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Closed restaurants stacking up in Healdsburg as ‘buyer’s market’ attracts investors

The local restaurant industry continues to shoulder the immense brunt of the economic decline and depressed tourism in Sonoma County tied to shutdowns during the coronavirus pandemic, with losses stacking up by the month in previously bankable visitor hot spots.

In food- and hospitality-focused Healdsburg, a recent succession of closures has exposed the distress felt by restaurants across the region. As statewide stay-home orders shift to indefinite timelines, eliminating anything beyond delivery and takeout, the owners of several longtime establishments in the city have joined a growing list of restaurateurs calling it quits.

In Healdsburg and beyond, though, the trend has created a buffet of shuttered restaurant properties for investors looking to cash in on new dining concepts even amid what economists have called a “tricky” environment for entrepreneurs. But the optimistic investments won’t bring back some of the county’s entrenched downtown destinations, whose prominent closures have become a sign of the perilous times.

In Healdsburg, New Orleans-style darling The Parish Café has been shut pending a sale and dependable diner the Singletree Café has been closed. Barred from outdoor dining, which was lucrative during better weather, the pair of Healdsburg Avenue mainstays a block from the downtown plaza could no longer justify the operational costs of limited meal options and are both for sale.

“If COVID hadn’t happened and Sonoma (County) wasn’t burning down, we wouldn’t be moving. We had the American dream,” said Rob Lippincott, who owns the Parish Cafe with his wife, Karla Lippincott.

As the sale of their flagship site goes forward – their second storefront in Santa Rosa is in escrow – they have not ruled out reopening in Healdsburg under pandemic limits before they pull up stakes and move to Nashville, Tennessee, where they plan to open another eatery.

“I’m making more money than I imagined I would in my life, but can’t save anything,” Rob Lippincott continued. “That’s not the way it’s supposed to be, not to mention doing business (in California) there are flaming hoops you have to go through and it’s only gotten worse.”

Nanci Van Praag, co-owner of Singletree Cafe, tells a similar story after 20 years in business. She and co-owner Dolores Rodriguez already had plans to retire from the restaurant before anyone had ever heard of the coronavirus, but once it struck, the situation worsened.

The business, which serves traditional diner fare, suffered significant financial hits during recent large-scale wildfires, plus the long-delayed construction of a nearby city roundabout. The cafe barely got through those challenges, Van Praag said, but benefited from an understanding landlord and a community fundraiser to help keep the lights on.

But now the pandemic and recent shutdowns, which prevent the outdoor dining that she said had been successful, have again ravaged sales. They’re currently under contract with a buyer for the location, branding and equipment at a small fraction of the cafe’s listing price with a closing date of Feb. 22. With two longtime employees in tow — a server and chef Minerva Vargas — they aim to spin off, opening a food truck within the next three months, Van Praag said.

“I feel sorry for every person who owns a restaurant right now. There are a couple people managing to make ends meet, and God bless them, I’m glad they can. But the majority of us can’t,” Van Praag said. “Every dime we’ve made has gone back into the restaurant just to keep it running. Those are the breaks of the game, what are you going to do? It’s a gamble. Every business is a gamble, and this gamble didn’t pay off.”

Compared to roughly this same time last year, nearly half of California’s leisure and hospitality businesses — a sector dominated by restaurants — are permanently or temporarily closed, according to data from Opportunity Insights at Harvard University, which is funded by the Bill & Melinda Gates Foundation. The study does not break down individual counties, nor detail whether those closures are permanent or temporary.

Other food service businesses in Healdsburg that have closed during the pandemic include The Brass Rabbit, and partner restaurant Chalkboard inside Hotel Les Mars, which is on hiatus until seated dining returns after the winter. With fewer large events and weddings, Moustache Baked Goods on the downtown plaza, co-owned by Vice Mayor Ozzy Jimenez with his partner Christian Sullberg, is for now consolidated into one of the couple’s Noble Folk Ice Cream & Pie Bar locations, also located on the plaza.

Local favorite Flying Goat Coffee was a victim of the pandemic shutdown, too. After 26 years located on the downtown plaza, the coffee shop closed its doors in October while still maintaining a smaller to-go space on Center Street. Another location of 23 years in Santa Rosa’s Railroad Square also closed at year-end, though there are plans to reopen smaller storefronts in both cities later this year, said Phil Anacker, Flying Goat’s co-founder and managing partner.

“It was basically just about money, and unfortunately we just couldn’t make it work,” said Anacker, of a disagreement with their landlord in Healdsburg. “In Santa Rosa, there was just no willingness with that landlord to find something that was fair for both of us. At some point, when you’re feeling like you don’t really have support or understanding or a partnership in something like that, it takes a lot of the incentive away to stay in the space.”

For the many restaurants still hanging on, the margins remain thin. Until at least outdoor seating is again permitted by local health orders, or additional state and federal assistance is made available, the prospects of survival are also increasingly dubious, said Sheba Person-Whitley, executive director of the county’s Economic Development Board.

“The takeout and delivery model does not work for all restaurants. Certainly it could be a temporary Band-Aid that’s sufficient for some, but not all,” she said. “But I do think Sonoma County has something great going for it, and a long history and reputation of being a great destination and place where people want to visit the coast, visit redwoods and visit wineries and have a fabulous meal. Once we get to widespread vaccination, and there are more activities, people will feel more comfortable traveling and dining.”

To help give local restaurateurs their best shot at making it until then, the Economic Development Board is once again hosting its annual Restaurant Week, this year from Feb. 19-28. Depending on local restrictions, it may be limited to takeout. The county group also is encouraging residents to help their favorite spots now by ordering takeout, or buying gift cards for when seated dining returns once COVID-19 caseloads fall to necessary levels, Person-Whitley said.

In a sign of some optimism for the industry’s future, particularly in Healdsburg, some new restaurant concepts are moving in. A handful of ambitious entrepreneurs willing to take a risk on the uncertainty ahead — and its length of time — have since signed leases to take over these and other vacated locations, said Tallia Hart, chief executive officer of the Healdsburg Chamber of Commerce.

Though perhaps contradictory, investors are pouncing on shuttered restaurants in this period of buy low-sell high opportunities, said Michael Hirschberg, founding partner at Centralbooks, an accounting agency that works with more than 45 local restaurants.

“It’s a buyer’s market right now. You can pick up all kinds of choice properties. People want to get out,” he said. “You can have your pick on Fourth Street (in Santa Rosa). I can’t even keep up.”

Still, the expectations for these types of purchases must be tempered — especially with even more restaurants likely closing before the economy fully recovers, said Robert Eyler, economics professor at Sonoma State University. In what equates to trying to time the stock market, he warned that the ongoing unpredictability of this unprecedented health crisis makes these investments and their paths forward precarious.

“It’s tricky, because we just don’t know. We Just don’t know how long the restrictions on how people gather together to sit down and eat will last,” Eyler said. “Regionally, we probably have a lot of restaurants who are trying to pivot. The ones that can have done so, but even those that have done so have likely lost revenue. So the game is, how many are going to survive in this environment the longer it goes, because lower revenue is not good for any business, namely those with these many risks boiled up into it.”

EDITOR’S NOTE: This story has been revised to more precisely detail the plans of Healdsburg restaurant owners Rob and Karla Lippincott.

You can reach Staff Writer Kevin Fixler at 707-521-5336 or kevin.fixler@pressdemocrat.com. On Twitter @kfixler. You can reach Dining Editor Heather Irwin at 707-526-8544 or heather.irwin@pressdemocrat.com. On Twitter @biteclubeats.

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