3rd Bidder’s the Charm: New Owner Takes El Matador Off O.C.’s Hands

A colorful Costa Mesa restaurant -- a landmark, some would say -- that was operated by the county after the owner died has been successfully auctioned. Again.

After the first bidder bowed out of buying El Matador, a new buyer completed financial arrangements Wednesday to take over the Newport Boulevard restaurant.

“I’m looking forward to operating the El Matador and getting back into the restaurant business,” said Greg McConaughy, a Corona del Mar businessman who paid $535,000 for the business.

McConaughy, 52, said he owned Shooter’s Sports Bar in Costa Mesa, also known as McConaughy’s, for 26 years but sold it last year.

“I’ve got lots of experience in the restaurant business,” he said.

McConaughy will take over July 1.

At a judge’s request, the county took over the day-to-day operation of El Matador after its owner and founder, Marcial Gallardo, died in June 2003 and his family squabbled over the business.

The Gallardo family had owned it nearly 40 years and cultivated a loyal clientele. The restaurant’s reputation helped establish its $690,000 appraised value, according to sale documents.

When the county finally sold the restaurant at auction, McConaughy was the third-highest bidder. The winning bidder was a Newport Beach engineer who later backed out of the deal.

Xavier Bengoechea, 33, gave no reason to the county why he didn’t complete the sale. When reached by telephone, he declined to give an explanation.

The county negotiated with the second-highest bidder, and when that failed it agreed to sell the restaurant to McConaughy.

County Public Administrator John S. Williams said most of Bengoechea’s $15,000 deposit would be refunded, although he said the county did incur some costs after the deal fell through, money that will be reimbursed from the deposit.

Running the restaurant has been one of the most unusual responsibilities Williams and his staff have faced, he said.

“This was new ground, but it was fun,” he said.

In the past, the office has auctioned jewelry, cars and real estate. Williams said they liquidated a furniture store in South County once, but never operated a restaurant.

According to probate documents, the estate owes about $120,000 in back taxes, management fees and other costs. Those will be paid from the sale and the estate closed out, Williams said.

“We still need to do a final accounting to the court and then disperse the money to the heirs,” he said.

One of Marcial Gallardo’s sons, Cesar, has said he might try to reclaim the restaurant on behalf of his mother, who divorced the elder Gallardo years ago.

But another son, George, who owns the Blue Agave restaurant in Yorba Linda, said the sale was the “best thing to do.”

“I’m just happy to see an ending to all this,” he said.