StoneFire Sale Could Stoke Growth

StoneFire Grill, the homegrown restaurant that started in Valencia almost 17 years ago, now employs more than 1,000 workers at eight locations – and with a recent majority investment by New York private equity firm Goode Partners LLC, it’s poised for further expansion. Mary Harrigan and her sister Maureen launched the eatery as a family business – Mary’s sons Kyle and Justin Lopez worked the cash register in the beginning. Now the family can leave the money worries to their new partners. “We’re excited because Goode Partners brings the opportunity for growth in a way that we don’t have to be the ongoing financial investment,” Mary Harrigan said. “They want to grow the concept – they think it can work everywhere.” Neither StoneFire nor Goode disclosed the amount of investment or the percentage of equity in the Westlake Village company. Goode did not respond to a request for comment. But while third-party funding will drive the chain’s growth, its founding family won’t take a back seat. The Lopez brothers will remain at the helm, and are determined to preserve the family-oriented, homestyle atmosphere that has been key to StoneFire’s success. “For the most part it’s just business as usual,” Justin Lopez said. “We just get to grow faster with Goode.” Family brand Harrigan didn’t expect her sons to wind up in the restaurant industry, but both returned from school with a newfound appreciation for the family business. Today, Justin manages StoneFire’s marketing efforts, while Kyle is director of operations. “I opened our very first location in 2000 as a team member,” Justin Lopez said. “Back then, I was doing everything from ringing you up to bringing your food out to catering.” But expanding the chain without diluting StoneFire’s family-centric feel may be easier said than done. Restaurant consultant Ron Santibanez, president of Profit Line Consulting in Los Angeles, compared the company’s trajectory to that of his former client Carl’s Jr. Restaurants LLC. “It is difficult to keep that hometown vibe and personal interaction that owners typically have,” Santibanez said. “Most people in Anaheim today probably don’t recognize Carl’s Jr. as a homegrown operation anymore, because it really isn’t.” As a chain’s geographic reach expands, he explained, its management becomes accountable for a larger number of employees while growing further detached from operations at individual restaurants. Furthermore, if it has built its brand on inspiring a sense of familiarity with customers, the company could risk alienating those who view expansion as a betrayal of its core values. Fortunately, StoneFire has an academic advantage when it comes to managing its public image. Prior to returning to the restaurant in 2010 as director of marketing, Justin Lopez researched and developed StoneFire’s branding strategy as part of his master’s thesis at the London School of Economics. “He has really been a gift to the company because he’s super smart and very intuitive from a marketing perspective,” Harrigan said. Her own experience could prove equally beneficial: StoneFire weathered a similar identity crisis during the early years of its growth. “Our biggest challenge was probably when we went from two restaurants to three and four, which are the two in Orange County,” she explained. “At that point, we weren’t well-known in the L.A. area, but the brand was becoming more and more recognized.” While the first two StoneFire locations had achieved profitability without formal promotion, winning patrons in Orange County required new tactics. The company revamped its image to one that could sustain the success of its original outposts while also attracting new customers as it continued to expand. “Prior to opening in Orange County, we were very fortunate in that we did not have to spend any money on advertising,” Harrigan said. “This gave us the opportunity to design a marketing plan that would develop our brand while also helping new communities come to know who we are and what we do.” Strategic staffing According to Lopez, maintaining the restaurant’s brand will be one of two major tests ahead for the chain. The second will be to staff increasingly distant locations with employees who can deliver on the restaurant’s mission. “We’ll have to make sure that as we expand, we find the right people and the right locations so we can continue to execute upon what has made us so successful,” he said. Training employees and treating them well has always been part of StoneFire’s culture, Harrigan said. Some workers have been with StoneFire since its inception, or even longer: More than one manager started out at Harrigan’s sole barbeque restaurant Rattler’s Bar B Que when it opened in Santa Clarita in 1988. “Our growth has always involved developing great leaders amongst us, and also bringing great leaders from the outside when needed,” she said. “We really felt from day one the benefit to our overall company when we invest in people and create long-term, lasting relationships with our team members.” To ease these growing pains, StoneFire’s expansion will be a slow, cautious process. The chain plans to add three new locations in 2017, according to Lopez, and will maintain roughly the same pace moving forward. “The goal will be to open two to three locations per year from here on out and to continue to do that responsibly,” he said. StoneFire was lucky to find an investment partner who shared the restaurant’s commitment to deliberate growth, not to mention its mission, he added. “We wanted to make sure that whoever we partnered with had the same values as us – family, relationships and a real desire to be of service to the community,” Lopez said. “We found that in Goode Partners.” For Harrigan, the firm’s investment is a long-awaited relief. She and her sister borrowed money from a local bank to establish the first StoneFire location, but the seven subsequent restaurants had been funded from company profits alone. “The biggest challenge was always a financial one,” she said. “We had always been only two shareholders, my sister and me, and all of our growth had come from within the company.” Goode Partners’ decision to invest in StoneFire was as much about the leadership team as it was the concept, Harrigan said. But if something goes awry, her sons won’t have to look far for expert advice. “Our family is just a phone call away,” Lopez said. “They’ll be involved in major business decisions as they come about.”