The San Diego hospitality company that founded Breakfast Republic more than a decade ago announced this week that it will be closing three of its older locations amid an aggressive growth plan that contemplates opening a dozen new restaurants in Texas over the next five years.<\/p>\n
More immediately, Breakfast Republic\u2019s first location, in North Park, along with two other restaurants in Encinitas and Ocean Beach, will be serving their last meals Aug. 9. While they are the earliest of the Breakfast Republic venues, they are no longer performing as well as the eight other Southern California locations, and with leases due to expire on two of the restaurants, it made sense to not renew them, explained Johan Engman, founder of Rise & Shine Hospitality, parent company of the Breakfast Republic and Breakfast Company brands.<\/p>\n
In the case of the North Park restaurant, Engman owns the real estate and said he will be putting the building up for sale. Business there declined, in part, he said, because of the removal of 175 street parking spaces to make way for bike lanes several years ago.<\/p>\n
The Ocean beach restaurant, at 5,000 square feet, is far larger than the locations he is now opening, and it\u2019s also on the second floor, which isn\u2019t as convenient for customers. The closure of the Encinitas location is more related to the rent, which was expected to increase significantly as part of a lease renewal, Engman said. That space too is larger, at 3,500 square feet.<\/p>\n
\u201cThe reality is, if I knew then what I know now, I probably wouldn\u2019t have opened this many stores in what I would say is a relatively small market as San Diego is, compared to a Los Angeles or Dallas, where I\u2019m expanding in the future,\u201d Engman explained. \u201cBut it\u2019s part of learning, too, and neighborhoods have changed. I mean, North Park, even five years ago, is very different than it is now.\u201d<\/p>\n
In San Diego County, there are a number of Breakfast Republic locations that will continue operating. Those are in East Village, Liberty Station, Mission Valley, Pacific Beach, and Scripps Ranch. And outside the county are six others, in Costa Mesa, Culver City, Echo Park, Irvine, Long Beach and Palm Desert.<\/p>\n
Known for their innovative spin on American classics, Engman\u2019s breakfast\/brunch-centric restaurants feature such menu classics as shrimp and grits, a variety of eggs Benedict concoctions, and decadent French toast options that incorporate peanut butter, br\u00fbl\u00e9ed bananas, and toasted marshmallows and chocolate sauce into the recipes.<\/p>\n
While the company\u2019s expansion plans will focus on Texas \u2014 most notably, Austin, Dallas and Houston \u2014 the Rise and Shine Hospitality Group will not ignore California entirely. Three new Breakfast Republic restaurants are planned \u2014 one in Palm Springs, which is expected to open in mid- to late October; another in Huntington Beach, planned for late February to early March; and then Highland Park in Los Angeles, in late February to early March, Engman estimates.<\/p>\n
The cost of converting existing restaurant spaces into a new Breakfast Republic or Breakfast Company restaurant in California is $400,000 to $500,000, says Engman. He notes that the financing for his new locations will come from existing cash flow.<\/p>\n
The first Texas restaurant \u2014 the Greenville Breakfast Company, located in the Dallas area \u2014 is scheduled to open by December. It\u2019s 3,300 square feet, a larger size more typical of the Breakfast Company brand.<\/p>\n
Engman acknowledges the cost and ease of doing business in Texas is one of the big draws for expanding there. Profit margins are also a little narrower in California, largely because of higher labor costs for hourly and tipped workers. He still expects to open at least one California restaurant a year, but that\u2019s a much slower pace than the planned strategy for growth in Texas.<\/p>\n
No other Texas leases have been signed, but Engman says he is actively looking in the state for vacant restaurant spaces that could be converted to a Breakfast Republic or Breakfast Company venue.<\/p>\n
\u201cIt has become increasingly difficult to do business in California. There\u2019s everything from increasing costs and labor and California being a state where there are a lot of frivolous lawsuits,\u201d Engman said.<\/p>\n
\u201cI\u2019m also pretty good friends with the guys over at Snooze, and they have breakfast restaurants in about 15 states or so. And Texas is their best market. I\u2019ve spent a good amount of time there in different markets, and it just seems to be a very foodie state, very business-friendly.\u201d<\/p>\n
Longtime restaurant broker Mike Spilky said he\u2019s not surprised to see Rise & Shine pivot to Texas for expansion of the breakfast brand.<\/p>\n
\u201cThis speaks to the difficulty of running a restaurant in California right now,\u201d said Spilky, president of San Diego-based Location Matters, a restaurant brokerage company. \u201cWe see a lot of restaurant groups closing and consolidating and, in turn, opening stores in other states. Broken Yolk is one of them. Places like Texas and Arizona are friendlier for business. Engman\u2019s brand is also a bit heavier for health-conscious California.\u201d<\/p>\n
As much as breakfast remains a popular dining concept among consumers, Engman points out that his locations have the advantage of full liquor licenses that help boost revenue.<\/p>\n
\u201cYou know, you go in for a permit or a liquor license in Texas, and it\u2019s not months and months like San Diego,\u201d he said. \u201cIt\u2019s weeks.\u201d<\/p>\n
The average year-to-date revenue of each of his breakfast restaurants, he says, averages about $2.4 million, although some locations like Mission Valley and East Village exceed $3 million, he said.<\/p>\n
\u201cFrankly, when I close the three that I\u2019m closing that have been struggling, the average goes up immediately because I wouldn\u2019t be closing them if they were little cash cows.\u201d<\/p>\n
Over the years, Engman\u2019s company, which also includes the Fig Tree Cafe, Eggies, Feast & Fareway at the Coronado golf course, and Ox Coffee, has had to close restaurants before, including Fig Tree and a concept called El Jardin that was at Liberty Station. More recently, a Breakfast Republic location in La Jolla closed last year as part of a lease buyout from the property owner.<\/p>\n","protected":false},"excerpt":{"rendered":"The San Diego hospitality company that founded Breakfast Republic more than a decade ago announced this week that…\n","protected":false},"author":2,"featured_media":416014,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[387,421,181,412,74,76,75,420,1696],"class_list":["post-416013","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-diego","tag-business","tag-food-and-drink","tag-latest-headlines","tag-restaurants","tag-san-diego","tag-san-diego-headlines","tag-san-diego-news","tag-things-to-do","tag-top-stories-sdut"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/416013","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=416013"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/416013\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/416014"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=416013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=416013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=416013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}