Foghorns Owner Bets on Himself, and Rightfully So

In the spring of 2002, Jeff Hodges was holding down a steady job as a bartender at the Electric Cowboy in Fayetteville when he attended a friend’s wedding in Indiana.

It was on that trip that Hodges was introduced to Buffalo Wild Wings and Quaker Steak & Lube, two national restaurant chains — specializing in chicken wings, cold beer and sports — that had not yet made their way to Arkansas.

When he returned to Northwest Arkansas, he was hungry to try something: opening his own vision of a “wings-and-beer” restaurant.

“At the time, Fayetteville had nothing like that,” Hodges recalled during a recent interview. “We [opened] a couple of years before Buffalo Wild Wings opened [in Bentonville]. Hooters was here, of course, but as far as sports bars similar to Buffalo Wild Wings, we were very early in the game.”

After working toward his goal for two years, Hodges opened Foghorn’s on North College Avenue on March 19, 2004.

Opening a restaurant is one thing. Keeping it open, though, is a different challenge entirely. According to a report from Perry Group International, a firm that specializes in the hospitality and restaurant industry, most restaurants fail during the first year, and of those that make it past the one-year mark, 70 percent fail within five years.

But as the years have unfolded, Hodges’ bet on himself has proven to be a smart one.

The original Foghorn’s location has since relocated to a larger building in Fayetteville, and the restaurant now employs about 110 people from two locations in Fayetteville, and another in Springdale.

Hodges has also identified a new market ripe for plucking on Walnut Street in Rogers, and is working toward opening the restaurant’s fourth location in just a couple of months.

That will push the company’s number of employees to more than 150, and Hodges projects the four restaurants will produce between $4 million and $5 million in sales in 2016.

 

From Finance to Wings

Hodges, 42, graduated from the University of Arkansas in 1997 with a double major in financial management and accounting. He then headed to Little Rock and a job working for national accounting firm Arthur Andersen. He worked there for almost four years, before moving back to Northwest Arkansas.

He described his employment with Electric Cowboy as a filler job. After 9/11 and the ensuing economic effects, most companies in the financial sector instituted a hiring freeze. That left Hodges — who is a certified public accountant and CFA charterholder — with few job options.

“I wasn’t sure what I was going to do, but I knew I didn’t want to continue in accounting,” he said.

But the trip to Indiana the following year provided an opportunity. Bitten by the entrepreneurial bug, Hodges seized onto it, and returned to Arkansas intent on becoming a restaurant owner. He and former business partner Corey Gayer started going to surplus auctions and buying used furniture, restaurant equipment and anything else they could get their hands on at a bargain price.

The accumulation of equipment continued until late 2003, when Hodges thought the time had finally come to find a suitable location and open for business.

He found one at 2175 N. College Ave., a 1,945-SF building that formerly housed a TCBY.

Hodges said the initial investment in the venture was less than $40,000, and none of the money was from a bank.

“I put in $11,000, my partner put in $11,000 and we borrowed $15,000 with full collateral on our vehicles and our personal belongings,” Hodges said. “That was a one-year note with a friend of ours. Banks wouldn’t touch us. Especially a beer-and-chicken wing place on North College. Even the landlord thought we were crazy.”

Six months after opening, Hodges bought out Gayer’s interest in the business for $24,000 after an amicable split, but that meant he was then paying off two notes on loaned money, both with 10 percent interest.

“And I gave [Gayer] full collateral on everything else if I didn’t make it,” Hodges said. “It was really sink-or-swim mode, but from there, I paid both of those notes off in one year, and I also had a personal note to some family that I also paid off in one year. After that, we started growing.”

 

Growth Begets Growth

Hodges said sales from the first year at Foghorn’s totaled between $275,000 and $300,000. It was a lean operation, with fewer than eight employees.

“Some days I was the cook, other days the manager, the server,” he said. “It was a very limited staff to start with.”

As the restaurant’s sales grew, Hodges started thinking of expansion. That came to fruition when he opened a second location on March 10, 2008, a build-to-suit space in a new commercial strip center on 15th Street across from Baum Stadium in south Fayetteville, called University Village. Hodges estimated the startup cost for that location was approximately $275,000. But this time, he was backed by The Bank of Fayetteville, which financed about half of the amount. The rest was out of Hodges’ own pocket from retained earnings that were set aside.

“It was still a risky note, but I had saved up,” Hodges said.

The growth begat more growth. In 2013, the University Village location underwent a 1,750-SF expansion to add seating for an additional 75 customers.

Later that same year, Hodges moved the flagship store from North College to a larger building at 1815 Green Acres Road, a 3,000-SF building he bought for $322,000 that previously housed Mermaid’s.

In 2014, Hodges paid $715,000 for a 4,436-SF building at 1100 S. 48th Place, off Interstate 49 in Springdale, which previously housed Bleu Monkey Grill (opened in spring 2012) and Oseguera’s.

After remodeling the property, it opened as Foghorn’s third location on Feb. 27, 2015.

As for the Rogers expansion, Hodges bought a 4,500-SF building at 2221 W. Walnut St., formerly a Mazzio’s restaurant, last year for $390,000. Renovation of the property is nearing completion, and Hodges is shooting for a May opening.

 

Retaining Staff

Hodges said the biggest challenge of being a restaurant owner is staff retention.

“There are more restaurants than restaurant jobs; you’ve got to make your place special,” he said.

To that end, Hodges said promoting a strong workplace culture has been important in helping to attract and retain employees.

He noted, for example, that Foghorn’s is supported by two district managers, Lacey Blacksher and Reed Brewer, who started with the company several years ago as hourly employees but have worked their way up to management positions.

Hodges’ idea of a strong culture also means incentives for employees, such as sales contests, flexible scheduling and being fair on hourly wages.

“We try to be at the top end of the scale for what we can [pay] as an independent,” he explained. “You’ve got to take care of your people.”

As a successful small-business owner, Hodges also recognizes his role as a community leader, and is active in several charitable endeavors.

Most notable is an annual miniature golf tournament to benefit the Humane Society of the Ozarks — Hodges sits on the nonprofit’s board of directors — and the event has raised more than $59,000 in seven years.

As for the next 12 years of Foghorn’s, Hodges believes there are more restaurants in store, though nothing specific is planned. If the right opportunity presents itself, he’ll seize it.

He’s already proven himself capable of that.

“I wasn’t looking for the Rogers location when I found it; it was just the right spot and the right deal at the right time,” Hodges said. “We don’t want to get too big too fast, and we don’t bite off more than we can chew.”