South by Northwest Hospitality in Fayetteville brings back jobs with pandemic investment

by Paul Gatling ([email protected]) 1,666 views 

Jeff Gabbard, left, and Todd Martin are the COO and founder/CEO of South by Northwest Hospitality in Fayetteville, the ownership group behind Northwest Arkansas restaurants Southern Food Co., Theo's and East Side Grill.

Todd Martin’s retirement project is becoming more successful than he could have imagined.

This story is about how a corporate agriculture executive and his wife bet on themselves, got into the restaurant business, and then grew it during a global pandemic. It’s also a story about opportunity and revitalization. And about helping people.

“People are saying hospitality died and changed forever during COVID, but we’ve found that hospitality has renewed,” Martin said in a recent interview. “We’re seeing heights we’ve never seen before.”

The story begins simply enough. In 2015, after 25 years, Martin, 59, retired from a corporate job in Memphis, Tenn. That set the wheels in motion to return to Fayetteville, where he met and married his wife, Marti.

They met in 1984 while attending the University of Arkansas and have been married for 37 years. Two of their three daughters went to school there (except, Martin quipped, one “black sheep” who went to LSU).

“We’ve always loved it [in Fayetteville] and came here often,” he said. “When you retire, you can live anywhere. For us, it was Fayetteville.”

The Martins moved in the summer of 2016. Todd Martin opened a consulting business specializing in management and advisory services, parlaying a successful career in agriculture. It began with a degree from the UA in agricultural economics. He went to work in commodities with Merrill Lynch in Little Rock before moving to Memphis to work for Ciba-Geigy, a legacy company of multibillion-dollar agriculture company Syngenta. Since 1990, he has worked in domestic and global roles encompassing seeds, traits and crop protection areas of the agriculture sector, working in sales, marketing and business development on every continent.

Consulting and other endeavors figured to keep Martin busy in retirement. In 2018, he co-founded EarthOptics, a soil sensing company that has, so far, raised about $45 million. “We can run our sensors over a field, and we can tell you — with certainty — you have this many tons of carbon per acre down to a resolution of about half an acre,” he said. “Nobody can do that.”

But the Martins also brought an idea to Fayetteville that they had kicked around for a couple of years — opening a restaurant.

“We were driving the last bit of stuff over,” Martin recalled. “Marti was in her car, and I was in the truck pulling a U-Haul. We were debating names on cellphones, and I mentioned ‘Southern Food Co.’ That’s the one that stuck.”

In 2017, the Martins signed a lease for a space on Fayetteville’s west side and opened their original concept.

“A mix of regional experiences from around the Southern U.S., dashed with a Cajun flair, fusing your Momma’s Home Style Kitchen with spice and healthy alternatives to bring a tasteful experience,” is the restaurant’s website description.

Martin said he quickly learned what other restaurant owners find out: The food industry is hard work with thin profit margins. Not that he wasn’t up to the task. Martin grew up in south Arkansas on the family dairy farm in Camden. He knows about long hours and hard work.

“It’s a lot of work and not much gain,” he said. “But we were fortunate. We were in the black from day one. Not heavily, but we were fine. It’s gotten much better.”

How much better? An investor approached the Martins in 2019 about buying the restaurant.

“We thought about it,” he said. “Because it was a lot of work. But we were humming. Business was good.”

And so, the retirement project was a success. How successful? Rather than exiting in 2019, Martin doubled down in 2020 — even during a business environment unlike he or anyone had experienced before.

Like other restaurant owners, the Martins endured the pandemic in 2020 as best they could.

“We got knocked in the teeth like everybody else,” Todd Martin said. “But I tell you what; there was a lot of government money and fast action by the state in some areas that helped us keep rolling in the dark times right after the early, dark times of COVID.”

The restaurant retooled and adjusted its service model and navigated numerous hurdles. Martin kept the payroll intact with no layoffs — about 25, primarily hourly workers.

Amid such uncertain business conditions, most operators would be content to hang on. Martin would find himself contemplating buying more restaurants.

The notion seemed questionable. Still, Martin saw an opportunity — not just to help himself, but to help others.

On March 17, 2020, Bowman Restaurant Group, led by Scott Bowman and his father, Ted Bowman, and one of the region’s premier hospitality companies, closed four Northwest Arkansas restaurants — The Grill at Pinnacle Hills (formerly known as Pinnacle Bar & Grill) in Rogers, East Side Grill in Fayetteville and Theo’s locations in Fayetteville and Rogers. Operations ceased, and employees were laid off. In June, a notice at all four restaurants indicated they would not reopen.

“We heard the news like everybody else that Theo’s and East Side Grill were never opening up again,” Martin said.

Fayetteville-based Signature Bank of Arkansas offered the restaurants as a business for sale. After doing due diligence and ensuring key employees were ready to return to work, Martin — through the holding company South by Northwest Hospitality (SXNW) — ultimately took the plunge. He acquired both Theo’s locations — downtown Fayetteville just off Dickson Street and Rogers’ Pinnacle Hills area — and East Side Grill in east Fayetteville from Bowman Hospitality Group in June 2020.

The flagship Theo’s in Fayetteville opened in 2005. East Side Grill opened in 2011, and Theo’s Rogers opened in 2012.

“We just decided, ‘OK, I think we can make this work,’” Martin said. “We understand what we’re doing now and how to handle COVID. Let’s go.”

Martin, who did not disclose the purchase price, said he was unsure how the bank came into possession of the restaurants.

“I never dealt nor discussed acquiring the business from Scott Bowman, nor was he a signatory to any of the process,” Martin explained. “That is why [Signature Bank Chairman, CEO and President] Gary Head was the unheralded hero of that acquisition. I knew of Gary but did not know him before we acquired the business. I can firmly tell you that we would not have made the acquisition without him, and I do not believe that the restaurants would exist today in the current form.”

Martin said what excited him most about the deal was putting 100 people back to work — with health and insurance benefits — during an uncertain time. SXNW has a payroll of nearly 130 people.

“I like to say we really invested in people to try and get them back to work,” he said. “Let’s face it — it was a difficult time in the restaurant business and not where people wanted to be anymore. And we still have challenges from moment to moment. But across the four restaurants, we’ve been pretty solid.

“It was a great win for us, but the people have made the difference. I think we have made a difference.”

Jeff Gabbard agrees. He started in the hospitality business when he was 17 and went to work as general manager for Theo’s in Fayetteville in 2005. He was Bowman Hospitality Group’s director of operations when the restaurants closed in March 2020.

The first time he met Martin later that year, Gabbard quipped that he was a struggling carpenter, trying to figure out his next move and whether that would be in the restaurant industry. Through deep discussions, Gabbard quickly realized Martin’s interest in acquiring the restaurants was twofold.

“His passion for people is the first thing,” Gabbard recalled. “It means a lot for him to be able to provide work and financial stability for young people. And he saw our [restaurant] brands and reputation and saw an opportunity. It was a chance to take something already successful and get it back up and running.”

Gabbard is SXNW’s executive vice president and chief operating officer. To say Martin considers him his right hand is an understatement.

“If Jeff Gabbard weren’t here, we would not have bought these restaurants,” he said. “He knows hospitality better than anybody I’ve ever met. His mentality is to delight the customer. I want to delight the customer, too. [But] Jeff lives it every day.

“And I would tell you, if he decided to leave, I don’t know what the hell I’d do. Jeff runs the company. Right now, my job is to empower him and get out of his way because he is excellent at what he does.”

Martin said the company invested about $350,000 in infrastructure improvements following the Bowman acquisition. He did not disclose revenue figures but said both Theo’s locations were up 20% last year compared with their best years ever. Southern Food Co. was up about 30% last year.

“From a financial perspective, we feel good about where the business stands,” Martin said.

How good? SXNW is expanding. Martin said the company is opening a tavern concept later this year near the Mission and Crossover intersection in east Fayetteville near East Side Grill. He’s been considering the project for over a year but delayed final planning as the other restaurants emerged from the pandemic.

“Our target opening date, if we can get everything done, knock on wood, is June 1,” he said.