Indy operators discover Columbus: economy spurs restaurant growth

Nation's Restaurant News, Feb 23, 1998 by Carolyn Walkup

COLUMBUS, Ohio -- A booming economy and an increasingly sophisticated local clientele are spurring restaurant development in one of the fastest-growing cities in Ohio.

Already boasting a sold base of service industry headquarters, including The Limited clothing stores and Nationwide Insurance, as well as Ohio State University, Columbus is experiencing a 20-percent employment growth rate, according to the Ohio Bureau of Employment Services. That growth bodes well for restaurant operators.

Demographic studies project that the population will reach 1.5 million by the year 2000, when average household income will total $65,000.

While Columbus formerly was considered one of the country's most ideal test markets for quick-service restaurants, it now is more noted for its innovative independent full-service operators. "There has been an explosion of restaurants that are catching up to pent-up demand," said Kyle Katz, who recently opened two of them, Magnolia and Barcelona, under the corporate umbrella of New World Restaurants.

Katz, a young real-estate developer who decided to become a restaurateur, enjoys mingling with his customers, whom he describes as "an eclectic mix of people." His restaurants currently are attracting local trendsetters and foodies.

"I came to this business from the outside, so I found people who knew a lot about the industry. When I create the deal, my role ends and I turn it over to them," Kyle explained.

Brian Henshaw, corporate chef, creates the menus. "We don't forget that everything else is dressing around the food," Katz said. Magnolia, his brand-new restaurant with a contemporary design, does an eclectic take on European and Asian cuisines. Menu examples include a bento box sushi appetizer, osso buco, and a beef and chili-pepper stir fry with crimini mushrooms, scallions, tomato, bok choy and udon noodles.

Although both of Katz's restaurants have similar price points, their concepts differ. Barcelona has a Mediterranean menu and features many appetizers and sports a different ambience in a turn-of-the-century brick building in the historic German Village neighborhood.

Average dinner checks at both restaurants hover in the $28 range. Everything is made in-house, including breads at Katz's bakery, Fahrenheit 350, which he built to service the restaurants.

Although Katz has not purchased advertising in the past, he plans to start doing so this year to create a branded image as he explores additional restaurant expansion.

Cameron Mitchell Restaurants, now numbering six with two more planned for this year, are becoming an established brand in this market. With annual sales now nearing $15 million, Cameron Mitchell, majority partner, will combine the six separate limited partnerships that run each restaurant into one entity at the end of March.

Mitchell believes that having a strong brand identity is good for business. To date, his restaurants are Cameron's Contemporary American Cuisine, Cap City Diner, Martini Ristorante and Columbus Brewing Co. Restaurant & Brewery.

In the works for openings later this year are Mitchell's, a high-end downtown steak house, and Columbus Fish Market, a 250-seat East Coast-style fish house with a retail seafood market. Mitchell plans to raise capital for those and more new restaurants through a private offering and a line of credit. The companies currently have no debt, he said.

A successful entrepreneur for the last five years, Mitchell said all future projects will have at least 200 seats. "We have stopped building restaurants with 90 to 100 seats that gross $1.5 million. "We've made a decision to build only restaurants with 200 or more seats in high-volume traffic areas. They take the same amount of work as a smaller one," he said.

He projects that the Fish Market, set to open this fall, will gross between $4 and $5 million, including the retail component, and that the steak house will gross about $3.5 million.

"Independents have a leg up," Mitchell said, in explaining his rapid growth. "We can move faster because we know the market. I can respond quickly."

Mitchell expects his company soon will surpass the Fifty Five Restaurant Group, where he formerly worked, in annual sales. He believes there is room for him to open a total of a dozen restaurants in the metropolitan area.

"Our goal is to make 8 percent on the bottom line. We are close to that and are working on some economies of scale," such as volume purchasing, he noted.

He has started recruiting nationally for top-level managers and is succeeding in attracting Midwesterners who left to work in larger cities but eventually want to settle down back home.

A group of some 20 investors, headed by Ralph Denisco, opened Chapin's last fall, a restaurant licensed to use the name of the late singer/songwriter Harry Chapin, and expects to open more. Although Chapin had no Columbus connection, Denisco and his partners believe the 1970s' recording artist was well-known enough to attract a broad clientele today.