A year of turnover for OBX restaurants. Why?

By on March 11, 2022

Mulligans, Mako’s, the Blue Point and Red Drum are among the notable restaurants that have changed hands or closed.

By its very nature, the restaurant business is volatile, and change is a constant. Yet this year, as the Outer Banks gets ready for its peak tourist season, there seems to be unprecedented turnover among restaurants with years of tradition in serving residents and visitors.

Blue Point in Duck, along with Red Drum and Mulligans in Nags Head, have new owners, as does Weeping Radish, now in Jarvisburg. Also in Manteo, Lost Colony Brewery and Tavern has a new owner. Mako Mike’s, the last of Mike Kelly’s three big restaurants to be sold, has closed. And although it does not have the history of the other establishments listed, Jeff Schwartzenberg sold his OBX Frozen Yogurt to the folks that own Southern Shores Pizza and Corolla Pizza.

There is no one specific reason why there has been so much sudden change. But the factors cited range from older owners aging out to the burdens of operating among a tourist boom with staffing challenges, as well as the high valuations for owners looking to sell.

Kelly, who has sold his signature Kelly’s Restaurant & Tavern, Pamlico Jack’s and Mako Mike’s the last few years, points out that he’s been in the food service business for some time and there is a time to move on.

“Our first year of working down here was 1972… So it’s going be fifty years for me, nonstop working in the hospitality industry,” he said adding, “I just got aged out a little bit. I’m seventy-one years old. You can’t keep on the pace you were doing before. And I have two children that didn’t want to go into the restaurant business.”

Kelly also noted that some other owners who sold their Outer Banks restaurants started working in food service before they owned an OBX business. He points to Gus Zinovis, until recently the owner of Mulligan’s.

“Back in the 70s and 80s…there was a chain called Milton’s Pizza. It was around Tidewater and there was one down here. Gus was one of the guys that [owned it)]. And they did well. Gus has been in the restaurant business a lot,” he said.

There are other factors, though, that may be a part of why so many restaurants are selling this year.

Wes Stepp, chef and owner of Red Sky Cafe and NC Coast Grill and Bar in Duck has no plans to sell his businesses, but he is aware of how difficult the past two years have been. What he sees is the natural cycle of owners deciding to sell and move on to other projects or retire. He also feels the added pressures of operating a restaurant during a pandemic have accelerated that process.

“We were really busy even though we had COVID, but there’s a lot of layers to the onion of COVID,” he said. “There’s been a real shortage in labor, and a lot of that has to do with COVID. So I think a lot of people met with the dynamic of a lot of change. And it sort of encouraged that natural cycle to go ahead and go a little faster.”

There are other factors as well. Colby Boone is one of the owners of Southern Shores Pizza and Corolla Pizza who recently purchased OBX Frozen Yogurt.

Although Boone and his partners are not planning on selling their businesses, he looks at some of the economic factors on the Outer Banks and sees them contributing to the trend. He’s cautious in his assessment, but he notes that as the ability to work remotely has taken hold, there appears to be a shift in business to places like the Outer Banks. The increase in residents coupled with creating a significant uptick in business, he said, make local restaurants more valuable than ever.

“Our economy and our restaurants kind of picked up the slack because they were…moving here [and] working from home,” he said.

According to the Outer Banks Visitors Bureau, Dare County food and beverage revenues for 2021 increased 51.1% over 2020. However, 2020 was a down year for the local restaurant industry and included a two-month ban on visitors, so a more accurate comparison may be 2019. Compared to 2019, county restaurant revenues increased by 26.5% in 2021, an unprecedented surge for those businesses.

That increase, coupled with other factors has created the ideal time to sell a restaurant for someone who is planning on doing so, according to Boone.

“After COVID, most everyone’s numbers are going to be up,” he said. “Inflation is up, and menus prices have increased. So what that’ll do for you, if you get a valuation, no one’s restaurant has ever been worth as much as it is today.”

There are, however, two sides to the equation. There are buyers for the restaurants that are selling, and although there is no one reason why a business is bought, the new owners see an opportunity in their purchase.

For the Raskin Family, siblings Leigh, Ryan and Jamie, the opportunity to create a family-run hospitality business on the Outer Banks presented itself at the right place at the right time.

Leigh already owned Eventide on the Duck boardwalk—it used to be Wave Deli and Pizza. Jamie had just finished a masters program in hospitality and was as sommelier, and Ryan had been the Blue Point assistant manager for the past nine years.

It was Ryan who started the discussions with Blue Point owners John Power and Sam McCann.

“It just came up in conversation. I said, ‘If you ever do [want to sell] let me know,’” said Ryan Raskin. “Then that kind of happened last year towards the end of summer. We got through COVID and ended up increasing business somehow. We all know how the beach has just grown over the past two years. They actually opened Blue Point at the same age that we are, so it kind of felt natural. It felt good to both parties, I think.”

 

 

 




Comments

  • KDH back seat reviewer

    Changing of the guard.

    Stepp hit it right in his comments.

    It will be interesting to see what this new generation of restaurant owners can bring to the table.

    Best o’ Luck there laddies

    Friday, Mar 11 @ 2:49 pm
  • Glenn

    Wish all the new owners well & my wife & I will definitely be stopping by to support them. That said, the overall food quality of so many restaurants throughout the OBX has deteriorated these past several years. Don’t know if it’s lack of help or exodus of qualified chefs but we have definitely noticed a downward trend on food quality. Nevertheless, we are strong supporters of local businesses so we look forward to visiting these restaurants. Wish them all the very best!

    Friday, Mar 11 @ 2:55 pm
  • Travis

    Tsk tsk. Article about local, long-lived restaurants and restauranters that fails to even mention Carol Ann and the Jolly Roger Restaurant. She’s run that place for over 30 years and somehow finds a way to keep going. Maybe she could give the fellows some advice.

    Friday, Mar 11 @ 4:00 pm
  • Stephen

    Add the Roadside Cafe in Duck to that list. I worked most of my career in the restaurant and hotel trade for 25 years. It can be a lot of fun, but it is bone crunching work requiring a lot of capital and is subject to scores of federal, state, county and town regulations.

    Friday, Mar 11 @ 4:36 pm
  • Chris Smyers

    Everybody is cashing out and selling high. Housing and Business included.

    I don’t blame them. I was a 15 year propane man that fixed your house, and made sure your business ran on propane. I left 2 years ago to make 95K a year.

    I found a job that doubled my yearly salary. And I’m not on call.

    When “you” locals figure out sustainable 65K$ a year jobs…that’d be a headline.

    Otherwise, nobody gives 2 shits about property sales.

    Saturday, Mar 12 @ 1:14 am
  • Debra

    You can add Argyles to the list as well. After 33 years on the Outer Banks serving the community as a bakery and then a restaurant, we sold to Kallie and Robert who bought Barrier Island Bagels. We trained them to do our menu as well as their bagels. Couldn’t have found a nicer young family to carry on our tradition when we retired.

    Saturday, Mar 12 @ 8:13 am
  • surf123

    I think some of it is that real estate prices have peaked or are close to peaking. Rising interest rates are not compatible with current prices and certainly not compatible with any additional increase. Throw in out of control inflation, significantly higher gas prices, and remote workers who will be leaving as they are recalled.

    The restaurant owners recognized real estate prices have peaked and decided to get out so they can control their next move. Plus the money might be good enough for them to retire. There are plenty of people who will be left holding the bag as we return to pre-COVID conditions and rents don’t line up with costs.

    Saturday, Mar 12 @ 9:08 am
  • Bob

    OBX restaurants, in general, are average. We need more places serving good downhome local fare at reasonable prices, and way fewer posing as upscale, because they seldom have the talent to actually deliver. We desperately need neighborhood style italian restaurants with full menus, not just pizza joints. We need more places oriented and priced to attract the long term repeat customers; the new OBX work from home crowd.

    Saturday, Mar 12 @ 2:36 pm
  • WindyBill

    TRAVIS; THANKS! Jolly’s does provide a local Fun standard of Service! The plague hurt this industry. The current fuel and other inflation will also deplete discretionary income. Only those that plan for it and still treat their customers right will be here next year. On the bright side, these depressing periods cause our visitors to need their vacation more!

    Saturday, Mar 12 @ 3:06 pm
  • sandflea

    I am friends with and know quite a few restaurant owners. They can’t find help; just like most every other business here. It’s physically and mentally draining them. Their costs have skyrocketed, but there are a lot of people with money down here and they’ll pay because they can. The restaurants are having record numbers. Do you really think they would want to get out with record profits? THEY CAN’T GET ANY WORKERS BECAUSE THERE IS NO PLACE FOR THEM TO LIVE! Do a search of available housing for rent here. There isn’t any. This place is going to be a disaster this summer.

    Sunday, Mar 13 @ 8:51 am
  • AV

    Bob, neighborhood style Italian restaurants are not down home local fare. This is a coastal seafood community. That is down home local fare.

    Sunday, Mar 13 @ 8:54 am
  • Steven

    Likely due to the demographic that now visits.

    Sunday, Mar 13 @ 9:00 am
  • Billnc

    AV,
    I believe Bob wants both “local fare” AND “neighborhood style Italian” restaurants. The comment didn’t say “local fare like neighborhood Italian restaurants.”

    Monday, Mar 14 @ 12:29 pm
  • Breynn Bailey

    In everything there are pivotal moments and I do believe this is one for the Outer Banks. I still think on the article published 8+ years ago regularly, about everyone being ready to retire and what would that mean. The iconic restaurants have been sold to out of state chain operators. Gas stations added at every corner (though it would be nice to have good diesel pumps). The marina in Wanchese sold to a company from TX and the list goes on and on. It makes me a little sad to see and hear the Outer Banks make it’s conversion from beloved family vacation spot to the stereotypical commercial beach city. I personally have never been a huge fan of the upper beaches and we always retreated to Hatteras Island, Ocracoke, and the federal parks. I guess I am not out anything with the changes and look forward to the Target and would rather a Sheetz but to each it’s own. Soon to come will be the event center, more hotels and an expansion in air travel. I do wish there would be an invention of public transportation, even if it is a trolly system. Road expansions coming with the update of alligator river bridge will lead to more and more traffic which unfortunately will lead to more accidents and deaths as long as leadership takes a back seat to pedestrian and bike safety. Don’t blink because there will no longer be an “on” and “off” season as the commissioners continue to drive year long business and off-season events. I would start with housing because that is a whole conversation in itself. I don’t know that I would compare the Outer Banks to Virginia Beach…but we can certainly see the direction obx is headed in. Show me the money continues to be the number one goal. I hope it was all worth it in the end. ❤️

    🤔I thought the Jolly Rogers was under new ownership also…

    Tuesday, Mar 15 @ 3:25 pm