food trucks descend everyday. When I walked around at lunchtime, it seemed like everyone on the street carried a blue badge and a takeout box.
Demand in the area is for "quick food, under fifteen bucks," restaurateur Josh Henderson told Marketplace. That means big business for lunch and happy hour Monday to Friday, but little else. Fast-casual places like Mamnoon Street have done well.
Sources: The Seattle Times, Marketplace
Last January, Henderson closed his tacos and drinks spot, Bar Noroeste, when Amazonians didn't bite. He reopened as Kiki Ramen months later.
Source: Eater Seattle
Henderson closed three restaurants in the area in August. He had hoped upscale eatery Vestal would become a destination. When that didn't happen, he focused on the Amazon crowd, but even that didn't work. "It's a pretty soul-sucking experience to have a restaurant that's empty on a Tuesday night," he said last April.
Source: The Seattle Times, Marketplace
Dinner and weekend business remains weak. Cactus began offering a "late night" happy hour last year to drum up business. Owner Marc Chatalas told The Seattle Times the move has not been effective. "Simply, the neighborhood has not developed," he said.
Some restaurant managers told The Seattle Times, they've even had trouble hiring talented chefs and experienced waitstaff, because tips are low and they'd rather focus on dinner establishments than those catering to the lunch crowd.
Award-winning chef Chris Keff sold Flying Fish when she found the restaurant wasn't making profit. "And that's the thing about when you build a whole new neighborhood, with Class A office buildings is that the space is quite expensive to rent, so you depend on having business at most times of the day," Keff said.
Source: The Seattle Times, Marketplace
Amazon has tried to help, keeping its campus cafeteria small to encourage employees to venture into nearby restaurants. And the area's landlords, including Amazon and Paul Allen-owned Vulcan, have given many tenants "improvement allowances" to cover some renovations for new restaurants.
Source: The Seattle Times
Douglas, who also owns Brave Horse Tavern, told The Seattle Times that the burden is on restaurateurs to adapt to the neighborhood by adding happy hours, outdoor seating, and other things that appeal to the daytime crowd.
Source: The Seattle Times
But Amazon's lease agreements require restaurants to stay open late into the night. Some restaurants have tried to close early because they found they couldn't generate enough business at night to justify the cost of staying open.
Marination co-owner Roz Edison asked Amazon to allow the restaurant to close on Sundays because business drops 50-60% on weekends. Amazon denied the request.
Source: The Seattle Times
Some former restaurant employees told The Seattle Times that Amazon security guards micromanage shops and track when they close. One restaurant owner likened Amazon to "Big Brother," a claim Amazon has pushed back on.
Source: The Seattle Times
The neighborhood is a microcosm of Silicon Valley trends. Bulletproof Coffee, the masterminds behind the idea of putting a slab of butter in your morning coffee, opened an outpost last year. It's only a matter of time before raw water and keto restaurants appear.
Source: Eater Seattle
High-end furniture stores like West Elm and specialty Asian groceries have moved in as well, but they didn't seem busy when I visited. Only Whole Foods seemed to have a bustling crowd.
Downtown Seattle has added 20,000 apartments in the last decade, with another 27,000 on the way. In some respects, Amazon and the businesses that bought into the neighborhood are just waiting for more people to move in.
Source: Business Insider, The Seattle Times
Despite the turmoil, Schoettler told The Seattle Times in August that all restaurants operating on Amazon property have survived and that they are working with operators to "to make sure they're staying healthy."
Source: The Seattle Times
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