Hoss's Steak and Sea House Inc.

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Hoss's Steak and Sea House Inc.

170 Patchway Road
Duncansville, Pennsylvania 16635
U.S.A.
Telephone: (814) 695-7600
Toll Free: (800) 621-0270
Fax: (814) 695-3865
Web site: http://www.hoss.com

Private Company
Incorporated: 1983
Employees: 3,700 (est.)
Sales: $80 million (2002)
NAIC: 722211 Limited-Service Restaurants

With its headquarters located in Duncansville, Pennsylvania, Hoss's Steak and Sea House Inc. is a privately owned chain of more than 40 family-style restaurants in a territory that encompasses parts of Pennsylvania, Virginia, and West Virginia. All but three of the units are found in Pennsylvania, with a pair located in West Virginia and another restaurant in Winchester, Virginia. The Hoss's menu centers around steaks, seafood, and a salad bar. Steaks are aged, hand-selected, and fresh cut at the chain's beef facility—part of Hoss's Fresh Xpress, a warehouse and distribution unit that supplies all of the restaurants. Hoss's offers a wide range of steaks from 6-ounce sirloins, the Little Hoss, geared toward youngsters, to 28-ounce Porterhouse cuts. Seafood offerings include baked cod, salmon, haddock, whitefish, lobster tail, crab cakes, clam strips, and shrimp. Hoss's also offers chicken dishes and ham steak. Included with entrees is Hoss's salad bar, which offers more than 100 items, including homemade soups, breads, desserts, and soft-serve frozen yogurt. Also on the menu are hamburgers, Philly cheese steak, ham and Swiss cheese, and other sandwiches. A children's menu includes grilled cheese, hot dogs, hamburgers, popcorn chicken, popcorn shrimp, and pizza. In keeping with its efforts to appeal to seniors and families, Hoss's has never served alcohol, and early on it became a smoke-free environment. Hoss's décor features memorabilia appropriate to its location. Corporate advertising is handled by an in-house agency, Image Advertising. In addition, the company operates Hoss's Fresh Food Market in Duncansville where cuts of meat and other ingredients used in the restaurants are available for sale. The company has begun testing a second concept, Marzoni's Brick Oven & Brewery, with a single location in Duncansville. Hoss's is headed by its founder and chief executive Willard E. "Bill" Campbell.

1980s Origins

After growing up on a farm, Bill Campbell sampled a wide variety of jobs before becoming involved in restaurants. He dug ditches, he drove a truck, he learned how to cook while serving in the National Guard, and he started his own general construction company. Always wanting to run his own restaurant, Campbell in 1979 became a franchisee of the Augusta, Georgia-based Western Sizzlin' Steak House chain. Campbell opened his first unit in Duncansville, Pennsylvania, in 1979. It became profitable quickly, prompting Campbell to open a second restaurant in Johnstown, Pennsylvania. In 1983 Campbell wanted to buy a third Western Sizzlin' franchise, to be located in Chambersburg, Pennsylvania, but according to him the parent company "sold it out from under us." In response, Campbell decide to start his own steak house, one like Western Sizzlin' that would fill a niche between fast-food and full-service restaurants. Western Sizzlin' used a cafeteria approach to family dining. Patrons pushed trays through a serving line and then carried them to open tables. For a name Campbell and his family sat around their dinner table searching for something that was evocative of the Old West. They came up with five possibilities but only Hoss's was not trademarked.

In late 1983 Campbell opened his first Hoss's in DeBois, Pennsylvania. In the beginning, this restaurant, and a second Hoss's, continued to follow the Western Sizzlin' cafeteria-style concept. Campbell then began to tweak the operation. He eliminated the tray, creating a format in which customers placed their orders at the counter and were then seated and received full service. In order to appeal to families, Campbell diversified the menus to avoid losing business simply because someone in the group did not want steak. In addition, he recognized that more customers were becoming increasingly more health-conscious and cutting back on red meat. He added seafood to the mix as well as chicken dishes and a full salad bar. There was also an emphasis placed on offering fresh steaks. All the cuts came from western grain-fed beef, USDA Choice or better, delivered fresh to Hoss's, never frozen, and cut by the chain's own butchers in a controlled environment. The meat was then seasoned in a natural marinade before preparation. The restaurants also began making their own soup and crab cakes. In spite of this improvement in quality, Hoss's was able to keep prices low and attractive to the family trade. Another factor in appealing to this market was the decision to forgo the sale of alcohol. "If you want a good steak and want nothing to do with alcohol, where are you going to go?," Campbell told Restaurants & Institutions in a 1994 company profile. "That's a huge niche. We just decided to fill it."

Campbell eventually converted his Western Sizzlin' operations to the Hoss's format and began opening three or four new restaurants each year, taking full advantage of his contracting background to have his Campbell Enterprises unit construct all the new buildings. Each featured a homey fireplace, wagon-wheel chandeliers, Americana paintings, and knickknacks. Also lining the walls was local memorabilia like old advertising signs and framed pictures devoted to the history of the local town, items that proved to be of great interest to many customers. Hoss's also emphasized friendly service and made an effort to become a significant part of the community. Drawing on his own farming background, Campbell encouraged restaurant managers to get the units involved in the activities of local 4-H chapters and the Future Farmers of America. Each year Hoss's visited dozens of 4-H fairs, buying many of the top-prize steers. The restaurants also became involved in a number of other charitable activities, such as raising money for the Multiple Sclerosis Society. In addition, the restaurants bought ads in high school yearbooks and other area publications and sponsored youth sports teams. As Campbell told Nation's Restaurant News in 1997, "We pump a lot of money into the community." All told, it was a winning combination, so that by the end of 1988 Hoss's was doing $1.6 million in business and operated 21 restaurants located in small- to medium-sized towns in western Pennsylvania.

Hoss's also gained a reputation for treating its employees well. Tuition assistance was provided, and there were opportunities for advancement in the organization. Much of his management team, in fact, would rise through the ranks. His human resources vice-president, for instance, started out as a laborer in the construction business. All managers received eight weeks of training at "Hoss University" at the corporate headquarters. Moreover, management structure was kept lean and responsive, with very few layers separating Campbell from his store managers. At the top was Campbell and his president, followed by a director of operations who had a five-person team to work directly with unit managers. As a result, Hoss's was able to maintain tight quality control standards. Another key element was the creation of Hoss's Fresh Xpress, a combination commissary and warehouse located in Claysburg, Pennsylvania, to service the stores and ensure consistency in what the chain served. Campbell was also careful to open new units within a small radius to make sure his influence was felt.

Expansion in the Early 1990s Beyond Pennsylvania

In the early 1990s Hoss's expanded into West Virginia and Virginia and continued to add restaurants in Pennsylvania, but management made sure that all units were located within a four-hour drive of company headquarters to keep a tight rein on quality control. Sales increased steadily as Hoss's refined its formula. In 1993 the company enjoyed a 33.3 percent increase in systemwide sales over the previous year, growing to $60 million. A factor in this growth was the chain's ability to attract seniors through an early-dinner program, which from 1 p.m. to 4 p.m. featured entrée specials priced at just $4.99. In 1994 the chain looked to spur sales by adding variety to the menu, but it did so by simply repackaging current items that could then be promoted in TV and newspaper advertising. Crab cakes that cost $10.99 were now offered in "light portions" half the size of the regular but still costing $7.99. Chicken fillet and sirloin tips were combined to make a $10.99 entrée. Hoss's also added scampi sauce, vegetables, and potato to the 8-ounce portion of langostinos on the menu to create a lobster-pot special.

By the end of 1994, Hoss's had 36 units in place with plans to add several more in 1995. One of those units was located in New York State in Binghampton, one of the few locations that did not work out for the chain. Ultimately Hoss's closed down the unit. Although the formula for Hoss's success continued to center around fresh food, a family friendly atmosphere, and developing strong ties to its small town customers through active participation in the community, Hoss's also was willing to use technology to improve its service. At peak times during the week, lines of customers often stretched out the door. Menu boards were placed outside for customers to look at, as well as signs indicating that the wait to the register at one juncture was 15 minutes and at another ten minutes. But unlike many restaurants, customers were able to place their orders sooner rather than later. The key was a computer system and headsets worn by the waiters and waitresses, allowing them to communicate with the hostess. As soon as a table came free, the hostess would be informed and with the help of a computer that kept track of available tables and servers she was able to make decisions on which parties to seat. The system was especially useful in handling large groups, a situation that often caused significant delays at other restaurants. Moreover, orders placed at the registers were relayed electronically to the kitchen, rather than having a waiter or waitress hand-deliver the order after accomplishing other tasks on the way to the kitchen. As a result, lunch orders could be ready in ten minutes and dinner around 15 minutes. Hoss's use of technology caught the eye of Inc. magazine, which in the mid-1990s named it one of its "Positive Performers."

Company Perspectives:

Hoss's Steak and Sea House is family dining featuring fresh-cut steaks, savory seafood, and tender chicken entrees . . . all cooked to order!

Hoss's had clearly developed a winning formula in the increasingly competitive restaurant field, but Campbell at this stage made it clear that he was not interested in franchising the concept, fearful he might lose the tight control that was key to Hoss's success. "At this point, we are going to be a regional chain," he told Restaurants & Institution in 1994. "We don't want really fast growth. Along the eastern seaboard, there is quite a lot of population, so we can stay and grow here for quite a while."

New Marketing Approach in the Late 1990s

In the late 1990s Hoss's hired a Pittsburgh advertising agency, The Kaiser Group, to handle its marketing. After a year a consumer study was conducted to help in positioning the chain for future growth. What the research revealed was that Hoss's main selling points were its homestyle food and service. To focus attention on the food and "hoss-pitality," the chain introduced a new tag line, "Welcome to a good, honest meal," and centered its advertising around a new slate of daily specials. To encourage repeat business, customers' favorite dishes were consistently offered as a special on the same day of the week. For instance, Monday was stuffed steak night and Friday was baked haddock night. Television spots also relied on employees rather than actors to make the pitch. In one, a server said, "It's all about what's on the plate," a comment that epitomized the new approach. Radio spots also featured employees' comments edited together in a documentary style. The success of the new marketing program was evident in the increasing sales Hoss's enjoyed in 2000.

By 2002, when the Hoss's chain numbered 41 units and annual sales were estimated at $80 million, Campbell and his president, John Brown, felt the time had come to explore the possibility of franchising the Hoss's concept. As Brown explained to Nation's Restaurant News in 2002, "We've tried to grow from a central point in small radii so we could keep control. New we believe we're well enough established that we can maintain those controls even with franchisees." Campbell and Brown were not ruling out any part of the country, open to turning Hoss's into a national chain but intending to "play it by ear." As of late 2004 the company had not yet announced any franchised operations. But in the meantime it launched a new concept, Marzoni's Brick Oven Brewery, offering wood-fired pizza and pasta along with a microbrewery providing specialty beers. Whether the Marzoni's concept would be introduced elsewhere or the Hoss's chain might grow beyond its regional roots through franchising remained to be seen.