By making strategic changes gradually, Ken Mikalauskas and his wife Lara Ross bought Mel’s Tearoom were able to make a historic landmark relevant to customers today
THE CHALLENGE
In 2012, Ken Mikalauskas and his wife Lara Ross bought Mel's Tearoom in Sackville, New Brunswick. The restaurant was an old-fashioned variety store selling not only food, but staples such as bread, eggs as well as tobacco products, and had been a fixture in small town since the 1930s.
It had been run by three generations of the founder before Mr. Mikalauskas and Ms. Ross bought the business and enjoyed a loyal clientele. As customers, Mr. Mikalauskas and Ms. Ross had frequented the restaurant and sometimes thought about what they would do to tweak the business yet stay true to 'Mel's' brand.
After buying the business, keeping consistent with the brand became the biggest challenge the couple faced. It was one of the few places in town that attracted customers of every age. Older customers wanted things to stay the same as that was an important reason for their patronage. Younger customers, on the other hand, wanted change and desired newer items such as gluten-free and vegetarian options.
The couple wanted to move the business forward yet keep a link to the heritage and maintain Mel's place as a histrionic landmark. But how could they accomplish this task?
THE BACKGROUND
Mr. Mikalauskas always considered himself an ideas man. With a degree in graphics art and design, the Toronto native thrived in the creative environment at various advertising and creative ideas firms in the GTA area. Although he enjoyed his work, he considered himself a good worker but not a good employee.
Over the fifteen years he spent in Toronto, he always had the drive to make things better but found himself restricted. Eventually he decided to change his lifestyle and accept an appointment with a firm in the Maritimes. An avid musician, he was also attracted by the opportunity to work with companies such as Sabian Cymbals in Meductic, New Brunswick. After six years, the firm began to lose momentum. It was at this point that he quit his job and became a freelance designer Living in a small university town with limited opportunities he knew that he had to be creative and find hidden opportunities. One such opportunity presented itself when a local diner came up for sale. Although he had no restaurant experience, he knew that the opportunity would be a perfect fit for his wife, who had the people skills so critical in the service industry.
THE SOLUTION
After purchasing Mel's Room, Mr. Mikalausksa and Ms. Ross decided to change things gradually – reasoning the slow pace would allow them to get customer feedback, as well as make it comfortable for the loyal clientele to get used to the new things.
They started out with minimal cosmetic changes such as replacing the floors, changing some lighting, reupholstering existing furniture and cleaning up the sight lines to increase the flow in the space. They also brought in memorabilia which gave the restaurant a museum feel. Another decision they made was to phase out the variety store business by removing the tobacco and other products The other significant change was to the menu; specifically the quality of food that they served. Not only did they start offering more items, but they started using locally sourced products and adding healthier options such as salads and gluten free choices. They also increased the prices, which were quite low.
THE RESULT
The gradual change in the business model has worked well. The couple has been able to retain their loyal following and attracted new customers due to their personalized quality service, better menu choices and good value for money. The couple know that they are not going to make a million dollars out of the business, but that's not what they want or expect. They're enjoying the business as it is a fun and financially viable enterprise and allows them to keep a historic landmark up and running.
Nauman Farooqi is a professor and head of the department of commerce in the Ron Joyce Centre for Business Studies of Mount Allison University.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.
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