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Wednesday, April 23, 2003 - Page updated at 12:00 AM

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Taste of the Town / Nancy Leson

Some restaurant owners battle the dining-out slump with ingenuity

A hundred and seventy seats are a lot of seats to fill, and you don't have to tell that to Tamara Murphy and Bryan Hill. Brasa, their swanky Belltown restaurant and bar, was the hottest ticket in town when it opened in 1999. Back then, Seattle had money to burn, Veuve Clicquot flowed like Miller at a Mariners game, and $24 for grilled squab was so much chump-change for the dot-com dynamos that packed the house.

But that was then, and this is now.

"We opened at the peak of the economy, though we didn't know that at the time," says Murphy. "People were throwing a lot of money into going out to eat. Now it's a roller-coaster ride. It started with the WTO, then there was 9/11, then the economy, now it's the war. Times have changed, and the whole emotional commitment of going into a formal dining environment isn't there."

Adaptation is the name of the game. While some restaurants are still rocking, others are rolling — with the punches. Closures and consolidations are on the rise, but so is renewal and re-invention. Tax increases and minimum-wage hikes have restaurateurs in a tizzy, but this tenacious lot is fighting to stay afloat, offering incentives to their ultimate life preserver — the diner.

Take Brasa. Moving into their fifth year, Murphy and Hill refuse to roll over and play dead. Instead, they are doing what many smart restaurateurs have opted to do: using survival skills to increase sales and bring in the customers.

March was a strong month, says Murphy, thanks, in part, to the prix-fixe promotion in which 25 restaurants, including Brasa, offered a fixed menu for $25 — one of many schemes to lure diners into area restaurants. At Brasa, they've lengthened the appetizer list, lowered menu prices, ditched the white linen and trumpeted their half-price bar menu served nightly from 5 to 7 p.m. "Hey, I understand not wanting to drop $100 a head on dinner," Murphy says. "We all need a financial break. I'm happy to have people come in for an appetizer and a glass of wine. We need warm bodies."

She's not alone. Other upscale restaurants born in the boom are retooling their menus and featuring high-quality bar food at check-us-out prices. Chef Kerry Sear has done it at classy Cascadia. So has Pier 70's Waterfront Seafood Grill. Morton's steakhouse recently rolled out a new bar menu and on weeknights offers complimentary filet mignon sandwiches to the after-work crowd. Hopefully that crowd will reciprocate by having a second martini, or better yet, by coming back for dinner.

Steve Stoddard is president and CEO of Seattle-based Restaurants Unlimited, operating 30 restaurants nationwide. "In this economy, customers are looking for a broader range of prices and choices," he says. "When you've got a big investment in something, you've got to do things to change."

As a cost-cutting measure, Restaurants Unlimited recently stopped serving lunch at its Magnolia showcase, Palisade, while downtown at Palomino, a new menu and beverage promotions have re-energized business, increasing sales over the past six months. When 20-year-old Cutters Bayhouse suffered losses for three years running, the company "repositioned" it — for the second time in five years — making cosmetic changes and taking it back to its classic Northwest roots with a lengthier, less-expensive menu.

"It's helped tremendously," says Stoddard. "Our (head) counts and sales are up. It's a miraculous turnaround. But doing that is an investment, and not every operator has the means to do it."

Some may have the means, but not the inclination. Fleming's Prime Steakhouse & Wine Bar opened in August 2000, the fifth in a fast-growing national chain of upscale meateries. Last month the Seattle restaurant closed, leaving 50 employees and a big vacant midtown space in its wake. The decision was purely economic, says joint-venture partner Kevin Whattoff. "Seattle was the only under-performer in our family of restaurants."

Somewhere, a profit

It's not just the high-enders feeling the pinch. After 20 years, Coco's in Edmonds, one of six local outlets of a West Coast chain, closed last month despite a per-person check average of only $7.50. "We're a family restaurant," says district manager Debbie Ulrich. "And the clientele we get, many of them seniors, already think we're expensive.

"It's scary," she says. "Sales are down across the board about 5 percent from last year, and way down from a couple of years ago. You try to get your labor and food costs down without affecting service, but the minimum-wage increase has had a huge effect on the restaurant business. We're paying $7.01 per hour to our servers, and somewhere we have to make a profit."

The Washington Restaurant Association claims the cost of doing business here has skyrocketed, with pressures coming from state regulations, taxes and premiums resulting in restaurant closures, lost jobs and decreasing revenue to state and local coffers. Last year 118 WRA member-restaurants closed, costing 2,500 jobs and a projected $85.6 million in gross sales — compared with 43 closures the previous year. The outlook for 2003 is every bit as grim although no firm numbers can be found yet.

The association partially attributes those closures to minimum-wage hikes totaling more than 36 percent since 1998; a liquor tax increase of 30 cents a liter in 2002; and a 26 percent rise in workers compensation taxes in 2003. Washington is one of few states without a "tip-credit." Elsewhere, that credit allows employers to pay less than the minimum wage to employees who get tips, such as servers or bartenders. They make an average of $18.50 per hour, according to the WRA. Additionally, local, county and state jurisdictions have increased fees for various licenses and permits.

Bruce Naftaly, owner of Ballard's 28-seat Le Gourmand, was incensed when he got his annual King County health-permit renewal form. "They've nearly doubled my fee to $560. There's no financing available for it, no pay-a-little-at-a-time. That's a hardship on small mom-and-pop places." Coupled with rising insurance premiums, health-care insurance costs and an unemployment rate among the highest in the nation, it's no surprise restaurants large and small see pulling the plug as their only option.

For others, however, business, while not exactly booming, is looking up. Consider Schwartz Brothers Restaurants — parent company for Daniel's Broiler, Spazzo Mediterranean Grill and Chandler's Crabhouse (which is scheduled to undergo a makeover and add a private dining room). Founded in 1970 by John and Bill Schwartz, the Bellevue-based company suffered a devastating loss early this year when its president and CEO, John Schwartz, died of cancer at 53. That loss was difficult, says 35-year-old Lindsey Schwartz, attributing much of the company's success to the hard work of his uncle John — whose shoes he's preparing to step into. With more than 700 employees, he's poised to head up one of the largest family-owned-and-operated food-service businesses in the Northwest.

"We've had a great run the last couple of years. 2002 was one of our best years ever," says Schwartz, "with overall sales up about 2 percent." While business for its box-lunch service, catering and bakery, including accounts such as Starbucks — a big buyer of fresh baked goods — helped those sales, Schwartz insists his restaurants are "down only fractionally" despite the slow economy, with private dining-room sales up a handsome 20 percent.

"We've made a big effort to get the Schwartz Brothers name out there," he says. A strong marketing push, he says, accounts for that rise in private-dining sales. Cross-promotions — putting restaurant fliers in catered lunch boxes, for example, are another tactic.

As independent restaurateurs, Kaspar and Nancy Donier, owners of Kaspar's restaurant and wine bar in lower Queen Anne, have used marketing successfully. "Our business is up 30 percent over last year," says Nancy, who, with her chef-husband, sell their restaurant by essentially selling themselves.

"We're doing a lot of catering and special events, including cooking classes and wine dinners. Kaspar does corporate team- and morale-building classes" — at $55 per person. "He's doing a Kid's Camp — teaching kids to cook. Private parties, both on- and off-premise, are way up. And though business dining is way off, the Chef's Table in our kitchen seats eight and it's always busy. We're lucky," says Nancy. "We have a loyal clientele. But I feel badly for new restaurants that have yet to establish that loyalty — they'll be the ones who really feel it."

You don't have to think hard to come up with the names of restaurants that have felt it in the worst possible way. Opening and closing in the past year or so were Belltown's Falling Waters, Queen Anne's Fira, Bellevue's Ackka Bell and downtown's Harbor Place. But if you ask restaurant real estate broker Gary Morton whether the sky is falling, he'll insist it most definitely is not.

"It's business as usual," says Morton, who, after 30 years as a local broker has seen economic upheavals before. "For every guy who doesn't make it, there are three more standing in line with an idea they think might work. There are always opportunities out there. That's what makes the world go round."

A buyer's market

When chef Jerry Brahm closed The Bistro on 24th last week, it was an opportunity for Carrie Bowen, who is already busy turning the old Bistro space into a new Thai restaurant. It was also an opportunity for Brahm. After five years spent sautéing seafood and serving coq au vin at his off-the-beaten-path Crown Hill location, he's using the economic downturn to his advantage. In a buyer's market, he and his wife, Susan, are opening a restaurant in the heart of Old Ballard. The dining room will be twice the size, he says, and the menu "a little more mainstream."

"The last two and a half years have been 'morph or die,' " says Brahm. "First came the dot-com crash, then the stock market — which killed me since so many of my customers were wealthy Blue Ridge retirees. Throw the terrorists on top of that and season it with a war and, well, you've got to do something. I've been stuck in a small, ill-equipped kitchen, squeezing the same fruit for juice. We want to take what we've got and put it in a bigger, better location. I'm growing to stay alive. I'm buying opportunity."

He's calling that opportunity "Carnegie's" — under construction in the first-floor space in Ballard's Carnegie library building. "A few years ago we couldn't touch this site," says Brahm. "Now I'm scraping the name of a dot-com company off the door of a place that sat empty for the last year."

A bank loan coupled with generous concessions by his new landlord — including five months free rent and a third of his startup costs spread out on a "rent-credit" — have made what Brahm calls a "roll of the dice" a reality.

"A few years ago when I tried to get a hood expansion in my kitchen I was told it was a six-month wait. Now they're lining up to build it. At every angle — from the landlord to the dishwasher-salesman — people are willing to work for you, and with you."

Brahm says Auto-Chlor, the dishwashing equipment vendor, is even building out his dish room just to get the new account, something the company wouldn't have considered five years ago. Call it the trickle-down effect, literally. Auto-Chlor charges its clients by metering dishwashing cycles, Brahm explains. "If the rack count's down, they're losing business."

Speculating on the reasons behind his vendor's generosity, Brahm echoes Gary Morton. "Look at Jimmy's Table," he says, using that short-lived Madison Valley bistro as an example. "Jimmy's became Gypsy, and Gypsy became Gitano... . but the Auto-Chlor stays."

Nancy Leson can be reached at 206-464-8838 or nleson@seattletimes.com.

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