Silver Diner: Potential gold mine? [The Journal]
by Hope Katz Gibbs
Jan. 23, 1997
It’s Saturday night at the Silver Diner in Clarendon. Rob, a 55-year-old Arlington resident, is sitting quietly at the diner counter reading a newspaper as a waitress named Janis places before him a platter of hot pot roast, potatoes, gravy, com, and a buttermilk biscuit. Rob gives her a quick smile then picks up a fork and digs into the mashed potatoes.
How are they?
“Not bad,” says Giaimo. “I’m old enough to remember the classic diner, and this one is close to what I remember. I probably will come back.”
Re-creating the past is exactly what founder Robert Giaimo was going for when he opened the doors to the area’s first Silver Diner in Rockville, Md., in 1988. The Clarendon location is his seventh, and it too carries a stainless steel and neon exterior, glass tiles and refurbishes Seeburg jukeboxes.
And if all goes according to plan Giaimo will build at least a dozen Silver Diners by the end of 1997. Most will be in the metropolitan Washington area but one in South Florida, and one in Cherry Hill, N.J.
How his he growing so much—and so fast?
The expansion is due in part to a recent cash infusion by George Naddaff, the multimillionaire franchising whiz who helped turn Boston Chicken in the national chain Boston Market. Last year, he sold the chicken chain to a management group that has ties to Blockbuster video. And, Naddaff went searching for the next Boston Chicken.
In preparation for that find, he raised $16.2 million for a company called Food Trends Acquisition Corp. And after tasting hundreds of pizzas, pastas and bagels, he found the Silver Diner.
“I chose Silver Diner because it had a well-rounded format and served classic American food,” says Naddaff from his office in Boston.
‘.%lost people love diners. They are homey. You can have meatloaf and mashed potatoes. And, there are no national diner chains. I think this will really catch on.”
According to Naddaff, Giaimo won the lottery. And that’s just how Giaimo feels.
“I do feel like I won the lottery,” says Giaimo. “I had wanted to go national and to go public from the start. But I wasn’t interested in giving up control. I just wanted a partner,. That’s what George is. It took us a year to work out the deal, and now we are ready to grow.”
A BALANCING ACT
Silver Diner Development took the first step toward becoming a national chain on March 27 when Silver Diner began trading on the NASDAQ National Market at $5.50 a share. As of mid-January, the trading price for the stock was hovering at $4.
Net sales for the third quarter of 1996 totaled $3.9 million, an 18 percent increase over 1985.
The company is losing money, about $1 million per year. Giaimo attributes the loss to overhead and says he is confident his chain will be profitable in 1997. In fact, he expects sales to double and hit a projected $30 million by this time next year. After that, the sky is the limit.
“Eventually, I want to build a Silver Diner on every Main Street in America,” Giaimo says.
At the same time, though, he is trying to balance his personal life.
“It is very hard to be well-rounded as a person if you are a driving entrepreneur,” he says. “It fills your life. It is as important to me to be a good dad and husband. I don’t want my life to be just about business.”
It may not be easy, but Giaimo is trying. In mid-December, he spent an afternoon Christmas shopping for gifts for his wife with his two kids, Melissa, 9, and Bret, 6. That night, he brought them to the Clarendon Silver Diner for hamburgers, fries, and an interview with a newspaper reporter.
With one eye on his kids, Giaimo keeps the other eye on the chaos unfolding around him. It seems too many waitresses are congregating by the door. Too many people are wiping up behind the counter. And the cappuccino machine is on the fritz.
Giaimo has ordered a hot cappuccino with extra steamed milk, and returned it three times. 1’ry again,” Giaimo instructs the waiter, Dexter. “I don’t mean to be difficult. It is just too cold. There may be a problem with the machine. I’d be all over this problem like a cheap suit later. But right now, please try again.”
Daughter Melissa would also like a cup of cappuccino. Decaf, of course.
THE GIAMO TOUCH
“Melissa has a tendency to organize and run things just like me,” says Giaimo, putting an arm around his heir apparent. “I used to think this [being an entrepreneur] was something you learn. But now I see how Melissa is, and I think it is definitely genetic.”
Bob Giaimo showed signs of an entrepreneurial spirit when he was young. In high school he was a leader of sever clubs, but it was at Georgetown University in 1971 that he really put his entrepreneurial skills work.
It happened that Giaimo could find a place to get hot food at 2 a.m.
He needed burgers to help him get through all-night study session His only salvation, however, was the all-night McDonald’s on New York Avenue.
On the way back from a food run, he thought, “Wouldn’t it great if there was a local place to for good food?”
The 19-year-old spent the summer coaxing the Blimpie’s sub chain into selling him a franchise. Then he persuaded the landlord of building at Wisconsin Avenue and M Street to lease him space.
The business proved to be Giaimo’s first win in the restaurant lottery and his store became the top-selling franchise in the 100-store chain.
But then young Bob graduated from college and took a few weeks to tour Europe. He discovered the concept of casual cafe eating; when I came home he turned his sub shop into another restaurant familiar to many Washingtonians: the American Cafe.
“In my opinion, the American Cafe defined the yuppie experience in America,” says Giaimo. “We took the sense of respect that Europeans have for food and re-created that with American ingredients.”
By 1985 the American Cafe was earning $18 million in annual sales from seven area cafes including ones in Capitol Hill, Tyson’s Comer at Baltimore’s Harbor Place. And Giaimo was ready to take his restaurant national.
He connected with financial giant W.R. Grace & Co., sold them 80 percent of the business and planned to turn their stable of national restaurants into American Cafes.
But in 1986 W.R. Grace had a leveraged buy out, and Giaimo wanted out of the deal. “A big company cannot run a restaurant,” says Giaimo, who then sold the remaining 20 percent.
For two years, Giaimo looked for a new concept. But Ms concept of the perfect restaurant had changed. He was married now, expecting his first child, and had just bought a house in the suburbs. He wanted to create something that would fit into his grown-up yuppie world.
It took a while to find the right concept. Giaimo has a theory. “I believe that before starting a restaurant you have to be solving a problem,” he says. “And basically I didn’t know what was the problem.”
Then it came to him: A diner. The Silver Diner.
“Why? Because a diner is one of the only place that you can go and know that you can get a pie, of pie, a cup of hot coffee, an all-day breakfast, a steak,” he says.
“A diner is very inviting. It’s a neighborhood family restaurant. It is a beacon in the night.”