Washington real estate businessman Mike Glosserman comes from a hard-nosed line of Texas Hill Country entrepreneurs. So when his son, Marc, asked if Dad wanted to be an investor in Marc’s barbecue start-up, the elder Glosserman signed on — with conditions.
The investment from the family was not a gift. Mike Glosserman wanted the money back, with interest.
Six years later, the Glossermans have their money back — with interest. They collect dividends on their son’s Hill Country barbecue restaurant chainlet, which has locations in New York and in Washington.
And they own a piece of their son’s successful business.
“I’m a happy investor,” said Mike Glosserman, who is a managing partner at the JBG Cos., a highly successful private equity investment firm specializing in Washington real estate. JBG’s projects include the Washington Marriott Wardman Park, the Woodley apartments in Northwest and the Waterview office building in Rosslyn.
The Hill Country restaurant, named for the Glosserman family’s Texas beginnings, is booming. It has two locations in New York and one in Washington. It is expanding into Brooklyn by year-end.
Revenue reached $21 million last year and is expected to hit $24 million this year, helped by its lucrative catering, special events business, pop-ups like the one at the National Building Museum in Washington, and healthy beverage sales because of late-night live music.
“They all have double-digit profits,” said Marc, 39. “We have several revenue sources that make this model work.”
The art of business runs deep in the Glosserman family. Mike had strong male role models who led by example, instilled a tolerance for prudent risk and taught the value of building relationships. He tried to impart that to his sons, Marc and Scott.
Scott is a filmmaker and runs a successful start-up in Los Angeles called Gathr. The Glosserman family has invested in that business as well, and Dad now knows more about filmmaking and restaurants than he ever did before.
“I have two sons who are deal guys,” Mike said. “They are both transactional business guys. If they have good ideas, I’m happy to be supportive and make judgments. I serve as a counselor.”
The family business culture goes back a century to tiny Lockhart, Tex. Marc’s grandfather, Sam, and his brothers owned a variety of businesses, including oil and gas, a downtown Lockhart men’s store, and one of the state’s first General Motors dealerships.
Mike got a front-row seat to business from his earliest days watching his father and uncles.
“From a very early age, I always wanted to be a principal in a business,” Mike said.
Mike left Texas to study business at the University of Pennsylvania. He returned to get a law degree from the University of Texas because it would help him build relationships and provide job insurance.
A friend offered Mike a job at the Justice Department in Washington. He and his new wife, Marilyn, whom he met while both were studying at the University of Texas, moved to an apartment in Southwest Washington.
Glosserman eventually left law and established himself in real estate, working in the finance department at the then-Rouse Cos. JBG came calling in 1979, and Glosserman called on his father for advice.
“I was going to go back to Texas and go into business for myself,” Mike recalled. “Dad’s advice was, ‘Texas will always be there. Go try JBG and if it didn’t work out, you can come here.’ ”
Glosserman took the job, raising his family in Bethesda, where the home was alive with talk about transactions, deals and structures.
“They wanted to know what I did,” Mike said of his two sons. “They picked up on the idea that I liked to create and build things, and they wanted to do it themselves.”
After graduating from Penn like his dad, Marc worked on several start-ups, learning how to cold call, how to deal with rejection and the perils of growing a business too fast.
Marc said he had the Glosserman gene for starting stuff, which would lead to his restaurant — a high-risk business.
Growing up, Marc and his family would frequently take trips to Lockhart to visit relatives, speeding from the airport to the legendary Kreuz Market to get their barbecue fix even before they said hello.
“We would sit and talk with all the family, chowing down on barbecue and eating off red butcher paper and asking, ‘Wouldn’t this be great if we had this in D.C.?’ ” Mike said.
In 2005, while taking an executive MBA course at Columbia University, Marc won a start-up business plan competition with his idea for Hill Country-style barbecue.
“I had an image in my mind growing up and it was my inspiration,” he said. Marc can riff for hours on barbecue, addressing the difference between pulled pork cooked South Carolina-style (mustard-based sauce) and North Carolina (vinegar-based).
Even before the Columbia competition, he had begun conversations with potential investors. He networked through the friends he knew from Penn, from Columbia and from businesses where he had worked. His dad helped some. His mother came up with the name, Hill Country.
By 2006, Marc had raised about $2.5 million from about 30 investors. It wasn’t enough, and Marc took out a $1 million loan to finish the job.
“Being undercapitalized was my biggest mistake,” he said.
He and wife Kristen, a business coach, stayed up nights brainstorming ways to build the business. He immersed himself in detail, finding barbecue chefs and a pit master. He found a source to truck in Texas “post” oak wood for its smoke. He cut a deal with Kreuz to use its sausage. He scoured Texas antique shows for memorabilia and artifacts to lend the ring of authenticity to the restaurants. He emptied Glosserman family scrapbooks onto the walls. He even brought in Texas Blue Bell ice cream and Big Red soda.
The first Hill Country opened June 1, 2007, in 11,000 square feet on two floors at West 26th Street in New York.
Within a few months, Hill Country was turning a profit. I estimate all three restaurants together turn a profit of between $2 million and $4 million a year, with some of that disbursed in dividends for each investment group.
The real secret to the profitability is the business model. Unlike many restaurants, Hill Country is not restricted by the number of seats. Hill Country can exploit vehicles like catering and pop-ups and special events to sell the 3,000 pounds of meat it can cook at any one time. The company has partnered with New York distributors to feature Hill Country guest chefs at corporate cafeterias throughout the city, including Hearst Corp., the New York Times and Goldman Sachs.
“He didn’t realize at the time just how good his model could be,” Mike Glosserman said. Now, both Dad and son get it.