Innovation in Fairfax County: Thompson Hospitality

Thompson Hospitality, headquartered in Reston, is the largest minority-owned food service company in the country and the largest minority-owned employer in any industry in the Greater Washington area. Founder Warren M. Thompson is a testament to entrepreneurial perseverance and an American success story, going from hog purveyor in rural Virginia to president and chairman of a company seeking to exceed $1 billion in annual revenue.

Family-run for more than 25 years, Thompson reinvented his company, transforming it from a reliance on restaurant ownership to emphasis on the contract food service and facilities management industry. The company has focused on diversification with an eye toward the future. 

EE: How did you get your start in the food industry?

WT: Growing up in the rural part of Virginia, my parents were school teachers. We always supplemented the family income by raising hogs and selling produce. Sitting in a Shoney's on a Friday night was a great experience back then and I said to my parents, at the age of 12, 'I'd like to own one of these one day.' From that point until now, I've constantly worked at becoming a good restaurateur.

EE: What about your family's involvement?

WT: My first business was with my father. He and I raised those hogs together and I told him at an early age that I would establish a real family business with my brother and sister involved. They joined the business within the first 30 days and have been part of the company since. Benita Thompson-Byas, my sister, runs all our joint ventures and Fred Thompson Jr., my brother handles our client relations and government affairs.

EE: Did you ever doubt you'd be successful?

WT: We faced several daunting challenges in the company's early days. My father, my best friend and confidante, passed away six months after we started the company. We had become a franchisee of a national restaurant chain, just as the brand was tanking -- at least in this part of the country. Then we had the Blizzard of '93 and couldn't get the restaurants opened for 10 days. We were short on cash and running out of equity. It was a heavily leveraged transaction. We had only $2 million in equity to start and $15 million in debt, so I was beginning to wonder if we could pull this off. I went away for a weekend, came back and said to our team, 'We're going to move in a different direction -- the contract food business. We're going to unload the restaurants -- not all at once, but one or two at a time. It took us 10 years to unwind our initial transaction. But that first year and a half to two years, which is the worst time for most startups, was the time that really tested our backbone.

EE: Tell us about the company today.

WT: We have four lines of business, notably our Joint Venture Segment, which is a contract food and facilities management service that we operate with Compass Group, the world's largest global food service. Our Solo Division operates separately from Compass and does about $100 million in food and beverage, primarily at Historically Black College campuses across the country. In addition to food services, our Facilities and Management Division encompasses everything from grounds keeping to plant operation to janitorial services to window washing -- all the soft services required to operate a university or corporate center. Then there's our retail group which operates a number of brands including Austin Grill, American Tap Room, Hen Quarter, Hen Penny, Willie T's Lobster Shack, BRB -- our burger concept -- and Neapolitan Express, a new pizza concept we've invested in.

EE: Who are the primary customers for your Joint Venture and Solo divisions?

WT: Our primary customers are large companies such as American Express, Capital One, Dell, IBM, Intel, Microsoft, Pfizer and Prudential, and universities such as Texas A&M, Bowling Green State, UMBC and Radford. We are the largest provider of food service to Historically Black Colleges and Universities. We also service individual venues such as the Smithsonian's National Museum of African American History and Culture as well as some K-12 school districts and hospital centers including Inova Health Care.

EE: Beyond your original investment -- converting Big Boy Restaurants to Shoney's -- then your affiliation with Compass Group, what has enabled Thompson to grow?

WT: We now have 5,000 to 6,000 employees, depending on the season. Our growth and development over the years has come as a result of our ability to diversify our portfolio and not be too dependent on any one segment of the business. We've gone through at least two recessions. If we had been dependent on one line during those times, we may have gone belly-up. But because we're serving such a broad spectrum of customers, we've been able to prevail and to grow.

EE: How do you attract the right employees?

WT: I think we're able to attract and retain great people in this company because we have an entrepreneurial spirit. We find people who are willing to take a risk in the short term for long-term gain. We pride ourselves in the retention of associates and all of our key players have become equity owners. My CFO, for instance, is not an employee, he's a partner. All 12 of our equity owners have been vested for at least 10 years. The aspect of the company that I'm most excited about is our growth and development and the chance to watch people come into this company and rise to an executive level. That's what gets me excited every day.

ET: How does your Fairfax County location play into all of this?

WT: Thirty years ago, I chose Fairfax County because I saw it as an area filled with young, dynamic people who were on the cutting edge of technology and on the cutting edge of the diversity that has become the American melting pot. ... When it came to choosing this office space in Reston and my CFO told me I could live in Vienna and be a mile and a half away, he had me there. I see this area -- Fairfax, Vienna, Reston -- as just a great place to live and work and play. (In the grand scheme) I think Fairfax County represents a place where ethnic diversity, economic diversity -- all those things that make America strong -- are at their best. This is a county where people are able to excel based more on their ability than who they know, where they're from or what race they happen to be.

EE: You mentioned how excited you were about your newest restaurant concept, a pizza chain.

WT: It's called Neapolitan Express and we're in two New York locations doing in excess of $3,000 per square foot, which, from a revenue perspective, is off the charts. We're achieving that because of the efficiency of the model -- only 26 items in inventory -- and operating with a maximum of four people on a shift. That, I think, is where the industry is headed ... a small niche perfecting a particular category of food. Really, that's what the customer wants. They don't come to us for anything but a pizza and a soft drink or beer. We plan to open (a store) every two weeks for the next couple of months in New York, then move to the D.C. market.

EE: What are your other goals and visions for the future?

WT: My goal for the next three to five years it so get this company from $700 million past the billion dollar revenue mark. That will be accomplished by continuing to diversify the four key areas of our business. We're also looking at the hotel business. We hope to be able to put a hotel, right here, behind our office in Reston. We have five acres of land and we plan to build a nice, extended-stay hotel property. We also plan to put test kitchens on the ground floor of our office building where we can bring in people from around the country in order to make our headquarters much more of a campus for training and development.