Economies of scales

 In 2010-08

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Economies of scales

Here’s a business that isn’t hurt the more things are battered.
By David Bailey

Dad was the original bean counter,” says Jon Burns, president of Riverview Inn, a Charlotte restaurant that last year sold about a million dollars worth of seafood, fried in some 10 tons of oil. From his no-nonsense office, which is in stark contrast to the cheesy faux pirate fort of a restaurant his father opened on the banks of the Catawba River 64 years ago, Burns produces a spreadsheet.

“Going across and coming down is every item we have on the menu, every combination item, every child’s plate, every soft drink, every iced tea, every Coke, every toothpick,” says Irwen W. Burns Jr., who upon retiring earlier this year sold his share of the restaurant to his younger brother. “Our dad started it, and it’s gotten more extensive since then.” Like father, like sons. “This is probably 90% of our success. While most people wait till the end of the month or the end of the year to look at their figures, we do it every week. We take it down every day.”

“I don’t see how they do it,” says Raymond Stowe, who runs Catfish Cove — across the river in Gaston County — by the seat of his tan khakis. He insists that he has no idea what his margins are and, after all these years, is not about to start keeping track of them. His accounting method is pay as you go, something he learned from his mentor, Luther R. Lineberger, who started Gaston County’s legendary Lineberger’s Fish Fry in 1948. “I know when I get through every week, I got extra money. I pay for everything every week.” If there’s still money in the cash register, he’s doing OK. “We make money, and that’s the bottom line. And if you don’t make money, you don’t stay in business.”

Like Catfish Cove and Riverview Inn, homegrown fried-seafood restaurants across North Carolina are thriving. “We’ve been extremely fortunate, and our sales have been doing very well in this economy,” Irwen Burns says. And that in the face of rising seafood prices, the deepest recession in decades and the encroachment of fast-food outfits like Long John Silver’s and Captain D’s. One of the prime reasons is they give you so much food for the money, says Don R. Lineberger, the son of Luther Lineberger. “You need to serve your customers the kind of food they’re accustomed to, prepared the way they want it, for a reasonable price, delivered in quantity.”

But there’s another tradition that goes much deeper than the Carolina-fried, megaportion-plus-value formula. As North Carolina fish camps and fried-seafood restaurants have shifted into second- and third-generation ownership over the last six decades, those that have survived have owners who have followed the formula of the men who founded them in the 1940s. Just as Stowe or the Burns brothers would never dream of changing the recipe for the homemade tartar sauce, the slaw or buttermilk-batter, they would never think of tinkering with their mentors’ recipe for financial success. They run their restaurants just like their kitchens — the old-fashioned, fiscally conservative way.

Fish camps are a great example of the principle that a region’s distinctive cooking is often its working people’s food,” says Tom Hanchett, staff historian of the Levine Museum of the New South in Charlotte. Just as Gaston County’s rivers and streams were once full of catfish and bream, its mills “had more looms and spindles than any other county in the U.S. — meaning more mill workers with a few coins to spend on a restaurant meal on Saturday nights.” It’s not surprising that fish camps took off there, Hanchett says, “nor surprising that they are found today anywhere in North Carolina where people value lots of good food for their dollar.”

And just what is a fish camp? “A family-oriented restaurant where they fry everything they see,” humorist Bill Melton wrote in a guide for Yankees in the Gaston Gazette. “I’ve been going to the same one [Riverside in Dallas] all my life,” he says. “I grew up going there every Friday night, and you saw everybody you knew.” (As Burns Jr. says of customer loyalty, “Fish camps in this area are very much like churches. People who go to the Baptist church won’t go to the Episcopal church.”) But aren’t people eating less fried food these days? “Lord, no,” Melton says. “Not here. Absolutely not.” Some might order grilled salmon for a week or so after bypass surgery. “But they’ll ease back after a while when they forget they’ve been that close to death.”

No story about fried fish would be complete without mentioning Calabash, the self-proclaimed Seafood Capital of the World, with only 1,400 residents but two dozen restaurants beneath its shady oaks. Calabash clearly came first, says Cathy Altman, a native of the coastal town who is president and CEO of the Brunswick County Chamber of Commerce. “Arguments often ensue over who opened the first fish camp here, the Becks or the Colemans. In the ’30s, both families already were holding outdoor oyster roasts. Both had moved inside by 1940 and had added the now-famous fried seafood to their repertoire.”

Wherever fish camps started, North Carolina can lay claim to the first use of the words “to designate a restaurant specializing in fish dishes,” according to Dictionary of American Regional English. “Often the lake on which the camp was situated provided the fish for a nearby restaurant, to which the term ‘fish camp’ came also to be applied. Later, other fish restaurants, many having no lake to draw upon, took on the name of ‘fish camp.’”

Eloise Armstrong Buthe, who is 77 and grew up on her father’s farm on the edge of the South Fork of the Catawba River, has no doubt about where Gaston County fish camps got their start. In the mid-1930s, she says in a short memoir that has not been published, her father, “Buck” Armstrong, along with Luther Lineberger and others working at Cramerton Mills “got together a big seine to skim through the river.” They caught mostly carp and catfish — no “high-society fish like tilapia, grouper, salmon and other yuppie-type fish.” As word got out and the Friday fish fry became a regular event, the men “tore down an old log barn from our home place, brought the logs down to the site and put together a long rectangular building, with a large rock fireplace at the north end.” (Someone’s house in Cramerton’s Lakewood neighborhood likely sits atop the site nowadays, she speculates.)

Don Lineberger, vice president of business development at First National Bank in Gastonia, vividly recalls “Armstrong’s hut,” as it was known. He helped his father, who generally did the frying, by cleaning fish and making slaw. (Adding a little apple to the cabbage was the secret ingredient). During World War II, the mill was the primary provider of the khaki uniform material used by the Army, and catching fish provided the hands a much-needed diversion. In 1948, Luther Lineberger started frying fish on weekends at his own place on New Hope Road, charging by the plate. “After 19 years on third shift at the mill, Dad decided he had enough business to quit his job and go full time into the fish-fry business.”

It was a rustic establishment, with fish fried over an outdoor brick fireplace and customers eating at picnic tables under a tin roof, cedar shavings underfoot. As the operation expanded, one thing never changed: Lineberger’s Fish Fry was always closed on Sundays. And it certainly didn’t serve beer; Gaston County was dry at the time. Don Lineberger, now 77, remembers painting a sign in the 1940s that said: “No Cursing, No Drinking Allowed.”

At the restaurant’s peak in the 1960s and ’70s, as many as 8,000 people a week ate there. The Linebergers had to hire off-duty cops to control traffic on Fridays and Saturdays. In 1998, 20 years after Lineberger’s death, the family sold the place to Angelo and Maria Spero, who refurbished and reopened it as Mayfair Seafood. Within a year of the sale, it burned to the ground, as wood-frame restaurants using a lot of hot, boiling oil sometimes will. (Riverview Inn burned down in 1972 and was rebuilt in the fall of 1973).

In 1958, 13-year-old Raymond Stowe had taken a job washing dishes at Lineberger’s. “When I got to be 18, I started cooking fish, and I cooked fish there until I was 45,” he says modestly. Don Lineberger, however, says Stowe was the restaurant’s general manager for many years until 1989, when he left to open Catfish Cove. Like Lineberger’s Fish Fry (and unlike Riverview Inn, which has a bar and buffet), his Belmont restaurant is a bare-bones, no-frills establishment. He credits the elder Lineberger for much of what he knows about running a fish camp. His recipe for slaw, cocktail sauce, catfish batter, fried shrimp and oysters — you name it — all came from “Paw” Lineberger. “All these fish camps up and down the road do the same thing,” he says. Success in the fried-seafood business does not involve secret recipes: It comes from working hard, making sure you get a good raw product at a decent price, whether it’s fresh or frozen, continuously taking care of it and not straying from tradition in the kitchen or at the cash register.

Stowe uses fresh oysters from the Gulf, fresh North Carolina catfish from the Pee Dee River, fresh whole flounder from up and down the Eastern Seaboard when it’s available and frozen flounder from the same place when it’s not. Shrimp, perch, flounder fillets and scallops are all flash-frozen. Food industry insiders say that few, if any, diners have palates sophisticated enough to be able to tell the difference between properly handled frozen and fresh seafood. “I’d say less than 5% of the dining public can tell the difference between fresh and frozen shrimp if they’re fried,” says Jay Pierce, who learned to cook seafood from Emeril Lagasse in New Orleans. Now the chef at Lucky 32 Southern Kitchen in Greensboro, he says the popularity of fried seafood is why the fishing industry is geared toward providing frozen shrimp, flounder fillets, perch and other seafood from around the world at volume discount.

But buying seafood is tricky and requires years of experience, he adds, experience that gives veteran fish-camp owners an edge — especially when prices go up, as they have since the Gulf oil spill. Stowe says he always tries to buy enough shrimp in November — quite literally tons of it — to last him at least through May. (His wholesaler stores and delivers it as Stowe needs it.) Around May, with shrimp season beginning in June, he sometimes buys excess inventory from his suppliers to take him into summer, gambling that prices might come down then. He also buys flounder fillets by the ton since he uses 300 pounds in a week. What’s essential, he says, is having a good relationship with your supplier.

Stowe makes the most money on flounder fillets, freshwater perch and shrimp — all of which are frozen, volume-oriented products. For instance, all last winter and spring he used frozen medium-size, peeled and de-veined Gulf shrimp, which he had bought for less than $3 a pound. A whole order of “green shrimp,” as fish camps call them, weighs about a pound and is priced at $12.50 — giving him a protein-cost-to-menu-price ratio of 25%, a good number. (Since this is all-you-can-eat fare, diners can reorder, but given the size of the portion, Stowe says, no more than one in 10 will.) The smaller Calabash shrimp he served last winter and spring cost him less than $2 a pound. A whole order sells for $10.95 — an even better margin. “He’s getting fast-food, global-domination prices because he’s doing that sort of volume,” Pierce says.

Most diners opt for “half” orders of shrimp, with a serving size of about a third of a pound. Half orders of green shrimp go for $10.50 and of Calabash shrimp, $8.95. Flounder fillets, generally from China, and perch from the Great Lakes carry an even more favorable cost-to-price ratio. Granted, dinners come with potatoes, slaw, hush puppies and salad bar, but since Catfish Cove and most other fish camps make their sides from scratch, their cost is almost negligible.

Shrimp prices started rising in May after the BP oil spill in the Gulf of Mexico — and that was for shrimp caught last year. But Stowe refuses to get all hot and bothered just yet. “Nobody knows how this thing is going to turn out yet. I still got green shrimp from last year, from where I got some in November.” In early July, he hadn’t raised prices for that item. Running out of Calabash-style shrimp, he found the price had gone up $1.50 to $2 a pound from what he had paid last year, so he raised the menu price by a dollar an order — his first increase in two years. In June, he took oysters off the menu when he could only get frozen ones. “They just have a real strong taste,” he says. Riverview Inn did likewise. “We have not raised our prices at this time,” Jon Burns said in late June, “but who knows what the future will bring?”

Whatever happens, customers seem to be getting a better value than ever before. Gluttons can get all the green shrimp they can stuff their faces with at Catfish Cove for $12.50, and that includes a visit to the salad bar. In 1979, Lineberger’s all-you-can-eat green-shrimp dinner cost $5 a plate. Adjusted for inflation, that would cost you $3.50 more than the same plate at Catfish Cove. In 1951, Lineberger’s sold a catfish plate for $1.50. In today’s dollars, that would be $12.56, a dollar more than Catfish Cove charges.

Across the river in Mecklenburg County, Riverview Inn couldn’t be more different from Gaston County’s spartan fish camps. Originally from Pennsylvania and married to a Charlotte girl, Irwen Burns Sr. opened the restaurant in 1946 after moving back to the Queen City from New York, where he had covered the entertainment industry for a trade paper. “Dad was doing fine, making 25 bucks a week,” his namesake son says. “He asked his boss for a $5-a-week raise, and his boss said he couldn’t afford it, so he got mad and moved down here.” Brother-in-law Bill Leigh, who ran Leigh Sandwiches in Gastonia, had an idea. “He told dad if he’d open up a family-friendly fish camp he thought he could make a good living.”

Reporting on show business apparently had rubbed off on Burns, and the Riverview Inn’s dining-as-entertainment concept was carefully considered and ahead of its time. With the war just ended and materials still in short supply, the restaurant was constructed of old slab oak. “The facade was built with a stockade effect like a fort, with fake cannons and a crow’s nest with a lookout.” Burns even hired a man with a genuine peg leg who dressed up as Captain Windy and served as a greeter. The restaurant provided coloring books and comics to amuse the kiddies and was the first in those parts to offer them free dining. Although it struggled for two or three years, it took off in the late ’40s and early ’50s as Charlotte grew.

But in many ways, Riverview Inn resembles its cousins on the other side of the Catawba and across the state. “The key is, we give you more food for the amount of money than anywhere in the world,” Jon Burns says. Half orders of perch, catfish, whitefish, flounder and deviled crab are value-priced at under $10. Today, Riverview Inn, which can seat 600, fries something like 100 tons of seafood a year. And uses word-of-mouth to move it. “We’ve gone for years and years without advertising,” Irwen Burns says. The brothers don’t believe in coupons, though they give discounts to “Riverview Regulars.” Community involvement is their best marketing, Jon Burns says. Every Wednesday night, a classic-car “Cruise In” attracts thousands, with proceeds going to the Shriners Hospital for Children.

Last year was not the greatest Riverview Inn has had, but the restaurant is doing OK, considering the economy: “Sales were down last year like everyone else,” Jon says. “We were right around a million.” One thing is for sure, he adds: “Our margin is too close.” How’s this summer looking? “A little better. We are seeing a small improvement.” Looking forward, Irwen, who is 67, says, “Unfortunately, we’ve run out of family. I’ve already retired.” Says his younger brother, who is 55: “I have thought about selling the restaurant, but we are not actively pursuing that right now.”

Having family working in the operation is a huge advantage, Don Lineberger says. “I was once talking to this Greek restaurateur, and he said the way to make money in a restaurant is keep your food cost at one third, the cost for your labor and all other expenses at one third, and take one third home.” After a pause that says wait for it, he adds: “And in order to be sure to accomplish that, you need one family member on the cash register at all times and another at any door that’s unlocked.”

Stowe, who’s 65, says he’s fortunate to have his son and daughter-in-law working with him. In October, Catfish Cove will celebrate its 21st anniversary. He’ll be in the kitchen, frying the flounder, shrimp and perch. Kent will be broiling fish and, with Summer, running the front of the house, seeing that customers are taken care of. Twenty years from now, if someone comes back and orders a seafood platter, will his son be serving it? Without missing a beat, Stowe says ,“Yes, I think he will be.” Paw Lineberger’s legacy will live on.


Libby Hill casts a wide net

For the president of Greensboro-based Libby Hill Seafood Restaurants Inc., the reputation that his grandfather and father established is a tough act to follow — quality fare at rock-bottom prices. “One of the challenges we have today is people are used to seafood being an inexpensive protein,” Justin Conrad says.

In 1953, Luke and Elizabeth Conrad opened the first one in a roadhouse on the outskirts of Greensboro that the sheriff had padlocked because of “bawdy activity.” Over the years, various family members worked there and at other places they opened. Like his uncle and father, Conrad managed one for many years. Now owner-operators run the nine restaurants — four in Greensboro and one each in High Point, Hickory, Reidsville, Mount Airy and Danville, Va. It’s an arrangement Conrad likens to convenience stores where operators buy gasoline from the company that owns the buildings.

“We own every building where there’s a Libby Hill. We own everything, the equipment, the furniture, the plates, everything except for the inventory.” Think of the owner-operators as contract employees, he says. “The operators have the right to operate the business at that location on a yearly basis. It gives them a very good incentive for working hard because, obviously, at the end of the day whatever’s left over in the cash register belongs to them. Their bonus structure, so to speak, is only regulated by how hard they’re willing to work toward their numbers and profitability.”

With degradation of the marine environment — Conrad blamed the recent closing of the Galax, Va., restaurant on the Gulf oil spill and weak economy — pressure from governments worldwide to limit overfishing and rising cost of diesel fuel for fishing boats, running a value-oriented seafood restaurant has become a challenging proposition. “The product price is considerably more expensive than it was way back when,” Conrad says.

He should know. He buys all of Libby Hill’s seafood at the source — whether that’s in North Carolina, Alaska or South Africa — cutting out the middleman. “We deal directly with the producer, the person who owns the boats or owns the plant.” Seafood is shipped straight to the commissary and distribution center in Greensboro, 30,000 pounds per truckload. The trout comes from African waters off the Cape of Good Hope. Perch and clams arrive from New England. Flounder and whitefish are from Alaska, scallops from Canada, oysters from the Gulf of Mexico or Atlantic, the shrimp from the Carolina coast, Gulf or Guyana.

The restaurant’s low prices are an economic reality he inherited and can’t change: “We do it out of necessity because our customers can’t afford higher prices. They are blue-collar workers for the most part, senior citizens or people raising families.” Has he raised prices yet in response to the Gulf spill? “Not yet, but unfortunately it is unavoidable.”

Keeping prices low means a never-ending quest for low-cost seafood, which turned his father — Marshall Conrad, now chairman of the board — into a global traveler. “Dad spent a lot of time traveling to places like Canada or Alaska, the West Coast and Seattle, sourcing product for us. Many of those relationships are still with us and are very good relationships.”

He recalls his father getting a call seven or eight years ago from a longtime supplier who had a deal that seemed to be too good to be true. “It was cold-water shrimp — a very good, high-quality product.” And the price was right. “Somebody at McDonald’s in Europe had this great idea that they were going to offer a shrimp burger. Well, at the 11th hour, after the packer had already produced this product, McDonald’s canceled the order.” Marshall Conrad bought all of it.

“With this facility, we were able to take them. What we got was a Cadillac for a Chevrolet price. It was the best shrimp I ever ate in my life, and we had it for about six months. But that’s how the relationships we’ve developed over the years benefit us.”

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