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Restaurants Faring Well

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Progresso’s Tamale Parlor regulars, from left, Althea Dunning, Millard Strohn, Gloria Grimsley and Cheryl Annotti talk after finishing their lunch Tuesday. They have been dining at Progresso’s about once every couple of weeks for years.

Local and family restaurants hold their own in changing market

By Melissa Flores
Pinnacle Staff Writer
The Pinnacle News, Volume 20, Number 5, November 6, 2005

Everybody has one. It’s that little Mexican place with the best margaritas or tamales in town or the place that serves Mediterranean cuisine on mix-and-match place settings. They are the spots residents take out-of-town visitors for a bit of local fare. They are restaurants that have been around so long they’ve become institutions in their communities. And Hollister, Gilroy and Morgan Hill have plenty of locally owned places that are surviving despite burgeoning retail centers bursting with chain restaurant options.

One such staple in Hollister is Progresso’s Tamale Parlor, which has been in town for 67 years. Margaret Zuñiga and her brother Gilbert are the fourth generation in the family to take control of the local restaurant. Zuñiga handles the everyday workings of the restaurant, including cooking and developing new menu items.

The restaurateurs are experimenting with new types of tamales and new flavors in addition to their traditional tamales. They added soups to their menu recently.

“We don’t make huge changes and we make them gradually,” Zuñiga said. “We don’t go overboard. We stick to what our market wants.”

Dale Achabal, the director of the Retail Management Institute at Santa Clara University, would agree with the Zuñigas’ formula for keeping customers coming back.

“One thing local restaurants, independents, have is hopefully a better knowledge of their needs,” Achabal said. “They build a relationship with their customers.”

As long-time restaurant owners in Hollister, Zuñiga’s family has worked with their clients for generations. She remembers washing dishes and waiting on tables when she was a kid. Now she brings in her children for visits and her cousins help with the business.

“One cousin makes all the tamales and sauces,” she said. “Another is a dishwasher.”

Even the employees who are not related to the family are like family, Zuñiga said.

“We have loyal employees who have worked with us for over 20 years.”

Still, she acknowledges that the restaurant has its ups and downs, though in the long run they’ve managed to turn a profit.

“When a new restaurant comes to town, people try it, but it hasn’t hurt here,” Zuñiga said. “We see a little bit of a dropoff, especially if it’s a direct competitor.”

But Zuñiga said, her restaurant seats 75 people and there are more than 30,000 residents in Hollister so there is plenty of room for competition.

The local eatery is also supported by retail sales of their tamales, which are popular around the holidays and during the graduation season.

Unlike chain stores that use formulas to increase efficiency, Progresso’s still makes their tamales from scratch.

“We cook our own corn and grind it,” Zuñiga said. “The recipes have stayed consistent, but we add to them.”

Achabal agreed that locally owned restaurants need to stick to their advantages — a loyal client base and high-quality cuisine.

“You’re not going to out Wal-Mart Wal-Mart,” he said. “They are never going to really compete on a pure price basis.”

He added that chain restaurants have increased efficiency and buying power over independent eateries.

“Their operating models are more efficient and they understand the market,” Achabal said. “They are able to leverage their brand when they come into a new market.”

But he doesn’t see the explosion of chain restaurants as the end for family or independently owned restaurants.

“They can create unique settings, and menus,” he said. “It raises the bar for everyone.”

Tasso Perakis found an out of the ordinary place for his local restaurant in an old Victorian house on First Street in Gilroy. His family relocated from San Jose 12 years ago and has been serving up a mix of American, Italian and Greek food ever since.

Perakis gave up a restaurant in San Jose when he moved to Gilroy, but he was able to hold on to many of his clients.

“I have customers from the Willow Glen [area] of San Jose,” Perakis said. “I am known for my lamb shank.”

Though he keeps on eye on new restaurants, he said his business is stable.

“Everybody comes in and takes a piece of the pie,” he said. “You have to stay on top of the business.”

From the outside, Tasso’s Old House looks like a Victorian home, but the inside has been remodeled to include a custom kitchen and a cozy dining room for visitors. Perakis takes a look at his menu every six months to a year, updating it. But one item is likely to stay on the menu as long as customers are willing to keep coming in for it — the lamb shank.

“It’s the quality of the food,” he said. “Good service and good food.”

Sinaloa Café in Morgan Hill survived its own relocation in 2004, after 43 years in the same building.

Owner Steve Pena started out waiting tables at the family-owned Mexican restaurant years ago and he remembers some of their customers from the early days.

“We had kids coming since they were in carriers and now they are of drinking age,” he said. “The kids like coming here. They like the food and the parents like the cocktails.”

The restaurant has had its setback, including a fire that destroyed their building on the Northern outskirts of Morgan Hill in June 2003. The Pena family had hoped to rebuild in the same location, but opted for a building in Morgan Hill’s downtown in the end.

Pena is nostalgic as he recalls the old building, with its crooked floors and the windows that vibrated when trains went by.

“It was small. It was hot in the summer, cold in the winter, but it had character,” he said. “But you can only catch lighting in a jar once.”

Though the restaurant location has changed, Pena said they tried to bring some of the old character to their new spot downtown.

“We tried to make it similar,” he said. “The bar was built by the same person.”

It is the consistency of their service and food that keeps long-time customers coming back, he said.

“We have people with us who came in the '60s and they say it’s still the same,” Pena said. “We don’t cut corners on our products.”

Still, he said the restaurant has had its ups and downs over the years.

“Customers moved out [of the area] due to electronics bottoming out and the price of housing,” Pena said. “But we are building back up. People who know us know we are back and they are coming.”

Achabal insisted that independent restaurants will be able to compete in the changing market.

“A lot of them will be challenged,” he said. “But there are well established institutions that will do quite well. It depends on how well they understand the market.”

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