Fifteen years ago, the South Bay barely registered on the regional dining scene. There were several good restaurants and a few excellent ones, but major media critics ignored the area, and it would have been laughable to suggest that people would soon be coming from the West Side and Beverly Hills to dine in Manhattan Beach.
Nobody would find that idea humorous any more, as top chefs have moved in just as locals have garnered respect. It’s more sophisticated by an order of magnitude, and with modern cuisine have come modern business practices.
Chefs may know everything about their sauté pans and spices but nothing about how to structure a corporate entity or negotiate a lease, and the quality of that deal plays a large part in the financial success of a creative endeavor. We glamorize chefs, but often ignore the active investors who play a part in shaping the local dining scene. I interviewed restaurant broker Tony Cordi, Mike Zislis of Circa and Strand House, and Mike Simms of Simmzy’s and Tin Roof Bistro about the dining scene in the South Bay and how the business has changed in the past decade.
From real estate agent to restaurant developer
Tony Cordi has stakes in several restaurants in Manhattan Beach, including the soon-opening Board Room on Highland near Rosecrans, but limited experience in an actual commercial kitchen. “I’ve worked in restaurants for a day or two here and there, just helping out,” he said. “I’ve bussed a few tables, taken orders, but never worked a whole shift. As for cooking, at my house it’s mostly salads and vegetarian, and it’s usually not me making it. I used to cook when I was younger, but haven’t done it much for eight or nine years.”
It seems like little practical experience for someone whose livelihood is based on the culinary industry. Still, Tony says he is doing much more than just handing cash to the people who do all the work.
“My area of expertise is about pulling the deal together, negotiating the lease or leases, everything about getting it up and going. More often than not there will be a general manager who will actually run the property. My job is getting the doors open.”
Tony spent years making real estate deals before one particular type of transaction seized his attention. He was an investor in the Redondo Beach restaurant Harbor Drive, which received critical acclaim but was only open for a few years, and the experience left him wanting more. Through his negotiations for himself and his clients, he developed an interesting perspective about the nature of the business in general and the South Bay in particular. He believes the traditional model of restaurant operations – the chef who sets out on his own and runs both the kitchen and manages the business – is dead.
“Look at Manhattan Beach, at the last dozen new concepts that have opened there,” he said. “I can’t think of one that was a sole ownership – they’re collaborations and partnerships. You get a better balance as far as talent goes, and you get better food, because the chef isn’t distracted by the financial aspects of the business. They may have no aptitude for that; there are some very good chefs who are very bad businesspeople. There have been restaurants that went bankrupt with a full dining room because nobody was watching costs. I think the improvement in the food in the South Bay has partly been due to the professionalization of the industry.”
Cordi admits that this corporatization can have a downside. “Occasionally investment groups can be conservative and reject the bold moves that give a restaurant character. I won’t mention the place, but I know one where they had a good chef with good ideas, but he was managed out of existence. All the creativity got beaten out of him, and it strangled him. The place was in a death spiral before it even opened the doors. On the other hand, there are a lot of open-minded operators who want to push the boundaries.”
The spectacular success of local restaurants has created a white-hot market in restaurant spaces, and landlords of desirable properties can pick and choose among interested parties.
“The most desirable places never even have a sign in a window – they’re on and off the market so quickly that even I don’t even hear about some of them. I had a listing in Hermosa Beach, and in two weeks I was approached by 36 different individuals and groups about making a deal. It drives up the value of even an unsuccessful restaurant in the downtown area– it doesn’t matter that a place is losing money, people will jump to buy it. Look at what has happened to prices in Manhattan Beach. In the 1990s it was two to four dollars a square foot; today it’s approaching seven dollars. The creativity and risk-taking started in Manhattan Beach and has moved to Hermosa. Not so much Redondo, not yet, but it will get there.”
Cordi is effusive about the Manhattan Beach restaurant scene, and says that despite increasing rents the scene is healthy.
“The price points are increasing, but it’s not a zero-sum game. More and more people are coming out to eat in Manhattan Beach – there are thirty restaurants in downtown, and a third of those are relatively new,” he said. “That third, which includes Simmzy’s, MB Post, and Fishing With Dynamite, are doing extraordinarily well, and each is doing far more business than their predecessors. This is not only the most successful that restaurants in Manhattan Beach have ever been, it’s the best they’ve ever been. You might be surprised, though, to know which four restaurants in Manhattan Beach are most financially successful according to sales tax records. They’re Strand House, Houston’s, Tin Roof, and Olive Garden.”
The mention of a low-end chain restaurant that caters to families in that list made me ask when the most recent family-oriented restaurant opened in downtown Manhattan Beach. There was a long silence before he answered.
“That’s a good question. You do see children sometimes at the high-end restaurants, but that’s more the exception than the rule,” he said. “The trend is toward finer dining concepts, and that approach is working – but I’m not sure what the families are doing. There are places like Mama D’s that do very well by any metric, and are family-oriented restaurants.”
When I pointed out that Mama D’s has been there for years and asked whether somebody would open up a new Mama D’s in the current market, he again hesitated.
“You’re probably right… when you look at all the factors involved, the pattern is for operators to aim at the higher price points,” he said. “They’re all aiming at the crowd who want a good dining experience and some kind of alcohol.”
Cordi says that he expects Redondo to change most in the next few years.
“In South Redondo you have a lot of people who live on the hill, a huge base to draw from, though a lot of them are relatively conservative in their tastes,” he said. “The thing about South Redondo is that the operators in the most desirable spaces all have been in place for many years. Some great locations are locked down by places that, I’ll say it diplomatically, don’t offer stellar creative food options. There isn’t that much movement, not many places for chefs who want to move up. It’s not a dynamic marketplace, where if something isn’t working very well then it moves out and something else moves in. That’s going to change. I think Rock & Brews opening in Riviera Village will change the demographic in that area – a lot of younger people will be walking around in that area, and it may help revitalize the neighborhood. There’s also the waterfront development project by the Redondo Pier – you’ve got a $350 million project that will seriously transform what goes on in Redondo Beach. That nine acre parcel in the middle [of the harbor and pier area], including the Boardwalk, has had several owners in the last ten years, and each of them has had some plan to develop it – for various reasons that has never happened. There will be a lot of capital invested in that area, and it will change dramatically. A lot of people are betting that it’s going to work this time, and I’m one of them. I’m working on a deal in that area that I’m very excited about. ”
North Redondo and the Artesia corridor could take a lot longer to join this trend.
“It’s a high-traffic area, but there’s no strong upward pressure in the scene,” he said. “There could be, because people in the South Bay will travel quite a ways for good food. I have friends who go from Manhattan Beach to Eatalian in Gardena, and that’s in a warehouse in an industrial area. It’s the most challenging location in a wide radius, but they have unique pizzas, you can watch them making the pastas from scratch, and they make their gelato on site. They serve 900 to 1500 people a day, and it’s proof that if you make great products people will go anywhere to get them.”
He is also optimistic about El Segundo, but says taking the long view is necessary.
“It’s a numbers game for El Segundo,” he explained. “The daytime population goes from 20,000 to over 100,000, so lunchtime is fantastic. In the evening their downtown has a combination of natural and man-made barriers, the oilfields, airport, and 405 – it feels isolated. That can change, it will change, but people in Manhattan Beach still don’t think of going to El Segundo as compared with Hermosa. It’s a psychological barrier rather than a literal obstacle, but it’s still there. There’s movement there – the old Stick and Stein location just sold, and it will be interesting to see what goes in.”
What he doesn’t expect to see is local entrepreneurs going en masse into the major PCH developments like the expanding El Segundo Plaza and Manhattan Village Mall. “It’s partly the cost of the buy-in, and also that the local owners congregate in their downtowns, the places that locals go,” he said.
Local operators are spreading within these communities, Hennessey’s, Zislis, Sharkeez group, Simms group – we have some very creative, well-financed, bright people who are creating franchises that will spread around California and beyond. Rock & Brews is opening in LAX, Cabo, Hawaii, and elsewhere, and the Simms brothers’ Lazy Dog Café is spreading too – they now have eleven units. The South Bay was the incubator for them, and there are more on the way. Jed from Abigaile is opening Little Sister and will probably eventually have other units, and there are others. They may have diversified concepts so that the same people own a gourmet burger place and a fine dining place and something else instead of franchising a concept and adhering to it slavishly.”
From The Kettle to the world
One restaurant group that has been conspicuously successful is the Simms family, who started with the downtown Manhattan landmark The Kettle decades ago. Brothers Mike and Chris Simms saw opportunities with more upscale ventures, and they now are partners in trend setters MB Post, Simmzy’s, and Tin Roof Bistro, as well as a more midscale operation called the Lazy Dog Cafe.
Mike Simms says that even though Tin Roof is doing extremely well in the Manhattan Village Mall location, it’s not a model other entrepreneurs can easily follow. He says that the reason local restaurant owners don’t jump at mall spaces is twofold – reticence of the business owners to move into those locations, and of mall landlords to rent to them.
“Mall developers like the security of dealing with known big brands,” Simms said. “We were fortunate enough to go into negotiations on Tin Roof during economic hard times, and nobody was looking at the site, so the landlord was willing to give it to a young group that didn’t have this type of operational experience. The highway model is numbers-driven – the owners want you to know your demographics, traffic counts, per capita incomes, office vacancies in the area, the kind of things that a big operation with a sophisticated real estate team can put together. Everything I’ve done has been in an existing building, and it’s a real leap to look at a plot of land and some drawings and imagine it. If you went to the corner by Simmzy’s or MB Post while they were vacant you could stand there and see who was walking by and what they were doing – trying to imagine the traffic patterns of something that doesn’t exist is a conceptual leap. I like staying in my little beach town because I really know what the standards are here. I understand the psychology of the people here, the visitors here, and how they interface with this town.”
Even though Tin Roof has proved their concept in a mall location, the Simms family doesn’t intend to replicate it.
“Not at this time, certainly – we have our hands full with Simmzy’s Long Beach and Manhattan Beach, and we have plans for another in Venice,” Simms said. “We believe in the concept, which is walking the line between family and upscale. It’s a place for lunch and dinner with family and friends whether or not they bring the kids.”
So since Tin Roof is doing so well as a family place, why aren’t other operators in the South Bay opening family restaurants?
“I have no idea. The options in Manhattan Beach for parents are mainly Pitfire, Kettle, and us at Tin Roof. Part of the reason for Tin Roof was that my brother and I both have families and we were frustrated,” he said. “We had to make a decision all the time about eating in a place with a bad atmosphere and mediocre food or whether to hire a babysitter because the restaurant frowns on kids being themselves. It’s a situation that more people should be addressing because I’m seeing a lot more families than there were around here ten, fifteen years ago.”
As to whether individual chefs can start with a small operation and move up the local ladder, Simms expressed confidence that it can still happen.
“The development teams have changed things, but I think a chef with a good idea and great skills will always be able to get into running a restaurant, and once they do they’ll get offers. It’s an upgrade business – someone can start on a shoestring and then build.”
Simms also acknowledged that the cost of leases in Manhattan Beach has skyrocketed, but laughed when asked if it is likely that there will be a bust in the next economic downturn because restaurateurs are stuck with high-dollar rents.
“I’ll add that to the long list, along with all the other things we can’t predict… It’s not as crazy as it was a decade ago, when landlords were getting premiums from guys who had never run restaurants before, and they went under quick,” he said. “Landlords have gotten more cautious – they don’t want to just give it to the highest bidder, they want to know that the people they rent to understand business cycles and can actually run a business that will pay their bills for the long term.”
Mike Zislis: The Empire Builder
The highest profile restaurateur by far in Manhattan Beach is Mike Zislis, who has become identified with a style of dining that includes celebrity chef appearances and events that attract a star-studded crowd. This inevitably has garnered detractors, such as the letter writer in these pages who decided that the paddleboarders who cut him off while surfing probably dine at Zislis Group restaurants. Those who think of Zislis as exclusively frequenting such places might be surprised at his answer when asked which restaurant operators in the South Bay he thinks are doing a great job.
“I respect the guys at North End Caffe – it’s my favorite little breakfast place, and I’m there every weekend,” he said. “They’re doing great things that are affordable for families. North Manhattan has some restaurateurs with a lot of potential, but the lack of parking keeps them from expanding or getting the traffic they should.”
Zislis has three small children, and as such is keenly aware of the lack of variety for parents in downtown.
“Among my restaurants, Brewco and Rock’nFish are kid friendly – otherwise, I go to Pitfire, Uncle Bill’s, The Kettle. Downtown Manhattan Beach is ripe for more kid-friendly restaurants; it should happen, and it will. There’s room for it. There are other things that are missing too. We’re dying for Chinese food around here – I go to Manhattan Village and eat at China Grill, but we don’t have dim sum, we don’t have anything downtown. ”
He acknowledges the competitive nature of the area, but like his fellow entrepreneurs believes that it serves to improve the whole scene. I was interested in his attitude toward a restaurant that is generally seen as his fiercest competitor as a creative kitchen, and when I asked his opinion of it the answer was surprising.
“I haven’t even looked at the menu at MB Post – never eaten there,” he said. “It’s not that I’m not friends with the Simms brothers – we’re involved in civic affairs and when he needs help he can call on me, when I need help I can call on him. It’s that what he does there doesn’t affect what I’m doing.”
Asked about whether he has considered opening in the mall, he dismissed the idea.
“I haven’t seriously considered opening in El Segundo Plaza – you can be sure that they contacted me, but it’s not the kind of location that fits any of my existing restaurants, and I am busy enough with those and with the new hotel that I don’t have time to develop a new concept,” Zislis said. “I don’t like dealing with the mall developers – they’re bureaucratic and any deal you make with them is going to be a lot more expensive.”
He believes that despite the increasing cost of opening an operation locally, there is room for new people as long as they have good ideas.
“There are always people who want to invest in a restaurant, but some of them start by aiming too high,” he said. “My suggestion to anybody who wants to get into this business is to create a hundred thousand dollar restaurant, prove it, show everybody how great you are, then open the million-dollar restaurant. The problem is the guys who start out with a million dollar restaurant and they don’t know what they’re doing. People invested in me in Shade because they liked what I had done in Rockn’Fish – they invested in Rockn’Fish because they liked Manhattan Beach Brewing. I just finished raising $20 million for Shade Redondo. It’s based on reputation, and that’s how you get one.”
That reputation has sent would-be entrepreneurs flocking to him for advice, which he cheerfully gives.
“I meet with ten or twenty restaurateurs a year that want me to look over their business plans, ask me questions,” Zislis said. “You call Clint Clausen of Four Daughters Kitchen, you call Petros, and they’ll tell you that I was instrumental in their restaurants’ opening. I did it for no money, I just wanted to see people successful. When Petros won his Hospitality Entrepreneur of the Year award, the first words out of his mouth were to thank me. I’m as competitive as anybody, but I’m happy when any new style of food comes into the area.”
