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EDEN PRAIRIE, Minn. Like the high-tech ventilation system that pumps fresh air into his cigar bar, Sheldon Jacobs is counting on new tactics to propel Woodroast Systems Inc. through the haze of startup companies to the easybreathing air of profitable firms.
To implement his strategy, Jacobs hired Ralph Guarino as president and chief operating officer of the two-unit chain. Guarino, a former Papa Gino's president and Boston Chicken veteran, most recently left the president's post at Italian Oven before it filed for bankruptcy.
"Sometimes you go into a company, and there's a lot of things you have to fix," Guarino said, referring to Italian Oven, which he said had a weak franchisee base that didn't have the capital to penetrate markets fast enough. "At Shelly's there's nothing really up at this point. I can do a strategic plan."
That plan will focus on developing the Back Room "Civilized Cigar Parlor" attached to the Shelly's Woodroast restaurant in Rockville, Md., as a stand-alone concept. Guarino said the Back Room offers "tremendous" unit economics because it minimizes labor and food costs.
Costing about $340,000 for a 1,700-square-foot unit that can produce in excess of $1 million in sales, the Back Room concept serves limited food and is staffed by about six employees, Guarino said.
In contrast, Shelly's fullservice casual dinner-house concept is more complicated to operate. "The full-service restaurants are very cash-intensive," Jacobs said.
The first unit in St. Louis Park, Minn., which cost $2.5 million to build in 1989, generates $2.7 million in annual sales in 6,200 square feet. Dinner checks average $17.50. The Rockville store, which opened in November 1995, will do $6 million in sales its first year in 9,600...