Potomac restaurant, the unabashedly opulent restaurant on the Georgetown waterfront that created a splash when it opened 15 months ago, shut down at the close of business last night.
Warner LeRoy, the impresario behind Potomac -- as well as New York's Maxwell's Plum and Tavern on the Green -- blamed the closing on legal problems with the restaurant's landlord, Western Development Corp., the large Washington development company owned by Herbert S. Miller. LeRoy said the dispute had cost him $1 million in legal fees, and he "saw no end in sight."
Steve Grigg, senior vice president of Western Development, declined to comment on LeRoy's statements. "I can't comment on a particular tenant's business difficulties, even if he contends the reason for the difficulties are the policy of our firm," Grigg said.
LeRoy said yesterday that Potomac was turning an operating profit. But there had been rumors in the local restaurant industry for several months that Potomac was having financial difficulties, in part because of its size and high operating costs. When the huge restaurant opened, industry experts suggested it would have to serve 1,000 meals a day to break even.
The owner of another restaurant in the Washington Harbour complex, who declined to be identified, said of Western Development: "They're a pain. ... " But he said he believed Potomac's problem was that "they bit off more than they could chew." He said the glitzy restaurant occupied more than 20,000 square feet, making Potomac two or three times larger than most restaurants in the high-rent complex.
Potomac's extravagant, carnival-like atmosphere, and its location in the Washington Harbour complex, immediately made it one of Washington's most talked-about restaurants when it opened in July 1986. Its appearance was distinctive: 21 crystal chandeliers ladened with red, blue and green glass, and a model electric train that circled around the restaurant. Its huge glass windows and five-tier outdoor garden overlooked the Potomac.
The decision to close the restaurant, which cost more than $8 million to open, apparently surprised employes and the restaurant industry. Kate Merlino, the restaurant's publicist, said she learned of the closing late yesterday morning, and she said many employes were not informed until late afternoon.
LeRoy said he had been considering the closing for several weeks as disputes with the landlord mounted. "I knew it would be endless battles and lawsuits," he said.
LeRoy said the restaurant had revenue of $10 million in the past 12 months, and $202,000 in the past week. According to the June issue of Restaurant Hospitality, a trade magazine, Potomac was the 10th-largest independent restaurant in the nation, and the largest restaurant in Washington, based on total sales.
LeRoy said the restaurant had an operating profit of about $200,000 for the past 12 months, but that the legal costs and the cost of doing work he believed Western Development should have handled ate up the profit.
For instance, he said, fees to help pay costs of the entire complex went up to $300,000 from $45,000 per year. He said there were disputes involving trash collection, landscaping, the alarm system, a covered walkway, pipes in the ceiling and several other issues. He also said that repeated telephone calls to Western Development were not returned, until yesterday when he informed the landlord of his decision. Grigg declined to comment.
LeRoy said he was planning to meet with Western Development officials today, and said there was a possibility the restaurant might reopen. But he stressed that it was a slim possibility. "It's not so easy once you're closed," he said.
LeRoy has a long-term lease with Western Development, but declined to discuss the legal issues involved in breaking the agreement. Grigg said he expected Western Development would have little problem leasing the property to a new tenant.