Surviving The Shakeup

by Mike Corrigan


So just what the hell is happening out there on the mean streets of Spokane's downtown dining scene? The stories that have been dominating the headlines recently are these: Chevy's is closing and leaving River Park Square (or is it?). Rock City Grill has signed a lease with RPS to take over the space as soon as Chevy's is gone (which translates into a big fat vacancy on the corner of Riverside and Stevens). Cucina! Cucina! has closed (which translates into another big fat vacancy on the corner of Main and Wall). But these recent closures are only the most recent manifestations of what might be described as "the big squeeze" in Spokane eateries. The harsh economic realities of the last couple of years have claimed their share of locally owned establishments as well: Staccato's, Quinn's, Patsy Clark's, the Shack, the Bayou. Do you care? Should you care?


The restaurant business, it should surprise no one, is a tough gig. And a couple years ago, things started to get even tougher. The economy took a nosedive; terrorist attacks and subsequent wars have served to squelch dining revelry. There was also a growing concern among proprietors of small, locally owned restaurants in particular, over the infusion of big, national chain restaurants -- slick, branded and well-marketed competitors like Chili's, Red Robin, Chevy's, etc. The recent spate of restaurant closures, however, seems to suggest that the big chains in Spokane are hurting just as much, if not more, in this competition for local diners' increasingly scarce dispensable income. For as the chains close up and move on to greener pastures, many local restaurateurs seem to be thriving -- or at least getting by.


"I can give it to you in a nutshell," says Far West Billiards owner Andrew Sackville-West. "We're doing great. Our lunch business is up, our dinner business is up. People love the food. They come here for the food."


Far West, once known primarily as a drinking, socializing and pool-shooting spot, expanded its intriguing evening menu into lunchtime earlier this year. Sackville-West says the first two months were a little rocky, but then things took off. Far West now has a rep as a great eatery.


"We definitely draw both crowds. In fact, my evening cook gets swamped between seven and nine -- which is good. I think part of what's happening with Chevy's and Cucina is maybe chain backlash. And I'm hoping that what we're seeing is people actually caring about local places. The chains don't really have anything to offer. You only need so many of those because the experience from one to the next is not all that different. You know, Cucina and Olive Garden are the same damn thing."


Is it perhaps that a national chain needs to see more profit from a venture than does someone operating a small, local restaurant?


"From what I know about the restaurant industry, no," Sackville-West continues. "The national average net profit margin is something like 4 percent. When I'm having a good month, my net profit margin is more like 10. Obviously, I'm a bar and that makes a difference. But I know of places back East that are doing like 35-40 percent. So I wouldn't say that the chains are looking for such a big profit margin. They're willing to spend the money to have people stand around in case they get busy. The corporate mentality is different. I bet they'd even be willing to take a loss on a store for quite awhile just to build brand awareness. They have the cash and the marketing to outlast local people. Look at the amount of money Chevy's spent on marketing in this town when they first opened. They had every frickin' billboard in the city."


Long-time Spokane restaurateur Tim O'Doherty of O'Doherty's Irish Pub sees it a little differently.


"It always seemed to me like Chevy's was doing OK," he says. "I just wonder if some of those chains might be looking for a little larger return than a mom and pop like myself might need. If I'm making 4 percent on my gross sales, I'm thinking, 'Hey, that's a pretty good year.' But different chains are set up different ways. They usually have local owners and they're paying a percentage back to the mother company. Now, the mother company might be doing just fine, while the local franchises could be losing money. I don't know. But in some instances they probably are not happy with smaller returns."


A local restaurant owner at the center of the conundrum is Rock City Grill's Jim Rhodes. Local newspapers the Spokesman-Review and The Inlander recently reported on an apparent lease agreement between Rock City and River Park Square for the space currently occupied by Chevy's. When asked if that deal is still being negotiated, Rhodes responds with, "Well, no comment. I think I'll just kind of leave that one alone for the moment." Still, the fact is that Rock City (which will celebrate its 11th anniversary next month) has survived the recent restaurant purge -- a purge that took out Rhodes' closest competitor, Cucina! Cucina! How did the indie outlast the chain?


"Those of us who grew up in the restaurant business in Spokane have a better understanding of the kind of volume you can do in restaurants here," says Rhodes. "Out-of-town companies have higher expectations. I've been in the business here for a long time, and my peers have always said if you can make it in Spokane, you can make it anywhere, because you have to work so hard in this town to stay alive. These larger companies are coming from areas that do $2 million to $3 million a store or more, and they build the exact same store here. But they do substantially less volume."


Then again, just three years ago, the business climate around town, indeed, around the country, was much different. It was before the economy tanked. It was before 9/11. And it was back when River Park Square still looked like the thing that was going to save downtown.


Says Rhodes: "Five years ago, someone asked me, 'What do you think the mall is going to do for your business?' And I said, 'You're going to have to ask me in five years, because I can't tell you if it will bring more people.'"


But he knew it would bring more restaurants. And it did.


"All these restaurants came at once in 1999-2000. [The city] added 1,400 seats in a six-month period. I've never seen so many seats open up in such a short period of time. Also, everyone expected that the mall would bring so much more traffic downtown. And I think it did. But not that much traffic, not enough to cover those seats. But I don't think what's going on in Spokane is any different from any other city. I suspect that there are restaurants closing all over the nation."





Five Tips To Success - So, how do you avoid becoming one of the losers? What's the secret to success in the highly volatile restaurant biz?





1] Negotiate the hell out of the lease -- "The number one thing that kills businesses is the lease," says Tim O'Doherty, owner of O'Doherty's Irish Grill. "When we were negotiating for this space, there were a couple of times I thought we weren't going to get it. But you know, there's always another space. They always tell you that it's location, location, location. And it may be with chains. But I don't believe that's the case when it comes to independent mom and pops."





2] Have An owner who works in the restaurant -- "Independents have a chance in this city, in this economy," says Jim Rhodes, owner of Rock City Grill. "The owner doesn't live in San Diego and have three or four managers between the store and himself. I live here, and you're calling me at the restaurant because I work here. We can respond to the customers' needs so much faster. We can change a menu in two days. That's why we've been successful. I know that's what got us through the first couple of years of Cucina! -- that loyal local customer."





3] Hire people who complement you -- "I am not very good at book work," says O'Doherty. "But my wife can run an entire house and restaurant on like $200 a month. She's amazing. And she's allowed me to concentrate on running the dog and pony show -- and the food, because that's what I know and enjoy."





4] Create a niche and stick with it -- "When we first opened, we had placemat menus, corned beef and barbecue," recalls O'Doherty. "It was stupid. Fortunately, I had low-enough rent and good customers [who] would tell me, 'Hey, cook Irish food.' You are there to serve the market, not to invent it. So we brought in Irish music, shepherd's pie and pasties and now, even though it's an incredibly small niche, it works."


"Far West, the Baby Bar and the Blue Spark are doing a good trade because they have something unique to offer," Sackville-West adds. "And that might be part of this urban conversion that we're going through. I feel that we're starting to become a real urban area. You get into any real urban area, and it's the unique local businesses that are jamming. We're not a strip mall called Spokane anymore. We're becoming a real city."





5] Do business in a city that appreciates you -- Here's where you come in, dear reader. See, restaurants are an important part of the local economy -- plus they're yummy places. If you don't dine out, you're part of the problem. So call some friends, make your reservation and enjoy!





Publication date: 10/02/03