'Anyone talking about expansion right now should go take a long vacation'

Amerigo co-owner Doug Hogrefe talks about moving on from a 'humiliating and demoralizing' year and the benefit of being corporate [From our print edition featured in Monday's City Paper]

Email | Print By William Williams

Doug Hogrefe

Doug Hogrefe is owner of JHS Holdings LLC, the parent company of four regional Amerigo restaurants as well as Char in Jackson, Miss. He has been associated with the Italian eatery for 20 years and now faces the task of returning it to respectability following almost a year of bad press related to financing firm General Electric Capital Corp. and its lawsuit aimed at former owner Vivid Restaurant Concepts LLC.

Recently, Hogrefe and Post correspondent William Williams met to discuss the future of Amerigo and the benefits of being “corporate.”

Amerigo suffered some financial difficulties that came to a head this year. You and business partners David Joseph and Paul Schramkowski bought the company from Vivid. Of note, you and Schramkowski held shares in the previous ownership entity. What gave you the motivation and confidence to move forward on this?

Before Amerigo was sold to Vivid at the end of 2006, the company was in great shape financially and culturally. We had no debt, little turnover and, by restaurant standards, the company was quite profitable. When Vivid bought the company, they bought it as a growth vehicle. There were a number of financial and cultural decisions that were made with the goal of turning the restaurant into a large chain.

Those decisions didn’t pan out. Vivid took on an enormous amount of debt, a very aggressive payment schedule and the company was extremely top-heavy in G&A (general and administrative expense). That was what caused the company to be placed into receivership.

But if you looked at the actual performance of the original restaurants, they were doing fine. In fact, they were doing great. But they could not sustain the amount of debt that had been taken on. You have to remember that David Joseph and I have each worked here 20 years. The original owners always opened the books to us so we were completely aware of what the company could or could not do. Along with Paul, we began making business plans starting with a worst-case scenario and worked our way up from there. The plans we came up with worked.

As far as motivation goes, that was simple: We didn’t want to see the company we had poured our lives into go away.

How did the lawsuit and receivership situations harm Amerigo and how do you move forward?

It was brutal. It was embarrassing, frustrating, humiliating and demoralizing. It came out of nowhere. I had no idea that Vivid was not making loan payments. I found out on New Year’s Eve. Right before one of the busiest shifts of the year, I had to tell my staff what was happening. That was unpleasant, to say the least.

After the news broke, everyone started looking at me like I was a dead man walking. “What are you going to do?” “Have you started looking for a job?” “This is a terrible time for this to be happening.” Parties started canceling. Vendors were demanding cash.

And the whole time, I am just asking my staff to trust me because I did truly believe that something good was going to come out of this. Deep down, I knew the company was a solid company and it just needed to once again be run the right way. Thankfully, Kevin O’Halloran, the receiver, agreed. He immediately saw that we were great restaurants with a great group of people working in them and that the company needed to be placed in the right hands.

Some members of the public perceive Amerigo as being “corporate.” How do you approach that?

There are two ways to look at someone or something that is defined as corporate. One way to define it is to say that business is all about method and practices and if anyone deviates from “the way,” then they do not belong. It gives the impression of a sterile, boring, repetitive culture that discourages individualism.

Of course, I don’t feel that Amerigo is corporate in that way at all. We encourage our staff to do things the way they feel they need to be done. Whatever it is, just do the right thing. Make sure guests leave happy.

The other way to look at corporate is well run or professional. I go to or hear stories about restaurants that close early, have sloppy-looking servers, allow their staff to drink during their shifts, don’t have a training program, are always running out of menu items [or] have dirty bathrooms that pride themselves on not being “corporate.” If being corporate is having a well-run, professional restaurant, then you can call us corporate.

I will say that I do have a proclivity to wear dark navy slacks and striped ties.

Amerigo is among the longest-operating full-service restaurants in the high-profile West End Avenue corridor. How will you build upon this success?

Make sure the food tastes right. Make sure the servers know the wine list. Offer things that can’t be found in other restaurants but still remain accessible with the old favorites that have been on our menu since we opened. Have staff that genuinely smiles. And never assume that people have to dine in our restaurants, because they don’t. Be thankful for each and every guest that walks through door and earn the privilege of them coming back.

What can you say about current and projected financials?

The company sold for $13.2 million at the end of 2006 and we bought it for $6 million this past July. Our goals are to get the company back to where it was financially and operationally in 2005-’06. The only way to do that is to operate with the food quality and service it had for the first 20 years. I would hope we could get there within the next 24 months.

The previous ownership entity wanted to make Amerigo a national chain. Do you have similar plans?

First off, anyone talking about growth or expansion right now should go take a long vacation. We still have no idea where this economic rollercoaster is going, and I think it would behoove everyone to just focus on their current business.

So, no, we have no plans to become a big chain. However, if the right opportunity presented itself to open another restaurant or take over an existing restaurant, we would obviously take a look. But our primary goal is to simply get the company back on the financial footing it was on three years ago.

Twenty years ago, you started working as a waiter at the original Amerigo in Jackson, Miss. How will your history with the restaurant shape how it moves forward?

Obviously, Amerigo has done something right to make it 22 years. Bill Latham and Al Roberts owned it for the first 19 of those years. Their basic concept of the restaurant was to make sure that the guests left happy. The way that they accomplished that was to have a workplace that viewed the employee as being served by management and not the other way around. This allows people to do their jobs and do them well without having someone micro-manage them to death.

That’s pretty much been ingrained in my head my entire adult working life and it is a concept I absolutely believe in. Now that I am the owner, my biggest challenge is to continue that culture. Because once you have that culture, then everything you ask of your staff is possible. And that’s what gets you great food and service day in and day out.

Many Nashville-area restaurants suffered in 2009. What will be your strategy for 2010?

The first thing we have to do is let people know that we are alive and doing fine. There are still a lot of people that think we are in distress, and I can’t loudly enough yell that we are open and plan to be open for another 20 years.

I also think it is imperative that we get back to being involved with local charities. I know a lot of them are struggling right now and helping out has always been a win-win for us because it allows us to do some relatively inexpensive marketing and then there is the karmic payback of helping out in your local community.

We also plan on doing some improvements to our facilities. The first thing on the agenda is painting the building on West End. That needed to be done years ago. Other than that, we just have to make sure that the food and service is great — as always.

Some folks contend that if a restaurant is located in a city but also in a suburb, the overall entity will be perceived — fairly or not — as a “chain.” With an Amerigo in Cool Springs, how do you fight this perception?

All of our restaurants have their own identity. From the interior/exterior design down to the server opening and closing duties, every restaurant is different. And because our food is prepared in-house from scratch, even the flavor profiles tend to differ due to the styles and skills of our cooks. However, there is a common thread in everything we do that does give a sense of familiarity to the restaurants.

I guess the best way to fight that “chain” perception would be to not perceive yourself that way. We choose to view ourselves as a loose collection of local restaurants. We are in three metropolitan areas and all three areas have owners living in them. That’s how we see ourselves.

If having restaurants in multiple cities is being a “chain,” then I guess you could call us a chain. But would you also call Nashville Originals restaurants Noshville and Mafiaoza’s chains? Are the local restaurateurs that own several different restaurants in town chains? I think it is just more of a mindset and, moving forward, I don’t see us having that frame of mind.

Speaking of the Nashville Originals, what is your opinion of their approach?

What they’re doing is a smart plan. Combining that many restaurants improves their purchasing power and the overall sense that Nashville is a restaurant town. My wife works at Zola (an Originals member) and we eat primarily at local, independently owned restaurants.