Eatery keeps serving favorites despite uncertainty over lease
Many pause at the door to review menu options first; nevertheless, a steady stream of customers walks through the door at Pepper's Place in Kailua Shopping Center.
Late Monday morning, co-owner John Dee cheerfully called to one pair of customers just outside, "It's 6,000 miles to Philly. Better eat here!"
The male customers smiled, entered and placed their orders.
Dee, his wife, Carol, and their seven employees are serving fresh-to-order cheesesteaks, custom-crafted foot-long hot dogs, other sandwiches, kids' meals and various styles of potatoes, on what may be their last lease for the space.
Their lease expires Aug. 15, and they have yet to finalize a renewal with Alexander & Baldwin, which in December purchased the shopping center, along with most of Kailua, from Kaneohe Ranch. About 70 percent of Kailua's commercial real estate and 90 percent of its retail property was included in the transaction.
"We just want more time," Carol said.
Advertising for Pepper's Place will debut in Japan next month, the Dees are in talks to expand to Japan and the shop has outstanding gift cards that have yet to be redeemed.
"It's a financial obligation to us and to our customers," she said.
Months ago Carol was told another company had offered to pay A&B double the rent that Pepper's pays; meanwhile, its lease renewal talks got repeatedly delayed.
The last meeting A&B official Kimo Steinwascher had with the Dees was in May, Steinwascher told TheBuzz. He had been out of town and did not have an immediate response to queries about the lease.
As of Monday, Carol Dee was in the process of mailing a certified letter to A&B to try to expedite a lease renewal or extension.
The Dees fully expect to pay increased lease rent to their new landlord, but along the way they were told "it wasn't all about money," she said. Rather, A&B was leaning toward putting a different concept in the 400-square-foot space that Pepper's has occupied since 2002. They were offered a 900-square-foot space on Hekili Street a few blocks away.
Moving to a new space would be akin to "starting over" for the Dees, Carol said.
"We can change our menu, we can add healthier items," she said, but for years, Pepper's was prohibited, via its lease, from offering salads so as not to compete against the nearby Subway restaurant, which they used to own. In the intervening years, Aloha Salads was granted space right next door to Subway.
The Dees were Hawaii's first Subway franchisees, having opened the McCully Shopping Center location in 1987 and eventually owning four stores.
On Monday, Carol happily greeted a pair of Japanese visitors who were standing outside Pepper's door with the Japanese-language version of their menu, which also happens to be posted outside, and she offered to answer any questions.
In addition to a cheesesteak to split, they also ordered Pepper's famous Happy Fries, which are fried potatoes in smiley-face shapes.
Pepper's is famous for them. "They're like breaded mashed potatoes," John explained, "light, not oily."
In addition to the unique Happy Fries, Pepper's offers eight other types of potatoes, including baked options, as well as onion rings and brownies.
Pepper's serves foot-long hot dogs, as do many quick-service establishments, "but not like these," Carol smiled. Pepper's foot-longs "are packed here locally" especially for the Dees.
While in Philadelphia, home of the cheesesteak, the provolone-vs.-Cheez Whiz battle rages, peace prevails at Pepper's.
The bright-orange processed cheese product used in Philadelphia originals is "too salty," Carol said, "so we came up with our own formula" using cheddar cheese, which is coupled with slices of natural provolone on Pepper's creations.
John is in the restaurant cooking twice a week, while Carol handles front-of-the-house duties on weekdays, and employees round out the restaurant's staffing needs.
John has been known to entertain customers with sleight-of-hand magic tricks and is often referred to as the "Magic Man."
Customers "love the cheesesteaks, but they come in for him, too," Carol smiled.
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