published Saturday, January 11th, 2014

Chattanooga-based Craftworks hires turnaround artist to boost brands

Tenesa Pickett, left, takes an order from customers at lunch inside the Big River Grille on Broad Street.
Tenesa Pickett, left, takes an order from customers at lunch inside the Big River Grille on Broad Street.
Photo by Tim Barber.

Craftworks CEO Srinivas Kumar:

* 2011 to present -- Head of Pearle Vision

* 1988 to 2011 -- Various roles at Dunkin Brands

* 1983 to 1988 -- Various roles at Unilever

Craftworks locations:

Old Chicago -- 96*

Gordon Biersch -- 34

Rock Bottom -- 32

Big River Grille -- 3

ChopHouse -- 3

Blue Water Grille -- 1

A1A Ale Works -- 1

Ragtime Tavern -- 1

Rhythm & Brews -- 1

Seven Bridges -- 1

Sing Sing -- 1

Walnut Brewery -- 1

* includes about 35 franchised locations

Craftworks Restaurants and Breweries:

  • * Majority owner -- New York-based Centerbridge Capital Partners LP

* Staff: About 10,000 employees

* Headquarters staff -- About 130

* Founded -- Big River Breweries was founded in 1993 by restaurateur Tim Hennen and acquired Gordon Biersch in 1999. Rock Bottom Restaurants was founded in 1976, then merged with Gordon Biersch in November 2010 to become Craftworks.

Source: Craftworks, News reports

Timeline

1979 -- Old Chicago founded in Louisville, Colo., by Frank Day

1979 -- Boulder Beer receives brewing license as Colorado's first microbrewery

1990 -- Rock Bottom Brewery founded by Day under Rock Bottom Restaurants umbrella that includes Old Chicago and other brands

1993 -- Big River Grille & Brewing Works opened downtown by Tim Hennen, part of an investment group that included Allen Corey, Rob Gentry and Jon Kinsey.

1997 -- Allen Corey becomes CEO of Big River

1999 -- Big River acquires Gordon Biersch restaurants, adopting Gordon Biersch name

2006 -- Bluewater Grille launched in downtown Chattanooga, Big River Grille & Brewing Works opened at nearby Hamilton Place

2010 -- Centerbridge Capital Partners buys majority of both Rock Bottom Restaurants and Gordon Biersch Brewery Restaurant Group, renaming the new company Craftworks Restaurants & Breweries. Corey stays on as CEO of the combined restaurant group, with Day taking over duties as chairman of the board

2011 -- Craftworks moves headquarters to downtown Chattanooga

2013 -- CEO Allen Corey steps down

2014 -- Company hires Srinivas Kumar

Source: Craftworks, news reports

Chattanooga-based Craftworks Restaurants & Breweries has hired turnaround wizard Srinivas Kumar to lift the company's fortunes and boost profitability at a time when the casual dining market is under pressure.

Kumar, who will lead Craftworks from its Denver office rather than from Chattanooga, built a career out of taking over troubled brands and turning their losses into profits. While there's potential for Craftworks to grow, particularly its Old Chicago brand, there is also substantial work to be done in other segments where growth has leveled off, Kumar said.

"My view is, if a brand is not growing, then you're losing market share," Kumar said. "So if I put the brewery segment together, Gordon Biersch and Rock Bottom, the unit level growth is slower than category level growth. That's why I define it as a turnaround. They've done a lot of work, it needs more refinement."

Kumar's acknowledgement that Craftworks' growth has slowed contrasts with statements officials made upon the departure of former CEO Allen Corey, who stepped down suddenly in April 2013. The search for a new leader, which began with an address to employees but no public announcement, was expected to last about six months.

At the time, Chattanooga-based spokeswoman Carrie Kleban told reporters that the board "couldn't be happier with the results and growth of the company, it's all very positive."

"One of the key drivers of Allen being comfortable and saying he's ready to move on from here is the fact that things are on this upward trend," Kleban said at the time.

Corey, for his part, has steadfastly declined to comment on the changes at Craftworks, including his own exit or the hiring of Kumar.

Though he was one of the initial investors in the company, still retains an investment stake in Craftworks and helped make the deals that built it into a national conglomerate, Corey no longer serves on Craftworks' board.

Kumar has yet to get his feet wet and dive headfirst into Craftworks' financials, but his initial assessment reflects more positively on the Colorado-based Old Chicago brands than the Chattanooga-based brands and specialty restaurants.

The challenge with the breweries is to find a way of differentiating them from competitors, without spending too much money and becoming unprofitable. Old Chicago has more potential for immediate growth, while the brewery restaurants will take longer to build up, he said.

Though the award-winning brewers who craft local flavors for customers across the U.S. are "true artists," Kumar's mandate from company owners Centerbridge Partners is to generate what he calls scalable growth while improving margins.

"I honestly believe Old Chicago has a huge runway for franchising growth," he said.

First, it's cheaper to build an Old Chicago restaurant -- both for company-owned and franchise locations -- because they don't require the brewing infrastructure and specialty materials required for the company's brewery restaurants.

Second, it's simpler to market an Old Chicago restaurant. A straight-up restaurant has a simpler value proposition than a restaurant crossed with a brewery such as Gordon Biersch or Rock Bottom, which are juggling both food quality and beer quality at the same time.

"Having said that, there are a lot of airports, and the airport concessions would love to have a Rock Bottom or Gordon Biersch," Kumar said. "There is always an opportunity in high-traffic locations for licensing opportunities as well."

For the present, the new chief executive has no plans to consolidate the company's two headquarters into one unit, closing either the Denver or Chattanooga headquarters. Kumar explained his own move to Colorado is based on a desire to kick start growth at Old Chicago immediately, and to work more closely with Craftworks' chief financial officer, who is based in the Old Chicago headquarters.

"My intention today is to continue like this, and to keep both centers," he said. "Each one has a center and competence which is slightly different. Denver has an Old Chicago base, while Chattanooga has all the back office, IT, HR, training, marketing, and really has a knowledge of the whole group."

Craftworks' chairman of the board, Dick Rivera, who took over as interim CEO while the company searched for a new leader to replace Corey, will remain as chairman of the board.

-- Contact staff writer Ellis Smith at esmith@timesfreepress.com or 423-757-6315.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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