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Business Observer Thursday, Dec. 2, 2021 7 months ago

Sunny side up: Restaurant group's focus on beachfront locales pays off

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The pandemic was a gut punch for Florida’s hospitality industry. SunPubs used the time to regroup and reinvest in its future.
by: Brian Hartz Tampa Bay Editor

Like most, if not all, of his colleagues in the restaurant industry, 2020 was a year to forget for Randy Esponda — but it also came with opportunities and lessons to be carried forward.

Esponda, operations director for SunPubs, the company that owns local bar and restaurant brands Caddy’s and MacDinton’s, was forced to play the role of the villain in the early days of the pandemic.

“I'm the one who had to go around and lay everyone off” says Esponda, 34. “That was tough.”

Founded in 2011 by four investors, SunPubs has found a unique lane for itself as a not-too-big, not-too-small chain whose properties — mostly located in hotspots like South Tampa, downtown St. Petersburg and the Gulf beaches of Pinellas County — boast individual flair yet retain enough brand commonalities to retain a loyal following among both locals and tourists alike. They also attract a diverse mix of young people looking for nightlife and families seeking a beachside meal and drinks.

‘Tourism has not stopped. It's almost like the season kept going. Everyone wants to come to the beach. Everyone is tired of being cooped up at home.’ Randy Esponda, SunPubs operations director

Starting with a single MacDinton’s location in South Tampa, the company now operates nine venues around the Tampa Bay region, with at least five more coming in 2022, says Esponda.

The pandemic, however, took a heavy toll on SunPubs, forcing it to shutter its properties and reduce its workforce. Caddy’s in downtown St. Pete closed permanently. And yet, Esponda says, the company’s 2021 revenues (it declines to disclose specific figures), to date, are 10% above pre-pandemic levels. How did it recover so quickly?

“Obviously, 2020 was a wash for everybody,” Esponda says. “So, the closest comparison is 2019. We're trending in the positive direction from 2019. We're very happy with that. We think it's because of not only us doing a good job with our brand and the beach locations, but tourism going up.”

Courtesy. A resurgence in tourism has helped Caddy's overcome some pandemic-driven challenges.

Indeed, despite the lingering effects of the pandemic, Florida tourism has been red hot in 2021. According to Visit Florida, the Sunshine State, as of the end of the third quarter, has welcomed a total of 91.48 million visitors. That’s just over nine million fewer than the same timeframe in 2019. In addition, Visit Tampa Bay, the destination marketing organization for Tampa and Hillsborough County, recently reported that six of the region's 2021 fiscal year’s 12 months saw record-breaking levels of bed tax revenue.

“Tourism has not stopped,” Esponda says. “It's almost like the season kept going. Everyone wants to come to the beach. Everyone is tired of being cooped up at home.”

SunPubs didn’t merely ride the coattails of Florida’s tourism resurgence. Company leaders made the best use possible of pandemic downtime to rethink operational strategies. They also saw it as an ideal time to take risks, such as opening SunPubs’ first non-MacDinton’s, non-Caddy’s property, in an opportunistic acquisition. 

“There was a silver lining,” Esponda says. “When we were closed during the pandemic, we reworked our operations and redid a lot of things, and that set us up for success — big time. That's part of the reason why we're doing so well right now — because the amount of work that we put into the company.”

SunPubs’ downtime work included everything from the mundane, such as creating its own in-house inventory management system, to the more complex, most notably a complete revamp of the company’s employee benefits package.

With Florida’s minimum wage set to increase to $15 per hour in 2026, SunPubs wanted to get ahead of that seismic shift — and also remain a competitive in the race to land and retain good employees. “We started paying people $20 per hour,” Esponda says.

Courtesy. Caddy's in Bradenton caters to locals and tourists.

Now, with a labor shortfall roiling the hospitality industry, SunPubs’ move seems prescient. In addition to a pay bump, the employees benefit package also includes a 401(k) account with company match, one free meal per shift, 10 days of paid time off per year and health and dental insurance. That's a list of employee perks that few small restaurant companies have had the wherewithal to provide, even as recently as 10 years ago. 

“We said, ‘Let's hold onto our staff members, give them a way to provide for their families and help them get ready for retirement,’” Esponda says.

SunPubs’ latest big move is the acquisition, for $5 million, of Sculley’s Waterfront Restaurant and an adjoining bar and restaurant called The Hut. Located in the heart of the John’s Pass boardwalk in Madeira Beach, the properties — Sculley’s opened in 1981 — are a magnet for the type of customers SunPubs aims to attract.

The Hut has been rebranded as a Caddy’s but Sculley’s will retain its name and, notwithstanding a few updates, its overall look and feel.

“We didn't want to change the name because it’s such a popular brand in the local community,” Esponda says. “And John’s Pass, it’s such a big tourist attraction. We see it only getting better and better, and so we thought it was the perfect time for us to get in here.”

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