Here's one person's opinion...
Magic Pan's growth was fueled by Quaker Oat's ownership in the 1960's and 1970's, when big regional shopping malls were being developed all over the U. S. Magic was really the first sitdown restaurant chain to build 4,000 square foot restaurants (with liquor licenses) in those malls. When they first signed their leases, Quaker was able to get landlord concessions and tenant improvement dollars from the mall developers. Rents were down at about $8/square foot for the initial lease term. And Magic grew to over 100 units. That is probably the Magic Pan you remember.
Unfortunately, three factors ruined the model:
- After the initial lease term, mall rents escalated in the 1980's to $14 - $18/square foot (mulitply that by 4,000 sq. ft), so the costs increased dramatically.
- Magic had built its reputation on crepes, a $3 - $4 center-of-the-plate entree. There was no way guests would pay $12 - $15 per entree for sauce-filled pancake.
- By the 1980's, sitdown restaurants with liquor licenses had permeated the malls and the outlots...Applebee's, Ruby Tuesday, Bennigan's, TGIF, etc. They had a model with higher pricepoint value, huge liquor sales and higher density penetration within the markets served. It killed Magic Pan's viability.
The Patels, for all their faults, jumped onboard as the ship was listing. Those 20 year leases were coming up for renewal at high rates. And landlords preferred Ruby Tuesday or California Pizza Kitchen to the 20-year-old crepe concept. Certainly, the Patels didn't have the financial ability to maintain the brand, so they started selling off piece by piece. Now that's not to say they wouldn't have disassembled the brand, even with healthy numbers. But they bought the company at "fire sale" prices and sold it off as salvage...keeping the cash.
Magic Pan's history is really an example of how great food and a great experience are relatively unimportant to a restaurant's success. By contrast, many low grade feeders with zero ambiance roll on year after year...White Castle, Omelet Shop, Krystal, Waffle House, etc.
It's all economics, really. Magic Pan had it's "time" and we're all better today for its experience. But it's a different time now. So let's simply appreciate what we remember, understand that today's economic climate cannot recreate it and move forward.
Today's generation will look back at Starbucks and Krispy Kreme 30 years from now with the same nostalgia as we view Magic Pan. In reality, it's just coffee or a doughnut. How long will they be able to sustain the costs that will surely escalate?
How much can they charge for a doughnut? How much more are you willing to pay for a cup of coffee? How much rent do they pay for those "main street and main street" locations? History will repeat itself. It always does.
Andy