Silver Diner revamp refuels 6-unit chain's forward drive

Nation's Restaurant News, March 4, 1996 by Suzanne Kapner

ROCKVILLE, Md.--With a $14.2 million infusion of capital, a refined design and a new unit posting record sales, the Silver Diner, like a '57 Chevy with a new transmission, is revved up for the future.

With average unit sales between $3 million and $4 million, the six-unit chain is surpassing volumes of some of the more-established casual dinner houses.

The 200-seat store here does $4 million in annual sales, and turns tables 20 times daily. On its busiest days the 5,000-square-foot restaurant serves 2,500 people, said Robert Giamo, Silver Diner founder, president and chief executive. The newest unit, which opened in Tysolis Corner, Va., in December, is expected to exceed those figures. In its first 28 days the restaurant grossed $310,000.

Tysons Corner also is the first unit to sport an updated restaurant design what features more chrome, bigger windows and brighter colors.

We want the restaurant to the the billboard," Giamo said. Me added that the design firm spent six months researching customer preferences before formulating a proposal.

"Customers said they wanted more than just a burger-and-shake place," he said. The Tysons urn, added entrees, which increased dinner sales to :60 percent of the total mix.

"He's a good learner and a sharp operator," said Paul Cohn, executive vice president and director of development for Capital Management which operates numerous restaurants in tire D.C. area. "In haven't heard too many negatives about the concept. He's really used this area for a laboratory and done good tests."

Silver Eliner's strong performance recently attracted Food Trends Acquisition Corp., a company formed to invest in concepts that show national chain potential. Food Trends chairman George Naddaff, one of the original developers of Boston Market, said Silver Diner's unique concept, ability to replicate and a management team that can engineer a national rollout fit the bill.

"Food Trends went public a year ago and raised $16 million for the sole purpose of searching the U.S. for a concept that we could invest in," Naddaff said. He said Food Trends examined 120 compa nies before setting its sights on Silver Diner.

According to the agreement, which closes this spring, Silver Diner would receive $14.2 million in cash and 55 percent of Food Trends, stock. In return, Food Trends would have a 45-percent stake in Silver Diner. Naddaff emphasized that the deal differed from a traditional merger in that Food Trends is merely a funding vehicle, not an operating company.

The money will fuel a desire for expansion along the eastern seaboard that has been brewing, like rich diner coffee, in Giamo's head since he opened the first unit in 1989.

But Giamo's entry into the restaurant business began almost two decades earlier, when, at age 19, he became one of the youngest Blimpie franchisees. Following that venture he opened The American Cafe, which grew into a small D.C. chain in the 1970s. He sold his 70percent stake in 1986 to financial backer W.R. Grace.

After reading the book "American Diner: Then and Now," Giamo became enamored of the classic, art-deco diner. With time, energy and money in his pocket after the American Cafe sale, Giamo toured more than 500 diners across the United States. He became convinced that the concept filled a gap between fast food, where customers spend 20 minutes and $5, and casual chains, where people spend an hour and about $10. Customers at the Silver Diner usually spend half an hour and $7.

He opened the first unit in Rockville with partner and executive chef Ype Von Hengst by marrying traditions with modern conveniences.

Silver Diners retain the low, linear, chrome-plated look of the classics, with big leather booths and authentic 1940s-era jukeboxes that evoke memories of singers like Buddy Holly and words like "peachy keen." But operations are strictly ,9Os style.

Servers are no more than 20 steps from any table in their station. They order via computer and runners bring out the food, which is served within 10 minutes nr else the meal is on the house--a fact that maximizes table turns.

The open kitchen, scaled-down menu and sous vice preparation make operations simpler-than traditional diners, which could have a kitchen staff of 10, Giamo said. Silver Diner kitchens are staffed by no more than five people, he added.

The menu represents traditional diner fare with updated options. Patrons can run the gamut from meatloaf to Southwestern Vegetarian Salad. Giamo said 20 percent of customers opt for healthful selections.

In an effort to double takeout to 10 percent of sales, Giamo is expanding the bakery section to include a deli with prepared entrees and made-to-order sandwiches.

Now, with fine-tuning complete and money in the bank, Giamo is eyeing other eastern cities, possibly Philadelpha or Atlanta, and hopes to open six units this year.

"Going national is feasible," said William Lecos, executive vice president of the Restaurant Association of Metropolitan Washington. "But there are a lot of hurdles along the way. All the pieces are in place but-it doesn't mean the game is done."