Five Questions

Mike Mcguigan knows how to turn failing restaurants into

profitable businesses. His McGuigan Enterprises operates Morgan’s Forest on

Sanibel and Channel Mark and Squiggy’s restaurants in Fort Myers Beach.

McGuigan’s current challenge is Brixz Grill & Bistro, which opened in

December in the notorious city-owned location that formerly housed Bradford’s.

McGuigan hopes Brixz Grill & Bistro, perched atop a prominent rise facing

McGregor Boulevard at Fort Myers Golf Course, will become a magnet for diners

from surrounding neighborhoods and beyond.

Why did you take on this challenge?

Everyone we talked with in the neighborhood said the same

thing: “We’re looking for an affordable good place, not a cheap place.”

Residents have longed for an alternative to the traditional, cold, country-club

atmosphere. Locals have comfortable incomes and growing families. They want a

good spot close by where they can stop in. It’s a prime location and the

immediate market has never been fully tapped.

How good are the lease terms granted you by the City of Fort

Myers?

I always look to make money on an investment right away.

With Brixz Grill & Bistro, I expect to pay back my initial investment of

$200,000 in the first two to three years. Typically, it would take four to five

years. Because the city wanted to stanch losses from operation of the former

restaurant, they offered a good deal. Rent typically would cost a restaurateur

8 percent of sales from day one. The city offered 18 months free rent,

afterward charging just 4 percent of sales when the restaurant’s annual gross

sales cross $1.5 million. They also kicked in $50,000 up front toward the

quarter-million-dollar renovation costs. We signed a 3.5-year lease, renewable

for two five-year periods, and I have the option of walking away with a 120-day

notice. For me, it’s a no-lose situation.

Some restaurant sites struggle for years despite outstanding

locations and committed owners. What does it take to achieve a turnaround?

I love a good restaurant location with a bad reputation.

Public attention is riveted on the place. People are rooting for the new

management. Everyone will try it at least once. The new owner’s task is to

astound and amaze with the first impression. Every sense must attest that this

is a totally new entity, disassociated from anything that preceded it. We

changed everything, inside and out. The new restaurant looks, feels, smells and

tastes different, down to the last detail. It helps customers conclude that

this is unlike any restaurant experience that came before.

What’s the typical financial risk and success rate of

opening a restaurant?

Restaurants are just about the highest-risk business there

is. Odds improve for someone who knows the business. The most common problem is

under-capitalization, which is why chains tend to make it. I routinely add 20

to 30 percent onto a project budget to anticipate unforeseen costs and ensure

survival for the first year or two. Still, other restaurants can’t outlive

excessive costs stemming from mismanagement, theft and employee turnover rates.

As an example, just by bringing my own established policies to the city’s

former restaurant, I could have cut their operating costs by 75 percent.

Turnaround situations like this one offer a minimal downside and a large

upside, up to 10 times the initial investment. I like that sort of risk.

(The National Restaurant Association cites an average profit

margin of 4.7 percent for a restaurant with an average customer ticket of $15

to $25. According to Dun & Bradstreet, the annual failure rate for U.S.

restaurants ranges from less than one to one-and-a-half percent, slightly

higher than for all businesses. Nevertheless, restaurants have a reputation as

high-risk and restaurateurs have scant chance of securing start-up loans.)

When will you know that you’ve made it with this new

restaurant?

I’ll start to feel good after the first week we’re open,

when I’m on the floor shaking hands, thanking customers and hearing comments on

the food, value, service, cleanliness, atmosphere and decor. I’ll be confident

in our success after our first season, when I look at what we have in the bank.

By September, when I see how the summer fared, I’ll be even more confident.

Along the way we will constantly evaluate and tweak the concept, theme, menu

and pricing structure. Good ideas come from everywhere. I’ll be listening.