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  • Setting the table

    Rogue Valley restaurant owners understand the delicate balance needed to make their business successful
  • Restaurants come and go.
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  • Restaurants come and go.
    Some vanish before the ink on the business license is scarcely dry. Others prosper under the same ownership for decades, then crumble under new management.
    Conspicuous examples of short-term successes and ultimate failures abound. If you've lived in the Rogue Valley for more than a decade, chances are you've lamented the closing of a favorite dining or drinking establishment.
    While the number of cafes, restaurants and pubs has remained relatively constant, the names continually change.
    A look at the Yellow Pages provides a close approximation of the restaurant count in Jackson County.
    The telephone book distributed in 2003 lists 274 establishments, not counting multiple locations such as McDonald's or Si Casa Flores. There are 270 entries in the current book.
    The real tale is told when comparing the two lists. That's where the magnitude of failures, sales and retirements are revealed. Gone, for example, are Gorilla Bites, Kim's, Shenandoah and Two Pines.
    Michael Donovan and David Taub operated Chateaulin Restaurant & Wine Shop for nearly three decades before entering the wine industry on a full-time basis.
    Donovan saw dozens of cafes, eateries and nightspots come and go during his tenure not far from the Ashland Plaza and Oregon Shakespeare Festival.
    "Four out of five restaurants go out of business in the first five years," Donovan said. "If there was a dyed-in-the-wool answer to why, we wouldn't have any failures. It's very hard to predict."
    While there are many factors separating longevity from flashes in the frying pan, the two critical elements for long-term success are capitalization and a proprietor's attention to detail. Establishments with long-term success have hands-on, ubiquitous owners who cultivate customers, Donovan said.
    One enduring example of that approach for nearly four decades has been Jacksonville Inn, owned and operated by Jerry Evans, legendary for taking very few days off from work.
    Evans was a 20-year employee with Harry & David before going into the restaurant business. Given the choice to head up the corporation's Jackson & Perkins operations outside of Bakersfield, Calif., or doing something else, he opened Jacksonville Inn on April 15, 1976. Since then, he's taken an average of four days off per year, aside from vacations, and built a reputation good enough to annually attract 400,000 customers, including three of the past four U.S. presidents for dinner.
    During his tenure, Evans has seen everything change, from the technology of processing orders and payment to customer eating habits and tastes.
    "I learned from Harry & David how important it was to use cost-accounting principles to determine the cost of doing business," Evans said. "It is really easy to have costs get out of hand, and that's not easy to control in the world we live in right now."
    He points to the cost of beef and labor moving up sharply.
    Evans said he controls inventory cost by shopping carefully and buying from local growers in season. Technology was an expense unforeseen in the 1970s.
    "I'm 77 years old, and laptops, desktops and smartphones didn't exist," Evans said. "I did financial statements on column-lined pads when I started. Business was easier, more fun, and it was more profitable then. Now everything is computerized."
    He recently upgraded 15 computers to Windows 7, at the cost of hundreds of dollars, and had to revamp his point-of-sale system, costing thousands more, because of the previous vendor's faulty product.
    "You can't get by without all those things, but it adds to the cost of doing business," he said.
    Early on, Evans sought out tried-and-true kitchen help and menu selections. He hired Julie Tummers, whose culinary efforts at Mon Desir in Central Point were immortalized by Life magazine in 1958.
    Nonetheless, tastes change. Prime rib, long the dominant menu choice, has slowly given way to vegetarian dishes as the eating public becomes more health conscious, Evans said.
    His staff includes veterans of three decades or more. Manager Platon Mantheakis has been around for a quarter-century.
    Evans borrowed a phrase from Jack Batzer, the late local contractor, to describe the importance of employees to a successful venture. "I never did anything, we did," he said. "I always try to give the employees the credit."
    Ashland, Jacksonville and the Upper Rogue region share tourism as a common trait and restaurants tend to be evening destinations.
    Along the Interstate 5 and Highway 62 corridors, however, chains dominate the landscape.
    "I think we're pretty reflective of the national dining customer in the Rogue Valley," Donovan said. "Ashland is unique because of its demographics and because of people who come here to visit the Oregon Shakespeare Festival. There are a lot of smaller, independent restaurants that have taken off and either flourished or gone under. But there hasn't been a lot of success by corporate restaurants in the downtown Ashland core."
    For every International House of Pancakes or Denny's that has disappeared from the Medford landscape, a Black Bear Diner or Texas Roadhouse has cropped up. Donovan points out there are newcomers and survivors such as Elements, Bambu and Pomodori Bistro & Wine Bar that come along, carving out niches and followings even as long-standing staples such as J.J. North's Grand Buffet fade into the past and buzz-creating upstarts such as 38 Central disappear.
    "I realize 38 Central was a loss to the community, but somebody else will come along and operate that restaurant (location)," Donovan said. "I don't think the challenges are greater in the Rogue Valley and Medford than they are anywhere else."
    Location remains a major factor.
    Tim Holmes' barbecue offerings were as good as any in the area, but after four years he closed Tim's Backyard Barbecue restaurant to concentrate on his catering business.
    "Location was huge," admitted Holmes, who started out with a drive-thru at the West Main and Columbus Avenue intersection before moving to the former Mrs. Q's location on Court Street two years ago.
    "I tried to find a spot along Highway 62, but the price is way out of control for a prime location," Holmes said. "The rent for any of those spots is monstrous — you almost have to be a chain to get into one of those spots."
    The corporate steak houses and grills he competes against could easily outspend him better than 10-to-1 in marketing as well.
    "They can throw out $10,000 a month for marketing, when I'm only shelling out $600 to $1,000 a month to market my place," he said.
    The weight of a secondary location and lack of marketing capital added up quickly, he said. The kind of food he served tipped the scale even further.
    "My product costs more because my meats are higher-priced than for someone doing rice and chicken," Holmes said. "You try not to put the price up too high, but at the same time you don't want to lose money every time a plate goes out."
    Holmes generally fired up his grills at 5:30 or 6 in the morning and wasn't leaving until 9:30 or 10 at night, even when the doors closed at 8. He figures he needed to bring in $1,500 per day, about $25,000 to $35,000 a month, just to break even.
    "When we moved to Court Street, I opened on Sundays, so that meant seven days a week, and that was tough," he said. "I thought about doing the cart thing, but there is still an expense."
    Holmes said it's easier to control costs as a caterer.
    "There is minimal overhead and you know exactly what you are doing that day, how many people you are cooking for and how much you are getting paid," he said.
    Donovan said cafe owners who arbitrarily price a menu item and then fail to track associated costs are flirting with danger.
    "If the food on that $18 plate costs $9, you aren't going to make it when you factor in employee and overhead costs," Donovan said. "That's often the recipe for failure."
    Even those who are seemingly successful run a risk if they don't pay attention to cash flow.
    In February 2013, Old Farmhouse Restaurants owner Greg Cordova shuttered five local locations because the business had outstripped its ability to pay its bills.
    Undercapitalized from its inception in December 2007, the company was unable to grow itself out of debt. Finally, Cordova turned out the lights one morning, putting 50 people out of work.
    "I wish I could blame anyone but myself, but I can't," Cordova said at the time. "I wish there was another outcome."
    Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness, friend him on Facebook and read his blog at www.mailtribune.com/Economic Edge.
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