Wine Cask Owner Speaks Out

The economy killed the Wine Cask.

So says owner Bernard Rosenson, who spoke out this week about the months leading up to the eviction and closure of the Santa Barbara wine country institution. The business – which included a retail shop, restaurant, wine bar, and annual futures wine tasting program that, altogether, were renowned for promoting and fostering the growth of the Central Coast region’s winemaking industry – closed its doors and laid off all its staff on February 17.

Calling the situation “an economic tale of woe,” a distraught Rosenson said over the phone on February 24 that business at the restaurant had been off by up to 60 percent since August, that he was “losing a lot of money every month,” and that he “could not see the light ahead.” Rosenson also challenged his landlord’s description of events that led up to the eviction, explaining that SIMA Property Management was unresponsive to his attempts to renegotiate a lease and that the company’s chairman Jim Knell told him, “I will destroy you.”

Meanwhile, former owner Doug Margerum, whose family took over the Wine Cask in 1981, confirmed this week that he is actively attempting to save at least a portion of the business.

Until the hit of what he’s calling an economic “depression,” Rosenson said business was strong at the Wine Cask and claimed that, in February 2008, the company broke all known sales records in its more than 30-year history. “We beat everything, and it was looking good,” said Rosenson, who bought the business from Margerum in June 2007. But then came August and September, and the “bottom fell out,” said Rosenson, because the tourists – which made up about half of the restaurant’s business – “literally disappeared.” Since then, business at the restaurant, which is by far the biggest part of the budget, has been off 50 to 60 percent.

Rosenson, who built his fortune by owning and operating senior care facilities before branching out into restaurants, calls the drastic downturn a specifically “Santa Barbara story,” noting that restaurants in the Los Angeles area – such as the Sky Room in Long Beach, which he also owns – are only down about 20 percent. “You can sustain being down 20 percent, but you can’t sustain 50 to 60 percent,” said Rosenson. “It’s just impossible.”

Rosenson also disputed the claims last week by SIMA’s senior vice president Anda Ashkar that he was unresponsive to the company’s attempts to contact him for lease renegotiations. He claimed that he met with SIMA in October and tried to renegotiate the lease. “That was the last we heard of them,” said Rosenson. “We sent numerous emails, made lots of phone calls, but there was absolutely no response.” At some point, Margerum also became part of the discussion. Rosenson supported his involvement, but then the company was unable to afford the rent at the historic El Paseo property. So a meeting was scheduled between Rosenson’s team and the SIMA representatives in January.

Attending the meeting, said Rosenson, was himself, his attorney, and his controller, as well as Ashkar, SIMA’s attorney, and SIMA chairman Jim Knell. “Jim Knell crossed his legs and looked at me,” said Rosenson, “and – I wrote this down verbatim because I couldn’t believe it – he said, ‘I’m going to destroy you.’ I didn’t know if he meant physically or financially or both, but it was almost like I was watching a rerun of Casino or The Godfather. He stunned his own staff. Everybody was speechless. That was the beginning and the end of the meeting.” The legal motion to evict the Wine Cask was filed soon after that.

Ashkar denies that ever happened. “I assure you Mr. Knell didn’t say such a thing and doesn’t even speak in such a fashion to tenants,” she explained. “Mr. Knell did vent his disappointment with how Bernie [Rosenson] had chosen to run the restaurant and how it was a travesty that the famed restaurant had to close due to in large part Bernie’s operational choices. We made it crystal clear that if Bernie were to show good faith in bringing his rent current, then the landlord would engage in discussions to determine a rent structure appropriate to the situation. No such good faith payments were ever tendered by Bernie.”

Ashkar also said that, in her many discussions with Rosenson, he alternately laid blame on Margerum and the “frugal unsophisticated nature of Santa Barbarians” for the downfall. At one point, Ashkar asked why the filet mignon enchiladas – one of the more affordable items on the pricey Wine Cask menu – had been removed, and Rosenson told her to “go eat at a Mexican place on Milpas Street.” She explained, “Never once did I hear him take or accept any responsibility for any of the famed restaurant’s demise. Bernie changed everything about the restaurant but the name: the staff, the carpet, the Intermezzo ambiance, the menu, and price points. And then he was perplexed when the locals were turned away and the margins shrunk.”

In an article last week, similar complaints about unpopular changes were mentioned by former employees. Rosenson believes that he raised the company’s profile and did not hamper it. He hired internationally recognized chef John Pettitt and oversaw much needed renovations, including the controversial removal of an old eucalyptus tree from the restaurant’s patio. “The infamous courtyard had been brought back to 1929 standards,” he explained, “not the hodgepodge that existed.”

Rosenson also says that he saved the business from going under when he bought it nearly two years ago and prefers to think that he kept it alive rather than killed it. “The Wine Cask would have closed two years ago,” said Rosenson. “It was not doing well, but I felt something could be done, something could be improved, something could be brought back. We elevated it to a higher level there for awhile. I thought it was turning around.” He also explained that he tried to save the wine futures program by finding another site but couldn’t get cooperation fast enough from other venues.

The Wine Cask brand is still owned by Rosenson, and the two separate Wine Cask retail stores in Calabasas and Oxnard are still open. He also owns the Big Yellow House in Summerland, which closed years ago for a revisioning project that never came to be, but has no intentions of moving forward with that restaurant. “That’s on hold,” he said. “I have no intention of opening up a restaurant right now.” The property was recently listed for sale through the Radius Group.

On a personal level, Rosenson said he is taking the loss rather hard. “Some people are unhappy by the closing, well, multiply that by a hundred – that’s me,” he explained. “It’s a loss of prestige, it’s a loss as a professional, but I also have the money loss. I paid for it. I lost millions of dollars there.” He called the experience “a very unhappy time” and said that it is affecting his family and friends.

But, understanding that Margerum may be making a play to salvage at least some parts of the business, Rosenson is trying to remain optimistic. “Maybe Doug Margerum and SIMA will take the bull by the horns and resurrect this restaurant,” he said. “I support that. I would love to see the Wine Cask come back, and I don’t have to be part of it. Then it can continue. It’s been there for so long, it’s a shame when something that has legendary status disappears. I wish they would do something to bring it back.”