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INSIDE DISH: Mug-n-Bun rides on 50-year formula

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Inside Dish

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

Our subject this week is Speedway’s landmark drive-in Mug-n-Bun, founded in 1960 and purchased in 1998 by electrician Jay Watson for $1.2 million. Rather than mess with success, the fledgling restaurateur stuck with the eatery’s signature elements, such as curbside service, cook-to-order fast fare, and vanilla-tinged homemade root beer.

Mug-n-Bun has been profitable for 10 of the last 12 years, Watson said. The recent profits aren’t exactly mind-blowing—usually in the five-digit range—because Watson includes himself on the books as an employee and tends to plow earnings right back into upkeep.

While sticking with Mug-n-Bun’s 50-year formula for success, Watson has tinkered with the mix to accommodate present-day diners and shifting economic conditions (see video below). Unwilling to close the eatery during the slow winter months, Watson personally renovated an adjacent building in 2009 to create indoor seating for dining in frigid (or scorching) temperatures. He also broke a 50-year cash-only tradition in January by beginning to accept credit and debit cards. Both moves came with a cost but have had a positive effect on sales, he said.



With repeat customers returning again and again for their favorites, Mug-n-Bun tends to measure its top-selling items in cases and tons. In the video below, Watson takes inventory of how many onion rings, tenderloins, hamburgers and other items he sells per year.



More Dish: Notes from the back of the napkin

Restaurant: Mug-n-Bun
Concept: Classic American drive-in, virtually unchanged since the 1960s, with curbside service, picnic area and new indoor seating. Signature eats include homemade root beer, hand-dipped onion rings and large breaded tenderloins.
Location: 5211 W. 10th St., Speedway
Phone: 244-5669
Web site: www.mug-n-bun.com
Founded: 1960
Owner: Jay Watson (since 1998); $1.2 million purchase price
Total sales/profit: $1.1 million/$24,000 (2005); $860,000/$18,000 (2006); $910,000/$27,000 (2007); $820,000/$11,000 (2008); $870,000/$22,000 (2009).
Seating: 48 parking spaces for curbside service; 110 seats in picnic area; 52 seats in new indoor-dining annex.
Recent projects: Watson opened an indoor-dining annex in an existing building in December, doing the majority of the build-out work himself. The final cost was about $60,000.
Goals: Increase public awareness of restaurant; generate more sales through new dine-in annex.
Good to know: Mug-n-Bun has entered the realm of social networking and currently counts 5,600-plus Facebook fans. The restaurant accepted only cash until finally joining the credit- and debit-card bandwagon in January of this year. While that move has increased sales by as much as 10 percent, Watson estimates, the restaurant must pay credit card companies 1.39 percent of every sale, as well as a 19-cent processing fee for each transaction.

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  • Sounds Good
    Never been to it. It looks like I may have to make a trip to the westside to check out the place.
  • Great onion rings and root beer, terrible "tenderloin"
    I go there once in a while for the excellent onion rings and root beer, but that "tenderloin" is terrible. I used the quotes because that's not a tenderloin, but rather a fritter. Too bad they come out of a freezer instead of making them onsite.
  • old times are still alive
    Mug n Bun is the perfect date. Share your dinner, laughs and privacy in your own vehicle. The root beer is the bomb and fried mushrooms whoo whoot!
  • Nostalgic
    Great place to take the kids, hubby and I still enjoy it even if we're by ourselves! You can always celebrate Spring w/trip to Mug n'Bun for that footlong w/everything on it, fried mushrooms and rootbeer!! Thanks for the memories!
  • Gotta love the Mug-n-Bun
    Love that place and so glad to know that they are doing well!

  • Yummers!
    Just had a tenderloin with lettuce, tomato and mayo there a couple of nights ago. Sure cured the crave!! Great place! Sure glad they started accepting debit and credit cards. My husband and I would always forget they only did cash; we'd have to go to an ATM the go back. But it was always well worth it.
  • Donald: Check this out!
    You might see if you can run the videos -- they're kind of interesting too.
  • A local favorite
    At least once every summer, a group of us acknowledge a collective crave and leave the office behind for a trip to Mug n Bun. The root beer is delicious - even the diet version. The food is exactly what you'd expect, and when that's what you're looking for, Mug n Bun always delivers. Thanks for giving such a great spot some well deserved ink.
  • Yeah
    I worked as a carhop at the Mug-n-Bun when I was a teenager (40 years ago). My brother was a cook at the same time. Maury was the owner then. It was a ton of fun!!!! AND, the food was, and still is, GREAT! Foot long cheeese dog with sauce, french fries/onion rings, and a chocolate malt! I use to be able to eat that way! Hah!

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  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

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  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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