Jake's in Steilacoom another economic casualty

It was just five days before Jake’s Bar & Bistro’s fourth anniversary when Jake Hathcock locked the doors of the Steilacoom restaurant for the last time.

Hathcock had had great expectations for the restaurant. And it had survived nearly four years in an industry in which 18 percent of businesses close or are sold in the state every year, according to the Washington Restaurant Association.

But last Saturday, Hathcock knew his dream was done. The last paychecks, including his own, had bounced. A food supplier had stopped deliveries and an urgent appeal to a business partner for cash to keep the restaurant going during the lean days of winter had failed.

Jake’s had become another casualty of a difficult business operating in a difficult time.

“I’m looking for work,” said Hathcock, who grew his wine and beer bottle shop into a full-fledged restaurant. Unfortunately, Hathcock has plenty of company.

Anthony Anton, chief executive of the Washington Restaurant Association, said the association’s latest surveys show 56 percent of Washington restaurants are reporting lower same store sales this year. And 57 percent reported that they’ve served fewer customers between October 2010 and 2011, according to the association.

“What I’m seeing is that in 2011 people who own restaurants are beginning to run out of cash,” said Anton.

With business still declining and access to loans difficult, the tepid economy is taking a toll. Over five years, statistics show, half of restaurants will either close or change ownership.

Scott Babbit, Jake’s Bar and Bistro majority owner, said he had seen the operation go from profitable to marginal in the course of four years. Babbit is the owner of the building where Jake’s was located. He invested considerable money, he said, in equipping Jake’s, but left the day-to-day operations to Hathcock.

Hathcock said both the unseasonably cool spring and summer this year (the restaurant does a thriving business on its deck on sunny, warm days) and the general economic malaise are to blame for Jake’s financial decline.

“We count on the summer business to carry us through the winter,” he said.

Anton said several factors negatively affected restaurateurs this year, including a steep rise in food prices and an increase in the state’s minimum wage. And customers, lacking confidence that the economy will revive anytime soon, are being conservative with their menu selections, ordering lower cost, lower-margin items, he said.

A good indicator of the state of the restaurant industry in Washington, said Anton, is employment. The industry now employs 13,000 fewer workers than it did when business peaked in 2008.

But the number of restaurants in business has not declined, he said.

“I attribute that to the fact that people who get laid off often take their savings and open their own business, in many cases a restaurant,” he said.

The casualties of the restaurant business’s weakness are not only owners but the staff. Jake’s employed a dozen or so workers.

Their end -of-November paychecks bounced.

Gilbert Applegate, a cook at Jake’s, said Jake’s owed him not only for the two week paycheck that was returned but for an additional week’s work.

“I’ve got three kids. It’s Christmas time. My rent check bounced,” he said. “I’m afraid they’re going to put a ‘vacate’ notice on my door any day now,” he said Monday.

Hathcock said he had no funds to pay the staff. “I don’t know where I’ll get the money to pay my mortgage,” he said.

Babbit said Tuesday, and Applegate confirmed, that he had paid Applegate and others’ back wages.

“I’m trying to get this mess all cleaned up,” he said. “If you’ve got proper documentation, I intend to do what’s right,” he said.

Also caught in the restaurant’s collapse were a dozen groups that had reserved the restaurant’s banquet room for holiday parties. A group of firefighters who had booked that room for an event last Saturday arrived to find the doors locked.

Babbit is considering how to handle the canceled banquets.

Hathcock posted a message on Facebook this week giving his account of the reasons for the restaurant’s demise. Babbit said that posting was incorrect.

“I made a business decision about whether to invest more money into Jake’s,” he said. “That’s all that I can say. My attorney is now handling the issue.”

Babbit said he’s unsure whether to reopen the restaurant. Several people have expressed interest, he said.

Anton said not everything is gloomy for the industry. Nationwide restaurant sales are beginning to revive, he said.

“We always lag the general economy by months. I hope that’s a good sign for us that better times are ahead,” he said.

John Gillie: 253-597-8663

john.gillie@thenewstribune.com