Donald J. Bohana appeared destined for success when he began serving soul food and wooing customers to Denny's "N" the 'Hood in the Watts-Willowbrook area. But nearly two years after the nation's first black-owned Denny's opened, corporate officials of the restaurant chain have taken over the eatery from Bohana.
Flagstar Companies, Denny's corporate owner, said the company was forced to take over because Bohana "was having difficulty in meeting the financial obligations to operate the restaurant."
Flagstar declined to give details, but the action followed the eviction of Bohana from the restaurant, located at the Kenneth Hahn Shopping Plaza, for failing to make any payments on a $735,000 county government loan.
The eviction culminated months of negotiations between Bohana and the shopping plaza's landlord.
"It is my understanding that Mr. Bohana owed the landlord money, and that coupled with the problems with the county led to the eviction," said Victoria Pipkin, a spokeswoman for Supervisor Yvonne Brathwaite Burke.
Bohana built the restaurant after securing a $635,000 low-interest loan from Los Angles County because the project was in a redevelopment zone. The amount of the loan increased to $735,000 later that year.
Bohana has refused comment through his attorney, Jesse Young.
Things were different in 1992, when community leaders heralded Bohana for opening the first family-style restaurant in Watts since the 1965 riots.
The restaurant appeared to take off when Bohana began serving collard greens and oxtails alongside pancakes and burgers at the eatery on South Wilmington Avenue. Despite the eclectic menu that broadened the restaurant's customer base, problems arose when Bohana failed to make loan payments for reasons that remain unclear.
Denny's officials declined to reveal whether Bohana was making a profit. The restaurant was closed Thursday after Bohana had been forced out.
Denny's moved quickly to reorganize the restaurant and reopened it Monday under new corporate management. Flagstar officials pledged that the Denny's "N" The 'Hood's menu will remain unchanged.
Employees were back at work early Monday morning with the addition of three company managers, according to Karen Randall, a spokeswoman for Flagstar.
The transition took place so quickly that many customers were not aware of the change. But the failure of the nation's only African American-owned Denny's did not go unnoticed by those who had supported the project.
"It represents a failure," said Teryl Watkins, vice chairwoman of the Watts Labor Community Action Committee. The nonprofit group and Alexander Haagen Properties Inc. own and manage the shopping plaza. "It crushes us to see this happen," she said. "We want more black-owned businesses in the area."
County officials with the Community Development Commission have refused to discuss the loan agreement, except to say that Bohana did not meet his payment schedule.
The agency is awaiting the go-ahead from the Board of Supervisors to pursue legal action against Bohana if necessary, said Corde Carrillo, of the commission's economic development division, which oversees community block grant funds.
This week, Denny's officials were working to secure a new franchisee for the restaurant, which once represented an opportunity to improve the company's tarnished image that has been plagued by racial discrimination lawsuits.
Denny's was accused in 1992 of discriminating against African Americans at two Denny's restaurants in Costa Mesa and San Diego, including allegations that African American customers were required to pay for meals in advance.
In another high-profile case, six African American Secret Service agents accused a Denny's in Maryland of refusing to serve them.
Last year, Denny's reached an agreement with the National Assn. for the Advancement of Colored People to include more blacks in the company.