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Closure of Mexican restaurant in Hays similar to others in region

3/12/2014

By MATTHEW KENWRIGHT

mkenwright@dailynews.net

The parking lot on north Vine Street sits empty, an obvious sign Carlos O'Kelly's has closed for business.

Not so obvious, though, is the reason the Mexican food eatery shuttered its doors.

Seventeen of the chain's restaurants were closed at the same time, said Dave Phillips, director of restaurant marketing for parent company Sasnak Management. According to Phillips, all of the restaurants had leases not suited for business because of high costs and locations no longer within the popular dining areas.

"It's too expensive for us to pay that rent and make money with the declining traffic," Phillips said of the reasoning for closing the Hays location.

When asked about the lease situation at the Hays location, Phillips said all the restaurants closed were in a month-to-month arrangement or expiring this year. All were closed at the same time to avoid creating "angst" among other restaurants about more possible closures.

When asked if the monthly lease amount had changed, Phillips said he could't answer that. The company executive handling real estate issues recently has left Sasnak. It was Phillips' understanding, however, the individual had been attempting to lower lease rates in locations not as profitable as the company desired.

"The restaurant business has changed dramatically over the years," Phillips said. "Casual dining numbers are down. Sales everywhere are not what they used to be. A lease that worked 20 years ago doesn't necessarily work today."

Terminating the restaurants frees money to renovate the company's other locations, he said.

"We just started on a pretty aggressive restaurant remodel program. ... It's expensive," he said. "You have to make the decision in restaurants like Hays. Can we ever recoup the amount of money that it's going to take to refreshen that restaurant? And obviously, we came up with the answer no."

Multiple attempts to contact Ralph Gottschalk, one of three people listed as a trustee for the RG & G Investments LLC group that owns the property at 4107 Vine, were not returned.

Phillips said the company will miss Hays.

"We had a wonderful time being part of the community and being involved in so many things beyond serving food," Phillips said.

Aaron White, executive director of the Ellis County Coalition for Economic Development, said the vacancy opens an opportunity to court national chain restaurants. Losing the restaurant does not have a significant effect on the coalition's plans to propose a 10-year special tax in a Community Improvement District to pay for a new convention center.

"It's all the businesses collectively that provide the engine to do the convention center," White said.

Ashley Primm, a waitress who had been at Carlos O'Kelly's for nearly a year, said the staff found out Thursday the restaurant would close Sunday. Many were "sad and heartbroken" to hear the news, she said.

Employees were told the restaurant was closed due to costs and market problems.

Tammy Wellbrock, executive director for Hays Area Chamber of Commerce, said the restaurant's former manager, Darren Schumacher, has been a "friend and community leader."

Schumacher, a Hays USD 489 school board member, served a six-year term on the chamber's board of directors. His tenure included six-months as the interim executive director for the chamber. He was appointed to the board a month ago to fill a vacancy.

Wellbrock said it is her understanding Schumacher will remain with the restaurant company.

"Many of us can say we're going to lose our friend, Darren Schumacher, and his family," she said.

Gift cards to the restaurant can be used at other locations. Call (316) 978-9509 or email mygiftcard@carlosokellys.com for a refund.