February 10, 2009 at 1:00 am

Upscale shops shutting down

Detroit's Zaccaro's Market, Mercury Coffee Bar fall to sour economy

Zaccaro's will remain open as it liquidates its inventory of high-end foods at discounted prices, which should take seven to 10 days. (Gary Malerba / Special to The Detroit News)

A Midtown gourmet grocery and an upscale Corktown coffee café both announced their closings Monday, just months after their openings buoyed hopes that Detroit's faltering rebirth could support upscale shops.

The owner of Zaccaro's Market, the gourmet grocer in Detroit's Midtown neighborhood, said Monday the store is closing because of slow sales after opening in April.

Mercury Coffee Bar, the organically correct café in the shadow of the moldering Michigan Central Depot, closed its doors Monday after just four months in business, with plans to reopen at a later date.

"We were losing $280 a day," said Phillip Cooley, one of eight partners behind the Mercury, at 2163 Michigan Ave. in the Corktown neighborhood. "We shut our doors, but we are regrouping; we plan to open it up again after some revision," Cooley said.

A reopening date is not yet clear, he said. Cooley said he plans to pare down the number of partners behind the café and tone down its ambition. The Mercury originally hoped to work with urban farmers and serve as much locally-produced food as possible.

"It worked as a coffee bar, but, we never did get the breakfast or lunch crowds we had hoped," Cooley said. In addition to espresso, cappuccino, latte and other coffee drinks, Mercury offered "slow coffee" with beans ground to order from a choice of three varieties of single-origin coffees from El Salvador, Honduras and Kenya.

Meanwhile, Zaccaro's is holding a liquidation sale that could last between seven to 10 days, said owner Cindy Warner. The 3100 Woodward Ave. store, located in a former ballroom, could not overcome a severe economic downturn.

"A number of forces happened that we didn't foresee, that very few people really foresaw in terms of the economic slowdown," said Warner, who moved from Traverse City to Detroit to open the store. "We tried adjusting some prices, but, our revenue was half than we had hoped," she said.

Pricing has become the No. 1 concern for customers amid the worsening economy, said Linda Gobler, president of the Michigan Grocers Association. "Most retail food businesses operate on a 1 percent profit margin, so the room for error is not big," Gobler said. "Various studies are showing us that pricing is becoming even more important for customers, so there is even less room for misjudgment."

Zaccaro's owed more than $25,000 in rent, late fees and maintenance expenses, according to a December filing in Wayne County Circuit Court by the building's owner, 3100 Woodward LLC. The court document identifies D. Michael Dunne as the plaintiff. The store's monthly rent was $8,358, according to the court documents.

For weeks, Warner and the Detroit Investment Fund, a private fund aimed at projects that could spark more development, had been negotiating with the building owner in an attempt to renegotiate the store's lease or come to some other settlement. Dunne declined comment, according to his attorney, Marc Drasnin.

Warner said she trying to find new jobs for her 20 employees. She wasn't sure of her plans.

"I'm still very enamored with the future of Detroit," she said. "You can never say never."

You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com">laguilar@detnews.com.

Mike Medow, of Detroit sips his drink inside the Mercury Coffee Bar. (Elizabeth Conley / The Detroit News)
Nicole Weldon of Detroit enjoys a coffee during the Zaccaro's grand ... (Gary Malerba / Special to The Detroit News)