On a frigid Saturday in January, some 60 clued-in diners crammed onto the bar stools and tatami mats of Izakaya Katsu for an early taste of the imported Japanese gastropub that had quietly opened in Detroit's Woodbridge neighborhood.

The first and only U.S. outpost of a Nagasaki-based chain, Katsu’s only exterior signage was a small, hand-painted wooden board with Japanese characters and the English “OPEN” sign, propped up by a plastic crate next to some empty sake bottles.

But the lack of flashy signage and Katsu’s scant online presence didn’t prevent the restaurant from being full on its third weekend in business.

The man sitting next to me at the communal table said it was already his third visit. We’d gotten to talking because the servers kept mixing up our orders. Service that night was such a mess you had to laugh or you were in for a very bad time.

Six months later, Katsu was closed, just the latest victim in a highly competitive dining scene that's grown immensely over the last five years. Now, the market may have finally reached a saturation point.

In an interview with Eater Detroit, local partner Joshua Chiatovic partially blamed his overseas’ partners lack of understanding of the American market and its specific food and labor costs, which caused the restaurant to bleed money.

In addition to Chiatovic having very little restaurant experience himself, Katsu was also the second izakaya-style restaurant to open in the area in a month, and just one of many restaurants of various genres, locations and price points to close recently.

Metro Detroit's recent spate of restaurant closings began quietly just before Christmas, with the end of the Conserva in Ferndale and Small Plates on Broadway downtown.

Then came the splashier shutters: the highly visible downtown outpost of the Hard Rock Cafe and Chicago-style pizza import Giordano’s, Royal Oak’s longtime beloved pizzeria Pasquale’s, Midtown crepery Le Petit Zinc, Axle Brewing Co.’s Livernois Tap in Ferndale, and the Allenby and Pursue stalls in downtown’s Fort Street Galley food hall.

And let’s not forget the development reckoning in Eastern Market led by Sanford Nelson and his FIRM Real Estate company, which precipitated a dispute with Russell Street Deli that will see that restaurant close in September. (Farmer's Restaurant, Mike's Coney Island and the Mootown Creamery also shuttered since Nelson became their landlord, though all have reportedly said their reasons for closing were unrelated.)

More:What Detroit really loses when a place like Russell Street Deli closes

Shrinking entertaining budgets long ago squeezed the tradition of the three-martini corporate lunch, which likely helped precipitate the closures of Cameron’s Steakhouse and Mitchell’s Fish Market in Birmingham and McCormick & Schmick’s Seafood & Steaks in Troy.

Meanwhile, celebrity chef Marcus Samuelsson, who’d long been eyeing a downtown spot for a Detroit location of his popular Red Rooster restaurant, recently scrapped those plans, according to multiple people with knowledge of the deal.

Of course, restaurant closures are inevitable in this cyclical industry of low margins, high turnover and epic failure rates. But for close observers of the local dining scene, something about the tempo and type of restaurants affected reflects a larger national shift, one that’s being felt both in Rust Belt cities like Detroit and Indianapolis as well as the longtime culinary coastal hotbeds of New York City and the San Francisco Bay Area.

“Most of those independent, chef-owned, casual fine-dining restaurants that came to define the last decade of dining have proven difficult to sustain as chefs burned out, rent and food costs increased, and the labor pool, especially in the back of the house, dwindled to near catastrophically low levels,” writes food journalist Kevin Alexander in his new book, “Burn The Ice: The American Culinary Revolution and Its End” (Penguin Random House).

“The social media that brought exposure to creative ideas without traditional gatekeepers now overexposes trends at lightning speeds while rewarding whichever bullies and copycats are willing to scream loudest into the void. The small-town feel of many of these neighborhoods has become an oversaturated marketplace controlled by hostile landlords and aggressive developers intent on capitalizing on past excitement while whitewashing a neighborhood’s culture and history," Alexander writes. "The words ‘craft’ and ‘artisanal’ and ‘farm-to-table,’ once vitally important signifiers of the movement, have become so commonplace they’ve really stopped meaning anything — or, worse, have taken on a sneering, ironic edge in the mouths of the cynics.”

Detroit bubble bursts in half the time

The places and events Alexander, a James Beard awardee, details in his book cover a 12-year period across America, but the same phenomenon he writes about occurred in less than half that time in metro Detroit.

On November 7, 2014, Judge Steven Rhodes approved Detroit’s adjustment plan, allowing the city to exit from the largest municipal bankruptcy in U.S. history. Two days later, former Roast executive chef Andy Hollyday and his business partner/beverage guru Evan Hansen opened the doors at Selden Standard, a seasonal New American small plates restaurants that utilized farm-procured produce and sustainable proteins cooked over a live fire. Hollyday and Hansen had turned a decrepit former dry cleaners in a rough-trodden stretch of the city into Detroit’s darling vanguard of modern dining.

"We saw into the future,” Hollyday told the Free Press ahead of the opening. “Development is moving toward downtown," and with a new arena coming and other new projects, "we hope it kind of meets us in the middle."

From Selden’s door today, you can see a year-old luxury condo building with an upscale Italian restaurant that mills its own flour on the ground floor, an experiential bar that serves scented cocktails out of the basement of an old Victorian house, and soon a pizzeria and Italian market will fill the former Will Leather Goods space a block away.

Midtown — as this part of the old Cass Corridor is now branded — is one of the hottest real estate markets in the city, where condos can sometimes sell for close to $300 per square foot.

“The craziest part about Detroit is that our real estate boom happened so fast,” said James Rigato, chef-owner of Mabel Gray, which opened a year after Selden in the blue-collar suburb of Hazel Park and quickly became a poster child for the area’s growing restaurant scene.

“2009 was probably financial bottom and in 10 years you have, like, Manhattan prices in some spots. It sucks that we hit rock bottom 10 years ago with the restaurant scene and the real estate scene, so a lot of talent left. And then before you had the talent that could regenerate, the demand for restaurants and the real estate boom is upon us. So we have a real estate boom but we have a talent drought. Conveniently, so does the nation, which doesn’t help our case. But I think for the public, because it’s so saturated, it’s hard to tell a generic restaurant opening from an exciting restaurant opening, where it used to be you knew it was coming. When Andy Hollyday opened Selden Standard, people were just so excited and the buzz lasted for years.”

Next year, Hollyday and Hansen plan to open their follow-up to Selden, this time purchasing a building on Woodward in Detroit’s “up-and-coming” New Center neighborhood, which recently welcomed a casual Afro-Caribbean spot and a vegan cafe/educational kitchen. In the coming months, the neighborhood is slated to receive a food hall, a Burundian cafe, a sit-down Jamaican restaurant, and a second outpost of Supino Pizzeria, to name just a few projects in development.

Compared to the days leading up to Selden’s opening, the dining landscape looks very different.

“Surely it would be naïve to think that restaurants can continue to open at the pace they’ve been opening,” Hansen wrote in an email. “Even the cost of construction seems to be escalating enough that it will begin to price people out or scare some people off. And with so many new spots, the audience for some of these restaurants is being spread out.

“I can understand why one would look at the rapid growth of the restaurant scene in town and see it in the context of a boom – but prior to said boom, there was clearly an unmet desire for a lot of what the new(ish) restaurants are offering," said Hansen about the Detroit scene. "And barring any broader economic issues, that desire isn’t just going to go away.”

The economy may be humming along based on national unemployment and GDP numbers, but some headwinds are turning cool: plant closures and layoffs at GM and Ford, Michigan’s unemployment rate inching up, developments by Bedrock and The Platform appear to be slowing and the local housing market is showing its own signs of fatigue. Taken together, it has some insiders cautious about the future of restaurants.

“Restaurants are really facing some really difficult demographic headwinds,” said Bill Knudson, an agricultural economist at Michigan State University who believes the recent struggles in the auto and agricultural sectors will have ripple effects through the restaurant business.

“People are time-constrained, so they just don’t feel like they have an hour or hour-and-a-half to eat dinner at a restaurant. There’s also this whole issue of where you’re going to find waitstaff and chefs and dishwashers. There’s a real difficulty in attracting workers. I think that’s a problem," he said. "And restaurants really have a difficult time passing on higher costs to consumers because there’s so much competition in the industry.”

Who's hungry? Diners and workers wanted

Chef Max Hardy triumphantly returned to his hometown of Detroit in 2017 after selling out a weekend of pop-up dinners here, proof positive that the city would welcome him and his style of cooking. Hardy had spent his teenage years and 20s climbing the kitchen ladders in Miami and New York, private cheffing for NBA stars and collaborating on cookbooks with the likes of Amar'e Stoudemire and Bob Marley’s son Rohan. He returned to Detroit with ambitious plans to open three restaurants within the year.

Today, Hardy’s enthusiasm is tempered by the on-the-ground reality.

“It’s just so many restaurants opening with the lack of people,” Hardy said. “You have the lack of people and the lack of talent to help keep the restaurants going. Those two are driving it. You need people to push this product out and you need customers to come in and receive those products.”

Hardy opened the casual sit-down restaurant River Bistro in Detroit’s Grandmont-Rosedale neighborhood in the summer of 2017 to much buzz and fanfare. A year later, he cut weekday service in part because of the lack of dinner guests. The Bistro is now open Wednesday through Sunday, but it’s not exactly smooth sailing.

“It’s a struggle still,” he said. “We just don’t have the same support that we had when we first opened. All the suburban business goes downtown or Midtown instead of going to the west side of Detroit.”

Last summer, Hardy opened COOP in the Detroit Shipping Co., a food hall in Midtown made of re-purposed shipping containers. But the crown jewel of his hospitality trifecta, a higher end full-service restaurant called Honey, is still just an idea. His initial location in the Ilitch’s District Detroit fell through because much of that development has failed to transpire, and delays also hindered plans for another spot in New Center.

“I haven’t won, but I’m still here trying to make it work and willing to continue being part of this whole food scene even though I think there’s some kind of a bust coming,” Hardy said. “Hopefully we can just ride the wave and not be part of that bust. All in all I’m glad to be back. I just thought it would happen a little different and a little sooner.”

Flowers of Vietnam Chef George Azar opened his hip Vietnamese restaurant in a former coney island in his old southwest Detroit neighborhood last year and said he sees a silver lining in the maturation of the market.

“The boom is over,” Azar said. “I think it’s a cycle that we’re going through that any city that has a reputable food scene has to go through. In the grand scheme of things, it’s part of the process. It means now everybody is not going to be able to get away with mediocrity. It’s about to be Darwinism.

“This is when it really gets fun. It’s like now let’s see who’s really got it. I might end up reading this later and biting my tongue, but oh well. I’m not going to stop because of the market around me. I’m going to stop when I can’t push any more.”

Like many, Azar points to the underlying real estate game as a major driver.

“The real estate market is attractive in the city and how you make it even more attractive is restaurants in the area,” he said. “It’s a symbiotic relationship. If you look at most of the people that are successful right now, they’re all partnered with developers and the developer owns the real estate.”

It’s not just the city of Detroit, either. The same economic forces are weaving their way through suburbs like Hazel Park.

“I bought this building for 80 grand,” Rigato said of the former greasy spoon that now houses Mabel Gray. “My neighbor sold for 390. I wouldn’t have paid more than 180 for it. So now, essentially as long as that person owns that building, it’s never going to be worth it for me to expand. So Mabel Gray happened because cheaper real estate. There’s some good and bad. I often say that chefs and restaurateurs are the victim and the criminal."

Rigato said just a few years ago he was constantly receiving inquiries from out-of-town developers and chefs, all looking for a piece of the growing pie. That no longer happens with such frequency.

“I think 10 years ago Detroit was way behind for the volume of dining,” he said. “We’ve caught up now and I think the future is uncertain because profit margins are slim on an average restaurant. You add crazy real estate costs and landlords and corporate development and labor concerns and an unstable political landscape when you already have a high failure rate industry and a slim margin and an economy that in recent memory was at the bottom of the barrel — you might open up a second concept and that second concept might drag down your original.”

Some hoping that the cream rises

Many considered in the top tier of current restaurants are pushing ahead with expansion plans regardless of the industry challenges.

“My dad always told me that the top 20 percent in any industry will be fine,” said Lady of the House chef-owner Kate Williams. “You just need to be in the top 20. Hopefully our businesses are there and will continue to be there.”

She and her partners are close to debuting their next restaurant, an all-day diner named Karl’s on the second floor of the Siren Hotel downtown. For her, expansion is a way to retain staff by offering new growth opportunities which, she said, has stemmed the rampant turnover common in the industry.

“We created a sort of restaurant group earlier this year so that folks could work in between our properties and we started hiring to have a management company for that so that everyone felt supported and they could grow within the organization based on what their desires were,” she said. “The staff turnover went from huge to almost nothing.”

Hansen is also optimistic about his team’s new concept in New Center, pointing to those same growth opportunities that an operator can offer staff when the number and type of positions grows.

“The acceleration of the development of the restaurant scene in the area has been astonishing,”he wrote in an email. “And while it almost certainly can’t continue at that rate, we still believe rather firmly in the momentum that it’s generated.”

Williams said that there’s a new reality to that momentum, which a few years ago wasn’t quite there.

“I just think you can’t be as bright-eyed opening a restaurant in Detroit now because we’re now held to those same standards that other big cities are held,” she said. “If you don’t do your homework, if you didn’t do everything right, it’s not going to look good.”

But you can do everything right and expand your staff and footprint and find yourself burnt out. That’s what’s happening to Nikita Sanches, the chef and owner of Rock City Eatery in Midtown. In the fall of 2016, Sanches reopened his cult Hamtramck hit in a larger space with expanded hours on Woodward right next to a QLINE stop. Six years after becoming a restaurateur, Sanches said he’s burned out and ready for a break from the industry despite being busy.

“Since we opened up, even back in Hamtramck which was over six years ago now, it’s just been 70-plus-hour weeks,” he said. “In the past six years I’ve maybe seen my grandmother a dozen times, an hour at a time. It just literally feels like I am wasting precious moments that I could be spending with people that actually love me and care for me. I think my priorities have changed.”

Many of the people who’ve jumped on the restaurant bandwagon have come from other industries. Some are real estate developers who double as operators to make their spaces attractive. Some are hobbyists or folks adjacent to the industry who think they can make their great concept work. Many don’t realize what they’re in for until it’s too late.

“What I described is standard,” Sanches said. “If you care about your product and you’re passionate about your establishment, you’re going to commit those kinds of hours. And a lot of people, I don’t know if they realize that’s what it takes to be successful in this industry.”

He’s not sure yet what the future holds for him and Rock City, but he’s taking all offers seriously and hopes to be able to walk away from the industry, at least for now.

“There are way more places that you assume are printing money that may be losing it, or are neutral, or are an investment vehicle for a larger entity, or a writeoff, or a passion project,” said Daniel Riley, who is the president of Axle Brewing Co. and ran its Livernois Tap in Ferndale until it closed last month. “I honestly think that there’s way more of that than we even realize.”

Riley, who for much of his career worked in the business side of magazine publishing for Time Inc., said Axle’s troubles aren’t necessarily indicative of the state of the restaurant industry. Craft brewing is having its own downturn, distribution was a challenge with Axle's cost structure and he and his partners faced an uphill battle from the outset by buying a distressed brand.

Regardless, Axle's closing was a huge blow to Ferndale’s scene. The two-year-old brewery was known for being engaged in the community, hosting events and taking progressive political stances that aligned with many of the local residents. It was touted as a neighborhood anchor and catalyst for more development along the Livernois corridor.

“There are people who said: ‘Imagine if you’d opened Livernois Tap three or four years before,’” he said. “Because there was less competition, it would’ve been perceived as way more novel. We saw a little tick down when Antihero opened up. And Bobcat Bonnie’s opened and another tick down. And that partly was our problem, because by design we cultivated a little bit of the people who want to see the new and what’s next and are a little more foodie-driven and care about the music and care about the vibe. Yeah, they’re going to check out Bobcat Bonnie’s.

“Somebody with an amazing concept and great service and a beautiful place is still going to kill it. But it’s not going to come at nobody’s expense.”

By and large, nobody characterizes the current state of metro Detroit’s dining scene as a coming apocalypse. But the Gold Rush, as they say, appears to be coming to an end.

“I think it could be that people were so excited about the Detroit comeback that there may have been an over-investment in restaurants,” Knudson, the MSU economist, said. “And now you’re beginning to see a pullback to a level that makes a little more sense given the population and the incomes in the area. Four or five years ago, people were really excited about Detroit. And I think they still are, but I think — this is just my impression — that there’s an optimism that’s tempered with reality now.”

Send your dining tips to Free Press Restaurant Critic Mark Kurlyandchik at 313-222-5026 ormkurlyandc@freepress.com. Follow him on Twitter @MKurlyandchik and Instagram @curlyhandshake. Read more restaurant news and reviews and sign up for our Food and Dining newsletter.