Turnaround Master Tries Starting Fresh

(Monday, May 26, 2003) - Carol Collis was cooking chili and corn bread in her kitchen when her husband suggested that a restaurant serving just chili would be a good idea. Oh, no. The restaurant burial ground is chock full of folks who thought they could run a restaurant just because they liked to cook. But Collis, 47, had more than cayenne pepper and pinto beans going for her. She has worked in restaurants for almost three decades: full-service steakhouses, bakeries, coffee shops, you name it. She had also done just about every job, although she says her passion made her less than ideal for middle management in large restaurant corporations. "My bosses always put me in the moneylosing restaurant", she recalls. "My forte was seeing what was wrong and making it successful." Collis had even better experience on her side. She had owned two profitable restaurants (in Southern California). In 1996, she bought a hole-in-the-wall sandwich shop on the circle in Old Towne Orange using her credit cards to come up with the down payment. In the first month she tripled sales. She recouped the $45,000 purchase price of Two's Company in three years. In 2001, she spotted a struggling sandwich shop in the Santa Ana Artists Village while she was considering expanding Two's Company to other locations. The owner just asked that Collis take over a $35,000 loan, which had been make through the Bankers Small Business Community Development Corporation of Orange County, a consortium of lenders that made small loans to businesses that could not get them elsewhere. Once again, Collis had immediate success. But she realized a flaw in her strategy. "I was under the illusion that Two's Company would work anywhere," she says. "It's a good independent business, but with limited growth potential because every community has a sandwich shop." Collis sold the Santa Ana shop for $50,000 and the Orange shop for $165,000 and took some time off. That's when the chili dinner sparked the next idea. Collis started researching chili recipes. She and her husband kicked around names like Big Ass Chili and It' Chili. Their web designer checked out the available domain names. The Collis' frequently visit Sedona, Arizona, famous for its red-rock formations, so they finally settled on Red Rock Chili Co. I started looking at different locations (28 in all)," Collis says. "The landlords asked to see my business plan, so I wrote one with a little help. We came up with a logo, souvenir cups and T-shirts. This is a company that has a lot of potential for growth." Few lenders will even consider making a loan for a restaurant because of their high failure rates. But Bill Davey, Executive Director of the Small Business Financial Development Corporation of Orange County, knew of Collis' success with the sandwich shop. "What's impressive is Carol's knowledge of what she was doing and her drive to succeed," says Davey, whose program oversees state loan guarantees for small businesses. He referred her to Andy Lamb at Pacific Mercantile Bank in Costa Mesa. "She had taken an existing restaurant, made it work and paid off her loans," Lamb says. "She had a well-thought-out business plan and a good recommendation from Bill Davey. And she had done her homework." Still Collis could only get a $75,000 loan and had to put up most of the proceeds from the other two restaurant to launch Red Rock Chili Co. When considering a lease at Atrium Court in Newport Beach Fashion Island, Collis for a month sat in the food court daily and counted foot traffic. Her financial projections were detailed and realistic. The Irvine Company deliberately looks for a mix of national chains and unique restaurants for Atrium Court, says landlord's spokeswoman, Jennifer Hieger. "We look for a strong concept, business experience (of the owner) and how the concept will complement the mix of restaurants we already have here," she says. "We saw Carol's passion for her business and her business skills. We taste-tested her chili and liked it." Collis says it helped that an Irvine Company retail executive is a big fan of Cincinnati chili, whose ingredients include cinnamon and chocolate and which is one of six chili types on Red Rock's menu. The Collis' signed their lease in September 2002. The Irvine Company projected that Red Rock Chili would open by March of 2003. It opened December 15, 2002 and captured strong initial sales of $27,000 the first week - from Christmas shoppers. Red Rock Chili could not sustain that pace, but it is slowly building monthly sales, Collis says. The long term plan is to partner with a national restaurant chain that understands expansion. "But even if that does not happen," Collis says. "I still have a good business that I am passionate about." Red Rock Chili Company is open from 11AM to 9PM Monday through Saturday and until 8PM on Sunday. Take-out and large order catering is available.

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