2003 Top 100 Independent Restaurants

Investments in the guest experience helped independents' sales rebound

By Margaret Sheridan, Senior Editor -- Restaurants & Institutions, 4/1/2003

The slump that engulfed restaurant business in the wake of the terror attacks made no exceptions for celebrity. The oldest, the largest and the most established operations felt the pinch, not just the small or up-and-coming.

As ever, the best restaurants refused to endure the downturn without a fight.

In New York City, Julian Niccolini, managing partner of The Four Seasons, sent personal letters to 100 of the restaurant’s best regulars. “I reminded them of our catering services and three private function rooms. Our customers have connections and tell their friends and associates,” he says. “We asked for help and got it.’’ The operation’s food and beverage sales totaled $14 million in 2002.

Restaurants and Institutions’ 20th annual ranking of the Top 100 independent restaurants during the year past is the result of dozens of similar examples, of restaurateurs not only in New York City but across the country, who found ways—often never before tried—to maintain their success stories. No magic solutions were discovered to counter the challenges of changing tastes, consumer wariness about dining out, tougher competition from chain restaurants and escalating operating costs. These operators used time-honored strategies, renewing their commitments to guest satisfaction by delivering quality food, attentive service and value.

“The challenges we faced are no different than other restaurants in this country,’’ says Alan Garmise, president of Tavern on the Green, which with 2002 gross sales of $36.2 million tops this year’s list. “If you want to stay on top, you focus on improvement and cut waste.’’

Restaurateurs managed to achieve strong results by honing operations, upgrading wherever possible while cutting back only where it wouldn’t hinder the guest experience. They renewed their dedication to delivering on their promise of a superior product.

View the Numbers

The Top 100
Alphabetical List
Top 25 by Number of Meals Served
Top 25 Sales per Seat
Top 25 Number of Seats
Top 15 Highest Averge Dinner Checks
Top 15 Lowest Average Dinner Checks

LISTENING TO CUSTOMERS
Restaurant management’s true mettle emerges during lean economic times, according to Bryan McGuire, general manager of “21” Club in New York City. Among midtown Manhattan’s most popular fine-dining establishments 83 years after its founding, “21” Club withstood last year’s economic storms by holding fast to tradition. For its efforts, customer flow at the restaurant grew 6%.

“We listen to our customers and work hard to give them what they need,” McGuire says. “Sensitivity is a word that permeates everything we do. That was especially true last year.

“Even before September 11, operators in the hotel and restaurant industries faced sagging sales,” McGuire recalls. “After, the problem compounded. With that in mind, we made sure we got off to a good start last year.”

Rather than reducing staff or slashing prices, “21” management began offering all-inclusive meals in addition to à la carte to provide greater value. Focus groups identified ways to improve customer service and maintain profitability. The restaurant also launched a direct-mail campaign to lure new customers and retain existing ones.

The slowdown is not confined to New York City. In Seattle, Palisade added combination meals to increase value perceptions. The restaurant also expanded appetizer offerings to provide guests with a broader selection of inexpensive items.

“We took a sectional approach, adding range to our menu,” says Attila Szabo, director of operations at Restaurants Unlimited, the multiconcept operator that owns Palisade. “This way, we were able to avoid lowering prices.”

KEEPING CONNECTED
Never forget the regulars. The Clubhouse used its 10,000-name database to e-mail preferred customers and past guests at its locations in Oak Brook, Ill.; Costa Mesa, Calif.; and Atlanta. Notices of special events, offers of priority reservations and a complimentary bottle of wine for birthdays and anniversaries did not go unused.

Pampering regulars is an art form at Gibsons Bar Steakhouse locations in Chicago and Rosemont, Ill., both among this year’s Top 100. Extra managers are assigned to the reservations desk during peak hours. “We hate to turn away business,’’ says Larry Shane, Gibsons Management CFO. “But sometimes it happens when we’re filled to capacity.’’ On such occasions, managers don’t just make reservations for longtime guests at nearby restaurants—they pay the meal tab.

Quality service and strong management presence helped boost business at Kowloon restaurant in Saugus, Mass. The 1,200-seat Chinese diner and club grossed $9.05 million, a 5% increase from 2001, with an average dinner check of only $15.

“Our motto is to give customers more than they expect in terms of portions and service,” says Manager Bob Wong. “Because we’re a casual establishment, we’re affordable, so people still come when times are tough.”

Personal service is a Kowloon hallmark. Owners William and Madeline Wong often mingle with guests, as do management staff, largely consisting of the couple’s children and extended family. “Our hands-on approach sets us apart from the competition,” Bob Wong says. “Customers feel like part of the family.”

Building bonds between operator and guest also has proved profitable at Boulevard in San Francisco. “We’re on the premises all the time,” says Nancy Oakes, executive chef and co-owner. “We work to make guests as comfortable as possible and to provide a consistently high level of service.”

TAKING DOWN COSTS
San Diego-based Anthony’s Seafood Group, which includes Top 100 operation Anthony’s Fish Grotto among its concepts, reduced stockpiling to save money and eliminate waste. “We buy fresh only in the quantity we need,’’ says Beverly Mascari, co-owner and director of guest relations. Value of fresh product for eight units dropped from $800,000 to $300,000. The restaurant also minimized waste by showing cooks how to scrape pans and pots more effectively.

Similarly, Boulevard curbed expenses by recycling and composting waste instead of using a traditional disposal service, the cost of which increased 33% last year. While management did not raise menu prices, they reduced portion sizes of fish and beef. Savings strategies also included educating restaurant staff on costs to foster frugality.

“We put a price tag on everything,” Oakes says. “For example, absorbent towels cost 42 cents each, but they look like paper towels to kitchen staff. If they know what things cost, they conserve more.”

Rising labor costs were stemmed at Frankenmuth Bavarian Inn, Frankenmuth, Mich., by reducing hours of operation during slow seasons. Owner William Zehnder opened 30 minutes later in the morning and closed 30 minutes earlier. Instead of a 40-hour week, hourly employees put in 38 hours. Administrative departments were scaled back and office responsibilities streamlined. “We operate with more efficiency,’’ he adds.

In trying to cut waste, no detail goes unexamined by Tavern on the Green’s Garmise. “I remind everyone to turn off unnecessary lights and watch the air conditioning,’’ he adds. “You pinch pennies where you can without harming the guest experience.’’

Old Ebbitt Grill in Washington, D.C., reduced food costs from 31% to 30% by hiring a production chef, says Tom Meyer, president. “Our production chef supervises portion control and watches for shrinkage by locking up ingredients.’’

A weekly meeting of all managers reduces overtime. “We chart overtime and put it up on a graph. Seeing it is dramatic,” Meyer says. “Managers then come up with solutions as a team."

Grant DePorter, president and CEO of Chicago’s HC Restaurant Group, which includes Harry Caray’s restaurants, credits a new director of operations for cost reduction. “She introduced ways to analyze productivity and manage vendors,’’ says DePorter. “Now, we get more vendors to bid on business and the restaurant buys more competitively.’’

A 5% rise in food costs at Kinkead’s Restaurant in Washington, D.C., was offset when owner Bob Kinkead postponed minor repairs. “We saved it all for July when we will close for renovation,’’ he explains.

To further control expenses, each kitchen staffer who helps the operation attain food-cost goals between 30% and 32% is awarded $25 to $100. “Sometimes, I pay out up to $5,000,’’ says Kinkead.

STAFFING CONCERNS
Spend for growth and staff for business is the philosophy of The Yard House, Long Beach, Calif. The operation spent more than $200,000 on improvements during the past two years, including new signage and patio, more prep space and refrigeration, and a reconfigured production line. “You invest to be ready for more growth,’’ says Harald Herrmann, president and COO.

At Chicago’s HC Restaurant Group, smarter scheduling of employees and more cross-training resulted in greater efficiencies, better gratuities and higher customer satisfaction and staff morale, according to DePorter.

The Clubhouse took advantage of the labor pool by upgrading staff, paying bonuses to employees who referred new workers. The concept also hired experienced cooks, servers, bartenders and managers during the fourth quarter to handle increased holiday business. To enhance employee training, it partnered with distributors for in-restaurant wine seminars and product tastings.

At Old Ebbitt Grill, daily staff meetings address thorny issues before they become problems, says Tom Meyer. He also conducts management training and quarterly performance appraisals. Meyer credits skill-enrichment opportunities for low turnover. “Having the same executive chef and general manager for eight years adds stability."

INVITING BUSINESS
Convention visitors traditionally supply 50% of business for Anthony’s Fish Grotto. With business travel off, co-owner Shirley Mascari worked to attract more local business, assigning two employees to circulate menus and coupons in nearby shopping centers and neighborhoods. “The coupons were numbered, so we knew exactly where the new business was coming from. We targeted those areas for future promotions.’’

Harry Caray’s keeps its name in the limelight by inviting media to the concept’s sports-related press conferences, political rallies and tourist events. To offset a loss in Chicago’s convention business, the restaurant found new customers in local neighborhoods. “We’re located in a booming area with lots of new commercial and residential properties,’’ says DePorter. “We passed out menus. I also got involved in local planning committees and charity events.’’

Frankenmuth Bavarian Inn increased the number of discount coupons offered through its Web site to draw more business. It also used a company-owned billboard to market its menu diversity. “We’re famous for our chicken dinners,’’ says Zehnder. “But we have more than that.’’ He promoted a “steakfest” in September and October and holiday menus in November and December. The billboard is in a high-visibility location at the entrance to town. “Even the locals noticed,’’ he says.