Upstart Crow’s Closing Seen as Big Blow to South Coast Village

South Coast Plaza Village has suffered what some merchants say will be a crushing blow to the remaining businesses at the struggling specialty center with the abrupt closing of Upstart Crow & Co., a popular coffeehouse and bookstore.

Ironically, the restaurant--which closed Thursday morning--reportedly had not only been profitable, but one of the biggest customer draws at the 42-store Santa Ana center, owned by C.J. Segerstrom & Sons. The 6-year-old cafe was one of about nine in a Berkeley-based chain that declared bankruptcy late last week.

On Monday, other retailers at South Coast Village said they feared the closure will have a ripple effect, leaving them scrabbling for customers in a center that already looks virtually deserted most weekdays.

Already, Anthony’s Shoe Service--a small store next door to Upstart Crow--saw business drop “a couple hundred dollars,” last Friday, said the shop manager, who identified himself only as Scotty.

“It was the lowest day in weeks. A lot of customers used to come in (the center) at lunchtime” for the restaurant, he said.

Another retailer, Linda Brown--owner of St. Ives, St. Ives Annex and Paper Garden--said the loss of Upstart Crow “absolutely” will hurt the rest of the center.

“Every person who comes in for whatever reason is likely to go to other stores,” she said.

About 50 Upstart Crow employees, most of them part-time student workers, were laid off.

South Coast Village, which retailers estimate is now at least 50% vacant, has seen a steady loss of tenants over the last three years. With the heavy number of vacant stores, several said Monday, just about the only consistent customer draws have been the center’s restaurants.

Last December, a group of present and former tenants sued the managing partners of C.J. Segerstrom & Sons, alleging that the developers and operators of South Coast Plaza--who also own South Coast Village--defrauded them by not promoting the small center as the plaintiffs said had been promised. The suit, which is pending, is at least the third involving disgruntled village retailers.

Maura Eggan, marketing director at South Coast Plaza, refused all comment Monday about South Coast Village. But former Upstart Crow employees and customers, and other village merchants, had plenty to say Monday about the center and what Upstart Crow’s closure will mean.

The espresso bar and bookstore chain apparently fell on hard times about a year ago, filing for protection from creditors and reorganization under Chapter 11 of the federal bankruptcy code. The company had been trying to get the chain back in the black until the ax fell last week: The company filed for Chapter 7 bankruptcy liquidation.

‘We Would Survive’

“When you’re in Chapter 11, things are always tight, but we didn’t expect them to eighty-six the entire chain,” said Joanne Sullivan, former general manager at the village store. “We thought even if they started selling the others, we would survive.”

Sullivan said the South Coast Village store--which offered poetry readings, jazz and children’s story hours--was “very profitable,” with a 12% net profit margin in May. Lunch hours usually saw the coffee shop filled to its 168-customer capacity.

For Sunday brunches, she said, “we did $3,000 to $4,000.”

The 3,000-square-foot restaurant was one of the few places near the Orange County Performing Arts Center that was open late on weekends for hungry theatergoers.

“It was an option away from the bar scene. There was no place like this,” said Craig Jennings, former bookstore manager at the store.

Sparse Foot Traffic

Even with the restaurant’s popularity, though, it suffered from sparse foot traffic at the tiny center, Jennings said.

“We got (our) customers, not (other stores’) shoppers. We had to coax people to get them in here.”

Whether the store’s doors remain permanently locked remains to be seen.

A San Diego Upstart Crow in Seaport Village remains open. Manager Marie Heacock said Monday she knows of no plans to close that outlet.

According to Sullivan, former manager of the Santa Ana unit, the San Diego cafe--one of two Upstart Crows in that city--was bought by buyers who also inspected the South Coast Village store Thursday.

Sullivan said the buyers, who have not been identified, began talking last week with Henry Segerstrom about buying the Santa Ana store, as well.