Bob McMahon is looking for an exit strategy.
The longtime Tucson businessman who spent the first half of this decade building an enviable empire at Metro Restaurants is quietly retreating.
Over the past several years, he has cut his holdings, which numbered nine restaurants in the early 2000s, to five, including an interest in the yet-to-open Nimbus Bistro and Brewery. That venture, a partnership with Nimbus owner James Counts that could open in September, replaces McMahon's Italia Ristorante, which he closed last weekend.
As he has downsized his Metro Restaurants, he also has downsized his role. McMahon, who once presided over every detail of Metro's daily business, including a heavy hand in the menus, has turned over the company's future to the young management team of longtime corporate chef Michael C. Brown, former McMahon's Prime Steakhouse manager Dan Multhup and newly anointed CEO and President Ray Flores, whose family owns five El Charro Cafés and the food-processing facility Chonita Foods, near downtown.
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Flores and McMahon joined forces last September to share operational duties like bookkeeping and payroll, but their restaurants remain independent.
"I wouldn't want to (fully) retire, but I have young people who want to get ahead," McMahon said on July 17, days after making the announcement to close Italia. "The young men deserve a chance.
"Everybody gets old," he added with a chuckle, sitting behind the tidy desk in his unassuming office next door to McMahon's Prime Steakhouse on North Swan Road near East Fort Lowell.
Leaning forward in his chair, the towering 61-year-old McMahon, dressed casually in khakis and a T-shirt, said he is semiretired. But try to pin him down on a definition of what that means and he is at a loss. He will still put in long hours as Metro's chairman, visiting the restaurants, chatting up VIPs at the steakhouse and greeting regulars at Old Pueblo Grille on North Alvernon Way near Broadway. And he will have ultimate veto power over his lieutenants on everything from menu changes to acquisitions and new ventures, he explained in a soft tone.
But he said he will focus much of his energy on the Nimbus project, which could include a distillery producing vodka, mescal and other spirits. They have applied for a distillery license, which could take a year, and may build the operation next to the bistro, at 6464 E. Tanque Verde Road.
"I don't know a thing about making beer at all, but it can be sold," said McMahon, who said he has been flirting with the idea of a Nimbus-Metro venture for years. "I like the long-term play of the liquor business and the beer business."
Metro's role in the Nimbus partnership is on the food and management sides, and Nimbus will run the brewery end, Counts said. McMahon also has offered to tap his contacts in Nevada to market Nimbus in that state. It already is sold throughout Arizona and in parts of California, Counts said.
"The meshing of the two companies is just so natural," Counts said. "We do beer so well and our food is good, but it's not what we want to do going forward."
A few months ago, McMahon and Counts, 51, went from wishing aloud to acting after Italia, which opened in May 2008, failed to make the profit margin needed for its survival. The restaurant had been a longtime dream for McMahon, but it suffered from bad timing; he opened it when the economy's downturn turned into a free fall.
"At the price point of Italia, where you were at the $12 to $19 range, that's higher than most people want to pay," McMahon admitted. "Italia does well Thursday, Friday and Saturday, but during the week we're not doing that good. I see the liquor aspect to be better for us."
Meanwhile, Nimbus has seen double-digit increases in its distribution (24 percent) and in-house sales (18 percent) this year, Counts said.
"From a business standpoint, (Nimbus Bistro) is a very smart move," said McMahon's longtime business associate and friend Rick Grinnell. "Bob's not immune from the economy. Nobody likes to feel like 'wow, it didn't work,' but he's smart enough to know 'I'm not Bank of America. I can't continue to underwrite.' "
The concept change at Italia came 14 months after he opened it and seven months after he closed Old Pueblo Grille in Foothills Mall last December. Since 2007, McMahon has shut three restaurants. Nimbus Bistro will be the fourth concept for that location; it was a Keaton's Restaurant when McMahon first acquired it in early 1999 and he converted it first to City Grill later that year, then Italia in spring 2008.
Metro's downsizing appears to be behind him. But McMahon, who got into the restaurant business in the late 1990s after selling his behemoth meat distributorship City Meats, said he has no plans to expand anytime soon.
"His job," he said, nodding to Multhup who had just strolled into the office, "is to focus on making Old Pueblo Grille, (Metropolitan Grill) and McMahon's the best they possibly can be. So we're internally focused on everything."
"My view is nothing but growth for Metro Restaurants. Stay with the times," chimed in Multhup, 39, who came to Metro from Flagstaff in 2001 and was named operations director early this year. "Metro Restaurants are a staple in Tucson and we are going to continue that."
Multhup said they already have introduced subtle tweaks to the restaurants' decor and small yet noticeable innovations to the menus, including a recent revamp of the kids' menu at Metropolitan Grill on North Oracle near Magee to introduce healthier sides. To promote those changes, kids eat free in July, and Multhup said the campaign may be extended to August.
At Old Pueblo Grille, they brought in a smoker and last week introduced a smoked barbacoa; at McMahon's Prime Steakhouse, they launched a Wednesday ladies night hoping to lure in younger diners, Multhup said.
"We've done things like that and we have gotten younger as far as our demographics," said the father of two young kids. "I think these are the signs of the times that we need to keep up with."
"They have a different way of looking at it than people like me," McMahon added, confessing that his visions for his restaurants have long reflected his own demographic.
"We do generate a traffic pattern of people our age."
McMahon is hopeful the youngsters, as he refers to Brown, Multhup and Flores, will breathe new life into Metro Restaurants.
"I'm always the optimist. We'll see what it is," he said. "These guys have been in the business and that's what they're going to do."
More, Page D6
• Earlier this year Bob McMahon predicted that 20 percent of Tucson's restaurants would need to close for the others to survive. Since then, the city has lost a number of prominent restaurants.
• While McMahon downsizes, Tucson native Sam Fox's Fox Restaurant Concepts is growing.
Metro Restaurants, past and present
Still open:
• Metropolitan Grill, 7892 N. Oracle Road. McMahon's first restaurant built from the ground up in 1997.
• Old Pueblo Grille, 60 N. Alvernon Way. Open since January 2000
• McMahon's Prime Steakhouse, 2959 N. Swan Road. Opened in November 1998.
• The Grill on the Green at Canoa Ranch Golf Club and Cafe Julian at Torres Blancas Golf Club, both in Green Valley.
• Smoke Cigar Patio & Bar @ McMahon's. Open since 2007.
Closed:
• Asian fusion restaurant Firecracker, 2990 N. Swan Road, December 2007 after 10 years to make way for a joint French bistro venture with noted chef Philippe Trosch. Bistro Philippe opens in February 2008; closes in June 2008.
• Metro Grill at Park Place, summer 2007.
• City Grill , 6464 E. Tanque Verde Road, summer 2007. Italia takes its place in May 2008. It closes July 19, 2009. Coming soon to that location: Nimbus Bistro and Brewery, a joint venture with McMahon and Nimbus Brewery owner James Counts. Expected to open in mid-September.
• Old Pueblo Grille in the Foothills Mall, December 2008. McMahon cites competition from other mall restaurants including including newcomers World Sports Grille by Sega, which opened summer 2008, and Sushi Garden, which opened January 2009.
Partnerships:
• September 2004: McMahon joins with El Charro for a pair of El Charro Cafés that replaced McMahon's Smokin', A Barbecue Place restaurants. Smokin' was McMahon's short-lived foray into barbecue.
• Late 2007: McMahon becomes a management partner with decorated French chef Philippe Trosch in Trosch's namesake bistro. The business closes four months after its opening in February 2008
• September 2008: McMahon's Metro Restaurants becomes full partners with El Charro restaurants. McMahon takes title of chairman; El Charro's Ray Flores becomes president and CEO.
• July 2009: McMahon announces a partnership with James Counts and Nimbus Brewery to open Nimbus Bistro and Brewery.
SLOW TIMES AREn't over FOR TUCSON RESTAURANTS, MCMAHON SAYS
Earlier this year Metro Restaurants Chairman Bob McMahon predicted that 20 percent of Tucson's restaurants would need to close for the others to survive.
Since then, Tucson has lost a number of prominent eateries, including VinTabla and Red Sky, both in May, and McMahon's own Italia Ristorante last weekend.
The economy might be settling down a bit, but McMahon said Tucson's restaurant industry is far from returning to profitability.
In a frank interview with the Star July 17, he said business at Metro's Metropolitan Grill and Old Pueblo Grille is down 20 percent so far this year; last month, though, business at Metropolitan Grill spiked 11 percent, and McMahon was at a loss to explain why.
At McMahon's Prime Steakhouse, business in March was off 25 percent — about $100,000, he said.
"Hurt? It's a slaughter," he said. "And I think it's just tough everywhere. Nobody wants to talk about it, but I think it's tough. I think the lower-end markets, the $5-type stuff, is doing well. But the midprice stuff and higher-end stuff" is suffering.
Where does he see growth potential for restaurants in the Tucson area?
"Probably out in the northwest," he said. "The El Charro on Orange Grove (and Oracle Road) moved north and it has more than twice the business. It's unbelievable.
"I see that area out in Cortaro and that area is good, but those are all chains out there."
How will the loss of spring training in 2011 affect restaurants?
"The economy is one thing. Without spring training here, we really won't have a season because the rodeo really doesn't bring a big season. Actually El Tour probably brings more people to town than say the rodeo or the golf tournament (Accenture Match Play held in February). How many people really come for the golf tournament? We're getting them all from Tucson; there's not a lot coming. . . . Without the peak season, I just don't see it."
Is it a tragedy to see all these restaurants, including his own, close?
"When the Cuveés go out, people are, 'Oh my goodness.' But they weren't doing any business. No busy restaurants go out of business," he said.
— Cathalena E. Burch