The Downtown Project: Retail & Restaurants

Welcome to the Downtown Project. This is a four-part series on the part of our city that makes Memphis Memphis.

We started this series with one simple question: How is Downtown doing? That question became important because perceptions of Downtown Memphis — and downtowns everywhere, we discovered — were not exactly positive.

Narratives emerged: Covid drained the office workers from Downtown Memphis. The downstream effects of that hit restaurants, events, stores, and more. Another narrative held that violent crime had gotten so bad in Downtown Memphis that people — especially tourists — just refused to go there anymore.

The trouble with these narratives was that they were only partly true. But these same narratives have been partly true in almost every downtown in America, according to the Brookings Institution.

Yet crime continues to recede across Memphis and the country. Turns out the bulk of those tourists never really left. And while downtown office markets remain softer than pre-pandemic levels, they — and the money they involve — are making a slow, slight, frustrating comeback.

But Brookings suggests that the downtowns we remember may never return.

“There is no going back in time to 2019,” the think tank says in a report.

Instead, Brookings says downtowns need to adapt. But how?

The Downtown Project will focus on these issues, examining the above questions and the general health of the neighborhood in terms of its office and residential sectors, as well as tourism, retail, and restaurants. And we’ll unpack the Downtown Memphis Commission’s three-year plan for Downtown’s next chapter. — Toby Sells

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The health of Downtown’s retail and restaurant sectors seems to be, uh …umm, okay? So, now that I have your complete and utter confidence in my reporting, allow me to explain.

In the previous two installments of this series, I’ve been able to give a definitive thumbs up or down on the health of Downtown. That’s because I had data to back us up.

How much office space is vacant? How many Downtown homes were empty? How many visitors stay in Downtown hotel rooms each night? How much is all of this compared to Birmingham, AL, and Louisville, KY? These are the peer cities, approved by the Downtown Memphis Commission (DMC), that we’ve used for comparisons throughout this series.   

I stood these data next to one another, measured them against each other, and could see that — among peer cities — Downtown Memphis was doing just fine. (And it is, too. Check our previous stories on Downtown’s tourism and real estate markets.) Backed by such numbers, I could begin each of the previous stories with something like, “When it comes to tourism, Downtown Memphis is … ”

This time, though, our Magic 8 Ball returned “reply hazy, try again” every time we asked it about the health of retail and restaurants. No pure numbers exist. How are restaurant sales Downtown? How often do stores open and close there? Cities collect this data differently, if they do at all. Hazy, yes. But I dug up enough numbers and a few perfectly positioned experts to at least give us a sense of its health.

With those, I can say that when it comes to restaurants and retail, Downtown Memphis is healthy. More than 180 restaurants. More than 75 stores. Also, Downtown Memphis is full of people, even if they don’t teem the streets.

On a typical day, more than 100,000 people work, live in, or visit Downtown. The DMC says foot traffic has recovered to about 85 percent of pre-pandemic levels.

One thing that makes this story different from the others is the nature of the businesses themselves. Office workers go where their jobs are. Tourists can only choose from a limited number of hotels. Downtown residents commit to a home for months or years at a time. Those decisions are pretty fixed.

Restaurants and stores are not fixed decisions, and half the fun is in the choosing. Every meal out is a choice. Every shopping trip is a choice. These are often made on a whim. A family decides to spend a Saturday afternoon Downtown and pops into A. Schwab. A couple decides to try a new restaurant. Friends stop for a nightcap after a show at the Orpheum. Downtown businesses depend on people making choices like these every day.

This makes restaurants and retail one of the clearest measures of Downtown’s vitality. They succeed only when people choose to come, stay a little longer, and enjoy themselves.

However, this vitality is uneven across what we call “Downtown.” It’s a huge neighborhood of neighborhoods. It’s about six-and-a-half square miles. You could fit five Gracelands in it, six University of Memphis campuses, and 12 Overton Parks.

Downtown’s many neighborhoods serve different audiences. So it doesn’t make sense that every corner of Downtown should be jamming with the vitality of tourists and locals enjoying themselves.

Civic Square and the nearby courthouses serve employees, citizens, lawyers, jurors, and people with court business. Beale Street is for tourists, concerts, big sporting events, and nightlife. South Main is the walkable collection of shops and restaurants. Mud Island, Uptown, South End, and the like are primarily about residents.

The real challenge for Downtown isn’t just making each neighborhood successful. It may be getting people to move between neighborhoods. Read more on this in a sidebar here from Tom Jones, editor of Smart City Memphis.

See also our Q&A with this story’s real estate expert, Shawn Massey, a retail dealmaker and partner at The Shopping Center Group (TSCG). He challenges Memphians to stop thinking about Downtown as the city’s central business district at all.

Restaurants

The DMC lists roughly 182 food and drink establishments on its website. While Birmingham lists more and Louisville fewer, raw totals tell only part of the story.

Remember Memphis’ Downtown covers about 6.5 square miles — roughly twice the size of Birmingham’s and more than three times the size of Louisville’s. So Memphis restaurants are spread across a much larger area and serve different audiences. That helps explain why Downtown can sometimes feel quieter than the numbers suggest.

“We’re doing better,” said Jeffrey Zepatos, the fourth-generation owner and operator of The Arcade Restaurant on South Main. “Post-Covid was a tough time for everybody. It seems like folks are starting to come Downtown a little bit more.”

The Arcade is a destination restaurant, a reason people travel to Downtown. Zepatos would like to give people more reasons. He said he’d like to see more family-friendly events that would draw suburban residents Downtown.

Retail

The DMC lists roughly 77 retail businesses on its website. So it’s firmly in the middle compared to the 127 in downtown Louisville and 45 in downtown Birmingham. Again, though, Downtown Memphis is double and triple the size of these, making shops here feel few and far between.

Vacant storefronts are plentiful Downtown. The DMC says about 17 percent of all property (not just stores) are empty. These facts are visible to anyone who has walked the Main Street Mall or South Main.

“I’d like to see the Downtown Memphis Commission put even more emphasis on filling empty storefronts,” said Stephen Guenther, co-owner of The Broom Closet and Historical Haunts Memphis. “They have programs like Open on Main with pop-ups, but I don’t think enough attention is being paid to all the vacant buildings. If you go from Martin Luther King Jr. Avenue south to where we are, there are a lot of empty spaces, and that’s not good.

“I don’t know if it’s subsidizing landlords or finding other incentives, but we need to attract more businesses because the businesses that are here can do well in a good economy. We could all do so much better if there were simply more places open.”

So many empty storefronts can dim a neighborhood’s imagined vibrancy in the minds of tourists and locals alike. The DMC’s Open on Main battles this directly. It pairs emerging retailers with vacant storefronts in and around the Main Street Mall for a lower cost up to a year. Since 2016, the program has placed 50 small business owners in these spaces.

Guenther said existing retailers, though, are struggling. The economy has stolen disposable income. Tourism is down, he said.

Like Zepatos, Guenther said he’d like to see more family-friendly events Downtown — something akin to the Cooper-Young Festival — with live music, art, and vendors.

DMC supports

Foot traffic is the lifeblood of Downtown’s restaurant and retail businesses, said Milton Howery, DMC’s chief marketing officer. To encourage that, the agency pushes activities like those Zepatos and Guenther mentioned, specifically Trolley Night, the July 4th celebration, New Year’s Eve, and Downtown Alley Dayz. Last year, Howery said the DMC produced more than 300 events that attracted more than 300,000 people.

Furthermore, the DMC supports existing retailers by encouraging the growth and development of all Downtown businesses — old and new — with financial incentives and a host of other programs to keep the area clean, safe, and welcoming, Howery said.

“All of these efforts work together,” Howery said. “From development and business support to marketing, events, cleanliness, and safety, our goal is to strengthen the overall Downtown experience, increase visitation, and create an environment where businesses and restaurants can thrive.” 

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FIVE QUESTIONS FOR SHAWN MASSEY ON DOWNTOWN MEMPHIS’ RETAIL AND RESTAURANT MARKET

Shawn Massey is a principal with The Shopping Center Group and one of Memphis’ best-known commercial real estate brokers. He shared his perspective on the current state of Downtown Memphis’ retail and restaurant market.

Memphis Flyer: How would you describe the current health of Downtown Memphis’ retail and restaurant sectors?

Shawn Massey: The last couple of years, basically back to Covid, were somewhat of a challenge in the Downtown retail and restaurant market. We did not recover well. It was not really bad, but not as good as pre-Covid. Some restaurateurs told me they were down as much as 30 percent.

2026 is proving to be a pivotal year and a comeback. Some restaurants closed, and that shifted traffic to others and provided a rebound. Vacant restaurants are now starting to lease slowly and cautiously. I am optimistic that this will continue through the second half of the year and into 2027.

Are these sectors healthy? Growing?

Overall, I would say that the restaurant industry is healthy, but a bifurcation has taken place. The (quick service restaurants) and fast casuals are doing extremely well, and the higher-end restaurants seem to be strong. It is the middle casual dining segment that has struggled.

Restaurants need to create an experience for the consumer dollar. Retail has a lot of demand but not a lot of space at the macro level. Although Downtown retail is still in slow recovery.

What would help Downtown Memphis’ restaurants and retailers succeed?

A better dining experience. We need creative concepts and not just food, and we need more foot traffic. I know the city of Memphis and Downtown Memphis Commission are working toward that goal.

What is Downtown Memphis’ greatest advantage?

Some people might not like the next comment, but we need to stop thinking of Downtown Memphis as the Central Business District. That has moved east.

We need to think of Downtown as our coolest suburb, with walkability, sports, and entertainment, great food, parks, and festivals. Will some businesses locate Downtown? The answer is absolutely — the same way they locate in the eastern suburbs.

Downtown is and will continue to be what other neighborhoods cannot achieve. That is where our success will come from.

Looking ahead, are you optimistic?

I believe we are at a pivotal point Downtown and moving in the right direction with great leadership in place. Will there be challenges? The answer is yes, but we will rise to meet them. 

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CONNECTING ISLANDS DOWNTOWN

Downtown has an embarrassment of riches. Let’s connect them.

By Tom Jones, editor of Smart City Memphis

Memphis has an enviable mix of Downtown assets. The challenge doesn’t seem to be building them. Memphis does that. The problem is how little these assets connect to each other.

It seems that when Memphis builds a major new asset, its focus is on the project and its footprint. What’s often missing is at the same time considering how that project seamlessly fits into the fabric of Downtown.

This is one of Downtown’s greatest strategic challenges. It’s also one of its greatest opportunities.

Consider what already exists. The riverfront stretches for five miles, anchored by nationally important Tom Lee Park. Nearby are Beale Street, FedExForum, AutoZone Park, the South Main Arts District, historic Cotton Row, Court Square, the Pinch District, St. Jude Children’s Research Hospital, Bass Pro Shops at the Pyramid, the Renasant Convention Center, the National Civil Rights Museum, Memphis Rock ‘n’ Soul Museum, Orpheum Theatre, Blues Hall of Fame, The Peabody, Baron von Opperbean and the River of Time, and more.

It’s an embarrassment of riches. Each has its own identity, patrons, and purpose. Each sits on its own island. If connected, they would collectively make Memphis one of the South’s great downtown experiences. And that does happen.

Economists have observed that the value of a place increases as its connections increase. The challenge is making sure these assets reinforce each other. It’s making 2+2 equal more than 4. Today, 2+2 often equals less than 4.

Think of Downtown as a network. Consider each asset a node. Every connection between nodes should create opportunities for restaurants, retail, housing, public art, entertainment, and spontaneous surprises. The equation is simple: The more connected the network becomes, the stronger every individual destination becomes. That’s the multiplier effect that makes great downtowns work.

Successful cities focus on making streets themselves destinations. Wide sidewalks, shade trees, and attractive landscaping, outdoor dining, public art, frequent events, comfortable lighting, protected bike facilities, inviting storefronts, places to sit and watch the world go by, street musicians, and things that make people slow down so they spend more time downtown. Most of all, it’s about a downtown built for walking.

Downtown does not need more islands. When people experience Downtown as one connected place instead of a collection of separate destinations, every investment works harder, every business benefits more, and finally, the whole becomes greater than the sum of its outstanding parts.

It can be said that Downtown Memphis has recognizable districts. Each developed independently over time. The next chapter of Downtown’s evolution should focus less on strengthening individual districts and more on stitching them together.

At a time when talent, tourism, conventions, and investment increasingly flow to cities offering rich urban experiences, connectivity becomes an economic development strategy rather than just an urban design principle.