In 1986, Michael Klauber decided to leave his father’s legendary Colony Beach and Tennis Resort, where he worked as food and beverage director, to open his own restaurant. Banks balked at loaning to restaurants then, so Klauber raised $750,000 through 17 limited partners and opened Michael’s On East, now celebrating its 25th year. Catering guru Phil Mancini soon joined him, and by 2007, the restaurant was doing so well that they paid off the original debt—a move that saved the company. “I’m not sure we would have survived 2008 otherwise,” says Mancini. They never had to lay off employees, eliminate bonuses or cut health insurance benefits. Last year, in addition to all the restaurant meals, they catered 2,000 events, and, despite the economy, have maintained the same level of philanthropy for the last three years.
Who does what?
Phil: I like sales and accounting. Michael does marketing and keeps an eye on the wine cellar and the restaurant.
How has Michael’s On East changed?
Michael: We started with 150 seats, enough for a liquor license, in about 6,000 square feet. Today, we also have catering, a ballroom and the wine shop in about 20,000 square feet. That includes the second level, where Phil has his offices. Annual revenues are now about $9 million, compared to $1.25 million that first year. We have about 100 employees.
Do you always agree on business decisions?
Phil: No. Our biggest disagreement was probably six months ago when we built the addition to the wine cellar. Michael has always had more expensive taste than me, and what he wanted was going to cost $250,000. I wanted to spend $125,000. We ended up spending $300,000, which was a bit of a gamble, but we don’t like doing things halfway.
Strengths and weaknesses?
Phil: I am extremely organized, but I have a terrible palate for wine. Michael has one of the best palates anywhere for wine.
Michael: I need to be better organized.
What don’t people know about you?
Phil: I don’t drink wine and Michael doesn’t drink beer.
How important is the wine business?
Phil: Michael has another whole part of the wine cellar that people don’t see, and that is this whole universe of collectors and the limited availability of certain wines. When he says to me we should pay $5,000 for this case of wine, my heart is in my throat. Then he sells it.
Goal you haven’t achieved?
Michael: We have an opportunity to expand the wine business here in a global way. Also, I want to be a good parent for my kids, 10 and 14, still at home, and the two older ones, 25 and 28.
Phil: I’ve exceeded my goals. I came here from North Providence, R.I., with nothing, in a 15-year-old Monte Carlo that stopped running soon after I arrived at the Colony, where I had this internship. My father had died when my mother was 31 and there were six of us kids. One day, growing up, I saw there was a bill from the milkman for $183. I knew my mother only paid him 50 cents a week. When I asked why he kept delivering when we owed so much, she said it was because the president of the milk company knew there were small children in the house. So coming here, I had nowhere to go but up.