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A Karl Ratzsch Post-mortem

Apr. 4, 2017
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Karl Ratzsch owner and chef Thomas Hauck announced on April 2 that the iconic restaurant is closed. Hauck purchased the restaurant about a year ago, made extensive renovations, updated the menu, and hoped to keep the 113-year-old restaurant alive for another century, or presumably longer than one more year. At the time he purchased Karl Ratzsch, Hauck gave interviews recalling memories of his parents bringing trinkets home to him from the treasure chest after they dined there. It was his own love of the historic restaurant that compelled him to purchase it. 

So what happened? How can a successful restaurateur not be able to keep an icon open? Let's look at some of the facts surrounding this news. 

Hauck purchased a sinking ship. The previous owners (who had not been Ratzsch family members since 2003) had been entertaining offers for the restaurant before Hauck came knocking, according to reports at the time. Those owners had made very few changes, instead riding the laurels of nostalgia, which their main clientele seemed to prefer. The problem with keeping things the same for the sake of nostalgia, though, is that at some point, nostalgia turns stale. 

It's no secret that the core customer base of Karl Ratzsch before Hauck purchased it was senior citizens. They had grown up during the golden age of the restaurant, or perhaps their parents regaled them with stories of it, as Hauck's parents had. Their connection to the restaurant was strong and personal, something which Hauck said he was keenly aware of when he purchased it. As soon as he announced that he was renovating the space and updating the menu, the backlash started. Comments on social media and articles about the plans were full of trepidation at best, and outright anger at worst.

The problem with making business decisions based on the wants of a core customer base that's well into their golden years is that they won't be your customer base much longer. When your core customers are literally dying off, that's not a sustainable business plan. So what to do? Try and appeal to a larger, younger customer base. 

And so the renovations to the space and the updated menu were made, with the hopes of getting a new generation to love the restaurant as much as their grandparents. At the same time, Hauck did his best to try to cater to the older customers. He celebrated couples on their 40th wedding anniversary who got engaged in the restaurant, or former employees who worked there in the '60s. He kept the treasure chest tradition going, Tom & Jerry cocktails at Christmas, and returned antique steins and old photos to the walls. But the changes were still too much for some senior citizens to bear, as evidenced again by the comments on the Karl Ratzsch Facebook page, celebrating the closure and attacking Hauck personally.

When you're trying to bring a historic restaurant into the 21st century, there lies a real challenge: avoiding alienating your customer base while also doing enough to appeal to a new one. In an effort to keep the business alive, you're having to walk a tightrope. It's this sweet spot of collapse that Karl Ratzsch seems to have fallen into, unfortunately. If Hauck had kept things status quo, would the restaurant still be open? For how much longer? If he had modernized it to the point that it was popular but no longer recognizable, would customers increase? Would it even be worth it at that point? I imagine Hauck struggled with all of these questions.

Then there is the larger issue of Milwaukee's restaurant bubble. New restaurants are opening constantly, whether they can be sustained or not. Food costs are going up, it's getting increasingly difficult to find kitchen help (and may get worse, depending on the political situation regarding immigrants), and the middle class and millennials are less willing to spend money, forcing an even tighter profit margin on food in restaurants. This is a difficult climate for restaurants, even one with the pedigree of Karl Ratzsch. 

There's also the restaurant's less-than-stellar reputation. Because of its core customer base, millennials likely dismissed Karl Ratzsch, regardless of upgrades, opting for restaurants with a younger clientele. The food before the switchover, too, was heavy, old fashioned and topped with loads of congealed sauces. While I appreciate the appeal of what I like to call 'nostalgia foods'--I have some of my own—to a new diner, the food was just plain stodgy. Unfortunately those preconceived notions probably permeated through the short year Hauck was at the helm. Local media, myself included, gave the restaurant much positive coverage over the last year, but that can only go so far. 

Since breaking the news of the closing, Hauck has told the New York Times that he tried unsuccessfully to find a buyer, stating that restaurateurs he contacted said, “If you can't do it..." If local movers and shakers in the restaurant world have faith that Hauck gave Karl Ratzsch the best shot at success, then customers need to stop blaming him and put it squarely where it belongs: themselves. Customers' inability to accept change, refusal to discover an historic landmark regardless of reputation, and tightening wallets are what doomed Karl Ratzsch from the beginning. Thanks to a city that didn't embrace it, Hauck just delayed the inevitable. 


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