Bennu Restaurant and Bar, Madly British Restaurant, The Palms Restaurant and Crown Mill Restaurant have all closed since the beginning of 2013.
Madly British owner Ronnie Bhogal said he had underestimated the importance of location in Dunedin. Being situated in Princes St, his business had missed out on most evening foot traffic, which stayed around the Octagon and north of it.
''We thought if we could provide a good product then people would come but that didn't happen,'' Mr Bhogal said.
''Nobody wanted to go south of the Octagon.''
The economic downturn was a factor in the business' decline, as well as it being hard to find quality chefs.
Dunedin needed entrepreneurs to build strong brands and revitalise the city, Mr Bhogal said.
Hospitality New Zealand Otago branch president Mark Scully said it was tough owning a restaurant in the present economic climate.
The businesses that had closed would have been under pressure for years, he said.
''Eating and drinking out is a luxury. Some people might be able to afford it once a week and others will be able to two or three times a week but unfortunately when times are tough, luxuries tend to be one of the things that can fall out the bottom,'' Mr Scully said.
''These places aren't closing because they've had a bad month. Shutting a business is not a decision made lightly.''
The Christchurch earthquake also had a major negative impact. Because Christchurch was the ''gateway to the South Island'', a decline in visitor numbers there meant visitor numbers were down everywhere, including in Dunedin, Mr Scully said.
Compliance charges remained as high as ever and paying for liquor licences, statutory holidays and other costs all cut into profit margins, he said.
The lean times were leading owners to discount heavily, which resulted in price wars.
Business owners were increasingly offering discount vouchers, such as those available in the Dunedin, Invercargill and Queenstown Entertainment Book, Mr Scully said.
As a result, some restaurants were finding themselves full of customers but still unable to cover costs because they weren't making enough money, Mr Scully said.
Times had been tough for several years now and although business owners were trying to stay optimistic and trade through it, Mr Scully said he could not see an end in sight.
''If you've got good business and you've got customers, hold on to them, because it's very competitive at the moment,'' he said.
- by Jonathan Chilton-Towle
