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Feast or famine

Madison restaurants face
many challenges to achieve success

Recent spate of closings reflect
just how tough it is to survive

By Konnie McCollum
Staff Writer

Read about restaurant franchises

(December 2007) – Stacey Fields and his partner, Harry Dobbins, have spent countless hours working alongside their employees at The Downtowner and other restaurants, doing whatever it takes to make their customers happy. Both men will often be found serving food, cooking, answering phones or other crucial tasks that make their four Madison, Ind., restaurants operate smoothly.

Stacey Fields and Harry Dobbins

Photo by Don Ward

Stacey Fields (standing)
and Harry Dobbins are
owners of several
successful restaurants
in Madison, including the Downtowner, Out of
Towner, Mr. Gatti’s, and Rogers Corner. They
attribute that success
to their hands-on
approach and excellent owner-employee relations.

Fields and Dobbins are an example of a success story in the independent restaurant industry. But for many independent operators, failure is an all-too familiar result of their business endeavors.
Operating an independent restaurant in a small town amid tough economic times appears to have its own set of challenges that may not always end successfully. Owners face stiff competition with other independents and are at a disadvantage when competing with chain restaurants. Seasonality or drawing from a small job pool for employees also may impact success.
Just in the last year, more than a half dozen independent restaurants have closed in Madison, while only three have opened. At the same time, many of the larger chain-operated restaurants have bypassed Madison in search of larger or more quickly growing towns. In addition to slow population growth, Madison’s absence of a highway interstate appear to be drawbacks for chains to want to locate there, officials say.
“Without knowing anything about Madison in particular, the fact that restaurants are closing, without an influx of chain restaurants, says to me that there is a relative shortcoming in either population or jobs, or perhaps both,” said Bruce Grindy, chief economist for the National Restaurant Association,
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry. Together with the National Restaurant Association Educational Foundation, the association’s mission is to represent, educate and promote a rapidly growing industry that is comprised of 935,000 restaurant and foodservice outlets employing 12.8 million people. It is based in Washington, D.C.
Grindy said that, in general, the success of the overall restaurant industry in a city or region is based primarily on demographic and economic factors. He said chains look for a growing population and a stable economy before deciding to move to an area.
“Generally, when independent restaurants close, it is often because of the competition from chains. But it sounds like something else is happening in Madison.”
John Livengood, president and CEO of the Restaurant and Hospitality Association of Indiana, said the restaurant business is a tough one that operates on very small margins. “With high gas prices, higher food costs, increased labor costs, smoking bans and daylight savings time, the past year or two have been especially challenging.”
His organization, based in Indianapolis, represents more than 1,200 member restaurant properties and industry related service companies. Part of its role is to lobby state Legislature on behalf of the Indiana hospitality industry.

• Recently closed:
Cabana Joe’s, River Valley Bar-B-Q Pit Stop,
Bella Vista Italian Restaurant, Buster & Jen’s,
Tapatio’s, Ovo Cafe, McQuiston’s Malthouse,
LaCosta Cafe & Deli.

• Recently opened:
The Greek Island Family Restaurant,
Mavericks, Mimi & Company.

“With increased competition and rising costs to operate, the restaurant business is getting tougher and tougher to survive,” he said.
Indeed, some of those issues were factors Greg Thomas faced when operating his Ovo Café, an Italian restaurant that opened in 1999 on Main Street and closed earlier this year. “We were certainly proud of what we offered Madison and tourists,” said Thomas, who has since become a real estate agent.
Thomas said the economy played a key factor in his business in the past five years. Prices to purchase from vendors went up, but he did not raise his prices accordingly. “My prices were fair for the quality and what you got,” he said.
Another issue he faced was mounting competition from other restaurants. At first, he said he had to turn regulars away because his restaurant was so busy. However, in the past three years, more competition popped up.
“Madison is a small venue for restaurants; it’s not like Bardstown Road (in Louisville), where there are tons of people.”
Thomas said although he invested many years of time and money into Ovo Café, when “an opportunity came,” he took it. “While I do miss everything, I felt it was time to move on.” He is now involved in real estate.
Livengood also said his association does everything it can to help independents become more competitive, but they are certainly at a disadvantage when it comes to their ability to advertise and buy product as part of a larger group.
Mavericks restaurant opened in late April on the Madison hilltop, replacing the former Cabana Joe’s. Casi Baker, general manager of Mavericks, said the independent restaurant industry as a whole is challenging, with as little as one in 20 small restaurants succeeding.

The Downtowner

Photo by April Wilson

Jim Wever serves customers at
The Downtowner Restaurant, located
on Main Street in Madison, Ind.

“In Madison’s case, we are not close to an interstate, so we depend on our hometown people and surrounding base to keep us going,” said Baker.
Her strategy for success includes advertising, keeping the turnover rate for employees low, and making sure customers have a positive experience. “Word of mouth can be detrimental or great,” she said. “When an experience is good, people will tell a few other people; but when it is bad, people tell everyone they can.”
Fields said owning more than one restaurant does help the economic situation. “We have more bargaining power during purchasing,” he said.
In addition to The Downtower, Fields and Dobbins own The Out of Towner in Hanover; Roger’s Corner on Madison’s Main Street; and Mr. Gatti’s Pizza on the Madison hilltop. They plan to open The Uptowner on the hilltop where Wendy’s is currently located. Wendy’s is building a larger restaurant next door on the former location of Tapatio’s Mexican Restaurant.
Fields said the business is tough to begin with because there is a lot of stress and frustration, which leads to a high rate of burnout. The fluctuations in business are also tough to deal with. “When other restaurants open, residents will try it. We see changes in business, but then it goes back to normal,” he said.
He and Dobbins believe in a hands-on-approach as owners. They are in their restaurants daily making sure operations are working. “No one is going to care as much as you do and put as much effort into making things successful,” he said.
He attributes the success of his business to good customer relations and happy employees. He said customers will give feedback on everything from hours of operations and menu selections to specials. “We listen and cater to our customers.”
Employees at the restaurant are also taken care of; apparently they are well paid, so turnover is not a problem. “It’s worth it,” said Fields. “Customers see the regular faces and know everyone is happy.”
The owners have only had to advertise for help once in the past several years, and that was only because an employee out on maternity leave decided to stay home with her baby.
Fields said a franchise operation may be in the future for the duo. Officials in several towns, including Shelbyville, Ky., and New Albany, Ind., have approached them about opening restaurants. “We will eventually franchise,” he said. “As we get bigger, we will be able to offer more benefits to our employees.”

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