CHAPEL HILL — Downtown Chapel Hill lost a Franklin Street institution Monday night when Pepper’s Pizza, the once punk-rock pizza place, served its last slice.

“Downtown is just not busy enough to support us anymore,” owner Pepper Harvey said. “The last three years has just been a struggle for us.”

The eatery once wildly popular with students and townies alike opened in 1987 in a tiny spot at 127 E. Franklin St., two doors down from the Varsity Theatre.

Longtime former manager Norm Underwood said the restaurant struggled its first year before curiosity seekers started stopping in to see the staff’s piercings and wildly colored hair.

Underwood, known for his multicolored dreadlocks, was immortalized on a staff T-shirt one Christmas with a caricature showing ornaments hanging from his hair.

“Everybody had this crazy personality, and people came by to see what the crazy punk rock pizza place looked like,” he said. “It became a place where people from out of town would come.”

Patrons would regularly wait in a line out the door for a table.

After about three years, Pepper’s doubled in size when it took over the office of the retiring optometrist next door. The restaurant would move in 2006 to a larger space at 107 E. Franklin St.

Like many Pepper’s employees, Underwood is a musician, playing drums in a band called Orange Driver during much of his time working there. Members of local favorites Superchunk and Southern Culture on the Skids also served pie at Pepper’s back in the day.

Underwood’s bandmate in Orange Driver, Joe Caparo, moved to Chapel Hill from Indiana in the ’90s and ended up working at Pepper’s for almost a decade.

“They hired people who played in bands, and I didn’t have to cut my hair,” Caparo said.

Those employees who weren’t musicians were artistic in some other way, Underwood said. DJs, actors and painters all worked there.

Rob Morton, who now owns a bar in New York, never played in a band himself, but worked in the business side of music, managing Orange Driver, as well as What Peggy Wants and Metal Flake Mother, and going on to manage the marketing departments of record labels in New York and Los Angeles.

Morton started work at Pepper’s when the music club Cat’s Cradle, where he had been working, closed for one of its moves. He said he learned more there than he ever would have thought.

“It really just helped me out in the early days of figuring out who I was and what I wanted out of life,” Morton said. “It was a great place to work with other like-minded, like-aged individuals.”

“I loved the open air kitchen, late-night beers with the staff, freedom of expression, loads of late-night talks about upcoming bands, new local artists,” he said.

Underwood said the joint lost something after it moved up the street in 2006.

“It didn’t have the same vibe about it, even though it had the same artwork,” he said.

Owner Harvey disagreed, saying the change did not affect business for the first two or three years. He blames, instead, expanded on-campus meal choices for restaurant’s demise.

In the last four years, Harvey said, business is down 40 percent, and he just can’t afford to pay the rent.

And there are more options for pizza on Franklin Street than there were in the ’80s and ’90s. For example, Mellow Mushroom opened at 310 W. Franklin the same day as Pepper’s closed.

As word about the closing spread Monday, Pepper’s once again had a line out the door as patrons and former employees gathered to say goodbye.

Stephen and Amy King brought 2-year-old Hudson and 9-month-old Rusher for one last meal, but decided the hour wait for a table was too long.

“We would probably wait if it was just us, but with the kids we can’t do it,” Stephen King said.

Hudson used to like to sit by the window and watch people go by while he enjoyed his cheese pizza.

“It’s entertainment plus food,” Amy King said.

The family also liked the variety Pepper’s offered. Amy King liked the Bermuda Triangle, which featured jalapenos and feta cheese, while Stephen King preferred the Slaughterhouse meat slice.

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