Mainstreet, Not Mainstream

Gina LaVecchia

To become a chain: Hasn't every restaurant operator dreamed of coming up with that one perfect concept, one so successful in its popularity, execution and balance sheets that it can be reproduced over and over, making millionaires of everyone involved?

Not necessarily. "I would be bored to tears if we did that," says Michael Gibbons, president of Mainstreet Ventures, a 25-year-old multiconcept operator based in Ann Arbor, MI. Mainstreet currently operates 17 restaurants in its home state and in Ohio, West Virginia and Florida. Gibbons says the greatest thrill takes place at the drawing board—creating new concepts and ways to make existing concepts seem new again. "That's what keeps it fresh and exciting for us, and it's what customers who know us expect," says Gibbons.

Mainstreet's concepts have mass appeal, from home-style Italian to upscale steakhouse, seafood, neighborhood bistro and dessert concepts as well. Though broadly appealing, the restaurants are anything but pedestrian. The highly conceptualized spaces and careful creation and execution of the menu make for impressive experiences that attract new guests and keep regulars interested and coming back for more.

The company's expansion has been site-driven, and Mainstreet favors downtown spaces and other destination locations. Developers usually make the first move, and Gibbons, along with Mainstreet partner Dennis Serras and corporate executive chef Simon Pesusich, creates concepts based on the particulars of the market and what's missing from the local dining scene. The exception to this approach is Florida, where Gibbons and Serras are actively seeking new markets. Mainstreet already operates three restaurants in Florida and intends to increase its presence along the state's Gulf Coast. "It's such a great, growing market, plus we have the benefit of name recognition with our Michigan guests who travel south," says Gibbons.

Mainstreet is also slated to open two Maryland restaurants in 2008 at the new Annapolis Town Center Mall, a much-anticipated upscale lifestyle center that will offer shopping, restaurants and residences. The restaurants Mainstreet will open here will be a fourth The Chop House restaurant (units already exist in Ann Arbor, Grand Rapids and Charleston, WV) and the fourth Real Seafood Co., the company's flagship concept (Ann Arbor, Toledo, OH, and Naples, FL).

With sales of $43 million last year, Mainstreet has been able to fund new restaurants largely from existing profits. Mainstreet has needed to take on partners at only two locations, and the company has no imminent plans to partner again.

Core Concepts
With check averages ranging from $23 at the least expensive restaurants to $85 at the high end, Mainstreet's concepts are casual to upscale in price points and oriented to middle-and upper-middle-income 35- to 55-year-olds. Partner Dennis Serras says sticking to three main categories—Italian, seafood and steak—lets the company exercise its core competencies, while still allowing for creativity within each restaurant itself. "I don't know if we'll never do another category, but we've reached a comfort level in these three areas," says Serras. Moreover, he adds, "We're going into these larger markets, and putting a lot more money into these sites, so you want to go in with a proven concept."

There are a few exceptions to the format. A dessert concept, La Dolce Vita ("the sweet life") exists adjacent to two of the company's Chop House restaurants. Serving after-dinner treats like scotches, sweet wines and an elaborate dessert menu by executive pastry chef Cheryl Hanewich, the concept is the perfect after-dinner stop for Chop House guests. Also breaking the company's mold is Carson's American Bistro, designed not as a downtown destination, but as a vehicle by which Mainstreet can access neighborhoods—a way, Serras explains, to offer $15 to $20 price points and create a restaurant people would use more regularly.

Which does better? "They're all profitable," says Serras. "We tend not to repeat our mistakes." Although three quarters of the restaurants serve only dinner, units still average about $3 million in annual sales. Beyond sales, the numbers are good, too. Mainstreet examines food/ beverage and labor costs and attempts to keep this number below 60 percent of their sales. Serras says looking only at food costs is a mistake. "Would you rather have a 30 percent food cost on a $30 dollar item or a 50 percent food cost on a $50 item?" But isn't it hard to sell $50 items? "Sure," says Serras, "but there are fewer operators serving the higher end of the market."

Creative License
After a site is selected, the fun begins for Gibbons, Serras and Pesusich. They lead a development team that includes David Doyle, director of operations, as well as directors of marketing and public relations and the district manager who will oversee the new unit or units. The team meets every Thursday morning from the time the site is selected until opening night. As the weeks pass and menu, staff and design decisions are made, the concept begins to take shape. Developing a strong format can take six months to a year, but Pesusich says planning time is time well spent. "Concept is so crucial, because until you have a clear picture of exactly what you want to do, you cannot accomplish anything else."

Menu development is in the hands of Pesusich, who enjoys serving an increasingly savvy public. "People travel more, they know more about nutrition, they are exposed to more. It requires us to stay on the edge of the trends," he says.

That said, Serras posits that there truly are no new ideas and likens this theory to fashion. "The tie goes from skinny to wide back to skinny again," he says. "It's a little different every time, but essentially the same concept." Finding a new way to interpret an old idea—or a new niche in which to introduce the idea—is key. Just look at Outback Steakhouse's success, says Serras. The 928-unit chain succeeded by making high-quality steaks accessible to the masses. Similarly, he admires Cheesecake Factory, which, with its eclectic menu, he says, "basically redid the (T.G.I.) Friday's concept, just in a more spectacular fashion."

Staying Power
While concept creation is important to Mainstreet, so is the longevity of its existing restaurants. Several of its Michigan and Ohio restaurants have been in business for nearly two decades—an eon in restaurant years. Putting money back into the older properties is key. Every Mainstreet restaurant undergoes a minor remodel every five years, a major remodel every 10 years. Menus are updated twice a year.

"You have to grow with your initial clientele," says Serras. "You can never go backward in concept or price point. You have to keep improving it to keep up with your guests' expectations. That's why we never develop concepts that are gimmicky. When you have an idea that can be refreshed on a continuous basis, then you've got something."

Of course, with longevity comes mistakes, and if you're smart, opportunities to learn. "We've been sidetracked a few times," says Gibbons. In the early 1990s, Mainstreet launched a coffeehouse concept, thinking it would be a simple, yet profitable enterprise. The venture turned out to be harder than it looked. Its challenges included finding enough people to operate them—and generating enough volume to make them work. "It seemed simple from the outside, but it took just as much effort as opening a new restaurant," recalls Gibbons. The lesson learned: Stick to what you do best.

Serras admits Mainstreet has also made mistakes in assessing its markets. This weakness became clear after attempting to open a regional Mexican concept in Ann Arbor. Several years ago, after deciding to open a Mexican restaurant, eating their way through the U.S. Southwest and still not finding the authentic foods they had in mind, Pesusich, Serras, Gibbons and other Mainstreet staff traveled to a picturesque town on the west coast of Mexico. Charmed by the bright colors of the town square, not to mention delicious local foods, they decided to open a restaurant based on this experience in Mainstreet's home town. The concept was as authentic and well-executed as they come. Along the way, they even had help from the master of regional Mexican cooking, Rick Bayless of the renowned Frontera Grill in Chicago.

As it turned out, Ann Arbor was not ready for such authentic fare. While Mainstreet was doing roasted meats with queso fresco, guests wondered where the tacos went. "The market just wasn't big enough. We opened a beautiful restaurant, but it turned out what people wanted was Tex-Mex," says Serras. "We're really good at development, training and opening. If we have had any shortcoming, it's understanding markets we're going into. But we're improving."

Independent Sensibilities
Maintaining an independent quality in each of the restaurants has been paramount to Mainstreet. The principles—Gibbons, Serras and Pesusich—watch the industry closely and respect the companies that do this well. Serras is a long-time admirer of Los Angeles-based Houston's. He says, "The restaurants fit well into their neighborhoods. They pay attention to the individual markets and they do a lot of business. There's nothing gimmicky, just good, crisp restaurants that will stand the test of time."

Gibbons also admires Chicago-based Lettuce Entertain You Enterprises, both in terms of concept creation and management."Rich Melman just dazzles us, in terms of creativity," he says. Similarly, Simon Pesusich says Todd English (Figs, Olives, Tuscany, Bonfire, Kingfish Hall), with his ability to master so many projects at once and his understanding of how to execute multiple concepts, is an inspiration to Mainstreet Ventures.

Like those companies it admires, both in the restaurants themselves and in the management approach, Mainstreet attempts to eschew all characteristics of a chain. The restaurants operate under the direction of the general manager and the unit's district manager. The reasoning: If you want to be seen as a local restaurant, then putting decisions into the hands of the people who are there, working in the communities, makes more sense than instituting a top-down structure, says Gibbons. Mainstreet requires an annual business plan for each restaurant, but even those are created by the general managers, not by corporate. Chefs and managers come up with their own weekly specials, a policy that encourages creativity and regionalism. "We don't believe in taking away their independent spirits," says Gibbons.

This approach, along with a share of the profits and bonuses based on performance, seems to help retain talent. The average manager has been with Mainstreet for 10 years. A less tangible key to retention is leadership, says Gibbons, who sits on the board of the National Restaurant Association and has seen and been inspired by many of the industry leaders he's met there. "Richard Sneed from Carlson, Craig Miller from Ruth's Chris, Ted Fowler from Golden Corral...the key to leadership is making people want to follow you. These guys have mastered that."

Looking To The Future
The Annapolis project is a turning point for Mainstreet: Entry into larger markets that can support larger clusters of restaurants. Growth will be slow and steady, with about one and a half new restaurants opening each year. Serras says Mainstreet is also looking to purchase a $75-$100 million multiconcept company if one that's suitable can be found.

Even as Mainstreet continues to open outposts of existing restaurants, as well as new Italian, seafood and steakhouse incarnations, new projects may be on the horizon. "We've been experimenting with Mediterranean and Pacific Rim," Serras says. "You never know what the future holds."

Of the company's future, Gibbons says, "The thing that's critical is having great people, most of whom we're growing from within. Our potential is limited only by finding the right leaders we can open restaurants with."