Beyond Water Street: Schmidt restaurant empire heads south to Oak Creek

Cover Story

Last updated on July 3rd, 2019 at 07:24 pm

Many Milwaukee-area residents have dined or had a drink at one of the numerous restaurants and bars in the region owned by R.C. Schmidt.

Schmidt owns four bars and restaurants on or near Water Street in downtown Milwaukee, including Water Street Brewery. He has four other establishments in Milwaukee and three suburban restaurants, including Water Street Brewery locations in Grafton and Delafield. Water Street Brewery also has a major presence at Summerfest and the Wisconsin State Fair.

Schmidt still owns the first establishment he bought in Milwaukee, RC’s Bar at 1530 E. North Ave., which he took on in 1974. The success of RC’s was the beginning of an entrepreneurial journey that has led Schmidt to expand his business over and over again.

“It’s all based on hard work,” said Schmidt’s son, Matt, who is the director of operations for the family business.

R.C. Schmidt, 65, remains actively involved in the business.

“He works every day,” Matt said. “No doubt he is going to be working for a while. Part of it is because he loves it.”

But Matt, 35, is increasingly becoming the public face of the business.

“I think I have that same passion, too,” Matt said. “I love doing this. My favorite part is being in the places, especially when it’s busy, and seeing us take great care of people.”

The Schmidts are always looking for growth opportunities. They recently completed a major restaurant makeover project and are building another new restaurant.

Rudy’s Mexican Restaurant, which R.C. Schmidt bought in 2000 and moved from the city’s Walker’s Point neighborhood to 1122 N. Edison St. near Water Street, was recently renovated and renamed Vagabond. It re-opened in mid-December. The highlight of the renovation was the use of a pair of Airstream trailers that were gutted and built into the two bars of the restaurant.

“It’s weird, and it’s out there,” Matt said of Vagabond’s interior design, which was done by Milwaukee-based Flux Design Ltd. “But we wanted to make a statement, and we wanted to draw attention to the bars.”

The Vagabond menu features an “elevated street food” theme, Matt Schmidt said. Another Airstream trailer will be used to serve food outside during the warm weather months. The restaurant’s hours were extended to provide late night food service for the Water Street bar crowd.

“One of the things we noticed is food trends in Milwaukee are changing,” Matt said. “People are willing to try new things more so than ever. We thought the combination of being pretty adventurous with the menu and going after the late night business that Water Street entertainment district is known for…we wanted to combine those two things and create something unique for Milwaukee.”

The Schmidts retained the Rudy’s employees and added 15 more staff members to Vagabond in order to accommodate the later hours and its increased business.

“Each week (has been) busier than the next,” Matt Schmidt said.

‘a spectacular building’

Construction of an even bigger project for the Schmidts began recently in Oak Creek. A new Water Street Brewery restaurant will be built at the southeast corner of Drexel and Howell avenues in the mixed-use Drexel Town Square project that a team of developers, led by Wispark LLC, is building at the former site of a Delphi auto parts plant.

“Going back a couple of years ago I got an inquiry from Mid-America (Real Estate), and they just said they were looking for restaurant partners for the development site and would we be interested,” Matt said. “I get a few of those every week. From the first time I looked at (Drexel Town Square), I thought it looked like a great spot and something I needed to look at more closely. I knew from day one that we wanted that corner spot.”

Construction of the Oak Creek restaurant is expected to be complete this summer. The building, designed by Shorewood-based Sto Architecture LLC, will be constructed with an industrial theme to reflect the manufacturing heritage of the site and the city of Oak Creek.

“We’re going to put up a spectacular building,” Matt said. “It’s going to make a statement. The people of Oak Creek are going to be really proud of it.”

The Schmidts think that Oak Creek and surrounding communities are an untapped market for a restaurant concept such as Water Street Brewery, which brews its own beer on site and features a variety of menu items that appeal to a broad customer base. People were already trying to book events at the restaurant shortly after groundbreaking.

“I think Oak Creek and Franklin are dying for something like our concept,” Matt said. “We draw a diverse group of people. We get people that come in for date night. We get people that come in after a basketball game. We get families. I think that community is really looking for something like that, and I think we can provide that.”

About 80 full- and part-time employees will be hired to work at the Oak Creek Water Street Brewery, Matt said.

Location, location

R.C. Schmidt opened the original Water Street Brewery in 1987 in downtown Milwaukee. In 1999, he acquired Winchester’s near I-94 and Highway 83 in Delafield and transformed it into a Water Street Brewery location. In 2010, he built a Water Street Brewery along I-43 in Grafton.

The Grafton restaurant, designed to look like a barn that was converted into a restaurant, has been a big success, Matt said.

“Like Oak Creek, the opportunity was to go to an underserved market,” he said. “People were looking for another place to go out to eat and have a beer. I think the access to the freeway and the visibility from the freeway is a huge thing. I think, because of how strong our brand is, it gives us the ability to have instant name recognition and validity. When we opened the doors the first day, we were busy right off the bat, and all we did was put up our sign. It was just mostly word of mouth and people seeing our sign off the freeway.”

The Schmidts are “always looking for other opportunities” for growth, Matt said.

“We’d love to do another (Water Street) Brewery,” Schmidt said.

Locations outside of the metro Milwaukee area would be considered, he said.

“Madison, even Kenosha, which is going through an unbelievable growth spurt,” Matt said. “That would be a market that we would be interested in, too.”

The Schmidt family business has been on a steady growth path for years, and the success of each of the businesses continues to fuel expansion. RC’s opened in 1974 on North Avenue. Then R.C. Schmidt became a Chuck E. Cheese franchisee in 1981, owning locations in Milwaukee, Toronto, Buffalo and Edmonton, Alberta. He sold the Chuck E. Cheese franchises back to the corporation in 1999.

“I remember I was the king of kindergarten because I always had my parties (at Chuck E. Cheese) and the unlimited tokens were a great friendship tool,” Matt said.

R.C. Schmidt opened Oakland Trattoria on Oakland Avenue in Milwaukee in 1994. It has since been split into two businesses, SoLo Pizza and The Black Rose Irish Pub. Andrew Schmidt, Matt Schmidt’s 31-year-old brother, runs SoLo and Black Rose.

R.C. Schmidt operated the Turner Hall restaurant downtown from 1994 to 2009.

Louise’s, an Italian restaurant, opened downtown in 1998. There is also a Louise’s in Brookfield, which opened in 2004.

Schmidt bought Brew City Barbeque on Water Street and, in 2007, moved it and later converted it into Trinity Three Irish Pubs. Across the street from Trinity is The Harp, also owned by Schmidt, a bar known for its deck on the Milwaukee River that has been there since the late 1800s.

In addition, the Schmidt restaurants have a major presence at Summerfest, the Wisconsin State Fair and other Milwaukee festivals. Water Street Brewery has had a permanent stand on the Summerfest grounds since the early ’90s. Louise’s, Trinity and SoLo Pizza also have stands there. Water Street Brewery also has a stand at the Wisconsin State Fair. Last year, Water Street Brewery served chicken inside a waffle cone with blue cheese dressing and coleslaw at the fair. “People loved it,” Matt said. Water Street Brewery also served a “twister dog” that combined a hot dog and potato with cheese and mustard toppings.

Matt said Water Street Brewery is already planning specialty menu items for the State Fair this summer.

“It’s got to be cool and it’s got to be out there and something people have never seen before,” he said. “And it’s got to taste good, because if it doesn’t taste good then what’s the point?”

The Schmidts are also thinking about creating a food truck they could take to local festivals.

The growth of the company has been driven by a commitment to hiring good employees who serve quality food and provide good service, Matt said. The profits of the Schmidt establishments have driven growth into additional locations.

“Put out a great product and give people great service, and they will keep coming back,” he said. “The reason we are at where we are at and able to expand is we have great people that work for us and we can trust them to run the business.”

Matt’s brother-in-law, Mike Foy, runs Trinity, The Harp and RC’s.

Attention to detail is important, Matt said.

“One of our philosophies is we don’t have broken things in our restaurant, whether that is a toilet, or a knob on a stove or an oven,” he said. “That sends the wrong message to staff and customers. If it’s OK to have something broken, then it’s OK to not put out the food to spec.”

The Schmidts will continue to seek growth opportunities that are the right fit for their business.

“If we are going to expand, we are going to use the concepts that have been successful for us, Water Street Brewery being a perfect example,” Matt Schmidt said. “We like to own and control our real estate. That doesn’t allow for the most aggressive growth plan. But we feel like we’re in this for the long-term, and if we control the real estate and the business we can put significant money into it and invest in the business. It would have to be a deal where we can spend significant funds to build a beautiful place and really make a statement.”

The company’s growth raises the bar for its existing operations. The Water Street Brewery locations downtown and in Delafield were both remodeled in recent years to match the quality of the Grafton location, Schmidt said. Business at the two locations remains good, he said.

“The reason we remodeled (the) downtown and Delafield (Water Street Brewery locations) was we built this beautiful place in Grafton in 2010 and, not that our other two places were outdated, (but) they just didn’t look as good as Grafton did,” Matt said.

R.C. Schmidt’s entrepreneurial journey is a classic American success story.

“He started with nothing. He was born in a trailer park in St. Louis,” Matt said.

Matt said his dad “scraped together some money to open RC’s, had no clue what he was doing, but turned it into a big success.”

Matt has been involved with the family business since he was in high school.

“Working for my dad…it’s like the best MBA program you could have asked for,” Matt said. “I got my MBA from Marquette. But this is hands-on.”

A hands-on approach is necessary to be successful in the bar and restaurant business, Matt said.

“In order to be successful you have to be in the places,” he said. “You have to be hands-on with people. That’s the only way that this works. You can sit in front of a financial statement, and they are very helpful. But until you get in the places and you feel what’s going on…I think that’s a big part of the business.”

Matt said he has had discussions with his dad about the future transition of the company’s leadership.

“I don’t want anything handed to me,” Matt said. “If we’re going to do this, I want to buy in. I want to take part of the risk. If the place doesn’t do well, then I don’t do well. If the place takes off, then I want to share in some of the success. That’s how I was raised.”

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Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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