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What Drove Dixie Cafe Down?Lock Icon

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(Editor’s Note: This is the latest in a series of business history feature stories. Suggestions for future Fifth Monday articles are welcome. Please contact Gwen Moritz at GMoritz@ABPG.com.)

In its more than 30 years, Dixie Cafe and its home-style, Southern food had worked its way into the rhythms and routines of many Arkansans’ lives. It became the kind of place:

  • Where the son of an Arkansas governor waited tables to earn money for college (John Mark Huckabee, mid-1990s).
  • Where a state senator considering a race for governor of Arkansas would dine and literally slap the backs of friendly diners he greeted there (Mike Beebe, 1997).
  • That earned a mention in an obituary about a decorated Air Force flier who loved eating there (Scott Foltz Sr. of Cabot, who “always ordered the Cajun grilled chicken and fried corn,” Arkansas Democrat-Gazette, April 17, 1999).
  • Where a couple would celebrate their 60th wedding anniversary with their family (Mr. and Mrs. William K. Swaim of Little Rock, July 20, 2009).
  • Where Leroy Donald, a business reporter for the Arkansas Gazette, would meet Randy Tardy, a business reporter for the Gazette’s fierce rival, the Arkansas Democrat, for weekly lunches, joined by other media types and businessmen (late 1980s until the week before Donald died in 2009. The lunches outlasted the storied newspaper war.).

And on Dec. 4, after Allan Roberts, the CEO of Dixie Restaurants Inc., announced that all 17 locations of the chain based in Little Rock would be closing in two days, the talk centered on memories of Dixie’s squash casserole, soft wheat rolls, chicken-fried steak and, of course, the fried corn-on-the-cob beloved of Foltz.

The food, at least for a long time, was good, it was comforting and it was familiar. That very familiarity may have played a part in Dixie Cafe’s death.

“The new consumer is looking for something different,” said Neil Culbertson, the founder of Growth Partners of Denver, a consulting firm focused on the restaurant industry. “The millennials are looking for healthier food, more technology, all of those kinds of things.”

In his statement announcing the closure, Roberts cited declining sales and increasing costs. Roberts, through his Dixie Restaurants co-owner Gordon Gondek, declined to speak to Arkansas Business about the restaurant chain and its history, as did Gondek.

But a number of restaurant industry experts, although they were unfamiliar with Dixie Cafe, pointed to the difficulties faced by the “casual dining” sector, those restaurants whose customers are waited on at table and that serve a moderately priced menu in a casual atmosphere.

“That segment has been under attack for quite some time,” Culbertson said. “Casual dining has been flat to negative in growth for eight years in a row or 10 years in a row. You’re going to see some fallout from that.”

And that, he said, is largely because of the rise of “fast-casual” restaurants, which offer counter instead of table service and food that is of higher quality and at a higher price point than fast food. Arkansas’ own Slim Chickens is a good example of a fast-casual chain, a midpoint between table service and fast food, along with bigger chains like Potbelly, Chipotle and Panera Bread.

The fast-casual sector has seen huge growth in the last 20 years compared with other restaurant sectors. In 2017, sales for fast-casual chains among the top 500 chain restaurants in the U.S. grew 8.9 percent, leading all other restaurant sectors, according to restaurant consulting firm Technomic.

And though last year saw fast-casual growth slowing somewhat, it’s still predicted to be robust at 7.5 percent in 2018.

But among casual-dining chains in the top 500 — stores like Applebee’s, Olive Garden and Cracker Barrel — sales rose by only 0.1 percent in 2017. Total sales among the 500 largest chains rose 3.2 percent last year.

“If you dig through the numbers, it certainly was full-service dragging this down,” Joe Pawlak, managing principal with Technomic, told Restaurant Business Magazine. “And if you look even closer, it was casual dining that was dragging it down.”

Dixie Cafe traced its origins to the Black-eyed Pea chain of restaurants, founded in Dallas in 1975 and known for home-style cooking. Little Rock investment banker Dan Lasater brought the restaurants to Arkansas. Lasater’s holdings also included Andy’s and Ponderosa Steakhouse restaurants.

Roberts, a Blytheville native raised in Little Rock, and Gondek, originally from Ohio, both spent time working at Andy’s, according to a 1994 article in the Arkansas Democrat-Gazette, eventually landing at Lasater’s Dixie Management.

Black-eyed Pea founder Gene Street sold the chain in 1986, and Roberts and Gondek used the occasion to buy three of the restaurants, one in Memphis and two in Little Rock. That included the original Little Rock Black-eyed Pea, which opened in 1980 at 1220 Rebsamen Park Road.

The partners formed Dixie Restaurants and changed the name of their eateries to Dixie Cafe. They kept the Southern cooking but converted the restaurants’ bars to soda fountains.

The restaurants flourished as Dixie Cafes. By 1996, Dixie Restaurants had opened its 12th location in Arkansas, in Searcy, and its 19th in the chain, which could also be found in Tennessee and in Oklahoma, where they went by the name Delta Cafe.

By 1999, Dixie Cafe was up to 23 locations, and in 2003, the restaurants were employing about 1,100 workers. Arkansas Business estimated the company’s annual revenue in 2002 at $30 million to $35 million.

Meanwhile, in 1988, Roberts and Gondek had opened Diego’s Hogsbreath Cantina, a Mexican restaurant and sports bar, in a building on Rebsamen Park Road that had once housed one of the first Shakey’s Pizza Parlors, a restaurant many in Little Rock will remember. But the pair demolished the building in 1996 to make way for what they called a “state-of-the-art” Dixie Cafe, at 1301 Rebsamen Park.

In 2003, Frank Battisto, then the president and chief operating officer of Dixie Restaurants, told Arkansas Business that the company wanted to keep growing, with plans to expand into Missouri, Texas and Mississippi. “Battisto said he hopes to improve upon the chain’s position as a home-style food storehouse, which he doesn’t see as a major challenge because competition within this sector is limited.”

By that time, however, Cracker Barrel, which likes to position itself along highly traveled highways and also touts its home-style cooking, had entered Arkansas and fast-casual restaurants were starting to hit their stride. In a few years the Great Recession would snap shut diners’ pocketbooks.

Potentially adding to Dixie Restaurants’ financial challenges was the failure of its Fire Fall Grill & Bar, which opened in 2005 in North Little Rock. It was a new dining concept for Dixie, “upscale casual.” It closed in December 2008, described as a victim of the recession.

In 2008, the Journal of Business Case Studies published an article on the “Down Home Cafe,” but notes in the article make it clear the study concerned Dixie Cafe. The study addressed the owners’ efforts to boost the chain’s flat revenue.

“While not really broken, there were signs that Down Home Cafe had underlying problems, and he [the owner] knew that, in this intensely competitive industry, complacency was dangerous.”

The study came to a stark conclusion: “The reality for Down Home Cafe is that, given their average ticket price, they must rely more on high volume than on large margins.”

That, apparently, didn’t happen.

Maeve Webster is president of Menu Matters in Arlington, Vermont, a food service consultancy. Midscale and family-style restaurants, she said, “are probably one of the most challenged segments in the industry right now.

“Their customer base tends to be aging out is a kind way of saying what’s going on, a declining population for that type of food,” Webster said. Such restaurants “typically have not adopted bolder or more unique or more interesting flavors until so far into the game that people have already moved on. Those types of restaurants are less and less relevant to a lot of the younger consumers.”

Todd Gold, dean of the Culinary Arts & Hospitality Management Institute at the University of Arkansas-Pulaski Technical College, said he visited Dixie Cafe eight or 10 times a year — “I always got the pot roast” — and took his daughter there when she first got braces on her teeth, so she could enjoy the restaurant’s tasty, soft rolls. “It’s got a lot of history with me.”

Good home-style, Southern cooking is in no danger of fading away, Gold said. But competition is fierce, and “if you’re not on your A game every day that you put the key in the front door, the chains will gobble you up.”

“It’s a shame,” Webster said. “Those restaurants like the Dixie Cafe — they’re part of the culinary heritage of that area, given how long they’ve been around. And it’s a certain history that ends up getting lost.”

But not necessarily.

On YouTube in December 2016, Battisto posted videos showing how to make several of the restaurant’s signature dishes.

So Dixie Cafe will live on in its squash casserole and chicken-fried steak, in its wheat rolls and its fried corn on the cob. Alone among all other human creations, including restaurants, the internet is, apparently, forever.

Dixie Cafe Food Sales

  2010 2011 2012 2013 2014 2015*
Dixie Cafe #101
1301 Rebsamen Park Road
Little Rock
$931,438 $903,241 $899,186 $854,305 $819,087 $315,817
Dixie Cafe #104
10700 N. Rodney Parham Road
Little Rock
$1,436,910 $1,476,527 $1,437,559 $1,364,126 $1,340,274 $505,729
Dixie Cafe #105
10011 Interstate 30
Little Rock
$876,654 $927,587 $936,712 $905,943 $842,014 $305,605
Dixie Cafe #116
2724 Lakewood Village
North Little Rock
$1,415,800 $1,507,667 $1,518,433 $1,454,267 $1,407,200 NA
Dixie Cafe #117
3623 Central Ave.
Hot Springs
$1,056,833 $1,149,167 $1,248,967 $1,184,867 $1,141,433 NA

*Through May, the last full month for which A&P tax collections were public under the state Freedom of Information Act
Sources: Advertising & Promotion Commissions for Little Rock, North Little Rock and Hot Springs

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