Taking the Plunge into New Business Opportunities

Jul 23, 2019

For many business owners, it can be hard to sit still once they've been bitten by the entrepreneurial bug. If you’ve ever considered opening a new business, you’re in good company in the IGA family. We talked to some IGA retailers across the country who have taken what they learned from running grocery stores and applied it to fun, new enterprises. From event spaces and a restaurant highlighting retailers’ catering and food service expertise to a food truck and snow cone stand that serve as a draw for the store, read on for a look at their ventures and business insights.

A Gathering Place

Business name: The Old Ptacek's Event Center
Owner: Ptacek’s IGA in Prescott, Wisconsin
Type of business: Event center
Overview: By 2015, Ptacek’s IGA in Prescott, Wisconsin had outgrown its 20,000 square-foot store and built a new location that doubled its size and added a Caribou coffee, gas station, and liquor store.

Manager Pat Ptacek said the kicker was that they owned the original building, so it was basically sitting empty and used as storage space when the idea dawned on him to turn it into an event space.

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“Because of the extensive catering we do, we already had the expertise in food service and liquor. At times we had four activation teams out at events—I thought, 'Instead of running around, why not have people come to us?'” he said. About three years ago, Ptacek put the plan into action, starting with extensive renovations to the space: new floors, lighting, built-out bathrooms, upgraded HVAC. They started calling it “The Old Ptacek’s” and the name stuck, he said. “That’s what everyone knows it as.”

Community niche: Now in its third year, The Old Ptacek’s is providing a gathering space for all types of events: graduation parties, class reunions, weddings, celebrations of life, birthdays, and showers. “We can host up to 400 people, not too many other venues in the area can do that,” he said. Starting with 72 events in the first year, 2019 is shaping up to hit a minimum of 150 unique events. "We ran five events last week alone. This is a 100 percent self-sustained business, and it's making real money," he said. 


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Challenges: While they now have a full-time person overseeing the event space, Ptacek admits there was some heavy lifting to get it up and running. “My wife and I ran it for the first two years without taking a paycheck. It’s a great opportunity, but a lot of hours.”

Opportunities: “It’s been a really good addition to our corporation’s portfolio, especially having a liquor license and being able to expand our catering business,” Ptacek said. 

But is this a business opportunity other grocery retailers should consider? "Absolutely yes," said Ptacek. "This wasn't just about recouping a loss on some unused real estate," he said. "We saw a need in our area that was essentially an extension of what we already do. Would a retailer consider adding more seating in their deli, or a pharmacy, or a coffee bar if there was a need? Of course they would because it's good business sense. Knowing what we know now, we would do it again even if we didn't already own the property. Why cater events all over town when you can make more money and do a better job doing it in your own space?"

Frozen Treats

Business name: Cooper’s Cones and Stuff
Affiliated with: McKim's IGA in Mount Vernon, Indiana
Type of business: Snow cone stand

Overview: Brian Williams, store manager at McKim’s IGA, was at home flipping through TV channels one night when he came across an episode of “Duck Dynasty,” where the family opens a snow cone business. Feeling inspired to give it a try, Williams ran the idea by his wife and his father, McKim’s General Manager Larry Williams, only to get shot down initially.

The idea became a reality when Brian’s brother Matt, who is an amateur barbecue master, convinced their father to buy a food trailer to turn into a BBQ business. That’s where Brian saw his chance to intervene and talked his dad and brothers into letting him give snow cones a try.

Cooper’s Cones and Stuff (named after Brian’s two-year-old son) opened on May 1, serving snow cones in 44 flavors (including six sugar-free options), frozen novelties, and ice cream floats. And for the record, all the Williams are now on board with the business.

“I thought he was nuts, but it looks like I was wrong,” said Larry. “The response has been fabulous.”

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Community niche: Brian is proud of how well the stand has been performing in its first three months of business. He had a hunch it would be well-received in the community, as there weren’t any existing frozen treat stands in Mount Vernon. And so far Cooper’s Cones has exceeded everyone’s expectations. A grand opening/ribbon cutting on June 4 drew about 40-50 people. Within the first month, the stand had paid for itself, said Brian. Next up, the Williams will expand the menu to include hot dogs, soft pretzels, and Matt’s prize-winning BBQ.

Opportunities: Being an independent retailer means being able to think outside the box, Brian said, and the snow cone stand is a perfect example of creative thinking. Rather than running Cooper’s Cones as a separate business, it’s being treated as an extension of the store, which took away many of the hurdles of opening a new business and having to deal with licensing, insurance, utilities, etc. Employees of the stand are employed by McKim’s IGA and the stand is situated in the store parking lot, with a few picnic tables and event tent for shade. As part of the arrangement, Larry bought the concession stand last year and paid for the refurbishment and build-out of the stand from his own pocket. For use of the stand, he charges the store a small amount of rent, which he puts toward Cooper's college savings account.

A win/win: When asked if there was any advice he would give, Brian emphasized what a win-win their venture is for the store. “In the grocery business you’re making pennies on the dollar. With snow cones, it’s quarters on the dollar. I would say do it.” Even if they hadn’t structured their business as part of the store, it would still be profitable on its own, Brian added.

Larry agrees. “Snow cone sales are accounting for more weekly sales right now than tobacco, frozen seafood, HBC, and just a little less than beer/wine,” he said.

American Fare

Business name: Aurora Borealis
Owner: The Myers Group, headquartered in Washington State
Type of business: Restaurant/bar/event space

Overview: The Myers Group, which owns a variety of businesses as far north as Juneau, Alaska, and south to North Albany, Oregon, has built a reputation of not shying away from trying something new. What started in 1978 with a single grocery store has grown to a company of six IGA supermarkets, six Ace hardware stores, two gas station/convenience stores, a distribution business, a pub, and most recently, a restaurant/event space. In addition, the retail management side of the business manages stores across the Pacific Northwest.

Opportunities: “We’re not afraid to try new things. I think the diversity works for us. It’s not always fun being in the gas business; same goes for grocery, restaurants, other retail. This way we spread the risk across all of them,” said CEO Tyler Myers, who started with the company his father founded from the beginning. “We have been diversifying since we started the company, so I have been able to learn a lot over the years of being in these different businesses.”

On his travels around the greater Seattle area, Myers kept eyeing a former casino for lease in Shoreline, just north of the city. He took a look, ran numbers, and got to work transforming the space into a combination restaurant and event space. At the end of May, Aurora Borealis opened as a restaurant open seven days a week. The adjoining event space is open several nights a week for music, comedy shows, and other entertainment. That main event center's concert hall and a smaller VIP event room are also available to rent for parties, weddings, reunions, and other occasions.

Borealis Video

 

Challenges: With any new business, Myers encountered some hiccups along the way, particularly doing the buildout. “I severely underestimated the work I needed to do,” he said. For starters, the old casino had a ’50s style diner that was transformed into a modern eatery. In fact, every inch of the space was remodeled, said Myers, who in hindsight would have hired a larger construction company to work with, but overall is pleased with the results. “It turned out really well.”

When creating his business plan, Myers had to factor in the recent increase in minimum wage in Seattle, which is now $15/hour. While that increase has had a ripple effect across the restaurant industry, pairing his restaurant with the event space makes the entire operation more stable, said Myers, due to the larger profit margins on beer, wine, and spirits sold at the bar and during events. “It’s all about the economics of the business and how you make it work,” he said.

Getting a start in grocery helped to build a strong base of knowledge and confidence, Myers said. “People always say it is a people business. I agree, but it is a numbers business, too. Know your numbers, stay on the numbers. Don’t let the numbers get out of control. It is a lot of work to turn them around. I would also say hire really good people and let them do their jobs.”

Community niche: Myers happens to live close by Aurora Borealis and much of the idea came from his inside knowledge of the area and what was missing. “One of the things for me to check the box was in this neighborhood, there wasn’t a place where you can get breakfast, lunch, and dinner,” he said. Falling back on his stores’ success in prepared foods, Aurora Borealis offers distinctly American fare: eggs, omelets, waffles for breakfast, sandwiches, burgers for lunch, and entrees like meatloaf, and ribeye steaks at dinner.

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And so far, the hard work has been paying off, with enthusiastic customers. A recent reviewer on Yelp.com exclaimed, “An oasis in a breakfast wasteland! Delicious, beautiful, and reasonably priced, you will delight in the presentation and flavors, and the wonderful service is a pleasure to enjoy….”

Restaurant on Wheels

Business name: Mt. Plymouth IGA Food Truck
Owner: Mt. Plymouth IGA in Sorrento, Florida
Type of business: Food truck

Overview: Mt. Plymouth IGA in Sorrento, Florida does booming business in its deli, and had reached a peak of what they could do in the space that they have. Thinking of ways to extend the operation, Mt. Plymouth IGA Owner Nakul Patel thought to create a spin-off food truck business serving lunch and dinner.

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They bought a 22-foot food truck, hired a company to outfit it, and launched the mobile eatery 15 months ago. Open Monday through Saturday from 11:00 a.m. to 6:30 p.m., the Mt. Plymouth IGA Food Truck serves up classics like burgers, Philly cheese steaks, fried fish sandwiches, with daily specials like Taco Tuesdays and Steak Night on Wednesdays, where diners can get a ribeye steak and twice baked potato for just $12. “It’s a chance for us to experiment with different types of stuff we don’t currently offer in the deli,” said Patel.

Challenges: Patel admits there was a bit of a learning curve at first. “Initially it was a very different business to run, but now it’s going really well,” he said. While controlling food costs and inventory were an original concern, Patel says they were able to overcome that challenge by integrating the store’s POS system with the food truck. In the end, the biggest challenge was with staffing. “We were having problems staffing both the food truck and keeping the deli going, but we overcame by hiring new staff for the food truck.”

Opportunities: Because the food truck is run as an extension of the store, there is a lot of integration between departments. The burgers come from the meat department and the buns are made fresh in the bakery. “We use a lot of produce, and that helps the shrink,” said Patel.

Another plus is the opportunity to cross promote. Recently, they added a coupon to the store receipts for 20 chicken nuggets for $5 at the food truck. They’ve noticed a spike in people using it, so they plan to run store specials on the food truck receipts as well, said Patel. They run the food truck specials and other highlights on the store’s Facebook page to help get the word out to the store’s more than 20,000 fans.

Community niche: With a lack of fast-casual restaurants in the area, the food truck meets a need for people looking for quick drive-up or take-out meals that are home-cooked and better quality than fast food. Originally they placed the truck in the store’s parking lot but found it wasn’t as successful. “Even though the deli does a crazy amount of business, we saw that people who came to the store weren’t going to the food truck,” said Patel. Moving the truck across the street to a parking lot the store also owns helped solve the problem and gave the truck its own identity and unique audience.

“If you think about it, when you’re driving around and looking for a quick bite, a grocery store doesn’t immediately come to mind,” said Patel. The new location made it easier to attract that drive-by traffic, and as a bonus, it’s given the store another “billboard” across the street, he added.

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