Tech-savvy Scotty’s owner eyes national expansion

The ignorance of youth made Scott Wise look smart.

Wise was an eager but inexperienced 22-year-old when he opened his first restaurant in Muncie with financial backing from
his father, an entrepreneur himself. He also got plenty of unsolicited advice, including a nugget that has stuck with him:
Don’t put your name on the business, just in case.

“I guess it’s a good thing I didn’t listen to anyone,” Wise said.

Indeed. After his first Scotty’s Brewhouse took off at Ball State University, Wise opened an upscale eatery in Muncie—and
failed miserably. But despite conventional wisdom that suggested he should retrench, Wise picked up the pieces when Lucy!Lucy
closed and used them to build a second Scotty’s in Bloomington. Then came a third in West Lafayette.

Next, Wise set his sights on Indianapolis, a market many advised him to avoid because it would mean straying from the college-town
niche Scotty’s fit so well. Any guesses how that turned out?

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Fourteen years after first seeing his name in lights, Wise now has five Scotty’s Brewhouse locations—including
two in Indianapolis—that together do $15 million in business each year. And he was set to debut the Scotty’s Lakehouse
concept March 1 near Geist Reservoir.

As IBJ reported Friday, a microbrewery also is in the works, and Wise’s
three-year plan calls for expanding Scotty’s footprint outside Indiana. He’d like to have restaurants on the West
Coast within 10 years.

“I get tired just thinking about Scott,” said Lennie Busch, co-founder of Bloomington restaurant operator One
World Enterprises. “He must thrive on chaos.”

Busch and partner Jeff Mease met Wise when he was starting out and came to them with what he called “wide eyes and
great, grandiose ideas,” seeking advice. Last fall, Busch presented Wise with the Indiana Restaurant Association’s
Restaurateur of the Year award.

Fourteen
years after launching Scotty’s Brewhouse, Scott Wise is trying out a new burger concept in Geist. Wise has big ambitions,
which he shares with his followers on Twitter. (IBJ Photo/ Perry Reichanadter)

Among the achievements that got the industry group’s attention: Wise’s effective use of technology—from
weekly e-mail blasts to near-constant Twitter chatter—to promote his restaurants and connect with customers.

“What sets him apart is what he has done with marketing, social networking. He’s doing incredible things,”
said Busch, chairwoman of the restaurant association. “He has tremendous people skills.”

That much is clear within minutes of meeting Wise. The 36-year-old is friendly, engaging and clearly passionate about his
business. That’s not surprising, considering they grew up together.

‘I thought I was invincible’

The son of successful parents—father Jerry ran a Muncie construction-company-turned-development-firm and mother
Deb led a property management business—Wise had a bit of rebel in him.

He started his college career at DePauw University to get some distance, then returned to his hometown to finish his marketing
degree at Ball State, “because deep down I’m a mama’s boy and a daddy’s boy.”

Still, he had no plans to go into either of the family businesses. He just wasn’t sure what he wanted to do.

Wise started working at 17, washing dishes at a bar. He was a server and a cook during
college, and he spent summers with buddies working at a seafood buffet in Panama City, Fla. But he never considered a career
in restaurants.

After graduation, he fled Muncie again—this time moving to Houston for a copywriting job. He hated it and tended bar
at night as a distraction.

“I think that’s really when the light bulb went off,” Wise recalled. “I put pressure on myself to
do something else, but I kept gravitating to the service industry.”

So in 1996, the homesick Wise returned to Muncie, where college hangout Mugly’s Pub and Eatery was for sale. Thinking
it would be cool to own a bar in his hometown, he talked to his dad about the idea and wrote a business plan at his urging.
Then, with his father’s help, Wise bought Mugly’s on contract for $60,000.

And Scotty’s Brewhouse was born.

Then and now, the restaurant is a bricks-and-mortar representation of its owner—from the name to the décor to
the menu to the “Go Cubs” cheer emblazoned on the back of employees’ T-shirts.

“We have a lot of beer because I like beer,” he said. “We have wings because I like wings … burgers,
fries. For a long time, we didn’t sell baked beans. I hate baked beans.”

In the early days, Wise recruited family to help keep Scotty’s running, putting his parents, sisters and wife to work.
As business improved, he let them off the hook and began hiring paid staff.

“I started making good money,” Wise said. “And I thought I was invincible.”

So he diversified, opening fine-dining restaurant Lucy!Lucy—named for his wife Amy, whose middle name is Lucille—in
1999. It had problems from the start.

Unfamiliar with the idea of a “soft opening” to allow his staff to get up to speed, Wise promoted its debut to
the world and ended up with a line out the door. The result was a reputation for slow service that he never was able to reverse.

He and Amy tried to make it work for three years before making the difficult decision to close. Still, Wise picked up some
valuable lessons along the way—the truth of the “location, location, location” adage, for example, and how
hard it can be on a marriage to work with your spouse.

“I learned, mostly, that I never want to go through something like that again,” he said.

But Wise was undeterred. Rather than retreat to lick his wounds—and pay off his debt—he decided to pack up the
equipment and furniture from his failed venture and grow the Scotty’s Brewhouse concept. So he and his top lieutenant
scouted out a location in Bloomington, and the rest is history.

Wise is philosophical about his early missteps.

“Your true character shines bright not when things are great, but when your back is against the wall and you have nowhere
to turn,” Wise said. “I feel like I picked myself up, dusted myself off and got back on the horse.

“I like to compare my story to the failures of Bill Gates, Steve Jobs or Phil Knight. They all went through a time
like [that] in their careers and it made them stronger and better.”

‘I believe in details’

As Scotty’s Brewhouse grew, Wise slowly began to extricate himself from the day-to-day grind. About five years
ago, he put together an executive team to manage routine operations while he focuses on growth, marketing and morale.

Wise now works from an office above the garage at his Allisonville Road home, but he lives and breathes his business. A self-described
micromanager—with a healthy dose of obsessive-compulsive perfectionist thrown in—he still pays attention to things
like where the salt and pepper shakers are positioned on tables.
“I believe in details,” Wise said. “I notice wilted flowers, missing comment cards. I see the little things.
… When I quit paying attention, it means I stop caring.”

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He wants his managers to be equally invested in the company—literally. General managers are required to buy at least
a 5-percent stake in their restaurants, for example, bumping them up the food chain from employees to operating partners.

Wise is the first to credit his team for the company’s success.

“I’m not a good cook. I’m not a great bartender,” he said, allowing that his outgoing personality
does make him a decent waiter. “I’m really nobody anymore. The team around me makes me look so much smarter than
I really am.”

His emphasis on hiring good employees and keeping them happy sets Wise apart from many less-successful restaurateurs, said
Joe Erickson, a 30-year industry veteran who advises his peers on Houston-based Web site restaurantowner.com.

“Scott understands and appreciates what ‘A’ employees mean for a restaurant,” Erickson said. “Personnel
is No. 1 for him. He has hired good people. That is his priority.”

Wise said as much himself. Although he doesn’t get to interact with his 550 employees
as much these days, he maintains an open-door (or in-box) policy and encourages them to let him know how things are going.
He also sends handwritten cards to workers on their anniversaries, and shares positive customer feedback with them through
e-mail and Twitter.

“I’ve always believed my people are what makes this company,” he said. “If they’re happy, guests
are going to be happy.”

Many employers pay lip service to such a philosophy, Wise acknowledged, but said his is genuine. Consider the business advantage:
Wise said it costs Scotty’s about $2,000 to hire, train and cover mistakes for each new employee. Cutting down on turnover
cuts cost. And experience improves service.

“Ultimately, when you boil it down, we’re selling burgers and fries … and everyone in town offers burgers
and fries,” he said. “The only other thing we can sell is our people.”

That’s one of the reasons Wise burns up the keyboard on Twitter, the free social media application that allows users
to communicate in 140-character bursts with legions of followers. More than 2,600 get Wise’s “tweets.”

He uses the technology to promote his restaurants, obviously—reminding followers about daily drink specials or special
events, for example—but Wise also seeks feedback from customers, asking about service as a matter of routine. He responds
to nearly every message that mentions the Brewhouse.

Although the marketing and morale advantages justify the ample time he spends on Twitter, Wise also has fun with the application.
After a successful promotion that offered followers the chance to win gift cards for tweeting photos of their meals at Scotty’s,
for example, he put out a call for photos of followers standing next to snowmen that were at least 4 feet tall. The first
to respond also won gift cards.

Wise also blends the personal with the professional, posting photos of his 3-year-old son, Slater, or someone running barefoot
on a treadmill at the gym.

“There’s a wonderful balance between Scott Wise the person and Scotty’s Brewhouse the business,”
said Lorraine Ball, owner of Carmel-based marketing firm Roundpeg. Ball met Wise when both served on a panel discussing social
media, but she has kept up the acquaintance through Twitter.

“He is just as likely to post a comment reacting to something someone said as he is to be promoting his restaurant.”

The result, Ball said, is that customers who follow Wise on Twitter feel like they know him.

“That’s incredibly smart,” she said. “If I’m going out to eat and have my choice of restaurants,
why wouldn’t I go to one where I feel like I know the owner?”

That’s the idea. Wise said he has been careful to avoid weighing in on hot-button issues like sex, religion and politics,
but for the most part his Twitter persona is the real deal.

“They get all of me,” he said.

‘We’re keeping it simple’

Stepping back from day-to-day operations has helped Wise save a little more of himself for his family, but he still
works far more than he plays. The economy hasn’t helped.

Wise signed a 10-year lease for high-profile space in Allen Plaza downtown in July 2008, just as the recession hit. By the
following summer, the restaurant industry was responding to the resulting slowdown by offering deep discounts.

“We had to follow suit,” Wise said.

The business also cut costs, giving up radio advertising, some employee perks and half the company’s health insurance
contribution. Eliminating the free meal before workers’ shifts saved $500,000.

The belt-tightening worked, allowing the company to finish the year in the black despite lower sales tied to the discounting.
And Wise has high hopes for this year after recording a profit in January—not a traditionally strong month.

Still, he’s not exactly resting on his laurels. Set to open March 1, Scotty’s Lakehouse is a new concept: an
upscale burger joint with an intensely local flavor. Almost all the food, beer and wine comes from Indiana, Wise said.

“Certified organic, fresh, local—we want that to be our thing,” he said. “We’re keeping it
simple.”

So, gone is the 18-page Brewhouse menu in favor of 15 burgers, five kinds of fries, and three varieties of macaroni and cheese—and
a handful of other choices.

“I love doing something new,” Wise said. “And this is brand new from the get-go.”

The business model also is different. Rather than invest the $2 million or so it takes to build out and equip a Scotty’s
Brewhouse, Wise essentially agreed to lend his name and experience to someone else’s enterprise. Delta Construction
Co. owner Mert Shipman and a partner bought out the previous tenant and asked Wise and Café Patachou owner Martha Hoover
to handle the food. Lakehouse is serving Patachou’s brunch on weekends.

“It’s basically a management agreement,” Wise said. “We run the restaurant and get paid a percentage
every month. We still get paid even if it loses money.”

With financing hard to come by, the arrangement made sense, Wise said, calling it a low-risk way to try out a new concept.

Scott Wise unpacks the first installment of a holiday gift from his staff—membership in a beer-of-the-month club.
(IBJ Photo/ Perry Reichanadter)

But he’s not stopping there. Wise is pursuing his longtime dream of opening a microbrewery, which would supply his
restaurants and others, and he has identified three markets outside Indiana where he’d like to expand within three years:
Chicago; Columbus, Ohio; and Charlotte, N.C.

“I want to create pockets,” he said. “The Midwest is one. The Southeast [is another]. And I’d love
to get out West—San Diego, Southern California, Phoenix. That’s more like a 10-year time line, though.”

Erickson, the restaurantowner.com adviser, said Scotty’s has the systems in place that allow it to successfully replicate
the concept—achieving the kind of consistency chains strive to attain.

“By and large, most independent restaurants stay independent because they’re unable to do that,” he said.

Wise rankles at the word “chain,” saying his goal, even as the company grows, is to avoid that label.

“We are a regional group of restaurants,” he said. “I don’t want to become what I’ve always
abhorred.”•