Bagel Shop to Close, Rex’s Moves Ahead With a New Model

(Photo provided by The Bagel Shop)

The cost of ingredients, specifically eggs, and of labor is behind the decision to close the popular Bagel Shop in Little Rock and transition to a new restaurant concept, Rex’s, said Myles Roberson, founder and owner of both.

In the March 31 announcement of The Bagel Shop’s closure, Roberson and his partner, Trevor Papsadora, cited “difficulties with weekday traffic and a steady decline in sales.” They added that “operational costs, including rising ingredient costs, and high labor expenses, have ultimately led to this decision.”

Three days later, the pair announced that a new concept, Rex’s, would be opening at the same location, at 1501 Main St. in the city’s SoMa neighborhood.

I asked Roberson to drill down into the challenges faced by The Bagel Shop, and yes, the price of eggs is a big problem. Bird flu has spiked egg prices, and restaurants throughout the country have had to adapt.

The Bagel Shop’s breakfast sandwich, which features an egg patty the restaurant makes in-house, accounted for half of its sales, he said. (The Bagel Shop’s sales in 2024 were between $600,000 and $700,000, Roberson said.)

Roberson said one misconception “is that restaurants have special pricing deals. It usually isn’t until you become much larger that these larger distributors are willing to work with you on pricing, based on movement.”

Roberson and Papsadora found that Sam’s Club offered eggs anywhere from one-third to half the price offered by distributors. “Over the past year, eggs specifically have run the range of $2.80 per dozen to $6 per dozen,” Roberson said. To cut expenses, they reduced the number of eggs in their sandwich patty from 2.5 eggs to 1.5 to two eggs.

Rising food costs in general have been a problem, “but I think economic challenges — the bigger picture here — have just led to a decrease in consumer spending.”

The question then is, how can Rex’s surmount these challenges?

Roberson expects labor costs to be less for Rex’s, which will offer full table service. He said that whereas The Bagel Shop offers counter service with workers paid $15 to $18 an hour, Rex’s will follow a more traditional restaurant model. Servers and front staff at Rex’s can be paid subminimum wage — in Arkansas, it’s $2.63 per hour for tipped employees — as long as their tips reach the state’s minimum wage of $11 per hour.

At The Bagel Shop, “tips are shared equitably throughout the entire restaurant, so our front to back people all make what would be considered definitely a living wage here in Arkansas,” Roberson said.

“I’m excited to shift that,” he said. “We’re still going to have an equitable tip share [at Rex’s], but we will subsidize the front a little heavier with the tips if they’re taking less of a base pay.”

An additional labor aspect to the bagel restaurant was simply the time it took to make bagels from scratch. “Our smallest batch, there’s 12 labor hours in those bagels,” Roberson said. “And on those declining weekday sales, when we would donate half, if not slightly more than half, of the bagels we made that day, that’s just an unsustainable loss regularly.”

“We’re going to work with Sterling Market to source our bread,” he said. “We’re going to work with our distributors to source bread, so we’ll have some really delicious bread. We’re just not going to be making it.”

The Bagel Shop’s hours, 8 a.m. to 2 p.m. were also a challenge, Roberson said. “SoMa is very much a nighttime restaurant destination, and I think that pulling that weekday crowd down there was just harder, and at night and on the weekends we do see traffic from west Little Rock. We do see Heights and Hillcrest coming downtown. We see all of those other neighborhoods and parts of Little Rock visiting the [SoMa] neighborhood.”

Rex’s also will have a full bar, which the partners expect will mean extra revenue, and will be open more hours than The Bagel Shop.