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Photographs by Stephen Laufer

Chef Maximilian Zelaya at work at Clouds.

Tips From the Top

How do restaurants survive tough times in what is notoriously one of the most fickle of all industries? A few Santa Cruz eatery icons reveal the secrets of their success.

By Christina Waters

Just how hard is it to succeed in the restaurant business? Better sit down for this one. Industry marketing analysis (National Restaurant Association; Hospitality Net) estimates that over half of all new restaurants will fold during their first year of operation, and close to 75 percent will be out of business before they hit the five-year mark.

Those are grim statistics, the sort that would stop all but the most die-hard gamblers--or dreamers--in their tracks. Given the long hours and considerable outlay of cash just to get up and running--all the while keeping an eye on trends, consumer whims and seasonal availability--it's reasonable to ask why anyone in her or his right mind would even consider such a daunting prospect as owning a restaurant? Setting aside the obvious ego boost that comes with playing the host and pleasing the public, there are also potential profits aplenty. With projected sales of $426 billion in 2003, over $41 billion in California alone (according to industry watchdog the National Restaurant Association), it's easier to see why so many entrepreneurs would take the chance and open their own restaurant.

And many do: the restaurant industry is the largest employer in the United States outside the government. But not all restaurants can come up with that magic formula that makes for success, much less success over time. The ones that can are doing more than one thing right, and they usually go on to be known as local institutions. Santa Cruz has several such success stories, and to shed a little light on this mysterious business we've asked a small sampling of them--Shadowbrook, Ristorante Avanti and Clouds--to spill their secrets.

Casting a Shadowbrook

Ted Burke, owner of Capitola's landmark Shadowbrook Restaurant, minces few words. "This is a very challenging industry," he says. "Very hard."

He knows what he's talking about. For 24 years, he has owned (with Bob Munsey) and fine-tuned the 50-year-old hillside restaurant, and recently Burke was elected to the board of the National Restaurant Association. "I'd say that some of our success is due to our focus on long-term issues and not simply looking at day-to-day short term." By keeping an eye on the long-term, Burke feels more prepared for economic downturns.

"You need to look beyond what you're doing right now. A plan for how you're going to improve what you're already doing--that's crucial. Never be satisfied with things as they are now," he says. "You start there, but then you see how you can improve. We're always trying to improve."

Taking the long view can be especially hard in the restaurant business, "because the nature of the business is that it's a daily challenge. The short term is always in front of you."

Burke has plenty of examples. "You've got two minutes to solve these kinds of problems: the cook calls in sick, the ice machine breaks down--the immediate needs take up all our attention. I've sat at the bar at 2am and complained that there's not enough time. And yet, every day brings its highs; this is definitely an addictive business."

Burke claims a sixth sense about what works--"especially after having years of experience and having learned things the hard way." He also stays in touch with the national hospitality community.

"I talk to peers, find out how they're doing, get perspective," he says. "You can't be an island."

"Right now we've got a new menu concept in place--it's our first attempt at something like a prix fixe. Our guests are invited to have one or more items on the menu our chef has put together, but if they order each appetizer and entree, then dessert is free."

The point is that the meal has been designed "as a balanced whole, the courses designed to complement each other." Such innovation is part of Shadowbrook's recipe for success. Burke also agrees that "fine dining restaurants don't have the same bottom line as the fast and casual. Our chairs aren't made from recycled plastic, for example, and those investments--such as expensive chairs, or new china--need to be amortized."

Shadowbrook may be more costly to run than the lower-end eateries, but Burke admits he's competing with them.

"I'm blessed by having a special-occasion restaurant. My clientele are here to celebrate something, and when you're around people who are celebrating, it's just more fun all around," he says.

On the negative side of the "special occasion" scene, however, Burke says "people's expectations are also heightened--they want everything to be perfect, and of course we can't always do everything right." To stay on top of special occasion demands, Burke is extra attentive to his guests' needs. "We pay very close attention to what they say." Training is an area of continual vigilance, and Burke uses shopping services, "people who come in and check out certain areas, they dine, they order and they provide valuable feedback."

At its most basic level, Burke says the successful restaurant equation is "partly identifying how you can improve, and partly maintaining what you're already doing right." And he's very clear about the importance of balancing those elements. "Looking at the big picture and being very detail-conscious--you cannot have one without the other," says the longtime Shadowbrook entrepreneur. "In this business, you need both."

Employee Expertise: Aimee Page is one of Ristorante Avanti's secret weapons.

The Avanti Advantage

"We started small and just kept evolving," says Cindy Geise, who with her husband Paul owns and operates the West Side's popular neighborhood mecca, Ristorante Avanti. "We went slow, and didn't add breakfasts until we'd been in business for four years."

Continually evolving, fine-tuning and responding to the feedback of customers--those have been key factors, in Geise's estimation. And while the restaurant has expanded its offerings, it hasn't increased its physical size.

"We didn't have a big debt," Cindy recalls. "And we did everything ourselves."

Cindy's father created the bar and other construction projects on the restaurant during the first five years--and both owners, who live a mere three blocks from Avanti, are hands-on proprietors. "We're both here at least once a day," she laughs. Costs, as a result, are kept low--"We did it on a shoestring," she says.

The hands-on owners divide the labor. "Paul does the wines and works with Brian on the menus, and I do more of the business end of things." But Cindy credits employee ideas, and her and Paul's flexibility in responding to those ideas, with much of their continued success. "We're open to the needs of our employees, and to their expertise. We know we don't know everything."

Changing the menu frequently has kept Avanti fresh for its regular patrons, "and interesting for us," Cindy says.

Maintaining career employees is another factor in Avanti's enviable longevity. "Turnover is expensive," Cindy notes, "the training, the hiring process, everything takes time." She considers the casual, friendly atmosphere a huge part of Avanti's popularity with employees.

"Working here isn't just work--it's a part of your life," she says. "And we recognize people's personal and family needs, when they want to take classes or something, and we're willing to be quite flexible."

Responding to patron demands and menu choices plays into restaurant success, she says. "We're here so much that we can see instantly what's working and what isn't--and we can respond to the marketplace," says Cindy. "We're pretty immune to the economy, being small and affordable, but right now we are feeling an effect--not so much from the economy as from the recent presence of five new restaurants."

While the Geises are quick to know when a menu item is or isn't well received, Cindy admits that patrons usually have trouble with menu changes in general.

"People are amazing--they want the exact same thing to always be there. They really get upset if a favorite item disappears--and we have to give them an acceptable answer," she laughs.

A comfortable, friendly atmosphere plus "really good food with great ingredients," these are key to Avanti success, according to Cindy Geise. "Obviously there are quieter places, more intimate and more romantic, but you've got to have the food, too. We seem to offer both--though it has taken time to achieve that."

Add to that combination a third key ingredient: affordability. "We did want to have a place that people could come to frequently, rather than just once a year," Cindy adds. "And another thing; we really enjoy Avanti. We're always working it, tweaking it, we love being here." It shows.

Clouds with a Silver Lining

"Location, location, location," admits Lou Caviglia when asked about the reasons for his Clouds Downtown "bar and grill" success.

"The location here with movie theaters nearby really keeps us in good shape," he says.

The longtime Santa Cruz restaurateur says he designed his dining room for the long run. Caviglia entered the business as a youngster in the late '70s with the Santa Cruz Bar & Grill, upstairs in the Santa Cruz Hotel. Introduced to the old guard of Santa Cruz families through that connection, Caviglia has kept important ties with "that old-time Santa Cruz clientele" to this day.

"I've been around long enough to see the cycles in this business, the ups and downs," he says.

With good reason. In 1984, Caviglia and partners opened Sea Cloud on the Wharf, and in 1995 he opened downtown's popular Clouds. This spring, he and chef/partner Steve Elb will transform Sea Cloud into a new cantina and grill called Las Olas. So how did they get this far?

"We knew enough to always leave sandwiches on our dinner menu," he says with a chuckle. "Never take them off--that way everybody feels that they can come in often, not simply for special occasions."

Much of Clouds' success relies on that devoted repeat business. "We wanted a place that people would come to two and three times a week, and that's exactly what has happened. Actually, the big thing we have going for us is our customers. They create so much of the excitement. They all know each other, and everybody loves coming in to a place where they can see people they know."

Indeed, that sort of in-crowd synergy is what has fueled top spots from the mythical Rick's Bar in Casablanca to Paris' legendary Café de Flore. "We also designed the layout to be open, so that you could see everybody." Caviglia says. "Our employees are great--they recognize the regulars, and in the nicest possible way, we cater to them."

Caviglia admits to keeping Clouds' kitchen flexible as far as responding to customer needs. "We bend over backwards to be able to say 'yes' to whatever they want."

Thanks to a stunning amount of prep work, Caviglia knew firsthand that there was a niche downtown for a friendly full bar nestled inside a cozy, lively restaurant, a bit of San Francisco spun through seaside resort consciousness. "Before I opened Clouds, I came and walked around downtown 365 days in a row, to really scope out who was down here, what they wanted. Nobody was doing American cuisine, and while I know any day now somebody could open something similar, we wanted it to be done the right way from the beginning."

That doesn't mean, however, that he's getting comfortable in his success. "Right now we're in a reinventing phase," Caviglia says with obvious relish. "We want to kick it up a notch as far as what we're doing. I'm very humble about considering ourselves an established Santa Cruz restaurant, so we're always working on our service, always re-evaluating the menu, and right now we're taking time to look at some of the dishes that have been on the menu for awhile. We don't take any niche for granted."

Caviglia admits that his daily presence at the "store" helps him recognize patron trends, "even if they don't seem to be rational." For example, when he started noticing a drop in late-night business this year, he began putting increased focus on being more prepared for the earlier dining hours. Caviglia says he always knows what items are selling and what aren't, and removes, tinkers and adjusts accordingly.

"We've always kept that midprice range--if you want to succeed, keep your prices low," he says. "Actually, I think Clouds works because we have the right location, the right menu and the right service. And especially the right clientele. When you walk into a busy restaurant you feel like you've come to the right place."

And, finally, there's the elusive X factor.

"I hate to say it," he chuckles. "A lot of success is pure luck."

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From the January 29-February 5, 2003 issue of Metro Santa Cruz.

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