ARRIVING FOR DINNER AT THE NEWEST restaurant in town was like entering a gritty, urban club booked for a private celebrity party. At the entrance to Moon Under Water, the lights burning in the awning above the door washed the Deep Ellum street in a Gatorade-yellow glow. The valet attendants were courteous and primed to please. It was easy to imagine being whisked through the heavy glass-and-wood door while star-hounding photographers flashed pulsing strobes.
Inside, roughly mortared brick, exposed flat-black ductwork and polished hardwood floors created a lean, elegant space that had been filled with simple tables, padded metal chairs and a muscular wooden bar. A young woman with dark hair, a sleek black pantsuit and chunky black shoes that looked fashioned from rubber auto parts, greeted us while fingering a stack of menus. “Reservation?” she asked.
She placed us at a table just a few feet from the piano, which was elevated on a small stage in the back comer. A tall, sinewy waiter with thinning blond hair and angular features took our drink orders while we scrutinized the menu.
The choices were inventive, with provocative entrées like Spicy Pork Chops marinated in achiote chile and sparkling oddities like Banana Tacoscrepes stuffed with bananas in a light pastry cream. The bar offered a moderately imaginative wine list and a mind-numbing selection of single malt scotches, small batch bourbons and anejo tequilas. The evening looked promising.
Just as we placed our dinner order, a young woman, also in black, made her way to the piano, sat down and unleashed a rash of jazz standards. Amazed at her dexterity, we tossed her the names of a handful of obscure tunes, which she handled with gutsy grace.
The food also lived up to its promise. After the last bite of banana taco and the last sip of coffee, it would have been time to leave any other restaurant. But this was just the first course in the Moon Under Water smorgasbord. We walked through a wide tunnel to the second: the Rhythm Room, a juiced-up industrial cavern with a big corner stage, a floor-to-ceiling mural on one wall and a huge bar. An energetic zydeco band soaked the air with tight, punchy sounds that had not leaked offensively into the dining room.
The third episode to this layered fantasy was the brewery: a row of glimmering copper and aluminum brewing tanks along the windows that glittered in the lights from the street. Our waitress informed us that the brewery was not yet operational, but the vision was potent and daring: You could enjoy a quiet, sophisticated dinner and then, without groping for your car keys or valet ticket, scurry into another world to listen, dance and slosh fresh beer. The brains behind the enterprise had smelled commercial potential: Another corner boasted a gift shop hawking themed T-shirts, hats and brew-pub propaganda. Moon Under Water seemed to be the work of a team of entertainment Einsteins unlike any Dallas had ever seen.
Strangely, in a town that feverishly pursues new dining experiences, only two tables were filled that early fall night: one in the back with a group of hip twentysomethings and another with a young married couple stuffing ice chunks from a water glass into a toddler’s mouth. From conception to creation to operation, something had gone awry.
A collaboration between expert microbrewers and a seasoned restaurateur. Moon Under Water was an ambitious undertaking, a fine dining/jazz club, brew pub and nightclub all in one. With two entrances-one on Main Street, the other on Elm-the creators were convinced it would become Dallas’ next sizzling see-and-be-seen people salon. And they would be restaurant royalty.
’The independent restaurateur is a person who is very much admired in our culture,” says Dallas restaurant consultant Matthew Mabel. “A lot of people get into the business late in their careers for that reason. ’I always wanted to open a restaurant.’ How many times do you hear that?”
But if the restaurant industry exerts a profound narcotic pull, it often draws people into hazards they’re ill-equipped to handle. Behind the glamour lurks the sweat and grime of exhausting work, long hours and numerous business risks-risks that somehow seem more savage in Dallas.
Nationwide, almost 27 percent of new restaurants close in the first year, rising to almost two-thirds after five years, according to a decade-long Cornell University study. But failure rates in Dallas are even higher-about 45 percent in just the first 12 months. “You have to be really careful opening a restaurant in this town,” say; Michael Morris, who owns Club One, the Kit Kat club and Martin Ranch. ’’This is a really tough place to read.”
Tough but potentially lucrative. The average Dallas resident spends $1,219 annually dining out; the city will surpass Houston this year to become the top food market in Texas. The lure of big profits can be irresistable; the trick is to keep that fervor from spi-raling out of control. “Sometimes people can have reasonable business savvy and the striving to hit the home run blinds them,” says a Dallas restaurant industry veteran. “Their ego takes precedent over common sense.”
With Moon Under Water, all of the right elements were there: an innovative restaurant concept, a great location, a seasoned management team and lots of cash.
If it were only that easy.
Mary Thompson watches intently as her husband Donald dumps a beer into a frosted mug. It’s a Negra 111 I Modelo, Mexican dark beer, and one of only a hand-Ill I lui of brews Donald finds acceptable enough to order I^L^^J in a restaurant. He shoves the stubby brown bottle neck into the mug at almost a 90 degree tilt, letting the liquid vigorously splash its way to a thick head the color of singed butter. “Most people tip their mug at an angle and pour the beer slowly against the side to avoid getting a head,” says Mary, demonstrating with a spent bottle and an empty mug. “It’s a mistake. You’re missing out on the fullness of the beer when you do it that way.” A frothy head, adds Donald, dissipates excess gases and releases the brew’s aromatics-where the vitality and true character in a well-made beer are hidden.
Beer is what the Thompsons have dedicated their lives to. Mary, a short, pretty 47-year-old with a round face and straight auburn hair, is a district officer in the Master Brewers Association of the Americas and a brewing industry writer and educator. She claims she can identify a beer’s brand and country of origin simply by smell. “I’ve not encountered anyone who’s really as sensitive to it as she is,” boasts her husband.
Silver-haired and lanky with a quiet intensity, Donald, 51, is renowned as one of the top consultants in the brewing industry.
Sparked by the hearty brews they discovered during long sojourns through Europe in the mid-1970s, the Thompsons’ passion for beer eventually fueled an ambition to become brewers themselves. In 1982, the same year Donald was named Homebrewer of the Year by the National Home Brewers Associ-ition, they founded Reinheitsgebot Brewing, a company in Piano, their beer was bottled under the “Collin County Gold” and “Collin County Black Gold” labels because of the clumsiness of the word Reinheitsgebot, the name for the German purity and brewing law. Reinheitsgebot was only the sixth microbrewery in the United States and the first in the Southwest. The Thompsons sold virtu-lly every drop they brewed.
They soon itched to start a brew pub in Texas like the ones they lad grown to love in England and Germany. Bui there was one formidable obstacle in their way: Texas law. State licensing statutes prohibited the brewing and sale of beer at the same site. The Thompsons were visited by a bit of luck in 1987, when a young state legislative aide named Davis Tucker traveled to Piano under the auspices of doing a story on Reiiihehsgebol. Mary grew leery as their conversation progressed, suspecting the writer’s real motive was to scour them for information to launch his own microbrewery. So Mary proposed a deal: She would tell him as much as he wanted to know if he would help her write and introduce legislation permitting brew pubs in the state of Texas. Tucker, who founded Pecan Street Lager in Austin in 1988 before launching the Copper Tank Brewery therein 1994, agreed. Beginning in 1987, they introduced the bill in every legislative session until it passed in 1993. Today there are more (ban 40 brew pubs in Texas, eight in Dallas alone.
Before (he passage of brew-pub legislation, however, the Thompsons’ microbrewery was mired in growing pains. They had maximized their brewery’s capacity at 2,5()0 barrels and discovered they weren’t generating much profit. To remain viable required a significant boost in capacity. But they lacked the capital for a larger brewery.
In 1989, just as the Thompsons were scrambling to come up with a workable expansion plan, a wealthy investor approached litem with a proposal to build a brewery. “We knew our ship had come in when he pulled up in a bright yellow Ferrari,” recalls Mary. Based only on the investor ’g word and a handshake, the Thompsons shuttered the brewery, sold off the equipment and began drawing up plans with architects for a new facility.
Then the investor stopped returning their calls. Just as the Thompsons felt their business was poised to move to a vigorous new level, they were left with no brewery, no equipment and no funding. “We haven’t had very good luck with partners so far,” says Mary.
Steve Hughes seemed the perfect partner. His resume included stints at the Montana Mining Company restaurant chain and TGI Friday’s. For seven years, he had been chief financial officer at Dick’s Last Resort, a time during which the restaurant company grew from two locations and S3.5 million in annual sales to five locations and $20 million in sales.
Mary Thompson had first heard of Hughes at a holiday party in 1W4. when she met his sister-in-law. Mary discovered that 46-year-old Hughes had the same ambition they did: to launch a combination restaurant/brew pub. Hughes had the restaurant background, but didn’t know a thing about brewing beer,
“And I said, that’s incredible, because we didn’t know anything about the restaurant side of it,” says Mary. “At the outset, it was a match made in heaven. We both supplied the missing link to the other.”
At their first meeting, the Thompsons were impressed with Hughes’ sincerity as he chronicled his industry experience. “Donald and I walked away from the meeting very enthusiastic because we had finally found someone in the restaurant business that seemed to have a loi of like ideas about wanting to do a brew pub,” she says. In May 1995, the Thompsons and both Hughes and his wife became partners, forming a limited liability company known as Craft Breweries L,C.
Each of the four partners picked up a 20 percent interest in the venture by purchasing one common share for $25.000. The remaining 20 percent was divided into 28 preferred shares, also priced at $25,000 each. As president. Steve Hughes would oversee restaurant operations and financial systems, while Donald would head up brewery operations. Mary would direct marketing and public-relations. Steve’s wife Julie, 33, a Wharton School of Business graduate, would handle business strategy and development, With a full-time job at Arthur Andersen and background that included a position at the NCR Corporation, where she implemented computer systems for the hospitality industry. Julie was described in loan documents as a person who “knows how to keep costs and waste down and enhance profits.”
The restaurant’s name was pulled from a newspaper article penned in the 1940s by futuristic writer George Orwell, in which he described his vision of the perfect brew pub: Moon Under Water,
THE PARTNERS IMMEDIATELY FOUND WHAT THEY AGREED was the perfect location for the restaurant across from NorthPark Center in the space that had once been Houlihan’s. But the property owners proved difficult to pin down and negotiations dragged on for months. Patience lost, the partners abandoned the site.
In September 1995, about the same time Craft Breweries got approval for a $350,000 Small Business Administration loan,, Hughes and the Thompsons located a site in Deep Ellum owned by Southwest Properties Group. The old Union Bankers Insurance building, the property was being developed with provisions for retail, restaurant and office space. Hughes thought the site was perfect and pursued it vigorously. But negotiations bogged down again. The Thompsons claim that every time they were close to agreement, Southwest Properties moved the goal posts. “It got to the point where [their demands] were ridiculous,” says Mary.
A deep rift had emerged between Hughes and the Thompsons as a result of negotiations, one that nearly ruptured the partnership. According to David Dudzik, a petroleum engineer who sank $ 175,000 into the venture, Hughes was frustrated with the Thompsons ’ apparent lack of interest in the negotiations and lease details. Then, just as Hughes was ready to close the deal, the Thompsons backed out. The Thompsons now say Southwest inserted a last-minute provision stipulating their personal guarantee of the lease.
Hughes was livid. He accused the Thompsons-who had more personal resources at their disposal than Hughes-of lying to him about the level of their commitment. “We were almost estranged from that point on,” bemoans Mary.
The tension between the partners unnerved Dudzik, who scrambled to find a way to disentangle himself from the project. “At that point, Steve started telling me what idiots [the Thompsons] were,” says Dudzik. “In large part, due to that friction, I was trying to persuade Steve to see if we couldn’t get our money back and just unravel the whole deal.”
But Hughes wouldn’t hear of it. He convinced Dudzik that he would make it work “come hell or high water.” Both parties quickly resumed the site search, albeit separately, passing on information only when they had to. The Thompsons made their way up and down Greenville Avenue, along Restaurant Row in Addison, to Northwest Highway and down to McKinney Avenue.
“Donald and I found site after site that Steve found unsuitable,” says Mary. “He would sort of come and make a cursory examination of the place and then just walk away and say, ’no, that’s just not it,’ like he was humoring us.” At one point, the Thompsons claim, Hughes deliberately short-circuited a deal they had in the works on a McKinney Avenue location by telling the broker – without consulting the Thompsons–that they weren ’t really interested in the site.
Those disagreements betrayed deep philosophical differences between the partners. The Thompsons wanted a modest operation, perhaps 8,000 square feet, while Hughes had a taste for something more ambitious. He had determined that it was impossible to make any money on anything less than 10,000 square feet. “It kept growing and growing and changing shape,” says Mary.
In the spring of 1996, Hughes became keenly interested in an old warehouse directly across the street from the Southwest Properties location in Deep Ellum that had been purchased by Westdale Asset Management Company earlier in the year. Hughes began lease negotiations without the Thompsons’ knowledge. “He was so sold on the Southwest Properties site that he was determined the only place we could ever have any success was in Deep Ellum,” says Mary. A short time later, Hughes, as president of the company, signed a lease independent of the Thompsons.
In early summer, Hughes hired Greg Garvey as director of operations-another move made without the Thompsons’ consent. Garvey had managed Dick’s Last Resort in the West End and immediately immersed himself in the project, transforming the restaurant/brew pub concept into a headlining blues/zydeco venue.
The Thompsons claim their space was originally just 7,500 square feet. But it ballooned to 13,000 square feet after Hughes and Garvey persuaded Westdale to lease them additional space in die warehouse. “Steve Hughes wanted a large, happening place,” says Garvey.
It became clear to the Thompsons that the venue was no longer the brew pub they had originally envisioned. But they kept quiet. “I don’t know how many discussions we had and said, ’This isn’t what we wanted’ and me only thing we could answer to ourselves was ’Well, maybe this is what we need, maybe this is what it’s going to take to be successful,’ ” Mary says.
Amazingly, as the summer of 1996 progressed, it began to look like there would be no brew pub at all. With the late August opening just weeks away, Dudzik was stunned to hear Hughes openly disparage the very brewery that was supposed to be the operation’s cash generator. “I walked through the place with Steve and he basically indicated ’Well, you know, we wasted $300,000 on this brewing equipment. We could just as soon be a restaurant and an entertainment complex.’”
Hughes was nervous, says Garvey, because four brew pubs had opened in Dallas in the preceding 12 months. But what really spooked him was when critic Mary Brown Malouf all but spit beer at the now-defunct Breckenridge Brewery-indeed, the entire brew-pub concept-in a stinging review in the Dallas Observer.
“At that point in time, every critic that was doing a review on a brew pub….The first thing out of their mouth was ’Does Dallas really need another brew pub?’ ” explains Garvey. “So we tried to play the brew pub part of it down, basically meaning that we were a restaurant and a rhythm room that happened to brew its own beer.”
The partners’ concerns became so acute Hughes and Garvey tore the word “brewery” from the restaurant opening announcement banners. But the Thompsons didn’t confront the two men over their attempts to undermine the brew pub. Says Mary: “The way it was presented to us was ’You all don’t know anything about the restaurant business. This is going to be big; this is going to be the biggest thing that ever hit Dallas.’ “
HUGHES AND GARVEY PUSHED FEVERISHLY FOR AN END-OF-August opening-despite protests from project archi-I tects-to capture crowds with their new concept before I summer’s end. The staff had been hired and trained. Garvey booked the headlining bands C.J. Chenier and the James Cotton Blues Band for mid-September. Fabian Gonzales, a former banquet chef from the Wyndham Anatole with previous stints at Nana Grill and Mi Piaci, was hired as executive chef. Gonzales developed an upscale Mediterranean menu with Southwestern influences.
Work crews toiled long and hard, scrambling to get the pieces in place. But their ambitious opening date was effectively scuttled by construction delays and engineering snafus. “It looked like a bus wreck from Calcutta,” says Mary, bristling.
Garvey says one of die biggest reasons for the delays was bungled shipments of brewery engineering that required lots of last-minute change orders-a point the Thompsons dispute. Yet something was gumming up the brewery: Moon Under Water would not pour its first beer until a month after opening.
Garvey also says the restaurant was neediessly over-engineered with things like $25,000 automatic dimming panels for the lights. “We had shock absorbers on our air conditioning units upstairs in case we had some kind of devastating earthquake,” he adds.
Hughes and Garvey realized the restaurant would not be open by the time their talent was to perform, but they refused to cancel, fearing it would severely hamper their ability to book national acts in the future. “With national touring acts, they don’t speak the language of ’We won’t; be open yet,’ ” says restaurant consultant Matthew Mabel. “National talent just doesn ’t play that game. Once you cancel, you’re dead. The professionals in the business know how to pace their schedules so they don’t get stuck that way.”
So on Sept. 14, C.J. Chenier played the huge rhythm room for an employee-only party complete with free food and drinks. Hughes withdrew $4,000 in cash from the bank to distribute S100 tips to the 40 employees who attended. For a start-up restaurant to spend that kind of money seems financially reckless, but Garvey believes it would have been disastrous to lose a trained staff so close to opening.
“I felt we had a really good staff,” Garvey says. “We thought it best at that time to get some kind of employee incentive out there…a sign of good faith on our part.” Garvey adds that he and Hughes expected to recoup the employee tips and other losses from a planned lawsuit against their sprinkler system contractor. “We were hoping this whole fiasco would end up costing the sprinkler company and not us,” he says. No lawsuit was ever filed.
That sprinkler system and subsequent delays in obtaining a Certificate of Occupancy from the city (a required operating permit) all but scrubbed an opening the following weekend when the James Cotton Blues Band was scheduled to appear. With city inspectors standing by, workers frantically tried get the system operational on Friday, Sept. 20. When it became apparent their efforts were doomed, the inspectors left, promising to return the following evening.
“Everyone was standing out in the street ’til all hours of the night trying to see if this thing’ll hold water and finally on Saturday night [the city] let us open,” says Garvey. “We maybe had 50 or 60 people mere to enjoy the band.”
HUGHES AND GARVEY HAD GONE ALL OUT TO MAKE MOON Under Water one of the premier music venues in Texas. They equipped it with a large stage and top-notch sound and lighting systems. They constructed 600-square-foot dressing rooms with showers and vanities for the bands and special offices for their road managers. Garvey assembled a 17-member gospel choir to perform regularly in the Rhythm Room each week for a Sunday gospel champagne brunch. “The music venue should have been Dallas’ finest and best,” insists Garvey. “We had everything in the world to accommodate great bands.”
But these lofty ambitions fueled an out-of-control spending spree. “Everything just seemed like there was an unlimited supply of money,” says Moon’s assistant brewer Mike Sipowicz. In nine weeks. Moon Under Water racked up $51,000 in entertainment expenses, far more than one Deep Ellum club owner says he budgets for an entire year. C.J. Chenier, who played to Moon’s employees, and the James Cotton Blues Band, who entertained 60 paying customers, cost more than $11,000.
Donald Thompson says the entertainment contracts Hughes and Garvey negotiated were loaded with fat, containing riders for extra meals, snack trays in the dressing room, beer, mineral water and in one case, two chilled bottles of Stoli. Thompson discovered later that some of these contracts paid as much as 10 times what he later learned could be negotiated.
Garvey scoffs at Donald Thompson’s contention that he could have handled the negotiations better. “[The Thompsons] have a total lack of knowledge not only of the restaurant business, but business period,” says Garvey. But if the Thompsons were void of business sense, it’s unclear who, if anyone, was making up the deficit. Garvey vigorously defends the entertainment contracts as the price to be paid for high-caliber, national acts. “Costs are something that shouldn’t even be an issue, because with volume, everything gets taken care of,” he argues. Garvey blames an ineffective marketing and promotional program headed by Mary Thompson for failing to pull in the necessary crowds to cover overhead.
Julie Hughes was supposed to be handling “business strategy and development,” keeping down “costs and waste.” But Mary claims Julie kept her full-time job and, to her knowledge, did little work on the restaurant project. “If she did anything on the side, we never saw any evidence of it,” Mary adds.
Julie Hughes strongly denies Mary’s contention and insists she was committed to the project. “I worked very hard to bring in business for Moon Under Water,” she says, beginning with creating the business plan used to entice investors and secure the SB A loan. Her other roles were strategic planning and marketing. But she admits that her planning failed on one point: “We probably didn’t plan enough contingencies in terms of needing extra capital.”
She puts the blame for the restaurant’s failure squarely on the Thompsons. “In my mind, the Thompsons were incompetent. They have no idea what a business is, what a business climate is or how to run a business.”
FOR A BRIEF MOMENT, IT WAS POSSIBLE TO GLIMPSE MOON Under Water’s promise: well-prepared food, urban ambience, great music. If they could have sustained these moments, Hughes, Garvey and the Thompsons would have been considered Einsteins of entertainment. Instead, it completely collapsed. Garvey fired Gonzales four weeks after the opening, when it was learned the chef’s food costs topped 131 percent of food sales. (A new restaurant’s food costs normally are high for the first three of four months, roughly 45 percent. Well-run operations gradually knock them down below 35 percent.)
Unfortunately, it was during this time of chef shuffling and the adoption of two separate menus for the fine dining area and the Rhythm Room (they shared the same menu when it opened) that the reviews started coming in. Moon Under Water was savaged by Teresa Gubbins of The Dallas Morning News (“The moon theme is said to come from a newspaper article written by George Orwell-OK, whatever”) and Malouf of the Observer (“Your mom can cook this food better”).
Although Thompson knew after four weeks that sales were not what they should have been and funds were tight, she gave it littie thought.Afterall, Hughes, a restaurant industry veteran, assured her these problems would evaporate following the official grand opening when they would be “slammed every day.”
At a meeting with investors in mid-October, Hughes hit her and their investors with a bombshell: Payroll couldn’t be met. Thompson was furious. But Hughes assured his partners that everything would turn around once they had the grand opening on Oct. 22 and the brewery was finished. Dudzik was flabbergasted: “I’m like, “You were the one who said we didn’t even need this [brewery], and now you’re telling me that people aren’t coming in because we don’t have our own beer?* “
“We think he was betting on the come,” adds Mary. “[Perhaps] he thought that if he could hide as much of this information from everybody as he could, we would have the grand opening and all of a sudden we would start having $30.000 nights and it would become a moot point.”
But the grand opening changed nothing.
On Sunday, Oct. 27, the investors called another meeting to review finances and discuss options. Expenses were dramatically outpacing revenues. The investors demanded severe staff, service and entertainment cutbacks.
Garvey came to work the following week and learned from Hughes that the Thompsons and the investors demanded he eliminate staff, cut out daily lunch service and silence the Sunday gospel singers. Garvey resigned rather than carry out their wishes. “I just knew immediately that if the Thompsons were going to get involved in taking the thing over, that there wasn’t a prayer in hell of it surviving,” he says.
But Hughes hit the investors with another shock during that Sunday meeting. He explained the payroll checks he had cut the preceding Friday would bounce the next day if the investors didn’t cough up additional funds. “It all happened so fast,” Mary says. “I was just so shocked because Steve had always assured us he would have so much in working capital.”
As it turns out, Hughes’ cash call wasn’t futile. “He did get some more money out of the others,” says Donald. “One of the small investors chipped in another 10 percent of their original investment, $1,500.” The money immediately went to the gospel choir, which was singing to an empty Rhythm Room, not far from where the investors were scrambling to keep their huge restaurant afloat.
Moon Under Water wasn’t shut down so much as I ill I it was abandoned. Months after it closed, the copper 111 1 and aluminum brewing tanks still shimmered through 111 I the thick panes of glass along Main Street. Behind the bar, a point-of-sale terminal still flickered with a Moon Under Water logo on the screen. The site seemed in suspended animation, patiently waiting for the right deal to revive it from its financial coma.
Westdale Asset Management had hoped that by leaving the venue intact, they could entice an operator to assume it “as is” for pennies on the dollar. But in early March, Westdale told the Thompsons they had to remove the brewing equipment so the space could be leased.
Steve Hughes was forced to resign two weeks after his investor cash call. The Thompsons clutched Moon Under Water’s reins until the investors instructed them to dissolve it. Moon served its last meal on Nov. 24.
Unnerved by the breathless pace of Moon Under Water’s demise, the Thompsons hired lawyers and consultants to scour the books. They suspected management procedures had been less than aboveboard. The scrutiny turned up nothing-nothing except a potent dose of poor judgment and accounting procedures showing, among other things, that no one in the operation had a clue as to what the restaurant’s break-even point was. The Thompsons briefly entertained a lawsuit against Hughes. ’’We talked to our attorneys,” says Mary. “I don’t know if you can be sued for stupidity or not. “
^JU^nrh^veeksafter il opened, the huge 13,000-square foot venue was gone. Moon Under Water’s flash-in-the-pan life cycle burned through $1.5 million in start-up capital, amassed more than 5200,000 in payables and left the Thompsons clutching the bag on a $50,000 point-of-sale system note and a 5350,000 Small Business Administration loan with monthly payments of $4,966.
Personal losses for the Thompsons amounted to $250,000, and they’re on the hook to creditors for at least another $400,000. The Thompsons say that Hughes, who reportedly put S75.000 into the original partnership, threatened to file for bankruptcy if pressured to assume partial responsibility for the loan. (Records show Hughes had filed for bankruptcy once before, in 1986.)
Hughes refused to comment on the substance of this article. “It was very unfortunate that I bet my life savings on a couple of people and they didn’t come through,” he says. Although he seemed to be referring to the Thompsons, Hughes refused to name them directly. “There were a significant number of misrepresentations made to me, and I’m sure other people feel that towards them…. A lot of people really got hurt by this. And it has and will forever affect my life.”
Management snafus aside, even before it opened. Moon Under Water’s design and execution all but guaranteed a swift asphyxiation. For one thing, it was sadly misplaced in Deep Ellum. The partners were attempting to draw a sophisticated 30- to 45-year-old crowd into a neighborhood swarming with strenuously hip twentysomethings that, as one local operator put it, are “always waiting for the next cool new thing to hit.” The Thompsons say they knew this going in, but they were banking on new developmerits in the area, including the Southwest Properties project, the Jefferson at Gaston Yard Apartments and planned luxury housing, to help feed their hungry venue.
Another problem was Moon Under Water’s deeply flawed blueprint. In gearing up for a massive project on three fronts at once-instead of focusing on the one with the greatest chance for success before easing into a second and then a third-the partners greatly broadened their exposure to hostile market forces. Survival ultimately hinged on the success of all three components simultaneously to maintain the volume necessary to cover its huge overhead.
According to consultant Mabel, who reviewed Moon’s books for the Thompsons after its collapse, Garvey ’s assertion that the marketing program was woefully inadequate is dead accurate. “A lot of people didn’t even know it was there,” he says. Money earmarked for promotion was absorbed in construction and operational cost overruns. Working funds totaling about S 120.000 that were supposed to be available at opening appear to have been completely absorbed by runaway start-up costs. This left Moon Under Water essentially with no operational margin from Day One. “Shortly after opening, I started having this really bad feeling.” admits Dudzik. “Nobody’s coming through the door, and we’re probably going to lose our butts.”
Predictably, Moon’s demise was attributed to “undercapitalization” by Mary Thompson and others. Scoffs one Dallas restaurant consultant: “Everybody says that. Il ’s the most generic answer you can possibly give. In other words, if everybody had an unlimited source of money all of the time, there would be no business problems in the world. If you’re undercapitalized at a million and a half, you’re not undercapitalized, you’re over-ambitious.”
Moon Underwater’s promotional materials carried the tag line “We’ve got it all, and we’ve got it right.” There’s no doubt the investors tried to stuff it all into their grand vision. But they foolishly attempted to mold reality to this vision instead of the other way around.
“I think they thought they were going to put all this money in the front end and make a really cool building-a ’build it and they will come’ type deal,” says a nearby Deep Ellum club owner. “But they didn’t realize that getting open is the easy part. Staying open is the hard part.”
Could Moon Under Water Have Stayed Afloat?
AS A RESTAURANT CONSULTANT, I THINK IT’S BAD JU Ju TO pick over the bones of a fallen restaurant; there’s a kin-ship in this business like no other. Hindsight being both cheap and easy, we can still learn from the mistakes of others.
The first problem was the name: Not only would its attachment to a food joint in Dallas, Texas, have George Orwell spinning in his grave. Moon Under Water imparts the idea of ilgirl food”-nay. expensive girl food-to the masses. It would take a seminar to get people to believe they could find hot chicken wings, fried pickles, stuffed jalapenos, blues and zydeco music-all decidedly masculine in design.
The brew-pub concept hits another wall. While beer has replaced hard liquor temporarily as the trend drink of choice, brew pubs will soon go the way of trick margaritas, layered shots and huge selections of imported beer (“You only have 30 kinds of beer?”). Even if MUW had been only a brew pub as originally planned, it still would have faced a tough trail because it was two years behind the trend. When confronted with this concept, 1 have suggested to clients that they build storage closets made of plastic to look like brewing equipment, sealed away in a glass room. Customers wouldn’t know the difference, and the client could save tons of money and future grief. Of course, good brewing will always be appreciated and folks like the Thompsons will always be respected, but not by the masses who support “trendy” restaurants. That’s why they call them trendy.
Enter the management team, two men with histories in restaurants that were the antithesis of the snappy trend concept, especially Dick’s Last Resort. People stick with what they know- -and what should have been a tidy little concept with room to grow was handled like the rollin’ thunder projects of established chains, riding on the coattails of past success. To maintain the comfort zone, the management team just did what they knew, a tragic mistake when underfunded. It’s hard for those who have worked with winners to understand baby steps.
Yet the main problem with MUW was mat it lacked “a voice,” a cohesive statement of personality. Everyone seemed to have his or her own agenda, so the restaurant never found its identity. Rather than being one soul with three parts-music venue, brewery and restaurant-it became three parts with no single soul. Because MUW couldn’t be defined, it couldn’t be properly advertised or promoted.
So what made the Moon set? A series of classic blunders, any of which could have been containable but when part of a domino effect could lead only to trouble. When a project gets funded, it’s exciting-something like a boxer getting a shot at the title. I feel that the Mooners got into the ring wearing mismatched gloves. Nevertheless they had the guts to climb in the arena, and 1 think they deserve a re-match.
George Toomer is a consultant who has been involved with the creation of many restaurants.