Restaurant owner calls for city incentive program to end
Originally published at Muskogee Phoenix Aug. 12, 2018
Kenny Greer saunters around Mahylon's in his red apron, checking in with customers about their service.
Greer walks up to a table in the corner and laughs as he catches up with old friends.
It used to take Greer longer to make his way around the dining room to greet all of his guests. He said his restaurant used to be filled to capacity by 11:30 a.m. daily. Greer now sees several empty tables and says his customer base has shrunk.
Mahylon's, a staple in Muskogee since 1994, has experienced a loss in sales worth about $44,000 since 2017. Those factors, Greer said, include the loss of regular customers who no longer patronize his business and residents with disposable income who left Muskogee.
Other factors include the opening of some new restaurants in town. He cites as a particular concern the opening of Colton's Steakhouse — a restaurant lured to town by incentivizes offered by the city.
In 2016, the city of Muskogee gave Colton's Steakhouse an incentive of $750,000 to open its first franchise in Oklahoma. The restaurant opened June 2017 within an area targeted for urban renewal — attempts to get comments from Colton's representative were unsuccessful.
Greer said he is calling for an end to the city's incentivized development project, which he believes has the potential to kill local business.
“I work my butt off, and I don't mind fair competition — I don't mind Chick-fil-A, Panda (Express), I Don't Care (Bar & Grill), because they're doing it themselves,” Greer said. “But when I struggle because of the city propping up somebody else, that's what I have a problem with.”
Muskogee City Attorney Roy Tucker said the city supports local businesses, and he has respect for Greer and his restaurant.
“I respect (Greer) tremendously, and so when he tells me that it has affected his business, obviously I believe him,” Tucker said. “But that certainly was not the intent — (if) you spur development, everything increases.”
Tucker said it initially was thought incentives would be necessary to bring developers to the area. He said Colton's contacted the city with a desire to open Oklahoma's first Colton's Steakhouse in Muskogee, and the incentive was necessary to make that happen.
Tucker said residents told city councilors and the Urban Renewal Authority there was a “need” in Muskogee for a “genuine 100 percent steakhouse, similar to Texas Roadhouse and Outback Steakhouse.” Their desire was relayed through social media and during various meetings.
Greer said he disagreed with the statement from city councilors that the absence of a steakhouse was a quality of life issue. He said several existing restaurants in Muskogee already served steaks: Mahylon's, Runt's Bar-B-Q, Zollie's, the recently closed Miss Addies, Okie's — also closed — and Cowboy's B-B-Q, to name a few.
“We already had steaks in Muskogee. This is not a quality of life issue,” Greer said. “Good streets are quality of life, good infrastructure are quality of life. A steakhouse and a convenience store? That's not quality of life.”
Greer said several other restaurateurs agree with him about this topic and also have lost business. Mark Melhouse, general manager at El Chico, said since the redevelopment, his restaurant has lost 10 percent to 15 percent of its business.
“To me it just seems they should support those who have been (in Muskogee) forever,” Melhouse said. He said if the city is going to give incentives for development, he would prefer they be given to local people who already live in Muskogee.
Tucker said the overall goal of bringing development to an area is to spur further development, bring more options to Muskogee, and allow citizens to shop within their community.
“I think if we did nothing you would have a community where you have very little development,” Tucker said.
Tucker said since Colton's was built, several new restaurants and businesses for which no incentives were offered have popped up near the urban renewal project area. Two of those include Chick-fil-A and Panda Express.
“I think it has had a positive impact on the city,” Tucker said. “Because even though (new businesses) are being built without any city assistance, I don't know that you could say those same entities would still be built had the urban renewal area been vacant.”
Greer said while Muskogee has experienced growth in its restaurant sector, no new higher-paying jobs have been created. The result, he said, is a stagnation in the number of people who eat out and the redistribution of sales.
“You've helped build another restaurant, so our customers leave us and go to them,” Greer said.
Greer said he has shared his concerns with several city officials. In June, he gave a presentation to city councilors about the incentive program's impact on his business. Ward III Councilor Derrick Reed agreed with him.
Reed said the decision to incentivize Colton's seemed like the right decision at the time. Now he has a different perspective.
“We were looking at the future of our city. I didn't realize back then the effect it would have on our local owners,” Reed said. “I walked away (from the presentation) with a sense of remorse.”
Reed said there were several effects he had not considered when voting on the incentive for Colton's. Among those factors was the possibility of putting existing businesses out of business and the possibility that higher paid executives with the new companies won't live in Muskogee and spend their tax dollars toward Muskogee's economy.
City Manager Mike Miller said restaurant sales increased 7.8 percent from May to June this year even while overall sales tax collections have remained flat.
Sales tax totals published Aug. 12 for selected retail sectors were based upon incomplete data. The article should have stated sales tax revenue generated during fiscal year 2018, which ended June 30, by full-service restaurants in Muskogee decreased 2.51 percent when compared with totals reported for fiscal year 2016.
“I understand what Mr. Greer is saying: that more restaurants means the pie is being divided up,” Miller said. “What we're seeing is that the pie is also larger.”
Miller said the goal of incentivizing a business is to spur further development in the area by showing other companies that “Muskogee is a great place for business.”
“People don't eat at restaurants online, and when we talk about sales tax, that's one thing that we hope we can keep in our communities,” Miller said. “We understand the value of local restaurants succeeding. You can buy your clothes online, but it's hard to buy a hot, steaming steak in front of you online.”
Greer said if the city would develop more industry with opportunities for higher-paying jobs in Muskogee, improve streets and other infrastructure, there would be no need to incentivize restaurant development. He believes they would come on their own.
“Incentives are a detrimental solution to a temporary problem,” Greer said. “If our city would prop up jobs and education, this stuff they're paying to bring to town, they wouldn't have to.”
Greer said if the city does not end its incentive program he will take further action.
“I do not believe logically that our council are being good stewards of our money,” Greer said. “If you stop (incentivizing) — you tried something and it didn't work — I have no problem with that. If we don't, you're not intelligently spending the tax dollars wisely.”