Reorganization brewing at Puck's dormant Eureka

Nation's Restaurant News, June 15, 1992 by Richard Martin

LOS ANGELES - Chef Wolfgang Puck is devising strategies to divorce beer-making from cooking at the star-crossed Eureka brewery and restaurant, whose closure here last month marked the famed restaurateur's first major business setback.

Although Puck officially owns only 10 percent of Eureka and its corporate parent, the Los Angeles Brewing Co., he has been actively negotiating to sell its $6 million prefabricated brewing plant back to its German manufacturer or to one of several boutique breweries.

Puck said he intends to reopen Eurekas' highly profitable restaurant component this year if he and his partners can satisfy creditors of the debt-strapped venture and refinance the trendy eatery.

"So far the options are good," he said. However, "if somebody puts you in Chapter 7 [bankruptcy liquidation], what can you do? But it's not in anybody's interest to do that.' Declining to specify his own investment exposure in Eureka, Puck said, "Listen, it's a lot; it's in my best interest to reopen."

The 26,000-square-foot exhibition brewery and industrial-chic restaurant debuted two years ago at a cost of some $7 million but about $1.5 millions shy of its budgeted capitalization, sources said. Puck had earlier paved the way for his involvement by successfully lobbying in Sacramento for passage of a special state law that permitted him to own a limited stake in a microbrewery, despite his concurrent ownership of on-sale alcoholic beverage licenses for his other businesses.

Although Eureka demonstrated profitability as a restaurant, the overall venture wound up losing money because of insufficient funds for marketing its Eureka California Lager wholesale product, according of Puck and his brewing-company partners. Sources said production problems and mismanagement by former officers also contributed to the brewery's difficulties.

"Eureka [restaurant] did $500,000 profit last year; of course, the brewery probably lost twice as much," said Puck, adding that the restaurant grossed about $4.5 million in 1991 and yielded an operating profit equal to that of his landmark Spago in West Hollywood.

Minus its adjacent brewery, the 214-seat Eureka would probably resume operations either in the manner of a French brasserie, in which beer varieties are featured, or as a brewpub, with a smaller-scale brewing operation producing just enough beer for on-site consumption, according to brewing-company partner Jerry Goldstein.

Puck outlined his reopening priorities: "First, we have to separate the restaurant from the brewery. No. 2, we have to get some new investors for the restaurant."

Apart from the planned installation of noise baffles to address the only consisted complaint leveled by Eureka's customers, the place would probably reopen at its obscure, industrial location in West Los Angeles with few changes in its popular menu or operating format.

In addition to its bolt-studded brick, brass and etchedglass architecture, Eureka boasted house-made sausages, pretzels and other bread specialties and an eclectic array of international fare prepared under the direction of executive chef Jody Denton, who now is cooking in Washington, D. C., at Mark Miller's new Red Sage restaurant.

Puck said his 10-year-old Spago flagship and his three other well-known California restaurants were unaffected by the closure of Eureka or the anemic Southern California economy.

"We are doing incredibly well; I'm actually shocked," said Puck. "Our profits are up this year, too," he added, citing a 5-percent sales gain at Spago in May over the same month last year.

Sales for all of 1991 were $6 million at Spago, $3.5 million at Chinois on Main in Santa Monica and $9 million at the hotel-based Postrio in San Francisco, Puck said, describing sales trends and customer counts as about even so far this year with last year's levels.

Granita, which puck opened in Malibu last summer, is generating sales at an annualized rate exceeding $5 million, he said.

Puck currently is preparing for a late-summer launch of his first Spago clone, at the Forum Shops upscale mall in Las Vegas.

The chefs namesake frozen-food company is also getting into the chain restaurant business. The Culver City, Calif.-based Wolfgang Puck Food Co., which launched a cafe-retail prototype last year, wholesales six frozen pizza varieties in 25 cities nationally and has estimated annual sales exceeding $20 million. Puck is chairman and a part owner of the company.

The fast-growing company's executive vice president, Terry Hall, said it is poised to expand its prototype Wolfgang Puck California Pizza cafe concept over the next 18 months into four test markets nationally. The expansion would follow the quick-serve concept's well-received debut last year in the Macy's department store's food and housewares floor. The Cellar, in San Francisco.

Hall said it is possible that the cafe format at Macy's - where eat-in consumption of pizzas, caesar salad, desserts and beverages has exceeded takeout and frozen pizza sales by a 3-to-1 margin - could be altered to a full-scale, full-service restaurant prototype in at least one of the expansion-market tests.