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.
by Matt Krumrie On a rare vacation Eli Khoury found himself relaxing in Mexico, reading a magazine tailored to restaurant owners. In the magazine were some comments that stood out to Khoury from Ray Kroc, the late founder of McDonald’s.
“He basically said that in order for a restaurant to succeed, it has to have a personality that fits the community it is located in,” said Khoury. “In today’s restaurant world, everything is so cut and dry. So many owners believe if it worked in one location, it will work or has to be run the same in the next location. It doesn’t always work that way.”
Khoury, 48, certainly knows his community. He has lived in Inver Grove Heights, a city of about 32,000 located 10 minutes from downtown St. Paul, since 1977. That’s why Khoury felt he could successfully open and operate not one, but two restaurants there.
In June 2001 he and his wife, Pam, opened Khoury’s Family Restaurant on Cahill Avenue, in a 3,985-square-foot building on what is considered the city’s main street. In December 2003, he opened Khoury’s Restaurant and Bakery on Bishop Avenue, a $2.5-million, 7,850-square-foot building at the junction of Upper 55th and Hwy. 52, about six blocks from the first restaurant.
The Bishop location offers a casual to upscale dining experience, and is right across the street from an Applebee’s, Outback Steakhouse, Damon’s Restaurant, and Showplace 16 Kerasotes Theatre. It’s a bustling area, and competition for the consumer dollar is fierce. Why did Khoury build another restaurant in the same town, so close to the first restaurant, and in such direct competition with the better known chain restaurants?
The answer is simple, Khoury says.
“We’re consumers like everybody else,” he says. “We know what other places have and what they don’t have. We want to take the notion that you can’t be everything for everybody and try to prove people wrong. I want to set the standard in the industry. I want to not only serve great food, but I want to offer great service, in a clean, friendly environment. I want to be on the tip of their tongue when people want to go out to eat. Is that a tall order? It’s a huge order, but we’re going to do it.”
Getting started
Eli Khoury got into the restaurant business like many others. His first job was in high school working for McDonald’s, where he progressed through advanced operation courses, also known as Hamburger University. He then worked in management roles with Poppin’ Fresh Pies (which eventually became Bakers Square) and then Perkins.
He continued to climb the company ladder at each stop, eventually moving into general manager and district manager positions. He started to think of what he would do if he owned and operated his own restaurant because “everybody who ever works in a restaurant always dreams about owning their own,” he says.
Khoury decided he would wait until the last of his three children graduated from high school before opening the first restaurant. “My baby graduated in June of 2001, and the first restaurant opened in August of 2001,” he says.
He has achieved his dream of opening his own restaurant, but for Khoury, the real work has just begun. He is now responsible for two businesses that employ 111 employees, open seven days a week. Khoury cut back hours on the Cahill location and that restaurant is open seven days a week from 6 a.m. to 2 p.m.
He also went from 65 employees at that restaurant to 16, but the majority of the night staff moved to the Bishop location. The Bishop location includes a management staff of four, three chefs, a full-time baker and a full-time pastry chef.
Jerry Westrom, CEO of RuralPolitan LLC, owns and operates an Embers restaurant in Cambridge. While Khoury is going into business with those chain restaurants already established, Westrom is now seeing independent family businesses evolve around his already established restaurant.
Speaking in general about the restaurant business, not specifically about Khoury’s, Westrom says standing out in the market is tough.
"The very first thing I was told when I went into the restaurant business was that in order to succeed you can't make it what you want, but what your customers want," he says. "The concept he has is going to be what makes or breaks the restaurant."
Westrom says standing out in that crowd is like trying to sell an unknown clothing item in a store filled with Tommy Hilfiger and Ralph Lauren.
"Everybody wants the designer clothes because they know its quality, and they want the name recognition," he says. "Standing out in a crowd of already established markets will be a challenge but done right, a challenge that can be met."
David Kristal, CEO of Embers in St. Paul, is moving his restaurant chain toward specialization. “What’s happened in retail, there’s increasingly polarization and specialization. That’s why Marshall Field’s is struggling. Bloomingdale’s in New York, you have your specialty boutiques. In restaurants, it’s become increasingly specialized,” he says.
About the family restaurant category, Kristal says: “What we represent is a jack of all trades. That’s no longer viable.”
So just how does Khoury plan to be everything to everybody? He emphasizes the people that work for him, and the people that come to his restaurants.
“The thing is, you’re only as good as the people you surround yourself with. I raised a family that was very close, that we could talk about anything. You ask anyone here and it’s like a big family. You can talk to me about anything, you can vent, and you can get mad at me, but I’ll be there for them.”
The same goes for dealing with customers.
“I encourage our managers to spend as much time on the floor as possible, getting to know our customers and really finding out what customers’ experiences are like. You get to know your community by knowing what makes your customers happy.
“Corporate America is trying to set the standard that the almighty dollar is the bottom line,” says Khoury. “That’s why a lot of places are cutting corners and demanding more but giving less. Don’t get me wrong, I want to be successful with this and make money, but we’ll be successful by providing opportunities others can’t with our food, service and atmosphere.”
The short and long-term plans could include additional restaurants in nearby cities.
“I’d like to grow this, but you got to be careful,” he says. “You can grow so fast sometimes it can end up destroying you. The long-term vision includes building another restaurant, and maybe another after that. But in order to do that, I need to do my research, I need to understand my market, and I need to spend a lot of time in that community.
“I want them to think of me and my restaurant before they think of anyplace else,” he says. “I want to be everything to everybody.”
www.Khourys.com. David Kristal, Embers: 651.645.6473; www.embersamerica.com. Jerry Westrom, RuralPolitan: 763.552.1551; je**********@*****il.com.
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