Lasco still flying high 10 years after Tasting Room debuts

Lasco, right, and his wife, Laura

Jerry Lasco estimates more than five million glasses of wine have been served at the first Tasting Room that opened in Houston’s Uptown Park 10 years ago. Not bad for an airline pilot, who only came to this business because he’d been furloughed from his job as a Continental Airlines pilot 12 years ago.

He was laid off after 9/11 and hasn’t been back in a cockpit since. He hasn’t had time, and it’s easy to see why: The first Tasting Room that opened two years later has grown from less than 1,000 square feet of space to more than 7,600, and three new units have been added in Houston. His second concept, Max’s Wine Dive, was recently named a Nation’s Restaurant News’ Hot Concept winner and is about to take off nationally. Lasco has another concept that could grow (The Boiler House) and plans for more.

Wine is the common thread among them, and what was once a hobby has turned into a thriving business for the former Air Force pilot whose entrepreneurial passion grew while he was based in New York City with Continental. While there, he attended culinary school and was certified as a sommelier, which came in handy when he was looking for his next career. He worked for two years in Houston at a wine shop while building the business plan for The Tasting Room with his wife, Laura, an attorney and now v.p. with their company, Lasco Enterprises.

On Sept. 15, 2003, almost two years after piloting his last plane, the Lascos opened The Tasting Room at Uptown Park. The motto then and now was “wine by the glass, bottle and case.” By not serving hard alcohol, the innovative concept was able to offer both on-premise and retail wine sales, giving customers drinking and dining there more than competitive prices compared to almost every other restaurant. The concept started out by offering a menu consisting of little more than cheese plates and now each location is chef driven with a full dinner menu.

Lasco, the c.e.o., now has 10 total units throughout Texas and the company has more than 600 employees, topped $24 million in total revenue last year and has been on Inc. Magazine’s list of fastest growing private companies the past four years. Lasco recently took some time to discuss how exactly a former Top Gun instructor has become a successful restaurateur.

RH: This month marks the 10th anniversary of the first Tasting Room. Did you ever imagine this kind of success?

Lasco: This definitely has exceeded my expectations. It started as a very small location, less than 1,000 square feet. Of course we wanted it to be popular, if I didn’t think it would have been successful, I wouldn’t have had the guts to spend the money on it and put in all that time. But as it’s grown, become an iconic place and just the sheer scale of it, I think it is very surprising. It’s a mixture of being at the right place at the right time and hopefully doing some of the right things.

RH: And it all started with the idea of “by the glass, bottle and case?”

Lasco: That was one of the philosophies. We tried to accomplish two things: The first was to alleviate a fear and solve the problem of people being intimidated going into a big wine store or outlet, because if you aren’t sure if a Bordeaux is a white or a red, you’re going to feel intimidated asking questions. The other aspect was how do you trust the recommendation from someone who doesn’t share the same taste palate? I can describe what a Brussel sprout tastes like all day long, but until you taste it, you’re not going to know if you like it.

Focusing on food

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So we built the concept on those two things. We simplified selections and put wines together not by region and varietal, but by how they tasted—the lightest, freshest whites on one wall, the deepest heaviest reds on the other. It didn’t matter what part of the country they were from, or the varietal. It’s all flavor based. The second thing is the taste question: Try before you buy. So before you invest in a glass, let’s taste some wines. Let’s say you like chardonnay, but not real buttery rich chardonnays, so our bartender or server will bring out two chards on both ends of the spectrum: One more crisp, clean and oaky, and the other side something richer. We try to resist going into more technical terms, but instead let you taste them first. Then we can tell you some facts about them, but not before. Ninety-five percent of people just want to know what they like and be able to order it.

RH: And you offer all wines by the glass? Is that practical, and how do you manage it?

Lasco: We offer everything by the glass if you commit to two glasses. The practicality of it? If I’m doing that chardonnay test for you, I probably have those two bottles open already, and if not, they’re going to be shortly, considering there are others after you. It’s not like we’re opening odd bottles for every individual. We’re trying to find broad strokes and have a multitude of bottles open every day. And if they decide to have two glasses and walk away, then it becomes an exciting opportunity for our servers to find a home for the other two, either through another tasting or by finding a new fan. And we feel proud of everything we offer—you have to, with 100 to 250 bottles of wine, and not thousands. Then it’s just finding the right homes and right food for the wine.

Max’s offers wine on tap and aims to be a dive bar with good wine and gourmet food, not beer and peanuts.

RH: How important is the food side of the business and how did it grow?

Lasco: In the beginning we started off with bread and cheese plates, which was appropriate for our size and staffing. We became a very successful wine bar, and sold a lot of glasses of wine, but it was a Catch 22. We tried not to have a lot of barriers; you didn’t have to come in and spend hundreds and invest three hours of time. We were very casual. You could come in and out, knock back an $8 glass of wine and be on your way. Or you could meet someone for a short period of time before dinner. We ran into low-check averages, with people coming in and then going somewhere else to spend the bulk of their money on dinner. So we started to incorporate more food into the mix, and people stayed longer, and now we do events and wine dinners. It’s a way for us to capture more business rather than sending people to a different restaurant.

Now we have top-tier chefs, and at one of our latest, we just imported a wood-burning oven from Italy. We sent our culinary team to get training in traditional Neapolitan pizza. We’ve just gotten more aggressive, experimental and ambitious with our chefs.

RH: How much revenue comes from food?

Lasco: In general, somewhere between 20 percent and 25 percent.

RH: Would you consider expanding the concept outside Houston?

Lasco: Absolutely. We have four units, and they’re of different sizes and shapes. In order to be ambitious with food, wine and do the things we want to do, we have to be a little larger. The smaller ones, even if crowded, can’t justify the culinary team’s salaries. We need those economies of scale. It’s an ambitious project and the large ones work best. For us to go to a different location, it would have to be a great location and a market we feel confident in and one that can support us.

RH: Which brings us to the concept you really are growing outside Houston at a quick pace, right?

Lasco: Yes, we’re going into other markets with Max’s Wine Dive. It’s a smaller footprint; much more restaurant than The Tasting Room. It’s just a different concept and easier to pull off. The average sales per square foot are higher and it’s easier to duplicate. And then as we get to know a market more—and we’re opening in Atlanta, Denver, Chicago, Philadelphia, and Indianapolis soon—and get more established in those, then the goal is to expand there with other opportunities, and some of those could be with The Tasting Room, The Boiler House or another one. The sky is the limit.

RH: How fast can you grow Max’s and would you consider franchising?

Lasco: All those are teed up to open by early next year, and then a slew of other locations will follow. Our goal right now is to open about one a month. We have no intention of franchising.

Another new concept

All the wines are offered for sale by the glass as long as the customer commits to buying two glasses.

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RH: And Max’s sprang from the idea and now motto, “Fried chicken and champagne?…Why the hell not?”

Lasco: Yes, it was about taking all pretention out of wine. It’s really based on a dive bar, a comfortable place, and instead of buckets of beer and peanuts, we have great wine and gourmet food. The food tends to be along the lines of comfort food. We have great chefs, completely scratch ingredients and 50 percent of the menu is original to each location. The classics—like fried chicken, a Kobe burger—are on the left side of the menu, the other side is the chef’s creation.

RH: How do the check averages compare?

Lasco: These are estimates, but we’re about $35 at The Tasting Room and at Max’s it’s upper 50s. Sales at Max’s are about 50 percent food. At The Tasting Room, a lot of people come just for a glass of wine.

The Boiler House. It’s at a cool location, a culinary mecca in San Antonio [called Pearl Brewery], that won’t even allow chains. It has to be local. We created a concept for that center, around the building we’re in, which is historic and built in the 1800s. It was a boiler house that drove the old Pearl Brewery. We gutted those boilers and put grills in instead and now we’re burning meat and creating food. It’s a Texas grill and wine garden, kind of a play on a beer garden with local Texas foods.

RH: Has the wine world changed in the decade since you first opened The Tasting Room?

Lasco: Yes, even in the last five years. What has changed is the profitability of selling wines. We’re a wine-centric business. We don’t have any hard alcohol, no mixed drinks, but we do have beer. The profitability and pricing structure has changed drastically. Wine was sold in white tablecloth restaurants and steakhouses and the markup was three or four times retail. That was normal. Concepts like The Tasting Room, wine bars and other restaurants that found success became much more aggressive with their pricing. All our pricing is based on retail and this really changed the model and I remember when we first did it, we got a lot of accolades and positive press and our customers loved us. They were paying half or a third for the same bottle of wine down the street. It felt really good, but we weren’t making any money.

RH: You obviously figured something out?

Lasco: To be competitive and have wine lovers, you have to price more aggressively. You can’t get away with those old markups, especially in lieu of the commoditization of wines, or what I mean is that now wines are at Costco and Walmart, other big box retailers, on the Internet and in low-overhead locations. What it has done is anyone with a smart phone can plug in any wine in the world and see that it really costs $8.27 at some place in New Jersey, so if it’s on the wine list for $70, they’re going to feel gouged. It’s really difficult. The reality is the restaurateur can’t buy that wine for $8.27 from the distributor, and frankly nobody can probably buy it from that place in New Jersey, they probably don’t even have it. The point being it’s much more difficult to make money selling wine. Customers are savvier, they have access to info and very low cost providers of good, name-brand wines. How does a restaurant combat that? Our secret is a lot of scale. It’s one of those businesses built on smaller margins and it’s hustle. It’s value-added services. We have lockers that our clients get and they pay a monthly fee for. We’ve figured out ways to do it. Our by the glass sales, we make a little more because we do a quarter pour, but get five five-ounce glasses. We don’t hide that, it is what it is. It’s doing the little things and building scale.

RH: Any comparisons between the restaurant industry and flying?

Lasco: In commercial flying, there’s a saying that it’s hours of boredom with a few moments of sheer terror. The restaurant industry is more like the Air Force: hours of sheer terror and a few moments of boredom.