Cleveland Hustles: The Hustle Continues

How a trendy hot dog stand revitalized a troubled New Orleans neighborhood

The rule long recited by realtors rings true for many small businesses: Location, location, location.

While paying a little extra for a storefront in an established neighborhood can be justified, other times an ambitious business owner might gamble on a neighborhood's potential.

For New Orleans native Constantine Georges, a former federal prosecutor who served for 22 years, the idea to open a hot dog stand was already a gamble, but perhaps even more so considering the location he settled on in 2011: a 475-square-foot shack in a traditionally economically depressed New Orleans neighborhood on Freret Street.

Former prosecutor Constantine Georges initially thought he would be a passive investor in the restaurant he cofounded with his former business partner and high school friend Skip Murray. That quickly changed when Georges found himself jumping behind the kitchen as the idea took off.
Qin Chen | CNBC
Former prosecutor Constantine Georges initially thought he would be a passive investor in the restaurant he cofounded with his former business partner and high school friend Skip Murray. That quickly changed when Georges found himself jumping behind the kitchen as the idea took off.

Yet despite crime in the neighborhood and an absence of foot traffic, the street remained an attractive prospect for business considering it was within walking distance of three universities and one of the few streets to connect uptown and downtown New Orleans.

That much was proven by the 2009 opening of Cure, a high-end cocktail bar that broke from Freret Street's history. Kellie Grengs, founder of merchant association The New Freret, remembers the moment vividly, as a new clientele visited the neighborhood.

"We were like, 'You're going to park your $100,000 car in this neighborhood? You're brave,'" she joked.

Declining to pay a higher price for a space across from a Whole Foods in a different neighborhood, Georges drew inspiration from an Irish playwright:

"George Bernard Shaw once said, 'A rational man adapts himself to the environment. The irrational man adapts the environment to himself. Therefore, all hope of progress lies with the irrational man.'"

But the opening of Cure was far from a cure-all. There was still more to be done to instill a sense of community in Georges' eyes, and his restaurant was to be the perfect complement.

As he opened the doors to Dat Dog in 2011, he set up benches and colorful umbrellas on the sidewalk and painted a bright hot dog in the shape of a smile, expecting maybe 50 customers on the first day. An hours-long line out the door proved he was onto something.

Georges’ first original Dat Dog location opened out of a 475-square-foot shack in 2011.
Source: Dat Dog
Georges’ first original Dat Dog location opened out of a 475-square-foot shack in 2011.

"All of a sudden, the street started to have a different life and aesthetic even," Georges said, adding that the demand for his hot dogs forced him to move to an abandoned gas station across the street a year later.

"I had no idea what anyone's temperament would be about a hot dog," he said. "I realized that it brought back in time a very free and happy time period in their lives," pointing to his own memories at the baseball park as a kid.

"You are just there having a good old time, and the hot dogs were there playing [their] role," he said.

Of course, that's not to say the role Dat Dog played in transforming the community aesthetic did not come without adversity. The larger Freret location was robbed twice, first in 2012 when a manager was shot after refusing to hand over money and once again in 2015 — a result at least in part due to the fact that Dat Dog was a cash-only business, according to Gengs.

Dat Dog’s current Freret Street location was once an abandoned gas station. Now, the restaurant hosts bingo nights and musical shows for the community.
Qin Chen | CNBC
Dat Dog’s current Freret Street location was once an abandoned gas station. Now, the restaurant hosts bingo nights and musical shows for the community.

A $25,000 grant Gengs secured for The New Freret through a competition sponsored by Markham Vineyards helped continue branding the transformation through the years, which recently attracted the attention of more established franchises such as LeBron James–backed Blaze Pizza and New York–based, rapidly expanding Halal Guys — a testament, in the eyes of some, to the progress made in the neighborhood.

"When you're a mom-and-pop, you don't want to experiment with a lot of money because you can lose it all," explained Mike Casey, co-founder of Liberty Cheesesteaks, which moved into the location Dat Dog outgrew in 2012.

But more established chains are not likely going to be dissuaded by the rise in commercial property prices, which have risen 135 percent to around $45 per square foot, according to Casey's estimates. "When you're Blaze Pizza, you go to where the crowd is, but when you're a mom-and-pop, you go to where you can create," he said.

As for Georges, he's used his success on Freret Street to build a unique, two-story Dat Dog on an empty lot where a bar burned down on Frenchmen Street just downriver from New Orleans' historic French Quarter. Now, the company is looking at opportunities to franchise Dat Dogs across other Louisiana neighborhoods.

Dat Dog opened another location on Frenchmen Street in 2014 atop a dirt lot that had been empty for decades.
Qin Chen | CNBC
Dat Dog opened another location on Frenchmen Street in 2014 atop a dirt lot that had been empty for decades.

"There are a lot of businesses [where] you can make a lot more money and probably with less effort," he said. "But this is something that engages the whole community. You know we're not just selling hot dogs. We really do try to integrate with our community."

— Video by CNBC's Qin Chen