Restaurant Business Sags

The spare, blond-wood-paneled dining room of Osteria Angelini on Beverly Boulevard in Los Angeles was half-empty at lunch one day last week, and that’s being generous. Still, chef-owner Gino Angelini was upbeat, saying the day before had been much better and that business was bound to pick up.

Opening a new restaurant is always a tricky proposition--a 10-year study by Cornell and Michigan State universities found that 70% of restaurants close within five years of opening. (So dismal is restaurants’ reputation, an article in a trade publication reporting the paper was headlined “Failure Rate Better than Expected”).

But Angelini went that scary statistic one better--he opened his 50-seat restaurant last week in the midst of one of the worst restaurant business downturns this country has seen. He is just one of a handful of Southern Californians who are struggling against the greatest odds to pump new life into the local restaurant scene.

“Was I scared?” Angelini asks. “Of course I was scared. An osteria is not an expensive restaurant [he predicts a $35 average bill, including wine], but still you wonder if people will come. Many nights I’d wake up thinking, ‘Oh my god, maybe this is not the right moment to do this.’ But by that point it was too late. There was no turning back.”

That pretty well sums up the feelings of most of the new kids on Southern California’s restaurant block. Just as the local fine dining scene seemed to be awakening from a long slumber, the terrorist attacks of Sept. 11 have thrown the industry into a tailspin nationwide.

The good news is that things don’t seem to be as bad here as they are in New York or San Francisco, tourist-dependent cities where there have already been several notable restaurant closures.

“We’ve only been open four weeks, and we’ve got nothing to complain about,” says Suzanne Tracht, who just opened Jar with Mark Peel. “It’s a bit slow out there, particularly on the East Coast or in Vegas, or in hotels. But I don’t think we rely as much on tourist trade as some other cities do.”

Jar, also on Beverly Boulevard in Los Angeles, seats about 100 customers at an average ticket of $40 to $50 a person for food only. It benefits from the fact that Tracht and Peel are well-known, locally and nationally. Tracht was chef at Jozu; Peel is chef-owner at Campanile.

On the other hand, trying to establish a restaurant’s reputation at a time when people are cautious about spending money is tough. Cafe Momo, Michel Ohayon’s casual extension of his Westwood Moroccan restaurant Koutubia, received decent early reviews, but that wasn’t enough. At least for the time being, he’s folded it back into the main restaurant.

“That’s the only way for me to survive at this point,” Ohayon says. “It was a new restaurant, and it hadn’t built up enough clientele. People don’t recognize you the way they recognize an old restaurant.”

Business at the cafe, which has an average check charge of about $30 for wine and food, was down 60% in the last month, Ohayon says, while the fine-dining Koutubia, where the average check is more like $40, held even. “People like special-occasion restaurants,” Ohayon explains.

That impression was stated even more strongly by Cary Chiu, who, with his wife, chef Kimmy Tang, opened the fusion restaurant Michelia near Cedars-Sinai Hospital three months ago to good reviews. Today they are holding on primarily because of their steady dinner business, where the average check is about $35, while lunch, which is more like $15 to $20, is down about 30%.

Chiu says financial difficulties don’t seem to have affected the upscale clientele nearly as much. “People who want to eat out at night, those are the people who already have money, and finances haven’t had that much impact,” he says. “Lunch people, those are mostly people who work at the hospital, and they might have to save their money.”

But even fine-dining restaurants are having to trim their sails. At The House, Scooter Kanfer’s new restaurant on Melrose--where dinner runs $45 to $50 per person, not including wine--business is picking up after a brief slump in September, but Kanfer’s not taking any chances. She has rewritten her menu, emphasizing more inexpensive ingredients.

“I was looking forward to doing some foie gras, but I thought perhaps should I think twice about doing that right now,” she says. “It’s one of my favorite things, but I’m also not foolish. Foie gras is a very expensive item to have sitting in the refrigerator. We’re doing a simple pate instead.”

And at Josie, the Santa Monica restaurant opened in January by chef Josie Le Balch, the ailing economy has dictated a paring back of some ambitions. “We were really gearing up for a Wine Spectator Grand Award this year,” she says. “People are going to go eat, they still want the reward. But a great bottle of wine, that’s a luxury they’re willing to cut out.”

Business at the restaurant, where the average check is about $50, is down about 15% over the last month. And that business comes in different forms than it might have before. “We have much more early business than we used to, absolutely nothing after 9 o’clock,” she says. “And for some reason we’re getting lots more larger groups instead of couples.”

Generally, restaurateurs seem to be holding on and knocking on wood, optimistic yet waiting for the next shoe to drop. Angelini has opened his osteria quietly, just letting some friends know at first. Maybe later he’ll go back to the grand opening party he’d planned. “People need to eat, absolutely,” he says, “but right now is probably not the right moment for celebration.”