Ed Levine to Open a Second LB Steak in Early 2012
August 26, 2011
Some experienced restaurateurs are already tasting the sweet side of a sour economy.
The recession and weak recovery that so battered the restaurant industry, culling underperforming eateries that in flush times might limp along, is offering some spectacular deals to those with a strong stomach and hungry for growth.
“There’s so much opportunity with the unfortunate effects of the economy and some operators not being able to hold on to restaurants that has allowed people to come in and buy (failed restaurants) for 25 cents to 40 cents on the dollar,” said Jon Swanson, chief operating officer of Moana Restaurant Group. “There’s more opportunity for it now in really great locations.”
Moana, owners of Piatti, Paragon and other mid-tier full-service restaurants, acquired the old Bing Crosby’s in Walnut Creek where it will open Corners Tavern in 2012. Its partners in that venture include the trio behind Town Hall and Salt House — Mitchell Rosenthal, Steven Rosenthal and Doug Washington — and David O’Malley of Bix and Scala’s. They are seeking additional investors for the brewpub.
“Bing’s is a good example of an amazing location in an incredible market that is something we’re seeing more common now,” Swanson said. The partnership will spend about $1.2 million on the restaurant, one-third of what it would cost to build from a shell, Swanson said.
There’s nothing new about restaurants taking over a failed space, using the existing infrastructure and equipment rather than building from scratch. What is notable now is the quality of the spaces available, and the fact that construction costs are relatively low compared to five years ago.
Other restaurateurs taking advantage of the opportunities for primo restaurant digs include Ed Levine and Roland Passot’s Left Bank Brasseries, which will open a second LB Steak in early 2012 in Menlo Park’s closed Marché space; Chef Joseph Humphrey, late of Murray Circle, who will open a new restaurant in the Presidio’s shuttered Pres à Vi; and Bill Russell-Shapiro recently opened Boxing Room in the old Citizen Cake, which Elizabeth Falkner had renovated just a few years before moving her restaurant to Pacific Heights.
“We’re back in growth mode, but we’re doing it a little differently,” said Ed Levine, CEO of Left Bank Brasseries, which closed two underperforming locations in 2009. “Marché frankly was a well-outfitted restaurant, especially in the kitchen, so we are going to get into this with considerably less investment than it would take to build it out from scratch. … To a certain degree, we’re taking advantage of other people’s investments that didn’t make the grade and coming up with a concept that fits the market and neighborhood, but also keeps capital costs much lower.”
Some new equipment and a remodel will cost well under $1 million, Levine said. By comparison, the now-closed Left Bank Brasserie the company built in San Mateo cost about $2.5 million.
Moana is also opening a pizzeria with Richard Reddington in Yountville’s revamped Hotel Luca in November, following a similar model.
Times are good for some restaurants. Moana’s restaurants are all significantly up from last year, Swanson said. So are Left Bank and LB Steak, where sales are up 16 percent year to date across four stores, according to Levine.
“We don’t have to spend a lot of money, so the risk profile in this deal is really favorable,” Levine said. “It’s the Adriano Paganini strategy of restaurants, what he did with Beretta. He bought it for a few hundred thousand dollars, put in a few hundred thousand, and ended up creating a restaurant that does phenomenal volume.”