Max & Erma’s Goes Back to Roots to Attract Diners

Columbus-based restaurant chain battles back from bankruptcy with store makeoverspic

The Beavercreek location of Max & Erma’s chain is the first of the three corporate- owned Dayton area restaurants to undergo an extensive renovation. Brandi Whitmer, a server at the restaurant, brings food to Jean Haus of Beavercreek and her son Tom Haus of Dayton and his daughter Karina, 3.

The venerable Max & Erma’s restaurant chain is battling back from bankruptcy with new leadership, a back-to-basics approach, and a little freshening up.

Nearly all of the 73 restaurants in the chain are getting some type of a makeover. The Max & Erma’s in front of the Mall at Fairfield Commons in Beavercreek, which opened 19 years ago, held a ribbon-cutting and grand reopening last week after shutting down for a week in mid-November for extensive renovations.

The Max & Erma’s on Miller Lane in Butler Twp. is in line for similar remodeling in mid-January, with the Springboro location off Ohio 741 likely to follow later in 2013, according to Max & Erma’s President Steve Weis. Renovation plans are not yet finalized for a franchise-owned Max & Erma’s inside the Dayton International Airport.

Weis, who has held the top job at Max & Erma’s for about seven months, said the makeover is “long overdue.” The restaurants are adding new tables and chairs, a gas fireplace to the dining room, more flexible seating arrangements in the bar and new carpet throughout. Across the chain, Max & Erma’s will spend about $3 million on the upgrades this year, and while the costs vary by store, many locations will spend “a couple hundred thousand (dollars) at least” on the renovations, the company president said.

Customers are warming to the changes: Max & Erma’s same-store sales have been up for eight consecutive months, and the Columbus-based chain is outperforming its competitors in the casual dining category of the restaurant industry, Weis said. “People are coming back,” he said.

Max & Erma’s competes against some industry heavyweights in the bar-and-grill portion of the “casual dining” segment, including a “big three” of Applebee’s, Chili’s and T.G.I. Friday’s, according to Darren Tristano, executive vice president for Technomic, a Chicago-based food service research and consulting firm.

The last five years have been a struggle for most restaurant chains in this casual-dining category, with sales declining quickly as the economy slid into recession, Tristano said. Most chains’ sales flattened out following the decline and have now started to bounce back. But even those higher year-over-year monthly sales figures that Max & Erma’s and some of its competitors are showing are not all that impressive because they they are “against comparable numbers from a year ago that were not very good,” Tristano said.

The type of exterior and interior renovations that Max & Erma’s has undertaken will help retain its most loyal customers and will give “lapsed” former customers and those who have never visited a reason to dine there, Tristano said. But the makeover can’t do the job alone. “You still have to have the right menu, the right service, and the right experience” to ensure long-term success, he said.

Weis knows a little something about his competition in the casual-dining segment: he was serving as regional vice president at Thomas & King Inc., one of Applebee’s largest franchisees, when he was hired away in July 2011 to serve as Max & Erma’s vice president of operations. He was promoted to president in May 2012.

The casual-dining chain’s parent company is Denver-based American Blue Ribbon Holdings, which bought the company out of bankruptcy for $27.5 million in September 2010 and which also owns restaurant chains Village Inn and Bakers Square.

It was a long, hard slide for Max & Erma’s, which four decades ago was one of the two pioneers of the casual dining segment along with TGI Friday’s. Over the years, chains such as O’Charley’s, Ruby Tuesday, Bennigan’s, Buffalo Wild Wings, Applebee’s and Chili’s crowded into the casual dining pool, sparking intense competition.

Once a publicly traded company before it was purchased in April 2008 by Pittsburgh entrepreneur Gary Reinert Sr., Max & Erma’s had more than 100 corporate-owned and franchised stores in 2006, but had dropped to about 80 by the time it filed for Chapter 11 bankruptcy in late 2009. It closed its first Dayton-area restaurant on Kingsridge Drive behind the Dayton Mall in Miami Twp. just a few weeks after the bankruptcy filing. Today, Max & Erma’s operates 73 restaurants — 52 corporate-owned, 21 franchise — in nine Midwestern states.

Weis said Max & Erma’s strayed from its roots under previous owners.

“We started as a neighborhood gathering place,” Weis said. “They got away from the neighborhood gathering space, and the restaurants started looking more formal” — and more like many of its competitors. The current renovations reflect a back-to-basics approach, with a more open feel, with high-top tables in the bar replacing four-person booths and allowing customers to move tables together to accommodate large family gatherings or office get-togethers.

The company president said he recognizes his task will be difficult. In addition to the stiff competition within the casual-dining segment, Max & Erma’s is feeling heat from “fast-casual” chains such as Panera and Chipotle, from “better-burger” chains such as Smashburger and Five Guys Burgers and Fries, and from independent bar-and-grill owners. But he is buoyed by the chain’s recent successes and remains optimistic.

“The greatest thing about Max & Erma’s is that our customers really do love us,” Weis said. “They had been disappointed with how it was run under the previous ownership. Now we are just focused on serving our customers and executing our plan.”

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