Restaurant owners endure intense competitive arena

Independent restaurateurs are toughing it out in a tightening market.
While some have gone over to the other side, entering into franchise agreements, others have taken a page from the enemy battle plan and have begun to branch out to increase their market share.
Fletcher Richards has successfully operated Lucile’s Creole Cafe in downtown Boulder for 15 years. But because he doesn’t own the building his restaurant is in, he has acquired a partner and will open a Fort Collins store at 400 S. Meldrum, and plans to open restaurants in Lafayette, La., and Lawrence, Kan.
“I am taking control of my future,” Richards said.
Richards and his partner, Tony Hanks, are in the process of renovating the former Magnolia Cafe, east of the Fort Collins Lincoln Center. The restaurant will seat as many as 65 indoors.
Although Fort Collins continues to be a major target for incoming chain restaurants, Richards said he expects to do well in downtown. Like the hugely successful Boulder store, the Meldrum location is close to campus and a business clientele.
Lucile’s, open for breakfast and lunch only, during the week is geared toward the business customer, providing small private areas for meetings, and a free phone and fax machine. “We cater to people who need a mid-week brunch,” Richards said.
The second tier of customers, Richards said, is composed of people who work from home or are of independent means, with college students and their families filling up the weekend.
Lucile’s will have to compete with established downtown breakfast restaurants such as The Egg & I, Joe’s Fireside Cafe, Village Inn and International House of Pancakes, Perkins and In The City Cafe. But by owning the Meldrum location, Richards said, he can better manage overhead costs.
Del LeBlanc Sr. and his family toughed it out at the Foothills Fashion Mall for about three years, trying to keep Delfannie’s Deli and Restaurant viable as wave after wave of chain restaurants marched into town.
This year, reeling from a decline in foot traffic in the mall and rent representing a percentage of sales more than twice the industry standard, 18-year-old Delfannie’s closed and filed for bankruptcy, citing $1.8 million in liabilities.
Since then, LeBlanc and his family have partnered with Preferred Income Investors, joined the enemy camp, and are now the franchise agents for Taco Cabana Inc.’s Northern Colorado region.
“Chains have a lot of deep pockets, and they all seem to be moving into Fort Collins,” LeBlanc said from his Greeley Mall store.
LeBlanc is operations manager for Taco Cabana. He said the investment group will open a Fort Collins location at the northwest corner of College Avenue and Harmony Road in the spring, and is scouting for sites in Loveland and Longmont.Over the years, six or seven chain-type, sit-down restaurants, in ways similar to Taco Cabana, opened within a mile of Delfannie’s, nibbling away at the formerly brisk lunch crowd.
“Hewlett-Packard used to bring whole departments in for lunch. Now there’s 12 restaurants between them and us,” LeBlanc said.
Increasing competition and declining mall traffic coupled with occupancy costs that were about 12 percent of sales, forced LeBlanc to walk away from the remaining six years on his mall lease.
“It just got to be tougher and tougher and tougher,” LeBlanc said. “We tried for three years to keep our heads above water, and it just became apparent it wasn’t going to happen.”
LeBlanc wonders if fine dining may be on the decline generally.
“Any independents who try to come into Fort Collins, if they don’t have a lot of money, they’re taking a big risk. You really need the backing,” LeBlanc said. “It seems that after we left, The Wine Cellar went bottoms up, Cable’s Inn closed. Those may have been locations, but I think fine dining is on the way out. Everyone wants a more casual environment.”
Tastes do appear to be changing in Northern Colorado, though perhaps not quickly enough to save the Greeley Salad & Pasta Co..
That 2-year old restaurant expects to close this month.
“The restaurant was real busy when it first opened,´ said assistant manager Barb Rehg. “But there are seven restaurants in this strip mall.”
Greeley Salad & Pasta Co., part of a small Denver-based chain, doesn’t have much in the way of large chain competition, aside from Golden Corral, Rehg said. “The only thing that hurt us is that Greeley is a meat-and-potatoes town, and we’re salad.”
But the big chains are on their way to Greeley, with Applebee’s Neighborhood Grill & Bar first in line.
The flow of chain restaurants to Northern Colorado doesn’t appear to be ebbing.
Look for the Lone Star Steakhouse to open near the Rocky Mountain Factory Stores in 1996, and Carabba’s Italian Grill is in the liquor-licensing and permitting process for a location near Steele’s Market on Harmony Road near Lemay Avenue.”Fort Collins has got a ton of restaurants. It’s pretty saturated, and I wouldn’t go up there with just any concept,´ said Mike Meyer, Carabba’s joint-venture partner in its Colorado franchise operations.
Nationally, restaurants do about $172 billion in sales each year, with business split about equally between full and limited service.”The independents are holding their own, but it’s pretty heavy competition,´ said Jeff Prince, senior director of the National Restaurant Association.