For over a decade, food magazines, national news outlets, and social media influencers have showered Durham with praise for its culinary excellence. The tastiest town in the South offers a smorgasbord of delicious food that satisfies a wide range of palates. And as Durham’s population grows, so does its list of James Beard Award-winning chefs. But being a foodie destination was not always the city’s destiny. Many of Durham’s flagship restaurants came from humble beginnings.
Areli Barrera Grodski and Leon Grodski Barrera—owners of Little Waves Coffee, their own coffee roaster, and three brick-and-mortar coffee shops in Durham under the name Cocoa Cinnamon—started their business from a bike cart they parked outside of Motorco and at the Durham Farmers Market back in 2011.
Pie Pushers, Boricua Soul, and the Parlour, fixtures of the downtown Durham food scene, all started as regular participants of the Food Truck Rodeo at Durham Central Park in the early 2000s before climbing the ladder (and a flight of stairs, in Pie Pushers’ case) to permanent locales.
But as rents increase and competition grows, taking that leap of faith is harder for prospective food entrepreneurs. Inflation—which peaked in June 2022 at about 7.1 percent and has held steady at around 3 percent since then—continues to raise the cost of goods, and business owners who want to do right by their staff are raising wages, which increases payroll costs. What steps can entrepreneurs take to get creative in times of hardship, and will small businesses get the support they’re asking for from city leadership?
A window of opportunity
When Michelle Vanderwalker and Sean Umstead considered opening Queeny’s in 2021, they included designs for a small drive-thru-style window facing the sidewalk as a COVID pandemic precaution. The 12-by-12-foot space would allow them to offer to-go food and, thanks to a new state law, cocktails. But as in-person dining returned toward the end of that year, the need for Queeny’s to offer socially distanced sales subsided.
But closing the window opened a door for other burgeoning food entrepreneurs to fill the space.
Isaac Henrion started making bagels out of his home kitchen in 2021. He would pop up at the park near his house to sell them and build a customer base among his neighbors. After collaborating with Ideal’s sandwich shop on three pop-ups, Henrion caught Umstead’s attention.
“We didn’t have any experience, and we hadn’t fully determined what our ideas were,” Henrion says, “so this was an amazing opportunity for us to practice doing what we wanted to do in another space in a way that felt really low-risk. The space already existed and we didn’t have to put a bunch of money into it, and there was already exposure from having Queeny’s shining a light on us.”
The space is compact, and with no additional kitchen, Umstead says it’s best used as a retail location to serve prepared foods as opposed to being a full-fledged restaurant space. Tenants do have access to the Queeny’s kitchen for cleaning dishware and emergency baking needs.
Isaac’s Bagels took over the Queeny’s pop-up window from January until May 2022. Afterward, Isaac’s moved on to the Durham Farmers Market before landing a permanent location on Chapel Hill Street, back near Henrion’s home neighborhood.
“I’d always wanted to have a space in that neighborhood,” Henrion says. “What was really important to me was wanting a shop in a residential neighborhood that would be some people’s local bagel shop.”
Henrion says the business now has about 25 full- and part-time employees, who cover operations at the flagship store and their spot at the farmers market.
“We did look at a few places downtown, but the rents were so high,” Henrion says. “Eventually, we figured out that 1003 West Chapel Hill Street was back on the market. And that’s what we got. It’s weird, because the shop is in the space that I had identified, a month after beginning to make bagels at home, as my dream place, and it didn’t work out then. Two years later, it did work out.”
Two more businesses have taken up the mantle at the Queeny’s pop-up window since then. Liturgy, a coffee shop, followed Isaac’s and is now a part of the Durham Food Hall. Lutra, a sticky-bun- and cinnamon-bun-focused baked goods shop, currently operates out of the space on Sundays.
The cost of doing business
Entrepreneurs say that one of the most significant milestones in their business journey is developing an MVP, or minimum viable product. This staple product serves as the carrot for attracting an initial customer base. For a fast-food restaurant, it could be a hamburger. In the coffee world, a latte. Once the first wave of loyal customers is hooked, the next hurdle is scaling up—going from making two dozen treats for a friend’s dinner party to producing enough inventory for a full-fledged restaurant. Leveling up requires more expensive equipment, Henrion says, which is hard to justify when you’re still a small operation.
“In the beginning, we had a little KitchenAid like everyone has at home. But that only makes so much cream cheese,” Henrion says. “Now, we have a 30-quart mixer. If we were trying to make 400 pounds of cream cheese a week in an eight-quart KitchenAid, not only could you physically not do it, but it’d take a really long time and it would be inefficient and you might throw in the towel because you’re like, ‘This is just too costly. I don’t see the reward.’”
Henrion says that the cost to build out a restaurant space with industrial-sized machines can be prohibitive. Banks offering small-business loans want to validate their decision, so business owners looking to outfit their own brick-and-mortar location need to show potential through a strong customer base and consistent revenue. Herein lies the chicken-and-egg problem. You need more expensive machines to scale up production, but how do you sell enough products to finance the necessary equipment?
Nick and Rochelle Johnson, owners of the Cast Iron Group, set out to solve this paradoxical problem in 2010 when they opened the Cookery, North Carolina’s first privately owned commissary kitchen.
Commissary kitchens are collaborative spaces for aspiring food entrepreneurs to share resources that are too expensive to justify investing in during the early stages of business. Tenants pay to rent the kitchen, giving them access to full-scale ovens, mixers, and other appliances that you can’t just Amazon Prime to your house.
“We have pizza ovens that cost as much as cars—like, nice cars, not entry-level cars like Camrys,” Nick Johnson says.
Business owners then sell their products at pop-up markets or from food trucks, growing their clientele at a manageable rate before making the jump to permanent retail space.
“The goal for us opening the Cookery was not to subsidize the cost of operating in a commercial kitchen, but to remove the barrier to entry of having to bet the farm on your idea before being able to test it out,” Nick Johnson says.
Outfitting a restaurant space can cost hundreds of thousands of dollars, according to Nick Johnson and others, and equipment costs specific to a culinary pursuit, like pizza ovens, are only a small piece of the pie. New spaces are a blank canvas, often lacking essential infrastructure such as HVAC, electrical wiring, and plumbing. Those investments are expensive and a sunk cost. No one is buying a restaurant’s old HVAC system on Craigslist. Commissary kitchens provide the foundation for restaurants to mitigate those costs.
“We tried to create it in such a way that we didn’t allow people to create a business model based on artificially deflated kitchen costs,” Nick Johnson says. “Because obviously, if they do that, then when they have to go into the real market, the model that they built wouldn’t work when they left. So we weren’t trying to reduce the cost of the kitchen; we were trying to scale the investment required to operate in a kitchen.”
What happens when a door closes?
Making it into the real market comes with no guarantees. The path to success is rarely without its hiccups, and some entrepreneurs in Durham have had to make lemonade out of unforeseen circumstances.
House Bill 125, a new law that the North Carolina General Assembly enacted last year, changed the definition of bars in the state. As of January 1, any establishment in Durham that serves food requiring time or temperature control for safety is under the inspection purview of the Durham County Health Department (previously, bars could serve limited food menus without inspections).
For Rob Montemayor, co-owner of Remy’s Lounge (formerly Remedy Room) in downtown Durham, the additional oversight means the bar could have to spend thousands to upgrade its kitchen equipment.
Last year, Montemayor opened Lady Gold Tacos, a food cart pop-up outside of what was then Remedy Room. The cart sold inexpensive tacos to folks during the lunch rush and hungry night owls exiting the dance floor at upstairs Rubies on Five Points. But overseeing the Lady Gold taco cart proved to be too burdensome on top of Montemayor’s other responsibilities at restaurant Luna and at Rubies, where he is also a co-owner. As the winter months slowed foot traffic downtown, Lady Gold went on hiatus.
This May, after months off, the restaurant made its comeback, this time inside Remy’s Lounge. But the new law, new location, and lingering effects of inflation and the COVID-19 pandemic create new challenges.
“We’re still feeling the effects of the pandemic, and I think it’s not going to end anytime soon,” Montemayor says. “Talk to any business owner that has a bar or restaurant and they can definitely say it’s not as good as it was in 2019.”
Labor costs are a major challenge that Montemayor and other owners face. Rising cost-of-living expenses mean employers have to increase wages to retain their staff, which often means raising prices. But for Montemayor, opening Lady Gold Tacos was worth the risk.
“I was like, ‘Maybe we should just sell pretzels or something that doesn’t provide labor,’” he says. “Because right now, you can’t hire anybody like you could in ’19. And I get it, because everything is more expensive.”
According to the North Carolina Restaurant and Lodging Association, Durham County has 724 open hospitality positions across the industry.
“I’m trying to pay these guys as much as I can that makes sense to them and makes sense to us,” Montemayor continues. “If I could pay these guys $50,000 a year, I would. I’m sure a lot of business owners feel the same way.”
The next course of action
During opening remarks at the May 6 Durham City Council meeting, Mayor Leonardo Williams told the audience that small businesses have fallen on hard times.
“Let me tell you, as a practitioner of it, we are struggling. We are struggling bad,” Williams said.
Williams and his wife, Zweli, own two restaurants, Zweli’s Kitchen and Ekhaya, in downtown Durham. The mayor has been an avid proponent of investing city resources into bolstering the small business economy. During his State of the City address, Williams proposed building a handful of capital improvement projects, including a new convention center and giant sportsplex, to attract more out-of-towners to Durham and drive up revenue for local small businesses and the city’s sales tax base.
“We don’t have enough pull to bring people here,” he said. “We don’t have a big convention center where it’s always full. We’re really relying on the folks that are in this community. I want to say to the small businesses across the city, I hear you, I feel the pain along with you.”
A new convention center might solve long-term economic woes, but small businesses who are struggling today can’t wait. For Durham to maintain its reputation as a foodie town, entrepreneurs will have to rely on the community and their own creativity to find a recipe for success.
The Can Opener, a “food truck rodeo”– style space that hosts permanent food truck businesses run by the co-owners, as well as a rotation of guest restaurants, is opening later this year. For established businesses trying to rebound, another option is fundraising, as the owners of COPA have been doing recently.
Asking for help from the community in this way, Henrion says, is the first step. Someone else will hold the door, or window, open for you.
“The thing I always encourage people to do when they get in touch with us and ask for advice, the number one thing that we’ve done well and that has benefitted us, is just ask random people for help a lot,” Henrion says. “A lot of people don’t know that they can just ask for help, or are kind of afraid of doing so. They feel like maybe someone’s going to say no, or it’s going to be embarrassing. It’s about having the confidence to just be like, ‘Hey, can you help me do this?’ And people just say yes. People like helping each other.”
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