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EMPIRE BREWING EXIT LEAVES BAD TASTE

Empire Brewing Co. has abruptly shut its Theater District restaurant, leaving city officials fuming over the owners' unannounced departure.

City officials in December 1999 had hailed Empire Brewing as a welcome replacement for Breckenridge Brew Pub, which had shut down in the same space inside the city-owned Market Arcade building 15 months earlier.

But Empire Brewing would remain in business for little more than a year, an unwelcome surprise to city officials who have tried to draw more visitors to the Theater District, only to find themselves searching for a new tenant yet again.

The way that the owners shut the restaurant seemed to sting city officials as much as the closing itself.

Peter Cammarata, senior executive vice president of the Buffalo Economic Renaissance Corp., which is the city's main development agency, said he received a tip late Sunday night that items were being loaded into a rented truck parked outside the restaurant.

Cammarata said he found Empire Brewing's co-owners, Michael Hodgdon and David Katleski, there and described the scene as confrontational at first -- he even called the police to open the truck to ensure that the business partners weren't removing equipment or furniture that didn't belong to them.

Cammarata said he discovered the company was hauling away only utensils and other small items that Empire Brewing had leased from distributors and was planning to take them to Rochester.

Cammarata said he agreed to allow Hodgdon to return to the restaurant Monday to run a final payroll, under supervision from a Buffalo Economic Renaissance Corp. staffer. He estimated the restaurant had about 40 employees at the time of the closing.

Neither Hodgdon nor Katleski could be reached to comment Monday about the restaurant's abrupt closing. Cammarata said he was told that the restaurant had struggled last November and December because of
poor winter weather and that the owners were pessimistic about the restaurant's long-range outlook.

In an interview last summer, Hodgdon admitted that the restaurant's early sales were slightly below where the owners had projected, but he expected business to pick up.

City officials said they had talked with the restaurant's owners since Empire opened but had no idea it was in danger of closing.

"I think the fact of the matter is, most people have thought they were doing well," said Alan DeLisle, executive director of the Buffalo Economic Renaissance Corp.

Feeling of confidence

City officials had felt confident about Empire Brewing's prospects in the wake of Breckenridge's failure. Breckenridge closed in August 1998, saddling the city with hundreds of thousands of dollars in losses.

Empire Brewing was already running -- and continues to operate -- successful locations in Syracuse and Rochester. It emphasized its food over its beer at its locations, the opposite of Breckenridge's formula.

The owners enlarged the Buffalo location's kitchen, poured more than $700,000 into improvements and offered seasonal menus.

City officials applauded the addition of the 160-seat Empire Brewing at 623 Main St. to a Theater District lineup of restaurants such as Gallery 101 Bistro and the Bijou Grille as a way of attracting more people downtown.

Empire Brewing had signed a 10-year lease, which included two five-year option periods. After their experience with Breckenridge, city officials were cautious in how they structured their business deal with Empire Brewing, DeLisle said. The Buffalo Economic Renaissance Corp. provided a $100,000 secured loan, in contrast to the $600,000 unsecured loan that was given to Breckenridge.

DeLisle said he believed that Empire Brewing was up to date with its lease and loan payments, but he needed to verify the numbers when city offices reopen today after Monday's holiday. M&T Bank also provided a $210,000 loan to support renovations carried out by Empire Brewing's owners.

Empire Brewing had been closed Sundays during this winter because of lower customer traffic, an arrangement the owners discussed with city officials.

DeLisle said city officials were planning to meet with the owners in the spring to assess the restaurant's situation, once the winter theater and Sabres hockey seasons were finished.

"We definitely worked with them every step of the way," DeLisle said. "We thought it was a good operation coming in. Now that they've chosen to leave the way they have, I'd rather have it happen sooner rather than later. It will not bode well for them in the future."

Disappointment from mayor

Mayor Anthony M. Masiello said he was "very disappointed" to learn that the Theater District's largest eating establishment had closed again, and he was equally dismayed over the circumstances surrounding the shutdown.

"They didn't tell anyone a thing," said Masiello. "Thank God we have a secured loan."

The man who heads the entity that manages and markets the Main Street Pedestrian Mall said he was "shocked" when he heard about the closing.

Michael T. Schmand, executive director of Buffalo Place, noted the owners' success in Rochester and Syracuse.

The owners also assembled a local management team that had extensive experience in the restaurant industry, including a general manager who worked in area eating establishments for 18 years.

"I talked with one of our Buffalo Place staffers who was in Empire as recently as Saturday night," said Schmand. "He said there was a great crowd."

But the manager of another downtown brew pub claimed there were recent trouble signs.

"We heard that business wasn't good at Empire," said Nicholas Wesley, manager of the Pearl Street Grill & Brewery, an eating establishment at 74 Pearl St. "It was a question of how long it would last."

Wesley said business at his restaurant is up 10 percent from a year ago and that it will likely post more than $3 million in sales this year. The Pearl Street Grill celebrated its third anniversary last November. Why is Wesley's establishment thriving when the Theater District venue has closed under two separate operators?

"There are mysteries in this business that just can't be explained," said Wesley.

Masiello said one factor might involve the size of the former Empire site.

"It's a big restaurant, and the overhead is high," said Masiello. "But why they couldn't attract people who were working downtown is a question we're going to have to answer."

Wesley doesn't buy the overhead argument, noting that the Empire site is considerably smaller than the 288-seat Pearl Street Grill.

Feel for market questioned

DeLisle said, in retrospect, he wonders whether the Empire Brewing owners had a "good feel" for the Buffalo market and whether they could have done a better job tying into Chippewa Street and Theater District activities and more aggressively marketing the restaurant.

"I think you can have out-of-town investors come in and do well. But somebody has got to be in tune with the marketplace," DeLisle said.

The closing means the New Millennium Group will have to find a new meeting spot for its "Thursdays in the City" mixers, which often drew 50 to 100 people, said Jeff Belt, the group's president.

The mixers had taken place at Empire Brewing since last November.

"We wanted to have a spot that was downtown and someplace that had some sex appeal, quite frankly," Belt said.

The group liked the restaurant's decor, spaciousness and easy-to-find location.

DeLisle said the city will now focus on ensuring it recovers its money and finding a new tenant for the space.

"The one thing I feel good about is it's a great facility," he said. "They put a lot of money into it. It's in walk-in condition."

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