Restaurants and risk

Tampa Bay Real Estate News

As Metro Diner grows, so does its Tampa headquarters. In August, the ConSul team moved into a 9,000-square-foot office on the seventh floor of Tower Place, an office tower on Westshore Boulevard that overlooks Jefferson High School. There, 28 people — the vast majority of whom are tied to the executives' former companies — work on every facet of the Metro Diner expansion, from real estate to operations.

That level of customer service might be standard at FCB, but it's a practically unheard of dynamic to exist between a lender and a restaurant company.

"Thereʼs no false illusions that say the restaurant industry is the banking industryʼs favorite business," Connerty said, "because itʼs not."

Restaurants are a "less prominent" player within FCB's portfolio, Ellert said. Banks shy away from restaurants because of high failure rates and collateral that quickly depreciates.

"So how do you manage around that?" Ellert said. "It's with track records and proven brands."

Metro Diner's business model is as enticing as its platters of comfort food. The restaurant has broad consumer appeal at a palatable price point, making it a place that diners could visit regularly. Startup costs for each location are around $1 million; annual sales are $3 million.

The economics of the concept, combined with the decades of experiencethat Sullivan, Connerty and Sahlsten bring to the table, sealed the deal for Ellert.

"Theyʼve done it before, and they know what theyʼre doing," he said.

Going national

Modern-day Metro Diner was founded in Jacksonville in 2000; in 2014, the restaurantʼs founding family, the Davolis, entered into a partnership with ConSul Hospitality Partners, which is controlled by Sullivan, Connerty and Sahlsten. In late 2015, ConSul exercised its option to acquire 100 percent of Metro Dinerʼs intellectual property.

The ConSul executives have been pleased with the reception Metro Diner receives in each new city where it opens. Its 2010 appearance on Food Network's "Diners, Drive-Ins and Dives" has given Metro Diner brand recognition hundreds — in some cases, thousands — of miles away from its hometown of Jacksonville.

Restaurants are now open in Florida, Georgia, North Carolina, Virginia, Indiana, Pennsylvania, New Jersey and Las Vegas. More locations in Nevada are in the works, as are Alabama, Utah and Arizona.

Its first store in the Tampa Bay region opened in St. Petersburg in mid-2016; ConSul is also targeting locations in Brandon, Wesley Chapel and Lakeland.

In the long term, the group is considering locations in Tennessee, Texas, the Ohio Valley and New England.

In each area, ConSul identifies a joint venture operating partner who will open several restaurants in that region. That person brings on a joint venture investment partner — typically a local businessperson, Connerty said — and identifies a managing partner for each location. Between those three partners, more than 30 percent of each location is locally owned.

Either Connerty, Sullivan or Sahlsten attends each restaurant opening, examining every part of the process, constantly looking for ways to improve.

Connerty, in a hat and sunglasses, recently visited the Ponte Vedra Beach location incognito. Waiting for his table, he overheard other customers chatting about the benches that had been added to the waiting area. Someone mentioned that shade would be nice — so he made a mental note to look into umbrellas.

The drive to constantly improve goes beyond Connerty's undercover mission. Each quarter, ConSul gathers its joint venture operating partners, investment partners and suppliers in Tampa to examine its business.

"We tear the business down and put it back together in two days," Connerty said.

The ConSul executives, Connerty said, knew early on in their partnership with the Davoli family that Metro Diner had massive potential. ConSul set aside its growth plans for Besito Mexican, an upscale concept, to focus on Metro Diner.

But the growth so far has surpassed even the executives' own expectations. "We are pleasantly surprised at how well itʼs gone," Connerty said.

Ashley Gurbal Kritzer is senior reporter for the Tampa Bay Business Journal.

Apr 7, 2017

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