Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 30, 1995 TAG: 9507310015
SECTION: CURRENT PAGE: NRV-3 EDITION: NEW RIVER VALLEY
SOURCE: KENNETH SINGLETARY STAFF WRITER
DATELINE: CHRISTIANSBURG LENGTH: Long
In their 2 1/2 years in business, they have developed a cadre of faithful customers and are starting to run in the black after moving June 1 from a small, unprofitable location to a storefront three times as big across Cambria Street.
But the Knoebels still have to worry about the small things customers might not think about as they enjoy their meals - the things that are the hard reality of being a restaurant owner.
Their story is one every restaurateur in the New River Valley knows by heart.
As many as three out of five small businesses, including restaurants, fail within five years, according to Small Business Administration statistics.
Fortune or failure for restaurants depends on variables that apply to any business: location, competition and product cost. Restaurant owners, however, also have to contend with high employee costs and turnover, high equipment and supply costs, razor-thin profit margins, long hours and fickle customers.
"One of the differences [between restaurants and other small businesses] is you're dealing with people who are hungry. People who are hungry tend to be a little grouchy, and if it doesn't go right, they tend to get grouchier," said veteran restaurateur Bill Ellenbogen, who has owned Bogen's Restaurant in Blacksburg for 13 years. A restaurant has no second chance to please patrons, who can't return merchandise if they are dissatisfied and who can - and do - mar reputations with idle comments.
Ellenbogen knows - and - that running a restaurant means lots of paperwork and working the equivalent of 2 1/2 full-time jobs. Their job is about working closely with employees, about figuring out how to pay the bills and about preparing for at least 13 different taxes and inspections.
For the Knoebels, it's about the kindness of strangers, one of whom saved their business with a $15,000 loan that allowed them to move to their new site. The bankers wouldn't offer them credit, and their previous location was so small that it wasn't making money.
Bankers are wary of restaurants, so securing financing can be a big hurdle.
"Restaurants ... can be open today and be out of business in two months," said John Phillips, assistant vice president for commercial loans at First National Bank. A restaurant's "believability" - the sum of the owner's experience, marketing plan, location, competition and other factors - influences his lending decision.
Litz Van Dyke, vice president for commercial loans at the bank, said probably less than half of all restaurant-loan applications are approved, and many prospective restaurant owners discard their idea before applying for a loan. A shortcoming Van Dyke sees in some applicants is an incorrect perception of how much work the job requires.
Tom Knoebel and Ellenbogen each work up to 100 hours a week, they said, and Kimberlee Knoebel works 60 hours a week.
Though their restaurant is closed on Sundays, the Knoebels say they can't afford to take much time off because no one else has their sense of what the restaurant should be. The Morning Glory Cafe isn't the same, they have found, if they are gone for even three or four days.
Something else prospective restaurateurs might not realize is how expensive it is to operate the business. Equipment includes stoves, ovens, dishwashers and refrigerators, all of which generate high utility bills.
"You have to be a very astute business manager, or you have to employ one," said Wendy Webster, media relations director for the National Restaurant Association.
According to the association's statistics, full-menu, table-service restaurants nationwide had a 1993 average income of 4.4 percent of sales, before income tax.
The Knoebels are running close to that figure, though during their first year they lost $5,000. During their second year, they managed to pay themselves less than $9,000 before taxes. This year, because business has tripled in the new location, they hope to give themselves a raise, up to $15,000 for the two of them. They recently hired their first accountant, having previously done the books themselves.
The move to their new digs hasn't occurred seamlessly.
Their bakery and delicatessen have not produced as much revenue as they had hoped. The restaurant lost $3,000 on breakfast sales since June 1, so the Knoebels decided to serve only lunch and dinner.
Their labor costs are about 32 percent of their sales, higher than the industry average of 29 percent. Food is their biggest expense, at about 37 percent of sales. Industrywide, the average is 27 percent.
The Morning Glory Cafe is able to spend more money on food because its rent is about 0.5 percent of sales, with the industry average at 4.3 percent.
The Knoebels are starting to see some success despite Tom's lack of experience as a restaurateur.
The couple opened their restaurant after he failed to receive an assistantship as a graduate student at Virginia Tech.
Originally from Spencerport, N.Y., Tom, 32, came to the New River Valley to get a doctorate in architectural history in 1992. He had 12 years experience making cabinets and refinishing antique furniture.
Kimberlee, 38, is a master chef who trained in Newport, R.I. She's also a former catering-business owner, and a former opera singer who toured with the American Opera Company based in San Francisco.
Early on, the restaurant was Kimberlee's passion, but Tom caught on fast.
"I'm thrilled," he said. "I thoroughly enjoy this, because I like people. I realize it takes all kinds of people to make this world go round, and I get to see them coming through the door every day." he said.
When they have a moment, they consider what customers have to say.
"If someone has input, we listen," Kimberlee Knoebel said.
The Morning Glory Cafe doesn't serve frozen or canned food.
Customers may choose from a menu that features seafood, pastas and specials such as peach soup or tomato-mushroom quiche.
"Not a week goes by that people don't walk out the door because we don't have ham biscuits," Tom said.
That's a sacrifice the Knoebels are willing to make. Their target customers are the 40 percent or so of Montgomery County's population they believe moved here. The Knoebels think such people, many of them upscale, won't mind traveling to Cambria.
The Morning Glory Cafe is at 990 Cambria St. in Christiansburg, near the historic train station. It is open for lunch from 11 a.m. to 3 p.m. Monday through Saturday and for dinner from 5:30 p.m. to 10 p.m. Wednesday through Saturday. Specialities include its homemade desserts and pastries, its Italian dinners and weekly specials such as grilled shrimp and chicken Saltimbocco. For information, call 381-CAFE.
by CNB