Welcome back to IBJ’s video feature “Inside Dish: The Business of Running Restaurants.”
Our subject this week is Murphy’s Steakhouse, the north-side meat-and-potatoes institution that has embraced a sense of nostalgia for its mid-1970s roots while making sly upgrades to stay profitable and relevant as tastes change and the gloom of the recession lingers.
As the low-slung design of the building and its carports might indicate, the property’s first incarnation in 1958 was as a Frisch’s Big Boy drive-in restaurant. In 1969, it began a series of concept and ownership changes that led to its purchase in 1977 by Jim Murphy, who dubbed the restaurant Jim Murphy’s Steakhouse. In 1990, he decided to sell to a two-man partnership including 25-year-old Craig Stonebraker, an aspiring restaurateur with whom he had an unusual connection.
“I was friends with Mr. Murphy, because once a month on Sundays I cleaned [the restaurant's] carpet,” said Stonebraker, who at the time worked for carpet-cleaning firm Bane-Clene Corp.
“Because of his and my friendship and his belief in me and his willingness to provide us with an opportunity, we were able to buy Murphy’s in 1990,” said Stonebraker, who purchased the eatery with his older brother Kelly.
These were no novices. Both their father and grandfather had owned and operated restaurants, and Craig spent a good deal of his childhood watching the inner workings of the food-service industry. “From the time I was a young man, I kind of had a feeling I was going to be in the restaurant business,” Craig said.
The brothers bought the business for about $125,000, lopped the name “Jim” from its moniker, and spent in the neighborhood of $30,000 to spiff up the joint and get it jumpstarted, including replacing carpeting and booths, printing new menus, buying inventory and insurance, and opening accounts with vendors.
“For six months, I kept my job at Bane-Clene and worked there during the day,” Stonebraker said. “Kelly worked days here, and then I got off at night and then we did the flip-flop, until we decided whether or not we could pay each of us—or one of us, for that matter.”
Business proved to be strong, in part because the brothers reinstituted lunch service that had been discontinued earlier. Craig bought his brother’s share of the restaurant in 1993. He then purchased the building and land from a separate owner in 1995 for $180,000.
Annual sales shot up over the years from $400,000 to more than $1 million. Once they hit $1.3 million in the mid-2000s, Stonebraker sensed that business had plateaued and started looking for new ways to generate revenue.
“I was well aware of how many calls I had taken on a Friday night for parties or 40, 50 or 60 that we just couldn’t accommodate,” he said. So, he decided to build a 1,500-square-foot addition to the back side of the restaurant that would house a banquet room and extra adjacent seating. He also created an outdoor patio that could seat 25 to 30 people. The total cost of the project, completed in 2006, was about $180,000 (prompting Stonebreaker to take a commercial bank loan of $100,000).
The addition ended up working as an effective hedge against the recession. Business in the restaurant began slowing in 2008, Stonebraker said, but the loss was offset by bookings in the banquet center. Annual sales have remained around $1.3 million over the last five years.
“So many times I’ve said, ‘Thank God we have the banquet room,’ because we’ve been able to maintain the dollars while traffic has slowed down in the restaurant,” Stonebraker said.
Although Murphy’s still bears a close resemblance to its identity circa 1990, Stonebraker has engineered changes to appeal to today’s diners. In the video at top, he discusses a recent revamp of the menu designed to please a more diversified palate. He also outlines his struggles to market the restaurant using 21st century social media and to keep the aging building in operable shape.
Another potential problem is the aging of the restaurant’s core constituency. Patrons tend to elderly, Stonebraker conceded, but new diners regularly replenish the supply.
“There’s always ‘new’ old folks,” he said. “We have a significant number of customers in their 60s, 70s and early 80s. Often, we lose people, long-term customers. I’ve attended many, many funerals, sent a lot of flowers, because we know our customers and their families. But there’s always new people that come in their 50s and 60s.
“There’s something about Murphy’s. You’ll hit 55 or 60 and you’ll start thinking, ‘Yeah, I think I want a Manhattan and a filet at Murphy’s tonight. And sit in the third booth by the window.' There is just something about the old-school steakhouse feeling here. There’s not many of us left.”