Twin Cities restaurants seeing a slow start to holiday season, and they desperately need some cheer

Noted restaurateur Erik Forsberg recently shut his Devil's Advocate spot in Stillwater and now prays this year's holiday revelers will drop some serious cash at his remaining two Minneapolis restaurants.

The holidays have not been a friend to restaurants in the past two years, said Forsberg along with other restaurant owners and managers. And 2024 hasn't been a great year, period, with concerns over inflation and the economy as a whole.

After Thanksgiving "it's like we walked off a cliff," he said. "Any momentum that we had seen or had up to that point just stopped. We are down year over year. It's not been easy."

As of last week, his downtown Minneapolis Devil's Advocate location on Nicollet Mall had just three bookings through January.

Forsberg, who also owns Dan Kelly's Pub, said other restaurant owners are telling him they are taking it week by week as well.

Still, industry watchers are hoping that people are ready to party now that the election is over, inflation is cooling a bit and interest rates are lower.

Deloitte found in its annual survey of the Twin Cities that seasonal activity should pick up in late November and early December. It found people expect to spend more on experiences this year, which includes socializing.

"Many of our metro members are optimistic that holiday party bookings will increase further postelection to get us to a similar or higher number than last year. Meanwhile our outstate operators, though anticipating a good season, are uncertain about a significant post-election boost," said Angie Whitcomb, CEO of the 1,600-member Hospitality Minnesota trade association that represents restaurants and hotels across the state.

Nearly a dozen restaurants have recently opened across the Twin Cities, including Minari, Diane's Place and Soul Bowl in Minneapolis and another Heather's location in Minnetonka. While that brings excitement to the scene, it also brings competition.

"We don't have as many [corporate holiday bookings] as we'd like to have. Last year we had quite a bit more," said Mark McCafferty, assistant general manager at the Hyatt downtown.

Sierra Carter, who opened HealMpls on N. Lyndale Avenue in 2022, has been surprised by a slower start to the holiday season. She only has four holiday parties booked to date and as of last week, and no catering jobs for December.

"That's a little late," she said. "But everything is super slow right now. It's a weird time."

Kittie Fahey, senior director of advancement at the Minneapolis Downtown Council, has heard similar reports across the board.

"I've been hearing from hotels that would normally have holiday gatherings that they've had lower sales," Fahey said. "They've been struggling kind of. While their room sales are excellent, in general a lot of them haven't had as much success in booking parties."

Forsberg blames the slowdown mainly on two things: election distraction and remote work trends that are still keeping many employees away from downtowns. It hasn't helped that Ameriprise Financial is shifting employees from the building across the street from Dan Kelly's to one a few blocks away.

"People are taking Thanksgiving through New Year's off. If there's any chance to work from home? They're working from home in what we would call the holiday season," Forsberg said. "That's what we're really seeing. It's almost like August in Europe. It's like a vacation month."

The reluctance of office workers to swarm downtown makes Forsberg all the more grateful for the big events Meet Minneapolis, the Minneapolis Downtown Council, sports teams and others sponsors have hosted to bring crowds near his businesses. In December, it includes bringing Holidazzle back to Nicollet Mall and several popup markets.

There will also be pre-decorated party spaces available for companies or families to use inside City Center. The food will be catered by Fhima's and Tom's Watch Bar. The new set up can accommodate 10 to 500 guests.

"There's been some real interest in that and it's gotten some attention. So that's good, because we've never done it before," Fahey said.

The Downtown Council is also hosting the city's first Peppermint Pub Crawl contest with at least 11 participating restaurants. The venues are busy decorating outdoor patios, concocting drink specials and plotting elaborate charcuterie boards for the big event. The Devil's Advocate, for example, will debut a Peppermint Mocha Espresso Martini.

Hell's Kitchen is running a series of drink specials and calling the season "Hell-i-dazzle."

The Downtown Council hopes all the December events bring 100,000 visitors downtown and pour $3 million into business coffers, Fahey said.

"We are a very, very event-driven in downtown now," Forsberg said. "That's downtown for you. People are doing that [afterwork socializing at bars] in suburbs and out in outlying communities, but unless there's an event ... they're not doing it here."

Deloitte's survey found Twin Cities residents plan to shell out $709 on restaurants, bars, concerts and other non-gift experiences this Christmas. That's up from $636 last year and $333 in 2020.

"I'm optimistic for the holiday season. It's [usually] a good time of the year. With a good November and December we see probably a 10% lift. And then, for us, it actually goes through the second week of January," said David Burley, co-owner of Blue Plate Restaurants, which run eight establishments including Freehouse, The Lowry and Long Fellow Grill in Minneapolis plus Highland Grill and Groveland Tap in St. Paul.

Blue Plate needs the holidays to boost business. The restaurants' coffers are either flat or up a bit, but seeing a little more activity lately, Burley said.

With the election finally over, Burley had six pallets of holiday decorations delivered to his restaurants to bring up the volume of holiday cheer.

"They just want to turn up, maybe unplug their phones, get together and have a cocktail," Burley said. "It's one of the reasons I wanted to really go all out with holiday decorations."