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This isn't widely circulated, but the effect of Toyota moving and leaving the confines of Torrance has some effect on the local businesses. The places many Toyota (and likely Lexus too) executives used to eat are feeling them.The exodus of 3,000 Toyota employees has exacerbated the already tough conditions facing the South Bay restaurant industry, which is grappling with changing consumer tastes, fast-rising minimum wages and a crowded field of competitors.
Only a relatively few employees are left at the North American headquarters of Toyota, which announced three years ago it would move from north Torrance to Plano, Texas, by the end of 2017. Toyota, which has just concluded the sale of its massive campus, is following in the footsteps of Nissan, which moved from the South Bay to Tennessee a few years earlier.
Michael Shafer, owner of the Old Torrance landmark The Depot, said the loss of expense-account lunches and dinners from Toyota executives, the would-be contractors who wined and dined them, as well as the well-paid rank-and-file employees who were regulars at birthday dinners and other special occasions, has caused a “severe dip” in the bottom line of restaurants.
“I’m a member of two different South Bay business associations that are restaurant-oriented and everyone is saying they’re down,” Shafer said. “The loss of Toyota is a huge loss.
“Some are down as little as 15 percent to up to 25 percent depending on the restaurant,” he said. “It’s this whole domino effect. I’m sure all the Asian (food) markets are down.”
Companies that supplied services to Toyota also are cutting back or relocating.
Advertising firm Saatchi & Saatchi, for instance, which has an office on Sepulveda Boulevard in Torrance and counts Toyota as a major client, reportedly has opened a Texas office and has moved staff.
For Torrance Italian restaurant Aliotta’s Via Firenze, where bottles of wine sell for up to $700 and lavish dinners for Toyota executives were a regular thing, the loss of business has been devastating, owner Michael Aliotta said.
“At least $150,000 to $200,000 in business (annually) we lost,” he said. “We don’t do no more parties.
“I do feel Toyota,” Aliotta added. “I lost a lot of money. It’s a big change.”
The loss of revenue from Toyota just adds to the overall malaise in an industry that has traditionally seen razor-thin profit margins in the best of times.
The emerging trend of inexpensive fast-casual dining options is hurting many full-service restaurants, where payrolls are rising as the minimum wage heads to an eventual $15.
And the sheer abundance of eateries has everyone scrambling for a piece of a decreasing pie at a time when wages are stagnant for many workers and high housing costs are consuming an ever greater share of household incomes.
“There’s a lot of problems in the restaurant industry right now,” said Vince Gaetano, president of the fledgling South Bay Restaurant Association and owner of Gaetano’s Restaurant in Torrance.
“As far as Toyota leaving, it’s one of many challenges we are facing,” he added. “One of the main challenges is that rising minimum wage.”
Not every restaurant is hurting, to be sure.
Tortilla Cantina in Old Torrance has seen an overall sales increase of 22 percent since 2013, owner Rick Gomez said. Sales were up 9 percent in the first half of 2017 compared to the same period the previous year.
But Gomez attributes the growth to the fast-expanding local craft beer sector, rather than food sales. Tortilla Cantina has about 50 craft beers on tap and goes out of its way to stock local products
“We are in the craft beer industry and you don’t see breweries closing — you just see a lot of them opening,” he said.
“A lot of them are taking the crowd that used to go to these restaurants,” Gomez added. “And they’re attracting a whole other crowd. We’re also attracting that same crowd. They’re not just going out to eat. They’re here for the experience, trying different beers.”
Sales taxes rise
The most recent figures provided by the city of Torrance suggest the industry is a lot healthier than the picture painted by Gaetano and others.
Restaurants accounted for Torrance’s third largest source of sales tax revenue in calendar year 2016. That was behind new auto sales, which actually declined 1.1 percent, and department stores, up 7.9 percent, as Torrance bucked the national trend of a decline in business at many brick-and-mortar stores.
Restaurants generated almost $5.9 million in sales tax revenue in Torrance, an increase of 8.1 percent over the previous year.
The refurbished and expanded Del Amo Fashion Center is driving overall sales tax growth of 3.6 percent, city officials said, with 2017 expected to show another increase over the previous year. New eateries there include trendy Asian restaurant Din Tai Fung, Brio Coastal Bar & Kitchen, and Bazille in Nordstrom.
Some though, aren’t convinced the mall’s success will last.
“The mall is a dead soldier,” Shafer said. “It’s too high-end for this area.”
Local restaurant owners are pinning hopes for an improved economic climate on redevelopment of the massive Toyota campus, which should bring in new companies and workers.
“I know somebody has bought it, but it’s going to be at least a year before we see new tenants move in,” Schafer said. “We can’t lose any more (big) businesses in the South Bay, we just can’t.”