If a Restaurant Idea Flops, Best to Eat the Loss
Steve Reynolds met his partner, Steele Platt, working in Denver’s restaurant industry in 1985. The two became friends and hooked up as business partners a decade later in Long Beach, where they devised a concept for an upscale restaurant that would serve the world’s largest selection of draft beer. Their restaurant, called the Yard House, has been so successful that the pair recently expanded it to Costa Mesa. But an adjacent project--a family diner--didn’t take off. Admitting that a concept is not working and pulling the plug is crucial to staying afloat in the restaurant business, Reynolds says. He was interviewed by freelance writer Karen E. Klein.
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When we found this property, in Shoreline Village right across from the Long Beach Hyatt and the Long Beach Convention Center, it was just sitting here, shuttered. We knew that everything in this area was starting to change for the better, so we secured a lease for this site, which seats 250 with a large patio overlooking the harbor.
Next door, there was a little food court of about 2,800 square feet, sitting empty. The landlords were looking for a family concept to go in there. We decided to put together a business plan for that site also, so within three days, Steele came up with a concept for a restaurant called Oinks, with a ‘40s roadhouse look and menu. It opened three months before the Yard House opened. We served home-cooked food, such as fried green tomatoes, meatloaf and chicken fried steak, and had a beer and wine license.
The landlords really wanted the project. They loved the idea and the style, so they backed it and paid for an extensive remodel. But we realized after about six months that the demographics and the draw of Oinks were not going to generate the kind of profits we needed. We did a little lunch business and a little breakfast business, but at dinner the place was empty. And we couldn’t rely on alcohol sales, which are important to a restaurant, so we were losing about $20,000 a month just keeping it open.
We stuck with it longer than we wanted to. Since the landlords had backed the project, they felt like they had a say in it and they didn’t want to give up. Thankfully, the Yard
House next door was doing well enough to offset our losses. It took us about nine months of documenting the problem and lobbying the landlords before they agreed to allow us to change the concept. By that time, we had come up with a new idea and it only took us 30 days to implement.
We put in a Mexican restaurant with a full liquor license that serves good food and beer, tequila and margaritas on the water. We did a very cheap overhaul with paint, pine bar stools and murals and the place became Tequila Jack’s Beach House Cantina. It took off immediately because it complements the Yard House and draws from a similar young adult/baby boomer demographic, but it’s not quite as upscale and it has a children’s menu so families are comfortable there as well.
Opening Tequila Jack’s was a real turning point for the whole operation. When the aquarium opened, we had a big jump in business, and now we run at capacity on the weekends. Our new Yard House just opened in Triangle Square in Costa Mesa and we’re looking for a third location in San Diego.
Sometimes you have to let go and make a change. You can’t be afraid--whether it’s a policy or a menu item that’s not working--to change, even though it’s hard to give some things up. We have to think of what’s best for the operation, and that means being able to change constantly to make things better.
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
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AT A GLANCE
* Company: Icon Restaurant Group
* Owners: Steve Reynolds, Steele Platt, Harald Herrmann, Carlito Jocson
* Nature of business: Owns and operates three restaurants.
* Location: 407 Shoreline Village Drive, Long Beach 90802.
* Web site: https://www.yardhouse.com
* E-mail address: steve@yardhouse.com
* Year founded: 1995
* Employees: 300
* Annual revenue: $10 million
