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Phil’s Diner Closes After Less Than 8 Months

The owners believe nearby construction inhibited business and the developer gave them an unfavorable deal.

closed its doors last Sunday, less than eight months from its opening in April and within two weeks of the in the adjacent building. How did Malissa and Casey Hallenbeck -- a couple full of vision and tenacity -- reach their breaking point so quickly?

As it turns out, it didn’t happen so quickly. Many years of effort preceded their grand opening. Casey had : the restoration of a beloved historic diner. When he met his wife Malissa four years ago, they pooled their expertise. She has an MBA in Sustainable Management and he has 30 years of experience working as a motion picture set decorator. They set up a business plan for bringing a mix of healthy, locally grown food and traditional diner fare to their community.

Since opening day, they say they’ve accrued a wealth of hindsight, along with substantial debt, and are on the brink of personal bankruptcy and foreclosure on their home.

This extraordinarily resilient duo was somehow able to laugh at the absurd number of catastrophes they have faced. Perhaps the “first fire” should have been a warning (they had one recently as well). It happened days before their grand opening.  

The chef they’d paid and trained for six weeks set the fire but denied responsibility, Casey said. In reviewing surveillance tape, the couple watched as the chef left three frying pans unattended. When the pans caught fire, another employee grabbed each pan and threw the contents outside — leaving grease splashed everywhere. The diner could have easily burned down before it opened, which “probably would have been a blessing,” Malissa joked.

The couple cited several factors that contributed to their inability to keep the diner open.

Casey bought Phil’s, which is believed to be the oldest dining car in California, in 1998. Construction on the meant the diner had to relocate. So the city’s Community Redevelopment Agency (CRA) offered Casey a deal, promising to relocate the diner to a spot in the planned NoHo Commons.

It took 10 years for the CRA to find him the land.

“At the height of the recession, the CRA asked Casey to develop a business plan for the diner so they could allocate funding, cautioning us that any delay on our part would threaten the funds to move forward,” Malissa said. 

As for the reason it took 10 years, CRA Spokesman David Bloom said a project of the scope of the NoHo Commons takes a great deal of time. The entire project cost $287 million and includes housing, entertainment and retail. Such a project means the agency is charged with “creating housing so you would have density of people to go to the diner,” Bloom said.

The CRA promised $475,000 of the $1,025,000 needed for the project to move forward, Malissa said. After filing 20 loan applications they found financing with the University of Southern California’s Credit Union. However, they reached a major deadlock when the CRA wouldn’t release funding until the bank put up the money. Meanwhile the bank considered the CRA funds as collateral.

“Neither party wanted to fund first,” Malissa said.

The couple had signed a land lease with JH Snyder Company, which has developed the NoHo Commons. CRA had given ownership of the land to Snyder in order for them to develop the project. Snyder offered to alleviate the stalemate by fronting the first step of funding with stipulations, Malissa said. 

Snyder required something in return for this favor. The couple had to give the developer full ownership of the diner. In addition, the Hallenbecks said they had to pay the construction costs. Those costs included $70,000 to repair the diner after the crane that moved it crushed the sides of the building. The crane operator was hired by Snyder without a contract, so the couple could not collect damages.

In addition, the couple said Snyder made a $60,000 mistake on the plumbing estimate. Malissa said Snyder told the couple that they would have to pay the bill because the developer “no longer had the funds to front the cost of the construction.”

Casey describes the deal with the developer as being “one-sided, in Snyder’s favor.”

Another example of the developer’s favorable position was what the couple considered an ultimatum from Snyder to move forward quickly, and before the start of the construction of the Laemmle Theaters. Casey described Snyder’s message as “you better build before the theater because it will cost more and you will lose your funds.”

The upshot of opening before the theater? Months of construction on the Laemmle were a “complete deterrent” to customers, Casey said. The already limited parking in the area was reduced even further by the closure of the sidewalk on Lankershim Boulevard and a decrease in street parking. In addition, potential customers saw the construction all around the diner, including workers carrying building materials. Those would-be diners assumed Phil’s was still being built and that it wasn’t open, Casey said.

A spokesperson from Snyder was not available for comment.

The couple is quick to cite the things they wish they’d known going in. They realize they missed a shot at leveraging their own power with Snyder early in the game, and might have been able to delay construction on the diner so they could open along with the Laemmle. They also could have moved the diner to a different location, unhampered by the offer of financing from CRA. Sadly, they say they learned far too much about receiving bad advice from lawyers. But that’s all hindsight.

Perhaps now the couple will get some reprieve from the brutal schedule under which they’ve operated for the past 10 months. Malissa worked nearly 13 hour days. Casey continued working in the movie industry, but every free moment was spent at the diner. They have a 10-month-old granddaughter, Lila, and Friday night was the first time Malissa had been able to babysit her newest family member.

Their wish for the diner? That someone will come in and want to take it over. They say its turnkey ready, the Laemmle Theater opens Tuesday, and they’ve already invested years of hard labor into the project, on which a new business owner can profit.

They hope for a new owner for two reasons. First, they stand to at least recoup a small amount of their investment by sub-leasing the property to a new owner. Second, their vision was always to bring a wonderful, historic diner back into operation and serving their local community.

The CRA shares their hope.

“It’s unfortunate they weren’t able to make a go of it after opening,” Bloom said. “We certainly are deeply aware of the cultural and historical significance of the diner in North Hollywood. We are hopeful that JH Snyder will be able to find another owner operator quickly so that Phil’s Diner can resume business in North Hollywood.”

The Hallenbecks consider themselves members of the legion of people who accepted financial deals and did not have a clear sense of the bargain made.

“We take total responsibility, having learned a major lesson that is affecting our country greatly today,” Malissa said.

Laura December 19, 2011 at 03:56 AM
Seems odd that they would close when they're on the brink of the theatre opening and bringing in a ton of business. It's a shame. I can't speak on the merits of the place as I've not been there. (I did go to the old Phil's when it was on Chandler though). Will this have any effect on their general store on Cahuenga?
Shawn December 19, 2011 at 04:10 AM
Had the food been as good and as reasonable as the Korean couple who had owned it before it might have had a chance... the service was worse... too bad.
Hannah December 19, 2011 at 06:14 AM
I had high hopes for Phil's, we went there just once in September and the service was our major turn-off. They only had one high chair, which was offered to the father and child who came in after us.The prices were high, but the portions were large. The quality could definitely have been better.There obviously wasn't a floor manager present because the servers were bringing out food and going to each table to find out whose it was. Coffee was brought out 10 min after our food and only to one of us. No offer of refill or checking in on us so either. We chucked it up to needing some more time to iron things out and train their staff. I did want to give it another try when the theater opened. I guess we'll head over the The Federal.
EnJayBe December 19, 2011 at 06:33 AM
Their BLTs were delicious, but the service left something to be desired. I had planned to go back. Too bad.
Scott Zwartz December 19, 2011 at 07:13 AM
The CRA is a deep dark hole of corruption and incompetence. Unless you are a crook looking to get tons of entitlements and then flip the property and stick the city with the bill, the CRA will only drive you towards bankruptcy. But, you know that already. My advice to my clients - Stay as far away from the CRA as possible. Right now the CRA is carrying over $3 BILLION in debt and the CRA is part of the City -- that is an extra $3 BILLION that we've given to the mega-developers while the CRA bankrupts people like Casey and Malissa.
Steve Silvas December 19, 2011 at 07:46 AM
Hi Laura - I live above Cahuenga General Store and I can tell you without a doubt that the unfortunate closure of Phil's will NOT have any effect on the General Store. I've just confirmed this with Anita. In fact, we're working on a lot of exciting new things for the General Store, so come by and see us!
Michael Higby December 19, 2011 at 07:50 AM
Yep, the CRA is really bad news. Folks need to wake up to the damage they and their drive-by developers have done to NoHo. So HOWS had real problems. Easily another grocery store could have been brought in, something the community needed. HOWS did not fail because of NoHo, HOWS failed because HOWS - their entire chain went out of business. Yet the CRA connected dealers and real estate brokers were able to just find a quick and easy business in 24 Hour Fitness - just what NoHo needed - another gym. And I hear 24 Hour Fitness is often empty.
John J. Nazarian December 19, 2011 at 09:58 AM
too bad......'Malt $6.00', who shook it?
Jonah Fitzsimmons December 19, 2011 at 06:54 PM
Knowing the backstory is good and gives perspective for sure, before we all lower the harsh boom of judgement, but I can definitely agree with what some folks here are saying. I found the food generally good after the initial kinks were worked out, but you can't be 'generally good' in the restaurant business: you've got to have something really great to 1) get people in the door, 2) keep them coming back, and 3) spreading the good word. I stopped in for a bite a day or two after they opened, and it was clear the service staff hadn't been trained adequately to prepare for a crowd. At the time, the food was sub-par. It did improve, and I enjoyed their Teriyaki hoagie with their awesome onion rings. But their food was definitely overpriced. The hoagie was $12 with only chips and a pickle. Really? For this area? You're catering to young professionals like me, sure and occasionally, we'll pay that for a sandwich, but it's gotta be darn good: there are an awful lot of of artists, actors, students, and cheap-living people in the area. If I want to spend that much, I'll visit Langer's Deli downtown for their absolutely stupendous Pastrami sandwich for $15, which I will recommend and drive out of my way to go to. Also, come to think of it, I never once saw them advertise. No door hangers, no ads...how they heck did they let people know? Word of mouth goes only so far, and not when the product isn't amazing. I think I saw their website once, but was not impressed. Sad.
Janet December 19, 2011 at 07:17 PM
One more voice to echo what most everyone is saying above. The food was ok at best, mediocre most of the time, and always overpriced. Most of the staff seemed clueless and the food I was served was always inconsistent depending on who prepared it on any given day. The prices were too high from the start, and while the menu was decent, it was pretty limited. Then, they made it even worse by completely changing up the menu in the last couple months, changing it from the diner food you would expect, like fish & chips, biscuits and gravy, etc... to upscale fine dining option like super expensive duck dishes. Who goes to a dining car in North Hollywood for a plate of $18 duck? And even though the listed vegetarian options on the menu, I sat there and watched as they grilled my veggie burger in a puddle of blood on the grill from the beef burger that had just been cooked there. I honestly wanted to love this place. I live very close by and work even closer. But there prices and inexperienced and unknowledgeable staff pretty much made this place a non-option for me. Only reason I kept going there was because my boyfriend liked the biscuits & gravy... which when the menu changed, was removed from the menu. I'm sorry these nice people went through such hard time, but it's a crutch to blame the construction. We would have happily patronized often despite the construction, but it was the prices, inconsistent food and poor staff choices that kept us away.
Tabloid Jane December 19, 2011 at 11:25 PM
I feel bad for these guys, but the fact also is that when they opened, their food was HORRIBLE. That chef that started a fire could be to blame, maybe they brought someone else in that was unprepared. But aside from the horrible food, the prices were way to high for a diner. When the food finally got better, they changed their menu to fancier food and the prices were just as high, if not higher. They never seemed to grasp that you could walk down the block to the Federal and get a gourmet meal for cheaper or one of the fast food places. In the end, you can't blame the construction. It came down to two things: The meals & the prices. They of all people should have known people can't spend $15 bucks for a lunch these days.
Malissa Hallenbeck @ Phil's Diner fresh-n-fast December 20, 2011 at 03:26 AM
WOW the truth hurts! The service has been an issue from the very beginning and we went through a couple managers too. The menu pendulum swung from one extreme to the other and finally to the middle last month. All par for the course on a start up restaurant and frankly that's the fun part. Langers didn't start out great and consistent - they worked for years. Corporate operations are plug and play - very different. All of you have started a new job where you knew nothing. Were you unsuccessful because you didn't know anything or did you learn as you went along? We realize it's a little different in a restaurant but not by much. In response to, "Seems odd that they would close ... on the brink of the theatre opening." We have no guarantee that there will be "tons" of customers from the theater since they already have a food vendor coming in. Someone new will have the advantage of starting debt free, allowing time for the momentum to build and make a bundle in time. We are simply too far leveraged at this stage. All of the untruths about the $18 Duck and the $6 Malt are exaggerations - including what you say about the construction. You have no idea what we experienced. However we're not VICTIMS - the article was written to state that we take full responsibility. JH Snyder and the CRA are not the bad guys. Their actions are not always right but they are necessary components of the redevelopment. Not everything in the article is correct but at least you know the story.
Laura December 20, 2011 at 07:25 AM
Perhaps I should have substituted "ironic" or "unfortunate" for "odd" - and yes, I do, optimistically, anticipate tons of new foot traffic in the neighborhood with the opening of the theatres. I look forward to it benefiting not just Phil's (or whatever takes its place), but all of the businesses, including those not built yet.
Alice Peters December 20, 2011 at 07:29 AM
I was excited to see Phil's reopen, insisted my teenagers see the place I enjoyed so in the first decades in Ca. While the Hallenbeck's experiences with Snyder seem like those of everyone I know who has done business with the firm - or tried to - the raft of problems we encountered at my "reunion visit" had nothing to do with those woes. The owners tried to make Phil's something it never was. I tried another visit 2 months later, but ended up paying for my drink and leaving without ordering when things headed down the same path. The prices were outrageous - not just "high." They were insulting. The service was obnoxious - the waiter auditioning his different voices and accents was NOT adorable. Phil's was loved because it offered good, plain food at a fair price in unpretentious surroundings by people who knew what they were doing. This Phil's was the opposite on every count. Oh, and the note here from Mellisa is just a cherry on top. A lot of excuses, but no one at fault, no victims, and folks just gotta understand that Langer's opened with some bumps, too? (The implication being they had capital enough to outlast a year or more of bad service, an inappropriate menu, clueless owners, etc?) No, it's more likely the bumps were simply outweighed by positives. Phil's had no positives, save for the value of the name - now worthless. Hallenbecks, let us know of your next pursuit doing business with the general public. We could all use the warning to steer clear.
Lightnapper December 21, 2011 at 01:15 AM
Or Pastrami locally at Art's for $10 with side salad and pickle. Soda a $1. And the brisket is even better.
Viktor Dobbs December 21, 2011 at 01:31 AM
To - Alice Peters and all other negative responses ! It is better to have tried and not succeeded than NOT tried at all .... Why Alice, are you so bitter and resentful towards two people who pursued a dream of re-inventing a iconic old North Hollywood treasure for the community to enjoy ? So, they made mistakes and things were not as good as they used to be .... By the sound of your harsh comments - neither are you ! I frequented this place many times and listened to how every patron gave pearls of wisdom to the humble owners on how to run a profitable restaurant. None, of which were accurate - the truth is it is a sad place to be in America with every other person wishing each other failure and gloating in it when it happens ! To Malissa and Casey - Best of Luck In your Future Endeavors - You Tried your Best and The Diner Looks Beautiful !!
Jack M December 21, 2011 at 02:05 AM
I tried Phil's a few times and thought that the food was good. Although I did find the stools inside too close to the counter for my long legs. The construction next door surely could not have been worse for the restaurant. Street parking was difficult and unless you wanted to go to the parking structure, you were likely to move on. Now that the construction is gone it's too bad, as things might have picked up for their business. I hope that Phil's comes back again.
Morgan Quisenberry December 27, 2011 at 05:12 AM
I work in the office next to Phil's and I went a few times but stopped after I realized I could get a tasty burger down the street at In N Out for $3 rather than a crappy, over priced burger at Phil's. Nobody in my office really understood what Phil's was supposed to be. On one side there was the sign for Phil's, on the other side was a sign that said Fresh and Fast- for a while we thought it was 2 different restaurants. I don't know why in God's name anyone would decide to open up a diner (especially one with outdoor seating) in this area. There's an abundance of crazy and/or smelly homeless people wandering about, often screaming obscenities at innocent people just trying to walk to Panera to grab a bagel. I'm also sure the delicious food trucks that are often in the area took customers away as well- who could say no to the Baby's Badass Burger truck? In summary, this was just a bad idea from the start and they should just tear it down and turn it into a McDonald's before the homeless people start living in the empty dining cart.
Joanna December 27, 2011 at 07:07 PM
Morgan Quisenberry - I totally disagree with your assessment that one would not want to dine al fresco due to the homeless population. Pit Fire has an amazing patio. As does Eclectic. Dining outside is a nice yearlong perk for NoHo; we're lucky to have so many options. I hope someone snatches up the train car and provides us with another great dining option.
Jack M December 27, 2011 at 07:50 PM
Morgan Quisenberry, you think that In and Out is better? You're joking, right? Tear it down and turn it into a McDonalds? Huh? You obviously have a fine taste in food. Do you know that McRib is made from a "slurry", yes that's right, a slurry.
David Rivers December 28, 2011 at 02:24 AM
Morgan, why waste everyone's time and even post such a lame post? Tear it down and build a McDonalds? Are you kidding me with that schlock? You do a disservice to this community. The residents in the community are working to make the area fun, liveable, etc and your endless drivel does nothing to make things better. You clearly don't want the area to succeed. Phil's diner has a lot of potential and just needs owners with the right vision.
John January 23, 2012 at 05:27 AM
I live w/my wife in the area & went to Phil's quite a few times. The food was good & our usual waitress was funny & endearing. Though I know of the guy w/the wacky voices who never seemed to stop talking. I've worked in quite a few restaurants myself & can honestly say the problem boiled down to management. They had quite a bit of traffic in their "heyday." But they saddled one poor server w/the task of waiting on everyone by themselves. Indoors & outdoors. That's a lot to ask of a server; well-trained or not. Sometimes, if I stopped by the take out window, it would take a few minutes for the cashier to see me & take my order because they had been bussing tables as well. Sometimes the food would take 30 minutes to come out. Sometimes it came out wrong. That's not unexpected in a new venture. And though the food was good, it was anything but healthy & certainly not cheap. It was often oily/buttery. Not that I mind that out of a diner. Just don't advertise healthy options when you're not actually making them. It seemed they were trying to recoup their losses too soon. If they'd had a sufficient staff on the clock, business would have run more smoothly & people would have been more satisfied. The one manager I spoke to acted like she didn't want to be there & their busser with the mohawk was rude at best. We stopped going in Aug. so I don't know how it was toward the end. I hope someone knowledgeable does take it over. Though I doubt the onion rings will ever be as good....
J. Ryan February 02, 2012 at 06:47 PM
We need an update on what might be happening with this. It's so sad to see Laemmle now with Phil's dark and abandoned right next to it. There's got to be something that can be done with it.
Craig Clough (Editor) February 03, 2012 at 01:05 AM
We haven't heard any more on it. Either someone will step up, lease the place and open the diner, or it will remain dark. We do know of one interested party who has the means and experience to reopen the diner. As soon as we know more we will report.
Casey James Hudson March 24, 2012 at 05:06 PM
I thought Phil's was awesome! I only got to go there once, as I was in town for the weekend, down from Northern California (Sonoma), but would have been back again and again, had I the opportunity. I walked in the door expecting "Diner" food, and "Diner" food was what I got. It rivaled any of my favorite greasy spoons, and I didn't find it particularly pricey and certainly not pretentious. Casey and Malissa were there personally, working inside their restaurant, as owners of restaurants often do.  I don't know if all you NoHo folks were expecting some sort of frou-frou Food Network type faire or what, but I found my Phil's experience to be very appropriate to my expectations, and it even exceeded them. That's all you can ask for in a place, and I am sad that Phil's won't be there for my next LA visit.  I should also note that upon my visit to the Federal for a beer the day before, I observed an over-sized 6'4 muscle-headed man-child sitting at the other end of the bar; frown-faced and arms crossed, entering into a state of near tantrum as he refused to place his drink order, all brought upon by his sudden realization that the Federal didn't serve Miller Lite. And in this day and age of Yelp and the myriad of other online review sites, this very same man-child is now empowered as a Bonafide restaurant critic, should he so choose, which in my humble opinion, is at least partly to blame in this, and many other sad restaurant closures. 
Nick Weston April 05, 2012 at 12:19 AM
Sorry for both of these people. But I will say I went there the day before it opened and had a long conversation with the male owner and told him I'd stop by on opening day. When I did, he didn't remember me. I reminded him again, and the next time I came back same thing. I would want to know my local customers. Also, the menu was nowhere as near as "fresh" and "local" as I had imagined, found it hard to order from. Also, the service was slow all 5 times I went there before I gave up. Too bad, I was really rooting for that place. In the ultra-brutal restaurant business, how could you have anything but awesome service? Sad to see the place go, sadder they didn't get the simple things right.
George Ghaby April 29, 2012 at 08:46 PM
I'm interested in this location. Anyone knows who owns it and how to get their contact info? 818-645-2669
Craig Clough (Editor) April 29, 2012 at 09:09 PM
The JH Snyder company owns the diner.
Jack M April 29, 2012 at 10:56 PM
Why does the J.H. Snyder Company own the diner? I thought that Casey Hollenbeck bought it and restored it? The article says that they gave ownership to Snyder. Sounds like a bad business deal to me. I wonder if they were taken advantage of?
Feef Mooney May 27, 2012 at 08:23 PM
Cannot someone use this great space? Maybe In and Out could take it on !

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