Wine Authorities expands mission by opening second store

vbridges@newsobserver.comMarch 24, 2014 

  • What to ask before opening a second location

    • Are you financially stable?

    • Will expanding help you lower costs and increase profits?

    • Is there enough demand?

    • Are you willing to put in extra hours to get a new location off the ground?

    Source: SCORE, http://bit.ly/1imMAXE

    Video online

    Watch Craig Heffley talk about opening his second Wine Authorities at http://bit.ly/1djSvxz.

— Craig Heffley wants to change the wine world, one store at a time.

He recently opened a second Wine Authorities store that exhibits the fruits of his labor, along with some struggles that come with having multiple locations.

The East Franklin Street store, which opened near the Oakwood and Mordecai neighborhoods in Raleigh in January, emulates the original Wine Authorities in Durham that opened in 2007.

Both locations have large and colorful hand-painted maps that hang on the walls to denote the home region of wines displayed below. The floors of both stores are cork, and wine shelves roll to the side to make room for classes.

The differences, however, reflect lessons learned learns from the first location, such as a need for wider aisles isles and reinforced shelving, along with customization to the space and different market.

The Raleigh store is larger, allowing room for accoutrements such as a bar built with 105-year-old recycled wood, a floor-to-ceiling glass door that opens to an outdoor patio with bistro tables, and more coolers for cheese, charcuterie and craft beer.

“Raleigh definitely has a more active beer culture, so we wanted to support that,” said Heffley, 43.

Opening another location, Heffley said, was driven by two motives.

First, the stores allow Heffley to increase revenue and create efficiencies that include sharing established operating systems, inventory, employees, website management and marketing efforts.

Second, the new place helps Heffley increase the impact of Wine Authorities’ larger mission: to only buy from and support independent, family-owned farms in an effort to prevent them from being bought or squeezed out by mega-corporations.

That mission stems from Heffley’s experience ordering wines and serving as a wine sales representative. He said he noticed a stark contrast between smaller farms and larger operations.

“I was seeing these small producers lose the battle,” he said. “At the same time, I was seeing more and more young people drinking wine, and I wanted to make a place that was working with their budget and allowing them to buy wine with integrity.”

Advantages of expansion

There are advantages to opening a second location, but small-business owners should wait until their business “is running smoothly and is profitable,” said Fred Gebarowski, Small Business Center director for Wake Technical Community College.

“That would be one of the main reasons to expand,” he said. “They are profitable and have a good working model.”

Advantages of a second spot include shared savings and efforts between the two stores. For Heffley, that means his marketing efforts, such as weekly emails, homemade signs for wines, and mentions on National Public Radio, go a lot further.

The biggest disadvantage, Gebarowski and others said, is the added risk coupled with owners who can’t be in two locations at once.

Each location needs to have an owner or a strong manager on site. Also, owners should consider opening within the same region as their original spot as travel will eat up a lot of their time, said Lisa Stansbury, president of bedding retailer Fred’s Beds.

If the first operation is successful, owners should look for similar demographics in another area, Gebarowski said. The second business should have a separate business plan and financial records.

Owners also need to have scalable systems and should audit their first location for improvement opportunities, Gebarowski said.

Stansbury, however, cautioned against taking on multiple locations.

The bedding retailer, founded in Raleigh in 1985, peaked in 2007 with 13 family-owned stores and franchises across the state. The stores started closing because of the recession and online competition. The company now has only three family-owned operations, two in Raleigh – one of which is in the process of closing – and one in Wilmington, along with a franchise in Kannapolis.

“We lost a lot of money,” Stansbury said.

A familiar pattern

Heffley and business partner Seth Gross opened the first Wine Authorities on University Drive in Durham in 2007.

Revenue increased quickly over the first three years, but leveled off to modest bumps.

In 2010, Heffley bought out Gross, who went on to open Bull City Burger and Brewery and Pompieri Pizza. The wine store’s business started to pick up again in 2012, and Heffley started to explore the first of what he hopes will be multiple expansions.

In early 2012, Heffley hired a company to organize and clarify his systems into an employee handbook. He scouted locations in Raleigh and Chapel Hill. He looked for an up-and-coming area surrounded by neighborhoods that were similar to the ones near his Durham store, but far enough away from existing wine stores.

Heffley set up the stores under two limited liability companies, but established a third company to handle wine acquisition and payroll. He raised capital by selling shares of the second business to investors, just as he and Gross had done to open the first store.

Between the two stores, Heffley said he has about 23 investors who own between half a percent and 8 percent of one of the companies.

Heffley began negotiating his lease in November 2012, signed it in August 2013 and planned to open just before Thanksgiving. The design, construction and other aspects, however, took twice as long as estimated.

The store didn’t open until Jan. 7 and still needs work, including an unfinished archway and a custom sign that had yet to be hung two months after opening.

Customers and wine purchases have increased since the opening. Heffley knows the pattern, he said, because the same thing happened in Durham.

In Durham, customer transactions average seven bottles of wine. In Raleigh, it’s about three, but it’s skewed by the number of first-timers who often walk away with one or two bottles.

“I love that people are embracing us already here,” he said. “I think believing in what you do and being confident what you are doing is right will help your customers support you.”

Bridges: 919-829-8917; Twitter: @virginiabridges

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