Headquarters: St. Louis Park
Founded: 1999
Revenues, 2006: $84 million
Employees: 3,000
Ticker: GCFB (Nasdaq)
Web site: www.gcfb.net
What it does: Restaurant chain offering made-from-scratch food and beer at affordable prices



Disenchanted with his accounting classes at Michigan State University, Steve Wagenheim made an appointment with an MSU counselor.

“That half-hour with the counselor changed my life,” he says. “She saw that I was good with numbers and had a personality, so she suggested I check out the HRI [hotel and restaurant institutional management] school.”

Good call. After graduation, Wagenheim landed at Laventhal & Horwath, a top accounting firm to the hospitality industry. Following stints in the firm’s Chicago and Denver offices, he was transferred to Minneapolis, where he was assigned to the Champps Americana account. Dean Vlahos, owner of the sports-bar chain, made Wagenheim a partner and later Champps’ first president. When the company was sold in 1996, Wagenheim bought and ran the Champps in New Brighton.

But Wagenheim and his staff had a grander vision. “We thought that the made-from-scratch food product that we knew from the Champps days was definitely the way to go, but we wanted to get away from the sports-bar genre,” he says.

Thus was born Granite City Food & Brewery, a regional restaurant chain with an upscale atmosphere and 18 locations (25 by the end of 2007) in eight Midwestern states. It features a made-from-scratch menu—meatloaf, gourmet sandwiches, London broil with bourbon barbecue sauce—and an affordable average check of $12.91. This price consciousness has allowed Granite City to compete with national powerhouses like Olive Garden and more upscale chains such as the Cheesecake Factory.

A prime Granite City’s differentiator is its home-brewed beer. “Basically, we start the process in a centralized location, which is a small plant in Iowa, and then we finish it on site, where the customers can see the finishing tanks,” says Wagenheim, who is Granite City’s president and CEO. “That way, we’re in for a fraction of the cost of typical microbreweries, and we’re making our beers for half the cost of the lowest national brands. More important, it gives us a proprietary, made-from-scratch product.”

To lure investors, Wagenheim’s team crafted a distinctive positioning strategy. “We thought we could push the story of Granite City faster if we opened up in nontraditional markets and in a variety of market sizes,” he says. “We started in the lowest-population markets—St. Cloud, Sioux Falls, and Fargo. Then we moved up to Davenport, Cedar Rapids, and Des Moines, and then Wichita, Kansas City, and Minneapolis. This year, we’re going into Chicago and St. Louis. We wanted to show that this could work anywhere.”

Last year, as some major restaurant chains posted flat to negative same-store sales, Granite City was up 5.5 percent; it’s up close to 4 percent in the first quarter of 2007. “That really shows the strength of our value proposition,” Wagenheim says. “We think we have the concept that is right for America.”