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Three years ago, surveying the dining room of Nua, his old upscale North Beach restaurant and wine bar, David White realized something had to give. The same diners who had once thrown down a credit card for $100 bottles of wine were now studying the list in the $30 to $40 range.  It was before the meltdown of the U.S. economy, but White could already see that his restaurant was going out of style.

“It succeeded in critical reviews,” White said, “But it did not survive financially…I did everything wrong at Nua, to be honest with you.”

With lessons learned from mistakes made at Nua, White teamed up with business partner David Steele and got back to basics with his nine-month old venture in the Mission District.  Despite the refinement of the Mission’s culinary scene, restaurateurs are finding neighborhood diners still prefer value to extravagance.

So far, it seems, that approach of balancing appetites and pocketbooks has paid off. White said Flour & Water, which has 58 seats, serves about 150 customers a night — never less than 125.  The restaurant was profitable by its second month, he added. The founders have even been able to start giving 15 percent returns to the investors — mostly family and friends — who helped fund the opening of the restaurant in May 2009.

“People in San Francisco still have money, but…now people read the check before they put the credit card down,” White said. Critics too are liking such pared down places. This week Flour + Water was nominated as the country’s best new restaurant.

Other restaurant owners who took a risk opening their businesses in the depths of recession, like Pi Bar’s Jennifer Garrison, confirm that affordability is always in vogue.

David White, center, joins his staff for “family dinner” before opening.

Garrison who opened Pi Bar five months ago on Valencia Street, says solid value is a perennial formula for achieving popularity in the Mission and elsewhere. She said the aim is that “everyone should be able to go out and get a beer and a slice.”

Flour & Water, with its mid-priced hearty fare and a rustic décor crafted from reclaimed wine casks, operates on the same basic philosophy.

“No matter what their background or education, whether they’re a carpenter or an international banker or a hipster that makes espressos, the premise is that all those people have to feel welcome,” White said. “That translates to the price point on the menu and wine list.”

The key to attracting that clientele, White said, is affordability.

Chef and business partner Thomas McNaughton uses extreme care in preparing a nightly menu and members of his team come in as early as 7 a.m. to begin making pastas and butchering meats — long before the first diners are seated at 5:30 pm. White says they utilize every part of the animals they butcher. The team produces five different house-made pastas daily, priced at $15 to $17. “Secondi” — or entrees — range from $21 to $24. The wine list ranges from $28 to $90 a bottle, and wines by the glass start at $7.50.

While McNaughton has worked at fine dining establishments in San Francisco like La Folie, Gary Danko, and Quince (where he met White, then a waiter), he too embodies the down-to-earth sensibility. McNaughton, a native of New Jersey, also honed his skills in various parts of Europe, honing his dough-making skills with pasta artisans in Bologna, Italy.

Still, the Flour & Water team strives to keep their focus local. White and Steele, who both live in the Mission, have made a concerted effort to keep their employees local as well. Most of Flour & Water’s staff of 30 live within five blocks of the restaurant, White said.

The investors, too, are locals. Steele, who works his day job directing a wealth management team at an investment bank, was tasked with raising funds to start the restaurant. So he appealed to his friends and family members who all chipped in, with the largest investment at $50,000. Steele fronted the rest.

White said that the state of the economy made it decidedly more difficult to raise the money, but he and Steele didn’t want to take out any loans. They decided: “If we can’t raise the money, we won’t do it” — a decision which also stemmed from lessons learned at Nua. (“That’s a new philosophy,” White said.)

“We’re still learning; you’re always learning,” White said.

And with Flour & Water’s 20-year-lease on its building at Harrison and 20th, White and Steele have plenty of time to keep evolving.

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  1. I love this concept. Across from Pi Bar on the corner of Valencia and 26th a new place, SouthEnd Grill has great wines, beers and food for loooooow prices. Hangar steak only $12, Pork Chop plate $13. Thx F+W, Pi and SouthEnd for looking out for our pocketbooks!

  2. These types of articles are great for restaurant businesses. They also create a destination place to spur gentrification of the Mission.