All roads pointed to Chicago for RH's inaugural New Directions Conference.
Today, perhaps more than ever, the restaurant business is a survival of the fittest. If you're not at the top of your game in the brutal competitive climate, you may not survive. At the first New Directions Conference, Restaurant Hospitality brought to Chicago a formidable group of top owners, chefs and seasoned experts to share their stories and advice on how to pump some new life into an anemic concept.
It's a battlefield out there. Just ask Darren Tristano, executive v.p. with Technomic, which tracks consumer opinion about restaurants. “Value and price trump experience,” he observed. Before dining out, today's consumers are asking themselves two questions: “What level of price can I afford, and where can I find that?”
With an explosion in happy hour pricing and free deals elsewhere, your guests have been trained to expect value pricing, and Tristano said it will be hard for operators to pull back on the deals once things get better.
Another habit that more would-be customers have acquired: cooking at home. Some 83 percent of those surveyed by Technomic said they plan to continue doing more of that once the economy recovers, Tristano noted.
Still, Tristano said there are opportunities other than value for restaurant operators, including:
Small plates at new dayparts (for example, mini benedicts at Ruby Tuesday; soup trios at Claim Jumper's).
Made-over comfort foods.
Healthy offerings, with more menus displaying nutritional info or offering targeted calorie counts; but don't forget that “indulgence still has its place on the menu,” Tristano added. “I think the reason many of us go out is to not know how many calories are in our food.”
Eat-some-now, get-some-for-later offerings — combining eat-in meals with take-home ready-to-eat meals.
Carry-out and delivery continue to gain steam, and younger diners are heavy users.
Different dayparts, which are seeing growth; happy hours, early bird dinners and late night menus are on the rise; 46 percent of the Technomic audience said they would like restaurants to offer breakfast all day.
On the beverage front, wine tastings and flights are good ways to boost wine sales, while hand-shaken cocktails and “skinny” beverages plug into consumer trends.
CPR for Ailing Brands
Lane Cardwell and Kerry Kramp have seen a lot during their combined six-plus decades in the business, but both of them faced formidable challenges with their latest assignments. Cardwell was brought in to turn around Boston Market, the struggling home meal replacement leader; Kramp was named by his fellow board members to be president and c.e.o. of Sizzler, a mature West Coast brand that had seen better days.
In Cardwell's case, he was the third c.e.o. to take over in a short time, and one of his first tasks was to assess the mood of the corporate staff who remained. “It was a group that did not see success in their future,” he recalled. Boston Market brought in a consultant who proposed a new look and feel product with upgraded service. The chain spent $25,000 retrofitting a Palm Beach, FL location as a test before rolling it out to the entire system. With real serverware, kitchen help outfitted in chef's whites and servers in blue oxford instead of tee shirts, the revitalized brand now calls itself “America's Kitchen Table.”
The strategy by Cardwell, who recently departed Boston Market, worked.
“We went from being in the transaction business to being in the hospitality business,” he observed. Stores that converted saw their sales jump 10-20 percent almost immediately.
Kramp recalled that Sizzler was a solid chain that had “lost its way.” He ate in the restaurants — something he thinks all owners should do — and discovered that the food was good, but not great. His challenge was to get long-time customers who had abandoned it to return. To do so, his team worked on the value proposition and replaced prepared foods with more fresh items, including the beef. The entire staff, from the dishwashers to the servers, was educated on the menu, which turned them all into salespeople. In a process he described as “defibrillating the company,” Sizzler offered guests deep discounts at the outset to encourage visits.
He reasoned that the company had nothing to lose by mixing things up a bit. “If we don't sweat a little, we're not doing enough” was the philosophy. Kramp's advice to others? “Figure out where you want to go, and don't be afraid to be bold.”
Lessons in Reinvention
Drew Nieporent, Lee Maen and Paul Bartolotta have all ascended to the top, but not without learning some hard lessons along the way. They compared notes during a panel at New Directions.
Nieporent, whose Myriad Restaurant Group has operated iconic restaurants such as Tribeca Grill, a number of Nobu locations and Montrachet, admitted that he's had some good ideas and some bad ones over the years. His attempt to reinvent Montrachet, for instance, by reducing the seats and raising the prices may have hastened the demise of the place. But opening restaurants in transitional neighborhoods has paid off, and so has Nobu, which remains a hot ticket, despite no tablecloths, bread or utensils. He likes Nobu's high check average/high volume/high perceived value formula.
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Bartolotta, who won acclaim for showcasing authentic Italian fare at Chicago's Spiaggia, then retreated from the limelight to develop less-glitzy operations in Milwaukee, switched gears yet again when he agreed to open a seafood restaurant, Bartolotta Ristorante di Mare, at the Wynn Las Vegas resort. He had to work hard to convince owner Steve Wynn that a high-end seafood restaurant would work. Ultimately, his idea paid off: Today, despite a hard-hit local economy the award-winning restaurant is racking up $138 check averages.
Bartolotta's success at Wynn is no accident, he admitted. He benefits from the culture at the resort, where high quality and “getting it right all the time” are the standard. He also benefits from an adept serving staff. “You've got to get your staff focused where they want to be focused,” he observed. In his restaurant's case, where mostly well-heeled customers are there to spend money, it's a matter of being able to read the table and “not letting servers sell too much or too little.”
Lee Maen, whose Innovative Dining Group developed the highly successful Sushi Roku concept, talked about the recent “version 2.0” updating of the brand. The company decided to close units for two to three months to overhaul the design, weed out many staff members, change about a third of the menu and outfit the staff in new uniforms.
“We spent $600,000 that we didn't have to spend, but it will set us up to make more money for the next 13 years,” he observed.
IDG also updated its steakhouse concept, Boa, by moving it to a larger location and adding less-pricey entrees such as pasta and a burger. Maen says the response was “off the charts.”
When David Takes on Goliath
Houlihan's and La Madeleine Country French Cafe operate in highly competitive segments against the likes of Panera Bread and Applebee's. How do they hold their own? Jen Gulvik, v.p. of marketing and creative director for Houlihan's; and Phil Costner, c.o.o. for La Madeleine, Country French Café, laid out ways they make more conservative marketing budgets work hard.
Most recently, Gulvik explained, Houlihan's has decided to go after Millennials. The primary tactic has been the introduction of a separate affordable small plates menu — 30 items priced at $3-$11, designed to satisfy the grazing habits of 20-something diners. The bonus: Baby boomers who are concerned about their waistlines like to order those small plates, too.
Realizing it can't compete in the mass media arena, Houlihan's decided to take its story to the internet and rely on social media for promotions. Gulvik had two pieces of advice: (1) Hiring coordinators to focus solely on social media is good use of your budget, and (2) think twice before using Groupon to bring in guests. “There was a huge ‘aha’ moment when we did it the first time,” she recalled. She suggested setting up rules to control usage, such as limiting deals to one per person and capping the total number of offers.
Costner said La Madeleine “had to kind of 12-step ourselves a few years ago,” after it became apparent that the brand had lost relevance. The bakery-café chain created a profile of a typical guest — female, relatively affluent, choosy — and designed a new experience targeting that prototype. The menu was simplified to streamline ordering and operations, a “slim portions at a slim price” promotion was developed and the chain got more active with the Susan G. Kommen Foundation. The last move tapped into the right demographic for its e-mail loyalty club, the focus of its marketing efforts.
Costner's succinct takeaway from the process of making La Madeleine more relevant: “(a) listen to your guests, and (b) respond to your guests.”
New Flavor Profiles
Knowing when to cut bait and predicting when a segment will heat up are tough calls; panelists Gene Kornota, managing partner of Chicago's Dana Hotel & Spa, and Jeff Sinelli, founder and c.e.o. of the 120-unit Which Wich sandwich concept, tackled those issues.
Kornota shared insight about incorporating a restaurant into the design of a hotel lobby. When his Dana Hotel launched ajasteak with Chef Joshua Linton in 2008, the restaurant showcased authentic Kobe beef imported from purveyors in Japan, sushi, sake and other traditional Japanese menu items. “In other words,” Kornota said, “not your father's steak house.” But just as the concept opened, he recalled, the economy retreated and spending on items like Kobe retreated as well.
Rather than abandon the concept, the hotel reinvented the restaurant as aja, an urban café with a blend of modern Asian cuisine. Kornota explained the changes. “We simply dropped the steak component, which was driving up food costs. They went from 40 percent to 20 percent; check averages went from $70 to $32. We're continuing to morph into more of a Pan Asian menu.” He also offered advice for hotels working with restaurant operators. “If you cede control to an operator, you will need one who's willing to do breakfast, banquets and 24-hour room service.”
Meanwhile, when he created Burguesa Burger, Sinelli's envisioned a brand as authentic as possible, although he was quick to point out that he's not Hispanic. “Phil Romano taught me that as a concept ages you have to strive to make it more authentic. Our menu infuses American classics with Mexican flavors.” The restaurants feature a signature salsa, a hot salt for seasoning French fries and a line of beverages made without high fructose corn syrup. Sinelli estimated that signature burgers represent half of the business.
Burguesa Burger opened in May 2009 and has three units, in McAllen, Ft. Worth and Dallas, TX. One unit has closed. Still, “the concept resonates with the Hispanic community. It's fun, and it's working,” Sinelli said. Future expansion will focus on towns bordering Mexico, and Hispanic franchisees. “It's probably not coming to a town near you,” he told the Chicago audience.
Sinelli compared Which Wich to a wife, and Burguesa Burger to a girlfriend. The former now has a 21-person corporate team, and a 3-person team of consultants. “Believe me, I have my hand on that rudder. That's where my focus is.”
Lessons from a Concept Master
He's created dozens of winning concepts, but Richard Melman always likes to say he's “probably made more mistakes than any restaurateur in the country.” Melman gave a peek behind the process at Lettuce Entertain You Enterprises, the Chicago-based company he created that operates more than 80 restaurants in the Windy City, Las Vegas and beyond.
While any one of the restaurants in LEYE's portfolio is ripe for duplication, Melman said he's more keen on pursuing new ideas. “We think small to get big,” he explained. His company also thinks long term — any concept worth pursuing should be viable for 20 years — and signs leases accordingly.
“Everything we do,” Melman explained, “starts with a menu. We won't do it unless we can pull off the food.” And he thinks it's a good idea to be the best at what you do choose to sell. “The better the food, the less items you need” on the menu, he noted.
Melman is also a firm believer in working with partners — the right partner. He advised owners to know themselves and know what they want in a potential business associate. He likes to have a chance to work with someone first.
“The key, to me, is their ability to develop people. We have about 6,000 employees and 60 partners, so they need to influence a lot of people.”
Managing an Evolution
Jonathan Eismann and Robert Del Grande have both endured changing demographics and locations; each one had a different approach to dealing with these market fluctuations.
Del Grande, whose Café Annie in Houston was a bastion of Southwestern cuisine, realized in the last decade that the “cool” people wanted to sit in the bar and that the once-prized dining room came to be considered Siberia to many of his younger customers. He shut down Café Annie and created a new property, RDG + Bar Annie, where he could make everyone happy: the fine dining crowd, the bar denizens and the group in between, looking for good food in a casual setting. Today, the phrase “dining room” is not part of the vocabulary — it's now called the “grill room.” He described RDG as “a high style dining Mecca for the iPhone generation.”
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Eismann faced a different challenge: When the lease expired on his popular and critically acclaimed Pacific Time restaurant in Miami Beach, the rent increase priced him out of the market. So he moved his concept over to the west end of the less-popular design district. He also developed several quick-service concepts nearby.
Eismann ran into several problems: The new location confused his regulars, parking was an issue and a major retail/mixed use development opened nearby. The competition — from new restaurants at the mall, where parking was ample — hurt Pacific Time even more, and the restaurant closed in June 2010. Two of Eismann's other restaurants have closed since then.
Among the lessons Eismann learned from his experience: traffic studies are worth the price, a partner might have been good for bouncing ideas off of and diners can be easily confused. “People call me ‘chef,’ but I want to be a restaurateur,” he observed. His regulars from Pacific Time expected him to be there, but he was busy with other properties.
If he had it to do over again, Eismann said he might have eaten the rent hike and stayed at the original location. For now, he has decided to slow down and avoid confusing customers.
“You need to connect the dots for people,” Del Grande observed. “How far apart are those dots?”
Patrick Henry, whose Patrick Henry Creative Promotions creates beverage training, promotion and development programs for restaurants and chains, says a great product and a skilled staff will help an operator ride out the economic downturn.
“Remember that your employees are your most important asset,” he reminded the crowd. At his company, staff members who go beyond the call of duty are rewarded with cash, gift cards and even car washes.
Henry described a variety of ways to boost beverage sales, from holiday promotions to messages on guest checks. He also encouraged operators to get creative with bar food, especially using two-fers with a value message. A “big drinks, little bites” promo, for example, paired a margarita with a small portion of nachos. Henry also provided these tips for successful happy hours:
- Have music low and correctly programmed
- sharp-looking, personable staff
- TVs on correct channels (no news)
- correct lighting
- proper display of spirits
- correct room temperature (not too cold)
- bar menu
And, if you think beverages aren't a huge key to profitability, consider this: Usually patrons only order one meal, but many will buy more than one drink.
Balancing Act: Top Chefs
Two hometown boys — Rick Bayless and Paul Kahan — joined newest Iron Chef Jose Garces to explore their approaches to empire building.
Kahan, the brains behind the award-winning Blackbird and Avec, admitted he likes to cook what he likes to eat, and with each new opening, he's getting closer. His favorite is one of his latest, Publican, which focuses on three items: oysters, pork and beer.
Kahan said his concepts take on a life of their own: He finds a space, then creates a concept to fit.
Bayless agreed with Kahan on the last point. “It's impossible to shove food into a place (where) it doesn't want to be,” he noted. Bayless, most associated with Frontera Grill and Topolobampo, went totally casual with one of his latest creations, XOCO, a quick-service breakfast/lunch/dinner operation with items like hot chocolate and wood-grilled tortas. It wasn't a hit from day one, but with a few tweaks it took off; now he's planning to open two more at Chicago's O'Hare airport.
To stay on top of his game, Bayless said he's careful to self-assess and reinvent constantly. “Just because it was good last year doesn't mean it will be good this year.”
Garces, who also presides over an ever-expanding portfolio of highly regarded spots, mainly in Philadelphia, said he has benefited from exposure from becoming the latest Food Network Iron Chef. “A lot of people know who I am who wouldn't know otherwise,” he noted. He compared the competition in the network's Kitchen Stadium to playing on a high school sports team, which he loved.
Bayless, who competed last year on Top Chef Masters, said he liked the idea, although the reality was brutal. But the exposure has its upside: “Afterwards, you're not a chef — you're a sports hero. Suddenly I'm getting more respect from my family.”
Kahan, on the other hand, frankly admitted that “I'm a pretty intensely private person. I decided the last thing I want to do is be on TV. I know it might help the business, but I don't think I would enjoy it.”
Andrés and Wilder Win the Melman Award
When José Andrés and Rob Wilder took the stage to accept the Richard Melman Award, Andrés told the admiring throng he was going to keep his comments short. Many smiled, knowing full well that Andrés is not a man of few words. And the passionate Spaniard poured his heart out, talking about his love for the restaurant business and about pushing the envelope to take people's perceptions of food to the next level. “You just wait, we're going to blow your mind with what we're going to do with water.”
No one knew quite what he was talking about, but ears perked up because the man known for introducing molecular gastronomy to this country has had our attention since arriving at Jaleo in Washington D.C. in the early '90s. It was Wilder, his now-partner and fellow Melman Award winner, who hired Andres, and together their Think Food Group has developed into one of the country's most dynamic restaurant companies.
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Since those early days, the duo has opened three more Jaleos (traditional Spanish tapas), a Café Atlantico (Nuevo Latino), Zaytinya (mezze), Oyamel (Mexican street food) The Bazaar (tapas and avant-garde Spanish), China Pablano (noodles and tacos), Next Stage (a café within a theater whose menu changes depending on the performance) and Minibar by Jose Andres (where he introduced molecular gastronomy). Wilder and Andres also created a catering company and plan to open a second Bazaar in a new SLS Hotel slated for Miami Beach.
RH editor Mike Sanson explained that Andrés will likely be remembered years from now for his culinary theatrics at Minibar, but the real revolution began at Jaleo where he and Wilder introduced the glory of Spanish cuisine and the small plate tapas format to many Americans. Nevertheless, there's no getting around the thrill of Andrés' molecular gastronomy, which he now demonstrates for students in his Harvard University culinary physics course.
On hand for the celebration was Rich Melman, the founder of Lettuce Entertain You Enterprises and considered by many to be the country's greatest restaurant concept creator. He applauded Andres and Wilder for their fearless quest to create exciting and relevant restaurant concepts.
LeFranc: “Be Empty” to Regain an Edge
If you want to survive this year and next, you need to tweak your attitude and your approach, industry veteran Fred LeFranc told New Directions attendees. Restaurant companies and owners pay LeFranc's company, Results thru Strategy, to learn how to achieve sustainable success by modifying their behaviors.
In the last several years, consumers have redefined the value equation, and services like Groupon have fueled that evolution. That means owners who thought they understood the business may need to reconsider their preconceived notions. LeFranc suggested that owners “be empty,” be willing to “creatively destroy” their company and ask for help, when necessary.
One way to look at your business differently, he suggested, is to experience your restaurant as a guest, and be sure to visit the competition and other industries to see how you stack up. And ask yourself: Would you want your son or daughter to work in your business?
Getting employees engaged is a tricky but necessary step in survival, LeFranc argued. An owner needs to figure out what the restaurant's purpose is and work to connect the entire team to that purpose. One way is to share information, such as the profit and loss statement, so everyone understands the challenges you face. If your staff knows you need their help, “they will do things that will blow you away,” he said.
LeFranc listed five ways a company can lose its edge:
by losing touch with its purpose
by failing to change with consumer trends
by failing to reinvest and innovate, not just for the guests' sake, but for employees as well
through conflicting objectives (for example, cheap versus high quality)
by lack of a strategic plan.
Whiteman: Make a Deeper Connection
Emotions matter. “We tamp down our personalities and don't connect to customers' emotions,” said Michael Whiteman, a longtime industry observer and restaurant consultant.
“If you aim at the mind and don't connect emotionally, you've missed an opportunity.” Whiteman, president of the consulting firm Joseph Baum & Michael Whiteman Company, called that the biggest challenge facing many operators.
Grocery and convenience stores, food trucks and others are picking off your competitors, Whiteman explained, but restaurant operators are in a perfect position to establish an emotional connection with their customers that will increase their tendency to be loyal. He suggested a number of simple ways to do that, including:
Create small plates menus designed for sharing, which will remind guests of the family dinner table.
Stress rituals, as Starbucks has done by deliberately slowing down service and focusing on the technique used to create its coffee drinks.
Display pasta if you make pasta on site, or have ice cream-making classes to show your guests how you do it.
Rewrite menu descriptions to make them less clinical and more romantic — remember that people eat with all their senses.
Combine price promotions and emotional rituals — for example, on BYO wine nights, put a corkscrew on the table and let the guests open their own bottles.
Design a distinctive entrance that sets the tone. If you bake your own bread or make your own charcuterie, make a showcase of it at the front of the restaurant to set a mood from the start.
Remember that Americans are gravitating to people who stand behind their food.
Realize that with a highly fractured population, a single method of reaching out emotionally won't work on everyone. Try something you may have overlooked.