Bud Kanke counts only three of the 11 restaurants that he has opened in the past 41 years as failures.
That’s a pretty good success rate in an industry where, Kanke estimates, 85% of restaurants fail in their first five years and 85% of the remainder fail in the next five years.
He now eases into retirement after selling the restaurant that he has owned the longest, Joe Fortes, to Keg Restaurants Ltd. owner David Aisenstat on March 9.
“David asked me to stay on in an advisory capacity for a couple years,” Kanke told Business in Vancouver between sips of Diet Coke in a booth at his former venerable restaurant near the corner of Thurlow and Robson streets.
No wonder. Kanke has accumulated a lengthy inventory of business lessons for how to run a successful restaurant.
Aisenstat groups Kanke in an elite club of accomplished local restaurant pioneers whose other members include Aisenstat’s father Hy Aisenstat, Keg founder George Tidball, Earls Kitchen and Bar founder Bus Fuller and Il Giardino owner Umberto Menghi.
“Bud is up there as much as any of them,” Aisenstat said. “He has taken a place that opened 27 years ago and made it so it’s still going strong.”
Kanke was the general partner in Joe Fortes when it opened in 1985 and has long been the face that people associate with the venture.
But he didn’t initially invest much money in the landmark high- ceilinged bistro because he was one of 56 partners who each chipped in $25,000.
Back then, Kanke had had trouble getting bank financing because he had more liabilities than assets. He was, however, starting to chip away at that imbalance “one salmon steak at a time” until his fortunes changed for the better in 1989.
The early 1980s recession hit Kanke hard. He lost a lot of money from investing in townhomes in Calgary as well as investing and developing projects in Washington, Arizona and B.C.
His Cannery restaurant on Port of Vancouver waterfront, Mulvaney’s on Granville Island and Viva Restaurant and Cabaret on West Pender Street all survived sales dips as British Columbians tightened their belts and then-premier Bill Bennett ushered in his legendary restraint program.
Jack Poole, who founded Daon Development Corp. and turned it into the second-largest real estate development company in North America before it collapsed in 1982, enlightened Kanke on how to stay solvent by counselling him to ask banks to extend repayment periods for loans.
Kanke would eventually buy out most of the original Joe Fortes investors, although there were 18 other remaining shareholders who had to agree by a two-thirds majority to sell the restaurant to Aisenstat.
The transaction was one of the rare times that Kanke had sought to sell one of his restaurants.
He had been approached many times to sell his various properties:
•Mulvaney’s (in 1987);
•the Cannery (in 1991); and
•the Fish House in Stanley Park (in 1998).
Kanke sought help from an investment bank to shop Joe Fortes around and he said the result was several bids from “notable” restaurateurs.
“David’s bid wasn’t necessarily the best bid,” Kanke said, “but I thought he was the best fit.”
Kanke and Aisenstat have known each other for decades.
Aisenstat’s father tried to buy the Cannery from Kanke about a year after it opened. But instead of selling, Kanke, a chartered accountant with a background working for companies such as RivTow Straits Ltd., resolved to stay in the restaurant business, which he enjoyed.
One of the most important lessons learned during his restaurant career came from Michael Gerber’s series of E-Myth books: systemize operations and write a manual to describe how to deal with all potential pitfalls.
Paraphrasing the book’s author, Kanke said an entrepreneur has succeeded if he or she can teach that system to staff and step away from the operation.
Kanke never considered expanding Joe Fortes into a chain because he likes each of his restaurants to have a unique character. But he also believes that the key to being successful when owning more than one restaurant is for the ventures to be at least 80% similar to each other.
Kanke said he sold Carlos and Bud’s Tex Mex Restaurant in 1980, soon after opening it, because he had just opened Viva and the two concepts were too different for him to run both successfully.
Both the Tex-Mex-style Carlos and Bud’s and more upscale Viva turned out to be what Kanke considers “failures,” which is how he categorized his 9th Avenue Grill.
“The most important thing in the restaurant business comes down to one word: management,” he said. “That’s a broad term that covers everything. It includes the people you select, the product you create and how you market it.”
He then scribbled out an organizational chart on the large sheet of white paper protecting the tablecloth.
“Go to some restaurants – Cactus Club Café or Earls – and you’ll hardly ever see a manager. Our managers are very visible to recognize and acknowledge the guests, look after them and show them that there is one more level above the server looking after them.”
Testing the honesty of staff is also vital. Kanke employs “silent shoppers” to come to the restaurant and do things such as place a $20 bill on the bar and order a drink or two.
The silent shopper would then watch to see if the bartender rings in the sale.
Some of his employees have been fired for being dishonest, but overall Kanke has been impressed with the integrity of the people he hires.
His preferred hire method is to first get a personal recommendation. He then interviews and carefully checks references.
When it comes to chefs, he doesn’t seek the latest Iron Chef or Golden Plates winner because those celebrity chefs often come with baggage.
“You might have heard that chefs have egos,” Kanke said with a smile. “When they become somebody special in the press, their ego only inflates and that makes them hard to manage.”
Kanke has been in semi- retirement for a few years. He spends about four months of the year in Palm Springs with his wife Dotty.
Spending less time at Joe Fortes will allow him to spend more time with his three children and six grandchildren.
He also plans to devote more time to charitable endeavours such as helping close financing so the Vancouver Native Health Society can build a health centre in the Downtown Eastside that will provide free services to those in need. •
