Unable to overcome debt from its startup in a staggering economy, Allyson's Kitchen will close its Bend store Friday.

Unable to overcome debt from its startup in a staggering economy, Allyson's Kitchen will close its Bend store Friday.

Allyson's flagship store in Ashland this year posted an improved bottom line over 2009 and will continue operating, though the next few months will be critical, said Lynne Galligan, majority owner of both stores.

"We're really sorry we had to close Bend. It was a great store. There are a lot of disappointed customers," said Galligan. "We hope we can keep the Ashland store going. ... If we get through 2011, we'll be OK in Ashland."

Galligan took over the Bend store in 2009 from original owners Steve and Allyson Holt after they incurred debt in building the store in the upscale Old Mill District shopping center. Receipts in both the Ashland and Bend stores dropped 40 percent in 2009, she said.

At the end of 2010, Bend remained flat-lined while Ashland improved 15 percent, with sales picking up from April onward.

Ashland was helping carry the debt of Bend, she said, "and investors thought, if we can hang on through the recession, we'll be OK. But it went on and on till it was out of money. You can't cover its losses month after month."

Galligan said she's in negotiations with creditors about restructuring Bend's debt and they hope to keep the store out of bankruptcy. Owners are selling off the Bend store's equipment to help lessen debt, she added.

"You do what you can do. I thought if we limped through '09, it would turn the corner in '10, but that didn't happen."

The Ashland store — which combines deli, wine shop, kitchen wares, classes and dining — remains debt-free.

"I believe we can make it in Ashland and am going to do my darndest, but it depends on a lot of things, including revenues and restructuring (Bend) debt in ways we can handle."

Of the Bend store, Galligan said, "Our staff has worked hard to try to meet customer needs and grow the business with some innovative new products and services, such as supporting local artists, selling refurbished KitchenAid products and adding our successful wine club. Unfortunately it hasn't been enough and we were unable to absorb further losses."

Allyson's in Ashland opened in 2000. The stores are owned by a group of Oregon investors called Neighborhood Gourmet Partners. Galligan is president and chief executive officer.

The Bend store will hold a clearance sale this week, but the deli was closed as of Tuesday. The team plans to hold a final Friday night wine tasting on Dec. 31. Gift certificates from Bend will be honored online and at the Ashland store.

John Darling is a freelance writer living in Ashland. E-mail him at jdarling@jeffnet.org.