Petersburg Indian Association will close the doors of the Seaside Restaurant permanently at the end of business Thursday, Feb. 28.
“This is a venture that has to be self-sustaining,” PIA Tribal Administrator Bruce Jones stated. “There are no grants out there to run restaurants.”
According to Jones, January was a good month and the restaurant still came within $730 of breaking even operationally, but that amount does not cover the debt.
“There were loans taken out to get it up to the way it is now and it just isn't making enough,” Jones said. “It is absolutely no fault of the manager or staff, the business just isn't bringing in enough money.”
Jones also explained that since Seaside Manager Jason Wilson arrived he has done an outstanding job of running things.
“If Jason had been here in the beginning, I believe we would have been closer to making it successful,” Jones stated. “I still think we would have come to the same conclusion, mainly because there was just too much debt associated with the business.”
Three loans were taken out on the restaurant in the amount of $747,000 and that amount was staggering to the profit line.
“The restaurant business is a tough business, no matter where you are,” Jones stated. “This was a good service to the community but I don't think they expected the costs that are associated with running a business such as this.”
Without the originating debt, the operational cost of Seaside Restaurant runs $41,000 per month just in expenses and with the debt repayment it is closer to $50,000 per month.
According to Jones, Wilson has been here since September and he did cut the costs down considerably and for the last three months the above amounts were less.
“He (Wilson) did an outstanding job,” Jones stated. “He just didn't have enough time to turn it all around.”
Jones also explained that the lifestyle in Petersburg just doesn't really support a business of this type.
“For anyone who has lived here for a long time, this is just the way you were raised,” Jones, stated. “Our mothers taught us how to cook and if we were going to spend money on a meal, we would get a nice big steak and cook it at home. That is just the way things are here.”
He also stated that in his lifetime, his parents only went out to dinner maybe four times a year.
“The problem isn't just here,” Jones said. “Even restaurants in Sitka are not filling all of their tables even during tourist season.”
According to Jones, places such as Coastal and Papa Bears have a niche market and they do well with a menu of sandwiches, breakfast and meals that aren't too expensive and can be ordered quickly.
“What people don't realize is that when you sit down at a restaurant, the price of the meal doesn't only pay for the meal but the overhead of the business,” Jones said. “It comes down to a price point thing as well as a cultural thing.”
Jones also explained that the possibility of opening the restaurant only in the summer for the tourist season, as other businesses do, would make no difference in the bottom line because of the debt that is owed.
“The way PIA works is that we depend on grants and each grant is specific in its purpose,” Jones stated. “The costs of running this business cannot continue to be taken from PIA because there is no grant to take care of the operating expenses.”
After Thursday, the restaurant will be closed and it will take approximately three to four weeks to inventory the business and that will be it for Seaside.
“We still have the debt associated with the business,” Jones stated. “We will have to consider either selling it or leasing it as a restaurant to someone else.”
Jones also stated that it is unfortunate that the business could not sustain itself but PIA cannot continue to put money into a business that can't pay for itself.
“I believe a business of this type is needed, personally,” Jones stated. “We just can't do it through PIA.”