Is Nashville's dining scene saturated?

When Arnold Myint’s family broke into the Nashville restaurant business in the 1970s, there was no “it city” moniker, no James Beard awards and barely any food scene at all.

His mother, Patti Myint, had the foresight to invest on Belmont Boulevard with her International Market, at a time when few others were taking culinary chances in an underdeveloped restaurant industry.

Four decades later, Nashville’s food scene is booming. Chefs from across the country are planting their flags in Music City, new restaurants seem to open by the week, and Nashville has earned a national reputation as a foodie town.

But how much is too much? Is Nashville’s restaurant bubble in danger of bursting?

If you ask Arnold Myint, chef/owner of PM, Blvd and Suzy Wong’s House of Yum, the answer is yes.

“Sadly, in terms of oversaturation, these (new) businesses will be around for a little bit, but I don’t think they’re going to have a legacy of 40-plus years that made Nashville,” Myint said. “The consumer obviously dictates what’s successful, and the consumer right now wants a really shiny new toy to play with, and that’s OK. That’s what the business is about these days.”

The restaurant industry is a major economic engine for the state. In 2015, Tennessee had 10,556 eating and drinking establishments with projected sales of $11.7 billion, according to the National Restaurant Association (NRA). Restaurant and food service jobs are projected to increase 10.6 percent to 325,800 by 2026.

The Greater Nashville area is home to nearly half of all the restaurants in the state, and the food culture has become a major selling point for the Nashville Convention & Visitors Corp.

“It’s the difference maker in us being able to compete with New Orleans and even Atlanta, where before we had to go on charm,” said CVC CEO Butch Spyridon.

The Nashville area has gained 490 restaurants since 2010, bringing the restaurant count to 5,395 in fall 2016, according to the NRA. The restaurant count has grown each year since 2010 but dropped slightly in 2016 as the competition increased.

Since 2014, 78 restaurants have opened downtown, according to the Nashville Downtown Partnership. Compare that to only 19 restaurant openings in Charlotte, N.C.’s downtown during the same time period.

Nashville’s restaurant count is rising at a much faster clip than the total U.S. market, which grew 0.1 percent from 2010 to 2016. For comparison, Nashville has seen a 10 percent increase in restaurants since 2010, Austin, Texas, has seen a 12.6 percent increase, and Denver has seen a 3 percent increase.

High-profile Nashville restaurant openings in 2016 ranged from chef Josh Habiger’s Bastion and small Connecticut-based chain Barcelona Wine Bar to local food pioneer Deb Paquette’s Etc. and New Orleans restaurateur John Besh’s Marsh House.

The accolades continued to roll in, with Bastion and Little Octopus landing a spot on Southern Living’s list of the South’s best new restaurants and City House chef Tandy Wilson winning a coveted James Beard Award.

It’s undoubtedly an exciting time for Nashville’s food scene — and there are still dozens of eateries slated to open this year — but it’s also concerning to some restaurant operators who worry the market has reached saturation, particularly within certain dining segments.

“About five years ago we got all this national attention with 'it city' and the TV show. I think everyone thought they could come here, put their name on a restaurant, make some investment and it was going to be a home run. Ten years ago that was the case, maybe even five years ago. Today, that is definitely not the case,” said Sam Reed of Reed Hospitality Group, which owns Sinema and decided in November to close casual seafood restaurant The Hook.

Reed said they just couldn't make the numbers work at The Hook. The group plans to open a new concept in the building on growing Eighth Avenue South.

“If only a third of the restaurants (in Nashville) are full, you’re losing money. If you’re a fine dining restaurant or something that needs to trade on a lot of volume, you’re losing a lot of money. That isn’t sustainable. That’s what happened at The Hook; there weren’t enough bodies in there,” Reed said.

He believes Nashville’s fine dining segment is crowded but there’s still room for casual, everyday restaurants that serve high-quality food at a reasonable price. He cited Martin’s Bar-B-Que Joint, BrickTop’s and the upcoming Von Elrod’s Beer Garden & Sausage House as concepts that resonate particularly well with Nashville consumers. He also said there's opportunity for more ethnic dining.

But opening a restaurant takes a tremendous amount of risk because the industry is notoriously difficult and profit margins are slim. The causalities are often mom-and-pop or independently owned restaurants.

That’s reflected in the restaurant trade group's data, which shows the number of chain restaurants in Nashville grew 1.5 percent from fall 2015 to fall 2016. At the same time, the number of independent restaurants fell 3.8 percent. Since 2010, the number of chain restaurants has increased 16.3 percent while independent restaurants have grown by 3 percent.

“It’s not just the locals that are here to swim; everybody wants to swim in Nashville. Sadly, the locals are the ones that are going to sink,” Myint said.

The nonprofit restaurant association Nashville Originals was created to support and promote the city’s independent restaurants. The group has more than 60 members and also organizes Nashville Restaurant Week.

Claire Crowell, president of Nashville Originals and chief operating officer of fast-growing restaurant group A. Marshall Family Foods, said it’s important to cultivate the network of locally owned restaurants because more diverse options build a strong food culture.

“We’ve seen that in downtown Franklin since we opened (Puckett’s) in 2004. We were one of, like, three restaurants and now we're one of maybe 10 in the core area. Because of that, there’s more of an attraction for people to come to downtown Franklin,” Crowell said.

Crowell is encouraged by growth in the hospitality industry, but she said hiring and retaining employees is a major challenge for many restaurant operators. In 2015, the NRA said many restaurant operators are struggling because customer traffic is strong but the labor pool is shrinking.

To combat that, the CVC is working across the country to fill hospitality job openings in Nashville.

“We are hosting job fairs and we’re starting to go out and visit college campuses around the country and talk about Nashville as a destination, hospitality as a career path and the opportunities that are here. Then we’re continuing to talk to the mayor’s office and others about housing and even local schools about workforce development,” Spyridon said.

Hiring isn't the only hurdle for Nashville restaurant owners. Many restaurateurs have bemoaned long wait times for inspections caused by the building boom. That delays restaurant openings and causes operators to bleed money. Other issues include rising rental rates and a lack of parking downtown and in hot neighborhoods.

“Our profit margins are pretty tight so you really have to work hard to negotiate a good (rental) rate, and sometimes we look at opportunities from our end, and it might be a killer location but we can’t make the numbers work,” Crowell said.

The CVC counts a whopping 92 restaurant openings already announced for 2017, including two concepts from local restaurateur Miranda Whitcomb Pontes, Strategic Hospitality/chef Julia Sullivan's Henrietta Red and Chattanooga's Milk & Honey.

Spyridon said he expects the boom to level off — but that's not necessarily a bad thing.

“I think that we are definitely nearing the bubble, and I’d say the same thing on hotel development. If all the hotels that have been announced happen, we have some growing pains coming. The same thing with restaurants. … The strong will survive," Spyridon said.

By the numbers: Nashville restaurant count

Fall 2010: 4,905

Fall 2011: 5,000

Fall 2012: 5,176

Fall 2013: 5,301

Fall 2014: 5,312

Fall 2015: 5,446

Fall 2016: 5,395

From fall 2010 to fall 2016, chain restaurants grew 16.3 percent in the Nashville market while the number of independent restaurants increased 3 percent. Overall, Nashville has gained 490 restaurants since 2010.

Source: National Restaurant Association

By the numbers: Tennessee restaurant industry

10,556: Number of eating and drinking establishments in the state in 2015

$11.7 billion: Projected sales in Tennessee's restaurants in 2016

294,800: Restaurant and food service jobs in Tennessee in 2011

325,800: Projection for the number of restaurant and food service jobs in Tennessee in 2026

Source: National Restaurant Association

Reach Lizzy Alfs at lalfs@tennessean.com or 615-726-5948 and on Twitter @lizzyalfs.