Restaurant chain serves a profit in tough times
FORT LAUDERDALE, Fla. (AP) -- In today's slow economy, restaurant chains are folding across America, but Duffy's Sports Grill keeps expanding.
The South Florida casual-dining chain just opened in Deerfield Beach, its 17th outlet, and soon will debut in Delray Beach. Restaurants are reaping profits and adding jobs, with staff topping 1,200 employees, said chief executive Paul Emmett.
What makes Duffy's thrive while Steak & Ale, Bennigan's and others are shutting down?
Buying failed locales at bargain rates. Negotiating hard with suppliers for low prices. And focusing on value for clients, especially through its frequent-diner program, restaurant experts say.
"They've got a great management team who knows what they're doing," said Richard Lackey of Lackey Cos., a restaurant consultancy in Palm Beach Gardens. "The restaurant industry had become bloated. You've got a lot of people who were riding the tide of good fortune and did not keep up to date with new trends. Duffy's is cutting-edge."
Perhaps the chain's greatest innovation is borrowing tools from airlines to adjust prices for peak and slow times and to reward loyal clients.
For example, Duffy's offers 40 percent off all food weekdays from 2 p.m. to 4 p.m., when tables tend to be empty. To qualify, diners must sign up for its MVP frequent-diner card. Cardholders also get a $10 credit for every $100 of purchases, among other rewards and benefits.
About 70 percent of sales come from more than 200,000 MVP cardholders, who mainly live or work near Duffy's outlets. Many retirees come in weekdays just before 4 p.m. to order cut-rate dinners and then, buy "2 for 1" drinks at happy hour that starts at 4 p.m.
"For people living on fixed incomes, it's all about value," said Emmett. "And we're fanatical about value."
Keeping costs down starts with buying good locales at discounts, including many outlets from the defunct Roadhouse Grill of West Palm Beach.
"There's no restaurant we've ever opened that hasn't been someone else's failure," said Emmett, who spent 25 years with New York heavyweight Restaurant Associates before investing in Duffy's in 2001.
Duffy's also negotiates prices directly with manufacturers and suppliers, the way mega-chains do, rather than buying through wholesalers who tend to charge more.
Smart purchasing is key, because food and beverages make up about one-third of costs for restaurants. Food prices are surging posting their largest spike in 27 years in 2007, said the National Restaurant Association.
Duffy's then changes its menu at least twice a year, partly to offer those items it can buy at favorable rates and still turn a decent profit. That might mean adding a new kind of seafood that is not rising in price as fast as another, Emmett said.
Top brass also keeps close tabs on operations to boost efficiency. General managers from all restaurants meet Tuesdays to share best practices. And owners invite staff to round tables with no direct supervisors present.
Server Lindsay Levine, a 4-year veteran in Boca Raton, recalls telling one round table that clients often asked for sweet potato fries and broth-based soup such as gumbo. Both items are now offered.
"Your input actually matters," said Levine, 19, adding that staff is encouraged and groomed to move up company ranks.
Owners have made missteps. Emmett was doing so well buying Roadside Grill locales that last year he bought the Roadhouse company, only to find it tough to unload units he didn't want amid a credit crunch. He sold the ailing firm months later at a multi-million-dollar loss. The buyer later liquidated Roadhouse altogether.
"It's going to take me a couple years more to dig myself out of this financially," Emmett said.
Duffy's can't escape consumer trends either.
Faced with rising costs for fuel and groceries, diners are watching their pennies, often foregoing a soda for tap water or skipping appetizers. The average check, without tax or tip, now runs about $18, down from $18.50 last year, said Emmett.
Still, more clients keep streaming in more than 2 million in 2007 alone.
Melissa Waldinger, a 35-year-old-lawyer, said she likes the diverse menu, good service and relaxed atmosphere. She and a girlfriend shared spinach dip at a recent lunch, as her 5-month-old,Hunter, played in his stroller by her side.
"When I was single, I used to come here a lot on Friday nights," Waldinger said. "Now, I come with the baby. I'm a big fan."
(Copyright 2008 by The Associated Press. All Rights Reserved.)
