Chefs On Fire
In New York City, Philadelphia, Washington, D.C., Denver — and other major cities across the country — creative young chefs are opening their own restaurants.
"In New York, the trend isn’t all that new. Think of Andre Soltner, Jean-Georges, David Chang and others," said Faith Hope Consolo, noted trend-watcher and chairman of Douglas Elliman’s Retail Group in New York City.
Indeed, we probably shouldn’t call it a trend any more. In a growing number of cities, chef-owned restaurants are a mainstay of rising urban neighborhoods.
"Urban dwellers love restaurants like Zahav, a casual Israeli restaurant in Philadelphia offering four-star quality for neighborhood prices," said Tim Duffy, VP of Michael Salove Co., a Philadelphia-based retail real estate advisory firm/brokerage and X Team International partner.
CookNSolo Restaurants, a company co-owned by chefs Steven Cook and Michael Solomonov, started Zahav in 2008. Its success led to two more CookNSolo restaurants: Federal Donuts, which serves up fried chicken and honey donuts, and Percy Street Barbecue is — you guessed it — a barbecue place. Both are fast casual, a rising alternative to mass-produced fast food.
Not Just Any Chef: Chefs opening their own urban restaurants boast excellent-to-impeccable credentials. Take the co-owners of The Mildred in South Philly — executive chef Michael Santoro and his partner general manager Michael Dorris, culinary arts classmates at Johnson & Wales University. After graduating in 2004, both signed on with a succession of internationally acclaimed chefs in Europe, Asia and here at home.
In 2006, Dorris founded Michael Dorris Catering just outside of Philadelphia. Six years later, he and Santoro opened The Mildred.
"Our concept is American cuisine with heavy British influence and cooking styles reflective of England, France, Spain, Korea and other countries," Dorris said.
Top Chefs D.C.: Washington, D.C., may have more contestants on Bravo TV network’s "Top Chef" program than any other city. Three you may have seen:
- Spike Mendelsohn who created D.C.’s Good Stuff Eatery and We, The Pizza.
- Mike Isabella created Graffiato and Bandolero and has two more concepts cooking.
- Bart Vandaele, the owner of the popular Belga Café, recently opened a second D.C. concept: B Too.
"Washington, D.C., has created a unique environment that attracts young people who prefer conversation and food to materialistic spending on things like clothes," said Jeff Pollak, managing partner of Bethesda, Md.-based Streetsense, a real estate consultant and brokerage and X Team International partner. "Our chefs are taking advantage of that with new restaurants."
On to Denver: Chef-owned restaurants arose in the large cities of the East and West Coasts (plus Chicago), and they have spread to the interior. Just look at Denver.
"In Denver, a lot of talented chefs are creating hip concepts on the less expensive edges of our city neighborhoods," said Kelly Green, president of Urban Legend, a division of the Legend Retail Group in Denver and another X Team partner.
It’s going on across the country.
The Money Recipe?: Chefs acquire seed capital from family, friends or private investors, said RJ Cilley, corporate development at Toronto-based Hudson’s Bay Co., with personal investment interest in restaurants.
"Restaurant start-up costs run $150,000 to $250,000 for 2,000 to 3,000 sq. ft. in an existing building," Cilley said. "This includes second-hand kitchen equipment.
"A chef might earn 20% to 25% in sweat equity," he continued. "A chef who contributes capital may also get around 20% in sweat equity."
Le Duff America Ignores the Slow Recovery
Chain Store Age asked Paul Carolan, chief development officer for Dallas-based Le Duff America, about the bakery-café company’s aggressive growth plan in the United States.
The North American subsidiary of Paris-based Groupe Le Duff SA, Le Duff America now manages four brands in the United States: Bruegger’s Bagels, la Madeleine Country French Café, Brioche Dorée and Mimi’s Café, which was acquired in March.
This year, the 300-unit Bruegger’s will add eight to 10 franchises and seven corporate units. With just over 60 units, la Madeleine will open seven corporate restaurants, one franchise and three licensed units. Brioche Dorée is adding two units to its existing U.S. roster of 33 units. Mimi’s is getting prepped for growth.
Seems brave in this economy.
How can you have confidence in such aggressive expansion plans in this economy?
Many restaurants are battling economic headwinds. We don’t feel those headwinds. We really don’t discuss the economy. We talk about food, customers and site selection. As a privately held company, we can take a long-term view of development. Public brands must focus on shorter-term development strategies. Of course, we have headwinds of our own.
We face two major challenges: finding franchisees and sites. Franchisees must be great restaurateurs and capitalized well enough to build at least five units. For instance, a la Madeleine costs $1.2 million to build out, an investment that typically produces an annual unit volume of $2.1 million.
Our biggest challenge is site selection. All of our brands have specific siting needs. Bruegger’s Bagels, for instance, needs a 2,000-sq.-ft. to 2,400-sq.-ft. endcap space, great co-tenancy and visibility. We look for these sites in areas with dense retail. Of course, it has to be in a center that is close to Bruegger’s customers.
Describe your customers.
All of our brands focus on customers with similar demographics and psychographics. Our customers are 25 to 44 years old, well educated and highly compensated. The bakery café segment has a strong lunch business. So we need sites in communities with high daytime populations. That’s another site selection challenge.
Doesn’t la Madeleine have strong breakfasts and dinners, as well as lunch?
Yes, our breakfasts and dinners are strong. Our menu is deeper than most bakery-cafés. We bake breads and make sandwiches, but we also offer plated French specialties, such as Chicken la Madeleine.
What are you doing that’s new?
Brioche Dorée has developed a prototype for street-front units in North America. Traditionally, Brioche has gone into non-traditional locations in hospitals, airports and hotels. Now, we’re taking to the streets.
What about Mimi’s strategy?
Strategy development goes to Le Duff’s core and applies to all of our brands. We’re all about the food. We invite you into our home, talk with you about the food and your choices, and take pleasure in serving you. And we want you to come back. We’re working through these ideas from Mimi’s point of view.
It’s Your Destiny
Billed as the largest LEED Gold-certified retail commercial building in the world, Destiny USA is more than an environmental leader. It is a shopping and entertainment mecca.
The 2.4 million-sq.-ft. tourist destination in Syracuse, N.Y., is an unexpected blend of luxury outlet tenants with restaurants and big entertainment names in a high-impact setting that includes a sweeping, three-story atrium, a replica of an upside-down city destroyed, and a suspended-rope adventure for the kids.
But it hasn’t always had this kind of magnetism. Prior to the construction of the circa 1990 property — originally coined Carousel Center — the central New York State site was an unsightly scrap yard, landfill and oil tank farm spanning a multi-block area called Oil City. Locally based Pyramid Management Group founder and chairman Robert Congel had a far different vision for the area, spearheading a mammoth, three-year environmental cleanup and redevelopment effort that culminated in the October 1990 opening of the 1 million-sq.-ft. Carousel Center.
Twenty years ago, that was a hot shopping mall. Charter anchors included J.C. Penney and now-extinct banners such as Hills, Lechmere and the last Bonwit Teller ever built. Lord & Taylor arrived in 1994. Not resting on its laurels, Pyramid planned a bigger, better, hotter iteration it internally labeled Destiny USA, but the plans remained tucked away until 2007, when the first phase got under way.
Over the next few years, Destiny USA took shape, as big tenant names committed and expansion square footage added a full level of entertainment, sit-down dining and an indoor outlet component. In 2011, retail openings included Lenox, Michael Kors, Saks Fifth Avenue OFF 5th, BCBG MaxAzria, Dick’s Sporting Goods, Cantina Laredo and The Melting Pot. The entire facility celebrated its official rebranding to Destiny USA in August 2012, and this year will see the addition of T.J. Maxx, Fossil Outlet, Johnston & Murphy, and Regal’s IMAX and RPX screens.
Developer Pyramid, however, is as proud of its environmental undertakings as the retail and entertainment offerings.
"It was a proud moment to achieve LEED Gold certification and become the largest LEED Gold-certified commercial building in the world," said David Aitken, Destiny USA spokesman. "The team at Destiny USA dedicated years to developing an environmentally friendly facility to coincide with the beliefs of the company and its founder and chairman Robert Congel."
In fact, Pyramid had announced in late 2011 that it would seek a LEED Gold certification for the expansion portion of the project, a move that would involve a host of cutting-edge sustainable features, including a solar reflective roof, renewable flooring, a comprehensive rainwater harvesting system — and all 100 new tenants within the expansion to obtain LEED certification.
"The green aspects of the facility paired with the dynamic offering of shopping, dining, entertainment and outlets have helped draw more than 23 million visits in 2012, with visitors from across the country, Canada, China and Europe," said Aitken. "It’s been a great draw for the community, and we will continue to work hard to drive unique tenants and events to the region."
Location: Syracuse, N.Y.
Developer: Pyramid Management Group
Size: 2.4 million sq. ft.
Components: 200-plus dining, entertainment, shopping and outlet venues
Major tenants: Sephora, Coach, Michael Kors, Saks Fifth Avenue OFF 5th, True Religion Brand Jeans, Brooks Brothers Factory Store, WonderWorks, Pole Position Raceway, Regal IMAX and RPX
Status: Opened in 1990 as Carousel Center, and rebranded to Destiny USA in August 2012