Donna Lee, founder of Brown Bag Seafood Co., is starting to feel optimistic about the Loop.
The number of office workers coming downtown seems to be inching up every month. Lunch rushes are back, and Lee hopes the summer will bring hordes of hungry tourists to her fast casual restaurant group.
Brown Bag closed two of its downtown locations in 2020, when the pandemic gutted the dining scene. But Lee is starting to think about opening another location.
“This is probably the first year that things are stable,” said Zach Flanzman, Brown Bag’s chief operating officer. “We feel fully back to 2019 levels.”
More than 300 downtown restaurants, bars and bistros shuttered during the first three years of the pandemic, including iconic spots such as Ronny’s Steakhouse and chain locations such as Starbucks and Panera Bread, according to Datassential, an analytics firm for the food and beverage industries.
But surviving Loop restaurant owners now say they can see light at the end of the tunnel. Even though many downtown office workers are still absent Mondays and Fridays, restaurateurs have found ways to compensate.
The rise of online ordering has offered a boost, and some landlords, recognizing downtown eateries can’t pull in as many dollars, agreed to charge tenants less rent. Other restaurants are fattening bottom lines by selling more drinks, shortening their hours or renting out space for special events.
“There is just not as many people coming downtown as there were pre-pandemic,” said Sam Toia, president and CEO of the Illinois Restaurant Association, an industry lobbying group. “But there are restaurants that have figured out how to survive and thrive.”
Datassential found the Loop lost a couple dozen restaurants and bars in 2023. But that’s a much slower pace of closings than in previous years, and several shuttered spots already host new restaurants.
Overall, the amount of space occupied by downtown restaurants ticked up slightly to 1.27 million square feet last year, said John Vance, principal at Stone Real Estate Corp.
“The business is clawing back,” he said. “In the Loop, in my opinion, what’s happening is that the landlords and the restaurant operators had a sit-down, and the restaurant owners said, this is what I’m experiencing: costs are up, customers are down, so let’s figure it out.”
Operating a restaurant in the Loop is still not for the faint of heart. But the fact that some restaurants have found their footing bodes well for downtown. Populating downtown buildings with innovative restaurants could help the Loop office market rebound, said Karoline Eigel, a commercial real estate broker with Cushman & Wakefield. Companies need ways to entice more people back to the office, and that means making downtown unique, rather than filling spaces with run-of-the-mill restaurants.
One section of downtown where restaurants have soared is Fulton Market. In 2023, 515,000 square feet of the neighborhood’s retail space was devoted to food and beverage, up from 430,000 two years earlier.
“That’s a big jump,” Vance said. “Everybody in retail and restaurants knows about Fulton Market. It was the bright spot in Chicago when the Loop and The Magnificent Mile were being beat up.”
DineAmic Hospitality opened La Serre, a French-Mediterranean restaurant on Fulton Market’s Green Street in March.
“There is just momentum in Fulton Market, a clustering,” said DineAmic principal David Rekhson. “Someone opens something new, creates something unique, and others follow.”
A turn for the better
Empty storefronts still dot downtown streets, and foot traffic, the lifeblood of restaurants and retail, remains far below pre-pandemic levels. But there are signs of improvement, and restaurateurs are taking note.
The retail vacancy rate downtown hit more than 30% last year, the highest recorded and more than double the 2019 rate, according to a Stone Real Estate study. And the number of visits on foot to major Chicago office buildings was down more than 37% in March compared with the same month in 2019, according to a study from Placer.ai, a data analytics firm.
But office foot traffic was up more than 8% compared to March 2023, Placer.ai found.
“I do see more and more workers coming back on Monday and Friday, and another change is we have many more tourists than we used to have,” said Tamar Mizrahi, partner at Goddess and the Baker, a breakfast and lunch cafe with five locations in the Loop and River North. “It’s changing the numbers on the weekend.”
Business at her cafe is up from 2019, she added, with the Loop locations doing best. Mizrahi attributes that to a strong business catering service, and fewer options for diners after the loss of so many other Loop spots during the pandemic.
Rekhson’s company also operates Prime & Provisions, a two-story steakhouse at 222 N. LaSalle St. The restaurant, started in 2015, had stopped serving lunch several days a week, but conditions improved over the past year.
“We are definitely starting to see lunch come back heavily,” he said. “We recently went back to serving lunch five days per week.”
Other restaurateurs see new opportunities downtown. Dan Rook, founder and director of food and beverage at Industry Ales, a new brewpub and restaurant at 230 S. Wabash Ave., said he and several partners began planning the project in 2019.
“It was a dream project for a long, long time, but reality hit during the pandemic,” he said. “When we talked to people about opening a place in Chicago, everybody looked at us like we had 10 heads. Everybody had their doubts.”
But the partners began building out their 14,000-square-foot space in 2021 — adding a brewery, a beer hall and private event spaces — and opened in March.
“The profit margins of our business were already slim, even before the pandemic,” he said. “But we’re a brewpub first and foremost, and your margins are much better if you brew your own beer.”
Rook said Industry Ales aims to become a community hub for residents, not just a restaurant for office workers, and wants to use its event spaces to bring in even more revenue.
“We teed it up perfectly,” Rook said. “We opened up in what will be Chicago’s phoenix-like revival this summer.”
The Loop’s population reached 46,000 during the pandemic, an almost 9% increase since 2020, according to a 2023 Chicago Loop Alliance report. The advocacy group expects the neighborhood’s population to grow an additional 17% by 2028.
Sujan Sarkar moved to Chicago in 2020, later opening River North’s Michelin-starred Indienne, and last year began looking at downtown locations for a new concept, an India-inspired coffee shop.
“I was a little hesitant at first,” he said. “I saw few people downtown, so a year ago there was still a question mark.”
But in March, he opened the 2,600-square-foot Swadesi in 328 S. Jefferson St., a West Loop office building near the Old Post Office, providing artisanal chai, coffee and pastries.
“We opened with very limited hours, but we’ve seen an amazing response, and now people are even queuing up outside on Saturday,” he said.
The building owner wanted a more active first floor, so Swadesi was able to get attractive lease terms, Sarkar added.
“That helped us,” he said. “Otherwise, the restaurant business is not easy.”
He hopes to eventually add an outdoor patio, but any expansion will be done slowly.
“We want to keep it as it is, at least for a couple months,” he said. “I don’t believe in chain restaurants; every restaurant should have its own personality.”
Still a tough financial proposition
Eigel, of Cushman & Wakefield, advises restaurateurs to use caution when launching new Loop businesses.
The high vacancy rates in many downtown office buildings have cut the amount of revenue they generate, so many property owners can’t afford to give breaks on rent or fund major improvements to first-floor restaurants.
“Somebody opening a restaurant there now needs to be experienced and know what they’re doing,” Eigel said.
It’s still less expensive to open restaurants on the outskirts of downtown, said Joshua Tilden, chief operations officer of Underscore Hospitality. Tilden and chef Erling Wu-Bower opened Maxwells Trading, a restaurant in the Kinzie Industrial Corridor, in December. The restaurant includes a retail space and rooftop farm.
“I’d have to see significant tenant improvement dollars to go into the Loop,” Tilden said.
Earlier this year, Mayor Brandon Johnson’s administration awarded grants of up to $250,000 to six Loop restaurants still struggling to recover from the pandemic. The restaurants, including Ceres Café in the Chicago Board of Trade building and Mizrahi’s Goddess and the Baker, are all clustered around LaSalle Street, where a coalition of developers is preparing to remake a collection of antiquated office buildings into a new residential neighborhood with more than 1,000 apartments. The grants are to be used for renovations.
Restaurants need a refresh every few years, said Mizrahi, who wants to upgrade her storefront.
“This is a project I would really love to do, but I probably could not do it without the grant,” she said.
Another grant went to The Roanoke at 135 W. Madison St., and Brad Alaoui, chief operating officer of Roanoke Hospitality, said it’s a chance to bring in better furniture and new lights.
But the Loop still needs more activity for restaurants to thrive, he added. He looks forward to the coming of Google, which plans to take over a renovated James R. Thompson Center in 2026, and the eventual makeover of LaSalle Street.
“We believe in LaSalle Street,” Alaoui said. “There is a lot of history and great architecture here, so all of this is going to have a huge impact.”
