Pizzas, and business plans, with everything

Pizzas, and business plans, with everything

 

Jim Grote’s father, the youngest of five children, and his uncle owned a grocery store on Columbus’ north side. Though the shop never made much money, Jim always looked up to his father and wanted to be part of what he was building, as sons often do.

Jim Grote’s father, the youngest of five children, and his uncle owned a grocery store on Columbus’ north side. Though the shop never made much money, Jim always looked up to his father and wanted to be part of what he was building, as sons often do.

“I was about 8 years old and said, ‘Geez, Dad, I’d like to help!’” Jim said. “Dad laughed — and said, ‘You’re not quite old enough.’ But he really wanted (the store) to be Grote & Sons, and that’s probably where the seeds were planted for me to build a business and get (the) family involved.”

Beginning at age 13, Jim worked for two partners at Cy’s Pizza. When he was 16, Jim tried to persuade his father to help him buy the business, but the elder Grote again felt his son was too young. He encouraged him to attend college instead.

While at Ohio State University, Jim worked at Donatos, another pizzeria; in his sophomore year, he saw an opportunity to buy it. Jim’s father by now realized his son’s commitment and lent Jim $750. In 1963, Jim bought Donatos for $1,300.

When Jim wanted to open a second Donatos in the Brice Road-Livingston Street area, he went to his bank of seven years, Ohio National, to request a loan. The banker looked at this 20-year-old applicant and said, “Pizza places are like gas stations. They never last.” He rejected the loan.

Dejected, Grote walked into the new Huntington branch on Livingston Avenue and asked for the same $75,000 loan. Almost comically, the loan officer responded, “Well, OK.”

Grote ultimately showed the loan officer his impressive revenue numbers. But he credits the immediate “yes” to Huntington’s knowledge. The bank realized the area was growing (after all, Huntington had recently opened a branch there), and seized the chance to support a passionate young business owner.

“I became a loyal Huntington fan way back then,” Grote said. “That’s when we really started to take off. . . . Huntington was there all through that growth period.”

Perhaps in spite of the original Ohio National naysayer, Grote often targeted old gas stations as properties to remodel into pizza shops. Huntington helped with leveraged loans and mortgages. All of Donatos’ commercial banking transactions moved over to Huntington, too; Jim worked with Fred Hadley, a 30-year veteran at the bank.

“All of our business went through Huntington,” Jim said. “All the people I dealt with in those early days were good people, and you got to know your banker as well as any of our business partners.”

During these early years, Grote kept innovating. To automate pepperoni slicing and placement, Jim had a prototype machine made for what became Grote’s Electric Peppamatic and secured a patent. The device became the foundation for what became the Grote Co., which would sell food processing equipment for more than 40 years. This “brother company,” as Grote calls it, is now run by Jim’s nephews Bob and Jack Grote, keeping it all in the family.

Grote Co. grew in parallel with Donatos, which had by the 1990s begun to franchise. Donatos had about 120 locations when McDonald’s Corp. came calling around 1999. McDonald’s appreciated the systematic approach Grote had developed and bid to buy Donatos.

By then, Jim’s son Thomas had become Donatos’ chief operating officer, while Jim’s daughter Jane led the human resources division. Tom and Jane disagreed on whether to sell. But Jim felt that the Grotes might be able to influence the huge fast-food empire, instilling some of their own family values of honesty, integrity and good customer service.
Jim’s idealism won out and the family sold.

When the tech bubble burst and corporations began tightening their belts, the Grotes feared that McDonald’s would divest Donatos at the expense of many employees.

Grote remembers that in 2003, “Jane said, ‘Dad, we’ve just gotta get our company back.’ Jane led the vanguard, she was a bulldog,” Jim said. Jane and Jim were partners again; Jane served as president and helped to orchestrate a $10.5 million turnaround of the bottom line during the first year after the repurchase.1

Huntington remained an integral part of Donatos, helping the Grotes with a $15 million “note”; Senior Vice President Bill Remias served as the primary relationship manager.

“Bill’s just a great guy,” Jim said. “He was real young when we first caught up with him and he’s just a real compassionate, good person. Our values align very much with Huntington’s values.”

Huntington’s compassion didn’t flag when the Great Recession arrived and the value of Donatos’ real estate portfolio dropped by 20 percent. Donatos’ collateral fell short and its line of credit was maxed out.
“Huntington kept interest rates low and was willing to extend the loans,” Jim said. “They hung in with us, during some very rough times. So we’re full bore with Huntington.”

Today, with nearly 200 locations across seven states, primarily Ohio, Indiana and Kentucky, Donatos remains family-owned. Jane Grote and Donatos CEO Tom Krouse married in 2015, keeping the business truly in the family. Jim has also invested in his son Thomas’ renewable-chemicals business, Green Biologics, another Huntington customer, and continues to invest in his home community.

Jane and Jim are leading revitalization efforts on Columbus’ south side; they’ve donated $1.5 million to help fund a community and day care center.

Jim was denied in his first loan application by a banker who believed his business wouldn’t last. Huntington saw something different — a business built to last.

“If I couldn’t keep my principles and still make money I was going to quit,” Jim said. “Fifty years later, I’d like to say that you can keep your principles and you can make money. You don’t make it as fast sometimes, but you last longer!”

Dontatos owner Jim Grote, his daughter, Chairwoman Jane Grote-Abell, and CEO Tom Krouse pose for a portrait in front of the Donatos Home Office in Gahanna, Ohio on June 17, 2013. (Columbus Dispatch photo by Brooke LaValley)
In 2013, Donatos celebrated its 50th year in business, thanks to Huntington’s continued support.  Photo Credit: Columbus Dispatch Newspaper