Casual Gets Classy

Gina LaVecchia Ragone

A new category that takes casual to a new level has been executed brilliantly by Reel Club

On the constantly-changing stage of the $558-billion restaurant industry, it is no secret that casual dining is evolving. Most notably — and to the alarm of many — the middle of this segment is struggling, as fast casual operations capture more casual dining business at the lower end of the price point spectrum, while the more specialized “modified” and “polished” casual concepts find a sweet spot in casual dining's higher end.

Ron Paul, veteran consultant and a principal of Technomic Inc. defines “polished casual” as “a dining operation that has invested more in décor to give it a higher-end look than typical casual dining restaurants.” He adds that this orientation trickles down throughout the entire concept and results in higher food quality implications. “It's the difference,” he says, “between a Friday's and a Houston's.” The 200-unit Cheesecake Factory is another classic example, as is its even more upscale 12-unit sister concept, Grand Luxe Café. “Polished casual is a place that feels more expensive and can produce higher volumes,” Paul explains. “As consumers become more affluent, they are willing to pay more and trade up. It's the experience and total package they're looking for.”

Aaron Allen, president of Quantified Marketing Group in Heathrow, Fla., says one must look at the fast casual phenomenon to understand the emergence of modified and polished casual. Fast casual operations have succeeded not only because their lower price points, hipper concepts and better products resonated with the public, but also because these businesses were able to “shrink the size of the traditional casual restaurant box, use less labor and get higher margins” than their midscale casual competitors such as IHOP or Applebee's, says Allen.

What's more, a typical 1990s casual dining model featured a million-dollar investment in return for a million dollars in annual revenue. With a fast casual model, an operator can open two to four restaurants for that same million, and that investment might net $2.5 million in annual sales. This shift “left big boxes, with those $10 to $15 price points, with tremendous overhead, declining guest counts and, like the rest of the industry, increased costs on top of it,” Allen explains. “They've been dealt a poisoned dart and now they're scrambling to make adjustments.”

LuckyFish

All of this has helped to set the stage for the polished casual business. “Because of shifts in unit economic models and dining habits, successful concepts are ‘niche-ing’ themselves off to these emerging categories where everything is elevated,” says Allen. The modified casual segment takes some principles from fast casual — a smaller space than the big box restaurants, a more upscale product and design, and a greater concept focus — but unlike fast casual, offers full service. Florida's growing Times Grill chain, where burgers make up 85 percent of revenues, is a good example.

The polished casual business model generally involves a larger footprint than its modified counterpart, a $2 to $3 million dollar investment, and annual sales up to $5 million. Aaron Allen cites Darden's Red Lobster as a good example of a big box chain that successfully moved to the polished casual dining niche. “Its menu and design have gotten smarter and more sophisticated, and the profitability, guest count and satisfaction scores are at their highest levels in the company's 40-year history,” he points out. Like Ron Paul, he believes that a savvy dining public will continue to trade up and indulge in the affordable luxury these concepts deliver. “We can't all trade up to a $60,000 car, but we can trade up to a $25 entree. That's the thinking that is going to drive the polished casual segment. These changes are going to put the Applebee's model in the horse-and-buggy category.”

Another important trend is taking place in the casual dining arena and driving a better class of casual restaurants: Greater demand for chef-driven concepts. Americans are watching and reading more about food, celebrity chefs and the glamorous world of restaurants. But at the same time, their interest in a formal restaurant experience is waning. This consumer driver, plus the oppressive overhead of upscale dining, are steering some of the country's most accomplished and talented chefs into casual territory. These operators are at times offering nearly the same menu in simpler settings, or, more often, reinterpreting their fine dining offerings for more casual venues. Tom Colicchio, celebrity chef and founder of the famous Craft in New York City opened 'Wichcraft — a sandwich concept that promises the Craft experience “between two slices of bread.” Similarly, Laurent Tourondel, who made a name for himself at Manhattan's Cello, found that while fine dining can give you a reputation, casual concepts can build an empire. Tourondel launched his own line of BLT (Bistro Laurent Tourondel) Steak restaurants, and most recently, the even more casual BLT Burger and Fish Shack concepts.

Still more restaurateurs are discovering the benefits of downscaling: In Washington, D.C., Galileo/Osteria's Roberto Donna recently launched a pizza concept, and the legendary Thomas Keller (of French Laundry fame), now has a three-unit bakery/casual eatery chain, and is working on a hamburger concept.

Lee Maen of L.A.-based Innovative Dining Group (parent of Sushi Roku and Boa Steakhouse) says, “I would say polished casual is more focused on design, product, is more expensive…without the formality of fine dining; the reservations, the dress code. I think they have more of a feeling of community, that you can walk in any time; but with better ingredients, more unique design, and a less ‘stamped-out’ image. It has more personality than most of casual dining.”

Sushi With Legs

Innovative Dining Group saw the opportunity to leverage the success of their high-end Los Angeles and Las Vegas Sushi Roku restaurants by packaging many of those menu items in a more casual concept. “We had been in the sushi business for 11 years producing (check averages of) $50 to $65 per person at all of our Japanese restaurants,” says c.e.o. Lee Maen. He and his partners hypothesized that their target market would go out for “quality sushi” not just weekly or monthly, but up to three times a week if the price points were lower. Thus, the goal with LuckyFish was two-fold: to provide something sushi aficionados would use regularly, and, to bring sushi to the masses.

SUSHI FOR THE PEOPLE: Lucky Fish was designed to bring sushi to the masses, with lower price points.

The LuckyFish décor is definitely a step above casual. A geometric sculpture made of warm woods hangs above the patio, creating a striking canopy. Inside, pink cherry blossoms decorate the walls. The sushi bar is made of white pebbles embedded in clear resin. The booths are upholstered in white leather.

To make the business model work — and to do so without downgrading ingredients — IDG knew they'd need greater guest volume, mass production techniques and reduced labor. The kaiten-sushi model was the solution that met all three of these criteria. The streamlined kitchen distributes little plates of food via a conveyor-belt that winds through the restaurant. The system allows guests to start eating even before they place their drink orders, which gets them in and out in as little as 15 minutes. Behind the scenes, tools such as a sushi robot, which forms the nigeri, speed up production. The self-service nature of the concept reduces labor, contributing to cost savings. “We had only seen bad examples of conveyor-belt sushi restaurants in the U.S.,” says Maen. In London, however, the partners were impressed with the YO! Sushi concept and, last year, recruited from that company Darren Wightman as LuckyFish's new director of development and operations.

Rather than cannibalizing their existing businesses, Maen and his team believe their polished casual concept will capture new guests, and help to recruit customers for IDG's higher-end concepts as well. “People go to all kinds of restaurants. We believe the same person will visit our different restaurants on different nights.”

The menu is priced by the plate, and the color of the plate indicates the price. Items range from $3.50 to $10 and include such items as sushi rolls, sashimi and nigeri. There's also a selection of hot and cold appetizers, salads, tempura and teriyaki items, including Crunchy Panko Breaded Shrimp with Tonakatsu Sauce ($6), Japanese Shishito Peppers ($6.50), and Yakisoba with Shrimp or Vegetables ($4.50 to $6.50). The little plates add up to big checks. The average LuckyFish guest spends $26. “It's too early to tell exactly what our profits will be,” says Maen, “but we're shooting for a 20 percent EBITDA, which is similar to fine dining.” He adds, “You have to look at the big picture. A fine dining restaurant could do $7 million, whereas something casual will do just $2 or $3 million — but you could open hundreds of casual restaurants.” Which is precisely the point. IDG plans to add three additional LuckyFish in Southern California, then tap new markets starting with Las Vegas and Scottsdale, AZ, entering with Sushi Roku or their Boa Steakhouse concept and “dotting around with LuckyFish.” The chain will grow at a rate of four to five units per year over the next several years, funded by its own cash flow. By the time LuckyFish hits the 30-unit mark, Maen says IDG will “sell it to a bigger company to take it the rest of the way.”

Same Quality, Different Space

In Venice, CA, Hans Rockenwagner built a reputation around fine dining. At his eponymously-named restaurant, the James Beard winner — classically trained and sporting a resume that includes Le Perroquet in Chicago — was lauded for his “intelligent” cooking and the “ability to seamlessly meld the classic with the new.” His praises have been sung everywhere from the LA Times to Gourmet and Saveur and the PBS series, “Great Chefs-Great Cities.”

SQUARE DEAL: L.A. Chef Hans Rockenwagner ditched his upscale restaurant in favor of a casual, threedaypart bakery concept.

Rockenwagner says that the shifting of the marketplace to a more casual orientation — not to mention the difficulty of maintaining a fine dining operation — gave him the impetus to downscale. After closing his fine dining restaurant, Rockenwagner took a year off, but not before leasing space on a popular street in downtown Venice, where he eventually opened a bakery. Eventually, he decided that “What was missing in this neighborhood was a place where you could go any time of the day, breakfast, lunch or dinner,” he says. He renamed the eatery 3 Square Café Bakery and, building on the bakery business, Rockenwagner expanded the menu to cover three dayparts. Despite this more casual setting, Rockenwagner actually brought some of the same offerings he menued at his fine dining restaurant.

While Rockenwagner doesn't miss the headaches and expenses posed by fine dining, 3 Square has posed its own set of challenges. One is “staying on top of a three-daypart operation,” says Rockenwagner. Of course, margins are slimmer now that many of his price points are lower, so there's a new focus on volume. “There are no $50-dollar lobsters. You need to make money selling many of one item,” he says.

What has not changed is his basic philosophy when it comes to what's on the plate. “We wanted a more casual setting, but we're just as serious about the food as we've always been,” he says. “We still try to find the best ingredients for what we make, but instead of serving lobster, we serve shrimp; instead of filet mignon, it's flank steak. It's not upscale, but we're conscious of how we put it out there and put our own spin on it.”

Moreover, he says there's still more room in the casual arena for chefs, “A lot of chains have similar concepts, but no room for individuality. Why not have more of that on the casual level? Quite a few chefs have come in and we're having a lot of fun with it.” Rockenwagner reports his average check is $12 for breakfast, $16 to $18 for lunch; and $30 to $35 for dinner. Many of the menu options from his fine dining Rockenwagner restaurant have carried over to 3 Square, such as the cinnamon-scented German Apple Pancakes slathered in creme fraiche and his Crab Soufflé with Lobster-Butter sauce. For these items, Rockenwagner did not even bother lowering the menu prices. “People didn't even question it. They knew the product, wanted the product, and are ordering it just as much as they did before.”

Most importantly, says Rockenwagner, the casual dining business seems impervious to economic downturns. “One of the things I find interesting is that the economy has not affected us. I don't want to say it's recession-proof, but I do not feel not as vulnerable as the high-end restaurants.”

Modern Take on Casual Seafood

Outside Chicago, the casual dining empire that is Lettuce Entertain You Enterprises recently opened a seafood restaurant that epitomizes the idea of “polished” casual. LEYE partner Mark Tormey teamed up with founder Rich Melman to create the concept, which is located in suburban Oakbrook.

REEL CLUB: Ecological and stylish.

When the duo began batting around the seafood idea, they came up with the idea for a more contemporary design than that of traditional seafood houses, including LEYE's own Shaw's Crab House and Joe's Seafood, Prime Steak & Stone Crab. The unit's clean lines and minimalistic style are complemented by executive chef Mychael Bonner's fresh, stylized and light approach to the menu and its presentation.

“When we put the restaurant together and made our (design) choices, we clearly tried to create a restaurant that felt special, but not stuffy or too expensive,” says Tormey. “We wanted to create a place people could use on special occasions or any time.” Seafood entrees run from $18.95 to $26.95; lobsters are $34.95 to $46.95. Described by one reviewer as “hip and edgy,” it is “the way the food is presented in such a contemporary way that is a big point of differentiation for us,” says general manager and LEYE veteran and partner Matt Mulvihill. For example, in its Fresh Alaskan King Crab Cocktail ($15.95), a blue light is embedded underneath the ice that lines the bottom of the bowl, illuminating the dish from below. Similarly, the Double Dip Shrimp Cocktail ($11.95) is presented on a huge mound of ice spilling from a bucket. In its level of social consciousness, Reel Club also shows itself to be ahead of the casual curve, boasting about its ecological practices on its menu. The seafood menu is rounded out with a beef, prime steak and veal section ($14.95 to $43.95), and the requisite chicken and pasta offerings as well. Taking a cue from fine dining, sides ($4.95 to $6.95) such as Truffled Mac and Cheese are a la carte.

Unlike many other casual seafood operations, especially the chain models, Reel Club benefits from the attention of an executive chef (Bonner), who updates the menu four times a year. Another asset is LEYE's master sommelier, Alpana Singh (a Restaurant Hospitality Rising Star, February 2001) who manages Reel Club's “Reel Hot 40” wine list. For the area's oenophiles, Singh keeps it interesting with lesser-known labels and suggestions for pairings.

Reel Club seats 200. Its average check is $18 at lunch and $45 at dinner, according to Mulvihill. As of now, there are no plans for future Reel Club locations.

The New Breed

BLT: Chef Laurent Tourondel has a casaul burger concept.

Whether they're coming from a corporate entity or from chefs looking to reach new masses, there are a number of great examples of new upscale, polished casual restaurants. Here are a few: