Rick Volland has decided to sell the South Sherwood Forest Boulevard location of Capital City Grill after Whitney Bank took steps to collect on a roughly $800,000 loan for Stroube’s, one of his downtown restaurants.
John Schneider, chairman of Vision City Development Group, which has been working with Volland since Vision City invested roughly $150,000 in Stroube’s in 2011, said the decision was a difficult one, but necessary.
“There is a silver lining in every challenge and while we can’t change the past, we can work to properly manage the future,” Volland said in a written statement. “This action will make our downtown properties stronger.”
Schneider said Volland, who did not return a call for comment, has two potential buyers for the restaurant but is prepared to entertain other offers — for the building alone or the building and restaurant operations together.
He said even an arrangement where the new owner could use the Capital City Grill name is not off the table.
Stroube’s opened in 2008 at the corner of Third Street and North Boulevard in the Shaw Center for the Arts. It’s on the other side of the building from Capital City Grill, Volland’s second restaurant by that name. The first has been open about a decade on Sherwood.
Stroube’s struggled financially in its first few years because of the recession and the heavy construction on the North Boulevard Town Square just outside its front door, Schneider said. The restaurant survived on the cash flow from the two Capital City Grill locations.
Schneider said, “2008, 2009 and 2010 were extremely tough for them,” adding the owner even had to consider closing Stroube’s.
But Volland overhauled the concept after Vision City got involved, bringing in Chef Scott Varnadoe and trading in the traditional chophouse approach for what is touted as “upscale down South.”
That transition was completed by June 2011 and the early results were encouraging, Schneider said. But it wasn’t enough to avoid having to enter into a legal agreement with Whitney last spring, putting up the Sherwood Capital City Grill building and the Stroube’s inventory as collateral.
Having bought some time, Volland and Vision City began to look into trying to refinance the debt with another bank.
But on Jan. 10, Whitney filed the agreement it had negotiated with Volland and Vision City, known as a consent decree, in the 19th Judicial District Court, indicating the bank was moving to collect on the loan.
With no banks lined up to refinance the debt, Volland had to make a choice, and did.
Schneider said things have continued to improve at Stroube’s after the concept change. The restaurant has won several awards, he said. Revenue was up 20 percent in 2012 and Stroube’s turned a profit. So far in January, sales are up 10 percent over that month last year.
Schneider said the Sherwood Capital City Grill building alone appraised at $1.25 million, exclusive of the restaurant operations. That puts Volland in a good position to move forward. Any additional proceeds from the sale after paying the bank will be used to improve and market the downtown properties.
“That will give us some money to get aggressive downtown,” Schneider said.