Why Sacramento restaurants close

It's been a very busy stretch around the Sacramento restaurant scene. Very busy.

Opened recently: Mother, Strings Urban Kitchen, Block Butcher Bar, Der Biergarten, Cafe Plan B, The Cultured & The Cured. A few more.

Closed recently: Enotria Restaurant Wine Bar, Restaurant Thir13en, Tuli Bistro, Michelangelo's, Lake Forest Cafe, The Eatery. A bunch more.

In the MARRS building where Lounge on 20 once struggled, LowBrau is killing it. At the corner of 28th and P streets that once had Una Mas and Pescado's, Lou's Sushi is ringing up big-time reviews.

Chef Adam Pechal rebounded from partnering in Restaurant Thir13en and Tuli and took over the kitchens at Crawdad's River Cantina and Pour House.

Oh, there's more:

4th Street Grille closed and Foundation Restaurant & Bar opened in its place.

The Broiler will become Brasserie Capitale, and Gallagher's Irish Pub across the lobby will become Café À Côté.

Spataro Restaurant & Bar became Hock Farm Craft & Provisions.

Maranello Bar and Kitchen became Dad's Kitchen.

TreyBCakes became Wrap N' Roll Sushi Burrito.

Purgatory Restaurant & Nightclub is becoming Burgers and Brew.

Blackbird became, well, Blackbird (formerly Kitchen & Bar, now Kitchen & Beer Gallery).

Enotria reopened—after announcing it was closed for good—now as a wine bar with a focus on comfort food and an event space.

What is going on here? A lot, actually.

“In the last eight months or so,” said Michael Thiemann, executive chef and partner in Mother, “Sacramento’s food scene has been more interesting than I’ve ever seen it. There’s been openings, closings, chef changes. It’s entertaining to follow.”

Thiemann has experience in entertaining food scenes. He’s a Sacramento native and former executive chef at Ella Dining Room & Bar, but he’s also worked in the Tyler Florence empire around the Bay Area, including at San Francisco’s hot Wayfare Tavern. He and the partners in the vegetarian Mother, which opened earlier this year, will soon be opening Empress Tavern, highlighting rotisserie meats. Both are connected to the Crest Theatre on K Street.

“I’m not bugged at all about the changes, including the closures,” he said. “For creation, there also has to be some destruction, and there’s a lot of both going on.”

Welcome to Sacramento’s suddenly quicksilver, clearly evolving, increasingly vibrant restaurant scene.

That doesn’t mean it’s a build-it-and-they-will-come scene, or an anything-goes-if-you’re-good scene, and it surely doesn’t mean what’s happening here is what’s happening anywhere else exactly.

Because of the city’s size, the semilow-key nature of the people here, the unusually congenial chef community, the pressures of recession and now growth, the wildfire embrace of the farm-to-fork concept, the idiosyncratic personality of the city’s core, and the understandable but still charmingly over-the-top love of pork and beer, what’s happening in Sacramento is uniquely Sacramentan.

The turnover? That’s kinda normal. How it’s playing out, what’s filling in? That’s the Sacramento part.

Restaurant failures and other urban myths

To see it all, let's break this into separate pieces. First, that turnover; then, what's working and what seems to be the nature of eating out in Sacramento.

In short, the restaurant business is tough. Restaurants fail at a faster rate than most other same-sized businesses—though nowhere near the urban-myth rate of 90 percent.

There are no great national stats on restaurant closures, but studies have been done on individual markets, including Dallas, Los Angeles and the Ohio regions, and all come up with a similar number: About one-quarter of restaurants fail in their first year.

The most detailed and often-used study came from Ohio State University professor H.G. Parsa. It was published in 2005 in the Cornell Hotel & Restaurant Administration Quarterly. Parsa put first-year restaurant deaths at 26 percent. Over three years, he said, nearly 60 percent—three restaurants in five—go kaput, but if they last five years, they become more or less like other small businesses, meaning maybe 5 percent close every year.

Parsa’s study found that most of the causes of failure were business related, not the food or service, though, of course, those count. But the biggest reason was that owners did not expect the workload, the time demands, or the impact on their lives and their families. Oh, the romance of owning a restaurant.

“It can shock people,” said Kathi Riley Smith, an industry veteran and Sacramento restaurant consultant. “It’s hard, hard work.”

Smith started in the 1970s and worked at, among others, Chez Panisse and Zuni Café in the Bay Area. Her consulting clients have included David Berkley Fine Wines & Specialty Foods, the Oakville Grocery Co. cafe, Enotria and Maranello. She said besides the surprise of the hard work, she’s seen too many restaurants start off undercapitalized, because new owners misunderstand the river of costs—food, drink, labor, insurance, rent, utilities, equipment, fixtures, licenses, signs, advertising, breakage and more—and that they are volatile. The cost of opening a restaurant can, of course, vary massively. Restaurateurs around Sacramento said that, depending on the size, style and property, the cost of getting started can range from $500,000-ish to $2 million or $3 million. And there are the ongoing expenses.

“You can never, ever let down your guard that the business side drives everything,” she said.

As for Sacramento’s turnover rate, Smith said this region may be a bit high, though only a bit, and like Thiemann and many others, she sees it as what she calls fine-tuning.

“We’ve been in a crucible the last couple of years, with the economy, with the competition, and with people just becoming more and more into food,” she said. “I think it’s tuning toward something more consistent.”

Randy Paragary knows a thing or two about turnover and change. He’s run his Paragary Restaurant Group for four decades and, maybe more than any one person, helped shaped Sacramento’s nightlife. He talked about opening Lord Beaverbrook’s in 1975—with its then-hugely popular ferns and Tiffany lamps—at 28th and N streets where Paragary’s Bar & Oven now stands and is, itself, going through a serious makeover at the moment.

“We thought we were set for life with that motif,” he said. “We learned tastes change. Our industry goes through design and concept cycles, maybe every three to five years. That means I’ve witnessed at least eight of them, and more will come.”

But Paragary and others say Sacramento, like Wall Street, was due for an adjustment.

“There’s always been a certain turnover,” Paragary said. “Look at long-gone standards like D.O. Mills or Fish Emporium or Americo’s. But when times were really strong in 2006 and 2007, I believe Sacramento overbuilt itself. Not just in the core. Look at all the restaurants in strip malls in Elk Grove and Folsom and all the communities. The supply was just larger than the demand.”

That’s a big part of the thinning that Smith and others talked about, and it made staying alive difficult for any restaurant with structural soft spots. Adam Pechal admits that applies to him.

“Closing two restaurants and taking over two others in two months was not exactly what I had planned,” he said.

The reasons Restaurant Thir13en and Tuli closed were both individual and not untypical. Pechal said some of it was the partnership, some of it was timing, but the two biggies were location and internal costs—not that they were crazy bad, just tough to overcome, which shows how hard the restaurant business can be.

Pechal is well-known in Sacramento and has a strong rep for putting out good food. He’s got a big, likeable personality on the floor. His stint on ABC’s reality chef competition The Taste raised his profile more, and both restaurants got good reviews. So? Still not enough. Told you, this is a tough business.

With Thir13en, it was also the location at 13th and H streets.

“Sacramento has defined patterns of where we go,” Pechal said. “People just don’t go north of J Street, especially later at night. Look at what Blue Prynt has to put up with.”

Perfect case in point. That slightly odd-looking building two blocks over at 11th and H streets is near big offices, close to City Hall and next to a Best Western. You’d think it would be golden.

Blue Prynt, which calls itself “upscale without the attitude” and mixes stylish comfort food and a slightly flashy bar, is making a go of it, but Pechal and many others are keeping their fingers crossed. The casualty list there goes back to the ’80s when it was the Bull Market, and has also housed, not necessarily in order, Grapes Dining & Spirits, Scorpios Restaurant, The Nine Doors, Sofia and, briefly, a small church.

“I thought with my reputation and the reviews, it would be enough, but north of J is off the radar,” Pechal said.

As for Tuli, Pechal ran into a different problem, and this gets us toward what works in Sacramento’s dining scene.

“We were on the bottom end of fine dining, and fine dining has hit a ceiling in Sacramento,” he said. Paragary and others said the same thing.

Part of the reason is that Sacramento is not a major expense-account city, and it doesn’t have enough well-paid, overworked young professionals who eat out five nights a week and take cabs home, like in San Francisco and around Silicon Valley. “We’re not a ’big wallet’ town,” Paragary said.

Also unlike San Francisco, Sacramento doesn’t have the huge population base and waves of tourists flowing along the streets and into restaurants. Only so many restaurants here can survive as special-occasion spots.

“Look at LowBrau or Firestone [Public House],” Pechal said, “they’re crushing it partly because you can afford to go there whenever you want. That’s what you need in Sacramento, a place where people come in once or twice a week, not once or twice a year.”

The thing is, fine dining runs on thinner profit margins because the product costs more. The National Restaurant Association in a number of statements says in general the average before-tax profit margin for restaurants is 3 to 5 percent, but a 2010 report by the consulting firm Deloitte for the association was even more grim. It said full-service eateries with average checks per person under $25 had an average profit of 3 to 3.5 percent, and restaurants with an average check of $25-plus per person had only a 1.8 percent profit margin.

Often, the biggest money maker is the alcohol, but Tuli didn’t have a real bar, so it struggled there, too. Plus, fine-dining dishes and glasses, especially wine glasses, cost much more and are more fragile.

“Every time I’d hear that sound of breaking glass, I’d cringe,” Pechal said.

‘People want to feel like they belong'

So, here is what we've got so far. The turnover rate has been high in Sacramento but not insanely out of whack from other cities. That turnover is moving in a direction, which is not toward a new round of high-end establishments. At least not now.

What is that direction? Let’s start broadly.

“You can be anything you want, just round the edges,” said Michael Passmore, the fresh-fish purveyor and owner of Passmore Ranch. He deals with restaurants throughout the region. “There are plenty of foodies here, but no place is going to survive being too far out there.”

Among Passmore Ranch’s highly regarded specialties are sturgeon and catfish. He said it took three years for restaurants to get their customers to really accept them. “People wanted trout and salmon,” Passmore said. “That’s what they knew.”

The next piece is comfort.

“I think feeling at home is the biggest thing in Sacramento,” said Michael Chandler, a veteran sommelier and restaurant manager. “Most people aren’t looking for an adventure, they want to feel like going out is easy.”

Chandler is a fifth-generation Sacramentan and is part of the team that just opened Strings Urban Kitchen in Capitol Towers at Seventh and O streets. Strings has a large, midscale Italian menu, with a Rat Pack-era drink list and a casual feel that comes from light wood fixtures and tall glass walls. He said people are telling him String’s breeziness fits the city around it.

“This isn’t just about us,” Chandler said. “Everywhere in town, people want to feel like they belong.”

That comfort thing is not unique to Sacramento. Across the nation, restaurants are moving toward more informal settings. The Wall Street Journal recently reported that many major restaurant companies, including San Francisco-based Kimpton Hotels & Restaurants are expanding their bar areas to create more seats for casual, less pricey eating.

Even at the top end, some of America’s most highfalutin restaurants are retreating—a bit—by removing or reducing expensive tasting menus. Restaurateurs told Eater, a national food and drink website, that tasting menus can handcuff customers’ choices and wallets. For the record, a report posted on the site also stated, only partially ironically, “there’s never been a better time in America to spend $1,000 on a dinner date, if you have $1,000 to spend on a dinner date.”

OK, fine. But certainly not here.

Sacramento has its own twist on comfort. Josh Nelson is a principal in the Selland Group, which includes Ella Dining Room & Bar, The Kitchen and the Selland’s Market-Cafes. He said despite their range of motifs, he sees the same general trait among Sacramento diners—they don’t want eating out to be a big commitment.

“I think people don’t want to have to put mental power into it,” Nelson said. “They want to go out, have a great meal, be interested in the food, but they don’t want it to be work. There are plenty of occasions in life when we have to make a level of commitment, but not when we eat out.”

Some of that noncommitment means Sacramento is not a town that makes reservations days or weeks in advance. Restaurateurs say they get a big chunk of their reservation calls that day or a day or two before—if people even make reservations.

“I’m guilty,” Smith said. “We say, ’We’re hungry, let’s go out.’ Then we park somewhere and start looking around. We have no chance of getting into The Waterboy on a Saturday night, but we try anyway.”

That not wanting to work contributes to Sacramento’s general cold shoulder toward fine dining. When a team of servers moves in to change plates, straighten silverware and sweep crumbs, customers have to stop, sit up and act like, you know, grown-ups.

“No one wants to have to be on their best behavior,” Nelson said.

But what they do want, he says, is connection.

“In San Francisco, lots of people go to the newest, coolest place,” he said. “We have some of that, but we’re still a small enough town that people want to stay connected to where they eat. They want to know the chef. They want to know where the food came from.”

Thiemann agrees completely. “In New York, if you had a good lamb chop, people would ask about cooking technique,” he said. “Here, people ask where it came from.”

Now we’re getting somewhere. This is Sacramento’s dining scene. Not every person, not every place. There are, of course, major exceptions to any generalization, but these qualities ring true intuitively: comfortable, so that we feel we belong. Casual, in the way of going to a party, not an event. We dress down as much as we can get away with, not up. Connected, so we feel a bit like regulars.

That connection piece runs very deep.

“Sometimes you’ll walk into a place and wonder why it works,” said Paul Ringstrom, who owns Tapa the World on J Street in Midtown and has navigated the dining tides since 1994. “Then you realize the same people are there over and over. There’s one word for it: engagement.”

Unpretentious, with a touch of cool

“I think it's uniquely Sacramento,” Chandler said. “In other cities, good food, good wine and bar, good service, that's the draw. Here, people also want to know the owner and the chef. They want to feel like the places they go are their places. We're still small enough where people want it to be intimate.”

Chris and Monica Miller are a precise example of that. He’s a high-school teacher and football coach, she’s a lobbyist. They tend to make every place they go their place. That includes Selland’s and Cafe Rolle, 33rd Street Bistro on Folsom Boulevard and the new Cabana Wines on Elvas Avenue. That’s their circuit. They come back over and over, get to know the staffs and the chefs.

And they are now fixtures at Formoli’s Bistro on J and 38th streets. They’ve become bonded to it.

“We like to feel like we belong there,” Chris Miller said. “It’s not just Aimal and Suzanne (the owners), it’s their entire staff. They’re our friends. It makes it feel like we’re at our home.”

That kind of connection goes even deeper among many Sacramento diners. Ryan Donahue is a partner in Mother and Empress Tavern with Thiemann, and he’s been around the Sacramento restaurant scene for years. He said it’s not just knowing the owners and chef, people want to watch the chef back in the kitchen. Call it the rise of the foodie or the Food Network-ization of dining, but lots of folks want to be in on the action.

“People want to see the whole process, every piece of it,” Donahue said. “The pomp and circumstance at the table doesn’t interest them. They want the window into the kitchen, and they want to be able to ask about it.”

As for cuisines that connect, the nearly two-dozen people interviewed for this story had a consensus on generalizations. When diners are spending a bit of money, it’s for California cuisine (which is the old name for “farm to fork”), Mediterranean styles with a bent toward Italian, regional Mexican, or any food that’s seasonal. Restaurateurs say what Passmore said, anything can work, as long as it’s not too far out. Or French. Old-school French is not hot.

For more casual diners, Asian kills it. Vietnamese, Thai, sushi, noodle shops, Korean tacos, you name it. On the other hand, pizza has lost its buzz. There are still some first-class spots—Hot Italian, OneSpeed, Masullo Pizza come to mind—but they don’t get the press or chat they had a couple years back when everyone was debating crust styles.

And beer places are rocking. Look into LowBrau on a weekend. It’s packed, energetic, filled with a mix of people and ages. They all look comfortably at home. Plus, there’s beer.

“Beer, even craft beer, is an every-person beverage,” said Clay Nutting, one of the owners of LowBrau. “Sacramento is kind of that. This is pretty much a no-BS town, and people like things that aren’t pretentious.”

Unpretentious, yes. But also, for lack of a better word, with just a touch of cool.

“We tried to make the design casual, approachable, but also culturally relevant,” Nutting said. “We’ve got a generation of people who are really connected to brands, and it’s pretty hard to define what a brand is, except that they know it when they see it or when it feels right.”

There is one other thing that seems to be pretty unique about Sacramento, though it’s behind the scenes: The chef community really is a community.

“Instead of a competitiveness, there’s a collaborativeness,” Thiemann said. “Everyone wants everyone to succeed. Everyone is a phone call away if you need something. And we all want to hang out with each other.”

“When we did a soft opening,” said Donahue, “it seemed like every chef came. And Grange [Restaurant & Bar] let us use their kitchen. Ella and Josh Nelson totally helped us out. We’re the perfect size city for everyone to talk to each other.”

And what are they saying about what’s coming?

“We all see lots of people walking properties,” Donahue said. “Lots of people are looking to open. In a couple years, the city is going to look a lot different.”