Restaurant Hospitality’s Fourth Annual Concepts of Tomorrow
Conference Gives Attendees The Winning Formula For Growth.
READY TO ROLL
Whether they were independent operators looking to open a second unit or emerging regional chain executives hoping to expand their concept nationwide, attendees at Restaurant Hospitality’s Fourth Annual Concepts of Tomorrow Conference left the event equipped with the strategies and tactics they’d need to take their businesses to a much higher level. Held at Chicago’s new Sofitel Water Tower hotel, the gathering featured the real-world perspective of some of the industry’s savviest chain and independent restaurant operators. Their collective message: In the restaurant business, you’re never too small to hit the big time.
Especially now. New York City-based restaurant consultant and trendmeister deluxe Clark Wolf kicked off the conference by giving attendees his rapid-fire perspective of what’s hot, what’s not and what’s coming next for the restaurant business.
"The post-9/11 effect is going be with us for a generation," Wolf said. "People today are tired of new things—a constant parade of new things gets old. Now they want not so much comfort food as comfortable food, food that seems safe, pure, clean and healthy.
"Even the way people eat in restaurants has changed," he added. "It’s not uncommon to see one, two, three or even four generations at one table because people are going out to eat as families."
Thus the question becomes, "So what does your restaurant have that everybody wants?" Wolf asked, "because what they want is food that is familiar and fresh."
And do you need a great chef to prepare this kind of food? Not necessarily, although it never hurts if you hire the right one. Wolf said he likes to work with chefs in their "post-jerk phase," when their passion for food still burns brightly, but is tempered by a keen grasp of restaurant business realities.
And business should be on the upswing soon. Wolf foresees a recovery and a new boom for restaurants just around the corner, and he warned operators to be prepared. "It’s gonna pop in 3-5 years," he said. "Invest now, and be creative when you do.
"Anything the public wants can become a good restaurant business, and figuring out what those desires are is key," Wolf said. "It’s true that being first and being broke is no fun," he said. "But sometimes we don’t change fast enough.
"It’s an opportunity for you...if you can replicate your concept with quality."
Of course, replicating a restaurant’s food and experience with quality is the major challenge for any concept that desires to grow. Rosario Del Nero has pulled off this feat dozens of times as v.p. and executive chef of Bertucci’s. And Noodles & Co. executive chef Ross Kamen has done the same for his company’s fast casual concept. The pair gave COT Conference attendees their formulas for producing consistently great food in a multi-unit environment.
Knowing The Drill
Del Nero said that 85-unit Bertucci’s Brick Oven Pizzeria, which began as a pizza place, is now a full-menu casual dining operation. "We promise to deliver a great experience to customers, and we have to deliver on that promise every day," Del Nero said. His challenge: Creating consistent great food at all units in a chain that has 7,000 employees.
To do it takes a food philosophy of "uncompromising food quality." Del Nero has formulated a standardized approach that relies on "systems. You need more than just recipes. You need systems," he said.
Part of the consistency factor is handled via rigorous purchasing and cooking specs. At Bertucci’s, peppers must be 20 percent red, zucchinis are a maximum two inches in circumference, and rosemary sprigs always have a four-inch stem.
"Twenty percent of our food dollar is produce," Del Nero pointed out. "These specs make our signature items distinctive. Giving our employees consistent product to cook with produces consistent food."
Another key: All Bertucci’s have brick ovens, and Del Nero designs the chain’s food to maximize use of these ovens. Kitchen layout and procedures are also standardized as much as possible across all Bertucci’s units. "For example, the dough room is in the exactly the same place at every unit," he noted
Del Nero has gone to great lengths to produce recipe cards for Bertucci’s cooks. "They are big, easy to read, and have a four-color photo of the finished dish so that the cook can visualize the final item," he said. "We even have proprietary measuring cups to ensure that items are made the right way."
Line checks are another part of his system. "We try to make them educational," he said. "If something’s not right at a particular station, it becomes a learning experience,"
Creating a company culture that underscores the need for delivering on the Bertucci’s promise is a pivotal part of the equation, Del Nero said. "The way to keep people is to give them the tools they need to succeed." That’s why Bertucci’s is a strong believer in training. The company has 10 certified training restaurants and 600 certified trainers. "Five years ago, there were none," Del Nero pointed out.
"This gives cooks a career path," he said. "They can become trainers and they can become part of an opening team. We have three opening teams, and our best trainers go on them."
The chain also makes vigorous use of external and internal shopper programs at all units, and Del Nero says unit managers become dependent on this steady feedback. "We say it’s measuring theoretical consistency in actual guest satisfaction."
Consistency is perhaps less theoretical at Noodles & Co., said executive chef Ross Kamen. The fast casual global noodle player relies on a commissary system to prepare its sauces and noodles. That’s no big deal when a concept has 50 units, which Noodles & Co. will have by the end of this year. But Kamen said it has gone with the commissary approach since the day the third Noodles unit opened.
"Our strategy was to operate the business as though we were going to grow." Another plus for this centralized approach: "It enables us to work with the best providers and to source the best ingredients," Kamen said. He added that even though food prepared at the company’s commissary has a 60-day shelf life, "I want that food used in one week."
Kamen told attendees that while Noodles began with a steam table/sauce format where orders were assembled in 45 seconds, Noodles units today prepare food within a two-to-four minute time frame. Also the original set-up saw people pick up their own orders; now Noodles & Co. runs finished meals to the table.
But all along, "our commitment has been to freshness, to broadly appealing craveable comfort food, bold and exciting flavors, authentic ingredients used in regional dishes. We import a lot of our food from Asia," he added. "We look at our food as the bridge between comfort food and bold exotic flavors. Our restaurant’s number one seller is Japanese Pan Noodles."
"We’ve completely revamped our menu twice in the last five years," Kamen said. "We looked at every SKU. You’ve got to stay ahead of the curve. Why? Because this way, as your concept grows, your food quality will grow, too."
Food, First and Foremost
If RH had to choose a patron saint for our Concepts of Tomorrow conference, Steve Ells would be it. The CIA grad has grown his fast-casual Chipotle Mexican Grill from a single unit in Denver to 210 units nationwide. Along the way he cashed in by selling a large interest to McDonald’s.
Attendees were wondering how he came so far so fast, and keynote speaker Ells gave them the answer: Chipotle was always all about the food.
"Just because it’s fast doesn’t mean it has to taste like fast food," he said. "Our idea was to take great quality raw ingredients and prepare them in front of the customer. We say we brought cooking back to the fast food segment."
He added that fresh alone isn’t enough. Customers today are more knowledgeable about food and they care about its source. Ells predicted that, due to consumer demands, the culinary landscape is going to change in the U.S. to one that features better foods raised with integrity.
In Chipotle’s case, this trend has created one serious menu change already.
"We became the first restaurant to serve free range pork on a national level," Ells said. "We source from Niman Ranch, where family farmers raise pork in a humane way. We’re socially responsible, but we made the switch because we put flavor first."
He added that when Chipotle began using Niman Ranch pork in its carnitas burritos, the chain had to raise the item’s price point from $4.50 to $5.50. Resistance to the increase was nil. "Customers now buy four times the amount of carnitas as before we began using free-range pork," Ells said.
Audience interest was high regarding Chipotle’s relationship with McDonald’s.
"We did the deal five years ago, and the discussion then was how to make Chipotle a national brand. We had a formula for growth, and they recognized that. They are committed to helping us grow."
But does McDonald’s tell Ells and Chipotle how to run the business? Not exactly. Here’s how Ells described his company’s relationship with McDonald’s.
"We pull non-brand specific resources from McDonald’s corporate," he said. "That includes such departments as real estate, purchasing and finance. But the food, operations, training and marketing are done in-house by Chipotle."
Ells’ answer to a question about franchising gave COT attendees plenty of insight into what the ride is like when a concept builds out nationally in a big hurry. "Initially, I wanted control over everything," Ells said. "Now I don’t want control over anything." Ells was primarily talking about food when he told COT attendees that "Big doesn’t have to be bland." But he was speaking from the perspective of a medium-sized chain that has financial backing from a deep-pocketed partner. But what about everybody else? Lane Schmiesing, former v.p. of marketing for Buca, Inc., had plenty of ideas about how little guys can leverage their smallness.
Fast-growing Buca is up to 82 units now, but was a relatively small organization only a few years ago. The mantra then and now was this: "Know who you are and know what you want to communicate," Schmiesing said. "Then sing it loud, sing it long, and sing it from the rooftops. Repetition is a good thing."
For Buca, the challenge was to communicate that it wasn’t just another Italian restaurant. "It goes deeper than that," Schmiesing said. "Buca is an immigrant southern Italian restaurant with family-style dining that is open only for dinner. It’s not ‘just Italian.’ All points of customer contact must reinforce this niche."
"Celebrate your smallness," he added. "be nimble, be quick, outthink, outwit and outmaneuver your big competition. It’s easy when you treat units as individual restaurants with local proprietors," he concluded.
But while you’re building out your concept, you also have to keep the big picture in mind. Branding whiz Bill Main told COT attendees that it is virtually impossible to build a concept of tomorrow-level restaurant organization without thinking like a brand.
"Your business is your brand, and your job is to become the caretaker and keeper of your brand," he said. "Your goal is to own a singular, clear position within the guest’s mind,"
He pointed out that branding is really the totality of hundreds of tiny strategies, both visible and invisible. How you execute them to make your operation different, better and special in your customer’s mind is the essence of branding.
All this is especially true in 2002, when the operating climate for restaurants finds a number of powerful forces at work. Main said the foodservice industry is still in the throes of a labor crisis, as there are just not enough people to go around and the industry is not keeping good people. Also, there is hyper competition for the food dollar on many fronts, which in turns helps create consumers who are both discriminating and fickle.
So you’d better have your ducks in a row before you build out your concept. Jamie Strobino, c.e.o. of Boston-based Not Your Average Joe’s, gave COT attendees a checklist of items that should be in place before you expand.
First, you need a mission statement.
"At Not your Average Joe’s, our mission is to be the defining standard in creative casual cuisine," he said. Such a statement defines you, gives your staff a sense that they are part of something bigger than themselves, and helps keep everyone focused. "It allows you to take a mundane task and make it seem like something more," he said.
Next, you have to articulate your concept’s values. Strobino suggested that operators create these values with their team members to establish their buy-in. Once defined, these values enable you to have a road map and protect your culture, which he said is crucial as you grow and replicate out.
A third building block is the ability to know who your guest is. "It’s not always who you think it is," Strobino said, noting that the fifth Not Your Average Joe’s failed because of bad real estate. "Our guests just didn’t really live in that local market," he said.
Then learn more about your guest. Strobino says you should go ahead and spend the money on research. That includes both surveys and focus groups. "Leverage your strengths and work on your weaknesses," he advised
Once these elements are in place, you have to determine if your concept is indeed replicable. Strobino cited these key factors which help operators determine their ability to grow and how fast they can handle it.
• Financing. "Do you have enough to weather a failure?"
Strobino asked.
• Independent teams. "Can they run on their own with mini-
mal guidance?"
• Manpower. "Do you have the bench?"
• Recipes. "Are they simple and documented?"
• Reporting. "Do you have a system in place?"
• Measurement. "Do you know how you will measure the results?"
Finally, Strobino suggested that any concept can benefit from some outside perspective. "If you can," he said, "create a board of advisors. Not a board of directors, a board of advisors. You don’t work for them. But pick people who have skills sets and knowledge you don’t have."
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Leader Of The Pack
The Richard Melman Concepts of Tomorrow Award was created three years ago to recognize one of the outstanding full-service restaurant concepts featured on the pages of Restaurant Hospitality. For nearly a decade, the editors of RH have been identifying up-and-coming concepts, concepts that we believe will be a force in the future. It’s this Concepts of Tomorrow feature that gave birth to the conference and the award.
Not just any concept can win the bronze eagle. The candidates are those who exceed nearly everyone’s expectations. That was certainly the case with Buca di Beppo, which won the first-ever Richard Melman Concepts of Tomorrow Award two years ago, and Kahunaville, which claimed the prize last year. With talent like this around the country, selecting a winner for the Melman Award is not so difficult. And neither was naming the award.
For 30 years, Rich Melman has been a step ahead of his competitors and the dining-out public. Many of his restaurant concepts have redefined how America eats out. And though three decades have past, Melman is still creating concepts and unique partnerships for his Chicago-based Lettuce Entertain You Enterprises.
The Award. At the Concepts of Tomorrow Conference, Rich Melman presented the 2002 award to Brad Blum, the vice-chairman of Darden Restaurants and the president of Smokey Bones BBQ Sports Bar.
"It’s an honor to win this award," said Blum. "It’s an honor because Rich’s name is on it. It’s an honor because there are many good concepts out there and we’re the ones taking this eagle home."
A key to growing any restaurant concept is the ability to take the concept from one region to the next. But barbecue has often been more difficult to execute on a national level than most other segments. The Holy Grail of barbecue has always been how to please barbecue lovers in different regions of the country where barbecue styles and tastes are widely varied.
Well, Smokey Bones BBQ Sports Bar has cracked the code. When it was featured in RH in the summer of 2000, it had only two test units. Today, the Darden concept has 20-plus units and sales near the $40-plus million mark. Next year, it plans to shift into a higher gear, doubling those figures to 40-plus units with sales of $80-plus million. Smokey Bones has performed so well, in fact, it recently claimed the top spot on Restaurant Hospitality’s list of the 50-Fastest-Growing Full-Service Chains in America.
Think About Drink
"Y our opportunity to help the customer spend more money comes on the beverage side," said Myriad Group beverage guru Michael Bonadies. He pointed out that few customers will ever eat more than one appetizer, one entrée and one dessert. But depending on what they order from your bar or from your wine list, you can really get into their wallet with beverages.
It starts with the bar, Bonadies said, noting that Myriad Group thinks bars are so important that it will put two or three of them in one restaurant to handle the anticipated traffic. Why so many?
"The energy of the bar helps fill seats in the restaurant," Bonadies said. He urged operators to ask themselves if their bar:
• attracts and welcomes patrons;
• has a design that "says" accessible/lower
cost of entry, so people can check you out;
• showcases your beverage concept;
• generates energy and excitement ("great
restaurants have great bars"); and
• "reeks sex, or at least helps ensure the
survival of the species."
He noted that service is a key component of a great beverage program. "And great service starts with great design." One key here is logistics. Attention to them will save steps, and saving steps increased the speed of production and delivery of your food and drinks. "Customers want food and drinks faster," Bonadies declared.
A second factor is ambience. "It’s incredibly important today," he said. "Compared to 15 years ago, it’s all about the scene now. You absolutely cannot spend too much on lighting, and you have to get the music right."
Once your design is in place, it’s time to start building your beverage program. Factors to weigh here, said Bonadies, include the following.
• Your concept. "If you’ve got an Italian restaurant, for example, then you’ll want to feature wine."
• The price point. "Determine the customer’s pain threshold for drinks," he advised. Keep the food check average in mind.
• Your location. When Myriad opened a restaurant in Seattle, it featured Northwest wines.
• Your staff. "Are they interested and are they able to be trained?" Bonadies asked.
• Your passion. "It’s the passion of the individual that is key. What are you and the people who work for you interested in selling? That’s what will move," he said.
He counseled operators that even the best beverage programs need hooks. "Hooks generate press, generate word-of-mouth and put asses in the seats," he said. "Set as many hooks as possible."
Examples of hooks that work include items like 100 wines by the glass, 1,000 beers from around the world, wine angels (i.e. staffers that rappel down to fetch wine bottles as they do at Charlie Palmer’s Aureole in Las Vegas), tiny tinis, and star bartenders, ("like having another PR machine," he claimed)
Spreading The Wealth
A no-holds barred Q&A session with industry legend Richard Melman found the Lettuce Entertain You Enterprises, Inc. (LEYE) headman telling attendees exactly what it takes to be good at concept development.
"The way you learn in this business is by making a lot of mistakes," he said. "That’s the value of trying all these different concepts like we have at Lettuce. I did better in my 40s and 50s because I had so much more experience."
The audience wanted to know how Melman structures his deals with his many partners—42 of them at last count. "I always say my lawyer, Michael Fox, sets it up. I like the sharing. I pick people who can do what I can’t do," Melman said. He added that at Lettuce, operating partners can’t simply buy their way in. Instead, it takes between two and five years of hard work to get to the partner level. Once they reach this status, they don’t have to put any money in up front. "But you are responsible for your share if it fails," Melman pointed out.
Not that Lettuce has had many failures. But even if they do, investors come out whole.
"We’ve built maybe 110-115 restaurants and syndicated 20, and we’ve never had an investor lose money at LEYE," Melman said. "And we don’t take any money out until we pay the investors back." He said that LEYE takes a 4 percent management fee for these operations, but will waive part of it "if we don’t meet our numbers." The company shoots for an 18-20 percent return on investment for its projects, Melman said.
So how come LEYE goes for operating partners instead of investment partners? "The best way to win is to develop people," Melman said. "The beauty of Lettuce is it provides a great farm system.
"For partners, I don’t want a workaholic who can meet the budget. Someone who has the ability and desire to develop people is the kind of person I want for a partner. My job is to make other people successful."
And what’s Melman up to next? He told the COT audience that he has hooked up with fast-casual chain Baja Fresh. "We saw Baja Fresh out in California and really liked it. So we took on the Chicago market and we will have 15 in here eventually. The first one opens in February, 2003 up in Evanston. It’s a little bit unusual for us."
