Before them, the hotel’s sprawling ground floor restaurant, bar, lounge and banquet rooms at Traffic Way and El Camino Real had seen two failed enterprises, leaving many wondering what business could survive there.
Late Wednesday, the Dorrises joined that unenviable club when they announced that Colby Jack’s would close at the end of May.
“We tried to make it work and couldn’t,” Natalie Dorris told The Tribune on Thursday. “We haven’t seen the economy get better.”
Colby Jack’s was the kind of business that downtown supporters wanted more of, and the community is concerned about how the loss will impact Atascadero.
To help protect their business, Jack and Natalie Dorris filed for bankruptcy last month. Ultimately, though, a disagreement over the lease led to the restaurant’s demise. Now, the future of the space is unknown as owner David Weyrich searches for new tenants.
“People are saying (the space) is jinxed,” said downtown business owner Kitty Arosteguy, who owns Haven Wine Bistro and adjacent business The Spa Central Coast. “I don’t think it’s jinxed. It’s just so big it needs to be split up into smaller businesses. There are so many possibilities to bring people down here.”
The last restaurant in the space, Shockley’s, closed after less than a year in operation.
But the Dorrises didn’t let the space’s past scare them away; they embraced the expansion and had high hopes to experiment with a new dinner menu and a brewery pub in the lounge.
Colby Jack Café & Bakery has been in business for five years. Late in 2011, the business moved from a 1,300-square-foot space farther south on El Camino Real to The Carlton’s 13,000-square-foot eatery and bakery — a tenfold expansion.
The owners went from 12 employees to 30, rebranded themselves as Colby Jack’s and proudly hung a new sign in the downtown core.
News of the restaurant’s demise garnered support for the business on its Facebook page, with many patrons expressing sorrow to see them go.
Impacts on downtown
The impending closure’s impact on downtown Atascadero, which has struggled in recent years to attract foot traffic, worried some because of its possible ripple effect for nearby businesses.
“I’ve been here 10 years, so I hope people don’t forget about the other businesses here,” Arosteguy said. “It’s never good when businesses keep closing down. I’m definitely concerned.”
Mayor Tom O’Malley thinks the strength of other businesses, including Haven and nearby eatery Fig Good Food, can maintain the momentum behind downtown’s push for economic vitality.
“I think in the short term, it’s certainly disappointing. But existing businesses are doing well,” he said.
He also said new projects are on their way in, although he declined to disclose further details until finalized plans go before the city.
As for the future of The Carlton’s restaurant and bakery space, Weyrich told The Tribune he’s looking for a specific vibe as he seeks new tenants.
“I’m trying to look outside the box and say, ‘What’s going to be good for The Carlton, and what would be good for locals?’ ” he said.
Some ideas are to look for popular restaurants in other markets such as Santa Barbara or San Francisco and have them expand to Atascadero, he added. He’s not against a local enterprise, either, and has two such eateries already interested in the space, though he declined to say who.
He also plans to rent out the bakery on its own, saying it’s likely more sustainable that way.
Bankruptcy and failed negotiations
In their announcement, the owners of Colby Jack’s cited a failure to come to a lease agreement with Weyrich, as well as other concerns.
Weyrich declined to make the lease negotiations public but said it was difficult for Colby Jack’s to operate without a full liquor license, since alcohol can make up half of a restaurant’s profits.
On their end, Natalie Dorris said it was difficult to get a liquor license because Shockley’s owners took theirs with them and the only way to get one is to buy it from someone else at a steep price.
Such obstacles made it difficult for the Dorrises to expand from the traditional wine and beer license they already had.
“Colby Jack’s has not been immune to the distress of the restaurant industry as well as the rising costs of doing business,” the couple said in a statement.
The couple also invested “all our finances” in their family-run business, and ultimately couldn’t make ends meet.
Last month, the Dorrises filed for personal Chapter 7 bankruptcy protection, citing about $300,000 in debts they couldn’t pay. Almost all debts were business related, including $70,000 to Carlton Hotel Investments in rent and $120,000 from their previous lease with former landlord Ted Jacobson at 9700 El Camino Real.
But Jack Dorris said the number owed to Jacobson is closer to $60,000, since they were let out of their lease early to move to The Carlton.
Hoping they could keep the business alive, the couple filed for personal bankruptcy instead of a business filing. But that plan depended upon a renegotiation of the lease, which failed.
“Jack and I had to file because we had tapped ourselves out financially,” Natalie Dorris said. “Always putting our employees first, there were many months where we would cash our paychecks very last.”
They thought they could file for personal bankruptcy and negotiate the lease to work toward being fiscally solvent, she said. When the lease negotiations didn’t work out, they had to close.
The couple also had several unexpected adjustments to make when they began operating in a hotel, among them, trying to fit into the hotel’s existing high-end ambience while retaining their classic family-friendly vibe.
“People just assumed we were too expensive,” Natalie Dorris said, noting how frustrating that was since the couple kept the breakfast and lunch prices the same at first.
“Some people would never even step foot in this location because they thought it would be too high-end. And then there’s the people who wanted us to be more high-end.”
She said managing those conflicting expectations was a constant struggle.
“We’ve been battling this for the last year and a half: (questioning) if we want to go more upscale and do the boutique hotel thing at the risk of losing the locals who wanted a more family-style restaurant,” she said.
After all of it, the couple says they’ve been grateful to the customers and community who have been supportive over the years.
“Maybe we’ll be able to continue Colby Jack’s in another space,” she said. “But now, we’re just trying to (close this chapter).”
The business will operate through the end of May, although a closing date isn’t set yet. The Dorrises promised to honor their banquet and catering commitments through that time, and Cassie Hunt, bakery manager, will honor the business’ wedding cake bookings received for this year.
Prior to the Dorrises’ venture, Shockley’s closed in summer 2011 and Weyrich’s The Carlton Restaurant & Grill was forced to close in February 2010 because of its failure to pay state taxes.
Tribune staff writer David Sneed contributed to this report.