A few days after my recent post on the decision to close Panzanella restaurant in Carrboro, I received the following reply from Weaver Street Market General Manager Ruffin Slater.  I have reproduced it below in full, without any editing, with his permission.

Dear Patrick,

Thanks for your email. I appreciate you sharing how much Panzanella has meant to you and your disappointment over the decision to close. The Weaver Street board creates the policies that govern the co-op’s direction and outcomes, but the final decision was my responsibility so I want to tell you more about the rationale and process.

Since the recession in late 2008, fewer community members have been eating at Panzanella. When Panzanella’s lease came up in 2010, we decided to renew for three additional years with the anticipation that the number of diners would rebound. In spite of our efforts, Panzanella has 25% fewer diners today than we did in 2008. In the meantime, expenses have gone up, including rent, utilities, salaries and health insurance. The combination of declining customers and rising expenses means that Panzanella has been incurring significant losses.

With Panzanella’s lease coming up at the end of this year, we needed to decide between two difficult options: closing, which would disappoint loyal customers and displace staff; or making a multi-year lease commitment, which would risk incurring continuing losses. In making this decision, I tried to weigh the interests of owners and employees as well as Weaver Street’s long-term goals.

I very much appreciate that there are many loyal customers like you for whom Panzanella means a great deal. As Panzanella is part of Weaver Street Market, we look at the restaurant with a holistic approach: is the business model sustainable and does it benefit the co-op as a whole to continue? When Weaver Street opened Panzanella it was one of the few restaurants featuring local food. Now there are many choices. While this is great for our town, it means that Panzanella doesn’t play the unique role that it once did.

Since we renewed our lease three years ago, Panzanella has been trying to attract more diners. Over this period, sales in each of our Weaver Street stores have gone up each year, while sales in the restaurant have continued to decline. The upswing in store sales after a difficult recession tells us that the stores fill a need with our owners and customers. In contrast, the decline in Panzanella sales tells us that the restaurant fills less of a need than it once did.

In an effort to keep Panzanella open, we could have slashed expenses. Panzanella has higher costs than most restaurants because it uses higher priced ingredients and offers benefits such as paid time off and health insurance. However, this approach would have compromised our food offering and created a second class of employee within our co-op. We could have tried a different concept or changed locations, but this would have required an even bigger investment and even more risk.

In an effort to keep Panzanella open, we could have continued to subsidize the losses with revenues from our stores. This kind of cross-subsidy makes sense if it helps to accomplish the co-op’s broader mission. However, subsidizing Panzanella precludes other potential uses for those resources. We receive a lot of feedback about ways Weaver Street should improve, such as making the food in our grocery stores more affordable or filling positions in the co-op that have gone unfilled since the recession. At some point, it doesn’t make sense to continue to postpone progress on these goals in order to keep Panzanella open

After weighing all the factors I made the difficult decision that the responsible choice was to close Panzanella. In order to develop a positive transition path for Panzanella employees, it was necessary to make a definitive decision about closing and to develop a clear timeline. This allows us to concentrate time and energy in placing staff in other positions within Weaver Street or making a smooth transition to a new job. We have started that process and I’m hopeful that it will have a positive outcome.

Thanks for taking the time to express your feelings about Panzanella. Panzanella has made a great contribution to building community and to growing the interest in local food. It has been a wonderful restaurant and it sad for it to close.

Sincerely, Ruffin

Ruffin Slater, General Manager
Weaver Street Market
437 Dimmocks Mill Road Suite 10
Hillsborough NC 27278
P. 919.241.1767
ruffin@weaverstreetmarket.coop