This is small business Jimmy Buffett style: Tiki lights, a Tahiti sunset, exotic margaritas and thick cheeseburgers on tables under cabanas.
Buffett’s Margaritaville Holdings has joined Outback Steakhouse to build Cheeseburger In Paradise, a small restaurant chain that is taking another stab at what boomed and failed in the 1990s: celebrities starting their own small businesses.
Observers say the previous celebrity ventures into small business fell short because the stars focused too much on themselves and not enough on customer service.
“A lot of people who get into the business think it’s kind of glamorous, and that’s often the wrong reason,” said Carolyn Walkup, Chicago-based Midwest Bureau Chief of Nation’s Restaurant News, a weekly trade publication based in New York City. “People need to treat this like it is a business. It’s not a party. Maybe Cheeseburger can do that.”
Celebrity can sometimes boost a business’ bottom line, but it can’t help the companies escape the benefits of doing business well–or the costs of doing it poorly.
And despite their personalities–and often the millions of dollars that come with them–celebrities also can’t avoid the other numerous trials of running a small business, especially a restaurant, which takes a careful balance of good food, service and fair prices to make money.
Restaurants owned, at least in part, by Oprah Winfrey, actor Steven Seagal and some Planet Hollywood restaurants owned by a slew of stars, have all suffered because of poor management or too much or too little celebrity contact. Michael Jordan and former Bears coach Mike Ditka owned their own restaurants in Chicago but have since closed some of their investments because of poor management and poor customer service, Walkup said.
Winfrey had a short-lived connection with a Chicago restaurant before it closed partly because tourists filled the joint looking for the TV star, not the food, experts said. And Seagal’s Chicago restaurant, which opened in the early 1990s after Seagal shot several movies in the city, was closed within about two months, putting him in the running for the restaurant with the shortest tenure.
All of these failures–among several other well-publicized ones nationwide–have made customers and the restaurant industry somewhat skeptical of celebrity-owned restaurants.
Learning from failure
Debbie Eybers, who went from being a joint-venture partner with Outback Steakhouse to president of Cheeseburger, said they have put to work lessons learned from other celebrity restaurant failures.
“The restaurants that succeed whether they are celebrity-endorsed or not, will succeed because they have great food and great service,” she said. “I don’t perceive Cheeseburger as a restaurant that Jimmy Buffett owns. I built it to be a place where Jimmy Buffett would want to come.”
To appeal to those other than hard-core Buffett fans, managers limit the Buffett songs that play randomly to about two an hour, and there aren’t many photographs of the star on the wall, which managers hope will focus the customers’ attention on the menu.
Eybers has opened restaurants in Indianapolis in 2002, Downers Grove last year and in Middleton, Wis., a Madison suburb, in January. There are plans to open a restaurant in Fredericksburg, Va., in March and one in Omaha by year’s end. Each restaurant has about 100 employees.
Out of the spotlight
Buffett, who owns roughly half of the business, has little say in the menu and business moves, but he does open each restaurant with a concert and sends the money raised to charity. Each store’s general manager, called a managing partner, owns about 10 percent of the store–a move by Eybers to make each store more of an independent small business, not a corporate coattail.
“We treat every restaurant like a small business,” Eybers said. “I think you have to treat it like a small business to make it a big business.”
Outback builds the restaurants, but each Cheeseburger restaurant works separately from Outback’s corporate umbrella. They rely on Outback only for help securing real estate and some minor financial backing, Eybers said.
And Cheeseburger doesn’t benefit from its ties to Outback in ways one might think, said one restaurant investor. “With three restaurants on our own you don’t really have that much buying power for supplies,” he said. “Suppliers don’t care if we are owned by Jimmy Buffett if we are only buying for three stores.”
Some have been successful
Izzy Kharasch, president of Hospitality Works Inc. in Deerfield, has worked with clients such as Jordan and Ditka to improve their restaurant services. He said it’s still too early to tell if Cheeseburger has the right ingredients to work as a celebrity restaurant.
They will need more than specialty burgers with salsa ketchup or appetizers such as barbecue shrimp and crabmeat, Kharasch said. They need more than chocolate nachos for dessert, cloth napkins and live bands each night. He said it’s important for customers to know it’s unlikely Buffett will show up for dinner and for the food and service to stand on its own.
“The restaurant business is a dangerous proposition for anybody, and celebrities are not excluded,” Kharasch said. “Those who are smart will make sure they know what is going on. Primarily what goes wrong is that people aren’t paying attention to the basic of good food, good service … giving them a reason to come back a second time. The only difference between a celebrity-owned small business and a regular small business is when the celebrity opens, it opens big and when it fails, it fails big.”
Harry Caray’s Restaurant has been a longtime favorite for its tie to the legendary sportscaster, but managing partner Grant Porter said the business has done well enough to expand to three restaurants and a catering service not because of the celebrity, but because of the food and service.
“The restaurant was built on the foundation of food and service first,” he said.
Hundreds of miles away, in Green Bay, Carrie O’Connor manages the dining room and gift shop at Brett Favre’s Steakhouse.
Since it opened in 1998, she said, her restaurant has tried to turn from being a tourist attraction to becoming a natural fit in the community.
It holds Friday night fish fries–a Wisconsin staple–and attracts return customers by offering conference and banquet space and features a unique menu for northern Wisconsin: Southern jambalaya, chicken and biscuits, and crawfish–a bow to Favre’s Mississippi roots.
Favre, the Green Bay Packers quarterback, owns between 10 and 15 percent of the business and stops by almost weekly during the team’s training camp and after home games, O’Connor said.
“As far as Green Bay, the locals, they are used to the Packers, so by being Brett Favre’s restaurant it doesn’t really change the fact that it’s a restaurant,” O’Connor said. “The advantage of being celebrity-owned is that you can get that first-time person in. It’s not that difficult to get that person in, but the main thing you have to work on is keeping them coming.”
Yet, there are no plans to end the frequent tours of the restaurant’s collection of Favre’s trophies and photographs–elements of a true tourist attraction.
“We wouldn’t think of stopping that,” she said.
