The Distillery brews an expanded reach

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With three Distillery restaurants in the Rochester area, Peter Psyllos is thinking of adding a fourth locally and possibly expanding statewide.
Psyllos this year received state approval-also recognized by 30 other states-to offer Distillery franchises. He owns the Distillery, formally Distillery America Inc., on Mount Hope Avenue. He has sold franchises to the Distillery eateries on Winton Road South and Paddy Creek Circle in Greece.
Psyllos owns the trademark for the Distillery, as well as the concept and the method of operation, said Andrew Zappia, a partner with Nixon Peabody LLP in Rochester who handles the legal end of the franchising.
“With franchising, you license that name and method of doing business to third parties, and they pay royalties or other fees back to you,” Zappia said.
Psyllos was approved for franchising after filing a prospectus with the state law department. The license also is valid in states that do not have their own franchising statutes.
“Once you’re registered in New York, you can sell in Pennsylvania, using the New York document,” Zappia said. “The same is true for Ohio and New Jersey. There are a lot of states right around us that this would apply to.”
Robert Barbato, professor of management at Rochester Institute of Technology’s E. Philip Saunders College of Business, said Psyllos should be cautious about additional restaurants.
“When you franchise, there are two things you offer.” Barbato said. “One is a recognized brand. The other is a successful business concept that can be duplicated. That was McDonald’s success. But that’s not always so easy.
“If he’s got something that is a successful business concept that can be duplicated, he could use it to sell franchises if it really does have a distinctive advantage over national chains. But he risks diluting his market.”
Psyllos also owns Pellegrino’s Deli & Caf? on Mount Hope Avenue and on Linden Avenue in East Rochester.
Altogether, some 250 individuals are employed at the restaurants.
The Distillery features steaks, burgers, fish, pizza, pasta, salads, sandwiches, appetizers and a sports bar.
Psyllos opened the Distillery on Mount Hope in 1980. The Greece restaurant was opened in July 2006, the Henrietta restaurant in June 2007.
“Now we have a presence on the west side,” he said. “Greece has 100,000-plus people out there. There are great demographics: retail, traffic, hotels, rooftops, businesses.
“The Henrietta location is doing very well. It’s been well-received by the Brighton, Henrietta and Pittsford communities. Greece is doing equally well. The Mt. Hope location is holding its own. We have a presence in this market that works.”
The Distillery expansion is the result of requests from customers, Psyllos said.
“As people asked us to locate closer to their homes, we started to look for locations on the east and the west side,” he said.
There are no plans for additional Pellegrino’s locations, he said.
The Greece restaurant is the former home of a Don Pablo’s eatery.
“The former operator of the Don Pablo’s was looking for someone to take over the existing building and set up shop there,” Psyllos said. “We originally were going to bid on that project. There was another bidder who had interest in that property.”
Psyllos contacted the competing bidder, who was interested in bringing a chain restaurant to the local market, and offered him a Distillery license. The offer was accepted.
“We discussed all the particulars and drafted the agreement and came to terms,” Psyllos said. “It’s very similar to a franchise agreement, only it’s with a brand that people in this market know and understand.”
He is considering a franchise in Webster or Penfield. There are no immediate plans for restaurants beyond the Rochester area.
“We’re going to walk before we run,” Psyllos said. “We’re currently looking at this market to see if there’s room in any other areas and then maybe go to Buffalo to see if there are any opportunities there. But there’s some interest outside of the state as well. This is all very early in the process.”
For now, the focus is on the existing restaurants.
“You typically have a three-mile ring where you get 80 percent of the people that patronize your business,” Psyllos said.
The Henrietta restaurant is the busiest.
“But not by a lot,” he said. “We’re going through our honeymoon period there. That typically lasts anywhere from six months to a year. Then it’s up to us to develop a core of repeat business. If people come there and enjoy themselves and perceive it as good value, there will be repeat business.”
Psyllos declined to provide specifics on traffic and revenues but said the goal each year is double-digit revenue growth.
“We’re usually able to do that,” he said. “The biggest challenge nowadays is growing your sales in a static marketplace. We’re fortunate that we’re in the moderate price area. “So they perceive they’re getting good value at our locations. We get repeat business, sometimes two or three times a week.”
Some 60 to 75 are employed at each Distillery location, 40 to 50 of whom are full time. Psyllos employs some 30 at each Pellegrino’s location.
Pellegrino’s is the end result of Psyllos searching for additional parking for patrons of the Distillery on Mount Hope Avenue.
“Parking’s always been tight around here,” he said. “The building across the street became available. We saw an opportunity to expand our parking.”
After buying the building, he decided to either lease it as office space or turn it into another restaurant.
“I thought I was underserving this market as a quick service business,” Psyllos said. “We thought we could serve that portion of our market with a complementary concept of soup and salad and sandwiches that is not fast food and is moderately priced. We looked around to see what other people were offering and came up with our own concept.”
The Pellegrino’s on Mount Hope was opened in 2000. The Linden Avenue location was opened in 2002. It offers submarine sandwiches, wraps, soups and salads.
The Distillery, meanwhile, is Psyllos’ signature endeavor.
“We opened in this market primarily to be a neighborhood establishment that caters to the (University of Rochester) and downtown community and the immediate neighborhood,” Psyllos said. “Over time, it evolved into a sports-oriented operation.
“We’ve always incorporated technology into our businesses. We were one of the first locations in town to have a satellite dish. That enabled us to get live feeds from sporting events.”
The Distillery’s cable and satellite packages enable customers to watch sporting events not shown on local television.
“Our Sunday football days are very big at all three locations,” Psyllos said, “not to mention the interest in hockey.”
Psyllos has sponsorship and promotional agreements with many of Rochester’s professional teams.
“Our connection to the local sports teams-the Amerks, the Red Wings, the Rhinos, the Knighthawks and some of the other teams-enabled us to become very community-oriented,” he said.
The sporting atmosphere is of secondary importance to Psyllos, though.
“Our motto is food, drink, sports and fun,” he said. “We are a restaurant first and foremost. That’s how we make our living. That’s what drives this operation. The other things are part of enhancing the experience.”
Psyllos became interested in restaurants as an employee while attending Rochester Institute of Technology.
“I worked as a waiter, a bartender, a cook,” he said. “I worked all the positions.”
After graduating with a degree in business, Psyllos took a position as an assistant manager at Scotch ‘n Sirloin.
“I enjoyed the business and the dynamics of it,” he said. “I saw that it could be very lucrative as well. I decided to venture out on my own shortly thereafter.”
He went from Scotch ‘n Sirloin to ownership of the Distillery.
“The Distillery restaurant franchise is the culmination of all my years of experience in the restaurant business, a lot of trial and error and fine tuning,” he said. “Our goal is to continue to improve the concept and make it more viable as a franchise opportunity for people.”
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12/14/07 (C) Rochester Business Journal