Sports Business

Bar-restaurant is graduating to the big city: Scotty's Brewhouse opens first Indianapolis location, branching out from its roots in Hoosier college towns

December 4, 2006

Scott Wise compares his Scotty's Brewhouse expansion to a washed-up college band that finally hits it big after 10 years.

If that's the case, his fourth location-and first in Indianapolis-just might go platinum. Before it opened Oct. 30, Wise estimated the 96th Street restaurant would gross $3.5 million in its first year; it's already on track to reach $5 million.

Wise, 33, tapped the college-town markets of Muncie, Bloomington and West Lafayette before taking on Indianapolis. He hopes the name recognition he's built among students will pay off as graduates get settled in the big city.

The Indianapolis resident had heard from former customers who recognized him in the gym or grocery store and wanted to know when Scotty's would open a Circle City restaurant. That was enough to convince Wise the concept could be a winner.

It took a little more to persuade lenders to get on board.

"Every bank that I would talk to told me that I was a fool for wanting to open in Indianapolis," Wise said. "'There's too much competition. You're breaking your model. You're not in a college town. It will never work.'"

Eventually, he found funding, and after a month in business, Wise thinks the restaurant-which mixes a traditional college bar atmosphere with family dining-already has proven the cynics wrong.

It's not uncommon for a popular college-town business to try this type of expansion, although results are mixed. Not everyone can experience the success of national chains like Domino's Pizza, which got its start in Ann Arbor, Mich., the home of the University of Michigan. Indiana University staple Mother Bear's Pizza, for example, eventually gave up on its Indianapolis location.

Still, experts say continuing to give graduates the tastes they acquired in college can be a way for Scotty's and other college-town businesses to find additional success.

"He's giving them a chance to connect with a brand they already recognize," said Chris Muller, interim director of the Center for Multi-Unit Restaurant Management at the University of Central Florida.

The concept

Wise got into the business at 22, after graduating from Ball State University. In 1996, he purchased student-favorite Mugly's Pub and Eatery and grew the 21-and-over bar into a restaurant that serves all ages. He expanded into Bloomington in 2001 and West Lafayette in 2004, increasing revenue as he went.

Originally, Wise set his expansion sights on the University of Miami in Oxford, Ohio, another Mid-American Conference school in a town similar to Muncie. But his mix of sports, beer, blues and American food proved too large for the small market.

Now, Wise is looking at additional expansion possibilities in Columbus, Ohio, and Champaign, Ill., among others.

"He has struck a chord with the young college market and young professionals," said Steve Delaney, a partner with Carmel-based The Linder Co. and local restaurant expert.

Wise's concept is deceptively simple. He likes to think of Scotty's as fusion dining-a place where professionals could hold meetings without feeling overdressed and sports fans could watch a game without feeling underdressed.

With each location, Scotty's has tweaked his model and Indianapolis is no different. It is the first location to serve liquor and the first to include the "Candlelight" bar area, which stays open until 3 a.m. Monday through Saturday. The small lounge seats about 30 people, providing overflow options for the restaurant and a revenue center after the kitchen closes.

"It's that fusion of having lots of different things going on and not one feeling out of place," Wise said.

If his $5 million sales projection holds up, Scotty's will be in good company. Many of Indianapolis' most popular restaurants ring up $3 million to $6 million in sales each year. Claddagh Irish Pub's 96th Street location, for example, posted sales of $3.13 million in 2005, state records show, and Champps Americana's downtown restaurant did $5.56 million.

Alumni base

Wise said he knew Scotty's would have a built-in customer base in Indianapolis, given its exposure at three of the largest universities in Indiana and the number of graduates sure to be living in the area.

"The minute we open here, we've got instant brand recognition and name recognition," he said.

Still, he wants the Indianapolis location to serve two demographics-which is why he positioned the restaurant right in the middle of them. Scotty's is between youth haven Broad Ripple and the Hamilton County suburbs. All the better to appeal to young adults and young families.

There's more to making the expansion work than taking advantage of the alumni base, though.

Mother Bear's Pizza saw a similar opportunity in 1986 after getting national exposure in People magazine, owner Ray McConn said.

The pizza parlor, which has thrived in Bloomington for 35 years, wanted to reach its alumni on the northeast side of Indianapolis, but the big-city business dynamics were too different. It closed after 11 years.

"It turned out that while it wasn't a failure, it wasn't an overwhelming success, either," McConn said.

Even so, it appears Scotty's Brewhouse has the right features to make it work and even continue to grow, said John Livengood, president of the Restaurant & Hospitality Association of Indiana.

"What makes any restaurant work is great service and friendly atmosphere that makes people come back," Livengood said.

The move

About a year ago, Wise developed a leadership team to manage Scotty's Brewhouse on a day-to-day basis. As president, he still visits each location at least once a month, but others answer routine questions that come up.

Building the corporate infrastructure temporarily drained profits from the three college-town restaurants, but Wise said he did it with an eye on growth. And adding the Indianapolis location gave the company enough heft to see the benefits of increased economies of scale.

However, that could be a double-edged sword. While a larger company can spread out costs that help the bottom line, it often watches its operations less closely, Wise said.

"I don't want to lose the character and personality that I've built into my restaurant, because this place bleeds me," he said. "Everything is a reflection of me and the bigger we grow, the more watered down we get."

Scotty's growth hasn't been careless, though, Delaney said.

"I think he's really doing it in an intelligent manor," he said. "He wisely went from one college campus to the other where he found his market."

Since the proper systems and management are in place, Delaney said Scotty's could have three or four locations in Indianapolis.

Wise also plans to grow outside of Indiana, even though that means going into scarier territory. But there will be some similarities: College-town markets with about 40,000 students and a population of 200,000 are still his ideal location, he said. He's not eyeing big cities like Atlanta, but could move into other regions, like North Carolina.

"The challenge is to create that new name-brand recognition, because I'm not going to have it built-in in another market," Wise said. "I'm going to have to get out there and resell myself like I did when I first opened this business."
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