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Is the Plaza's flagship burger business done well or, well, done?

The craft-burger business on the Plaza faces an uncertain future.



The noon rush has started at Blanc Burgers + Bottles. On this Friday, servers in gray T-shirts carry burgers on square white plates as they swing through a dining room filled with Plaza holiday shoppers.

In the restaurant's entryway, a young man with close-cropped hair nervously fingers the driver's license in his right hand and asks the hostess for a job application.

"I think we have an opening," she replies. She directs him to a highboy table by the bar and gives him some paperwork to complete, then seats the three parties that arrived after he did.

This is the Blanc that Kansas City knows, a bustling burger business where Justin Bieber stopped to eat before his October concert at the Sprint Center. It's the home of a record-breaking Groupon promotion and the older brother to a restaurant in Leawood's Mission Farms. "It is a Growing KC Crowd Pleaser," according to a silver plaque from Leawood Lifestyle magazine, one of nearly a dozen canonized write-ups on the walls in this gleaming white space.

Not every crowd has been pleased, though.

In just less than five years, the Circle Restaurant Group (Blanc's parent company) has opened four locations, closed two of them and abandoned plans for a fifth outpost. (It also operates a concession stand, the Burger Box, at Arrowhead Stadium, and serves burgers in the Field Club at Livestrong Sporting Park.) The upheavals involved in these deals have badly fractured Circle's original partnership. Of that group, only Ernesto and Jenifer Peralta are still involved in Circle's daily operations. Over the past year, two lawsuits over nonpayment of services have been settled, and Blanc's vendors have been shuffled like a one-deck shoe at Harrah's.

All of which has left former employees and partners wondering if Blanc is, well, done.

The thing that breaks my heart is how good Blanc could have been," says Eddie Crane, one of Blanc's founders. He's fiddling with a sandwich at the Filling Station, recalling the day four years ago, in this same coffee shop, when Peralta told him that Blanc was moving forward without him.

Crane is out of the restaurant business — he sold his Martini Corner place, the Drop, in October. As he recounts his side of the Blanc saga, he's just back from a trip to Lawrence to pick up a guitar. He's focusing now on his band and on being a dad. His 3-year-old daughter is playing with his iPhone in the chair at his left. But disappointment colors his voice as he talks about his former partner and mentor. For Crane, Blanc still stings.

There was a time when Crane and Peralta were family to each other, when Peralta was a charismatic, divorced young bartender who loved his regulars on the weekdays and his three kids on the weekend. Drawn to the Plaza from the moment he moved to Kansas City, in 1999, he was a wizard with a Stoli bottle behind the bar at Morton's. And when the Capital Grille hired him away, he took Crane along. These were the days of $500 tips for opening a bottle of wine, of three-deep crowds of thirsty drinkers. On his Tuesday night off, Peralta would drop by Morton's for a steak and for conversation with David McMullin, who would become Blanc's front-of-the-house manager and beverage director.

"Ernesto was like a father figure to me," says Crane, 35. "He taught me how to set up a bar and about life. He moved me from adolescence into young manhood. When we worked together, the thing we always talked about was opening a place together."

The duo went from tending bar to running one in October 2006, when they opened the Drop. Ernesto and his wife, Jenifer (they met while she was working at the Granfalloon on the Plaza), together owned 51 percent of the business, and Crane had the rest. Josh Eans left 40 Sardines, where he'd been a line cook, to join the Drop; his wife, Abbey-Jo, became the pastry chef. With its carefully cultivated wine, beer and cocktail list and Eans' bruschetta menu, the Drop was an early success. And Peralta began thinking about what might be next.

"The Drop was a small space, and while it was fun, I wasn't making the money I was used to making at the Capital Grille," says Peralta, 47.

Peralta visited a new development under construction in Leawood: Mission Farms. He envisioned a wine bar with small plates, and he picked out a name: Ombra. When financing didn't materialize, he shelved the project. But it wasn't long before he struck his next deal.

Tatsu's Café & Wine Bar, a French restaurant at 419 Westport Road, was on its last legs at the end of 2007. Owner Tatsu Arai had exhausted his second concept in three years, having started his five-year lease with a sandwich shop called KC Toaster's Sandwich Café. Peralta saw in the narrow, rectangular space a new beginning for a partnership that had begun to fray.

"Jenifer and Josh came to me and said they couldn't work with Eddie anymore," Peralta says.

"I was a hothead then," Crane concedes.

The articles of incorporation for the Circle Restaurant Group were filed on December 26, 2007. Jenifer Price (she took Peralta's name later), Crane and Eans signed the paperwork. Peralta's name is absent, a fact he attributes to his wife having put part of the new venture's financing on a credit card in her name. The Peraltas would own 50 percent of Blanc, with Eans and Crane each maintaining 25-percent ownership stakes. The restaurant opened on March 20, 2008. And whereas the Drop had been steady, Blanc was an instant hit.

"I'd walk out onto Westport Road and scream the name of somebody who was next on the list," says Beth Evans, a former server and assistant manager. "People would wait an hour or two to get a table."

Blanc heralded a wave of craft-beer bars and craft burgers, arriving in KC ahead of the national chains Five Guys and Smashburger (both of which have since opened KC outposts). It made a popular novelty of its house-made ketchup (Eans was vocal about his refusal to stock Heinz), and the fries arrived at tables in miniature metallic shopping carts (an idea that Peralta took from Delux, a burger shop in Phoenix).

The fast success allowed a swift adjustment: Three months after Blanc opened, Crane and Peralta agreed to trade the Peraltas' interest in the Drop for Crane's percentage of Blanc. The deal was finalized in December 2008. Around the same time, Brian Wilson began working at Blanc as one of its managers, helping prepare for the launch of a new restaurant in Leawood.

A month shy of the first anniversary in Westport, Blanc opened a second location, in Mission Farms. David McMullin, who had been managing the Westport operation, moved over to Leawood. He purchased a 10-percent ownership stake in the new space for $10,000. Eans was given approximately 25 percent. The remaining portion belonged to Jenifer and Ernesto Peralta.

In October 2009, Ernesto Peralta told The Kansas City Business Journal that he envisioned Blanc locations in Omaha, Des Moines and St. Louis. The business seemed on its way to being the next Smashburger or Five Guys.

But first it needed to leave Westport.

At the end of January 2010, Blanc closed the doors at its wildly popular original location. On February 11, Blanc debuted on the Plaza, taking over the former Pizzeria Uno space. Sources say the refit was hampered by unexpected repair costs, mainly associated with the property's aging heating and cooling system. Still, the new Blanc was impressive, starting with its size. At 5,400 square feet, it was triple the area of Blanc's first space. The Westport location maxed out at an occupancy of 75; the Plaza restaurant could hold 175 people, with room for another 40 on the patio.

Not that everyone liked the interior's luminous whitewash. "It looked like somebody murdered Pizzeria Uno and its bleached white bones rose up in the spot," Crane says.

"It was really sterile," Evans says of the space — and of the Peraltas' shifting management style, which left some employees longing for Westport's funkier vibe. "In Westport, it was about being yourself and being self-expressive. At the Plaza, they didn't want visible tattoos."

"The Plaza gave us a face," Ernesto Peralta counters. "It gave us exposure. We were alongside the better restaurants in Kansas City."

Dan Lowe, founder of RED Development (now RED Legacy) and an early Blanc booster, agreed that the restaurant was on its way up. He and Peralta began talking about how to export Blanc to other markets. Soon, Blanc's website announced that a location in Little Rock, Arkansas, was "coming fall 2010." It was supposed to move into one of RED's properties, a 2,500-square-foot space in Little Rock's Promenade at Chenal development. Blanc's signature white-and-orange color scheme made it onto the walls, but the project stalled.

"Going from one store to three stores is probably the trickiest time," says David Claflin, a marketing consultant with RED Legacy. "I'm just not sure how well-known Blanc was outside of the Westport community."

A third location did open in April 2010 but closer to home. B:2: A Burger Boutique — The Pitch's Charles Ferruzza called it Blanc's "country cousin" — was meant to be a kind of Blanc LongHorn Steakhouse to Blanc's Capital Grille. It offered 6-ounce patties (instead of Blanc's 8-ounce) at lunch and stocked only American craft beers (rather than a vast international array of brews). But the white-and-royal-blue space at Summit Fair never really found its rhythm.

"It just didn't work out the way we wanted," Peralta says.

"Ernesto was always looking for other opportunities," Crane says. "And that's good, but you still have to be able to execute on what you have."

In the summer of 2010, faced with a large space to fill and a brand identity on the mend, Peralta looked to Groupon to better execute what Blanc already had. But the daily-deal site further taxed the business.

"We grew from a small space in 2010 and needed to fill more seats. The best way for us to create a buzz is to create conversation."

That conversation can come with a heavy cost. A recent Rice University study found that 57 percent of businesses make money with Groupon, but 23 percent lose money. Small businesses have sometimes found themselves overwhelmed by a strong response to a coupon that failed to cover their costs. Dyer Price, the owner of Muddy's coffeehouse in Portland, Oregon, took out a bank loan last summer to cover what she says were $8,000 in losses. Need a Cake bakery in Reading, England, lost an estimated $19,500, according to owner Rachel Brown, after customers bought Groupons for 102,000 cupcakes. And the validity of Groupon's own business model is under attack, with its stock price dipping below $4 in early December.

"Groupon is not a moneymaker," Peralta says.

Blanc offered Groupons in June and September 2010, selling about 8,000 and 14,000, respectively. By that fall, mention of the Little Rock location had vanished from Blanc's website, though Circle had opened the Burger Box concession stand at Arrowhead Stadium, in time for the Chiefs' new season.

On January 1, 2011, B:2 closed. Within a few days, the guts of B:2 — kitchen equipment, tables, computers — would be repurposed in Nebraska.

Blanc in Omaha, with 3,700 square feet of restaurant in the city's Midtown Crossing development, opened at the end of that month with a chef from the Plaza and a sous chef from the Leawood operation. While the restaurant struggled to find the right vendors — particularly a bakery that could duplicate Farm to Market's buns — the initial feedback was positive, and the space reportedly was on track to gross almost a million dollars in its first year.

"We brought them to Omaha," says Ken Cook, president of East Campus Realty, the Mutual of Omaha subsidiary that owns Midtown Crossing. "Omaha is a burger town, and this was a different spin on it."

In May 2011, Blanc on the Plaza sold 20,150 coupons at $10 for $20 worth of "gourmet burgers and drinks." But that increase in Groupon sales led to a dip in staff morale.

"Customers came in wanting to argue what the Groupon was about," says Evans, who was then an assistant manager at the Plaza restaurant. "It was the worst clientele. People would calculate exactly how much they had to spend and then they wouldn't tip." A Facebook group popped up, dedicated to registering complaints from Blanc alumni.

There was a bigger worry than social-media sniping, though: Agia Properties had filed suit against Circle for nonpayment of rent. The property at issue was an office space in Prairie Village's Somerset Plaza development.

In September 2011, Arkansas finally got its upscale burger shop, except it wasn't a Blanc. It's called Big Orange and it's not part of the Circle group.

"It's our color scheme. It's our fixtures that we had to leave behind," Peralta says. "Maybe we were going a little too fast. ... Jenifer and I never had the money to get it open."

Blanc's partnership was falling apart. Eans, Wilson and McMullin all left the company in October 2011. The Peraltas bought back Wilson's 1-percent share. (Wilson now manages the Rusty Horse Tavern, in Parkville.) Eans and McMullin remain what Peralta calls "economic interest holders": They have money and ownership stakes in the business but no other connection. All three declined to comment for this story.

That same month, Ernesto took over daily operations on the Plaza, and Jenifer began managing the Leawood location. He says he didn't know until then that his company was struggling.

"If you have a pool full of water and the pool is full, you don't see the cracks," Ernesto Peralta says. "But all of a sudden, you're losing water and you start seeing cracks. Sales were not where they were when we opened the business. And we still had the same expenses. It wasn't until we jumped in that we saw the cracks. We lost money last year."

Problems persisted into the new year. In January, Blanc left Arrowhead Specialty Meats — which had been supplying Blanc with a custom grind of sirloin and beef shoulder since Blanc's early days in Leawood — for Scavuzzo's. Arrowhead confirms that the account has been settled but won't comment further.

Peralta says the decision allowed him to save a dollar a pound and sell what he calls "never-frozen, grass-fed, hormone-free, no-antibiotics beef from Kansas and Missouri."

But several industry sources familiar with meat pricing in Kansas City tell The Pitch that they doubt Peralta can buy the meat he wants while realizing such a significant cost savings.

Also in January, Blanc changed another supply agreement, switching from US Foods to Sysco — and trailing a balance. During an interview with The Pitch in early December, Peralta said Circle had "worked out a payment plan in the last four weeks." (A representative for US Foods had no comment.)

In February, Blanc settled with Agia. According to Ron Kraft, an attorney for Agia, Blanc agreed to pay $700 a month toward $22,500 owed. Kraft says his client was last paid on June 25; he estimates that Blanc has paid $3,600 so far.

In June, the Omaha Blanc shuttered after a midweek lunch service. The restaurant still had three and a half years on its lease.

"It was working," Cook says. "It would have been fine but for the strategic issues that Ernesto was facing. It's bittersweet. I really like Blanc Burgers. I had a lot of time and energy and capital invested in that concept."

Peralta says East Campus Realty approached him about breaking his lease because it had a tenant interested in the property. The Midtown Crossing space sits empty today.

On June 23, United Heating & Cooling filed suit against the Circle Restaurant Group for nonpayment of $5,076 worth of maintenance contracts related to the Plaza and Leawood restaurants. And the temperature kept rising for Blanc. A walk-in refrigerator at the Plaza Blanc was failing to keep food at the proper temperature when a Health Department inspector visited the restaurant August 8. It was one of the six critical violations that closed Blanc for several hours that day. A follow-up investigation August 13 found no violations. A judgment in United's favor was issued August 29 by a Jackson County Circuit Court.

Crane says: "That fits a pattern of behavior, a pattern of Ernesto leveraging other people's financial risk and harvesting all the gain."

Peralta, who won't disclose his salary, says, "I've never gone into my pocket and taken out cash. Every single employee and vendor that has worked with us has been paid."

Some of those former associates remain unhappy — less because of money than because of something lost. "We should have stayed in Westport," Evans says. "I've never found the happiness and family I had at Blanc."

"A lot of people miss Blanc Burgers + Bottles, Cook says of the failed Nebraska restaurant. "It was their favorite place to go."

Blanc's first address is still a favorite place for a lot of people. The Westport Café & Bar took over 419 Westport Road from Blanc, and today it's part of a restaurant renaissance that's again turning empty storefronts into vibrant spaces. It's a resurgence that Blanc helped start when it opened in a neighborhood whose reputation relied mostly on bars. But Peralta is done with Westport.

"I love Westport," he says, "but we can never go back there because we're on the Plaza now."

If Peralta can sound defensive about his business, though, he also can't stop framing Blanc as a success. "I'd love to open up a third restaurant in Kansas City," he says. (He mentions downtown Overland Park as a potential target.) "I'd love to eventually open up the brand outside Kansas City. But it has to be with the right financial support."

On the Plaza, an early winter lunch crowd has thinned. It's 1 p.m. on a Friday, and a boy and his mother have the back section to themselves. The child rolls one of the french-fry shopping carts across a white shelf. The place isn't empty, though. The number of people here would have been a good-sized crowd in the Westport space.

"If the Plaza space was half the size," Peralta says, "we'd be twice as profitable.

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