Owner of mainstay Georgetown waterfront venue 'stumped' about next steps as sales decline

Ark Restaurants Corp. (NASDAQ: ARKR) owns one venue in D.C., Georgetown mainstay Sequoia. At 26,000 square feet, it is the largest restaurant in Ark’s portfolio and ties New York City’s Bryant Park Grill & Cafe for most indoor and outdoor capacity at 1,000.

The longtime Washington Harbour restaurant is important to Ark’s bottom line, generating more than $10 million in sales last fiscal year, according to Securities and Exchange Commission filings. It's by no means failing, but it is treading water through a difficult time.

Chairman and CEO Michael Weinstein didn’t have a lot to say about Sequoia during the company’s most recent earnings call. Indeed, he offered just one sentence about the District.

“Washington, D.C., is problematic because the city is problematic,” he told analysts Feb. 13 during the 11-minute call.

Weinstein elaborated in a follow-up interview. Washington Harbour, the mixed-use waterfront destination at 3000 K St. NW, “is not anywhere near as vibrant as it once was” as an office destination, he told me, citing hybrid work and fewer tenants. The events business, which offer higher margins, is strong, but clients are often more price-conscious — a 150-person wedding years ago is now 100 guests, for example.?

And on a macro level, Weinstein said, “away from whatever effects the economy may have on spending, is that Washington is perceived to be dangerous.”

“That type of stuff is a depressant to people who are sensitive and that may be affecting the way people go about their lives and whether or not they eat out,” he said. “Crime is a big issue, and just the general feeling about Washington, D.C., seems to be more negative than it has been in the past.”

Many D.C. restaurateurs are navigating similar struggles, whether they cite crime, lower foot traffic or the challenges of paying their staff with the District’s changes to its tipped wage law.

Sequoia generated $2.46 million in sales during Ark’s first quarter of 2024, which ended Dec. 31, down from $2.8 million the same period in 2023, according to SEC filings. Across fiscal 2023, Ark reported $10.6 million in Sequoia sales, down 0.1% compared to 2022, “driven primarily by lower headcounts in the third and fourth quarters partially offset by strong revenues from our event business and targeted menu price increases in the first two quarters,” per its year-end report filed with the SEC.

The restaurant, which opened in 1990, underwent a $3.2 million renovation in 2017 — the year the first phase of The Wharf in Southwest opened, presenting Georgetown with a strong waterfront competitor — a project that included moving the main bar to the ground floor, leaving more room for private events upstairs, adding a mezzanine-level private dining space and reconfiguring the downstairs bar to serve as a buffet if it is booked for a private party. The venue’s best months come in the summer, per Ark’s public filings, “attributable to our extensive outdoor dining availability.”

“We really rely on the location to carry us,” Weinstein told me. “When it comes to Washington, D.C., I’m really stumped as to what to do.”

Ark’s lease at Washington Harbour runs through 2035.?

“I think the answer is,” he said, “to wait it out.”