Made From Scratch

The location had seen three businesses come and fail. The restaurateurs were inexperienced fledglings. How then did Just Fresh grow into a $4 million chain?
Magazine Contributor
8 min read

This story appears in the February 1999 issue of Entrepreneur. Subscribe »

Getting a commercial landlord to take a chance on their carefully conceived bakery-cafe concept wasn't easy. After all, among Whitney Montgomery, 34, and his four partners, only one had any restaurant experience. And that wasn't the only strike against them. With their eye on a location in the downtown business district of Charlotte, North Carolina, the team would also have to break the curse of a doomed property: No less than three other businesses had failed in the seemingly perfect space in recent years.

After all, national statistics culled by Cornell and Michigan State universities reveal that more than 50 percent of restaurants fail in the first year. But stepping up to the plate, Just Fresh took a swing, and today the lunch crowds--and breakfast early birds--are cheering. First-year sales of $300,000 in 1994 have mushroomed to nearly $4 million in 1998.

No Fear

Montgomery is no stranger to challenges. In fact, he's always eagerly pursued them. After graduating from Davidson College in Davidson, North Carolina, in 1988, he and his wife, Mary Charles, packed their belongings and moved to Kenya, where they taught for two years as volunteers. They even climbed to the top of Mt. Kenya, a 17,000 ft. peak. When he returned to the United States, Montgomery decided to become partners with his father-in-law, Robert L. Avinger, 60, for what would become the adventure of his life.

"We made a commitment early on that we would approach our business as an adventure," says Montgomery. He and Avinger, an economics professor turned money manager, found their inspiration for a business through a source close to their hearts--a mutual friend had discovered the virtues of fresh juices while fighting cancer. They believed a juice bar would be a sure-fire hit; after all, America was eating healthier every year.

The partners needed a business concept of the long-haul variety. Together, they had the time and the resources to go about it in the right way. "If you're going to play the game, you might as well win," says Montgomery. He and Avinger each threw $25,000 into the pot for research and development. "We were looking for a concept that we could cookie-cut and grow," Montgomery says. In the summer of 1992, they flew to the San Francisco Bay area to check out the juice-bar scene.

"In interviewing juice-bar owners and operators there, we quickly found they needed to offer more products [than just juices and smoothies]," says Montgomery. But the California juice bars were typically affiliated with vegetarian-style restaurants, something the partners knew wouldn't fly in the Southeast. As they looked for complementary products to go with the juices, it all came together. Why not glean the best of several worlds and capitalize on the multiple trends of juices, gourmet coffee, bagels and premium-quality made-to-order sandwiches, salads and soups?

After starting their baking research at the library, they traveled around the country and talked to bakers. Montgomery even took a four-day baking class in Washington, DC. Next, they used a business incubator affiliated with the University of North Carolina, Charlotte. Setting up an office there, the pair carefully laid out a business plan as they continued to experiment.

As the months unfolded, the duo sought to expand the partnership. With Avinger and Montgomery remaining majority partners, Larry Trull, a businessman and former banker, joined the team, as did Avinger's son, Robert Avinger III, and Scott Milkey, a friend and college classmate of Montgomery's who had a restaurant background.

In their search for a location, the path of least resistance meant finding a spot with a lot of foot traffic. They hoped Avinger's longtime local business connections and sterling reputation in the community would open a door or two, so they aimed for the First Union Atrium, located in downtown Charlotte. Standing as a connector between an office building and a hotel, the Atrium had no less than 9,000 people passing through it daily.

"The Atrium could be considered one of the best retail spots in all of the Southeast," contends Montgomery. The only problem was that a sandwich concept had already been tried there more than once unsuccessfully. To make a difference, the partners would have to do something the other businesses owners hadn't done. "What it boiled down to was speed--being able to take a person's order and make their sandwich as fast as they could get it if they went to McDonald's, because that's about the max that people are willing to wait," Montgomery says.

After numerous meetings with the Atrium facility landlord, the partners at long last got the go-ahead. It had taken them close to a year to convince him they deserved a chance--and there was a string attached: "When we signed the lease, part of the deal was that the landlord could control the [decor], so that assuming we failed, they could put somebody else in very quickly," says Montgomery.

The partners were confident they wouldn't let that happen. Burgeoning consumer dining trends were on their side. "People were becoming more and more accustomed to [having] fresh items," Montgomery says.

On their first official day of business in March 1994, the partners served 450 customers. Just Fresh was a hit, and quickly grew to serving more than 1,000 customers a day, selling everything from muffins and bagels to soups, salads and pastas--all with an emphasis on fresh.

So Long, Farewell

As business at the Atrium boomed, the partners' dreams of huge success were unfolding right on schedule; next, they would test the Just Fresh concept in the 'burbs. Opened in 1996, "It was our first look at what a suburban unit would look like, and how it would act," says Montgomery.

By January 1997, the Atrium location had been going strong for nearly three years, the suburban model was flourishing and a second downtown location was off and running. The partners gathered in the midst of all the activity to discuss future expansion plans. The meeting was also the backdrop for a surprising disclosure by Robert III, who announced plans to leave Just Fresh and pursue a graduate degree. "When you first start a company, the amount of excitement and pressure you go through makes each team member very dependent on the others to succeed. When a part of [your team] leaves, there's some real emotion attached to it," says Montgomery.

"We were losing one of our comrades, and we were opening more restaurants," he continues. "Could we pull this off?" they asked themselves. The troops rallied. As they wished Robert III well, says Montgomery, "We found ourselves digging a little deeper and pushing on."

Ready, Set, Grow

The Just Fresh concept evolved once again when Presbyterian Hospital called. It was looking for a replacement for the traditional coffee shop that had once occupied space on its grounds. "They wanted something quick, so we put all the baked goods in a combination of self-serve and made-to-order formats," says Montgomery.

Not wasting an ounce of momentum, Just Fresh also waged and won a protracted zoning battle to place a second suburban unit in a freestanding former bank. It was worth the hassle for the competitive entrepreneurs. "We thought this was a great place to experiment further with our suburban model," says Montgomery.

"One of the major obstacles we've faced as a start-up restaurant company in a town growing as fast as Charlotte is that it's now attracting national players like Starbucks," Montgomery says. "The competition is for the best retail sites."

But Montgomery and his partners don't see this as an insurmountable obstacle: Just Fresh can respond to different opportunities, go into a smaller or a larger space, stay open for fewer or more hours--find a way to make it work. "The chains don't have that flexibility. I think we've created a competitive edge that way," Montgomery says.

Indeed, there's no longer any question of whether Just Fresh can overcome a doomed location--or anything else, for that matter. The question is, just how far and how fast can they grow? According to Montgomery, "The fun is about to really begin."

Next Step

Should a start-up entrepreneur even consider starting a business in a seemingly doomed location where others have failed? Could your business concept succeed where those before it couldn't? Only research will tell. To guard against repeating history, do your homework, says Luigi Salvaneschi, a consultant who specializes in creative retail development.

"You have to understand the location's relationship to other businesses, buildings and traffic--inside and out. You have to walk it, drive it, even fly it," he says. For more information, check out Salvaneschi's comprehensive guide, Location, Location, Location: How to Select the Best Site for Your Business (Oasis Press, $19.95).

Contact Soruce

Fresh Holding Inc., 3410 St. Vardell Ln., Ste. D, Charlotte, NC 28217, (704) 521-3252


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