Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Choosing locations for expansion is not an exact science, says Steve Wagenheim, CEO of Granite City Food & Brewery of St. Louis Park. But his methods can tutor other business owners looking to branch out.
He reached Upsize via his cell phone while scouting locations in Cedar Rapids and Davenport, Iowa, doing due diligence to select more spots for the microbrewery and restaurant chain. Three are open now, and the publicly held firm is in some stage of development on another eight.
“We want to take this concept and fully develop the Upper Midwest region — Iowa, Nebraska, the Dakotas, Minnesota,” Wagenheim says. “Then we’ll move to another region, and hit towns of similar size, again working to connect the dots with towns of 150,000 people and greater.” He wants a controlled approach, slating four openings for next year, until eventually hitting a 10-a-year pace.
Wagenheim’s process starts by physically going to a city, with a small group of people, and eating in the local restaurants, checking out the activity hubs.
“We try to learn the market,” he says. “We try to find out where the potential demand generators are, and how the market ticks and what makes it work, and try to get some nuances.” Wagenheim used to select new locations for the hamburger chain Champp’s Americana, and before that was with an accounting firm that did feasibility studies for restaurants and hotels.
“We look at demographic information, and sales information, and then we sit back and create our own internal set of pro formas and we test that in roundtable dialogues amongst our people who have gone into the market. And we reach a number that we feel the market can create for us,” he continues. The questions include: Is it the best location? Are we at the epicenter of activity? What’s the competition like?
Key to the plans of the $12.5-million company is its brewing approach, which allows a hub-and-spoke operation in which its boutique beers are brewed out of one location, and then served at surrounding restaurants. “It creates terrifically high margins,” he says. He thinks 25 restaurants could feed off of one brewery center.
Also driving the cluster strategy: he believes that strong management works better if stores are close together. “So all of our stores are within a couple hours of each other,” he says. At some locations the firm is conserving cash through sale/leaseback arrangements with a developer in Sioux Falls, South Dakota. The developer buys land, builds the restaurant, and then leases it back to Granite City.
Steve Wagenheim, Granite City Food & Brewery, 612.751.3334
