Welcome back to IBJ’s video feature “Inside Dish: The Business of Running Restaurants.”
In the last year, we've focused primarily on locally owned eateries with a single location. This week, we'll examine one popular pizzeria's decision to expand to a second spot and how the owners have anticipated—and hopefully mitigated—the risks of spreading their attention and resources.
Mick McGrath had managed the Bazbeaux Pizza restaurant in Broad Ripple for more than a decade before deciding to strike out on his own with a similar concept. He and his wife, Nancy Duncan, enlisted their longtime across-the-street neighbors Bob and Laura Stark as minority partners and began planning what would become Jockamo Upper Crust Pizza.
Each partner brought talents and resources to the table that would help the new venture prosper. McGrath had the experience running a sit-down pizzeria and the vision for Jockamo's specialty cuisine. Bob Stark, a sales engineer for concrete construction supplier PERI Formwork, had the nuts-and-bolts smarts to manage the build-out and find savings in that often-exorbitant stage of opening. Laura Stark, vice president of operations for the Center for Diagnostic Imaging, handled the business plan and budgeting. Duncan, an outreach coordinator for the Indiana Transplant Center at Clarian Health, had experience in both business development and restaurant management.
McGrath would run the new restaurant, while the others kept their jobs. The fact that three partners would maintain incomes outside the restaurant potentially made the venture more attractive to lenders.
The pizzeria opened on Oct. 22, 2007, with start-up costs of about $500,000, covered in part with a $350,000 Small Business Administration-backed loan. The quartet of owners chose to set up shop in the historic east-side neighborhood of Irvington, which was sorely in need of sit-down eateries. The restaurant was profitable within its first quarter, McGrath said, and its gross sales exceeded $1 million in its first 12 months.
"We always said that if the first one was successful, we'd probably do at least one more," he said. "So after the second year of business in Irvington, we actively started looking looking for another location."
McGrath had seen other local eateries sink after taking on the weight of a second location, so he and his partners deliberated carefully about the terms of opening a second spot. They created a second, separate limited liability corporation as the ownership entity, to protect either restaurant if the other failed. They also had to choose the locale carefully, scouring the city for an area with low costs of operation and few, if any, similar options for diners.
In the video above, McGrath and Laura Stark reveal the group's main concerns as they plotted their expansion and eventually zeroed in on Greenwood's Old Town area, where the second Jockamo's opened Nov. 3. Maintaining the quality of operations in Irvington while McGrath spent 80-hour weeks at the new locale was paramount. Operating two similar eateries at once also has its benefits, such as providing a place for dozens of employees to train while the new eatery is under construction.
For all the owners' collective expertise, they did not have a firm grip on the real estate issues involved with leasing a space. Counseling other fledgling restaurateurs, they suggest hiring a leasing agent to help locate a space and negotiate the lease.
"I see so many businesses get caught up in a battle with their landlord over something that shouldn't be a worry," Stark said. "It's been nice that we haven't had that, either time."
"If there is an area where you don't have experience, get someone to help you," McGrath said.