R&I Special Report: High Rolling

Las Vegas continues to reshape R&I’s Top 100 Independent Restaurants ranking while others build sales to keep up.

By Derek Gale, Associate Editor -- Restaurants & Institutions, 4/15/2007

The numbers behind this year’s Top 100 Independent Restaurants ranking are staggering: food-and-beverage revenue totaled nearly $1.46 billion, up 8.7% over sales in 2005. Where does that kind of growth come from? Vegas, baby.

The rapid rise of Las Vegas as one of the nation’s premier dining destinations is not hard to grasp. The city welcomed 38.9 million visitors in 2006, up 1% from ’05. But the local customer base grew even more: The population of Clark County, Nev., rose 4% in 2006 alone, after jumping 14% between 2000 and 2005.

From a gaming perspective, casinos are fairly commoditized. But a restaurant bearing the name of a well-known chef or a brand familiar from New York City, Chicago or elsewhere can set a casino apart.

There is plenty of guest traffic to go around, as evidenced by double-digit sales increases at restaurants such as AquaKnox at the Venetian Resort Hotel & Casino, new this year to the Top 100 (which ranks single operations of nonchain concepts with no more than five locations).

"We have not touched our pricing," says Charles Robinson, president of Orlando-based E-Brands Restaurants, which operates AquaKnox. "It’s all volume increases."

This year looks to be better: Just 10 weeks into 2007, AquaKnox was $500,000 ahead of 2006 revenue.

"Vegas is such a phenomenal place, it can’t help but do huge volumes. People just fall into restaurants there," says Hugo Ralli, co-owner of two-location Gibsons Bar Steakhouse and Hugo’s Frog Bar & Fish House, all three again among the Top 100.

As those restaurants attest, strong sales aren’t confined to Las Vegas, but other markets do feel casino restaurants’ pull. "Las Vegas is becoming competition for dining destinations across the country," says Mariann Costello, vice president of Scoma’s Restaurant in San Francisco. "Every year we move down [the Top 100 list]. We used to be in the top 10. Then all of a sudden there’s this Vegas explosion. It’s very geographically competitive now."

New York City’s Tavern on the Green has held the Top 100 No. 1 spot since 2002, but its $38 million-plus in gross sales for 2006 is dwarfed by Tao Las Vegas Restaurant & Nightclub’s remarkable $55.3 million.

How can any restaurant achieve that level of business? Start with a 44,000-square-foot space, add a $70 average dinner check and some 600,000 meals served, and you’re almost there. Bar (50% of revenues are from alcoholic beverages) and private dining (15% of the total) complete the picture.

For Tavern on the Green, the ratio is nearly reversed, with 42% of sales from private dining and 21% from alcoholic beverages. Many of this year’s Top 100 have focused on building these business elements—wine and spirits, and private dining—to grow sales, and they plan to continue to do so in 2007.

Wine sales have increased as consumers become more beverage savvy. "We’re responding to what people are asking for—there’s a real desire to drink better and have good wine pairings," says David Moran, general manager of Old Ebbitt Grill in Washington, D.C.

To meet these needs, Old Ebbitt Grill trains staff on wine-and-food pairings, and its menu suggests wines that complement each entrée. "It’s tremendous how successful that has been," Moran says.

Scoma’s held its first wine-pairing dinner this year and found it to be a success, and plans more in the future, especially during slower periods when such events are more manageable, Costello says.

Regular wine-by-the-bottle sales have increased during the past few years (a result of upgrading its wine list) and Scoma’s executives have seen wine pairings on menus proliferate.

"People like the wine pairings," Costello says. "That may happen here." She notes that with increased education of service staff comes more comfort and confidence in suggesting wines for guests.

Tavern on the Green also sees growth opportunities in wine, General Manager Bill Zambrotto says. "We’re looking this year to do a lot with wine dinners. We may do it as a regular thing; we’re just starting to experiment."

A prix fixe winemaker’s dinner series has been successful at ‘21’ Club in New York City, well-known for its 20,000-bottle cellar. The restaurant also offers a wine seminar program for private parties, with a sommelier offering wine education during a meal or reception. It’s different and "most people want to know more about wine than they do," says General Manager Bryan McGuire.

As with any marketing tactic, wine programs must fit a concept. "Wine is important but we don’t push it," Gibsons’ Ralli says. "Our philosophy is that if someone is going out and they want a bottle of wine, they will order a bottle of wine.

"But if a sommelier is selling you and looking down his nose, you’re going to resent it. There’s no hard sell for us. We mention that the wine list is on the back of the menu and that’s it." That tactic works too: Alcoholic beverages (including bar) accounted for 35.5% of sales at Gibsons’ Chicago flagship location.

Others cite many consumers’ sensitivity to high wine prices. "I’d rather sell more wine for less money and give good value than do a big mark-up," says Brian Johnson, general manager at Joe’s Stone Crab in Miami Beach.

Private Parts

Like wine marketing, promoting private dining benefits from new approaches. At III Forks in Dallas, Chef-proprietor Chris Vogeli says he’s seeking ways to maximize private rooms by "double stacking" parties, creating early and late seatings where possible. "It works during holiday time," he says, but he finds it more difficult during the rest of the year, when people often book rooms for 6:30 p.m. or later.

For Ralli, private dining is booming in each of his locations, he says, "but where we have a big opportunity is in lunch business." To address that, he has brought on a lunch sales team to contact former private-dining clients and call on potential new clients to let them know the restaurants offer private rooms for lunch—and that they aren’t outrageously priced.

At ‘21’ Club, with 10 private dining rooms and nearly 60% of its business from events, McGuire also sees nontraditional dining occasions as a growth path. The restaurant is closed Sundays, but he says they will open for large private events. "With the 52 Sundays we are closed each year, 500 banquet seats and two meals [lunch and dinner], there’s a lot of opportunity there."

More Growth Strategies

Increasing check averages through suggestive wine selling or improving private-dining revenue helps avoid menu-price increases, which operators hope to avoid. Vogeli says III Forks staffers work with hotel concierges to gain recommendations. At AquaKnox, staff similarly maintain relationships with Venetian casino hosts and front-desk staff.

"The majority of our marketing is internal for the casino," Robinson says. "With 4,000 rooms, that’s a lot of people. If we do our job, that should keep us busy."

Ownership by luxury hotel company Orient-Express Hotels drives some additional business from international visitors to ‘21’, although the parent has no lodging properties in New York City. Tapping pre-theater dinner business between 5:30 p.m. and 7:30 p.m. is another strategy.

"That period can be the difference between a good and a great night," ‘21’ Club’s McGuire says. To attract customers during those hours, ‘21’ offers a fixed menu and complimentary parking for $40.

On the opposite coast, Scoma’s menus a three-course lunch for $21.95. Patrons like to pair house clam chowder with a petite Dungeness Crab Louis salad, Costello says. "That’s the most popular combination, for a very good price, and a very good move for us."

Other promotions designed around specific time periods, such as happy hours, also have successfully boosted sales. At Old Ebbitt Grill, "oyster hour" runs from 3 p.m. to 6 p.m. and from 11 p.m. until closing Monday through Thursday. All items at the restaurant’s raw bar are half price, which brings in a different (often nondining) crowd and drives beverage business, Moran says.

As Joe’s Stone Crab knows, working with consumers to help them eat more conveniently can be a boon. The restaurant has been doing carryout for years, but now is focused on improving that service, adding new recipes to the menu and doing more intensive training for staff.

As a result, "Our biggest growth vehicle right now is takeaway," Johnson says. Joe’s CFO Marc Fine reports that takeout business makes up about 15% of the restaurant’s total revenue.