Smile Supply

Smile Supply

HOSPITALITY by Mark Gordon | Managing Editor

An accountant-turned-bar-owner gambled she could handle the restaurant equipment business two years ago. The bet is paying off.

Marilyn Snodell is the rare Gulf Coast company president who can smile when she looks at the books for 2008.

And why not? The Sarasota-based restaurant equipment and supply company she bought in 2005 has nearly doubled its revenues in two years, from $7 million when she bought it to just under $14 million last year. She's hired 20 more people and opened branches in Bradenton and Fort Myers in that time, too.

Snodell's biggest smile, though, is reserved for the fact that the company is poised to grow even more in 2008. It has already signed a $5 million contract to provide a full kitchen for a large business, one Snodell declines to identify, only to say it's in the northeast. Overall, the company is projecting as much as $16 million in revenues this year.

Gulf Coast business growth stories like that, in any industry even remotely connected to the housing market, such as restaurants, have been far and few between lately. So it would make sense that a company that supplies restaurants with everything from industrial ovens and walk-in freezers to whisks and aprons, would be struggling, too.

Not Sarasota Restaurant Equipment. The business has grown so rapidly the last two years for several reasons, executives say, from luck to smart planning to simply being nice to employees in an industry notoriously short on young, talented people and notoriously long on turnover.

There are a pair of other factors in the growth: The company has been a leading player in the bid process to supply public schools in Lee, Manatee and Sarasota counties with kitchens and the area's school construction slowdown has lagged behind the housing slump.

It helps, too, Snodell says, that the company's previous owners, an elderly couple looking to retire, "had a good head of steam going" when they sold the business.

Snodell, however, isn't constantly smiling. There are also some challenges and worries. For starters, the entire staff, including Snodell, haven't completely adapted to an expensive new software system intended to make it easier to control and monitor inventory backlog.

Snodell is also encountering an entrepreneur's constant challenge: Access to capital. "Our needs have outgrown our bank," says Snodell, of the $1.5 million credit line the company has. She's seeking a new bank to expand the credit line, in addition to possibly taking on some passive investors.

Buying power

Snodell is more suited to financial lingo like that then the language of restaurant equipment. A native of Chicago, Snodell worked as an accounting professor and ran a small accounting business before moving to Sarasota in the early 1990s.

She took a CPA job in Sarasota, while also expanding her business resume by buying two liquor stores, one in Sarasota and another one on Siesta Key. By 1994, she had also opened a bar on Siesta Key, which she initially called the Key Hole and later renamed Gilligan's.

Seeking a business she could run with her son, Randy Snodell, she bought Sarasota Restaurant Equipment in 2005. The switch from buying equipment to selling it was "much more complicated then I would have thought," says Snodell. "It's not as easy as it sounds."

Complicated enough that from almost her first day, Snodell began searching for someone with experience in the restaurant equipment business to run the business. She found her answer in Lee Zabel, who had been running a $6 million, fourth-generation family-run restaurant supply business in Youngstown, Ohio.

Zabel passed on that business, W.C. Zabel, to his two sons so he could move to Sarasota and take on Snodell's operation. Zabel's most significant contribution to the business, Snodell says, has been his experience with national buying groups - the backbone of a supply business that has to buy dozens, and sometimes hundreds, of products with little notice.

Zabel got Sarasota Restaurant Equipment Supply hooked up with the National Association of Food Equipment Dealers, of which he's now president. The association is a buying consortium made up of 53 companies that buys $210 million worth of restaurant equipment a year, using the power of volume to bring down prices.

Says Zabel: "A buying group allows us to buy better and get backside rebates."

With the purchasing savings, Zabel and the sales team set out to find clients in need of new or upgraded kitchens. By 2006, the effort was going so well the company bought the remaining inventory of Coast Restaurant Equipment in Bradenton after it went out of business. And after being persuaded by a sales employee working in Lee County, Snodell bought another supply operation in Fort Myers in early 2007.

Snodell's latest purchase cements the company's expansion: Late last year, she bought a 13,000-square-foot warehouse in a Sarasota industrial park for $1.15 million. The space will be used for storage, as well as a central bid office.

In addition to schools, the occasional hospital or government building, some of Sarasota Restaurant Equipment's recent clients include golf course clubhouses, a restaurant on St. Armands Circle and some new eateries in east Manatee County. "We sell everything you could possibly need in a kitchen," says Snodell. "Everything but the food."

Entrepreneurial expertise

While Zabel runs the day-to-day and buying side of things, Snodell brings the entrepreneurial expertise, which she picked up largely from being a hands-on bar owner. A key component to her business mode of operation, one that can work in any business dealing with a wide product list and customer base, is her ability to respond quickly to mistakes.

For example, there was the time last year, when a Sarasota Restaurant Equipment client was upset about a furniture delivery he claimed was wrong. Rather then have the frustrated client keep the order as a stop gap until the correct order arrived, the staff quickly found enough chairs and other items within its three stores to lend to the customer. Situation solved.

"We know we are going to have problems," Snodell says. "But it's how we take care of the problem that separates us."

Zabel says the other aspect separating Snodell from competitors is her employee-friendly attitude, something she also picked up from her past business ventures. Snodell even provided all of her bartenders at Gilligan's with heath insurance, an industry rarity.

At Sarasota Restaurant Equipment, Snodell has defied an industry staple by not enforcing non-compete clauses with sales personnel. "A non-compete agreement is only applicable when there is unique knowledge and I don't think that fits for this industry," says Snodell. "If you don't want to work here, you aren't going to represent me well anyway."

AT A GLANCE

Sarasota Restaurant

Equipment

Year Revenues % Growth

2005 $7 million

2006 $8.5 million 21%

2007 $13.5 million 59%

2008 $15-$16 million (projected)

Source: Sarasota Restaurant Equipment

REVIEW SUMMARY

Business. Sarasota Restaurant Equipment

Industry. Restaurant supply, hospitality

Key. Company has doubled annual revenues to $14 million and tripled its employee base to 31 in two years.