Dreams of Denny's displacing Destin Diner die away

Denny’s, which took over the lease of the Destin Diner property last year, is now looking to unload it, Charlie Sutherland of the Shopping Center Group says.

“They had some internal changes, then decided not to do anything on that site,” Sutherland told The Log. “They’re trying to sell their ground lease position in the property; what we are charged with doing is finding another use or a restaurant use — there’s just under an acre of land there.”

Destin Diner opened in 1992 and closed early last year.

“We originally built it — we being my dad and a couple of other investors — and operated it as the Destin Diner for a number of years,” former state Sen. Charlie Clary told The Log recently, but the other investors dropped out over time. “My dad basically ended up with the property. He was not a restaurant operator per se and that was not his goal when he started.”

The Clarys leased the property to Rupert Phillips, who took over running the diner. Last year, with the Clarys’ approval, Phillips contracted with Denny’s to take over the lease and applied to the city to replace the diner with a 4,720 square-foot restaurant that would have 140 seats compared to the diner’s 85.

Sutherland said Denny’s — which did not return The Log’s calls — decided last summer that it didn’t want the diner property and asked the Shopping Center Group to find a replacement leaseholder. He said the site on the corner of Airport Road and U.S. 98 is a good one, but potential lessees have been discouraged to learn Denny’s stripped the inside of the diner last year, when they still intended to demolish and replace it.

“They took all the equipment out and donated everything to a charity,” Sutherland said. “We’ve got a building that’s stripped and not usable anymore (and) the majority of the contacts we’ve had are interested in trying to reopen the restaurant. It would take more money to rehabilitate the existing structure than to knock down and rebuild.”

Hank Woollard of Destin’s Community Development Department said Phillips had already paid $1,876 in fees as part of the process of obtaining a building permit, plus whatever he’d paid his own people for landscaping and design work. Woollard said the application for the Denny’s hasn’t been withdrawn yet.

Sutherland said that if a deal closed this week, it would take three to six months before the new leaseholder could begin building.

“I would hope we could get something happening sooner versus later,” Sutherland said, “but I don’t know. The market is really kind of down right now but it’s a very, very good corner. If we can get someone who’s got a need to be in Destin, it could move very quickly.”