Photo by Tony Valainis
IT SEEMED LIKE Neal and Paul Warner had it all. They’re the founders of Small Victories Hospitality, a homegrown restaurant group behind a number of stylish, cool, and bustling Indianapolis businesses. But in a surprise announcement this spring, the brothers announced that they were shuttering or stepping away from all of their restaurants but one. Suspicious minds immediately assumed the worst.
Was gross mismanagement or financial malfeasance to blame? Or are we at fault—is Indianapolis too stuffy for the big city vibe of Small Victories innovators such as Landlocked Baking Company or natural wine bar Chalet?
The truth is far more mundane. “It’s money,” Paul Warner says. “And debt.”
In 2017, when the brothers opened their first business, restaurants operated with a three-step playbook of open, profit, expand. Coat Check Coffee, which poured drinks inside downtown’s historic Athenaeum, “was one of very few craft coffee shops in Indianapolis,” Neal Warner says. They brewed drinks from locally roasted beans, while dairy was from an area farm. Paul whipped up the shop’s baked goods in its narrow kitchen. It was an immediate success.
The Warners used Coat Check’s revenue to open Provider, a second coffee shop in a historic Kennedy-King space. The cafes’ success begat Strange Bird, a Polynesia-meets-California restaurant with slews of customers vying for seats by its chic tiki bar.
With three booming businesses under their belts, it seemed like a no-brainer to keep growing in 2019. They agreed to launch another coffee shop called Certain Feelings in The Garage food hall, which was set to open the next year. They signed other contracts for a brewery in a defunct fire station, a stand-alone bakery, and a burger joint. Going into 2020, things were looking big for Small Victories.
“Looking back, our biggest error was not just pulling out as soon as we realized what was happening,” Neal says of the pandemic. But they “had put $50,000 into this thing here, $50,000 into this thing over there,” so they kept charging forward with these nascent operations. “We were like, ‘We don’t want to just walk away from this. We made promises. We have our names on the line.’”
But as customers stayed home and safe, the pressure on the Warners continued to grow. They sold all the expensive brewing equipment they’d purchased for the firehouse project and opened it as coffee shop by day/wine bar by night Chalet. They also took on high-interest debt.
By the time the pandemic waned, the financial hole was just too deep. Food costs continued to rise, especially for the high-quality ingredients used in their bakery. Ensuring fair treatment of workers meant labor costs also rose. “No matter what we did, no matter how busy we were, some of these places were just an anchor pulling us down,” Paul says.
“Only Strange Bird was bringing in more than it was spending,” so they made the decision to shutter Chalet and Landlocked, while handing Provider and Coat Check off to new operators. Strange Bird is suddenly their sole business, at least for now.
While the pair is sad about the tough decision they had to make, they’re also feeling hopeful about the future. “It will be great to have one place to put a laser focus on,” Neal says, trailing off. Paul picks the sentence up, after a second. “And I think we both need a chance to breathe.”
