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Flat Out Crazy talks funding, growth

Greg Carey, president and chief operating officer of Chicago-based Flat Out Crazy Restaurant Group, the operator of the Stir Crazy and Flat Top Grill Asian-theme casual-dining chains, describes himself as “one of those odd ducks that likes the thrill of taking an already conceptualized business and growing it.” While he’s pulled off the job before, overseeing the expansion of concepts such as Rainforest Café and P.F. Chang’s China Bistro, he admits that “it’s not always the easiest job in the world, but it fits my management style.”

Easy or not, Flat Out Crazy plans to start growing again over the next 18 months and has secured $8 million from U.S. Bank and HillStreet Fund IV to do it. The company is targeting Texas, the Rocky Mountain states and the mid-Atlantic region for developing about six Stir Crazy casual-dining restaurants and about nine fast-casual Flat Top Grills, where guests create their own stir-frys. Plans call for two Flat Tops and one Stir Crazy this year, with the balance to come in 2011. Currently, the company operates 28 units in eight states.

Speaking with Nation’s Restaurant News from the latest Flat Top Grill in the Loop in Chicago, Carey said it was both the company’s entrepreneurial culture and improved operations and menus that convinced its lenders to partner with it and will keep it well positioned to grow as the economy recovers.

What was your pitch to U.S. Bank and Hillstreet for funding your growth plans?

We look for partnerships. Hillstreet was very hands-on and wasn’t going to just give us $5 million. With this deal, we wanted to work with somebody who’d give us the funding and covenants that worked for everybody, and who at the end of the deal would want to give us more money because they liked the partnership and could see the value in it. With U.S. Bank, our CEO, Fred Mayerson, has done business with them for years, and it’s a matter of continuing to go back to them and say: “Look at our numbers, and look at the growth potential here. Look at how well this senior-executive team executes.” They could see that, and they saw that the industry’s coming back a little bit, and they wanted to be part of the early growth of this company.

Next time we go for funding, we’re hoping that both entities will want to play again. We’re hoping that’s the last round we’ll need to get to build out to a $150 million company. We’ll need about four years of significant growth, with about 15 units a year.

With the economy having signs of coming back to life, I think everybody would admit today that there are nuances that we can see that maybe we couldn’t see in 2007 and 2008. I think it’s given everybody who held out and maintained a quality business hope that it’s turning around.

What kinds of nuances are you seeing?

It’s almost hard to put your finger on it, because it’s not like the jobs have gotten any better. Unemployment’s still what it is. Certainly, foreclosures and the housing issues are still there, but we’re feeling more energy in our restaurants. The negative comps are really slowing down. But more than that, people are starting to comment, “We feel better about going out, and we’re doing the things we used to do.” Those comments really encourage us, because we’ve been a strong “used to do” concept for a long time now.

What Stir Crazy did during the down time was look at this hard. We asked what could we do as an organization to be responsible and give some level of humanity to our guests? We actively pursued a plan to lower our check average — by almost $1.50. We put a section on our menu that’s an $8.88 section, for an incredible value. We did it to make it easier for our guests to decide to go to Stir Crazy, but more importantly, we wanted to tangibly put out there that we understood what people were going through. It’s been received overwhelmingly, and our guest count losses have been significantly better than we’d hoped for.

You couldn’t put that genie back in the bottle if you wanted to, right?

I have no desire to take that off the menu. We want to keep that mindset, even when times get better. It’ll never be back to the free-spending ways that this country experienced for years. I think that’s healthy, because it means people will have to be better at what they do, more fiscally responsible, and have to understand their guests’ needs better. I’m trying to find ways now to add more of that without looking like we’re discounting or pandering to the challenge. So we’ll add another section to Stir Crazy’s menu that’s in the same price range, but it’ll be pitched as more health-conscious.

Did you make significant back-of-the-house changes after taking over?

We made a conscious decision to integrate the two brands and look at best practices. If Flat Top did something better than Stir Crazy, we went with that, and vice versa. As a result, a lot of our financial systems from Stir Crazy are now part of Flat Top. Some of the food items from Flat Top were incorporated on the Stir Crazy side. We just worked out a deal with Sysco to pick up both concepts nationally, which is going to create incredible efficiencies for us.

What’s changed the most in the recent past about growing a restaurant concept?

Even though we’ve been involved for about four years with this concept, I still feel like we’re very entrepreneurial. I want to keep everybody focused on that spirit. If we can maintain that mindset when we get up to 60, 80 or 100 restaurants, we’re always going to be better because there will be that enhanced energy. What happens with some companies when they pass the 50- or 60-restaurant mark, things tend to get rote or everyday.

At Stir Crazy we change our menu three times a year, and we don’t really have to. We’re always trying to create the idea that there’s something interesting going on. That’s what small guys and independents do. As long as the mind-set for change is there, and you’re flexible enough to make a change that doesn’t work out, you can fix it and go forward again with whatever the new nuance needed to be.

So how do you identify and recruit managers with that entrepreneurial mindset, when often those people are trying to go into business for themselves?

Anybody that wants to be in business for themselves and do they’re own thing, they’ll do it. The failure rate for something like that is over the top, but I encourage it. We’ve all given it a run. When we look for management, the focus on that manager profile is the mindset, not so much whether they have the means to be an entrepreneur. But I want a person who’s excited about jumping into the fray, and when things don’t go right, they raise their hands and say, “This is what I learned, and this is how we’ll change it.” And for that, we’ll offer growth. Our two regional managers for Flat Top were unit-level GMs, same with our three regional guys for Stir Crazy.

Contact Mark Brandau at [email protected]


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