Small Business of the Month: Tex’s Star Grill

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    Tex1.jpgby Susan Caminiti.

     

    No matter what the economic climate, one thing is certain: the entrepreneurial spirit that helped build America is alive and well. George Kallinikos, 53, founder and owner of Tex’s Star Grill in Watauga, Texas, is one such entrepreneur. Here, he speaks with business writer Susan Caminiti about why he left corporate America to strike out on his own, the challenges of being the boss, and why every nickel counts in the restaurant business.

     

    SC: So how did a Greek guy named George, who was raised in Chicago, come to own a restaurant in Texas called Tex’s Star Grill?

    GK: All my life I have been surrounded by family and friends who owned restaurants. It looked like a really hard life and one that I didn’t want. Instead, when it was time to get a job I decided to go to the corporate side. In the mid-1980s, I took a job with a subsidiary of [catalog company] Montgomery Ward and started running their call centers all across the country. The job was going pretty well and I rose to the position of vice president. Then India came along.

     

    SC: Meaning?

    GK: Companies in the U.S. began outsourcing call center jobs to India. In 2000, I took a job with another call center company in Texas, managing 1,600 call center employees, seven days a week. After September 11, [2001] that business slowed, so the company offered me a transfer to Corpus Christi.

     

    George_Sidebar2.jpegSC: How did that job go?

    GK: About 18 months into it I wound up with a boss I just couldn’t get along with. Finally I said, ‘You don’t like me, and I don’t like you. Why don’t you consider giving me an offer to get me out of your hair.’ He did, so I left.

     

    SC: Did you have another job lined up?

    GK: No. I just thought, OK, now what do I do now? I realized that call centers were on a downward trend in the U.S., and even though it was something I had been doing for my whole professional life, it didn’t seem like a good career path to stay on.

     

    SC: That must have been a scary turning point in your life. What did you do?

    GK: At that point I was married with two young daughters and knew we wanted to stay in Texas. We really love it here. So I thought, what can I get into that taps into what’s in my DNA? And the answer was restaurants. Not long after that I went to visit with some family in Salt Lake City. They own a fast casual-type restaurant with a drive-thru. It’s not a franchise, but it’s an upgrade from typical fast food. At the time they had nine stores that were doing really well and were willing to share their knowledge with me.

     

    SC: What made you think the concept would work in Texas?

    GK: Texas is among the top states for dining out. Folks here eat out more than twice a week. All the major chains are here because Texans love to eat and they love to eat out. At my restaurant we have something for everyone’s taste. That’s our motto. So if Dad wants a burger, but Mom wants a salad, they can each have what they want.

     

    I also did my homework when it came time to find the location. I knew I didn’t want to be in a space that was more than a second generation. If you go into a building that’s been a whole bunch of other things, people begin to form the opinion that nothing ever works in that location. I didn’t want that. The building I bought in 2004 had only been used as a fast food Italian restaurant before I came in.

     

    SC: Getting the money to start a small business is tough for most folks, but especially for restaurants. How did you finance it?

    GK: I’ve always been a saver and before starting the business, my wife and I always lived within our means. So I did have money to help start the business. In addition, I was able to take out an SBA loan. But I have to admit, I was a fool to think that you unlock the doors and the customers come rushing in.

     

    SC: What were those early years like?

    GK: The first two years were just so difficult. When you’re running a non-franchise business that no one’s ever heard of it takes awhile to get it going and get customers to come in and try it. It took every bit of those first two years to build the foundation, but now we’re doing really well. I’ve blown away my previous year’s numbers every year, and even during the economic downturn I was able to double my sales.

     

    Tex-PQ.pngSC: What are some of the biggest challenges in running your own company?

    GK: The personnel. In my career with the call centers I had hired thousands of people directly and indirectly. That was also an industry with something like 300-percent annual turnover, so I figured running a restaurant with 15 or so employees was going to be a piece of cake. I was so wrong.

     

    SC: Why?

    GK: What I didn’t realize was the power of large numbers. In a call center with 1,600 people there is always going to be someone who will pick up the slack if people don’t show up for a shift or a manager is out sick. You don’t have that luxury with a small staff. When I was open only a few months, I remember it was around Easter. I’m open seven days a week so I knew I couldn’t go to church that Sunday, but my family was dressed and ready to go. Then I got a call that my drive-thru guy couldn’t make it to work. I had no backup and the only other person I could rely on at that moment was my wife. All of this behind-the-scenes drama has to be invisible to the customer.

     

    SC: What’s been the biggest surprise to you in being on your own?

    GK: The budgeting. In my corporate life, the rounding errors of my budgets equaled more than what I have to work with now for an entire year. I began to see that the margins in the restaurant business is one of nickels and pennies. If I don’t stay up on my inventory, waste, and shrinkage when I’m dealing with 600 customers a day, those pennies and nickels are going to add up pretty fast and it will have a huge impact on the business. That’s why you’ll see a lot of restaurants charge $3.99 for something instead of $3.95. Psychologically, customers don’t register the difference between those prices, so you might as well charge the extra four cents because you’re going to need it.

     

    SC: So George, can you tell me now why it’s called Tex’s Star Grill?

    GK: When I first moved down here, all my buddies from Chicago would call me Tex. It became my nickname so I thought it would be good for the restaurant. Now, the folks who really know me refer to the restaurant as ‘George’s place’ and that can sometimes be a double-edged sword. If my regulars tell someone to try George’s, they can’t find it. But you know what? We’ve become so successful now it doesn’t even matter.

     

    This interview has been condensed and edited.