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Market Forces at Work at Santa Monica Eateries  

By Ed Moosbrugger

August 22, 2011 -- Downtown Santa Monica's restaurant business scene presents a decidedly mixed picture following the reopening of Santa Monica Place in August 2010. The mall brought more people but also added several major new restaurants to the dining mix.

Some restaurant operators believe that the overnight jump in supply has cut into their business. Other dining companies, however, remain eager to locate Downtown, often seeking to replace closed restaurants.

“There has been a proliferation of restaurants” in recent years, said Jeff King, co-founder and chairman of King's Seafood Co. “It takes a little bite out of everyone.”

King's recently closed i.Cugini on Ocean Avenue after 21 years in business but continues to operate Ocean Avenue Seafood nearby, where business is up slightly. King's is still happy with Santa Monica even though it decided to concentrate on its other restaurants instead of reinvesting in i.Cugini, which was larger than its typical restaurant, King said.

Reflecting the continued keen interest in Downtown, however, the i.Cugini space won't be vacant long. Seasons 52, which is part of a major national restaurant company, has announced plans to open a fresh grill and wine bar restaurant there in 2012.

“Downtown Santa Monica is an ideal setting for Seasons 52,” said President Stephen Judge in announcing the plans. “The combination of upscale shopping, dining and entertainment provides a lifestyle environment compatible with the Seasons 52 concept.”

The fact remains, however, that the big increase in dining supply at Santa Monica Place has hurt some long-time Downtown restaurants.

“I think the reality is that some of the sit-down restaurants have been impacted,” said Robert O. York, a leasing consultant for Downtown Santa Monica, Inc. (DTSM, Inc.).

Jo Won, general manager of Monsoon Café on Third Street Promenade, noticed a big drop in business as soon as Santa Monica Place reopened with a much bigger emphasis on dining. Business had been on the upswing in June and July of 2010 at Monsoon, which has been in business 15 years, but is now down between 10 and 15 percent, Won said.

Santa Monica Place restaurants appear to have captured a large segment of the tourist business that normally came to Locanda del Lago at Arizona Avenue and the Promenade, said owner West Hooker. Increased business from local residents has partly made up for the loss from visitors. Business at the sister Caffé Bellagio on the Promenade about a block from Santa Monica Place is up a bit, Hooker reported.

Hans Röckenwagner has a good view from both inside and outside Santa Monica Place, because he has bakery/cafes on Arizona Avenue and inside The Market at the newly remodeled mall.

He reported a steady increase in business over the past six months at his cafe at 311 Arizona Avenue after being initially disappointed at the location.

At his place in The Market, business was very strong in the first week or two after the May opening, but it's now a bit of a struggle to get people to come up to the third level of the mall, he said. Weekends have been strong but “I had hoped for a little more business during the week,” Röckenwagner said. “There is no traffic to speak of until 11:30 a.m.”

Meanwhile, new eating places keep coming to Downtown.

Daniel Radell opened California Monster Salads at 411 Santa Monica Boulevard in June and said business is “off to a great start” at his place, which he calls “a healthy alternative to fast foods" offering such things as salads in a bread cone and kale lemonade.

“There's a lot going on,” York said, noting that several other new restaurants have opened recently or plan to open soon.

One in the works is Tender Greens, which is taking the former Lighthouse restaurant space at Second Street and Arizona Avenue and which York believes will “add a lot of energy” to that corner. Another planned is chef-driven Tar and Roses at 602 Santa Monica Boulevard.

The visitor industry has been a key factor in Downtown's appeal to restaurant operators, and the news has been good on that front this year. Through April, hotel occupancy in Santa Monica rose 5.2 percent from a year earlier to 84 percent, according to PKF Consulting. Santa Monica had the highest occupancy rate among Los Angeles County markets tracked by PKF.

Reflecting the importance of visitors, DTSM, Inc. and Santa Monica Place in May hosted a tour operator workshop for Downtown restaurants outlining best practices in enhancing dining voucher programs for group and individual business through menu preparation, relationships and contracts. The workshop was hosted in partnership with the Los Angeles and Santa Monica convention and visitors bureaus. Follow-up events are planned.

“The goal is to assist Downtown restaurants in capturing additional lunch and dinner traffic from visitors to Santa Monica in a convenient way that enhances their current business model,” said Ashley Walkley, senior marketing and communications manager for DTSM, Inc.


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