John Tuohy

john.tuohy@indystar.com

Why is it so hard to get a decent meal in Fishers?

It’s a question Mayor Scott Fadness said residents ask him all the time.

Unless one is an aficionado of the Quarter Pounder, the Triple Double Crunchwarap or a Baconator cheeseburger, only savvy epicurean explorers can find an upscale or locally owned restaurant. For a booming city of 90,000 trying to establish a balance between cutting edge and cozy, the culinary conundrum has gnawed at Fadness for a couple of years.

The mayor said there's a simple reason why fast-food joints dominate: High rents are scaring away the mom-and-pops and foodie entrepreneurs.

“We are a growing city, with new development and high rental rates,” Fadness said. “That means only the big food chains can afford to move in. The independent guy whose profits aren’t large can’t afford it now.”

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The result is a numbing assembly line of chains that forces residents to drive to Indianapolis or elsewhere if they are celebrating a special occasion or want to try something new.

In older cities, adventurous restaurateurs seek out space in neighborhoods where real estate values have sunk, often jump-starting foodie districts. Fountain Square and South Broad Ripple in Indianapolis are examples, to a certain extent, of that type of food-processed reinvestment.

Fishers is not in that mix. It doesn’t have pockets of abandoned industrial buildings or vacant homes that can be rezoned and turned into funky, new-concept restaurants, Fadness said.

The city of 35 square miles has roughly 220 chain and franchise restaurants, including six Subways, four McDonald's and four Taco Bells, according to records with the Hamilton County Health Department. Of those, 25 are independent and locally owned, according to Visit Hamilton County Indiana. Tourism spokeswoman Whitney Riggs said the office counts only independent restaurants that asked to be promoted by the office, so the number could be a little higher.

For independents, the high lease rates are akin to a food-borne disease because the small business owner can’t match the sales that established chains rake in, said Mike Cunningham, chief executive officer of the Cunningham Restaurant Group, which owns Bru Burger, Mesh, Union 50 and other Indianapolis restaurants.

“The escalating rents can make it difficult to survive,” said Cunningham.

The rents in Fishers are often twice as high as Indianapolis — $35 to $40 a square foot compared to $15 to $20, which amounts to $240,000 a year for rent in Fishers versus $120,000 in Indianapolis for a 6,000-square-foot space.

Cunningham, who has restaurants in Noblesville, Plainfield and Avon but not Fishers, said he targets $3 million to $4 million a year in sales and tries to keep rent payments to about 6 percent of the gross receipts. But with the prevailing lease rates in Fishers, Cunningham said he’d need sales of $5 million a year to retain that profit margin.

“That’s a daunting task,” Cunningham said. "You put yourself in a really dangerous situation if you can’t do really big sales. Everybody, including the mayor, wants independent restaurants, and the demographics are there in Fishers. But the rents are high.”

Fishers is one of Indiana’s wealthiest cities with median household income of $95,500 per year in 2015 compared to $49,000 for the state, according to the U.S. Census. Real estate is also more valuable in Fishers than the rest of the state; the median home was valued at $216,000 last year and $124,000 in Indiana as a whole.

Steve Delaney, who specializes in restaurants as first vice president for retail brokerage firm CBRE Group, agrees Fishers rents are high but said most restaurants are satisfied if their rents are 10 percent or less of receipt.

“But when you have high rents, you need high volume, and most of the time it’s only the chains that can get there,” Delaney said.

High-end restaurants face the added hurdle that more expensive food lowers the profit margin

“Meat is low profit margin and pizza is high volume and high profit,” Delaney said. “So the chains sell the pizza.”

Despite the expensive leases, some high-end restaurants and independents have managed to open, including upscale tapas-style LouVino on 116th Street near the Municipal Center and locally owned Four Day Ray Brewing on Lantern Street.

Ed Sahm has been a local restaurateur since 1986. He said he didn't have to worry about high rents when he opened the original Sahms at 116th Street and Allisonville Road, when Fisher's population was about 4,000. It didn't matter anyway because he owned the building.

But since then, Sahm has opened about a dozen restaurants of various motifs and has four in Fishers — Sahms, the Roost, Rockstone Pizzeria & Pub and Sam’s Bar and Grill.

“When renting, we try to stay out of the high rent areas and find places off the beaten path where the rents aren’t so high and let the customers find us,” Sahm said.

“If I was to go into a high-rent district, it would be very salty,” he said. “Unless you enter some type of deal with the developer, it would be risky. A lot of the time they went a five-year commitment on a lease and that right away can be a million dollars.”

Sahm sold his original building in 2008 and moved to a spot on the other side of Allisonville Road. He pays rent there to landowner CVS, but it is a reasonable rate because he took over the previous tenant’s 23-year lease, which was signed when rents were lower.

Sahm said finding success with a fine dining restaurant is even more difficult; what works best is a small spot that customers visit during the week as well as weekends, a tall order.

In Fishers, just one restaurant could be considered fine dining that rivals the type found in Indianapolis. Peterson's on 96th Street, at the Indianapolis-Fishers border, serves a prime boneless rib-eye steak for $52, grilled New England sea scallops for $37 and a selection of good wines.

Owner Joe Peterson acknowledges a shortage of high-end independent restaurants and said it probably benefits him, so he's not complaining.

"There is not a lot of competition, but we'll fight anybody who wants to try moving in," Peterson said. "Our main competition is the high-end chains in Indianapolis like Eddie Merlot's and Sullivan's steakhouse, but the key for us is catering to our customers and showing the personal touch."

Peterson's opened March 30, 1999, with mostly the same menu it has today. About half its customers are regulars and the rest come once or twice a year from as far away as Muncie.

Peterson's General Manger Bradley Phelps said if a business owner really wanted to capitalize on Fishers' favorable demographics, they'd find a way.

"They can all whine about the rents, but if they don't like them, they need to get in there and negotiate," he said.

The mayor has another plan. Fadness reached an agreement with developer Thompson Thrift, Indianapolis, to create a culinary campus near 116th Street and I-69 that could become a dining district.

Called The Yard, it would have 10 to 12 lots for restaurants and two buildings totaling 3,000 square feet with a shared kitchen for new businesses. The space would give startup chefs access they wouldn't normally have to commercial-grade kitchens.

"We are trying to create a culinary hub, a centralized location where people can come for a variety of choices," Fadness said.

The chefs at the shared kitchen, or incubator, would try out their concepts for a few months and if they were successful, could go out on their own. Though there'd be no guarantee that they'd stay in Fishers, the Yard increases the possibility that they would.

"If you create an opportunity for them, they could feel a string connection to the community," Fadness said. "And if they demonstrate that they can succeed, maybe they can get a low rent from a developer."

Call IndyStar reporter John Tuohy at (317) 444-6418. Follow him on Twitter and Facebook.