Holokai Grill closes
Waikiki Beach Walk loses another tenant
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Holokai Grill at the Waikiki Beach Walk abruptly shut down on Saturday, following dismal sales and lower-than-expected foot traffic at Outrigger's $535 million project.
The 152-seat restaurant, which has been on the market for the past three months, was unable to generate enough revenue to cover operating costs, said Bill Tobin, managing partner, who also runs Tiki's Grill & Bar in the ResortQuest Waikiki Beach Hotel.
Holokai, which opened in March 2007, laid off 130 workers, some of whom the company hopes to absorb at Tiki's or help place at other restaurants.
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The 152-seat Holokai Grill at the Waikiki Beach Walk quietly shut down at the end of business on Saturday.
The 5,329-square-foot restaurant, which has been on the market for the past three months, was unable to generate enough revenue to cover operating costs because of lower-than-expected foot traffic, said Managing Partner Bill Tobin, who also runs Tiki's Grill & Bar in the ResortQuest Waikiki Beach Hotel.
Holokai, which opened in March 2007, laid off 130 workers, some of whom the company hopes to absorb at Tiki's or help place at other restaurants.
"Tiki's had always enjoyed the support of local people. We'd hoped to build that local clientele at Holokai as well, but just ran out of time with our resources," said Tobin, who decided to close the restaurant on Friday.
The business expected to reach its sales targets within six months of opening, but 14 months later still struggled to meet projections as Hawaii's visitor count continues to decline.
The company, which secured a long-term lease with Outrigger Enterprises Inc., is negotiating a sale with several prospective buyers and hopes to close a deal in the near future, said Tobin, adding that a buyer could reopen the restaurant or another concept altogether.
"It was kind of a shock, but at the same time I was still prepared for it," said Matt Dennis, who has worked at Holokai since it opened. "There's too much competition in that small area."
Holokai posted sales of more than $700 per square foot in its first year of operation, a decent amount compared to the more than $800 per square foot restaurant average at the Beach Walk project, said Barbara Campbell, Outrigger's vice president of retail development and leasing.
"If there are tenants that aren't reaching targets, we want to work with them and figure out a way ... to work towards generating more traffic and increase sales," she said. "As we refine our tenant mix, it will be better for everybody, but along the way ... you have turnover. It's part of the evolution of a shopping center."
Beach Walk sales are on target, though Outrigger is working toward increasing foot traffic in the area, Campbell said.
Outrigger is preparing to record actual traffic counts for the project's first year in business in the next couple months, she said.
Since the $535 million Beach Walk's first tenants opened in December 2006, apparel and beauty products store Bernard's closed in January, and Virtual Turbulence, which offered experiential videos, closed last fall. The latter was immediately re-leased to Thor Stor, and Outrigger is negotiating the Bernard's space to an undisclosed tenant scheduled to open in June, Campbell said.
Business has been steady for the internationally recognized Ruth's Chris Steak House Waikiki on the opposite end of Holokai on the second level, which has seen 20 percent to 30 percent higher-than-projected revenue for 2007, said General Manager Jay Kaneshiro.
However, Bob Bach, who spent $2.5 million building Giovanni Pastrami across from Ruth's Chris, is disappointed in his restaurant's first-year sales, which are significantly lower than projected.
"When you don't have a brand name and occupancy in Waikiki is bad, you're just not going to do good business," he said. "My projections were to do double the amount of business we are doing already, based on foot traffic. I'm not even breaking even on Beach Walk."
Bach is paying the same amount of rent for his Beach Walk restaurant as two adjoining restaurants at Hilton Hawaiian Village: Roundtable Pizza and CJ's New York Style Delicatessen, which have been exceptionally successful, he said.
"We're not doing the business I anticipated, but repeat business is terrific so I know it's going to get better," Bach added.
The dynamics of attracting customers to different parts of a new retail center, including a second level and adjacent sites, is complex and includes ways of designing and leasing space to brand-name tenants to draw foot traffic to lesser-known businesses.
"There's a lot of unknowns," Campbell said. "To design it and put in merchants, you'd think it would be good drivers of traffic, but you really don't know until you open how things will work out."
The project's overall sales in its first year are close to $1,000 per square foot, she said.