DEDHAM Mass. There’s nothing halfway about outpacing the field in sales, and Halfway Cafe, a six-unit casual-dining chain based here, is doing exactly that.
Last year, the chain’s sales were up 8 percent from the year earlier, at a time when many restaurant operations were struggling to simply keep pace with inflation.
John Grasso, who more than 18 years ago purchased and resurrected what was then a tired single restaurant with his late partner, David Steen, attributes Halfway Cafe’s success to great service and a value-oriented menu. Along with such American items as steamers, steak tips and wings, Halfway Cafe also offers a monthly selection of special entrées called “7 for $7.”
Despite the economic slowdown, Grasso this year is scouting potential new locations in such Boston neighborhoods as Downtown Crossing and the North End. He says he hasn’t found the right opportunity yet, given that the economy is taking a cautious tack.
“We want to look at the risk versus rewards and minimize the risk,” Grasso said. “It must be the right deal. Right now, we’re focusing on being the best we can be.”
That is more difficult in the current economic climate, he said.
“Our food costs went up 8 percent and liquor up 4 percent last year,” he said. “Then there are the hidden costs, like frying oil. It’s all up, and you can’t raise prices to balance it out, so we take it.”
Operators need to “be innovative and stay true to who and what they are, but stay current and offer value,” he said. “If you stand still, you will die.”
The Halfway Cafe concept grew out of Grasso and Steen’s experiences at operations such as Lord Bunbury in the Faneuil Hall Marketplace in the 1980s and Callahan’s Steak House in Newton, Mass., where they met.
The original Halfway unit, founded by Tom O’Riordan in 1964 in Dedham, had been a popular destination for steamers, pizza and pitchers of beer that had fallen on hard times. Grasso and Steen renovated and relaunched the concept in 1990 with a formula of serving “quality food at inexpensive prices while offering friendly, attentive service in a clean, comfortable environment.”
The menu is broad, offering everything from steamers and seafood to pizza, pasta, sandwiches, burgers and specialties such as pot roast or marinated turkey tips. The average per-person check is $29, including alcohol, Grasso said. He estimated that the chain sells more than 12,000 meals a week.
Industry analysts have their eye on Halfway Cafe.
“It’s on our radar with six units,” said Darren Tristano of Chicago-based Technomic Inc. “Given the economic climate and their positioning in family casual, they aren’t a real threat for ‘high’ growth. Their success will be based on how well they execute and the quality of service. Their menu seems broad, and the atmosphere looks inviting. My question would be, ‘Why go here versus Chili’s?’”
Hospitality consultant David Shinney of DCS Associates LLC sees Halfway Cafe’s pricing structure as “appealing in this kind of economy.”
“They’re positioned well because of the value they offer in terms of quality of product, portion and pricing,” he said.
Grasso likes to say he “ended up here by accident.” His first career choice, teaching, ended when a combination of low wages and an assault by a student drove him back to the restaurant industry, where he’d worked his way through college.
Jobs at Callahan’s, Hampshire House in Boston and others offered a training ground for what he gradually came to realize was “a real job” that he enjoyed.
With a friend, Michael James, he bought a closed restaurant on Boston’s North Shore, taking it “from zero to $10,000 in weekly sales,” he said. “It was my M.B.A. in restaurant management.”
Today, the six Halfway Cafe units range in volume from $1.9 million to $2.3 million. Sizes vary from 1,200 square feet in Dedham to 6,000 in Holbrook. The Holbrook unit features a function room and a video game room.
“We really need about 3,000 square feet,” Grasso said.
“We knew the first Halfway Cafe would be a success,” he said, “but not quite how much.”
Asecond restaurant opened in 1995 in Watertown and a third opened in Marlborough in 1999. There are also units in the Massachusetts towns of Canton and Marshfield.
When tech stocks plummeted, he recalled, “we had a little bump.”
“Now, we draw on those experiences and the periods like 2002-2003, when the economy faltered and it trickled down to us,” he said.
Halfway is a “nuts-and-bolts” kind of concept, Grasso said.
“Anyone can serve a cold beer and a burger,” he said, “but it’s really about the people who serve it.”
To that end, he’s worked to build a corporate culture of service, quality and value. Two of his staffers have been with the company 19 years, and 25 have been there 15 years or more.
“David believed that the Halfway Cafe is about its people,” Grasso said. “People work with us, not for us.”
The philosophy of “‘know your role and perform your job, because we are all accountable,’ is practiced daily,” he said. “We are a family. It’s not always perfect … but all family members bleed Halfway green. There is a tremendous amount of pride.”
The company offers strong benefits and a bonus program.
The chain is “reaping the benefits of people looking for more bang for the buck, and many come here twice a week,” Grasso said. “We knew when we hit $4 a gallon [for gas] that it would get extremely difficult. You have to control costs and not cut quality, and drive sales by quality service and lots of grassroots marketing. We have our managers let people know about our brand. We upgraded our website, and we spend a lot on electronic media. We take our menus around to different businesses with samples of food.”
Last year, he said he saw “an angry consumer.” This year, “they’re frightened, and they’re going out less and spending less,” he said. “They’ll pay, but they’re still angry, and they’ll take it out on small merchants. We raised prices last fall about 2.5 percent, which didn’t really keep pace. You have to be strong to survive because this is not going away.”
To drive traffic, Grasso is promoting “kids eat free with adult meals” early in the week and $7.99 “all you can eat spaghetti and meatballs” on Wednesday. He also is trying to “broaden the base and get more volume through the door,” he said.
“Working people are not sitting around the dinner table every night,” he said. “The supermarkets get their highest profit margins from prepared foods. It’s expensive everywhere, but people have more choices today. Even though their discretionary income is shrinking, they may dine out less frequently, go out two times a week for $100 each time or four times for $50 each.”
Grasso projects that the environment won’t improve much until the second half of 2010. Still, some observers say Halfway Cafe is poised to go all the way.
“Their culture is conducive to what’s happening,” said Daniel Newcomb, a real estate broker at Atlantic Restaurant Group Inc. in Marshfield, Mass. “They have well-informed managers who know what they have to do. They will be growing.”