35-Year-Old Family Restaurant Rolls Out New Prototype Store

In its first redesign ever, 35-year-old family restaurant Max & Erma's rolled out a new prototype store that includes a revamped kitchen. The new store layout, which was conceptualized by the design firm WD Partners of Dublin, Ohio, and introduced into three markets, is part of Max & Erma's

Max & Erma's operates 78 company-owned stores and 23 franchised units throughout various states, including the three, new-construction prototype stores that opened in each of the following markets: Springboro, Ohio; Findlay, Ohio; and Merrillville, Ind. The chain also has 10 new restaurants under construction in markets such as Las Vegas; southeastern Florida; Myrtle Beach, N.C.; Richmond, Va.; Lancaster, Ohio; and Sharonville, Ohio. In addition, the company plans to remodel 23 units in the next couple years.

The new prototype design features a modernized look that stays true to Max & Erma's roots — a casual, family, full-service restaurant serving all-American, freshly prepared food, said Eric Steinhoff, director of franchise development. Overall, it's a cleaned-up, fresher and more contemporary appearance. “The old restaurant and new one are dramatically different,” Steinhoff said.

“The old restaurants were almost like a dark, insider's club that doesn't stand out much and is sort of hidden from street view with a lot of dark woods, artifacts all over the walls and dark lighting,” Steinhoff added. “The new restaurants feature softer, lighter colors and lighting with less artifacts on the walls and a wood trim that's more medium in lightness and a bar that used to be dark wood but is now granite.”

A stone fireplace now sits in the lobby between the waiting area and the bar as well as on the outside patio where customers can linger even in cooler weather. The exterior of the building features a more prominent sign that's raised on a tower-like structure over the front door. Overall, Steinhoff said, the new restaurants feature higher-end finishes intended to create a more upscale, classier image.

“In the past, our restaurants targeted the traditional decision-maker in the family when it came to deciding where to eat: the male,” he said. “Now, based on studies, we've seen that the female in the family is making the decision of where to eat.” As a result, Steinhoff said, the company conceptualized the new look based on what would appeal to a 35-year-old mother of young children that would accompany the family to the restaurant as well as a 45-year-old woman with older children that might be dining out with just her husband or friends.

With respect to the menu, Steinhoff said, the chain made no major changes to the food. The printed menu, though, now plays-up the freshness of the food with photographs showing cooks hand-grating cheese or slicing carrots to prepare dishes.

“What's unique about our restaurant is the freshness of our food,” Steinhoff said. “We cook our chicken from a raw state, our burgers are fresh not frozen, we don't use bagged salads, and we make a lot of our ingredients. In the past, other restaurants microwaved a lot of food. Chicken was precooked and portioned off, then reheated later. We always went in the other direction; we just haven't been doing a good job of telling our customers this until now.”

Although the size of the new restaurants closely matches the previous ones, measuring roughly 6,200-square-feet and seating 192, Max & Erma's made some changes to the back of the house in the form of swapping old equipment for newer, more efficient equipment in all areas as well as purchasing more efficient hoods with variable-speed fans. A white ceiling and roof also help to preserve energy.

In terms of kitchen layout, Steinhoff said designers knocked down a wall to open up the kitchen and make room to straighten out the cookline for more space and better flow. Other than that, there were no major changes to the kitchen, he said.

Despite quarterly and year-to-date losses in revenue for the entire company, Max & Erma's, a publicly traded company, experienced increased sales for its newly remodeled restaurants. “2004 and 2005 were challenging years for our industry,” Steinhoff said. “Commodity prices shot through the roof, so it made us take a close look at what we were doing.”

The company posted revenues of $39 million for the third quarter ending Aug. 5, a 3.6-percent decrease from $40.6 million during the third quarter last year. Year-to-date revenues decreased 3.7 percent from $141 million in 2006 to $135.9 million in 2007.

Same-store sales decreased 3.6 percent and 3.4 percent for third-quarter and year-to-date periods, respectively; however the seven restaurants remodeled prior to the start of the third quarter posted a 3.2-percent increase in same-store sales, almost a seven percentage-point improvement over the entire chain.

For new franchisees, the investment to open a Max & Erma's restaurant ranges from $600,000 to $3 million. Franchisees benefit from initial step-by-step training, location counsel, operations tools and other guidance to help them run a successful business.

“We're looking for strategic partners who have extensive restaurant experience and really understand and appreciate the value of the Max & Erma's brand and philosophy,” said Todd Barnum, chairman of the board. “We intend to align with people who complement our goals for ongoing growth.”

Barnum, a co-founder of the chain who saw his original Columbus, Ohio, gourmet hamburger and beer restaurant expanded to more than 100 restaurants in 11 states, retired from his chief executive officer role in late September, although he continues to serve as non-executive chairman of the board. The board elected current Max & Erma's President Robert Lindeman to take on the additional role of CEO. Lindeman's move into that role was part of a planned transition, which began when he became company president in September 2005.

Lindeman has more than 18 years of experience with Max & Erma's, rising through the ranks from a restaurant assistant manager to chief development officer overseeing franchising, and then on to president.

In other news, Max & Erma's hired Michael Nahkunst as chief operating officer. Nahkunst, a Cheesecake Factory and Brinker International veteran, comes to the company most recently from BJ's Restaurants, where he served as COO for the last three years.