Faced with a changed economy and expansion that appeared to be one restaurant too many, Matty’s will close this month.

The first Matty’s saloon and restaurant in Lake Shore will close Feb. 26, seven years to the day after it opened in 2004. Saturday is the last day for the Brainerd restaurant on Highway 210 near the Brainerd Lakes Regional Airport. The Matty’s restaurant in Walker, which may have proved to be the undoing of them all, closed about a month ago. 

For owner Matty Walsh, it was time to let go. 

But the decision was difficult. 

“I had good intentions of trying to keep all of them,” Walsh said of his restaurants. He owns the business, as well as the buildings. “Sometimes you’ve got to know when to quit.”

Walsh said he reached that point as he was stretched to pay suppliers and the financial strain took its toll.  

“You can’t think about anything else,” Walsh said. “Not being able to pay people, it’s just awful.” 

At some point, the question becomes how deep in debt to go while waiting for the economy to turn. Walsh said it was a question of being in a worse position later, or letting go now. 

“You get to a point you can’t buy what you need to keep going,” Walsh said. “Pretty soon, it’s too much. It catches up to you.”

Walsh said he talked to a lot of people who had done it the other way and waited too long. 

“The human spirit wants you to not quit, not give up,” Walsh said. “It’s a tough decision. It’s tough to get yourself to that point where you know you’ve lost it.”

At its peak, the Matty’s restaurants employed 47. The restaurant was known for its sunfish sandwich, variety of burgers and sweet potato fries. Walsh said his goal from the start was to provide high-quality familiar food with a gourmet twist and service. The portions were generous. The atmosphere was casual. 

Things were going so well, Walsh expanded to his native Brainerd in 2007. He wanted to open a restaurant in the city for a long time. While the site by the airport had some wondering if it was just too far from the city and not enough on the beaten track, Walsh said the location wasn’t a problem. It was the economy, he said.

The tipping point came with Matty’s expansion to Walker. Walsh loved the city. He opened a restaurant in the downtown in 2009.

“I took a gamble and I rolled the dice on Walker,” Walsh said. “I thought it was a great opportunity.”

Looking back, Walsh said he would have waited on Walker had he known how bad the economy was going to get. Without Walker, Walsh thinks the restaurants would have survived in Lake Shore and Brainerd.

Walsh said the Brainerd restaurant continued to draw about 90 people a day, divided between lunch and supper, but there was a 30 percent to 40 percent drop per check as customers cut back on how much they spent. 

That the recession had hit Brainerd was evident. The winter of 2010 was worse than a tough 2009, Walsh said. 

“You might see a market rebound, but we are really two years away,” he said. “It’s going to be our rebound in two years. These are some of the toughest times I heard from people, worse than last year. ... Most people I’ve talked to have never been here before. You just do the best you can.”

In an area that relies heavily on real estate,  construction and tourism, Walsh said the recession’s toll is particularly visible here.

“I can sit here and blame everything,” Walsh said. “It is what it is. I took some risks. I made some mistakes and couple that with the economy — when you take the whole thing really it was the perfect storm for me.”

Walsh said when the economy is doing well, a business is able to recover from risk, such as the Walker expansion. This economy wasn’t forgiving. But without taking a risk, Walsh said an entrepreneur is also avoiding reward. 

“I was fine until this year,” he said. Walker didn’t prove to be the draw Walsh hoped it would be. Brainerd’s customers were cutting back on spending. Even in Lake Shore, gone were the lunch crowd construction crews previously there building million dollar homes. But while Lake Shore continued to be healthy, Walsh said the other two restaurants took it down over the course of a year. Now he is working through bankruptcy and is underwater on real estate investments, owing more than their current value. 

“It only took a year,” Walsh said. “Had I had more time I would have been fine.”

Walsh said there were changes he could have made with smaller portions, or cutting back on quality of ingredients, or cutting back on hours. But those have risks as well, he said, in terms diminishing customer expectations. Walsh did provide discounts in Brainerd with a special as a bargain, but customers were coming for the regular menu draws. 

“I already had low margins on my food,” Walsh said, adding it was hard to discount further and still make money and stay within his own concept for the restaurant. Prices for a meal with a burger and fries could be about $10.

While it’s been a humbling experience, Walsh said he learned from the adversity. 

“You look on paper and three years ago you’re a millionaire and three years later there is no equity left in any of them and you’re upside down,” Walsh said. “That’s the reality of this economy.”

He’s thought about what he would do differently.

“The way we all do business now compared to what we did four years ago is totally different,” Walsh said. “People are more money conscious.”

Walsh praised his staff and thanked his customers. Now, he said, the measure is making it through, staying positive and moving forward. 

While this dream is over, Walsh said he is hopeful he’ll be able to continue his passion of providing a dining experience for people. That may mean finding an investor, moving to a larger market or working in the meantime until another opportunity presents itself. 

“I don’t know what my options are at this point,” Walsh said. “I don’t want to think about not doing this.”’

RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.