Granite City Food & Brewery

Granite City Food & Brewery

The idea behind Granite City Food & Brewery [3]—that people like good food and good beer—is not unique. But the system by which the 19-unit brewpub chain delivers its made-from-scratch desirables is, company officials say.

Through a proprietary method of brewing its signature beers that was awarded a patent in January, St. Louis Park, Minn.-based Granite City is steadily introducing its food and beer throughout the Midwest. The company, which was founded in 1996 by a handful of veterans of the Littleton, Colo.-based Champp’s Americana concept, expects to reach 25 units by year’s end.

“We wanted to come up with a concept that had the made-from-scratch menu we knew from the Champp’s days, but we wanted to get away from sports bars,” Granite City’s founder and chief executive Steven Wagenheim says. “[We asked] ‘What can we pair with the made-from-scratch food that would create good synergy?’ So we said, ‘Let’s create made-from-scratch beer.’”

Wagenheim says research showed difficult margins in the microbrewery genre because of the costs involved with having a brewery at every site. Granite City’s solution was a patented brewing process that officials call “Beverage Leverage,” wherein the initial, most expensive and complicated part of the brewing process is done in one central location. Then the resulting wort—the sweet, nonalcoholic liquid that is fermented into beer—is delivered to each restaurant and finished on site.

Officials say the process, which they describe as “par-brewing,” allows Granite City to serve five signature beers that are brewed on-site without the need for a full brewery at each location.

“It’s an interesting thing,” says Darren Tristano, executive vice president of information services at Chicago-based foodservice consulting firm Technomic Inc. “They do all the heavy lifting and then ship it off and brew the beer efficiently.… Most microbreweries do it all on-site, so this system certainly creates efficiency and reduces the investment and the time it takes.”

Granite City’s par-brewing system has influenced the chain’s growth strategy, Wagenheim says. New units must be within 500 miles of a wort house production facility, the first of which is located about 45 minutes north of Des

Moines, Iowa. That location supplies units as far west as Wichita, Kan., and as far east as Chicago.

Granite City officials put the first restaurants in second-tier communities, planning to work their way up the population ladder as the concept grew, Wagenheim says.

The first unit opened in St. Cloud, Minn., which is nicknamed the “Granite City.” It was followed by openings in similar-sized cities like Sioux Falls, S.D., and Fargo, N.D., and then in slightly larger cities like Cedar Rapids and Des Moines, Iowa.

“Our marketing position is—and this is our internal slogan—‘We give you a $25 experience for $13,’” Wagenheim says. “What we really want to do with this made-from-scratch product is give a really upscale type of product in terms of presentation, flavor, quantity and originality. It’s very distinctive and non-chainlike.”

“We call our food ‘comfort food with a twist,’” says Art Nermoe, director of culinary research and development for Granite City. “The concept was founded in the Midwest, and that’s an area that has grown up around meatloaf and steak and mashed potatoes. We always knew that if we took some of those items and added a flavor twist, all based on real ingredients, that would be a key to building our business and building repeat guests.”

One of the most popular menu items is the Granite City Meatloaf, charbroiled and served open-faced on grilled ciabatta, for $12, Nermoe says. It is topped with bourbon-onion sauce and crispy fried-onion strings and served with mashed potatoes, which are made fresh throughout the day with baby red potatoes, sour cream and butter.

Regarding growth, Wagenheim says: “We’ll do a regional model where we’ll put the wort house at Point A and draw a circle with a 500 mile radius. Those cities that have more than 175,000 people in a trade area—it doesn’t have to be in the city limits, but in a trade area—are eligible markets.

GRANITE CITY FOOD & BREWERY

Owners: Publicly traded under the symbol GCFBHeadquarters: St. Louis Park, Minn.Number of units: 19Average unit volume: $4.3 millionStates where located: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and WisconsinType of concept: casual-dining brewpubAverage check: $13.23Year founded: 1996

“We want to feel confident that our price point fits in the middle of the casual-dining spectrum,” Wagenheim adds. “Because at $13.23, our average check breaks down to about $7.90 for lunch and about $17.50 for dinner. $7.90 is not that far off from a fast-food price, so we get a lot of the administrative staff [for lunch] as well as the suits and ties.”

Wagenheim says Granite City will debut later this year in Chicago; Orland Park and Peoria, Ill.; Creve Coeur, Miss.; Rogers, Ark.; Fort Wayne, Ind.; and Toledo, Ohio, totaling seven new units in 2007. Eight new units are planned for 2008, and leases have already been signed for six of them.

Typical Granite City units are approximately 8,850 square feet, seating 260 people inside and 60 in an outdoor patio. Startup costs for each unit run approximately $3 million. Average sales are about $4.3 million per unit, which Wagenheim says he expects will increase as Granite City moves into larger markets.

“As they move out of the Midwest, regional differences are challenging,” says Aaron Noveshen, founder of The Culinary Edge, a restaurant consulting firm in San Francisco. “There are different levels of sophistication, and costs will be different. The cost of doing business on the coasts can be a lot higher.”

Nermoe says Granite City may address such challenges by using the concept’s biweekly chef’s specials program to tailor items to suit regional tastes.

Beers are, of course, an integral part of the concept.

The chain’s beers are incorporated into several menu items, including the popular Ale and Cheddar soup, which sells on average about 2,500 cups per store per week, Nermoe says.

Wagenheim says food accounts for about 80 percent of sales and alcohol makes up about 20 percent.

“Obviously, they’ve got a lot of competition with other brewery-oriented places, but they fit nicely into that growth niche within casual dining of places that have an adult-beverage focus,” Technomic’s Tristano says.

“Our goal is to be one of the major players in casual dining throughout the country,” Wagenheim says. “Our idea is not to do 25 units; we feel like we could be 400 or 500 units, because we’ve proven that this thing can work anywhere.”

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