Chefs Feel the Economy’s Pinch

Chef Michael Kang. Photo by Don Romero.

Changes are afoot at Five Feet, French 75 and Sorrento Grille, three long-established Laguna Beach dining spots, due to two key ingredients: recession-trimmed tabs and local restaurant trends that defy the rest of Orange County.

French 75, under new ownership since 2009, recently hired celebrity chef Pascal Olhats as a managing consultant to boost the restaurant’s profits.

Local chef and restaurant-concept maven David Wilhelm, engaged by the new owners of Sorrento Grille 18 months ago to perform a similar feat for that restaurant, is leaving the fledgling team he set up to fly on its own. He’s now preparing yet another new restaurant concept, this one with a Mexican twist, a dream project he has been honing for a while, pending the ideal location.

And Michael Kang, chef-owner of Five Feet, is considering closing his iconic downtown restaurant after 25 years due to a lease dispute.

The three chefs are shifting their game plans in order to survive the economic downturn as well as accommodate the idiosyncrasies of the Laguna Beach market.

The French-born Olhats put himself on the culinary map with his signature Newport Beach restaurant Tradition by Pascal. He also guided the transformation of money-losing French 75 at Fashion Island into Brasserie Pascal last year and began consulting for French 75 Laguna Beach about a month ago.

Both French 75 restaurants, as well as Sorrento Grille, emerged with new investors from the 2008 bankruptcy of Culinary Adventures, the restaurant group founded by celebrity chef Wilhelm.

Olhats’ changes so far at French 75 include adding more interior light and greenery and lowering the decibel of the live music offered three nights a week.

It is common wisdom that discretionary spending at restaurants falls in a recession, but some restaurant operators say more than the economy keeps dining tables full in Laguna Beach.

Olhats believes that French 75 lost clients by becoming too much like a “corporate” restaurant. He believes a “family run,” boutique-style restaurant can rebuild patronage. He envisions it akin to a quintessential auberge on the coast of Normandy, a welcoming place with wood beams and a warm ambiance, offering very good food that is “unpretentious.”

In addition to tweaking the ambiance, Olhats, who claims a good relationship with chef David Shofner, said they have changed about 40 percent of the menu and introduced “more reasonable” pricing, while maintaining the small plate offerings so popular in the bar and patio areas.

On a recent visit during prime time on a Saturday night, the restaurant boasted a full house. The bar/lounge area was swinging with live music and lively conversation, a large party had taken over the patio area and the dining tables were full. The host promised a “long wait” for anyone arriving without a reservation. And during the week, Olhats confirmed that business is “moderate to fairly busy.”

A visit to Kang’s Five Feet on the same Saturday night also revealed a full house and lively ambiance. Customers are still filling tables, but are ordering less alcohol and desserts, the two most profitable menu items. Receipts are down 35 to 40 percent, Kang said. “That’s what’s killing me.”

For Kang, rent hikes combined with sinking profits make him skeptical about committing to a new lease, up for renewal this month. He is negotiating with the landlord, who has agreed to extend the current lease until August. In the meantime, the landlord will be shopping for other possible tenants willing to pay higher rates. Kang retains the right of first refusal.

Kang’s hopes rest on the landlord’s risk tolerance for tenants without a proven track record and ability to find a tenant willing to pay higher rates. Kang already pays almost $8 per square foot, along with maintenance, a rate he believes is exorbitant.

Indeed, Ryan Harman, of Irvine’s Lee & Associates Commercial Real Estate Services, said that local restaurants tend to pay between $3 to $6 per square foot and that “anything over six bucks is pretty high.” Still, Harmon receives daily calls for would-be restaurant operators in Laguna, where spots that are already permitted for restaurant use are scarce and highly prized. When one in Laguna opens up, potential new tenants line up, making it easier for the landlord to demand above market rates.

Those in line include Wilhelm, who thinks the space that Five Feet occupies would be perfect for his vision of a high-end, small-plate, Mexican restaurant and bar, something he has been cultivating for a while, waiting for the right time and location.

Three weeks ago he opened a gastro pub in Point Loma, and now he is ready to pursue his long-held dream of a “sexy and fun” upscale Mexican spot in Laguna Beach.

While Wilhem holds Kang in high esteem, neither does he want to miss an opportunity to secure a dream property should Kang and his landlord not reach an agreement. Wilhelm’s El Diabla has already applied for an amended conditional use permit at the property to allow for a liquor license as Five Feet only serves beer and wine. A Planning Commission hearing is scheduled for May 26.


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