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INSIDE DISH: Italian eatery tables expansion amid downturn

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Inside Dish

Welcome back to IBJ’s video feature “Inside Dish: The Business of Running Restaurants.”

Our subject this week is Augustino’s Italian Restaurant, the south-side eatery that earned a second lease on life in 2006 when new operators bought the struggling spot and quickly increased sales. The new owners had grand plans to expand, but the shaky economy and slumping receipts have put them in a defensive posture, hoping to simply solidify operations at the current locale.



“The plan for the next 12 months really is just staying par for the course,” said Aaron O’Mara, co-owner and executive chef. “We have kind of maxed our growth in this economy and where this economy is growing.  I just want to be safe. I want to make sure that we’re taking care of every guest, maximizing every dollar, and really just keeping Augustino’s healthy.”

The restaurant was founded in 2003 by Gus Mascari Sr., whose family has deep roots in the Italian food business. His great-grandfather founded the grocery J. Bova Conti’s Italian Foods in the late 1920s at 960 S. East St., which is now part of the Eli Lilly and Co. campus. Mascari populated Augustino’s with dozens of black-and-white family photographs, depicting life in Indianapolis’ Italian neighborhoods on the south side.

Although Augustino’s was a labor of love, Mascari didn’t possess the nuts-and-bolts expertise in the restaurant business to sustain the eatery. He also was surprised by the intense demands of running a restaurant.

“It takes all your time and energy,” said Mascari, 57. “I couldn’t get it over the hump to where it was feasibly profitable enough.”

Mascari sold the restaurant to a group headed by O’Mara, the scion of a family of restaurateurs who had spent almost two decades working as a chef in kitchens across the country. He was looking for an opportunity to own a locale, and Indianapolis-based family members alerted him to Mascari’s intention to exit the business.

O’Mara and his wife, Erin, relocated from San Diego to take over Augustino’s in 2006. They partnered with O’Mara’s brother Michael, a pharmaceutical sales rep, to buy the restaurant from Mascari for about $180,000.

Although Augustino’s was ensconced at the far end of a strip mall at 8028 S. Emerson Ave., O’Mara liked its across-the-street proximity to Franciscan St. Francis Health—Indianapolis hospital that now is in the midst of a major expansion. A new 221-bed tower is slated to open in early 2012.

“That was one of the things that sold us very quickly,” O’Mara said. “On a daily basis, I would say that 50 to 60 percent of our lunch business comes directly from that hospital or the office parks associated with that neighborhood.”

In the first year of operation under the new owners, the restaurant began developing catering clients, which helped increase gross sales by an astonishing 50 percent. In turn, the catering acted as advertising for the restaurant, and sales continued to climb in the dining room.

The three owners initially hoped to open several locales, but the economic downturn scuttled those plans. Annual gross sales continued to grow through 2009 to $586,000, but then dipped about 7 percent to $547,000 in 2010.

“The holiday season is what hit us the hardest,” O’Mara said. “We were getting the same clientele, doing the same caterings and the same in-house parties, but they had less money to spend.”

In the last year, catering has slipped from about 35 percent of gross sales to about 20 percent, O’Mara said. Conspicuously cutting back are pharmaceutical sales people, who would cater lunch-and-learn events with local doctors. “That industry changed a lot; they don’t have the money to spend anymore,” O’Mara said.

He also is spooked by volatility in food costs, and how spikes in gas prices seem to scare away customers. He anticipates raising menu prices in the near future, generally in the range of 10 percent to 15 percent. Augustino’s also will introduce new menu items with better profit margins, and O'Mara will retool some existing dishes to reduce sticker shock for regular guests.

The restaurant remains profitable in the range of about 6 percent to 9 percent of sales, O’Mara said, but expansion is off the table for the time being.

“There’s no plan for growth,” O’Mara said. “And until I see stability in the gas market, in the housing market, in the food markets, I’m not comfortable moving in that direction.”

In the video at top, O'Mara discusses the surge in sales after the restaurant changed hands in 2006, and then how the economic downturn has affected the top line and changed his attitude toward expansion.
 

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Augustino's Italian Restaurant
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8028 S. Emerson Ave.
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(317) 865-1099
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www.augustinosindy.com
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Concept: Affordable, neighborhood-style Italian restaurant with a combination of traditional favorites and more adventurous items.
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Founded: September 2003
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Owners: Husband-and-wife Aaron and Erin O'Mara, and Aaron's brother, Michael. They purchased the restaurant from its original owner, Gus Mascari Sr., in 2006.
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Purchase price: About $180,000.
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Gross sales: $586,000 (2009); $547,000 (2010).
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Employees: 20
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Seating: 92
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Goals: To put expansion plans on hold while continuing to improve operations at the current locale.
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Good to know: Mascari's great-grandfather founded the grocery J. Bova Conti’s Italian Foods in the late 1920s at 960 S. East St., which is now part of the Eli Lilly and Co. campus. His family also founded the Mascari Cleaners chain in the Beech Grove area.
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  • Best Italian in Town
    This place has the best Italian food in town and the atmosphere and "family" feel is very relaxing and makes the meal even better. I would love to see them have a place downtown for lunch, and hopefully someday soon that will happen.
  • leave your comfort zone bigjer!
    bigjer, there is a wealth of living to be done in urban Indy, restaurants, shopping and just feeling the energy of the city. I have several friends from Carmel, Fishers, etc., and the commonality they share is that Urban Indy is their loss is certainly my gain when it comes to experiencing Indianapolis!!!
  • awesome place
    I take family and friends there quite often. It is an awesome place! Great food and great service.
  • Best Restaurant in Town
    Augustino's is absolutely the best in town, and not just among Italian eateries. While I am a Southsider, unfortunately they are tucked away so that probably not even many SS know they exist. I would love to see a downtown location for lunch, but I'm always concerned when I go in whether they have enough business to sustain the existing location. Thanks for sticking it out guys and hope you become a permanent part of the Indy landscape.
  • nice place
    We went here once and liked it but we live in Carmel and get down to that area almost never. To bad they are expanding. Would love to see one on the Northside.

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    1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

    2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

    3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

    4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

    5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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