While successful, Ted Turner hasn’t partnered with many people in his business career. In fact, he grew even more gun-shy after losing most of his wealth in the Time Warner-AOL merger. Still, Turner put up $5 million a decade ago to partner with veteran restaurant owner George McKerrow. They started Atlanta-based Ted’s Montana Grill, partly to create a commercial demand for the threatened American bison, which Turner raises on his vast land holdings.
McKerrow, 62, is a self described serial entrepreneur who began in the restaurant business as a teenager. The founder of LongHorn Steakhouse and current co-owner of fine-dining restaurants Canoe and Aria, McKerrow is also CEO of Ted’s. The casual-dining restaurant firm has grown to $104 million in revenue from 44 company-owned locations in 16 states. Making it in the restaurant business is difficult, but McKerrow shares some of what he’s learned since his early days as a busboy.
Q: You got the entrepreneurial bug early in your life. What happened?
A: I learned how to make potholders in the eighth grade and then started mass producing them. I’d go after school on my paper route and knock on every door. I’d sell potholders to the housewives for 50 cents and a dollar, in addition to delivering the paper.
I learned that if I tried things that were unconventional, that they would probably work. I found out that I needed to be busy. I’m probably a little bit ADD. I always worked when I was in school. If I had a lot of idle time, I probably would have done stuff that wasn’t real good.
When I was 16 and a sophomore in high school, I got a job at Uncle John’s Pancake House in Cleveland for gas money for my little Corvair. I got a job as a busboy and then got promoted to lead cook six months later. I was ordering the food, writing the work schedules and running the kitchen in the summertime. Here I am 16, and there’s a bunch of guys much older than I am, but I’m in charge. In hindsight, it wasn’t a very smart move on the manager’s part.
Q: You were accepted to law school but decided not to go. Instead, you ended up with several bartending and restaurant jobs before launching LongHorn Steakhouse, which struggled in its early days. Would you please discuss?
A: I kept migrating back to the restaurant business because I enjoyed the interaction with people. Working in a law office while in college taught me I never wanted to be a Monday-to-Friday, 9-to-5 guy. I would have shot myself if I had to go in rush-hour traffic every day and live a routine life.
Early on in LongHorn’s life, there were lots of times when I could not afford to pay the staff. I was hiding the paychecks. For marketing, I’d take $20 out of the till every night and I’d go from bar to bar. People would say, “I’m so sorry to hear about your restaurant failing.” I’d say, “No, it’s succeeding. You should come by. We had a record night.” Now the truth was we did 36 meals instead of 35, and we were failing.
But it’s all about being positive. During the times I couldn’t afford to pay the staff, I would greet you at the front door, I would seat you, I’d take your drink order and then run behind the bar and make your drink. I would cook your meal and deliver it to you. I might have one other person there.
Slowly but surely, the restaurant started to take off. During a big snowstorm in Atlanta, I kept the restaurant open. I put up a sign, “Drinks $1 while it snows.” We did $700 in drinks that night. The whole neighborhood came. Because we were on the grid with Piedmont Hospital, we never lost power.
Q: Many people dream about owning a successful restaurant. What was a turning point for Ted’s Montana Grill?
A: Ninety-five percent of all restaurants fail and they fail because they’re under-capitalized. Most people use up all their capital getting to day one. You have to have staying power after you open the door. Once you do, you’ve got to have a minimum of six-months of operating capital, preferably a year. Then you’ve got a chance to build a reputation.
Look, we’re the only industry that orders, receives, produces, sells, delivers and collects all in one day. We’re only as good as the number of people who come through the front door. So, without any marketing dollars, without any reputation, you can’t expect everybody to find you overnight.
At Ted’s Montana Grill, it took us 10 years to be an overnight success. Ted’s capital is the only reason we’re here. The recession hit and we lost 20 percent of our sales. We had to close underperforming locations. Ted never gave up. He could have bailed out. We started losing a couple of million dollars a year and he had to give us the money to keep the doors open.
Now, we are becoming a profit center. The last two years have been good. Our goal is to double the size of the company, from 44 to 88 restaurants by 2021. We’ll do it all with internally generated cash.
Q: What’s your management style?
A: The biggest thing I’ve learned is that if you inspire people around you to work together as a team, and you get the right people, you can do amazing things. I treat people with respect. I work side by side with them and I advocate for them. When we open a restaurant today, I still relieve the dishwasher for 20 or 30 minutes and let him sit down or have a Coke. When the whole team sees the top guy doing the lowest job on the totem pole, they gain respect for you.
I believe that the job of management is to lead from the front, but to support from the rear. You give them the tools, inspiration and recognition. You can’t say thank you enough to people.
Power is an elected position, where people trust you and believe in you. Managing by the authority of a title rarely works.
Q: So you’re not a micro-manager?
A: In a 100-yard dash, I give people a 99-yard leash. I trust the right to people to go out and accomplish the mission their way. Everybody gets to where you need to go differently. There has to be a corridor of tolerance.
For me, having a tight rein doesn’t work. First of all, you can’t get very big like that, because a human being can only control so much. Because of my style, the No. 1 quality I look for in hiring people is their demonstration of loyalty. Many people move around a lot and are self-centered. For my management style to work, I have to find people who are going to stick around for awhile.
Each week, Sunday Business Editor Henry Unger has a candid conversation, called “5 Questions for the Boss,” with a top executive in Georgia. Some remarks are edited for length and style.