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High End Downtown Minneapolis Restaurants Suffer from Economy and Location;
Four Closed in Two Months; Two Others File for Chapter 11 Bankruptcy

By Bill Ward, Star Tribune, MinneapolisMcClatchy-Tribune Regional News

Aug. 7, 2009--At the once-bustling intersection of 6th and Hennepin, "Save the Schubert" signs cover the windows of City Center's long-shuttered TGI Friday's. Windows on the first and second floors of Block E are draped with "For Lease" banners. And a "Writ of Recovery of Premises" is posted at the hot spot formerly known as Bellanotte.

It has been a long, not-so-hot summer for downtown Minneapolis restaurants. Four high-end eateries -- Chambers Kitchen, Bellanotte, D'Amico Cucina and Morton's the Steakhouse -- have closed in the last two months. Two others, Seven and Oceanaire, recently filed for Chapter 11 bankruptcy.

The sputtering economy is only part of the problem. Corporate spending on travel and entertainment is down markedly -- "that's been killing us," said Morton's manager Susan Dunlop two nights before her steakhouse abruptly closed -- but insiders say other factors played a bigger part in the many downtown demises.

"Sometimes it's operational, sometimes it's concept, sometimes history just passes them by," said Cambridge Commercial principal Dick Grones.

Morton's, for example, had many problems, from a basement location and parking issues to too many high-end steakhouses nearby. And it may have been too masculine for these times. "When Morton's first came along, all the businessmen were men," said Andrea Christenson of commercial realtor Colliers International. "Capital Grille is much more women-friendly, and so are Manny's and Ruth's Chris.

"I don't think any [closing] had to do with their location or the economy. Concept, size -- I mean Bellanotte was huge," said Christenson.

Bellanotte, like the struggling Seven, was almost as much nightclub as dinner destination, relying heavily on being a magnet for a crowd that's young, hip and moneyed.

"While there is a sizable 'party crowd' here, it isn't large enough to support multiple high-end hot spots," said Chris Mumm, a 29-year-old lawyer who works downtown. "The 'cool kids,' as many people sarcastically refer to them, travel in herds, and a formerly 'cool' place can turn into a relative ghost town overnight."

That crowd now flocks to the W Hotel, for dinner at Manny's and/or revelry at the various lounges. Since relocating from the Hyatt last year, Manny's has been one of downtown's few success stories.

"I hear nothing good," said Craig Ritacco, manager of Mission American Kitchen. "I'm in the Bermuda Triangle, between Morton's here and Chapter 11s there and all this road construction."

'The worst stretch'

Although Mission is still profitable, Ritacco said, "This has got to be the worst stretch for the restaurant business ever, or at least in my 22 years."

That's certainly true nationwide: According to the National Restaurant Association, same-store sales, sales at restaurants open at least a year, have declined for 12 consecutive months and customer traffic for 22 straight months at U.S. restaurants.

At 6 p.m. on a warm Friday evening, the patios along Nicollet Mall are packed. But outside Block E's Hard Rock Cafe, only three of the 35 tables are occupied -- two of them by staffers with no one to wait on.

Around the corner, Ben Cook stands idly outside Seven, waiting for cars to park. "Some places are more resilient," said Cook, who works for Tradition Valet, which serves several downtown spots. "Fogo de Chao and Capital Grille are more resilient. Seven is not so resilient, but it's picked up a little since they made parking free [for dinner patrons]."

The competitive nature of the restaurant business downtown cuts both ways.

"Downtown's a little more unforgiving because there are so many options," Christenson said. "I don't have to go back to a restaurant if I get bad service or bad food. In the suburbs you might give a place three or four shots," because there are fewer high-end restaurants to try.

But having so many wide-open spaces where restaurants formerly resided can hurt those that survive. "You want to have a certain amount of critical mass," said Josh Thoma, co-owner of Solera. "It's like the way car dealers tend to group up. You want to have other restaurants around you, to have people maybe not knowing where they're going, just knowing they're going to eat [in that area].

"We're really looking forward to D'Amico opening across the street [in the former Chambers space]."

It's not just other restaurants that provide the foot traffic. During the Broadway-show summer hiatus at the Orpheum Theatre next door, business slows at Solera. Similarly, attendance declines at Target Center -- the Timberwolves have been losing, and a lot of lucrative concerts are going to St. Paul's newer Xcel Center -- hurt Bellanotte and other venues near the aging arena.

Having so many boarded-up businesses along a few city blocks -- Friday's, Shinders, Chevy's Fresh Mex and other spots on Block E -- has a chilling effect on prospective restaurant owners and patrons.

As do orange cones: "The ongoing construction on Marquette and 2nd [Avenues] hasn't helped with the image that downtown is open for business," said Sam Grabarski, president of the Downtown Council.

Not all the news is bleak

It's 6:15 p.m. The main dining rooms at a pair of restaurants on Hennepin are empty, but their rooftops are bustling. At Seven, the SkyBar Patio is abuzz with folks of all ages and ethnicities sipping, supping and soaking in the view. At Solera, a party has heightened the volume of laughter. Much of the view is obstructed, but through an opening to the northwest, a promising sign stands out: "Twins," crowning the almost-completed Target Field.

The news is not all bleak. Restaurants are popping up throughout the suburbs. "Within the last three to four months our lists of restaurant openings have been surprisingly large," said Mike Mitchelson, editor of the local trade publication Foodservice News. "On the outskirts a lot seems to be happening."

One newer Hennepin restaurant, Fogo de Chao, has been a huge success since opening two years ago and is one of the top grossing restaurants in the state. Nearby, Randy Norman, an original owner of Seven, is about to open an Indian restaurant, Om, in the old Nate's clothing shop.

Next April's debut of Target Field will bring 81 well-attended events a year to that end of downtown. "The area around the ballpark has some pretty aggressive development plans," said Grabarski.

But Grones expects most of the new places to be oriented toward "what you're in the mood for when you're down there for a baseball game": family-friendly eateries and brewpubs, rather than high-end restaurants.

"You look at Bellanotte," he said. "Maybe not a lot of people are going to go to a ballgame and eat high-end Italian."

Bill Ward --612-673-7643

COMINGS AND GOINGS

D'Amico Cucina, the Twin Cities' most ambitious Italian eatery to date, opened in Butler Square in October 1987 and closed in June.

Chambers Kitchen, helmed by renowned chef Jean-Georges Vongerichten, opened in the then-new Chambers Hotel in October 2006 and closed in July. It will be replaced by a D'Amico Partners restaurant.

Morton's the Steakhouse, part of the national chain, opened in Gaviidae Common in December 1991 and closed in July.

Bellanotte, featuring Italian cuisine and a bustling nightclub scene, opened in Block E in February 2004 and closed in July.

Oceanaire, a high-end seafood emporium, opened in the Hyatt hotel in October 1998 and spread to other cities. It filed for Chapter 11 in July and closed four of its 15 restaurants. The Minneapolis location remains open.

Seven opened in November 2007 as an upscale sushi bar on Hennepin Avenue and expanded to include the ground-floor r. norman's steakhouse in 2008. It filed for Chapter 11 in April.

BILL WARD

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Copyright (c) 2009, Star Tribune, Minneapolis

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