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After 35 years in fine dining, Michael Namour was ready to try something casual. With $275,000 and a lot of elbow grease, he opened Buns with partner George Ash in May 2008 across the street from the University of North Carolina at Chapel Hill (UNC). The name, chosen to grab customers’ attention, isn’t the only thing that’s catchy about the pair’s concept.
While other restaurants cut quality and portion sizes to stay afloat, Buns serves customers 6 ounce Angus Chuck burgers on buns made fresh daily at a local bakery. A towering side of hand-cut fries, gourmet dipping sauce, and a soda complete the store’s combo for less than $8.
Buns’ beef, turkey, and veggie burgers, prepared without a freezer or a microwave, brought the concept almost instant success. But Namour and Ash will tell you that it takes more than a good product to run a successful independent operation.
Although the Chapel Hill area is usually a revolving door of storefronts, Namour and Ash turned a profit only six months after opening Buns. The pair credits market research, carefully thought out pricing, and strong community connections. And they did it without the help of a corporate office.
QSR followed Namour and Ash for one day, from pre-opening to close, to give you a first-hand account of the challenges independent operators face.
8:30am - Namour and four of his 16 full-time employees have been at Buns for half an hour already. One forms hundreds of beef burgers by hand while another seasons salmon and tuna steaks.
Namour’s day started long before 8 a.m. Although he and Ash chose to open the store in Chapel Hill because the nearby university offers a captive audience, Namour commutes into town two to three days a week from his home in Denver, North Carolina. The ride takes three hours. He spends another day or two each week at the restaurant’s office in Hickory, North Carolina, where a bookkeeper manages paperwork and performs cost analyses. But making it out to the store regularly is important to Namour.
It allows him to be intimately involved in operations—counting the money in the register, tasting various products, taking inventory. Whatever is necessary to prepare for the day’s 11 a.m. opening.
“It’s exactly like running a play,” Namour says. “When the curtain goes up, you’ve got to be ready.”
10:00am Jennifer Robbins, the cashier for today’s lunch shift, arrives. After running to a nearby bank to deposit last night’s earnings, she fills the condiments in the dining room.
Robbins has been with Buns since the beginning, about two months before the store opened. She’s not the only one.
The restaurant’s staff is almost identical to what it was the day it opened 13 months ago. Only two staff members have left, which puts Buns at 12.5 percent turnover. That’s 87.5 percentage points below the industry average.
Namour is used to outstanding retention. At a former concept, he had staff members who stayed with him for 19 years.
Despite the fact that the UNC campus is so close, Namour and Ash shy away from hiring students, who often don’t make a quick-serve job their priority. That leaves Namour with employees who depend upon their job for their livelihood. He tries his best to accommodate this, refusing to release employees early when business is slow and offering them competitive wages.
“You can’t compete with the franchises because the franchises have 401Ks and health insurance,” Namour says. He gives employees regular raises to keep them from being lured away and promises health coverage after a year.
“It’s really a hardship on an independent to provide that, but in order to keep them ...” he says.
After Namour hires employees, he removes all temptations for them to steal or cut corners, decreasing the likelihood of firing them. Security cameras transmit a live feed to his Denver home, he offers them free food, and he jumps on anyone who strays from standard protocol—even slightly.
11:00am - Buns’ first customer of the day comes in. He has been waiting outside for 10 minutes.
Robbins reports hearing that a restaurant down the street is going out of business. It’s located on Franklin Street, the town’s main drag and a spot notorious for its high rent. Buns is on a side street, which means it receives less foot traffic and pays lower rent. The 2,000-square-foot location has served the restaurant well.
“I did not see much of a change,” Namour says about business after the onset of the recession. With about 370 customers per day, an average ticket price of $6.50, and a steady increase in business, Buns is on track to make almost $1 million in revenue by the end of its first year.
Buns’ operating costs haven’t been affected much by the economy, either. The store increased prices by 50 cents in November after food costs went up, but they have since come down again. Now Buns’ profit margins sit at 10 to 15 percent.
Customers consistently tell managers they should be charging a lot more, but Namour keeps prices low since he doesn’t invest much in marketing. Beyond donating gift cards to local organizations and buying the occasional university newspaper ad, Namour relies exclusively on word-of-mouth marketing, a strategy that’s already paid off. Out-of-town visitors flood Buns after sporting events, telling Namour that word of the store’s opening has reached them even from afar.
11:26am - Two representatives from Pate Dawson, a local food distributor, visit the store. Namour schedules an appointment to meet with them the following Monday.
At first, vendors wouldn’t even consider giving Namour the credit they usually give franchisees. He had to pay for everything cash on delivery (COD).
“Nobody wants to take a chance on you,” he says. “Everybody waits for you to build your business.”
Now multiple vendors solicit Namour daily; everything from food distributors to credit card companies want a piece of Buns’ profits. Perhaps the most striking example is Buns’ experience with Coca-Cola.
When Namour first talked to the company, it wanted to charge him weekly service fees and refused to give him any perks for signing. Meanwhile Pepsi offered Buns free cups, a free ice machine, and no service charges. In the seven months the store operated in 2008, it generated more business for Pepsi than some restaurants do in an entire year.