St. Elmo spinoff, Harry & Izzy’s, could go national

The owners of St. Elmo Steak House get dozens of requests a year to expand or franchise their landmark downtown restaurant.

Their answer always has been no.

But the strategy may be different for Harry & Izzy's, a St. Elmo spinoff slated to open in mid-April at Circle Centre
mall.

It's the city's most anticipated new restaurant in years–a more casual cousin to St. Elmo, with lunch service and
a wider menu, including salads, pastas and pizzas, along with old standbys like the famous shrimp cocktail.

If the $4 million venture succeeds, and most restaurant observers expect it will, the owners would like to open Harry &
Izzy's locations across the country. They set up the ownership structure with that idea in mind.

"We didn't want to expand St. Elmo–it's one of a kind," said Stephen Huse, who co-owns the 105-year-old
restaurant with his son, Craig. "This, we think, could be more than one of a kind."

The new restaurant, designed with dark wood and brick finishes to emulate the Prohibition era, sits at the northeast corner
of Illinois and Georgia streets. The 9,000-square-foot space is among the best restaurant locations in town, accessible from
both the mall and the street, just steps from the Indiana Convention Center.

And location isn't the only advantage in Harry & Izzy's corner. The restaurant's lineage and look give it
instant credibility as a "see-and-be-seen" kind of place, said Renee Wilmeth, who writes Feed Me/Drink Me, a popular
blog covering the city's dining scene.

"I think it's a foregone conclusion it's going to be successful," said Wilmeth, co-founder of Indianapolis-based
trade publisher Literary Architects. "Any restaurant coming from the owners and investors of St. Elmo has a
significantly better chance than your average startup."

St. Elmo is so popular that its hosts have to turn away potential customers six nights a week and refer them to other restaurants.

Soon, they'll be able to send them next door.

Harry & Izzy's is owned by the Huses and a few friends and business associates. That group included Marion County
Prosecutor Carl Brizzi until two weeks ago, when he sold back his stake amid concerns his involvement would violate state
law.

The new restaurant is a way to provide "growth opportunities" for people who have been dedicated to St. Elmo, company
President Craig Huse said. The owners also had grown tired of the city's multiplying army of chain restaurants.

Indianapolis has undergone a renaissance in downtown dining, sparked by the opening of Circle Centre in 1995. But mostly
downtown has been a playground for big chains, names like Champps, Palomino, Oceanaire and P.F. Chang's.

"Some of the chains complement the city well, but traveling, you see a lot of restaurants that give cities character
and identity," said Craig Huse, 36. "And we're in a better position than anyone to do a unique independent restaurant."

St. Elmo has led the city in restaurant revenue for years, topping $11.3 million in 2006, up 6 percent from 2005. St. Elmo's
revenue has increased each of the roughly 20 years the Huse family has owned it, and is up 10 percent for the first two months
of 2007. Restaurants & Institutions magazine ranked St. Elmo 44th on its list of top-grossing independent restaurants
in 2006.

Named for the patron saint of sailors, St. Elmo has earned a reputation as a haven for elite businessmen and celebrities.
One room is named the "Card Room" in honor of Jon Bon Jovi, who enjoys playing poker there before he performs. While
visiting Indianapolis, Formula One teams often dine in a private room in the basement next to the wine cellar.

The addition of Harry & Izzy's should not hurt St. Elmo, said Jim Bennett, a professor in the Department of Tourism,
Conventions and Event Management at IUPUI. The St. Elmo brand is powerful enough–and the concepts are different enough–to
make it work, said Bennett, who heard the same concerns when his former employer, Marriott, began sub-branding its hotels.

Food offerings at the new restaurant will include a chopped iceberg salad for $6, prime rib sandwich for $12, and a New York
cheese pizza for $10. The menu has more variety and is more affordable than at St. Elmo, where entrees start at $24.

Some St. Elmo customers may try Harry & Izzy's instead, Craig Huse said. But ultimately, the spinoff should help
capture some of the business St. Elmo has had to turn away in the past.

"Our customers don't eat solely at St. Elmo," Huse said. "We're just trying to provide them one more
restaurant in their portfolio of favorite places to dine."

The new restaurant is named in honor of Harry Roth and Isadore "Izzy" Rosen, who owned St. Elmo from 1947 until
the current owners took over in 1986. The vibe may be more casual, but Harry & Izzy's also is designed as a place
to conduct business and be seen.

Guests will be greeted by couches and lush carpets. Several private rooms will overlook a circular bar that will serve as
the restaurant's focal point. The space was designed by Chicago-based Aumiller Youngquist, a firm specializing in restaurants.

"We're doing this first-class," said Stephen Huse, 64, during a tour of the space, as workers around him scrambled
to hang drywall and install fixtures. The restaurant's space previously was occupied by several mall tenants, including
the Colts Pro Shop and Hat World. Both have taken space elsewhere in the mall.

The owners announced plans for the restaurant in April 2006 and had hoped to open by winter, but there were hiccups. For
one, they had to redesign around Circle Centre's Rost Jewelry Co. facade. The historic portion of the building extended
farther into the restaurant space than anticipated.

They also faced a mini-crisis as they applied for liquor permits. Brizzi, a longtime family friend, decided to sell back
his 10-percent stake when questions arose about the legality of his ownership. At issue was a state law that doesn't allow
law enforcement officers to hold liquor permits. Brizzi could buy back the stake if the Attorney General's Office determines
his interest would be legal.

Stephen and Craig Huse each now have a 40-percent stake in Harry & Izzy's Inc. Two other shareholders own 10 percent
each: Christopher Clifford, the general manager at St. Elmo; and Thomas Browne, who runs more than 30 Arby's franchises
for the Huse family.

Harry & Izzy's Inc. owns 95 percent of the restaurant itself; the other 5 percent is held by the restaurant's
general manager, Jeffrey Smith, a former operating manager at Bonefish Grill. The setup allows Harry & Izzy's Inc.
to open additional restaurants and offer ownership stakes in each to the general manager.

It isn't the only restaurant planning to open downtown in the coming months. Capital Grille plans to open in the Conrad
Indianapolis hotel, and Weber Grill Restaurant is taking the former Old Navy space at Claypool Court. Both are chain restaurants
where steak gets top billing.

The addition of more restaurants could actually help the existing ones by continuing to build downtown as a destination,
said Dave Hornak, general manager of Ram Restaurant & Brewery, which sits along Illinois Street across from Circle Centre.

"It's one more reason to come in this direction," Hornak said. "We have 36 restaurants in a four-square-block
area, and there's definitely plenty of business to go around."

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