January 30, 2009 
A lot of thoughts in two threads over at the Chaska Herald site about the closing of MIX New American Diner. (Thread 1) (Thread 2)
What does it mean? Well, let’s look at the case of MIX in particular, and then talk about the climates for restaurants in Chaska overall.
The way I see it, MIX did the following things wrong:
- The menu was overpriced (at least initially). As I recall, the fish and chips on the initial menu was $17 or $18. When you can buy similar items at places like Houlihan’s or Applebee’s for $10 or $12, you’ve got problems. I’ll grant you there’s a quality difference between MIX and those places. But that much of a difference? Realistically, that’s not gonna fly. Adjustments were made, and I found later incarnations of the menu to be more reasonably-priced. However, it is clear that many others don’t fee that way. Some people didn’t go back and give MIX a second chance. So despite the protestations of John Pullis, when your customers think you’re overpriced, you’re overpriced.
- The operation didn’t run smoothly in the beginning. I recounted my story on the Herald website — our server accidentally dumped the tray of beverages on me during our first visit. She and the rest of the staff was very accommodating in getting me cleaned up. But when we received the bill, there was no adjustment. I had to ask if they would make an adjustment to the bill. Good customer service dictates taking care of that problem upfront. We didn’t go back for a few months because of the combination of service and prices.
- Lack of marketing. MIX didn’t do very much (if any) advertising and promotion. New restaurants need to get people in the door. MIX didn’t do enough to drive traffic. Pauly’s is constantly doing things to bring people in the door. My wife works at a downtown business. Not once did anybody from MIX come by the office to drop off a menu or some coupons or just to say “hi” and encourage folks to come over for lunch. Their office used to lunch frequently at River City Pub, before its demise. One thing River City did right was reaching out to local businesses. Word of mouth — particularly in a tough environment — isn’t enough.
- Insufficient capitalization. In the Chaska Herald story, Pullis indicates their loan officer told them they were in a “recession-proof” venture. Time to get a new banker! When you’ve only got enough working capital to last nine months, something isn’t right. Did the owners spend too much on the renovation and ignore the working capital needs? Perhaps.
MIX was also fighting against a number of other structural issues working against it.
- The economy cratered shortly after the restaurant opened. Restaurants of all stripes are fighting hard to maintain traffic counts.
- A downtown Chaska location creates challenges. The reality is that people “on top of the hill” have to have a compelling reason to come down the hill. A restaurant in downtown Chaska is going to have to be better than a restaurant on top of the hill to achieve the same level of success.
What other reasons are offered for the failure of MIX? Here are some I don’t agree with:
- Chaska residents weren’t sophisticated enough to appreciate what MIX was trying to do. I don’t buy this one at all. Plenty of Chaskans go to restaurants with more upscale tendencies — Axel’s, Redstone, Wildfire, etc. The real question is: was MIX sufficiently comparable to those more upscale spots to have a price point that people considered in that category versus the Ruby Tuesday/Appelbee’s tier? It would seem that most people didn’t feel that way.
- Chaska residents don’t want upscale dining. Maybe, maybe not. This certainly isn’t the kind of economic environment to be in the hospitality business, period. But, the best restaurants are still surviving. I do believe that a quality upscale restaurant could still make it in this town.
So where do we go from here? What does this mean for future restaurant owners in downtown Chaska? Here are the salient points, in my opinion:
- In this economy, value is key. If you want to do upscale diner food, the price needs to be more like “diner” than “upscale”. For instance, there are a lot of cheap options for a hamburger. People aren’t going to be inclined to trade up significantly in price, because there’s just not that much you can do with a hamburger to make it “upscale”. Chains that have gone after the upscale hamburger market, like Ruby Tuesday and Red Robin, have had to cut prices substantially to keep folks from trading down to McDonald’s and Culver’s. MIX and Chestnut’s failed because they couldn’t find the right combination of upscale dining experience and making sure the price was one the market could support.
- Downtown restaurants have to work harder to get traffic and keep customers. Marketing is key. Unless you’re Cy’s, which has a regular clientele, you have to constantly be making sure that you’re giving people a reason — on top of the food and service — to come down the hill and go to your restaurant. It’s advertising, and specials, and promotions, and even gimmicks. You also need to have a part of your menu that appeals to the senior citizen population that already lives downtown. There’s an audience that no doubt would love to have another place to go eat that they can walk to.
Someone will move into the MIX location, just as the former Chestnut’s/River City location will soon be Mi Casa. Will the lessons be learned? Or are the current structural disadvantages of downtown Chaska too much to overcome?
