With its exterior decked in teal and polished metal, one could easily mistake Mel's Diner for just another trendy restaurant capitalizing on nostalgia and cranking out burgers and shakes. But the small chain of diners that serves traditional comfort food and calls itself "Southwest Florida's Kitchen" is a homegrown success. Along this region's busiest thoroughfares, Mel's neon lights and crowded parking lots have become a twilight tradition.

"We've got a large menu, a low check average, and we do high volume," says founder, president and CEO Chris Karakosta, explaining his restaurant's hold on Southwest Florida. "We serve 3.5 million meals a year, 2 million between Fort Myers and Golden Gate. We've got regulars who have been coming since [Mel's Diner] first opened in 1989, and we've always been a family that's proud of what we do."

Whether it's the family-friendly atmosphere, fare that includes pot roast and turkey, or an average meal cost of $9, Mel's has become a local staple. With an updated infrastructure, upgraded menu and a new name-Mel's Gourmet Diner-the 11-unit chain is entering a period of rapid expansion. New stores are planned for Naples, Cape Coral and Sarasota in the next 18 months. Within 10 years, Karakosta hopes to expand the chain to 50 corporate locations plus 50 franchised units.

Prepped in the Kitchen

Karakosta is a restaurant lifer who returned to his roots when he opened the first Mel's Diner. Growing up near Chicago, he worked alongside his parents in the family's diner, Dimitri's. By the time he was 19, Karakosta was manager of the restaurant and responsible for 25 employees.

"I never thought to do anything else," says Karakosta, now 52. "There might be days when I get up in the morning and wish, but this is a passion. Even when I have time off, I'm grocery shopping and cooking for my friends or family. That's what I enjoy most on the weekends. My career is really my hobby."

In the late 1970s, Karakosta entered a joint venture to open his first concept restaurant, On Stage. Located in a suburban strip mall near Chicago, the restaurant had Hollywood décor and entrées named after movie stars. Karakosta's next endeavor, Reel People, had a similar theme. After he closed the latter restaurant in 1982, Karakosta decided to spend a year in Florida helping a friend open a Naples eatery.

Karakosta quickly decided to make Southwest Florida his permanent home, and with two partners he opened the Green Onion, an upscale steak-and-seafood restaurant. Popular among seasonal residents, the steakhouse's brisk winter business slowed considerably in the off-season.

"We opened the first Mel's Diner to subsidize the other restaurant in the summer months," says Karakosta. "We bought our first building in San Carlos, an A-frame, Stuckey's-like roadside diner.

"The name Mel's, we thought, conveyed a level of comfort. There was also the tie-in with the show Alice, so we [thought] people might stop out of curiosity."

Modeled after Dimitri's and initially staffed by Karakosta's family, the 120-seat diner attracted local residents, snowbirds and the growing stream of commuters traveling U.S. 41 between Naples and Fort Myers. Despite a retro theme and shiny exterior, the Mel's formula has always been simple-provide a large selection of hot food at an affordable price.

"There's really no secret to the diner concept," says David Manuchia, president and chief operating officer of Restaurant Partners Inc., an Orlando consulting firm. "What makes diners popular, I think, goes back to when everybody was a kid. People like big portions, friendly food and a place where you don't need reservations."

Restaurant Partners Inc. also owns and operates Market Street Café, an upscale diner in Celebration, Fla. Manuchia says that Florida's population of Northern transplants provides especially fertile ground for the diner concept.

"I don't think diners ever went away, they just moved south," he says. "As the population shifts, what people like up North becomes popular down here. Not many people are from Naples; they're from Flint, Mich., or Poughkeepsie, N.Y., and they grew up eating in diners."

The formula might be simple and the concept an easy sell, but operating a diner does pose challenges, says Karakosta. Over the years the menu at Mel's has grown to include everything from steaks and seafood to grilled cheese sandwiches. The current menu offers more than 70 entrées.

"The difficulty has always been in maintaining the quality of the food," he notes. "Most restaurants are specialists, and they need to keep up with the competition in their own specialty. With a diner, you really need to have the full gamut and keep getting better at each specialty. You need to be as good as everyone."

A New Recipe for Success

Judging from the chain's growth, Mel's Diner has been competing very successfully in the Southwest Florida market. In 1992, just three years after opening the San Carlos Park restaurant, Karakosta opened a second diner in Fort Myers. In addition to six locations in Lee and Collier counties, there are now units in Port Charlotte, Venice, Bradenton, Sarasota and New Port Richey. Systemwide sales in 2005 topped $25 million.

To handle the growth, Karakosta has lured corporate managers from larger companies such as Applebee's and Disney. Once a mom-and-pop operation, Mel's now operates under a corporate name, Creative Restaurant Management Co., and its leadership includes an executive vice president and two district managers.

"When we expanded to 10 units, we needed five or six key people," says Karakosta. "We're growing bigger every day, so we brought in some talent with young, fresh ideas who can be mentors for our existing staff. The growth we are planning now is for them, to provide opportunity to the people joining us."

Hired as chief operating officer in 2004, Ralph Desiano spearheads efforts to streamline operations and prepare the company for expansion. He has experience as an executive with Uno Restaurants and Briad Corp., a major T.G.I.Friday's operator.

"I'm here because I saw a concept that had carved out a niche in the restaurant industry that I had not seen anywhere else," says Desiano. "We're nestled right between Perkins and Applebee's, serving breakfast and dinner. Guests look at the portions we offer, and they look at the check, and they feel good about the experience. It's a loyal relationship."

Desiano's first charge has been to upgrade the chain's infrastructure. Early this year, the company installed a new computer system with inventory, labor-management and operating-cost software. The system allows managers and executives to retrieve data quickly and helps each restaurant run with less waste and more profit.

"It was a big chunk of money to lay out, but technology is the starting point, and we now have the latest and greatest," says Desiano. "We have all the capabilities as far as tracking food quality and costs. When we're in the middle of the rollout, the system will be able to tell us what works and where we might have missed the mark."

Another goal is to broaden Mel's target demographic. With an eye toward 20- and 30-somethings, the company will revamp each store's interior décor, providing warmth with more wood and earth tones.

Under the direction of Fred Scherger, director of culinary operations, Mel's is also tweaking the menu, eliminating a few items and enhancing others. The new menu will include breads like ciabatta and such desserts as bread pudding and warm apple strudel. Such entrées as Chicago chicken muffuletta should appeal to more sophisticated palates, says Desiano. Even one of the current menu's most popular items, meatloaf, gets a makeover; caramelized vegetables, sautéed onions and portabella mushrooms have been added to the traditional recipe.

"That's in line with a very common trend," says Darren Tristano, who tracks the restaurant industry as managing director of Technomic Information Services in Chicago. "We've seen companies like Applebee's and Chili's putting more sophisticated ingredients in their menus, using more bold flavors. The attraction would be to a younger generation."

"Mel's Diner already has a pretty broad demographic, but it is somewhat skewed toward people who are 50 and older," explains Desiano. "We'll continue to cater to that 50s and 60s group but we would like a little bit more of the younger clientele. That's where the Gourmet Diner comes in."

With a new menu and management structure in place, the plan is to first open new restaurants along the west coast of Florida, says Desiano. Expanding by 15 percent to 20 percent of its base each year, the company will then break into the Central Florida and the East Coast markets. Eventually, Desiano wants to attract experienced restaurant executives who can establish multi-unit territorial franchises outside the state.

"I'd say that increasing the number of units by tenfold is a pretty aggressive plan," says Tristano. "When you reach about 10 units, things get complex, and a lot of regional chains find it hard once they get further from their base. That's where you need good management structure and a lot of built-in compliance. But people flock toward that nostalgia concept, and Mel's is in a pretty good niche."