As published in the January 1, 2015 Toledo Business Journal
Michael Gibbons
Mainstreet Ventures, Inc.
Restaurant industry path of economic opportunities
Toledo Business Journal is providing readers with an insight into the restaurant industry that highlights the entrepreneurial significance of this important segment of the economy. Michael Gibbons, president and CEO of Mainstreet Ventures, Inc., shares the role that this industry plays in creating business opportunities for many entrepreneurs and jobs and training for a large number of employees in this country.
Toledo Business Journal: During your past tenure as president of the National Restaurant Association, the organization launched a communications effort to highlight the role that restaurants play in the economy in this country. Can you discuss the economic impact of the restaurant industry in the US?
Michael Gibbons: Restaurant industry sales are projected to exceed $60 billion in 2014. There are 990,000 restaurant locations in the US and 13.5 million people are employed by the industry. The restaurant industry workforce is 10% of the overall workforce in the country and 47% of every food dollar is spent in restaurants. Eight out of 10 restaurant owners started their industry careers in hourly positions. Nine out of 10 restaurants have fewer than 50 employees. Seven out of 10 restaurants are single unit operations
TBJ: The consumer media and some politicians have portrayed the restaurant industry as a segment of our economy that is responsible for minimum wage jobs. The industry has represented a path of economic opportunity for many in this country. Can you discuss this issue?
MG: As I pointed out in the first question, nine out of 10 management personnel started as hourly workers and eight out of ten owners started as hourly employees and that includes me.
TBJ: How has your own company, Mainstreet Ventures (MSV), provided management and other job and development opportunities to employees?
MG: Every executive in my organization started as an hourly employee somewhere, but at least 75% of our general mangers and 80% of our assistant managers started in an hourly capacity within our organization. There are several people who came up through our system and have moved on to open their own establishments. The Zingerman’s group is a good example of this but there are many, many more.
TBJ: What impact would an increase in the minimum wage to $10 or $15 dollars an hour have on the restaurant industry in the United States?
MG: The term minimum wage is a bad one as far as I am concerned. The industry needs some type of entry-level training wage. We are an industry where most people get their very first jobs, and they come to us with no skills but are willing to learn, and also know that if they wish to they can advance quickly. When people speak of minimum wage they are often speaking of tipped employees who generally are the most highly compensated in our businesses. If a tipped employee with wages and tips fall below the prescribed minimum wage, the employer is required to make up the difference and many people are unaware of that.
A major increase in minimum wage will make many employers look to technology to make up the difference in the bottom line. Most people don’t know that the average restaurant profit is only 2-4% of revenues, which is a very thin margin. A major increase in minimum wage would upset the business model. Businesses will close and jobs will be lost if a major increase occurs. It makes more sense to see a gradual increase in line with the cost of living and many states including Ohio and Michigan have adopted that model. Keep in mind that tipped employees benefit from inflation in that as menu pricing escalates, so do tips.
TBJ: Can you explain the mission of Mainstreet Ventures and share information about the background and growth of the company?
MG: The mission of Mainstreet Ventures is to consistently exceed our guest’s expectations by providing memorable dining experiences in creative and distinctive restaurants.
MSV was formed in 1982 when I joined forces with Dennis Serras and Dieter Boehm. All three of us had worked for the CA Muer Corp., which is where we met. We agree we like downtown locations and that is where Mainstreet came from. Our goal from the onset was not growth but quality growth. We also agreed we didn’t want to cookie cutter our concept. We wanted to tailor our restaurants for the communities in which we operated. While some share a name, no two look alike or have the same menu. We currently own and operate 17 restaurants in five states.
TBJ: What are some of the things that MSV restaurants do to enhance the dining experience of customers?
MG: We are always looking to enhance the guest experience. We are constantly tweaking our menus to make sure we are giving our patrons what they desire. Our management and culinary development programs are about improving the guest experience. We have a central reservation system so guests can have a better experience in making reservations. They are calling an office full of highly-trained people in a quiet atmosphere where questions can be asked and answered, directions given, and special requests handled rather than calling a restaurant only to be put on hold while the host staff seats the guest at the door.
We have also developed a digital menu where we can pair food and wines for our guests, provide pictures of what is being ordered, keep the menu current so you don’t order something which we don’t currently have, and we can provide better and more complete descriptions of ingredients, whether or not an item is gluten free, etc.
TBJ: Which MSV restaurants are located in northwest Ohio and southeast Michigan?
MG: In the Toledo area we have Ciao, Real Seafood Company, Revolution Grille, and Zia’s. We have a restaurant called EO Burgers in Beavercreek, Ohio. In Michigan we have Real Seafood Company, Gratzi, Mezzevino, Carson’s, Palio, Chophouse, and under construction in Bay City another Real Seafood Company.
TBJ: Can you discuss the role that community support plays in the approach taken by MSV and provide some examples of these efforts?
MG: One of our guiding principles has been community involvement. We are a decentralized organization and tend to empower our general managers. They represent the restaurants in their respective communities and we encourage and expect them to be active and involved citizens. We seek out ways to give back to each community in which we do business. We believe that the support the community has shown us should somehow be returned. Collectively we help in raising over $1 million annually for various worthy causes and feel honored to be in a position to help. We will likely serve 2,000 meals at Real Seafood Toledo to those less fortunate on Thanksgiving Day.
TBJ: Can you discuss plans for further growth of the business?
MG: We currently have one restaurant under construction in Bay City, Michigan, right on the waterfront. It is a similar situation to Toledo except that it has a marina and mall component. The mall is a lifestyle center with a hotel, apartments, and numerous condos as well. Other than that I am looking at several sites ranging from Indiana to Bethesda, Maryland, but none are done deals. As I mentioned earlier we are not driven to grow but when the right opportunity appears and we have a management team ready we move ahead.
TBJ: Your company has initiated a new technology venture involving digital menus. Can you share information about the background of this venture and opportunities that you see for the future?
MG: About three years ago my director of wine and spirits and I developed a digital menu application intended for our restaurants. When other restaurant operators saw it they began to inquire about getting it for their own restaurants. We formed a new company called Imenutech and it’s been off to the races. We double the size of the company about every six months and we have thousands of tablets in the marketplace.
I think it is the way of the future, even in fine dining. In quick-serve restaurants you are already able to order and pay at the table at some establishments and this aspect will continue to grow. In upscale restaurants we find that the consumer wants more information and this is the best vehicle for providing it. We can provide calorie and other nutritional information without turning menus into books. Once comfort levels increase you will see them being used more completely as ordering and payment devices even in the higher end establishments. It will not only improve the guest experience but speed up service and improve tables turns.