By Vesna Vuynovich Kovach
In Corporate Report Wisconsin, June 2001
All is gold shovels, plaques and photographers at the ceremonial groundbreaking of the Culver’s restaurant in Winona, Minnesota, a town wedged on the narrow plain between the west bank of the Mississippi River and a set of craggy peaks still swathed in snow this sunny March day. A matched set of Chamber of Commerce members in bright green jackets and blue ties, along with a mayor in baggy brown corduroys, felt hat and puffy down vest, pose with Culver’s president and co-founder, Craig Culver—he’s flown in from the company’s Prairie du Sac headquarters, 30 minutes away by private plane—and with new franchisees Ellen and Mike Minter. “I’m so glad Culver’s is coming here.” a onlooker says happily, “Now I won’t have to drive half an hour to the one in La Crosse anymore.”Newspaper and radio reporters cluster around the 51-year-old Culver, white-haired and hale, comfortably dressed in a dark blue sports jacket, light-colored slacks, and brown loafers. With round face and ready smile, he talks about signature menu items. What is a ButterBurger, anyway? “It’s a good old fresh tavern burger, that’s what it is.” Culver’s burgers are made of lean, never-frozen beef, each one cooked to order on a searing-hot grill. “A friend and I were reminiscing over a glass of beer one day, about the old drive-ins of Milwaukee. He told me about one, the Milky Way, that had ‘butter burgers.’ That sounded so great—I never forgot it. When we opened the first Culver’s, I thought, ‘The butter burger has to be there.” Culver’s ButterBurgers are served on buns that are lightly buttered, then grilled.
Frozen custard? It’s not egg pudding, says Culver; it’s a super-rich, dense, ice cream fortified with egg yolk. “The ripples you see when ice cream is being scooped, that’s the air that’s been mixed into it. You won’t see that in ours. There’s no better ice cream in the world than frozen custard.”
Culver is the star of this show, a visiting Wisconsin celebrity. But he persists in shifting the focus to the Minters, who will own and operate this, the 140th Culver’s restaurant. When someone asks, “What’s your favorite flavor?” Culver answers, “Vanilla,” then calls over the reporters’ heads, “Ellen, what’s yours?” “Snicker Swirl,” she responds. “Snicker Swirl!” Culver smiles and shakes his head. “These young people.”
Eight years ago, when she couldn’t find work with her brand new teaching degree from UW-Platteville, Ellen Minter took what she thought would be just a summer job at a Culver’s, the popular family eatery which has single-handedly revived Midwestern road food traditions like frozen custard and malteds. Now she’s building, marketing and staffing her own restaurant. “The success of our organization has been because of people like Ellen and Mike,” Culver declares.
Franchisees like the Minters pay Culver’s Franchising System, Inc. an initial $45,000 fee, plus 4% of net sales thereafter. Average gross revenue for a Culver’s restaurant is $1.5 million per store, much higher than the average for quick service hamburger chains ($1.15 million) or ice cream chains like Dairy Queen ($550,000). In the year 2000, Culver’s saw bottom line margins increase to 7 percent. Since its first successful franchise in 1990, the restaurant has spread to eleven states, from the Dakotas to Michigan, and as far south as Texas.
Though Craig Culver, this year’s recipient of Wisconsin’s SBA award for Small Business Person of the Year, is the president and co-founder of a growing company which expects to open its 150th location by the end of the year, he doesn’t have a formal business education. His 1973 undergraduate degree from UW-Oshkosh is in biology, and he’s kept up an interest in botany: at home, he grows native prairie plants like purple coneflower and big and little bluestem. He has a nostalgic passion for the classic American Graffiti-style 1950’s drive-ins. And right now, he’s busy filling the Midwest with restaurants that fit into a new niche. In the previously unnoticed gap between quick service (think Burger King) and casual dining (think Applebee’s and Denny’s), Culver has created a new category: “We’ve coined a term—quasual,” he says.
The restaurant model Culver and his wife, Lea, founded in 1984 serves up a unique blend of affordably-priced, service-oriented dining. You order and pay at a counter, fast-food style. But your meal is brought to your table restaurant-style, by a smiling team worker. The dining room is carpeted; the seats are comfortably padded. Coffee is served in real, solid, mugs, not disposable cups. Custard is made fresh several times a day. All food is cooked to order, not made ahead. Even the custard flavor of the day is mixed especially for your cone.
Craig Culver’s carefully worked out philosophy of quality plus committed citizenship underlies the restaurant’s special character. It’s central, he believes, to the success of the entire enterprise. “We’re in the quality and hospitality business,” he says, “not the price point business.” In the quality business, he says, “you can raise the prices when you need to. People are willing to pay for clean restrooms, for customer service.” Culver decries the “minimum wage” mentality in parts of the restaurant industry. “The best, brightest, smartest people—that’s what we want at Culver’s,” he says.
Good deeds get recognized, he says—“people want to support the good citizen”—but must also be done for their own sake. Culver’s public-interest activities over the years have been as diverse as helping establish a bald eagle reserve across the Wisconsin River from the company headquarters (“How can anyone say no to those beautiful eagles?”), promoting Wisconsin farmers, giving college scholarships for student employees, and contributing to the Hunger Task Force.
Within the company, education is promoted strongly. Management skills are honed at three-day managers’ workshops held at company headquarters every other month. Nearly one thousand Culver’s workers have completed the National Restaurant Association’s ServSafe food safety training program. Culver’s maintains four certified staff members on each shift—even though state and federal standards mandate only one certified person on staff.
But Culver’s, for all its successes, faces a serious challenge “There’s an old-fashioned family feel to our business,” says Culver. “Warmth, honesty, and loyalty. That’s what’s at greatest risk as we develop further. How am I going to protect this culture we started in 1984?” The answer, he believes, is in the Ellen and Mike Minters of the world. “It’s going to be by selecting the right operators to run our business,” he says. “I believe in the franchise system of owner-operators, who run the restaurants day in and day out. The Moms and Pops. I believe in those people, I really do.” Every Culver’s store has at least one operating partner who works in store fulltime, and who has at least 50 percent ownership.
To open your own Culver’s, you must first go through a six day, 60 hour in-store evaluation and orientation. That means long days of work, making custard, serving customers, cleaning up. It means classes and lectures, too. “We’ve had people drop out after a day or two,” Culver says. “That’s fine. Better they find out sooner, rather than later, that this isn’t what they want.” If your background check, application, and evaluation all pass muster, you move on to a twelve-week in-store training program, and your $5,000 application fee is applied to your franchise fee. If not, your money is refunded. By design, the orientation program only has space for 30 people per year, to control the rate of Culver’s growth.
There’s one other franchise requirement on which Culver is standing firm: any new restaurant must be somewhere near an existing one. “I won’t add any new markets,” he says. “We’re saying no to places like Pennsylvania, Kentucky, Carolina, California. I get calls every day that I turn down.” Why turn down opportunities for growth? “We’d be going crazy, and we’d wind up losing,” he says. “I don’t want to do that.” Each new market demands its own set of logistics, like developing affordable networks of quality food suppliers and building contractors. And a TV spot costs the same whether its broadcast area covers one Culver’s or ten. Plus, every new population that encounters a Culver’s has to learn what frozen custard is, what a ButterBurger is.
“The restaurants must be run to our standards,” Culver says. “That’s the one thing we can’t lose our grip on. It’s hard to say no. But we don’t have the infrastructure to grow like McDonald’s, adding 500 restaurants a year.”
Craig Culver learned the importance of careful growth the hard way back in 1987, with his first attempt at a franchise, in Richland Center. “They found out that they hated the restaurant business,” he remembers. “They couldn’t keep employees, because of their hate for what they were doing.” Every Culver’s restaurant since then has succeeded.
There was a time when Culver himself wanted out of the restaurant business—in 1973, just after graduating college. He’d grown up working in his family’s restaurants. “I just wanted to get as far away from restaurants as possible,” he says. When his father became ill and asked him to take over the family business, but Culver refused, so his family sold the 40-acre resort near Devil’s Lake, with its 24 cabins and 350-seat restaurant. But Culver couldn’t escape his fate; he soon found himself working at, then managing, a Madison McDonald’s. By 1976, he’d gained invaluable experience and training—and he’d forgotten about wanting to leave the hospitality industry.
“From my family, I learned about quality and hospitality. But from McDonald’s, I learned the systems approach to restaurant management—waste management, inventory control, training manuals, things like that.” Culver asked his parents to buy back the Sauk City A&W they’d owned in the 1960s. “I wanted to be my own businessman. I wanted to open my own restaurant.” He and Lea operated the A&W until 1982, then sold it, moving on to the Ritz supper club in Baraboo. But the new owners of the A&W ran into trouble, and, says Culver, “They begged me to buy it back, take it off their hands.”
Now Craig and Lea had an idea: ditch the Ritz, move back to Sauk City, and remake the A&W into an entirely new thing: a modern version of the old-fashioned custard stand. “We said “Hey, let’s do this under our own terms!” The couple developed a fresh foods menu including fish—“A real Wisconsin fish fry, like in my family’s supper club, with my parents’ tartar sauce recipe—but why not serve it every night of the week?”—hamburgers made with fresh beef, frozen custard, malted shakes. “We remodeled the whole building. We made it blue and white, as different from orange and brown as we could. I suppose we could have chosen green and white, or purple and white. But blue just felt like ice cream to me. Clean and wholesome, like what we were trying to do.” The classic Culver’s oval logo came about simply because something had to fit into the knocked-out A&W sign in front of the restaurant. Today, the flagship Culver’s restaurant stands on the site of that remodeled A&W.
What’s next for these restaurant innovators? The Blue Spoon Creamery Café. Conceived as a lower-cost franchise that can be fitted into existing buildings, Prairie du Sac’s casually elegant Blue Spoon serves upscale dishes like smoked salmon Caesar salad and artichoke focaccia. Coffee beverages include imaginative hybrids like steamed custard cappuccino and espresso malted. “Where our destiny lies with the Blue Spoon, I’m not sure,” says Culver. We’ll probably open another restaurant or two and then decide its fate.”
Whatever the restaurant format, Craig Culver has mastered hospitality: the kind of personal attention that’s as much about making each employee and franchisee feel welcome and valued as it is about engaging customers. The future of Culver’s, though, depends on being able to transmit this skill to every new person who joins the organization. Ken Dickinson, a 27-year-old franchisee about to open a restaurant just outside St. Louis, has noticed this about Culver: “He doesn’t forget a name. He remembers the names of fry guys he sees once a year. I’m trying to get like that.”