INSIDE DISH: Sales slacking, Smee’s owner seeks solutions

Welcome back to IBJ’s video feature “Inside Dish: The Business of Running Restaurants.”

Our subject for this installment is Smee's Place, a bar and grill in the "Cheers" mode opened by north-side native Tim Smeehuyzen in 1993 after years working in the food-service industry and the kitchens of several local eateries. Smeehuyzen aimed for a place with an everybody-knows-your-name familiarity, which helped drive its success in the neighborhood-haunt niche. Ironically, that same sense of familiarity may be contributing to a major sales slump that now has the restaurant running in the red.

"My challenge is to find out why, not that people try new places, but why they don't come back," Smeehuyzen said. "One may be simply because we've been here for 17 years and they feel like they need a change."

Several elements appear to have conspired to depress the eatery's gross sales by a third since 2006—from $1.4 million to $950,000 in 2009 (see "Napkin" below). Located in the commercial mecca at the intersection of 86th Street and Ditch Road, Smee's Place must contend with about two dozen other restaurants and food sellers in the immediate area. The economic downturn also sapped consumers' funds for discretionary spending, even for casual dining at middle-of-the-road prices.

"I thought I'd be much better positioned to hold onto customers than the high-end places," he said. "But with the recession, people are still going out to dinner, but they might go out once a week instead of three times a week. And then the challenge is to make sure that they go to Smee's that one time a week."

Near the beginning of 2010, Smee's began operating at a deficit. So far this year, Smeehuyzen has taken some $55,000 from his own pocket to cover losses. He now is racking his brain to find the combination of fixes that will help revive business.

There is some precedent for major changes that have increased sales without disrupting the restaurant's familiar vibe. In 2001, Smeehuyzen doubled the size of the eatery by leasing an adjacent space and investing $75,000 to make it a mirror image of the first. In 2005, he began leasing more space to the west and spent $85,000 to convert it into a party room for special events. That move also paid dividends, at least for a couple years.

"It is being used, but not as much as I'd like it to be or it needs to be," Smeehuyzen said, citing the slumping economy for lack of demand. "In retrospect, if I knew then what I know now, I probably wouldn't have done it."

In the video above, Smeehuyzen discusses fixes he considering to help freshen Smee's in the minds of patrons, including new menu offerings and cosmetic changes to the restaurant's interior. He also sheds light on a sign recently posted in the front window, reading "Friends don't let friends eat at chain restaurants."

Smee's Place 1454 W. 86th St. (317) 876-0202 Concept: Neighborhood bar and grill in the "Cheers" mode, with a wide selection of American appetizers and entrees below $20. Founded: 1993 Owner: Tim Smeehuyzen Start-up costs: $50,000; expansions in 2001 and 2005 required another $75,000 and $85,000, respectively; in all three instances, Smeehuyzen took out a second mortgage on his home. The loans have since been paid off. Gross sales: $1.4 million in 2006; $1.25 million in 2007; $1.05 million in 2008; and $950,000 in 2009. In 2010, Smee's Place began operating at a loss, which Smeehuyzen has covered with about $55,000 from reserves. Employees: 33 Seating: 150 Goals: To introduce a revamped menu within the next month with some new items and repriced dishes; to make some cosmetic changes to the interior in order to freshen the feel of the restaurant; and to renegotiate the space's lease.