When Lisa Santos opened the upscale Southport Grocery and Café Inc. nearly six years ago in the Wrigleyville neighborhood, her eatery was the result of several years of planning and a lot of sleepless nights.
“The first year was hard,” Santos, 46, recently said while sitting at a communal table in the café during a weekday brunch period. “I would lay in bed and all I could think about was [balance] spreadsheets. ‘Break even’ was in my head. It was horrible. I mean, it’s your dream and you know you’re not going to make any money for awhile.”
Santos placed ads in local papers and magazines, but she didn’t turn a profit for the first few years. Business started to improve, however, after WTTW profiled Southport Grocery on the food program “Check Please!” in 2004, and products such as a gourmet cupcake, made with European-style butter and pure vanilla extract, met critical acclaim. Eventually, Santos began sleeping at night.
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Southport Grocery had revenue growth of 3 percent to 8 percent each year between 2003 and 2008. Santos’ original staff of seven burgeoned to between 25 and 35 depending on the time of year.
Southport Grocery’s revenue growth came from several factors, including Santos’ experience as an accountant and the grocery’s location on Southport Avenue, a boutique-heavy shopping corridor attracting affluent young professionals. Many of the young professionals push strollers and Baby Mum-Mums, rice rusk crackers for toddlers, are Southport Grocery’s best-selling item.
These days, customers are loyal to the point that they’ll rearrange their schedules for a visit. Wrigleyville mom Amy Katz, a weekday patron with toddler in tow, enjoys brunch on the weekends but recently visited during the week to avoid the long wait for bread pudding pancakes on Saturdays and Sundays.
“I thought we’d treat ourselves,” Katz said, perusing the boxes of Baby Mum-Mums.
Lines may be long on the weekends, but the recession is causing Santos to cut costs in anticipation of falling revenues. Santos estimated that revenues will fall 10 percent this year compared with 2008. Santos started seeing her top line slip in December, a drop that was a first for Southport Grocery. Still, she expects the business to turn a profit in 2009.
To reduce her expenses and combat lower sales, Santos has taken to canning goods in-house, shortening business hours, lowering prices where possible, and buying items in bulk and repackaging them under a house label. Selling specialty items, such as salts and baking sugars, allows Santos to cut “about $2 or $3 off every jar” for the customer, she said. Santos is also teaching her staff to pickle and can foods under the Southport Grocery label.
“It’s a lot of work to kind of figure out, ‘How do we fit this new paradigm?’ [The recession is] not going away anytime soon. It’s your new set of rules that you have to play with,” she said. “It’s amazing what you learn about your business during those times.”
Like upscale retailers, the sluggish economy has caused angst in upscale food businesses, both large and small. The Goddess and Grocer Inc., a small business peddling similar products as Whole Foods Market Inc. and Southport Grocery, is showing signs of growth. It opened its third Chicago location in Lincoln Park in March.
Most people don’t realize the manual labor involved with running a café and grocery, Santos said.
“You know, people think like, ‘Oh your fiends will come in and you’ll have coffee with them,’” Santos said with a smile. “It’s like, ‘You’ve got to be kidding me.’”
In the face of recession, Santos’s customers and employees remain committed to the small, upscale grocery and café. Co-head chef Derrick Dejaynes, 30, started as a server three years ago, and head line cook Carlos Valasquez began as a dishwasher more than four years ago.
“I started from the lowest and I kept going up and up and up,” Valasquez, 28, said recently, whisking an omelet.
Chicagoans Leah Bleuer, 33, and Erin Ryan, 29, have been coming to Southport Grocery occasionally for years because, as Bleuer joked recently, the food is reasonably priced, unique and “made with love.”
Southport Grocery and Café is different from other boutique grocery stores because items offered on the shelves are also featured on the café menu, Santos said. She now spends little to no money on advertising, instead relying on word-of-mouth. However, she makes sure to pepper customers who subscribe to Southport Grocery’s e-mail and Twitter lists with special offers, including “Secret Suppers,” where guests can gather and sample her and Dejaynes’ dinner creations after hours.
Guest checks average between $12 and $15, more if patrons purchase wine with their meal or additional items at checkout, Santos said. She has added more locally grown or locally made products each year as she continues to network with fellow food connoisseurs.
“It’s refreshing to see places that are getting stuff closer to home,” cashier Adam Galik, 26, said.
Admitting she went through an uncertain time as the recession took hold, Santo said that in the long run she expects to weather the storm, thanks in part to her business knowledge, which she said gives her a unique perspective.
“We are very financially focused here, even prior to this, and I’m surprised even at what I’m learning,” she said. “I’m wondering about businesses that aren’t as financially focused, what they’re learning.”
Santos plans to increase her branding power, possibly by selling her own cheeses and meats at some point in the future.
“I think it’s taking this idea of things that we make, that also fit the grocery, that have our brand on it, as taking it to the next level,” she said.
