The Raincross Café, where Riverside City Hall employees and visitors have been grabbing coffee, sandwiches and hot meals since 2008, will shut down at the end of April but may reopen in coming months with a new operator.
Provider Contract Food Service helped design the café on the ground floor of City Hall and has run it since it opened almost nine years ago.
Despite a contract that specifies profit sharing with the city, Provider has reported losses every year and has never paid the city anything.
Provider President Rodney Couch said Thursday, April 6, that he chose not to take advantage of a five-year extension in his contract for reasons that include upcoming increases in the minimum wage and plans for several new dining options within blocks of City Hall.
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City Manager John Russo said that while the food and service at the café were good, it’s in the best interest of taxpayers to seek new bids to run it.
“We grew apart,” Russo said of the city and Couch’s company, which also runs cafes at Riverside County’s administration center in downtown Riverside and California Baptist University in Riverside, as well as the Market Broiler restaurants.
“Having a full-service lunch restaurant downstairs is a great thing, but it’s not such a great thing if it doesn’t make money and no rent is being paid,” Russo said.
Business challenges?
Under their first agreement, the city paid the company an annual management fee of $25,000, and the company agreed to pay the first $100,000 in profit to the city and split additional profits evenly. The management fee was increased to $35,000 a year in 2012.
Including the annual fee, two marketing contracts and separate catering business at city-owned venues such as City Hall’s Grier Pavilion, Riverside has paid Provider $608,324 over the past nine years, city records show. The company has told the city it had no profits to share, and annual statements it gave the city showed net losses, sometimes of $50,000 or more.
“Limited-hour cafes are very difficult in terms of revenue,” Couch said.
The café does good business at lunch but not at other times, he said, and the customer base is largely limited to city workers.
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Russo didn’t know whether Provider’s contract with the city is typical, but the company’s agreement with Riverside County is structured differently.
In that case, Provider pays an annual lease fee of $26,640 and 20 percent of profits in exchange for exclusive use of the kitchen and indoor and outdoor dining areas. Information was not immediately available on how much the county has been paid, and Couch declined to discuss the county contract.
Riverside Councilman Paul Davis said it seems strange that the café never turned a profit and that the city didn’t re-evaluate the contract before now.
“I don’t think we’ve ever even audited,” he said. “These type of things need to go to bid.”
The city’s marketing contracts with Provider were questioned in 2011 after a former deputy city attorney – who was later fired – alleged contract steering and favorable treatment for friends of former City Manager Brad Hudson. An outside law firm’s investigation, requested by Hudson, found no wrongdoing.
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City officials did seek competitive offers before opening the café, but after four companies came to a pre-bid meeting, only Provider submitted a bid.
‘A bummer’
After the café closes April 28, Russo said, the city has arranged for a coffee cart-style service that will offer drinks, pre-made pastries and the like. Meanwhile, the city plans to seek bids to operate the restaurant.
Some diners are disappointed, like Riverside resident Rich Gardner, who often grabs something in the café when he’s at City Hall.
“What a bummer,” he said. “It’s nice to be able to go inside and relax between meetings.”
Lea Deesing, the city’s chief innovation officer, wrote on Facebook, “As an employee, I eat there regularly and will sorely miss the current operator,” and added that she’d like whatever replaces it to offer more vegan choices.
Couch’s company also will end its contract to provide food for Riverside Meals on Wheels. Janice Bielman, the group’s executive director, said she’s talking with a couple of new vendors and that Couch offered to help with the transition.
Even though the café lost money, as a lifelong Riverside resident Couch is proud of the city and wanted to offer great food to its employees and residents, he said, adding, “It’s been a pleasure to serve them.”
Asked whether the city should be hosting a restaurant that competes with private downtown businesses, Russo noted that the city already made the investment in a full-service kitchen but added, “I certainly don’t think we ought to be subsidizing (it).”
Davis, who said he voted against Provider’s last contract renewal, said if the café isn’t making money for the city, “Then we’ve got a problem and we need to fix it.”
CAFÉ CLOSING
The Raincross Café at Riverside City Hall will shut down, after operating since 2008.
When: The café will close at the end of the day April 28.
What happened: The current operator, Provider Contract Food Service, chose not to renew the contract after the city asked to renegotiate.
What’s next: A coffee cart-type service will fill in with drinks, pastries and prepared foods while the city seeks bids for a new restaurant operator.
