True to their people-oriented goals, the partners tried to make employees feel more appreciated than they had ever felt at the chains. They gave them a free drink and a meal at the end of every shift, let them give away appetizers and desserts, and provided them a week of paid vacation each year.
A special camaraderie developed among the employees. After all, they worked in an industry in which a turnover rate of 250% was something to aspire to. The night before McGuffey's opened, in October 1983, some 75 employees circled the ficus tree next to the bar, joined hands, and prayed silently for two minutes. "The tree had a special energy," says Dunn.
Maybe so. By the third night of operation, the 230-seat McGuffey's had a waiting list. The dining room was so cramped that after three months, the owners decided to add a 58-seat patio. Then they had to rearrange the kitchen to handle the volume. In its first three and a half months, McGuffey's racked up sales of about $415,000, ending 1983 just over $110,000 in the red, mostly because the partners paid back the bulk of their $162,000 debt right away.
Word of the restaurant's success reached Hendersonville, N.C., a town of 30,000 about 20 miles away. The managing agent of a mall there -- the mall there -- even stopped by to recruit the partners. They made some audacious requests, asking him to spend $300,000 on renovations, including the addition of a patio and upgraded equipment. The agent agreed. With almost no market research, they opened the second McGuffey's in April 1985; Asheville was still roaring, having broken the $2-million mark in sales its first year, with a marginal loss of just over $16,000.
By midsummer, the 200-seat Hendersonville restaurant was hauling in $35,000 a week. Gee, you guys must be getting rich, the partners heard all around town, when are you going to buy your own jets? "Everyone was telling us we could do no wrong," says Dunn. The Asheville restaurant, though, was developing some problems. Right after the Hendersonville McGuffey's opened, sales at Asheville fell 15%. But the partners shrugged it off; some Asheville customers lived closer to Hendersonville, so one restaurant was probably pulling some of the other's customers. Either way, the customers were still there. "We're just spreading our market a little thinner," Dunn told his partners.
Business was so good, Dunn says, that the partners were "starting to believe that we had invented the restaurant business." If that was so, maybe the time was right to reinvent the restaurant business. McGuffey's was a great concept, to be sure, but they had mastered it already. "We thought we could do anything," says Dunn.
Only six months after opening the Hendersonville restaurant, Dunn and his partners decided to open McGuffey's Sneakers, a 123-seat pub and grill in Skyland, N.C. It was a scaled-down, simpler version of McGuffey's.
Like its predecessors, Sneakers took off right away. But there was still that nagging matter of shrinking sales at the other restaurants: Asheville had lost another 10%, Hendersonville 5%. This time, Dunn blamed the fact that the drinking age had been raised to 21 in Asheville, cutting into liquor sales. "I didn't want to face that maybe our quality was suffering," he says.
Dunn thought of himself as the man who made daring restaurant concepts succeed in the middle of nowhere. McGuffey's Sneakers pulled in just under $1 million in its first year. Four competitors took him on in Hendersonville, including one national chain; he put two of them out of business within six months. How? "It's not any one thing we do," Dunn told admirers over and over. "We just do 100 little things better." For instance, there were the chilled salad forks, heated maple syrup, and pewter soup bowls.
By 1985 the company recorded nearly $3.5 million in sales, with nominal losses of about $95,000. But the adulation, and the expectation of big money and fancy cars, was beginning to cloud the real reason they had started the business. "McGuffey's was born purely out of frustration," says Dunn. Now, the frustration was gone. "You get pulled in so many directions that you just lose touch," says Brandson. "There are things that you simply forget."
What the partners forgot, in the warm flush of success, were their roots.
Dunn talks about his former managers with disdain. "You know the type. He comes in and starts pinching the waitress, says, 'Cut your labor, it's too high,' has five drinks at the bar, then waltzes out the door."
His own employees describe Dunn, circa 1985, as the guy "with his nose in the air" who was "all dressed up for the bankers" and "never said hello." Says one employee: "Keith was just somebody who came through the restaurant once in a while."
He should have plunked down on a bar stool and listened. McGuffey's just isn't the same, he would have heard from his workers. Asheville employees resented that the owners didn't seem to care about the original eatery anymore. In Hendersonville workers were unhappy that their superstars had been sent to open Sneakers. "The magic was gone," says Sharon Morales, a bartender.
The magician had pulled a disappearing act. Dunn was off at trade shows, spending money on "neat" items like a $3,000 french-fry cutter. He was busy preparing for bankers, lining up plans for another McGuffey's. He got involved with local charities and street festivals, activities befitting a successful businessman, he thought. "All I was doing was going to meetings," says Dunn. The man who had devised two-thirds of his restaurants' recipes was never in the kitchen.
"Success breeds ego," says Dunn, "and ego breeds contempt." He would come back from trade shows or real-estate meetings all pumped up. "Isn't this exciting?" he'd ask an employee. "We're going to open a new restaurant next year." When the employee stared back blankly, Dunn felt resentful. "I didn't understand why they weren't thrilled," he says. He didn't see that while his world was constantly growing and expanding, his employees' world was sliding. They were still busing tables or cooking burgers. Forget the new restaurant; you haven't said hello to me in months; and by the way, why don't you fix the tea machine?
