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Saturday, October 10, 2009
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Restaurants seem to buck rough economy New sub shop in Brainerd is off to a good start Senior Reporter The worst recession since the Great Depression continues to take its toll on businesses, jobs and budgets. But one sector is attracting entrepreneurs - restaurants.
Jimmy John's gourmet sandwiches opened along Washington Street in Brainerd Sept. 15. Darby Sheets, who owns the restaurant along with his partner, Troy Hocum, said business has been better than good. When sandwiches were offered in a special for $1 Jimmy John's sold $1,000 worth of subs in four hours.
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Jimmy John's gourmet sandwiches restaurant opened Sept. 15 on Washington Street in Brainerd. Nor-Son constructed the building. Restaurant owner Darby Sheets praised Nor-Son for the work and the fast pace that allowed them to open in little more than two months after the project began. Brainerd Dispatch/Renee Richardson
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"I was worried about the location, but I'm not anymore," Sheets said.
Sheets tried to move a Jimmy John's restaurant here two years ago when franchises were available for Brainerd and Alexandria. But after extensive searching and negotiations for particular sites fell through, he ended up opening the Alexandria restaurant first. And then he came back for another shot.
"We just liked the Brainerd area," Sheets said. "It's a good business community."
Now Sheets said he's glad the company waited.
Jimmy John's renovated a site that was home to a closed former service station and convenience store. When he came back for another look at the Brainerd community, a second offer on the convenience store site was accepted. With the recession, Sheets said he got a favorable price.
At the Small Business Development Center at Central Lakes College in Brainerd, work continues with small businesses as owners try to predict the future, as they look at cash flow projections and programs that can help them survive until things get better.
"Businesses now need to adjust to the new normal," said Greg Bergman, SBDC director.
Bergman recently attended a national SBDC conference. He said restaurant financing has amounted to roughly 50,000 Small Business Administration loans since 2000.
One out of nine SBA loans finance restaurants. The failure rate is 15 percent.
"That is high," Bergman said.
There are now about 1 million restaurants in the U.S., that's basically one restaurant for every 320 Americans, the SBA reports.
In the lakes area, Bergman said repair businesses, dollar stores and fast-food restaurants are doing well. Nationally, even some high-end perfumes are doing well as people are willing to spend on something that makes them feel good as they cut back on other discretionary spending, Bergman said.
At the SBDC, the center has been as busy as ever, Bergman said. Business counseling is up 20-25 percent. While some businesses are seeking help through struggles, others are looking at the opportunity of starting a business. Some are trying to turn a layoff into a chance to work for themselves as a business owner.
For new businesses, Bergman said seeing half of startups go out of business within five years is pretty common, although there typically isn't as much churn here.
Regarding the rise in sub-sandwich shops here, Bergman said they are generally low investments in terms of equipment while offering a good value that fits what people are looking for now. He said pizza restaurants can fit in that same category.
"Right now it's the right type of business people are looking for," Bergman said.
At Jimmy John's, Sheets said the first Sunday here the sales volume was higher than the best day in Alexandria. The restaurant is selling double of the $7.50 J.J. Gargantuan sandwich here than in Alexandria. Sheets said the Jimmy John's organization sent extra help for the second week after opening.
"I know they were impressed," he said.
Sheets, a carpenter who previously worked in higher end residential construction and commercial construction, once built a house in the Twin Lakes area of Nisswa. After listening to his partner talk about getting into a restaurant franchise for a year and thinking about the long-term physical demands of the construction industry, Sheets said he decided to make the move.
Why a Jimmy John's?
"They are successful to start," Sheets said, adding the chain is known for high quality and speed through simplicity. Jimmy John's was started in 1983 by a 19-year-old Jimmy John Liautaud. The company is headquartered in Champaign, Ill.
The Brainerd restaurant is No. 989. Jimmy John's expects to have 1,000 restaurants by year's end.
Jimmy John's hired 23 workers and is still looking for more.
Sheets said he regularly gets calls from Baxter as residents aren't in favor of the limited delivery area. But for Jimmy John's, which delivers individual single sub sandwich orders, keeping the drive time within the city limits of Brainerd is a must, Sheets said.
If the restaurant business continues to experience success and the economy picks up, Baxter could get its own Jimmy John's. The next project for Sheets is putting in another Jimmy John's in Fargo, N.D., where there are already two.
"They want more," Sheets said.
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.
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