SIOUX FALLS, S.D. (Dakota News Now) – Earlier this week, the surprise announcement from the owners of Papa Woody’s Wood Fired Pizza of their abrupt closing left customers with questions.
The owners of Papa Woody’s did not reply to Dakota News Now’s interview requests. No doubt, it’s been a difficult week.
The Facebook post made mention of whether the closure was effective immediately or not. On Papa Woody’s website, the hours and location page already shows as “Page not found” and their service for ordering online will not accept any orders.
Employees are now left without a job, customers won’t get to experience Papa Woody’s pizza and the livelihood of the owners that they fought so hard for is now gone.
It’s also a reminder of what so many local restaurants face.
2nd Street and Phillips Avenue during the dinner hour should be a busy place. Instead, cars pass by an empty restaurant.
Papa Woody’s closure has sent shockwaves for small restaurants in South Dakota. In their post on Facebook, co-owner Lisa Esser addressed financial challenges.
“Steve and I have used every dollar of our own money to try and keep our doors open, and we have nothing left to give,” Esser said in the post.
The South Dakota Retailers Association also acts as the state’s Restaurant Association, and executive director Nathan Sanderson said that inflation has created more problems for an already difficult business.
“Between higher costs, fewer customers, it’s hard to continue operating for a business that has a very, very low margin. A lot of restaurants operate at a margin that’s about three percent. That’s kind of the industry average,” Sanderson explained.
Sanderson said that higher costs due to inflation are not just found at the grocery store. Higher overhead costs of food, utilities and labor wages have cut into their margins. At the same time, working families budgeting and trying to save money have gone out to eat less often, especially in the last few months. Sanderson said that this changes the way most restaurants operate and they’ve adapted by changing hours, changing the number of days open, changing menus and more.
Papa Woody’s is not alone. This year, Obscure Brewing and Lupulin Brewing also announced they would close their doors in Sioux Falls.
It begs the question, does the abundance of restaurant options play a role in these struggles? Sanderson said it could be a factor.
“Competition is a very, very real thing. Again, as a very low-margin business, anything that affects your business is a big thing,” Sanderson said.
Severance Brewing Company has been a business neighbor to Papa Woody’s since the pizza location moved in, bookending the Cascade Building with a unique partnership.
They’ve seen challenges in the industry firsthand and in a statement to Dakota News Now, owner Scott Heckel said:
“We’re extremely saddened to hear about our neighbors closing their doors. Papa Woody’s has been a great partner since they moved into the Cascade, essentially allowing us to have a kitchen without actually having a kitchen in our space. It’s more important than ever for small businesses to continue to lift each other up where we can and for the Sioux Falls community to continue to support them.”
Whether it was a result of higher costs, more competition or something else, Sanderson said that it’s a stark reminder that if you want local establishments to succeed, dining local is critical now more than ever.
“Restaurants depend heavily on this time of year as well and so if we are interested in seeing local restaurants, local breweries, local businesses thrive, we need to patronize those businesses especially this time of year,” Sanderson said.
The South Dakota Retailers Association has around 4000 members statewide. Sanderson estimates around half of the 750 SDRA member businesses in Sioux Falls are restaurants.
Papa Woody’s was not a member of the South Dakota Retailers Association restaurant division.
“It’s also worth noting that restaurants have a tendency to turn over relatively quickly,” Sanderson said.
Customers may be asking about what happens now for customers who purchased Papa Woody’s gift cards this holiday season.
Typically, gift cards become unusable and there is no guarantee of a refund, but there are some steps you can take.
The Office of the South Dakota Attorney General said if you purchased a gift card recently, to file a complaint with the Division of Consumer Protection.
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