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Change Coming at Mosun, KFC

Newport Coast resident David Mainiero plans to reopen the closed KFC as a mostly organic burger stand. Photo by Ted Reckas

Owners of two longtime Laguna Beach restaurant properties that share the same block and closed within weeks of each other this summer are taking steps to reopen, but face myriad uncertainties before welcoming patrons again.

A sale sign going up next week should instigate interest at the defunct Mosun sushi bar and upstairs nightclub, says the listing agent. City of Industry’s American Continental Bank seized the 8,000 square foot property, priced at $5.2 million, in a foreclosure proceeding last month.

“Whenever I have a restaurant in Laguna, my phone rings off the hook,” said Ryan Harman, vice president of Irvine’s commercial real estate service Lee & Associates.

The princely sum reflects the coveted terms of the property’s conditional use permit: approval to operate a liquor-selling restaurant and nightclub that can remain open until 1:30 a.m. without a valet and possession of 169 “grandfathered” parking spaces. “The value is in the C.U.P.,” Harman said.

Nevertheless, the permit expires at 680 S. Coast Highway if the building is not re-occupied within a year, putting Harman in a race against the clock to find a buyer before the bank’s asset shrivels in value. “Banks aren’t in the business of developing or holding properties,” said Ricky Fleischer, American Continental’s chief credit officer.

And though Mosun customers spilled out its ground level windows through most of the summer, a new restaurant operator will want an interior makeover due to deferred maintenance on the property, said Harman. The property’s condition effectively speeds up the clock to close a deal due to the time needed to remodel, he acknowledges.

In fact, upkeep was Mosun’s undoing. The restaurant’s owners, Kelo Enterprise LLC and its principals, Keon Jae Lee and Lori Cha, disputed lease terms mandating $71,000 a year in upkeep on the property formerly owned by Mike Rafipoor’s Coast Retail Investments, Harman said. “The maintenance issue is where it began to unravel.”

When Kelo quit paying $40,000 in monthly rent last October, Coast Retail went to court, but obtained a judgment too late to forestall foreclosure by its lender. “There was consideration if a new operator could raise an income stream there could have been negotiations,” said Rafipoor’s attorney, Irvine’s Herbert Niermann. “But no operators were on the scene.” He has since hired a private investigator to track down Kelo’s principals.

The bank also seized Rafipoor’s neighboring retail space at 670 S. Coast Highway, also for sale by Harman and listed at $1.35 million.

Despite the ticking clock, a wealth of new restaurants opening in Laguna in the last year underpins Harman’s belief he can lure a new owner-operator to Mosun. “There’s been a buzz that bodes well,” he said.

Across Coast Highway, another eviction proceeding against Kentucky Fried Chicken franchisee Smile Foods of Cerritos also closed one of Laguna’s earliest fast-food restaurants, which opened in 1967.

Within days of its closure on Aug. 31, a long-term lease was struck with newcomer David Christopher Mainiero, who aims to open a budget-priced, organic burger joint, said Michael Kinsman, a local accountant representing the property’s sub-lease holders, who he declined to identify.

Susan and Joseph Jahraus, descendents of some of the town’s early settlers, own the property, where Taco Bell is also a tenant. In ’48, the corner served as an open air ceramic shop, but by 1957 it had turned into a used car lot. A rival Chevy dealer competed on the opposite corner, city records show.

The former dealership’s service bays figure in Mainiero’s plans to create an environment reminiscent of an outdoor hamburger stand by reopening the closed bays as an al fresco dining area at the rear of the restaurant, explained local architect Anders Lasater. The concept is to create “a gourmet experience without spending a lot of cash.”

As tentatively conceived under Mainiero’s “farm to tray” philosophy, Urbun will serve steroid-free burgers on fresh baked buns embellished with produce from sustainable sources. Patrons will quench their thirst on Mexico-produced cane sugar-based Cokes or craft beers. Furniture will be sourced from recycled or sustainable sources. Bike racks will keep company with an electric-car charging station.

“This is my great idea,” said Mainiero, 23, a history major who graduated in June from New Hampshire’s Dartmouth College. He drives a Prius and lives in Newport Coast. He previously spent summers working in his family’s high-end Florida restaurants, beginning as a server.

He’s eyed restaurant locations since moving her. “I always drove by KFC and one day it was closed. I jumped all over it,” he said. “This just fits the bill.” He hopes to open within six months and anticipates $500,000 in carrying costs. Lasater’s fingers are crossed. “We’re hopeful. It’s going to be way better than KFC,” the architect said.

A liquor license and outdoor seeing will require Planning Commission approval, said planner Wendy Jung.

Both Lasater and Kinsman think the city’s land-use officials will welcome a locally based operator with a stake in the outcome. KFC earned a reputation under operator Ismail Kazi for failing to remedy code enforcement violations.

While Mainiero’s concept borrows from the slow-food movement, he clearly sees himself on the fast track. Time will tell, though, whether he can obtain the necessary approvals and see his concept to fruition. “I know how this works. I have a lot of history to draw on,” he said.

 

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  1. CH says:

    Excited for an Organic Bruger joint to replace KFC!! Even more excited if they offer grass fed beef options and side dished made with local produce! :) Sign on the changing times!

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