CEDAR RAPIDS — Bob Wagner and David Stephan came up with their business plan for their restaurant during nap time.
“When I had my firstborn daughter, I would stay at home with her during the day, and manage a pizzeria and brewery at night,” said Wagner, who lived in Chicago at the time. “When she was napping, and the chores and everything were done, I would use those nap times to write an original business plan for a different restaurant brewery combination.”
With Stephan’s help — the two met while working at the Cedar Rapids Country Club after high school — they created a business plan that would bring the business to Cedar Rapids.
But the key question left to answer was where — precisely.
“Each location we scouted dictated exactly what we would do with that business, looking at demographics, surrounding competition,” Wagner said. “Location plays a huge part on what you do, and how you can make it successful.”
When studying the market, Wagner noticed that downtown Cedar Rapids lacked a late-night food place.
“We looked at Google, Wikipedia, compared our business plan to similar cities with similar demographics, Galesburg (Ill.), Peoria (Ill.) and college towns like Iowa City,” Wagner said.
Their business — Need Pizza, 207 Second Ave. SE — began selling pizza in July of last year and is open until 2 a.m. on the weekends.
“We were bringing something unique, the New Haven-style pizza is something nobody is doing in Iowa. The kind of pizza I learned in Chicago — with friendly large portions,” Wagner said. “We believe in the downtown area, and its resurgence.”
Downtown Cedar Rapids’s Business Improvement District is defined by Sixth Street SW to Third Street SW and A Avenue to Eighth Avenue.
The district currently has about 50 eateries and night-life venues,.
“We were just about to this level in 2007 and 2008, just before the flood, and then, of course, that number went way down, and has slowly built back up over the overs,” said Doug Neumann, Cedar Rapids Economic Alliance’s executive vice president and community development strategist. The flood, he said, swept away about 25 restaurants, and predicts the number will continue to grow because of the surrounding areas.
“Our numbers of restaurants have grown as the (DoubleTree by Hilton) hotel got renovated, as the convention center opened, as the theatres reopened, and have been growing their attendance. They also have shown growth as Rockwell Collins, GoDaddy and Northwestern Mutual moved employment bases downtown,” Neumann said.
He also attributed the 200-plus housing units that currently are going up in the downtown area.
The gap the flood opened has been filled by owners seeing the opportunity downtown.
Ariel Barros, with his two brothers, Christian and Pedro, opened La Cantina Mexican restaurant and bar in 2010 at 102 Second St. SE.
“We started looking for locations after the flood — downtown was empty,” Ariel said.
Just as with Wagner and Stephan’s Googling in advance of starting Need Pizza, others did some research before deciding to set up shop downtown.
“We couldn’t afford a survey, but we did three focus groups on what people wanted in a downtown restaurant,” said Lee Belfield, one of the managing partners of what in 2007 became Zins at 227 Second Ave SE.
We then found a void in the market that wasn’t there, and looked for ways we can differentiate from others,” Belfield said.
The focus groups suggested diners would be interested in tapas, a small-plate menu that would “be able to deliver quality and creative food in a way that responds to a price point,” he recalled. “You wouldn’t have to invest 30 bucks to determine you don’t like lamb.”
Other beginning restaurateurs wanted to help fill a different gap.
“We kind of focused on downtown because we wanted to have a space that was in an urban area … as opposed to having a place in a strip mall, next to a Target, surrounded by chains,” Cobble Hill chef and co-owner Andy Schumacher said about his restaurant at 219 Second St. SE that opened in 2013.
Schumacher, and his Iowa-native wife and co-owner, Carrie, lived in New York, where he went to culinary institutes and studied the cuisine of urban areas.
“We were looking for a unique spot, because that’s where we draw inspiration from,” he said.
For Jess Streit, owner of the Lost Cuban, he opened his restaurant because he felt disconnected from the homemade Cuban food his grandmother and mother used to prepare.
“I grew up eating Cuban food because I am Cuban, and everywhere I would go (in Iowa), the Cuban sandwiches would be worse and worse,” he said. “I turned to my fiancé one day and said, ‘I am going to start a Cuban place.’ … A month later, we were opened” — in October 2012 at 209 Third St. SE.
All these businesses identified a niche in the downtown district, then filled it from a personal interest to share expertise in a type of cuisine and/or after careful research.
Business experts agree that is the way to proceed.
“Restaurants need to know their customers, and be able to identify what is most important for the customer. Is it the menu, is it the quality of service, is it the cleanliness of the restaurant, atmosphere, what are those factors for their target customers that are most meaningful, and will help build a regular customer base?” said David Hensley, executive director of the John Pappajohn Entrepreneurial Center at the Tippie College of Business at the University of Iowa, and a former restaurant owner himself.
Hensley said most restaurants fail because owners overestimate costs and underestimate revenues.
“If you do that,” he said, “you are out of business before you really had a chance to get into business.”
According to a study by Ohio State University, 57 to 61 percent of restaurants don’t make it past their first year, and 80 percent go under in five years.
Hensley suggested an equation that can help fight the failure.
“It starts with understanding your customer, making sure you do understand the economics of the restaurant industry and finding and building a team that can lead that company. A part of that means you get chefs that can cook well, you get servers and wait staff that know how to provide excellent customer service, and you get management that can lead those individuals.
“But they also need recognize (that) when there are problems and issues, they need to make changes on the fly,” he said.
That’s an idea a number downtown restaurants have learned.
“Small plates have been a tough sell, so we expanded to big plates in 2009, and last year added a whole big entree section because people wanted a traditional entree,” said Belfield of Zins.
He mentioned another problem that burdens a downtown business — parking.
“We identified the perceived parking problem, so we added complimentary valet parking. The people who know about it, use it,” he said.
“The perceived parking problem is bigger than it used to be. It is becoming more and more important as downtown gets busier.”
Other restaurants also have changed aspects of their operations when they noticed shifts in the market.
“We initially just opened for dinner, then we added lunch, and after about a year we stopped doing lunch because it wasn’t worth it,” Schumacher of Cobble Hill said.
Some restaurants take a more conservative approach toward adaptation to the consumer’s needs.
“We listen to what people are calling for, like, ‘Do you have reservations? Do you cater or deliver?’”
For Wagner’s part at Need, “We are trying not to do too much before we are ready for it. We are nine months in, and we are trying to perfect our in-house services before we extend out too much and do ourselves a disservice.”
Although restaurants adapt accordingly, there are still some challenges they can’t control.
Hensley of the UI Henry B. Tippie College of Business believes parking and weather are inevitable obstacle for any retail business, and believes they need to look at different paths.
“I think restaurants are better off looking for other avenues to build customers. That could be catering, taking food to events or delivering lunches into the corporate world. Just looking for other avenues to build customers that can also build awareness and interest in your business for people coming in.”
For downtown restaurants that rely so heavily on surrounding environments, Iowa Restaurant Association President and CEO Jessica Dunker, based in West Des Moines, suggests they must start to look online for the future to grab those people that are unaware of the area.
“People want to be able to read the menu, and see things right there on their phones,” Dunker said. “They don’t want to wait and look for it.”
“If you don’t exist on social media, you don’t exist as a restaurant,” Ariel Barros of La Cantina said.
Zins used social media to aid its very existence.
In January 2015, Zins posted on their Facebook page an announcement that it was in danger of closing due to the slow pedestrian traffic in winter, and the fewer number of downtown events on which that restaurant relies. The post urged that if 12 more people came to the restaurant every day for the next couple months, the crisis would be averted.
“The response was heartwarming and overwhelming at the same time,” Belfield said of the post the brought people to come through the door in droves. “People certainly showed they cared.”
Belfield said they built a strong staff this year, and that this winter has gone much better, since the post.
“Restaurants are a welcome mat and a welcoming committee for any city,” said Dunker of the National Restaurant Association. “They not only provide a unique flavor for a region or a state, they also give you a real sense of the culture and vibe of the city.
“ … If you want to attract people, restaurants are the first place they look.”