You’d think in a place like Phoenix people would want to stay far away from heat sources if they could help it. That’s apparently not the case when it comes to their grilling.
About 17 years ago, avid griller Mike West just knew the popularity of outdoor kitchens and BBQ islands would only intensify. Patios were becoming an increasingly important gathering space for friends and family, and grillmasters like Bobby Flay were gaining more exposure.
So, while working for the world’s largest timber-product company, West used his bonus money to buy outdoor-kitchen doors and cabinets and sold them on eBay — all out of his garage.
People from all over the U.S. snapped up his inventory. After the garage operation did well, West eventually quit his job and started BBQ Island to become a full-time entrepreneur. Since then, the business has exploded, with three showrooms in the Phoenix metro area and employing 21 people.
“It’s fun, seeing all the people at the stores,” West said. “It’s always great when you’re doing stuff you love. In college, all I could do was grilled chicken. Now, I grill all the time.”
Recently, West moved into a new Tempe, Ariz. corporate building that’s twice the square footage and costs $2,000 less a month…all thanks to an SBA 504 loan. West talked to CDC Small Business about making that financial move, BBQ Island’s origins and how they became the pre-eminent BBQ experts in their region.
The BBQ Island backstory
Originally from Oregon, West came to Phoenix at the insistence of his friend who got a job at Motorola. With just a few dollars to his name, West made a temporary home on his friend’s couch as he contemplated his next move.
Eventually he’d move on to working at Weyerhaeuser, one of the biggest players in the timber-products sector. So how does a timber guy become a BBQ guy?
The company at one point focused on expanding their fiber-cement division, and some of West’s co-workers were looking to buy large quantities of the material to build large outdoor kitchens.
That’s when West, who’s always been a grilling devotee, started his eBay side hustle, which later on spun into BBQ Island.
“I’ve always wanted to run my own business,” he said. “I mowed lawns when I was self employed.”
For the first six years of BBQ Island’s history, West and a former business partner focused mainly on building outdoor kitchens. But after the 2008 financial market crash, the company switched gears to retail. They pivoted to selling “gas grills to charcoal grills to smokers to refrigerators and kegerators,” said Adam Ebert, the company’s long-time chief financial officer. To encourage customers to come back, they also began selling sauces, rubs and charcoal.
What also helped BBQ Island stand out from competitors was the fact that West, Ebert and their employees love to cook and smoke foods outdoors. That meant they were able to educate their customers on the products they sold from personal experience.
“We could walk (customers) through things like smoking a Thanksgiving turkey,” Ebert added.
Moving into a bigger, more open HQ
A few years ago, BBQ Island’s original Tempe, Ariz., headquarters started to feel cramped. That 5,000-square-foot space served as both a corporate hub and receiving area for the two other locations, in Scottsdale and Peoria. What also made that space far from ideal was that West only owned half of the facility, and lack of space meant they couldn’t hire additional people, which they needed to continue growing.
Fortunately, a commercial space opened up just two doors down from their warehouse that was double the size and far more open. They knew right away it’d be an optimal next home for the business.
As West and Ebert explored financing options, Chase recommended working with CDC Small Business Finance’s Chris Bane to get an SBA 504 real estate loan. This type of financing is designed for small business owners who want to buy commercial buildings and heavy equipment, requiring only 10 percent down from the borrower.
The bank and CDC (certified development company) split the remaining loan structure at 50 percent and 40 percent, respectively.
“It was a huge sense of relief to get it approved and to know that all of our plans we’ve made were going to be able to move forward,” said Ebert, the CFO.
Double the space, lower monthly payment
Not only did the purchase double their building footprint, West was also able to reduce his monthly payment by $2,000. With that money, he was able to afford hiring another employee.
The BBQ Island team has since moved into their new digs. The space comprises three areas: an open, inviting showroom; offices and receiving space.
“It looks and feels well-planned,” Ebert said. “It makes for a better buying experience. We already followed this model in Scottsdale and Peoria.”
Jobs created/preserved: 21
Are you looking to buy commercial real estate or major equipment? CDC Small Business Finance has a team of experienced loan experts in this speciality who can personally guide you through the SBA 504 lending process. Let’s talk! Reach us at loaninfo@cdcloans.com or (619) 243-8625.
In case you missed it:
