Three years ago it was thought of as the area's impervious bastion of economic growth. This year, however, a sluggish economy and more cautious consumers have exposed a few possible chinks in the armor of the Augusta Exchange shopping center.
Don Pablo's Mexican Kitchen closed in April after three years, citing poor profits. Cooker Bar and Grille, the development's first restaurant, announced its closure Monday for the same reason.
But the two chains were having corporate troubles, so it's a little early to blame the Augusta market for their failures.
Besides, the shopping center was recently energized by Best Buy Co.'s decision to open a 45,000-square-foot store nearby. Kimco Realty Corp., the nation's largest shopping center operator, also wowed the area by purchasing a 50-acre parcel of the Augusta Exchange in late April for $61.4 million.
"The problems aren't so much with the Augusta Exchange," said Mike Graybill of the Augusta real estate firm Graybill & Associates. "The Augusta Exchange is still one of the premier centers in the area. These restaurants had problems nationwide."
Stock for Avado Brands Inc., which owns Don Pablo's, slipped below $1 per share in February, and the company had to close several underperforming stores in the Southeast in order to generate cash to pay debts.
Cooker Restaurant Corp., which had 64 restaurants in 10 states, has filed for Chapter 11 bankruptcy protection. The company has sold 21 stores already this year.
Cooker CEO Henry Hillenmey-er said the Augusta Exchange property was sold to another restaurant corporation, though he wouldn't say whom.
"That Augusta restaurant was slightly profitable," Mr. Hillen-meyer said. "We had someone interested in buying the property, which we owned, and the purchase price made it better for us to sell it and pay down debts than to continue operating there."
The closure of a couple of restaurants hardly signals panic time. Economists say restaurants have high failure rates compared to other businesses because of the industry's competitive nature.
Profit margins are never as wide for restaurants as they are for other businesses, so an economic slowdown has a faster impact on the bottom line.
"Quite frankly, there are too many restaurants in America now," said Jeff Humphreys, director of economic forecasting for the Selig Center for Economic Growth at the University of Georgia. "We may have seen an acceleration of their high failure rates with this recent slowdown."
Only two restaurants have closed at the Augusta Exchange since the shopping center's anchor tenant, Target, opened nearly four years ago.
October 1997:Target officially opens.
March 1998: Cooker Bar and Grille opens.
April 1998: Don Pablo's Mexican Kitchen opens.
April 2001: Don Pablo's closes; Augusta Exchange LLC sells a giant portion of the shopping center to Kimco Realty Corp. for $61.4 million.
May 2001: Best Buy announces plans to leave Augusta West shopping center and build a $45,000-square-foot store on a 10-acre parcel across the street from Augusta Exchange.
August 2001: Cooker files Chapter 11 and closes its Augusta Exchange location.
Reach John Bankston at (706) 823-3352 or email@example.com.