Ranch House struggles downtown

Ranch House BBQ and Steak House restaurant received a new lease on life six months ago with a new home in downtown Olympia and free rent, but the business is struggling financially, its co-owner said Thursday.

Since moving in January after its Kennedy Creek Road location was destroyed by flooding, the business has had to adjust to new customers and competition from other downtown restaurants, co-owner Melanie Tapia said.

The result has been a 25 percent year-over-year drop in first-quarter sales; a staff reduction of six employees, leaving the restaurant with about 20; and mounting expenses as the restaurant invests in its new location while making mortgage and insurance payments on its old 5.2-acre site west of Olympia, Tapia said. Those payments are about $5,000 per month, she said.

"It's lost something," Tapia said about Ranch House, which has existed for about four years. "We're just another restaurant downtown."

Tapia said she has considered closing the restaurant, which she co-owns with Amy Anderson. The restaurant that previously occupied the space, Southern Kitchen, closed in November.

After Ranch House's Kennedy Creek Road location was destroyed, the Governor Hotel offered it free rent for six months and no utility payments for three months, Tapia said.

Ranch House will begin paying rent in July, hotel general manager Sandra Miller said.

Miller said Thursday that she was aware the business was struggling.

"I'm open to negotiating (rent) and supporting them as best we can, but I just can't continue to operate it for free," Miller said.

Another challenge facing the business is rising food costs.

In 2007, wholesale food prices for Washington restaurants increased 7.6 percent, the largest year-over-year increase in 27 years, Washington Restaurant Association president and chief executive Anthony Anton said. The forecast for 2008 is for wholesale prices to increase 9 percent, he said.

"It has created a tremendous amount of challenge for the (restaurant) industry," Anton said.

Ranch House customer Steve Argeris of Olympia said he was surprised to hear the business was struggling.

"I thought they had it made when they got into this place," he said about the move into the Governor Hotel.

Argeris said, however, that customers might be intimidated by dining at the hotel and miss the down-to-earth feel of the old location.

Tapia said Ranch House plans to rebuild at its previous site. She said the business has been approved for a low- interest loan of 4 percent from the U.S. Small Business Administration, although she's not sure whether it will receive the full amount needed to rebuild. She estimates that rebuilding will cost $750,000.

Tapia expects to learn more about the loan next month, she said.

"It's in the hands of the SBA," she said.

Rolf Boone is a business reporter for The Olympian. He can be reached at 360-754-5403 or rboone@theolympian.com.