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Capitol Hill ‘neighborhood cafe’ Tallulah’s isn’t closed — but it’s not open, either — UPDATE: It’s closed

(Image: CHS)

Diners hoping for a Friday night visit found the 19th at Mercer restaurant dark and a paper sign on the door announcing it was closed for the night. Weekend brunch patrons had their reservations canceled. The weekend closure followed other nights of unannounced shuttering. This Monday and Tuesday brought more of the same.

Ownership hasn’t said anything definitive but Capitol Hill restaurant Tallulah’s did not have the best week of business even as the venue marked its sixth year on Capitol Hill’s quieter side along the leafy 19th Ave E.

The restaurant ownership won’t say it is done. But it’s not open, either. Owner Brad Haggen tells CHS the restaurant was closed due to staffing issues. “We lost some key staff and were not able to take care of our guests properly,” Haggen said.

He has not responded to further requests as the restaurant remained shuttered this week.

(Image: Tallulah’s)

The wrinkle comes just over a year since CHS reported on new ownership for the Linda Derschang creation.

She also sold off her 15th Ave E pub Smith this summer.

Tallulah’s debuted in December 2013 in a lighter vision, veggie-friendly menu, and more modern design design that was partly a response to Derschang’s reputation for vintage and dive vibes.

Entrepreneur and investor Haggen, part of the family behind the grocery chain told CHS after the 2018 acquisition that the Derschang founded restaurant represented a “no brainer” opportunity as was looking for businesses to start or buy following his family’s sale of their interest in the grocery company.

Haggen made Tallulah’s part of a small collection of “neighborhood cafes” including Skylark’s in Bellingham and ownership of regional franchise rights to a Neopolitan pizza chain.

UPDATE: While Haggen hasn’t said what led to the loss of key staff at Tallulah’s, CHS is told there had been payroll issues and other signs of cash flow problems with the business. Meanwhile, other big closures to end the year on Capitol Hill have been pegged in large part to expensive leases and challenges around how expenses are handled. Matt Dillon, chef and owner of the award winning Sitka and Spruce which is set to close at the end of the month, explained to CHS earlier this year how triple net reconciliation — in which lessees are responsible for paying rent and also expenses like utilities, real estate taxes, building insurance, and maintenance — was at the center of his decision to close his Melrose Market venue.

UPDATE x2: According to a person familiar with the situation, the Tallulah’s closure stems from months of payroll problems and paycheck delays as the restaurant struggled with cash flow after Haggen’s takeover. “It’s really disheartening to see him blame this on staff,” the person tells CHS. We’re not identifying the individual we spoke with out of concerns over possible retaliation. The person we spoke with says the situation came to a head the weekend of December 6th as multiple employees walked out over paycheck issues. The source says the owner was able to convince a handful of employees to scramble together an opening last week — an ill-fated taco night — before shutting down for good. Haggen is referring employees to contact his lawyer. CHS has reached out but not yet heard back from Haggen’s representation. We did hear back from Haggen, however. “I have Tallulah’s listed for sale,” he said in a text message.

UPDATE x3: Tallulah’s employees would like to be paid. We’ve heard from one who says they are owed nearly $2,000 they are counting on for Christmas. We’ve asked Haggen about the owed paychecks but have not heard back.

UPDATE x4: Staff members say they are organizing a legal response and have verified with CHS that a fundraiser has been set up on their behalf by friend Marissa DeLeon with plans to split the proceeds among the workers to help out with living and holiday expenses in the meantime. If you would like to lend a hand, you can give here:

Tallulah’s closed after months of payroll issues, and the owner not paying his employees on time and what they are owed. With holidays and rent coming up, please help us support our local service workers (and FRIENDS) this holiday season. This fundraiser will be run with these displaced employees and all funds will go directly to them. Let’s support our community.


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31 thoughts on “Capitol Hill ‘neighborhood cafe’ Tallulah’s isn’t closed — but it’s not open, either — UPDATE: It’s closed

  1. I hate seeing great places like this close. Everyone in Seattle wants to ignore that $15 plus paid family leave + everything else along with the costs mostly related to property taxes aren’t killing these restaurants off. Read the UW study on $15. Its more objective than the Berkley study. All of these initiatives signed into law by our local government are good intended but the consequences are unfortunately starting to emerge. I know this is going to make the Sawant crowd go nuts but oh well. Its about time people wake up.

      • “the study i agree with is less biased, and here’s some divisive commentary on how your political views make me not like you”

        cooooool

    • so what’s the alternative? lower the wages? you think maybe that’ll help? if the people who do all of the manual labor just suck it up, work our asses off to serve shitty people like you, commute hours to do these bullshit jobs? no thank you, not any more.

    • Michelle, not sure if you read the article?

      They closed because they couldn’t keep their staff, not because they don’t have enough customers.

      I know you’ve got your minimum wage hammer and you think you’ve found another nail, but this ain’t it.

    • You might have missed my morning update after I was able to nail down a few more elements of the story:
      While Haggen hasn’t said what led to the loss of key staff at Tallulah’s, CHS is told there had been payroll issues and other signs of cash flow problems with the business. Meanwhile, other big closures to end the year on Capitol Hill have been pegged in large part to expensive leases and challenges around how expenses are handled. Matt Dillon, chef and owner of the award winning Sitka and Spruce which is set to close at the end of the month, explained to CHS earlier this year how triple net reconciliation — in which lessees are responsible for paying rent and also expenses like utilities, real estate taxes, building insurance, and maintenance — was at the center of his decision to close his Melrose Market venue.

      • I can see the villagers gathering, pitchforks in hand, to take down those evil commercial landlords. Save my local restaurant! Impose commercial rent control! Maybe just raise menu prices to meet the costs of operating a restaurant in a desirable urban area?

        The financials of this business should not have been a surprise to the
        purchaser if they performed due diligence. Expenses should have been known, so what happened to change tnings so dramatically that the business closed suddenly just over a year after the sale? Sounds like an individual restaurant management issue not a reason to cite trends.

    • This has nothing to do with the minimum wage. But even if it did, nobody has the right to eat at an affordable restaurant on the backs of people making non-living wages. So if you can’t come up with a restaurant business model that is profitable and pays living wages, then we don’t need to have restaurants. Restaurants are a luxury, not an entitlement.

      That said, anyone who reads this page regularly understands that the problem is more complex. There is a restaurant bubble that is popping in Seattle and in much of the nation. Rents, taxes, triple net are all factors. Also, with the local unemployment rate hovering around 3% there are just not enough bodies to staff all of these niche restaurants out there in a way that provides a quality experience.

      I’ll admit that I barely eat out any more because the level of service provided by overworked, and still underpaid, staff is just not worth the expense.

    • FYI most tipped employees in Seattle who are working for small businesses make $12/hour currently, not $15. Only businesses with 500+ employees are required to pay $15. It increases by 50 cents every January 1 until they reach $15. It blows my mind how many non service industry people don’t understand it. But hey, if it doesn’t effect you ¯\_(ツ)_/¯

  2. The reality is that overall expenses, the ones Matt Dillion mentions, AND wages, have exploded in Seattle. The City, County and State governments are passing well intentioned laws, but don’t care about the impacts those laws have on small retail businesses. If they did, they could write the laws differently, but they mostly refused. Sometimes they do the right thing. But for minimum wage, they could have and still could, make a proper tip credit that would help all these restaurants and their staffs.

    For the head tax, small businesses were exempt. For safe and sick time, small businesses had to offer fewer days than large businesses. For the first few years of Seattle’s minimum wage law, there is a tip credit which has helped a ton. It should be made permanent.

    Beyond that, Sawant has made proposals in the past about commercial rent control. These should be revisited. We should also protect small business leases, and historically significant small businesses should be protected from development, not as a one time move to curry political favor as we’ve seen the current council do with the Showbox, but as an overall city policy.

    If the council and mayor don’t get serious about supporting small business, we’ll continue to see them fail. Many more of them. And the staffs who love working at these places will lose their jobs and the city will lose culturally significant places to be replaced by Panera Bread and banks.

    It’s significant that this and last year, Linda sold 3 businesses on Capitol Hill (because they were not making money), Matt is closing a few, as is Ethan Stowell. Quinn’s sold and is struggling. Full Tilt is closing. Sizzle Pie Closed. Stout failed and sold. Others are struggling, and are for sale or just hanging on hoping the 1300 tech workers moving next to The Stranger will bolster their business.

    But let’s not pretend this isn’t about the minimum wage law. It is. It’s just not JUST about that. And the city and county could help, they have the tools. But aren’t, because they don’t care. Sad.

    • You say Linda sold her businesses because they were not making money. So why are people buying them, and not changing the business models (Tallulah’s basically stayed the same prior to and post-sale) if they weren’t making money prior to sale?

      • You nailed it exactly. Its because most people think they can ‘fix’ whatever is wrong with a business, without understanding the core issues and what has been tried already that failed, or because they are too optimistic about their ability to turn things around.

        I’m sure the financials were made available for review, but that the losses were being covered by profits from Linda’s other venues and that on paper, it probably didn’t look that bad. She has deep pockets and can afford to prop up a place and make it look reasonably dynamic until the right buyer comes along.

        The other thing is that there are at least some patrons who would visit a place simply because Linda owned it (and might be seen there regularly) that would stop going if not. Also, this location is just not that great. 19th seems to have lost its soul since Kingfish Cafe closed.

    • It’s still largely about rent (commercial and residential) and cost of living. If residential rent and housing prices hadn’t skyrocketed, the push for minimum wage increases wouldn’t have been as successful. Businesses had to take that on as commercial rent also skyrocketed. But, let’s blame the workers making less than $30k.

      I spent less money on a meal in Tokyo. The food actually cost the same, but there wasn’t the 20% hidden markup of a tip. Why is Seattle more expensive than Tokyo?

  3. How can you have commercial (or residential) rent control when you don’t have similar control over the costs that property owners are often shouldering and responding to: property taxes, maintenance & upgrades (rising labor costs effect this too). But here is a case where an owner took over a restaurant that was not making money, didn’t really change anything, and it continued to not make money, surprise! The restaurant closes. Only in silicon valley can you run a business for years and lose investors’ money and subsidize your customers. In the real world, the balance sheet needs to pencil out.

    Plenty of restaurants have figured out how to be successful under the new wage laws: eg raise prices, go tipless, standard service charge, for example. But again, in this case, it seems that the fundamentals of this particular restaurant were weak.

    We liked it, would eat there a few times a year, but it’s not really walking distance to where we live and parking is always tight. This is the challenge with “neighborhood” restaurants. You have to be so good to keep the people who live in your walk shed coming in regularly.

    To the editor: it seems a little strange to lump this closure in with Sitka and Spruces for which you have the owner’s clear reasoning, and staffing and cash flow issues were not really among them, iir, and in this case triple net rent issues were listed as the issue.

      • You would think that this is true, but in a lot of cases the landlord will keep the space empty and wait for someone to pay their desired rates. It has been a huge problem in NY, and some neighborhoods have tons of vacant storefronts doing no good for anyone.

        https://www.theatlantic.com/ideas/archive/2018/10/new-york-retail-vacancy/572911/

        The long term nature of a commercial lease makes is such that a lot of landlords would rather wait than lock in a discount for 10 years.

        The national chains will often pay, but that’s how you end up with every block being the same as every other.

  4. Nah- this has nothing to do with minimum wage – I know for a fact most of the staff at this restaurant were paid the tipped minimum wage and those not being tipped were paid below market rate for BOH. And Paid family leave isn’t even effective yet. The restaurant was busy, it was doing better numbers than any previous year. It has everything to do with an incompetent owner purchasing a business he has zero experience in in order to use it as a tax shelter for his capital gains from the sale of his inherited multimillion dollar business. Then saddling it with unnecessary expenses like his local apartment so he can commute from Bellingham on the weekends and play restaurateur. It’s really just a another story of know- nothing rich kids playing with working class people’s lives.

  5. It is not true that Tallulah’s “stayed the same” after the sale. While it is true that the concept, design and basic menu didn’t change much, every single thing about it got at least a little bit worse, and the effect was noticeable almost immediately. The food was a bit less interesting, and clearly didn’t taste as good, and the service suffered. I’d been more than 20x before the sale then went 3x after and never again. So if you start with a situation where a restaurant is being run by someone who *really* knows how to run restaurants, and still losing money, and you sell it to someone who clearly isn’t as good at it, then the the chances of success are very low. Quality matters and customers can tell, period. Finally, a tip: if someone who is really smart and successful is indifferent enough about a business that she is willing to sell it to you even though she NAMED AFTER HER OWN DAUGHTER then you should really probably think twice about buying it. Sad overall of course.

  6. wasn’t there a bit in this piece mentioning that Tahullah, Linda’s daughter was feigning interest in buying the place? There were even quotes from her … where did that bit go?

  7. Someone put a sign on Tallulah’s regarding possibly a Taco Bell Cantina going into this location. Can you confirm this? Please tell us it isn’t so!

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