Tag Archives: restaurant failure

February 18, 2024 · 11:20 am

A tough business in a tough town

Most people realize that the expense and hassle of opening a restaurant in New York City is daunting, but a 1980 New York Magazine story by Paul Tharp laid it out in excruciating detail.

Generally new restaurants have a short run, but the piece underscored this observation by noting that the city’s Restaurant Association claimed that three of every four places shut down or had new owners within five years. Tharp added that a real estate broker said that one out of ten operating restaurants was for sale “at any given time.”

New York was a particularly tough city for restaurant operators. Higher food costs there meant that the consumer was going to pay four times the cost of a meal’s raw materials rather than three times, then the national norm.

Expenses involved in opening a new restaurant were staggering. Although the total estimate for a 40-seat restaurant of $162,018 given in the article seems quite low by today’s standards, it wasn’t then. The biggest chunks of money were for payroll, kitchen equipment, rent, and remodeling costs.

But that was just the monetary total. Tharp also outlined a time factor, noting that the amount of time spent getting set up was often not anticipated by those lacking previous experience.

The article observed that few new owners expected to be putting in 14-hour days the first year working in the kitchen or waiting on tables, virtually abandoning their personal life. Nor did they realize how much time and patience would be required to obtain licenses and satisfy city regulations, such as taking and passing a 15-hour Health Department course in sanitation and food handling.

And then there were the exasperating bureaucratic hurdles. For some it was a surprise that stove vents were required to extend to the top of buildings. If the Buildings Department found that the restaurant had not obtained a permit and met city standards for remodeling, an owner might need to tear out all the work that had already been done and start over.

Taking over an existing restaurant may have avoided the hassles of remodeling, but its costs were likely much higher and brought their own hazards. Tharp relates a horror story involving two inexperienced men, elsewhere termed “babes in the gastronomic woods,” who wanted to take over a former Toots Shor restaurant for a bargain price if the new owners also assumed the restaurant’s debt. They teamed with major investors who pulled out and left them at sea. They renamed it Jimmy’s after soon-to-vanish partner Jimmy Breslin. Although at first it was quite popular, business then fell off with the recession and they realized they couldn’t handle the large staff or deal with unexpected costs such as credit card service charges, electricity rate hikes, and a temporary loss of their liquor license. Even adding an upstairs cabaret and a downstairs jazz club and hiring Jack Lemmon as Monday night bartender failed to attract the disappearing crowds. After about 34 months capped by a flooded basement, Jimmy’s shut down.

If Tharp’s report didn’t contain enough warnings, a published letter from a Manhattan realtor added another note of caution. He pointed out that owners of “quality buildings,” fearful of restaurant failure rates, tacked on security deposits equal to as much as five months rent, plus additional payments to make up for premiums required by insurers who assessed a higher fire risk for a restaurant tenant. Altogether, he estimated the operating budget should be 30% to 40% higher than Tharp’s.

Perhaps to offset all the bad news, the story included five thumbnail sketches of restaurateurs who overcame obstacles. I took a closer look at their subsequent careers, which raised some questions about just how well they all did. Three seemed to be well-connected pros who, despite disappointments with some ventures, did well overall. One of those briefly profiled was Peter Aschkenasy who had a number of successes including Charley O’s and U.S. Steakhouse, but who hit a snag trying to revive the classic New York restaurant Lüchow’s [pictured at top].

One restaurateur had a place I could find absolutely no trace of anywhere, and another had a single tiny restaurant with a short life. It was operated by the only woman mentioned in the story, chef Leslie Revsin, whose professional biographies unfailingly cited that she was the first woman chef to be hired by the Waldorf-Astoria. She opened Restaurant Leslie in Greenwich Village in 1979. With only nine tables and no liquor or wine license, it lasted only a few years despite critical praise. Following that she cycled through about nine New York restaurant kitchens including Argenteuil, One Fifth Avenue, and The Inn at Pound Ridge, often as executive chef. Eventually she turned to writing cook books.

Celebrity restaurants: Here’s Johnny’s

Restaurant chains whose owners and franchisees hope to succeed based on a connection with a celebrity are often disappointed. It’s clear that a famous name is not enough, leading to the failure of many that have depended too heavily on this while ignoring other elements of what makes for restaurant success.

Here’s Johnny’s, with Johnny Carson as its namesake, is a vivid example of the inability of a name to build a chain’s fortunes. The same was true of many other chains, such as those affiliated with Pat Boone, Minnie Pearl, James Brown, and Mahalia Jackson.

The fact that the would-be national restaurant chain Here’s Johnny’s barely got off the ground had nothing to do with Johnny Carson. The bad timing for fast-food start-ups then, 1969, had something to do with it. But so did the initial concept – gourmet hamburgers – and the poor implementation and direction of the chain’s development.

Rather than Johnny Carson, it was the Swanson brothers, grandsons and wealthy heirs of the frozen food empire that introduced Swanson TV dinners, who were responsible for the chain.

Johnny Carson, a popular host of the Tonight Show, was already a television fixture when he agreed to lend his name and engage in publicity for Here’s Johnny’s. He accepted the position of nominal chairman of the board of the parent company, Johnny’s American Inn, Inc. His duties were to appear at five or more restaurant openings a year. In exchange he was to receive $37,500 a year and what amounted to about 15% of stock in the parent company.

Carson insisted publicly that he was more than a figurehead: “I’m going to be active in it. . . . I’m not going into one of those get rich quick things that you just lend your name to and strike gold.” But, of course, the business was under the direction of the Swansons, primarily the elder brother Gilbert Jr. Carson was right, though, in saying it wasn’t a “get rich quick thing.”

The Swansons had been overly optimistic about how many franchisees they could sell. Even before the prototype opened in Omaha in 1969, they announced that they were hoping to sell 375 franchises in the next 18 months, including four or five in Omaha. An advertisement for franchises that appeared in Esquire magazine less than a year after the grand opening claimed “more than 300 have been sold.” However many may have been sold, few actually made it into operation. When the parent company declared bankruptcy in 1974, only 13 were in business.

The original concept was of restaurants with booths, each furnished with a telephone for placing orders (a setup shared by the King’s Food Host chain, based in Lincoln NE). The menu was fairly limited, with hamburgers, fried chicken, steak, fish sandwiches, and hot dogs. However, in October of 1971, a little more than two years after opening, the two Omaha restaurants, described in the Esquire ad as having a “luxurious atmosphere,” were redesigned and the entire concept was changed to that of a family-style restaurant. The telephones that enabled each booth to call in their order were scrapped. Reportedly they had never worked properly.

All franchising was to halt until the new program was in place, but the changes were made only in the two company-owned Here’s Johnny’s in Omaha. The company acknowledged that it would be unable to carry out the makeovers for the franchised units. Needless to say the revamp did not save the chain, though it did improve business at the initial Omaha restaurant. [pictured: advertisement, 1972, for the only two Omaha locations ever opened]

The final blow for the Swanson brothers was a lawsuit brought by the Louisiana franchiser, who charged numerous problems with the chain, such as shoddy kitchen equipment, inadequate training, and little help with financing and site selection. The franchiser was awarded damages. Altogether, the brothers ended up having lost millions.

In 1976 the last Here’s Johnny’s, the first to be opened, closed its operation on S. 72nd Street in Omaha.

At the same time that Here’s Johnny’s was launched, the Swansons also opened the first of what was to be a chain of 100 Time Out fast food eateries meant to serve as financial boosters for the Black community. The brothers partnered with two Black sports figures, Bob Gibson and Bob Boozer, and other backers. The North Omaha location, opened in 1969, was the only one ever built. It failed in 1972 and was then taken over by new owners. It is still in business today, in the original building.

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Filed under chain restaurants, family restaurants, proprietors & careers, restaurant issues

Tagged as celebrity figureheads, franchising, Johnny Carson, Nebraska, Omaha, restaurant failure, Swanson family, Time Out

September 8, 2019 · 5:10 pm

Boston’s automats

I have written quite a lot about automats, their origins in Germany, and where they have appeared around the country and the world. The automats run by the Horn & Hardart Company in New York, which began in Philadelphia in 1902, were undoubtedly the most successful and best known.

But automats did not do so well in other places. In Boston, The Automat Company of New England is pretty much completely unknown and I could not find a single illustration. (Boston’s automats were not part of Horn & Hardart Co.)

In 1916 the Automat Co. of New England’s first automat opened in a renovated building at 255-257 Washington, occupying the first floor and basement.

It’s difficult to say exactly who was behind this business, but evidently there were numerous investors, including a NYC bond merchant, a New England hotelier, Harvard College, a Philadelphia trust company, and a Boston realty company.

The company began advertising in Boston papers for help, running hundreds of advertisement for chefs, cooks, buss boys, dishwashers, porters, bakers, pie men, and mechanics. Applicants were directed to 40 Winchester Street, which was the central office and commissary where food was to be prepared for the branches that would soon open.

Next, the company hired a general manager and began running advertisements for leases on new locations containing “not less than 4,300 square feet floor space with basement preferred.” Soon it had five: 2 High st., 40 Court st., 234 Huntington ave., 255 Washington, and 32 Franklin, as well as its headquarters on Winchester. As might be expected, the cost of installing automat equipment in the five locations was high.

By early 1919, the company was insolvent and operating only three locations. Receivers were appointed by the court. A story in March revealed that the company owed a serious amount of money to its creditors: $103,789. In August, the commissary and the remaining four locations were auctioned, including all equipment, furniture, stock, and patent rights.

The Waldorf Lunch System, which ran about 24 lunchrooms in the Boston area, acquired the assets of the Automat Company. They continued to run at least one of the locations as an automat, 234 Huntington, until they auctioned the restaurant in June 1924.

Waldorf ran a second automat in the 12-story Little Building on Boylston Street. Since this had not been a location of the Automat Company, Waldorf must have moved automat equipment they acquired in the auction to this address. But, in 1924 they converted this automat into a “modern cafeteria,” saying that they would now be able to handle an additional 50 customers at a time, as well as to expand the menu to include steaks, chops, roasts, and even oysters, cooked by “special chefs” who would provide “regular first-class hotel cooking.” The change was seen as a substantial upgrade.

It sounded as though Bostonians weren’t shedding tears over the disappearance of automats in their city.

It seems to beg the question of why NYC’s automats were celebrated and became objects of nostalgia.

Automat is a word still in use in Germany, meaning a vending machine. And if you think about it, weren’t the old H&H automats simply large vending machines with people working inside of them?

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Filed under chain restaurants, lunch rooms

Tagged as Automat Company of New England, Automats, Boston restaurants, Horn & Hardart, restaurant failure

May 19, 2014 · 4:46 pm

The ups and downs of Frank Flower

Everyone knows that being a restaurant proprietor is chancy. This is amply illustrated in the life of Frank Flower, born in England in 1854, and working as a Boston waiter in 1878. He staked his career as a restaurateur on Harrison Avenue in Boston where he ran a restaurant from about 1880 to 1895, moving twice.

The reason for his failure in 1895 is unknown, but it may have had something to do with shifts in the neighborhood beginning just as he opened at 13-15 Harrison in 1880. That was the year that the first property lease was made to a Chinese person in Boston, on Oxford Place, very near to Frank’s restaurant. Frank had catered to patrons whose tastes ran to fish balls and baked beans. But, little by little by the 1890s Harrison would become a business street in Boston’s Chinatown. Boston’s first Chinese restaurant would open at 36½ Harrison in 1890.

In 1882 Frank advertised that he sold a week’s worth of meal tickets to men ($3) and women ($2.50). He also had rooms for rent, both “box rooms” and “side rooms.” I remember some years ago when I read about single working people who rented small kitchenless rooms in Boston’s South End in the 19th and early 20th centuries. While visiting a friend’s apartment in that area one day, I suddenly realized that her cramped and oddly-shaped three-room apartment was in fact made up of one box room and two side rooms.

By 1884 Frank was doing well enough to buy a nearly new 11-room Queen Anne house in Dorchester. He moved his restaurant to 19-21 Harrison about then. That location soon became problematical when the block was sold off to a developer who planned to raze the buildings and construct a large office building.

That same year, 1890, Frank won the contract to feed 10,000 Civil War veterans coming to Boston for a week-long reunion. In other words, he would need to furnish about 210,000 meals in the space of a week, rather than his usual not-too-shabby 10,500.

Though he claimed he nearly went crazy making all the arrangements, Frank felt confident he could handle the job by feeding 2,000 diners in five shifts for each meal. He contracted with a local baker for bread and the all-important baked beans; bought 3,000 new plates; had all the meat delivered to his door in a refrigerated car by Armour Co. of Chicago; bought four immense boilers that would steam 2,400 eggs at a time; hired 100 waiters; found a professional coffee maker who would turn 9,000 pounds of beans into endless streams of hot coffee; and paid 35 scullions to clean up. When the encampment was over the G.A.R. executive committee commended him on how well he had fed the multitude.

Evidently the veterans were pleased with what they were served. Nonetheless, Frank’s menu, repeated each day, gives a fair idea of why Boston restaurants of that time were not known for their fine cuisine.
Breakfast: cold meats, baked beans and brown bread, boiled eggs
Dinner: cold meats, baked beans and brown bread, boiled potatoes
Supper: cold meats and doughnuts

Frank’s Dining Room moved to 79 Harrison in the early 1890s, just about the same time that his original location became a Chinese store. But soon he hit the wall, declaring in 1894 that he was unable to pay his bills. His Dorchester mansion went back on the auction block.

Following his fall, he continued in the restaurant business as manager of Munro’s restaurant on Eliot Street. Always fond of boastful advertising, the irrepressible Frank took out newspaper ads claiming “1000 boarders needed” and “dinner, 20c, the finest on earth.”

In the decades after Frank left Harrison Avenue, Chinese restaurants such as the Chinese Royal and The Red Dragon took over several of his locations.