Saturday, March 27, 2010 | 12:05 a.m.
"I'm not recognizing that guy," Ashley Morris says, a bit of frustration in his voice. Jason Smylie nods. The guy being discussed is wrapping a sandwich at the Capriotti's Sandwich Shop near the corner of Sahara and Las Vegas Boulevard, the first Capriotti's opened in Las Vegas. It's in a small strip mall, sharing the same space as a Golden Steer, and the parking lot is full. Locals and tourists alike are flocking here for the lunch hour, shouting their orders across a long, shoulder-high counter.
Morris and Smylie pride themselves on knowing everyone in this joint, hence the frustration.
It's not that they're regular customers — it's that they own the place. Not to mention the entire company, which they acquired in 2008. And both men monitor every detail of the Capriotti's chain, from the placement of the chip stands to the decor to the employees. After all, they say they're about to take this puppy nationwide.
"We fully expect to have 500-1,000 stores by 2015," Morris says without a hint of doubt. Smylie, the quieter of the two, just nods.
It's the evolution of what both men fully admit is the American Cliché — a dream come true. And while Morris isn't a big believer in fate — he's a pragmatist, believing more in the power of determination than the planets aligning — even he has to pause when he looks back on the convergence of events that brought him and Smylie to this point — owning a seemingly recession-proof business that's about to explode.
Every day for a year
Morris, 30, and Smylie, 28, grew up in the same Los Angeles neighborhood throughout the '80s, but weren't close. "I knew my best friend through my parents' best friends," Morris remembers. "His name was Adam, and Adam had a brother, Kevin, and Kevin was Jason's friend. We'd see each other during our parents' parties, but 8-year-olds don't hang out with 6-year-olds."
The friendship didn't evolve until both men's families moved to Las Vegas in 1990 — and, in the first fateful twist for both, neither family realized they were moving into the same Desert Shores neighborhood. The two men have been bosom buddies ever since, becoming roommates while at UNLV, where Morris majored in corporate finance and Smylie majored in computer science with a minor in math.
It was while attending UNLV that Smylie ate his first sandwich at Capriotti's, the one on Sahara. It was the Bobbie, the sandwich for which the chain is best known. "He came back and told me, 'I've just had the greatest sandwich in the world,'" Morris says. "He just kept talking about it, and I finally had enough and decided to try it. I had the cheesesteak, and, by no surprise, it was the greatest sandwich I'd ever eaten."
Both men were hooked. "I ate that sandwich every day for a year," Morris says. "We fell so in love with Capriotti's that we broke our lease early so we could be closer to one."
Morris graduated in 2002, Smylie in 2003, and both went on to successful careers, Morris as the youngest money manager with Wells Fargo at that time, and Smylie as a software engineer at Bechtel Nevada. Both were unattached at the time and made good investments in the housing market, so both were doing well, money-wise.
Then came the first of two aha! moments. In 2004, both men were dining at — where else? — Capriotti's, "and the line was out the door. We looked at each other and decided to open our own store," remembers Ashley. "We inquired with corporate, and discovered the ROI [return on investment] was higher than anything else I'd been looking at investing in."
They found a location at Stephanie and I-215 — the only location the owners would allow to be built in Henderson at that time, as they felt the market was saturated — and began building. But during construction, they discovered the Capriotti's near Eastern and Sunridge Heights in Henderson was up for sale. They pounced, purchasing it that year. The money began pouring in almost immediately. "It was so good, we decided we wanted to be into this in a big way, and made a bid to open another one in Henderson. We were approved, even though the Stephanie location was supposed to be the last one, because we were only competing with ourselves." They opened their third store at Horizon Drive and College in 2006. By this time, Smylie had quit his job to oversee all three stores.
During this time, both men struck up a close friendship with owner Lois Margolet and her sister Ann Guinn, president of operations. They had put together a plan to develop 30-40 stores in Phoenix, but the owners were resistant. "Whenever we talked, the standing joke was, 'Hey, why don't you buy the company? Ha-ha!" Morris says. "They always planned to sell, and they'd always joke with us about it."
Morris had dreams of success, but didn't really get his motivation until aha! moment No. 2 in 2007: "I was visiting my sister in Los Angeles and watching the World Poker Tournament on TV. The prize was $2 million, and the winner was 22. The announcer said, '22 is the new prime in poker. At 27, you're an old man!' Well, I was 27 at the time. I called Jason right then and there and said, 'We're buying the whole company!'" Jason looks over and remembers his response: "Sounds like a plan."
Beg, borrow and (not really) steal
The timing was fortunate — Morris quickly learned that someone else had made an offer on the company. The time was, indeed, now or never. So in April 2007 the two men put Capriotti's Sandwich Shop Inc. into escrow. "We had no idea where we were going to get the money," Morris admits. "The economy hadn't tanked yet, but banks were just beginning to tighten their belts. We got nowhere there."
But that part about wills and ways? Just talk to Morris. "The power of intention is unbelievable. In a very short time, we talked to everybody we knew — begging, borrowing, stealing." "Well, not stealing," Smylie adds, laughing. "We did everything we could — stock offerings, private debt financing ... we sold two of the restaurants and kept the Horizon store. We put a group together that's 95 percent Las Vegans."
Ashley Morris and Jason Smylie became the proud owners of Capriotti's on January 1, 2008. They've franchised 16 stores since then, bringing the total in Las Vegas to 26. They own two company stores — the one on Horizon and the original on Sahara. And while all stores are doing well — the Sahara location did 44 percent better business in December than the same time period the year prior — Morris and Smylie are more focused on making preparations to take Capriotti's to the next level, on a par with In-N-Out.
"When we bought Capriotti's, it was being run out of someone's downstairs living room, with five employees and 44 units across the country," Morris says. "We've been building an infrastructure that could support 1,000 restaurants."
They're off to a good start. They now have more than 20 employees, and they've redesigned all the stores, including the kitchens. In addition, they've introduced national pricing, a national distribution system, technology to track sales, a marketing department, new website and social media presence, design and building department, product development department and a guest-satisfaction program. They also started a convention for franchisees which is in its second year. This year's was held at the M Resort.
"Our growth model is through area growth, not single-unit franchise growth," Morris says. And the process has been set in motion. They've established a California presence already, with a store that just opened in Beverly Hills (and is already trending to be one of the top five performing stores), with plans to open another 80 in Southern California over the next 10 years. Deals are also being negotiated for Oregon, Minnesota, Iowa, Missouri, Texas, Mississippi, New Jersey, Maryland, Pennsylvania, New York and Miami.
Add to this that they also get to pursue their dream of breaking into the Phoenix market. "We're in the process of starting that," Morris says, a great deal of satisfaction in his voice.
It's worth noting that they don't intend to tweak their menu much. That would fall under the "if it isn't broke" rule. They've introduced one sandwich in the time they've owned the company (a chicken cheesesteak, which they both swear by), and salads may be added, but that's about it.
And don't think for a minute that this success has gone to either man's head — Ashley and Jason still eat at Capriotti's all the time, with each rotating through five favorites apiece. Jason's current favorite is the grilled Italian, and Ashley's is the chicken cheesesteak, "especially if you add hot peppers and marinara, which isn't mentioned on the menu."
They still marvel at the quality of the product they get to shepherd to national greatness. Vice President Joe Biden had it catered to his inauguration event in Delaware (where the company began in 1976), the Bobbie was named the nation's greatest submarine sandwich in last year's AOL poll for National Sandwich Day, and Sandelman & Associates, a customer-research agency, ranked Capriotti's No. 1 for exceptional customer satisfaction (it tied with In-N-Out).
"It's a bit surreal. We've very lucky," Morris says. "I loved my old job, but once I started doing this, I realize I was actually miserable at my old job. Jason and I are firm believers that you can create anything you want with your intentions. I don't want to compare us to star athletes, but that drive to succeed has been why we've been able to stay friends for so long."