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Posted: 7:28 p.m. Wednesday, Dec. 19, 2012

Local Restaurants shutting down, not unusual says professor

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Square Cow closes
Square Cow closes

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Square Cow closes

By Genevieve Curtis

EL PASO, Texas —

New local restaurants unexpectedly close their doors and without warning El Paso favorites shut down.

This week, the Square Cow, a gourmet burger joint on the West Side, suddenly closed. The brand new eatery, boasting 100 beers on tap, just celebrated a grand opening in June.

Back in June we talked to owner, George Bustamante, who explained the modern restaurants unique concept and open kitchen style. Now, just six months later, the lights are off and Bustamante did not return our calls for a comment. Employees now are out of a paycheck, just days before Christmas.

Dr. Tom Fullerton, an economics professor at the University of Texas at El Paso, said the restaurant industry can be tricky.

"The restaurant industry is one of those industry's that is highly competitive and there are lots of new restaurants that open every year and there are a lot of existing restaurants that close every year," said Fullerton.

The closing part seems to be a recent trend. This week it's the Square Cow, but it comes on the heels of other local favorites like Jaxon's Restaurants & Brewing Co. and Cappetto's, which both closed in October.

Fullerton said it's hard to pinpoint the exact reasons restaurants fail.

"It doesn't require that much money to open up a restaurant and usually the licensing requirements are fairly reasonable, that combination of relatively low barriers to entry mean that a lot of people get into the restaurant business. It also means that a lot of restaurants go out of business every year everywhere in the world and El Paso is no exception to that rule," said Fullerton

Stiff competition in the industry can make it tough to turn enough dough to keep cooking.

"A lot of them close simply because competitive pressures cause profit margins to be razor thin," said Fullerton

Other reasons can be traced back to management.

"Other times restaurants can go out of business due to bad management," said Fullerton.

The sudden closing of old staples or new flavors is not exclusive to El Paso but rather reflects a national trend according to Fullerton.

"A lot of restaurants went out of business simply because of the recession and people started eating at home or they started eating at lower price restaurants. It is sad when long time favorites go out of business. But long time favorites go out or business anywhere in the country. That's not something peculiar to El Paso. That's just the nature of the game, "said Fullerton.

However, the borderland does have a unique marketplace that may explain some changes not seen in other parts of the country. Fullerton explained many restaurants in Ciudad Juarez packed up and headed over the Rio Grande between 2008 and 2011 at the height of the cartel violence. He said some of them weren't able to break into the El Paso market; others closed having a hard time with the different regulations imposed on restaurants in the U.S.

Fullerton said some closed down and went back to Juarez once some of the violence subsided while others did force some local El Paso restaurants out.

Fullerton said the comings and goings of local eateries is not indicative of the local economy. In fact, according to research by The Department of Economics and Finance at The University of Texas at El Paso in its Borderplex Economic Outlook UTEP Borderplex the food and beverage industry in the Sun City is set to grow, not shrink. The industry is projected to increase sales by 5 percent in 2013.

"So this is a big booming industry locally and it's going to remain that way for a lot of years to come," said Fullerton.

Other homegrown local chains are enjoying success and expanding into different cities. Taco Tote now has shops in Phoenix and Houston.


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