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Lessons in Success and Humility With Mike Young of Shady Grove

Lessons in Success and Humility With Mike Young of Shady Grove

An entrepreneur can make it big with a restaurant—or could end up broke. Find out some of the ins-and-outs of restaurant ownership and a few telltale signs that an investment or business just isn’t going to work with an Austin serial restaurateur and owner of Chuy’s, Mike Young. 

foundingAUSTIN: So Mike, my first question is, why open up a restaurant as you hear it’s one of the most risky ventures out there?

Mike: There's a high failure rate in restaurants, but the failure rate is usually with people who've never been in the business. People think, "I'm going to open a restaurant where all of my friends can go. It’ll be like Cheers!” And it's not. They get into the business and then they realize that it's a lot of work, a lot of organization, it's a very complicated business. If you're in the business then you understand the business, you’ve learned the rules, and you have methods of operating, so the success rate is rather high. 

fA: Did you have to worry about funding yourself or did you raise money? 

Mike: We were broke. I mean I grew up in a very modest family. I didn't have the money when I opened my first restaurant. But you have to recognize the times. From the end of World War II up until probably the mid 1980s, the U.S. was really a free market economy. People could pretty much do what they wanted to. We had the freedom to take chances. My first place was in a little house on 34th street, just a house. We knocked out some walls and put a restroom in the closet, literally. We pieced it together and probably opened it for $30,000.  Back then you could take a piece of graph paper and do a floor plan and design where everything is and take it to the city and get a building permit in maybe a week. Today it's the opposite. The city’s job now, is to make sure you meet all the complicated city rules and regulations. When we opened Chuy’s on Barton Springs in 1982, we did the building permit on one sheet. We paid our first month's rent paid, paid for our inventory, hired our staff, did our construction, painted the building, printed the menus, everything for just $75,000. Now you need engineers, experts, attorneys, building plans … working through the city with different experts. And what we did for $75,000 today would cost $750,000 or so. Now, what's the end result for the entrepreneurs? Currently all these regulations force young people out of bricks and mortar. You find food trucks and trailers all over the place because that's the only way they can break into the business. If you're already established and have funds and you can pay, you can build your business. But if you don't have huge dollars, it is hard to open. And that, to me, is heartbreaking because it kind of takes the fun out of life. You can still do it, you just have to have a good idea, you have to have good food, and you have to bring in financial partners.

fA: What would you say has been your top strengths for your success?

Mike: Surrounding myself with good people. That's the only thing I'm really good at. We hired great people. If you're not up to our standards, you don't last long in our organization. We're committed to the people who work here and we do the best we can by them. Southwest Airlines taught us that if you take care of the people behind the counters, then you don't have to worry about the customers. They'll make sure that the customers are taken of.

fA: Where do you see yourself in five years?

Mike: I'd like to say surfing but it's getting harder to get up at age 67. Five years from now I'll be 72 and my youngest kid will be going to college. So, I don't know what the heck I'm going to be doing. But I've always got something. I've always got a goal; I've got a list longer than ... I just don't think I'll live long enough to complete my list. I'm still thinking that I can make the Olympics in something. I'm not sure what it is, but...

fA: What's the most difficult lesson you've learned as an entrepreneur?

Mike: The most valuable lesson I've learned is humility. I opened my first restaurant, Mike and Charlie's, when I was 24. It was a boutique restaurant, one of the hippest restaurants in Austin. It became a success and I was just 24 years old. Then we opened Los Tres Bobos when I was 26. Bam—knocked it out of the park! And then John and I did Gianni's, a Northern Italian restaurant. It was one of the nicest fine-dining restaurants in Austin—and we were like 30 years old. To be 30 and have this string of successes, you really think you're the coolest person to ever grace the face of the Earth. Then we did Café Havana and we lost everything. We got slapped back down to the ground and I realized, I'm not all that great…. Just a regular guy. That was one of the best things that ever happened to me because if I would've kept having a string of successes, I would've continued to let it go to my head and I would really be a jerk today. But you realize through humiliating experiences that you're just a human being. That's why I'm successful, because I learn from every mistake. And no one will make more mistakes that me. You don't learn from success.

fA: Do you have a favorite mistake? 

Mike: Cafe Havana might have been my best mistake. I got sucked in, just thinking, “Location's not right, parking's not right, we don't quite have it together, but we can't lose! Look at us!” The failure changes your perspective, makes you realize that you're just as the next guy. 

fA: What do you love about being an entrepreneur?

Mike: Living and dying by your own decisions. The risk and the reward, but the risk is terrifying at times. I don't know if I could've made marriage work during the risky times. I was married at 53 and we had two kids. I was a bachelor until then. If I would've had a family at 30 years old, I don’t know if I would've taken some of the risks I took because I've been broke a couple of times where I've had to sell my car, sell my house, buy a used car and live in a rental and rebuild my life. So, I don't know if a woman would have put up with that kind of behavior.

fA: What drives you, what wakes you up in the morning? 

Mike: Looking for a new adventure either financially, personally, artistically or learning how to play the guitar. Building something, or trying to figure out how to communicate with my daughters.

fA: What's the best advice you received when starting your business?

Mike: Harry Joseph, who we bought our liquor from, was kind of our mentor back in the 1970s. Harry told us two things. The first was, “Buy a piece of commercial real estate. It doesn't matter how big it is. Get it paid off, and then buy another. And keep doing that. And when you're old, you'll be fine.” That's what John Zapp and I basically did. We bought a bunch of Chuy's locations and we paid them off and when we sold the company we kept the real estate. Very patient, long-term planning when you're retired. The next thing Harry said was, "You have two worlds in business. You have a world where people treat each other honestly and fairly and then you have another world where people lie, cheat, and steal. When you see people lie, cheat, steal, or their ethics aren't what they should be, don't ever return to them, just stay away from them."

fA: What advice would you give to someone who was considering starting or growing a company?

Mike: Make sure you're passionate about what you do. If you don't love medicine, don't become a doctor. If you don't love children, don't open a daycare. Also, for whatever you plan to do, make sure there's not someone out there being unsuccessful doing the exact same thing. After you've done your research and you really know what you want to do, jump in with both feet and don't look back. But you have to know when you can't go any further. Not everything works. When I invested a bunch of money in a toy company seven or eight years ago, I kept chasing that thing hoping it would work. I finally had to walk away. I should've walked away sooner. But you've got to know when your idea's not going to work. So dedication, research, hard work and then going all in. 

fA: How do you know when to call it quits? How did you know when the toy company wasn't going to work? 

Mike: I knew it wasn't working when I went to the first few trade shows, sold a bunch of stuff, and there were no reorders. You know, because if there are no reorders—it’s like if you open a restaurant and 100 people come to eat lunch, then the next day 50, the next day 20, and the next day 10. You know you're not doing something right. In the restaurant business you can turn things around if your location is good and the staff is good. Just work on your menu, work on your food, just keep working on it. 

We’ve had restaurants that I thought would never make it, and they did incredible. But then there's restaurants that I thought were a home run and they were a struggle. After you've done it for a while, you start to look at a neighborhood and figure the demographics and look at the traffic flows, and pretty much guess whether that's going to be a great location. The more research you do on a location, the better your decision will be. Research is the key, really. You have to know what your product is, and you have to know who's eating there. And then you have to find those people.

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