Magoo's owner willing to roll out the dough

By Dan Nakaso
Advertiser Staff Writer

The walls of his restaurant aren't enough to contain Gilbert Sakaguchi's ideas for the business he resurrected four years ago.

Magoo's owner Gilbert Sakaguchi, right, spent $100,000 on a cooling and pumping system to deliver 120 different brands of beer from a walk-in freezer to the taps at the bar where bartender Stan Combis serves the customers. Deborah Booker • The Honolulu Advertiser

Sakaguchi, 58, didn't start in pizza. He was the oldest of four boys growing up on their family's coffee farm in Kona on the Big Island. But when Gilbert was attending Konawaena High School in Kealakekua, the family farm burned down and Jackson Sakaguchi moved his family to O'ahu so he could find work as a mason.

Gilbert went to culinary school at Kapi'olani Community College and worked in a variety of Honolulu restaurants and hotel kitchens, including a pizza parlor.

In 1967, Sakaguchi borrowed $1,000 from his father and opened his first 500-square-foot, Magoo's delivery shop on Kalakaua Avenue. A large, 15-inch cheese pizza sold for $2.75. A large pepperoni cost $3.

Sakaguchi was only 23 when he saw his business take off, in part because Magoo's was one of Hawai'i's first delivery-only pizza operations.

Less than a decade later, Magoo's expanded to 19 franchises across O'ahu with seven more spread around Kaua'i, Maui and the Big Island.

"In those days, it was easy to make money," Sakaguchi said. "Mostly it was lack of competition. Pizza Hut wasn't delivering and Domino's wasn't even here yet."

Sakaguchi lived in a $3 million house in Portlock but was growing tired of the little pizza parlor empire he started. In 1982, faced with increased competition from the national chains, most of the individual franchisees were going under. Sakaguchi gave the first Waikiki store to his brother, Glenn, then put his own stores and the rest of the business up for sale as he headed toward divorce.

He was 38 years old, had little profit left and knew that he couldn't work for someone else.

Over the next two decades, Sakaguchi got involved with several business ventures with mixed success: He worked with a chain of beachwear stores, started slot machine and video poker parlors in Saipan, Guam and China and opened six Carnival Carnival children's gaming centers in Hawai'i and Las Vegas.

The Carnival Carnival store at Pearlridge was a profit machine, said Bruce Nishimoto, Sakaguchi's friend, sometime business partner and frequent business consultant. But the overall business expanded too fast, Nishimoto said, and died from the sudden slowdown in the Hawai'i economy during the Gulf War.

"We should have just stayed with that big Pearlridge Carnival Carnival," Nishimoto said. "We shouldn't have gone into Vegas, the Big Island, Kane'ohe, Kailua. Then again, who could have seen the Gulf War coming?"

By 1997, Sakaguchi's gambling operations faced political and competitive pressures and he came back home in 1998 to start over.

The only Magoo's that remained was the first one that Sakaguchi started in Waikiki. He began helping his brother, Glenn, even though he didn't want to get back into the food business and didn't care much for the taste of pizza anymore.

In late 1998, he took over the 1,600-square-foot space on University Avenue vacated the year before by Mama Mia Pizza, another Honolulu pizza institution that had been around for 30 years. This time Sakaguchi had a new idea for a pizza delivery service, bar and self-serve restaurant.

"I definitely wanted something different," Sakaguchi said. "Open air, cheap beer, good food."

He invested $25,000 and hired 10 employees. Even though customers would have to order everything themselves and even wipe their own tables, business soon grew to keep up with Sakaguchi's ideas.

The menu started small, with pizza, sandwiches and chicken cooked in the pizza ovens. Two-and-a-half years ago, Sakaguchi bought the remaining Waikiki Magoo's from his brother and closed it, saving $6,000 a month in rent for the 500-square-foot shop.

He started spreading the word of his new University Avenue restaurant and delivery service among Waikiki hotel workers, who continued to recommend Magoo's pizza to tourists. At the same time he looked mauka to UH students and now pizza deliveries make up 50 percent of Magoo's revenues.

Inside the restaurant, Sakaguchi's imagination ran wild.

Sakaguchi pounded out the front walls to give his Magoo's an open-air feel. He took over a 400-square foot pawn shop in back and converted the space into a walk-in freezer just to hold and chill the kegs of 120 separate beer brands that pour out of the bar's taps.

He bought out the Vietnamese sandwich shop next door for $40,000 and took over that space. Then he paid another $50,000 for the Thai restaurant that shared the remaining wall, knocked it down and installed a sushi bar — which also serves fresh 'ahi poke — and a separate counter that offers steak and pasta.

Nishimoto has told Sakaguchi over and over not to franchise the new Magoo's.

So far, Sakaguchi has complied. But Nishimoto just shakes his head at the expansion Sakaguchi has unleashed on one restaurant to encompass more than 4,000 square feet and accommodate 275 customers.

"It's easy to sum Gilbert up," Nishimoto said. "He's a genius in business. He can create concepts and turn them into reality. It's just that he's always had a problem of keeping it small."

In October 2001, Sakaguchi began offering fresh 'ahi poke at the bar for $11 a pound and got only two or three orders a day before giving up on the idea.

"It was too expensive," said Magoo's sushi chef, Jose "Sonny" Ramos. "It didn't work."

But Sakaguchi was convinced he needed more than just pizza to attract a steady stream of customers and he refused to give up on his poke idea. So instead of spending money on expensive 'ahi filets, he and Ramos started buying the entire fish at auction and drove the cost of a pound of poke down to $5.99. Now he sells 50 to 75 pounds a day.

"Best poke in town," customer Tom Mick said the other day as he ate the remaining piece of 'ahi from a shoyu-soaked platter. "You can't beat the price."

Sakaguchi fattened his menu with salads, built a $10,000 sushi bar, hired three sushi chefs and opened a separate pasta and steak bar using the stove from the former Thai restaurant.

The last expansion worried Sakaguchi's friend and consultant Nishimoto.

"I told Gilbert a month ago, 'Put the wall back up. Get your money back and we won't have to worry about whether the revenue is making up for the rent for that stupid sushi bar.' He said, 'Shut up, Nishimoto.' ... Gilbert's Gilbert."

But Nishimoto liked Sakaguchi's last idea two months ago.

Sakaguchi spent $100,000 on an elaborate cooling and pumping system to deliver 120 different brands of beer from a walk-in freezer to the taps at the bar.

When he first opened, Sakaguchi was moving two kegs of beer a week. Now he sells 100 per week.

Mick and his friends have certainly done their part.

They come in for pizza, poke and beer before they go to UH basketball games and try a different beer every time.

Mick's friend John Barnes remembers buying pizza from the Waikiki Magoo's in the late 1960s and early 1970s and taking it to the beach. Now he's happy with the way Sakaguchi has transformed the latest Magoo's.

"Pizza, poke and a pitcher of beer," he said, as he and his five friends emptied the last of three pitchers. "How can you go wrong with that?"

It's a formula that has seen sales shoot up from $75,000 in month to $200,000 per month. At the same time, the number of employees has leaped to 70, with many of them making deliveries.

Yet Sakaguchi says he's not really generating much profit.

"We're doing a lot of business," he said. "But that doesn't mean we're making a lot of money."

He's already gotten inquiries about franchising his formula and Magoo's name. And so far, Sakaguchi insists that he's learned his lesson and wants to focus on just the one restaurant.

"I'm already tired of working 15-hour days," Sakaguchi said. "If somebody else wants to do it, fine. Not me."

But Sakaguchi isn't too tired to come up with new ideas.

Next month, he plans to start serving breakfast, starting at 2 a.m.

"That'll be another chapter," he said. "But we'll still be Magoo's pizza."