Proposed ownership change at Aspen Public House will need council’s OK

Aspen Public House owner will continue waiting to hear from City Council on whether they approve his request to sell his majority ownership in the restaurant.

The Aspen Public House was open for business on Thursday, Aug. 25, 2022, in downtown Aspen.
Austin Colbert/The Aspen Times

The owner of Aspen Public House will need to wait a few more weeks before learning whether City Council will approve his request to sell his majority ownership in the restaurant to a future operator.

Bill Johnson, who has owned and operated the restaurant from its downtown corner spot since May 2018, will bring his proposal back to the five-member council on Sept. 13. It will come after the council, which is the landlord for the restaurant space because it is part of the city-owned Wheeler Opera House, held off making a decision at its Tuesday meeting.

“I support us taking our time with this,” Mayor Torre said at the meeting. “I think there’s more work that needs to be done … more assurances of the concept going forward.”

Johnson’s pitch for the Aspen Public House concept won over a selection committee in February 2018 following request-for-proposals process with the city that drew 12 applicants. The space is sought-after by restaurant operators because of its prime downtown location and below-market rent. The space is coveted by city leaders because it is meant to be a community-serving, social setting.

When the City Council approved the lease, the terms of the agreement said their approval is also needed if a transfer of ownership interest in the restaurant tenant is greater than 25%.

That’s what Johnson is trying to do. He appeared at this week’s meeting with Raphael Derly, a former owner-operator of French Alpine Bistro-Crêperie du Village, which is less than two blocks from the Wheeler.

Johnson has agreed to sell 51% of his ownership of Elk Mountain Hospitality Inc., the corporate name for Aspen Public House, to Derly, who would take over as the restaurant’s full-time operator.

“I’ve always been in love with that space,” Derly told the council.

Johnson would become a 49% minority owner under the new deal. He would still be involved in operational decisions, but he wouldn’t have a daily presence, he said.

He said he is selling because he is engaged to be married and plans to start a family in Carbondale, and he’s ready to move away from the daily restaurant grind.

Derly would give the menu an overhaul and modernize the space, according to a memo to City Council.

The restaurant would need to close for six weeks to make the improvements, the memo said. It would reopen under a new name to “to more accurately reflect the updated ambience, menus, etc.,” the memo said.

“The updates would be cosmetic in nature and would not require any permits or intrusive construction,” the memo said. “The updates will include: brighter wall/ceiling colors, new ceiling trim, new furniture and an updated floor plan”

Affordability at the Aspen Public House location has been a touchy subject with City Hall and the public over the years. The previous lease for Justice Snow’s addressed menu affordability, but the restaurant did meet its end of the bargain and had an exclusive feel to it, Mayor Torre said.

“I was on City Council when it moved from Bentley’s to a new lessor who we approved at this table,” he said. “The concept we got back was not the concept that was on the menu. It wasn’t even the name of the place. I sit here being burned once.”

Council members agreed that Johnson has lived up to his bargain for the most part. Even though his lease doesn’t address food prices, diners can buy a hamburger for $13; they just need to ask since it’s an off-menu item, he said.

The restaurant has fallen short, however, of the lease’s terms that its food service be open from noon to 8 p.m. seven days a week. Johnson said the restaurant scaled back its hours because of a staffing shortage that goes back to the pandemic. The city hasn’t enforced that part of the lease, recognizing the unforeseen consequences of the pandemic, which hit in mid-March 2020.

“With the influx of restaurant groups replacing smaller, locally-owned establishments, APH is struggling to compete in a demanding labor market where we can be outbid by competitors with seemingly unlimited resources,” Johnson wrote to City Council in an Aug. 8 statement. “The capital injection resulting from selling a portion of the business would allow us to rebrand as well as recalibrate our employee wages to better meet these free market forces.”

He and Derly said a larger staff would put them on a path to resuming lunch and dinner hours moving forward.

The city has been regularly checking in with Aspen Public House, said City Manager Sara Ott, regarding its operations.

“What we’ve done, really, is foster a relationship; and, as those menus concepts change, there is a check-in process with the executive director of the Wheeler, and then, if necessary, with the manager’s office to see if there’s still the sprit of that, the intent of that,” she said.

Determining what is an affordable burger or meal isn’t clear cut, she said.

“It’s difficult to nail down where’s the tipping point, if it is a $12 burger, if it’s an $18 burger or a $30 burger because you can find them all in town right now,” she said.

Derly said they will have menu items that won’t break locals’ banks. Johnson and Derly pointed to the new menu’s appetizer menu that only has items under $20. Torre pointed to the entrees that all exceeded $40.

Council members’ concerns included the new menu prices, the new ownership structure, terms of the lease and the blowback they’ll receive without conducting another RFP for what essentially is a new operator.

“It’s interesting to me that the current owner is selling 51% of his business, which means Raphael will be in control, when it comes down to brass tacks,” said Councilman John Doyle. “The other thing I struggle with is if we allow this to go forward, I’m going to hear about if from some restaurants … so that’s an issue I’m struggling with right now.”

The lease terms call for Aspen Public House paying an annual base rent of $125,664 for the first year, with annual rent increases based on the cost of living the preceding lease year using the Consumer Price Index. The restaurant pays for 2,618 square feet of net leasable space.

It currently pays $11,876 in monthly rent, which equates to $142,514 annually. The lease also requires restaurant to pay 8% of its gross revenues that exceed that year’s breakpoint.

The current lease expires April 30, 2023, and it can be renewed another five years if the city deems it compliant with its lease agreement; it can be renewed another five years after that with continued compliance.

“To me, this starts to feel like new ownership, a new operation; it’s going to be a new restaurant,” Richards said. “At the very least, I could not see having two automatic extensions. Potentially one, but not two.”

Derly said the re-opened restaurant would “not be fancy, not very very expensive” with the aim to “bring the locals back.”

Johnson also said Derly has a proven track record as a restaurant owner-operator and would elevate the space’s dining experience.

“I would hope the assurance that I’m still retaining ownership in half of the business and am still invested in its success,” Johnson said. “It’s absolutely necessary for my own financial independence moving forward.

“I have enough faith in Rafael as a business partner that I’m willing to bet my professional career and success on this.”

Councilman Ward Hauenstein acknowledged as much.

“I appreciate that, but we’re betting on it as the community as well,” he said.