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ZAPP: Competitive advantage in the restaurant business

The Crystal Beer Parlor, 301 W. Jones, oozes history. Originally, it housed the first Jewish grocery store in Savannah. When its owner died during Prohibition, it was purchased by a character known as “Blocko” who knew how to make money selling illegal items. When Blocko was sent to a Federal penitentiary, he roomed with associates of Al Capone. According to local lore, Capone later visited the Crystal to offer his personal security, legal or otherwise.

With the end of Prohibition in 1933, the establishment opened legally under its current name which was taken from the original Crystal Ice Company then located across the street. Walls are covered with photos, menus, and newspaper articles documenting its 83 years operation. Recently an elderly gentleman informed a staff person that he was in one of the old pictures. He pointed to a photo of then Gen. Eisenhower in a convertible talking with a child on the sidewalk.

I visited the Crystal twice after purchasing a historic house in the west Forsyth neighborhood during the previous decade. At that time, the Crystal felt like an old lady who had seen better days. It was tired and everything felt old but not in a good way.

In 2009, the Crystal was facing an uncertain future and potential closure. John and Phillip Nichols came to the rescue with deep restaurant expertise and business savvy. John had almost 35 years kitchen and restaurant experience. His career started at The Pirates House where he was tutored on all things food by owner Herb Traub. Later, John was catering director at the Hyatt, ran his own catering company, operated a sandwich shop in the Oglethorpe Mall, managed Jack & Linda’s place in City Market and for a time owned the iconic Clary’s Café. Phillip provided financial expertise and additional food knowledge.

Renewing the interior, they opened walls and extended the bar to its original size along the entire wall of the front room. John and Phillip produced a menu designed to serve local comfort food, which fits the discerning expectations of the gentrifying neighborhood. Sprinkled throughout the menu are Greek specialties, including rack of lamb with Greek seasonings and a Greek salad that sports a dressing their Greek mother gave them.

Originally, they expected to have about 90 percent of their customers from the neighborhood. Recently, however, the tourist portion of the business has grown to about 35 percent. John attributed this change to the influence of social media and review sites such as Trip Advisor. The latter now rates the Crystal 12th out of 673 restaurants in the entire Savannah region.

John, who purchased Phillip’s share in 2013 when he wanted to return to the financial field, reports that the history of the building and business poses several challenges. First, he feels responsible to celebrate and support the Crystal’s legacy. A connection to the neighborhood and employees must be maintained as the world changes wildly. Also, the name feels sacred. John often hears that new customers decided to come even though the Beer Parlor portion of the title almost deterred them.

The Crystal has become the place for locals to go for unpretentious quality lunch and dinners. The soup and salad special is impossible to beat: the city’s best crab stew and Greek salad for $10 is an economist’s great deal. My only frustration is the wait at noon and 6 pm. So we come early or late.

Business strategy experts claim that a firm’s competitive advantage usually stems from one of two sources: differentiation, providing something that the customers want but the competition does not offer; or offering lower prices than competitors due to unique sources of efficiency. I asked John to name his competitive advantage.

His answer was refreshing, especially coming from a true foodie. He says, sadly, most restaurants do not value their employees. He believes that he appreciates his staff and treats them with respect. His management style is to give subordinates parameters and goals but then allow them to use their unique talents to find the best way to achieve the goals. He listens to staff and their recommendations on menu items including the array of draft beers offered. He expects them to help each other and they do.

John is proud to offer health insurance to his full-time employees (the company pays 75 percent) and that everyone gets one week paid vacation each year. He also refuses to have people work on major holidays because they have their own needs. The result is that his 70 employees seem happy to be at work and naturally do their best to make the restaurant successful. Their demeanor clearly adds to the positive experience customers derive from visiting the Crystal.

His second competitive advantage is keeping his prices reasonable. He follows the guideline of price of a plate being only three times its cost. He does not believe his customers need artistic squeeze bottle designs on plates or intricate 3-D sugar creations for desert. Delivering tasty food from fresh ingredients allows him to turn his seats almost three times at lunch and dinner. This produces profit.

Recent changes at the Crystal? John is glad to report that he has been able to improve his wine list. At first, the Beer Parlor moniker may have dissuaded wine enthusiasts from coming. Over time he has been able to coax diners from the “house” brands to higher quality choices. He also now offers seasonal dinner specials which provide a variety needed to keep the return customers coming.

What will be new in the future? Not much because the Crystal’s history must be maintained. They are experimenting with a few brunch dishes that may be available on weekends sometime soon. And look for frozen strawberry pie!

I will see you at the Crystal, but please do not tell anyone else about it so we can still find seats.

 

Kenneth Zapp is a professor emeritus from Metropolitan State University and a mentor for Savannah SCORE.

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