Napa Sonoma SBDCSanta Rosa and Napa, California

“The SBDC has the background and expertise to objectively analyze our business with no agenda other than helping. They have been able to reaffirm all the things we do right and point out the weak spots. The SBDC has a lot of great programs we use as tools to keep our business at the top of our game.”

Bob Hurley

The restaurant opened in November 2002 after an extensive renovation of a facility that closed due to declining profitability. The location was chosen because the owner was well know in the community, had a loyal following, and a group of private investors that would assist in cash flow requirements during the early stages. There is a 60-room hotel being built across the street that will offer opportunities for expanding group functions and services. In addition, the lower priced restaurants are disappearing, representing a great opportunity to meet the desires of those seeking quality with good service but not wanting to or being able to afford the most expensive establishments.

The second year of operations saw a decline in revenue and the restaurant was not profitable. Since then however, there has been a consistent increase in revenue and profitability. In addition, diners' tastes change, especially for those that are visiting and they seek diversity from their standard fare, and competition in this area is very strong. There has also been a constant opening of new restaurants that have to be tried and thus take away from otherwise expected revenue.

Actions Taken
Hurley’s is a great example of how clients can benefit from SBDC assistance over time. In 2002, the SBDC worked with Bob to project revenues and expenses of the planned restaurant. In 2004, a critical year for the struggling business, the SBDC provided the Mystery Diner program and areas of improvement within the restaurant’s service standards were identified. Bob and General Manager Jerry Lampe embarked on a training program with staff and an introduction of improved training and customer service. Hurley’s has continued to utilize the Mystery Diner program to quantify the restaurant’s delivery of excellent customer service. As the restaurant stabilized, Bob and his staff also attacked costs and expenses to maximize profitability. This year, Bob engaged the SBDC Rx for business program, to tune-up his business. The SBDC prepared the report and presented the report to Chef Hurley.

By all accounts, the restaurant has improved its level of customer service witnessed by improved Mystery Diner scores and their Zagat Service rating moving from 18 in 2004 to 22 in 2007. Sales increased 11% from 2005 to 2006. In 2006, the restaurant made a net profit of 7.8% of sales compared to a loss of 1.4% in 2005. Free cash flow increased from 2.7% in 2005 to 11% in 2006. This improvement has been a result of increased sales and a 2.4% decrease in cost of goods and a 7% decrease in labor and benefits. The business has retained 40 jobs in the process. In quarter 1 2007 to date, sales are up 3% and free cash flow up 22.7% over last year. The restaurant is now refining operations and has plans to expand into a second location soon.

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Funded in part through a cooperative agreement with the U.S. Small Business Administration. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA or HSU Sponsored Programs Foundation.