Arches on the Water closes

Local restaurateur Dan Marcheano opened up the Arches on the Water restaurant last fall with hopes of luring the local yacht set to park their boats or order take-out dinners, but the waterfront eatery has failed to reel in enough diners to keep it afloat.

Although Marcheano says the original Arches Restaurant, at 508 29th St., is faring well in the rough economy, the Arches on the Water, 2816 Lafayette St., closed its doors for good last week.

“Simply put, it was either a really good business plan that didn’t work out, or a bad business plan that did work out,” Marcheano said, who has owned the landmark Newport Beach eatery the Arches since 1982.

Arches on the Water was meant to be a companion to the original restaurant, which has been serving up rack of lamb and swordfish in Newport Beach since 1922. Old Hollywood greats including Gary Cooper, Shirley Temple and John Wayne all once dined at the Arches.

“You can cry and whine and blame it on the economy, but this one just didn’t work out,” Marcheano said.

As for many local businesses, 2008 was a rough year for restaurants. Concerned about a sluggish economy and job security, people are eating out less. The Dow Jones U.S. Restaurants & Bars index dropped about 13% in 2008. The index includes 12 restaurant companies like McDonald’s and Starbucks and other large restaurant groups.

“Restaurants have felt a decrease in sales revenue in the bad economy in Newport Beach, but it hasn’t been close to the level of other industries, or other destinations,” Peggy Fort said, who organizes Newport Beach Restaurant Week for the Newport Beach Restaurant Assn.

Sales tax revenues in Newport Beach, which include sales taxes from local restaurants, are down an estimated 20% from the same time last year, city officials said in December.

Newport Beach could be looking at a loss of about $4 million in tax revenue for the fiscal year, if the trend continues.

“From what I’ve heard, everyone is a little off,” said Sheri Drewry, president of the Newport Beach Restaurant Assn. and owner of the Balboa Island restaurant Wilma’s Patio.

Well-established restaurants with loyal clientele are doing better in the down economy than new eateries, Drewry said.

“There’s a bit of a trend when things get rough like this, people tend to revert to warm and fuzzy things they’re used to,” Drewry said.

“People don’t like to go to a newfangled restaurant. They want something they’re familiar with.”

BRIANNA BAILEY may be reached at (714) 966-4625 or at brianna.bailey@latimes.com.