Just shy of a full year in operation, the Dickey’s Barbecue Pit restaurant in the Sewell section of Washington Township NJ (Gloucester County) has closed. I spoke to the owner who provided some details of the closing.
The restaurant was located in the “Acme” shopping center on Egg Harbor Road In Washington Township. Dickey’s Sewell opened in September of 2022.
Dickey’s is a franchise operation with over 550 locations. They feature delicious in-house smoked BBQ as well as amazing side items. I also really liked the store design of the Sewell location.
Note: this closing does not affect other area Dickey’s Barbecue Pits.
I’ve met owner Chris several times and he is generally one of the nicest and forthright guys I’ve met in my many years of writing 42Freeway. And a local… the family is from Mantua, NJ.
I chatted with Chris this morning and he cited several reasons for the closing, but he highlighted increasing costs in several categories which reduced the amount of profit he could earn from the business.
It was a tough decision for Chris and his wife, but like any big decision.. they had several other aspects to consider.
In my prior coverage I mentioned that Chris and his wife had welcomed a new baby into the family right around the time of the restaurant’s opening!
Also Chris’s prior “day job” and experience before building out the Dickey’s Barbecue Pit restaurant is in a stable and in-demand technology field.
So when you factor in a reduced income from the restaurant, a growing family, and having good “day job” skills (which would give him a nice and steady income if he went back to the Corporate World), he had to make the tough decision that was best for his family.
Dickey’s Barbecue Pit – Sewell. Rising Costs
Chris tells 42Freeway that he is in the process of removing all of the equipment from the unit, likely leaving much of the nicely refinished interior and counter space.
Chris still has a lease for the unit so he’s hoping that with its current “almost ready to go” condition someone would be interested in taking over the unit’s lease… bringing in their own restaurant equipment (or whatever they want the space to be).
More specifically on the rising costs which impacted his ability to pull enough revenue, Chris cited 2 main aspects:
First is something that’s plaguing all restaurants, and that is rising food costs.
It’s a challenge for many restaurants to find a pricing “sweet spot” where they are able to buy food at current market prices, prepare it and mark it up with a profit… while still selling it at a price point that consumers are willing to pay.
Which for many restaurants this price/profit balancing game puts the squeeze on the restaurant owners who have to take a smaller and smaller amount of profit out of the sales, in order to keep prices low enough for the customers to continue to purchase in the restaurant.
I don’t know the pricing details of Dickey’s and the franchise operators ability to manage prices, but the point is any restaurant can only increase prices so much while keeping customers happy.
The second big factor was that a portion of the Chris’ business financing was done via variable rate SBA loans.
If you aren’t familiar with variable rate loans, they are based on a standardized “prime rate” indicator, with some amount of extra percentage points added for the lender profit. The “variable” aspect is, as that Federal prime rate indicator changes based on economic factors, the borrowed loan percentage rate changes along with it.
And in the time that Chris initially applied for his Small Business Administration loan, the cost of borrowing money has increased significantly.
I do not all of the details of Chris’ SBA Loans, but according to JP Morgan data the Historical Prime Rate has more than doubled in 16 months from 3.25% in March 2022, to 8.5% in July 2023. We are getting close to tripling that March 2022 recent low.
Keep in mind that SBA loan borrowers pay percentage points above that… so right now Chris has a loan rate that is over 10%.
Links and Location
Dickey’s Barbecue Pit Sewell – Closed
Washington Center Shoppes
415 Egg Harbor Road – Unit 22
Sewell NJ 08080