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Thursday, February 16,2012

Shug’s is latest casualty in 13th Street’s revolving door

By Steve Weishampel

A band you like is playing one of the two restaurant/music venues on the 2000 block of Boulder’s 13th Street, so you fire up Google Maps to be sure of where you’re going. In the glare of a summer sun, between beer delivery trucks, you can just spot a sign outside: RedFish. Or, wait, there: b.side. Wait, no. Are you on the right block?

 

You would be. You’d just be back in 2009. These days RedFish is Shine, a two-month-old venture from the Emich triplets, who once ran Trilogy next door. Meanwhile, in the old Trilogy space, Southern food chef Sean Shelby recently closed the doors — or had the doors closed for him — at his latest eatery, Shug’s Low Country Cuisine.

Hit by a sudden drop in revenues and in debt to landlord Tebo/ Karakehian for more than $18,200, Shug’s was evicted from 2017 13th St. on Feb. 7, as first reported at boulder weekly.com. Shelby says Shug’s hit a sudden hole it couldn’t climb out of.

“We went from upwards of $80,000-plus in November to $38,000 in December and $36,000 gross revenue in January,” Shelby says. “So, a huge gap between the revenue loss and the reality of what our bills were.”

Rent for Shug’s was more than $6,500 a month. But that’s before you account for triple net expenses — an element of the lease that can bump the rent up three or four thousand dollars. Hate paying utilities on your apartment? Triple net expenses means picking up the real estate taxes, building insurance and maintenance as well — costs that Shelby says raised the rent to $12,000 at its highest point of the year.

The Shug’s space at 2017 13th St., and its neighbor, 2027 13th St., have seen at least seven businesses since 2009. Shine’s spot, 2027, was home to RedFish, Colorado Brewing Company/ Boulder Draft House and Los Oasis before the Emich sisters took over. Meanwhile, 2017 held Trilogy and b. side before Shug’s signed a lease in April.

Why the turnover? Is it a bad location? Is the rent too damn high? Or are owners to blame?

To one former owner, there’s no mysterious curse on the spots. Jim Howser, former co-owner of Boulder Draft House, says 13th Street has the same chances of succeeding as any where else.

“I’m not a believer that a certain area is cursed,” he says. “In Boulder either you kill it or you don’t survive. You either need to have a concept that kills it, or you’re a great operator.

If you’re average, you’re not going to make it.”

He says Boulder Draft House closed for financial reasons that went beyond the rent.

“Our issue was never the landlord.

Our issue was the fact that we didn’t run our business properly,” says Howser. “We had customers, we had a beer following. We just didn’t run behind the scenes very well. I think that’s the reason for everything.”

Howser doesn’t lay the problems at Tebo’s feet, but he admits he may not be objective.

“I’m a commercial real estate agent,” he says. “I specialize in restaurants, and I do deals with Tebo.”

At Shug’s, large, white Tebo Space for Lease signs fill the front windows. The two restaurants on 13th between Pearl and Walnut average a new name every nine months. But ask Stephen Tebo, owner of the landlord company Tebo/Karakehian, and he’ll say there’s nothing unusual about the turnover along 13th.

“I would say they’re very standard,” Tebo says. “The spaces are not inherently bad spaces.”

He cites a common figure for restaurant failure.

“Eighty percent of restaurants go out of business in the first five years. And that’s nationwide,” he says.

But that number’s hard to confirm.

Businessweek magazine puts the number at 60 percent for the first three years — still high, but “on par with the cross-industry average for new businesses,” the magazine wrote in 2007. In other words, restaurants don’t fail any more often than art galleries, convenience stores or any other new businesses. Researchers at Cornell and Michigan State universities studied the question and came up with 60 percent for restaurants’ first five years, Restaurant Startup & Growth magazine reported in 2004.

Even if the rate was 80 percent, the two venues are beating that by a wide margin. Tebo says the reason comes down to the proprietor.

“It’s 100 percent dependent on the operator,” he says, pointing to the Emich sisters’ Trilogy as a success story. The sisters sold the restaurant after operating it for nine years, and Jill Emich says the decision was driven by a need to change.

“For us, it was a matter of timing,” she says. “We’d had it for nine years and we were just ready for a change.”

Shelby wasn’t. But change came anyway, and Shug’s now joins that percent, whatever it is, of restaurants that don’t make it five years.

Tebo says he’s received at least four proposals for the Shug’s space, but wouldn’t release any details. He says he doesn’t know when the building will have a new tenant.

Respond: letters@boulderweekly.com

 

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