Kornick, Morton plan DMK's future

In 2009, Chicago restaurateurs Michael Kornick and David Morton partnered to open DMK Restaurants, which operates 10 popular and successful concepts in the city and suburbs of Chicago, and was named one of Restaurant Hospitality’s “Coolest Multi-Concept Restaurant Companies” in 2014.

DMK’s success is hardly surprising, given the partners' backgrounds.

Kornick, the culinarian of the team, is best known in Chicago and industry circles for his successful, upscale MK, The Restaurant, which he opened in 1998. Before that, the CIA grad cooked his way around some of the country’s most prestigious kitchens, and he created the menus of Chicago’s Marche (1993) and Red Light (1997), both of which earned national critical acclaim. Kornick also co-created the Nine steakhouse restaurants in Chicago and Las Vegas and is a five-time nominee for Best Chef: Midwest by the James Beard Foundation.

DMK Burger and Fish. Photo: Lindsey Becker

Entrepreneur Morton ran a host of successful businesses in music, finance and real estate as well as in hospitality before partnering with childhood chum Kornick. Restaurants are clearly in his DNA. Dad Arnie created the famous Morton’s Steakhouse brand and brother Peter co-founded the Hard Rock Café.

Kornick and Morton launched DMK Restaurants with the purpose of infusing casual dining with the things people love about upscale restaurants—food quality, design and great hospitality—but with a relaxed vibe and an eye toward value. What evolved included DMK Burger Bar (launched in 2009, now with four locations, including nontraditional venues such as Chicago’s Soldier Field and Navy Pier), followed by Fish Bar (a fast-casual place serving sustainable seafood, tater tots and craft beers/cocktails), Ada Street (sharable plates and tavern fare), County Barbeque (2013), Henry’s Swing Club (a bar specializing in house carbonated draft cocktails), DMK Burger & Fish (a marriage of Burger Bar and Fish Bar) and Arlen’s Chicken—a fried chicken joint that opened last November near the campus of Northwestern University in Evanston, IL, and might turn out to be DMK’s first big growth vehicle.

We talked with the guys about Arlen’s, what it’s like to work with your best bud, restaurant concept inspiration and more. See what they said:

David once said that DMK restaurants exist “at the intersection between really hardcore culinary and casual." Can you expand on that?

Morton: I view our collection of brands as the most expensive and inexpensive in the markets we serve. There are many examples of [casual] restaurants that lack a quality background, so we saw a void. Since Michael is more oriented toward fine dining, we thought we could fill that void. Casual dining will always be the largest part of the market, period; as a fast-growing company that has aspirations for further growth, we see that as the sustainable area for the future.

Kornick: For us, casual means fun and community and the opportunity to serve a specific part of the community for a long period of time. In neighborhoods around Chicago, there are a lot of restaurants that have been around for 30 or 40 years. That part, evolving as a neighborhood restaurant, is appealing to us. There’s an opportunity for longevity as long as we continue to produce high-quality [food] at a fair price and have a creative evolution of that product over time.

Talk about the growth of DMK’s portfolio. What comes first, the restaurant concept or the space?

Kornick: It’s not always one or the other. Sometimes someone comes to us with a space and we think “this is an awesome opportunity for a [DMK] Burger Bar because there aren’t other people focusing on great beef and craft beer in this area.” Sometimes a location speaks to us immediately like that. On the other hand, if we find a space that we love, but it doesn’t have the walk-in traffic potential for a Burger Bar, for example, then we think of an idea that would fit the location.

Where do each of you stand on the tip/no-tip debate?

Morton: This is the one area where we disagree. I grew up in the business and I like tipping, as a guest myself. I also like it as some measure of the quality of [our guests’] experience. We like that feedback. We’re in the business of taking care of people, and from the guest’s side, [tipping] is their opportunity to take care [of servers]. Personally, I don’t think this is going to be relevant in three or five years, just because one or two people think it’s relevant.

Kornick: This is the only business that is using this antiquated system for compensating its professionals. You can’t bring a plumber to your home and decide what you’ll pay for his service. To me, Europe has done fine providing a level of service with compensation being wrapped into the program. Danny Meyer went public about it in ways other people didn’t, but others are [moving to no-tip structures].

In some restaurants, servers can make $500 to $600 a night while cooks might make $150. That’s a real disconnect. The other thing is tips used to be used as a tool to ensure prompt service. You tipped to get attention or special treatment, it wasn’t meant to be done at the end of the meal. That changed with the arrival of credit cards. I don’t think it’s a great barometer to show us our best servers. I think sales are a better metric. [Upscale] restaurants will move more in this direction, especially with prix fix menus. Do I think that Applebee’s will have [all] things included some day? No. But do I think our concepts will still be talking about it in 20 years? No. In the higher-end restaurants, you’ll see [tip-included policies]. 

The other problem is that this is the only industry where governments—federal, state, local—try to manage how people report their income and it becomes the burden of the restaurant operator to report tips. Take taxi cabs or hotels or salons; they don’t have this economic burden.

Staying relevant in a competitive market

(Continued from page 1)

You’re just opened Arlen’s Chicken. Tell us about DMK’s take on fried chicken.

Arlen's Chicken, Evanston, IL. Photo: Lindsey Becker

Kornick: We thought about fried chicken for a long time; With a few exceptions, fried chicken was stuck in fast food mode for a long time. There weren’t many hospitality- and chef-driven casual chicken restaurants. Now tons of people are doing it and it’s a fun way we could add our culinary instincts to another segment of the market. We chose boneless chicken for the unique factor and obviously there’s a big demand for “nuggets.” We wanted to see if we could bring it to a college environment; not just because it’s quick and easy, but also as a fun choice and a home meal replacement. With innovation and flavors, we wanted to make that our niche and examine some things we thought we could do better. I think it will be a continuing segment for us. I hope we’re one of the concepts that survives the 99 percent rule, and we have something in place that our consumers value.

Morton: It’s classic DMK in that it’s such a broad category. Like other DMK restaurants, I think we’ll prove to be outstanding because of our ingredients and processes and innovation. It’s a huge frontier for us to play in, and we see a lot of fun things coming out of that brand. We also see Alren’s as an interesting prospect for a franchise, which is something we’ve never done before. We think it has the potential for franchising by virtue of its simplicity.

Chicago’s a competitive restaurant market. What’s the secret to staying relevant?

Morton: Being nimble is incredibly important for us. We used to have strong opinions about “always and “never,” but we’ve evolved. I think the second thing is that we’re in an industry that is booming and it’s not uncommon today for businesses that boom to also go bust. Look at American industry in general: autos in the 1920s, tech in 2000. Wars are won based on the balance sheet. The companies that succeed have the best balance sheet, and that’s as critical to longevity as anything else.

Kornick: Innovation, creativity, paying attention to what our guests are looking for and being responsive to that. As tastes change, you need to innovate and be smart and nimble enough to be aware of the changes in the marketplace.

DMK's take on chicken. Photo: Lindsey Becker

What’s the shelf life of a restaurant?

Kornick: It’s all over the board; There are examples of restaurants in Chicago that are in their 25th year or more—Shaw’s Crab House, Gene & Georgetti’s. I hope MK is there for our children—David’s kids and mine. We hope that if we pay attention to our businesses, if we do things well, they can last as long as we continue to own and operate them.

You’ve been friends forever—has business ever tested your friendship? What’s the key to a successful partnership?

Morton: It’s never tested our friendship. Just the opposite; I think we’ve enjoyed a closer relationship every year we’ve worked together. The keys, I think, are that we both admire each other and respect each other’s respective contributions. And it’s like a marriage in a way: Great communication and the ability to have fun together are key. I can say that I laugh as much and as hard with Michael as with anybody I know.

Kornick: I’ve known David’s family almost our whole lives. We had a good knowledge of each other’s backgrounds. I admire David and his work ethic and his ability to lead by example. We each have our areas of expertise and we respect that. We both believe there’s more to learn. There’s no ego or fights over who’s in charge. I don’t think that either of us would describe another work experience as being more enjoyable. We’re still having a ball and hopefully that’s something we can sustain.

How do you create success?

Morton: My dad said 99 percent of restaurants fail before they even open. There’s a high enticement factor and low barriers to entry for people wanting to get into this business, so there’s a high failure rate. Finances, equity versus debt, lease structures; business models, cost structures—there are a myriad of variables that require expertise. The things that create success require discipline. It always goes back to the initial structuring of a concept. The busiest restaurant today might not have the opportunity for longevity because of structural problems.

Kornick: Restaurants are much more difficult and expensive to run than they once were. That low barrier to entry model that emerged after World War II is not as common now, so the stakes are higher.

What's next for DMK

(Continued from page 2)

How do you find the talent to expand your portfolio?

Morton: Our highest aspiration is to be the best company to work for. We’re known as a [company] where it’s hard to get a job. We have a very selective hiring platform and a lateral hiring structure: Lots of people are involved in hiring process to ensure that anyone joining the team is a good cultural fit and [will contribute to] a sense of enjoyment and fun. We have the luxury of being able to be selective. Nine out of 10 of our front-of-house employees have college degrees. We like bright people, and by “bright” I mean curious; those who want to learn more. In turn, we offer the best training in the business. Michael and I want them to see how decisions are made in real time, how we think about our business. We ask what they think. By having people who are passionate and bright, we’ve built a laboratory where people can create success.

Kornick: I think that part of our job in HR is to recognize that the current workforce has somewhat different values and aspirations. We know that not everyone is taking this job as their end goal. But we think the life lessons to you learn here you take everywhere and are valuable in other walks of life, and that helps us attract good people.

You both have fine dining in your backgrounds—any desire to open another upscale concept someday?

MK, the Restaurant. Photo: Lindsey Becker

Morton:  For us, our role is to keep our guests excited and engaged, so if the right opportunity came along, we would do it.

Kornick: I only did fine dining until DMK Burger Bar in ’09, so it was my whole orientation—working in restaurants that were too expensive for me to eat in [laughs]. Then MK and Marche were more casual but still upscale. David and I always talk about where we would like to enter that market again; what it would look like for us in fine dining, conceptually. We’re always looking for fine dining opportunities, but it has the burden today of cost. You need to spend a few thousand dollars a square foot to be competitive. We’re anxious [to open one], but cautious.

What’s next for DMK?

Morton: We’re finding more opportunities for partnerships with larger companies and institutions, such as our [partnership with] Soldier Field or the Navy Pier real estate package. We’re interested in opportunities to partner with other brands and institutions to operate our brand side-by-side with theirs. We’re conservative by nature, so we’re continuing to diversify with a burgeoning real estate business and vertical opportunities to have the most stable, long-term platform possible. We’ll have some announcements from our partners soon.

Kornick: We’re thinking about different markets and franchising, but only if we can set it up for success for our franchisees. We’re always looking for opportunities to continue to grow our other concepts if we find right locations. We are always interested in what others are doing; we would pursue the acquisition of an existing brand if we can help them to manage to succeed. We’re also interested in being an operator for something else: managing food and beverage for a small hotel company, office environment. We think DMK management has expertise to share and there are opportunities for us in the next couple of years.

Contact Gina Ragone at [email protected]
Follow her on Twitter: @RagoneGina