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Two Restaurant Titans Wage A Battle For Wayzata

Two Restaurant Titans Wage A Battle For Wayzata

As local restaurateurs Dean Vlahos and Randy Stanley prepare to do battle in downtown Wayzata, the lakeside city looks to grab a much larger share of regional discretionary spending.

It was a quiet spring in Wayzata—eerily quiet. Cool, rainy weather kept day-trippers home, while its two largest, most prominent restaurant spaces were dark, reinventing themselves for a big summer splash.

This lakeside hamlet of 4,136, home to a fairly static array of dining and retail, was girding for change, as a major mixed-used development accepted its first tenants and the city prepared to upgrade and market itself to the entire metro area.

In the battle for discretionary spending, Wayzata has one huge natural asset: Lake Minnetonka. The small buildings of its downtown are splayed along the lake’s shore like charms on a bracelet.

Wayzata also has historically had one very big disadvantage, and it’s not the BNSF railroad that separates downtown from the lake, not limited boat slips or scarce auto parking.

It was that Wayzata was for Wayzatans. Its well-used, sort of preppy collection of shops and restaurants served locals and held limited visitor appeal, outside of a collection of summer weekends when day-trippers descend to be on the lake.

“Wayzata likes being small, sleepy, a place where you can park in front of anywhere you are going to,” says Terri Huml, owner of Gianni’s Steakhouse on Lake Street. “Wayzata caters to locals. We have two fine-dining restaurants, but you can still get cheap beer at the Legion and a $4 breakfast at Maggie’s.”

Excelsior, on the south shore of the lake, has the historic streetcar boats and populist lakeside eateries with plenty of dockage; a hotel is set to begin construction this year. Excelsior is open for business. In Wayzata, Huml continues, “there’s no pier, you can’t park your boat and there’s nothing really to do.”

Opportunity at Sunsets

Dean Vlahos finally punched his ticket to a lakeside Minnetonka restaurant via a rather unexpected path. Vlahos had been taking meetings, looking for projects and partnerships post-BLVD, the Minnetonka restaurant he opened in 2010. Plans to open more BLVDs were stillborn. A venture at the West End development in St. Louis Park fell through. Then he got a call from Steve Wagenheim.

“I called Dean last summer. I was looking at buying some Champps franchises and wanted Dean’s input,” Wagenheim recalls. “Dean wasn’t interested, but we decided we worked well together when we were younger, we know the business better than we ever have . . . why don’t we do a new concept? We were looking for low cost of entry.”

Sunsets owner Paul Swenson well knew of Vlahos’ interest in his Wayzata restaurant. “Paul and I have been friends for years; he was a good customer at BLVD. Every time I saw him I told him I was interested in Wayzata,” Vlahos says. “He called me last fall. He owned the building where the Sunshine Factory in New Hope was located. His operator was leaving on short notice. He wanted me to take it over. He also wanted to sell Sunsets Woodbury, which was not making any real money.”

Vlahos asked about Wayzata, the real prize. “He said if I buy Sunsets Woodbury and take over Sunshine Factory, he’d revisit selling Wayzata in a year. I told him all three or nothing.” Vlahos would not disclose the purchase price.

Last fall Vlahos and Wagenheim formed Genuine Restaurant Group and converted Sunshine Factory to Pub 42. They renovated on the fly. The space was so unfamiliar to them that on day one “we didn’t know how to turn on the TVs,” Wagenheim recalls. (Sunsets Woodbury will reopen as Craft Kitchen & Bar in June. Wagenheim is managing both concepts.) GRG took over Sunsets Wayzata this winter and is racing to convert it to Cov before too much of the Lake Minnetonka season is past.

Wagenheim says GRG achieved low cost-of-entry by entering New Hope and Woodbury without buying the pre-existing restaurants, merely entering as a new tenant. Only in Wayzata did they purchase Sunsets as a going concern before shuttering it. (GRG does not own any of the three buildings, says Wagenheim.)

 

The redevelopment of the seedy Wayzata Bay shopping center—a relic of an era of suburbanization that turned its back on all of Wayzata’s natural assets in favor of acres of parking—got Wayzata thinking. “A significant project in a small downtown needs a catalyst,” explains city manager Heidi Nelson. “The city asked itself, ‘How do we reconfigure downtown to capture more discretionary dollars?’ ” Huml recalls.

The answer, more than anything else, seemed to be with restaurants.

The Battle Royale

If, as it’s now said, eating out is where America spends its entertainment dollars, then what will play out in Wayzata this summer should be very entertaining indeed. Two of the titans of the Twin Cities restaurant world will open multimillion-dollar eateries at Wayzata’s top restaurant sites, a third of a mile apart.

To the east, longtime Twin Cities restaurateur Dean Vlahos has redeveloped Sunsets, the place your parents went for brunch and cocktails, into Cov, a Newport-meets-Nantucket-meets-Santa-Monica hub of drinking and dining for the waterfront mogul and those who aspire.

To the west, in the star-crossed Wayzata Boat Works, again owned by Twin Cities tech entrepreneur Rick Born, longtime Manny’s Steakhouse general manager Randy Stanley and celebrated Twin Cities chef JP Samuelson have joined forces to create 6Smith, a softly edgy mix of dining rooms, patios, and rooftops, designed to bring some Gen-X and millennial buzz to Wayzata from the broader west metro.

The timing—both were slated to open by early July—is coincidental; the impact will not be. An estimated annual $10 million-plus in new dining trade will flow into Cov and 6Smith, not to mention thousands of patrons in search of what’s new and next. Whether Wayzata is quite ready for its rebirth is an open question (see “The Lake Effect” sidebar on the next page).

For two of the town’s most pedigreed restaurateurs, it is something of a rebirth as well.

Midas unleashed?

It is not hyperbole to say Dean Vlahos knows exactly what the upscale west metro resident wants from a restaurant. He snared them in their 20s and 30s when he created Champps (1983), a buzzy sports bar with good food that women were as eager to spend time in as men were. He followed it up with Plums in St. Paul (1984). Vlahos followed his baby boomer clientele as they matured, opening Redstone (1999) in Minnetonka and Eden Prairie (and Chicago, DC, Philadelphia and New Jersey)—the tony spot where every middle-aged man or woman on the make made their first stop of the night. Next came BLVD (2010) in Minnetonka, a brighter, more mature expression of Redstone’s assets without the meat-market vibe.

All remain at the top of their genre locally, but all have lost something since Vlahos moved on. He sold his last stake in Champps in 1999 after it went national (he was ill-suited to a CEO role, he says); was forced out of Redstone—due, he says, to perceptions surrounding his friendship and business relationship with convicted Ponzi scammer Tom Petters; and BLVD was a creation wholly owned by his partner, developer Gary Holmes—Vlahos merely concepted and managed the operation.

The Petters saga is relevant because though Vlahos was one of the biggest individual Petters investors, he eventually lost everything with Petters, declaring bankruptcy and spending years under the immobilizing scrutiny of Petters’ bankruptcy trustee. Finally free of it, Vlahos is set to create what he calls the ultimate expression of his hospitality vision.

“For many years I’ve wanted to be on the lake,” Vlahos says. “I’ve done business in Minnetonka for 30 years, I live in Wayzata. I passed up a chance to buy Maynard’s [on the shore in Excelsior] and always regretted it.”

Vlahos, 59, is partnering in the venture with Steve Wagenheim, the first president of Champps, who went on to create the Granite City chain, a $140 million company operating in 13 states, which was sold to private equity investors in 2010. Together they’ve created a company called Genuine Restaurant Group (see “Opportunity at Sunset” sidebar) and have three restaurant projects in the works, all connected to the Sunsets acquisition. Wagenheim provided seed capital for the venture, and there is a second silent investor Vlahos would not name.

Though Wagenheim and Vlahos cut ties during the Champps era over philosophical differences, he says rejoining forces was not a difficult decision. “Nobody works harder than Dean,” Wagenheim says. “He is a visionary and a master of small details. I saw how hard he worked at BLVD, with no skin in the game, and how humbled he was [post-Petters]. I was impressed.”

Vlahos is the only one at the tiller of the Wayzata project, with design assistance from Shea.

“I have two things going here,” Vlahos explains. “I have a vision and the A-1 location.” Sunsets, though not beloved among the foodie set, was a profitable business with a loyal clientele, largely due to its lakeside setting and central location, Vlahos believes. Despite that, Vlahos gutted the space to the studs and has changed the face of the building. “I had to,” he says. “It just didn’t look nice.”

His vision is a classy, nautical-themed restaurant, albeit not exclusively focused on seafood. Patios are being enlarged, and an oyster bar has been added, as has an open kitchen. Vlahos recruited a chef with culinary honors (Cory York of Deep Blu Seafood in Orlando, Fla.) rather than a kitchen manager charged with templating recipes.

“What I do when I concept a restaurant,” explains Vlahos, “is I take a bit of the best out there and put it together. I promise, you’ll have never seen anything like Cov in the Twin Cities. It’s Redstone meets Oceanaire with bits of Champps.” If that sounds strange, the smart money is nonetheless voting on Vlahos.

“Dean is formidable,” says Boat Works owner Rick Born. “I tried to get him to work with me.”

From a business standpoint, it’s a bit of a departure for Vlahos: “I’ve always built [restaurants] with an eye toward making chains. This is a one-off. But we do believe we will get interest from people who own waterfront properties and seaside restaurants, and there may be opportunities there.”

Though the partners will not discuss finances or what they paid for the Sunsets portfolio, GRG is thought to be spending between $1 million and $2 million renovating the Cov space. Vlahos says Cov will “do every bit of the $6 million [annual revenue] we were doing at BLVD.” Vlahos expects to open in early July.


0714_wayzata_f01.jpg Sunsets, mid-conversion to Cov.

The Manny’s Expat

Randy Stanley is not a polarizing figure in the restaurant community. He’s unassuming, relatable and wears his intensity loosely. Where Vlahos admits his reputation is as someone who’s “difficult to work for,” Stanley’s tenure with Parasole Restaurant Holdings, mostly running Manny’s Steakhouse, made him a lot of friends. It was also a trial by fire, serving the city’s most demanding customers. Manny’s remains the highest-grossing local restaurant by most estimates, trading on a signature mix of setting, vibe, service and good, if not great, food.

Yet Stanley did not create Manny’s. Parasole CEO Phil Roberts did, and Stanley’s venture in Wayzata is not meant to be in any way a replication of it. Stanley’s charge is to take what has been a problem location and use the hospitality savvy he gleaned with Parasole in service of a concept that can finally break the curse of the Boat Works.

His landlord is RBA Consulting’s Rick Born, an Orono resident and consummate restaurant enthusiast. Born bought the Boat Works from Irwin Jacobs in 1996 and converted it to offices. He sold the building in 2001 but bought it out of default last year. The restaurant space was dark, home to four previous failures.

He was determined to give it one last try. “I want a restaurant in there,” says Born. “Honestly, the economics don’t make a lot of sense, because it is prime office space.”

The century-old Wayzata Boat Works has great bones, but it has proven a mausoleum for restaurant concepts. Irwin Jacobs opened Sasha’s, a New York-style deli operated by D’Amico & Partners, on the site in the 1980s. It was a monumental disconnect with preppy Wayzata.

0714_wayzata_f02.jpg

Green Mill co-founder Brian Bangs later opened Portofino in 2002. After it folded, two iterations of North Coast operated in the space, which went dark again in 2011. Both struggled with middling reviews that lauded the amazing waterfront site.

Born says he tried to sell Vlahos on the Boat Works last year, but he was focused on an opportunity in St. Louis Park’s West End development that did not come to pass. “Dean said to me, ‘The problem isn’t the space, it’s that you’ve never had the right operator. If you had me, Rick Webb, the Crave guys [Kaskaid Hospitality], Parasole, it’d be a success.’ ”

Born was channeling the same thinking. “I’d been trying to get Parasole to locate here since ’96,” he says. Last year Born invited Parasole’s principals, including Stanley, to tour the space, hoping they would perhaps open a Pittsburgh Blue steakhouse.

Parasole was interested in operating a restaurant for Rick Born, but not in owning it. “It’s a tough location,” says Parasole’s Roberts. “But we’ve had tough locations before. The right concept will trump a tough location, but we were focused on expanding Pittsburgh Blue, and Wayzata would have cannibalized both the Maple Grove and Galleria locations.”

Born was undeterred. “I didn’t want to own a restaurant either,” he says. “So it wasn’t going anywhere, but I saw a gleam in Randy’s eye.”

Born reconnected with Stanley and asked to meet. “Once I agreed to talk, I knew I was interested,” Stanley recalls. He had been with Parasole since 1980 (with a seven-year gap to pursue other ventures). Stanley, 58, had managed Muffuletta Wayzata (now Blue Point) in the 1980s and moved to Excelsior in 2012, so he had some Lake Minnetonka credibility.

“I needed to convince myself the location was viable,” Stanley says. “I’ve been in restaurant development and operations for 30 years and lived out here for two summers. The lake is burgers, beer and party bars. It lacks winter traffic and that broader demo you need to keep a restaurant going.

“So I studied the eight or nine [adjacent] zip codes. Roughly 67 percent of all the people making over $150,000 in the metro area are within eight minutes of us. Sixty-two percent of the 30- to 55-year-olds in our trade area have incomes over $125,000.”

Born’s desire not to own the restaurant was a good fit with Stanley’s goals. “I told Rick I didn’t want a partner. I would have had 10 to 20 percent and no life. I needed this to be my shot at the big time.” Born offered Stanley what he calls “a generous tenant improvement” package and arranged a bank loan for the remainder of the investment. Stanley left Parasole in January. “Phil [Roberts] was concerned,” Stanley recalls, “about the financial risk I was taking on.”

Born says all the restaurateurs he consulted estimated it would take $2 million to $3 million to make the space over. Stanley believes 6Smith will need to do a minimum of $5 million in revenues to cover his debt and overhead.

“I wanted a safe route,” Born explains. “Randy has Parasole DNA. He’s had failures and learned from it. He has to make it work. Look, right now Gianni’s is the only option for all these bankers and brokers who are based in Wayzata. They are dying for a cool space to have lunch and hang out in. There is enough buzz [about] and momentum in Wayzata to make this work.

“This will be the fourth restaurant in this space,” Born continues. “There won’t be a fifth. It will be office space [then]. We are not going to fail due to lack of experience or inadequate capital.”

Stanley’s vision is focused: “I’m after the Gen-Xer. They like a customizable experience, they don’t like to plan, they like authenticity. It’s going to be a protein-y menu where you can graze, eat or dine in multiple spaces, all under one brand.” There will be a tavern dining room, a scene-y bar, a nicer dining room, private dining.

There will also be a name chef. “This generation grew up watching Food Network, so it’s a chef-driven world,” says Stanley. “They are rock stars.”

That’s where JP Samuelson comes in. “I had people in mind,” Stanley says. “I needed someone who understood the balance between art and commerce. Someone who knew how to cook and could teach. His name kept coming up.” Stanley cold-called him. Samuelson, cooking at Figlio for Kaskaid, was interested. “I got super-lucky,” Stanley says. He expects to open June 23.

Despite the Boat Works’ dining legacy, both principals repeat the mantra that failure is not an option. “If this goes down,” Stanley says, “my life will change in dramatic ways. I have all my skin in this game.”

Adam Platt is TCB’s executive editor and has covered the local restaurant industry for two decades.

 

The Lake Effect

Wayzata has big plans to create a destination downtown.

The thinking in the Wayzata restaurant community, among both the new entrants and long-termers, is that the focus should not be about who survives the coming onslaught, but how the buzz and interest surrounding it can lift all boats and bring the Twin Cities foodie set to Wayzata. Though the town’s tax base is equivalent to suburbs many times its size (New Hope, for example), “we have to have broader reach to support the kind of commercial center we’re creating,” says city manager Heidi Nelson.

In its current state, Wayzata probably doesn’t even see $5 million in annualized upscale restaurant trade; it might claim $10 million in all its eateries combined, say local restaurateurs. Factor in the new Lunds and Byerly’s Kitchen restaurant, Cov and 6Smith, and Wayzata’s restaurant volume is set to double this year. The number of restaurant seats in Wayzata may quadruple by 2016.

The new project—a five-building, multilevel mixed-use project—is transforming the old Wayzata Bay Center site. When complete in 2016, the project, colloquially known as the Presbyterian Homes project and formally known as the Promenade of Wayzata, will bring to downtown hundreds of new residents, predominantly middle-aged and older, as well as visitors. In addition to Lunds and Byerly’s Kitchen, which opened this winter, there are four additional restaurant-designated sites in the development.

A hotel, planned for the Promenade, “is desired and needed,” Nelson says. But it will need to be Twin Cities residents that drive Wayzata’s restaurant engine.

Wayzata spent $100,000 with the St. Paul Riverfront Corp. to develop a plan for the city. “The work was worth five times what we paid for it,” insists Terri Huml, Gianni’s Steakhouse owner. “I think it was brilliant.”

The goal is to broaden Wayzata’s base with a manageable influx of “lively but not rowdy” visitors. Job one is to better connect Lake Street and Wayzata’s commercial center with Lake Minnetonka. Visit Excelsior and Wayzata today and the disparity is evident right away. Excelsior’s main drag, Water Street, ends at the city pier, with some transient boat mooring, and nothing separating people and lake.

Despite Wayzata’s far better freeway access (it’s 12 minutes from downtown Minneapolis on I-394), it is at a general disadvantage to Excelsior. Wayzata’s lakefront has little public access and almost nowhere to dock a transient boat. There is no pier or boardwalk, and there’s a BNSF track hosting a dozen freights a day between the town and the water.

“These issues have been around since the 1980s or earlier,” notes John McDonald, co-owner of Wayzata’s Blue Point seafood restaurant since 1989. “But the city was ambivalent about change.” McDonald credits current leadership with finally addressing the issue head-on.

There is a plan now, called Lake Effect, to enhance access to the lake, perhaps build a boardwalk, and add boat and auto parking. “But the plan is broad and non-specific,” says Huml. “What does ‘ample parking’ mean?”

The restaurateurs face two challenges, they say: in-season parking, and an off-season that is substantially off. “A lot of my regulars leave town in the winter,” says Huml.

Opinions on Wayzata’s seasonality are mixed. “There is business in the winter,” says Dean Vlahos, partner in the new Cov restaurant, “but it’s heavy repeat business. I live in Wayzata, and I know there is business there. You’re talking about the most affluent zip code in the state.”

For Wayzata’s restaurants and merchants to thrive under new competitive pressure, the city needs to expand its reach. “I call it the 101 solution,” says Tanya Spaulding, restaurant consultant and principal at Shea design. “You have a high concentration of disposable income up and down Highway 101. People are not house-poor or overbuilt. They key is getting those folks to see Wayzata as their regional hub. It’s do-able.”

Spaulding believes Wayzata’s timing is good, coinciding with a wave of anti-suburban sentiment. “People like urban environments and streetscapes. Wayzata is one of the few western suburbs with a real downtown. The goal is to make Wayzata the downtown of the western suburbs.”

To do that, the city will need more parking. The restaurateurs are nervous, frankly, that it is still in the planning stages—that as summer arrives there will be no tangible increase in accessibility. “Right now Wayzata’s civic parking lots are underutilized,” says Huml, however, so the need is still theoretical.

“Parking is a critical issue. It should have been set as part of the Presbyterian Homes planning, so we had the cart before the horse,” says Blue Point’s McDonald. “It was a failure.”

The lakefront restaurants also need boat access to compete with Maynard’s and Lord Fletcher’s elsewhere on the lake. Boat Works owner Rick Born was briefing an aide on the need for boat slips as I met with him. “The best thing Wayzata could do right now is create more slips,” says Vlahos. “That’s how people want to arrive in season.”

Wayzata remains invested, but wary of collapsing the fragile civic consensus for the Lake Effect plan. “We are discussing a parking ramp at Mill Street and we are interested in adding transient boat slips,” says city manager Nelson, “but this is a 10-year vision and we want to make sure we don’t overdo it.”

Gianni’s Huml hopes the city moves quickly, so the current spirit of bonhomie among restaurateurs sustains itself rather than devolving into a competition for scarce resources. “In Napa Valley and San Francisco the restaurant community works together, knows each other, supports each other.” The only time a competitor stopped by her restaurant, she notes, was for reconnaissance.

It’s a cliché, but only time will tell whether Wayzata’s rising tide can keep afloat all that the restaurant industry has in store for it. “Randy [Stanley] and Dean will bring 1,000 new people a day to Wayzata,” says Parasole’s Phil Roberts. “I hope they’re ready for it.”