Special Report: Top 100 Independents-The Long View

Owners of R&I’s Top 100 Restaurants remember the basics of what it means to be a restaurateur.

By Kate Leahy, Associate Editor -- Restaurants & Institutions, 4/15/2008

View the Top 100 ranking

Operators of America’s most-successful restaurants know their food-and-beverage sales totals to the dollar. They know how many meals their restaurant served in 2007 and the share of revenues accounted for by wine and spirits. They also understand what it is that keeps their restaurants successful.

"If you wish to be a restaurateur, by definition, you should be able to be in your restaurants and say hello to people," says Alan Stillman.

Last year, Stillman sold the 10-unit Smith & Wollensky chain to New York City-based Patina Restaurant Group but retained the original Smith & Wollensky restaurant along with Quality Meats, Maloney & Porcelli, Park Avenue Winter and Post House, all in New York City, where he runs Fourth Wall Restaurants with his son, Michael. A restaurateur for more than 40 years, and operator of three of this year’s Top 100 venues, Stillman knows that despite the dazzle of the numbers—such as the $66.6 million in food-and-beverage sales last year by Tao Las Vegas Restaurant & Nightclub—the restaurant business’ core remains hospitality: the connection built with each guest by delivering high-quality food and service.

A humbling economy has all foodservice operators familiarizing themselves again with the basics. After an ebullient 2006, when total revenue for that year’s Top 100 Independent Restaurants ("independent" defined here as any restaurant brand with no more than five locations) increased by 8.7% over the prior year’s total revenue, 2007 produced less-showy results.

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The 100 restaurants on this year’s list had aggregate 2007 food-and-beverage sales of $1.53 billion, 4.8% ahead of 2006. This year’s marketplace shows no signs of being more forgiving, requiring even greater focus on the core competencies of hospitality.

The Independent Advantage

Those skills haven’t diminished at New York City’s 88-year-old ‘21’ Club, says general manager Bryan McGuire. "There are a lot of great restaurants in New York City and in the world," McGuire says. "Often what becomes the differentiation point are the people. People who make you feel comfortable, who are unobtrusive, who know you by name."

Stillman, who has run both chains and single-location restaurants, believes that one-on-one hospitality inevitably diminishes as a restaurant brand expands.

"The independent restaurateur truly has to touch the things that he has, and I found that hard to do when [restaurants] are 1,000 miles apart," he says, reflecting on his years building the Smith & Wollensky concept.

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Charly Robinson disagrees. President and COO of Orlando-based multiconcept operator E-Brands Restaurants—which includes Top 100 member AquaKnox in Las Vegas—Robinson says that the human touch can be maintained by managers of individual restaurants, no matter how far away corporate offices are based. As an example, he points to Mario Gonzalez, managing partner of AquaKnox, which competes for guests with 19 other restaurants in The Venetian Resort Hotel & Casino and scores more throughout Las Vegas.

"Mario knows all of the hosts, all of the [other restaurant] owners—he has relationships just like he was the mayor of the town," says Robinson. Good managers think like owners, he adds, whether the focus of the moment is marketing, guest relations or decision-making. "If they have an interaction with a guest, they do it naturally; it is expected," he says. "A lot of chains are more manually driven."

Las Vegas Effect

Las Vegas, with 40 million visitors annually, has taken the dining experience to a new level in the past decade. When partners Richard Wolf and Marc Packer took their New York City concept Tao Asian Bistro (with 2007 revenues of $26.8 million) to Las Vegas from New York City, they achieved success on a whole new scale—Tao Las Vegas Restaurant & Nightclub boasts 44,000 square feet of space and $66.6 million in revenues.

Although the Las Vegas restaurant market may seem rarified and otherworldly, "part of that is about demand," says Andy Masi, partner in Las Vegas-based multiconcept operator The Light Group, whose properties include Top 100 member Fix Restaurant & Bar. "You have hotels with 3,000 or 4,000 rooms in Vegas," he says. "Just to meet the demand of guests staying in a 4,000-room hotel, you need more restaurants and more seats. Dinner is on everyone’s agenda when they come to Vegas."

But glitz, glamour, style and showmanship don’t sell—even in Las Vegas—without the basics of quality food and service keyed to the marketplace, Masi says.

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"It’s getting very expensive to build out there," says E-Brands’ Robinson. E-Brands recently opened David Burke Modern American Cuisine in The Venetian. "The cost of entry is not inexpensive and it can be very risky if you don’t have the capital behind you. There is no guarantee that you’re going to do great.

"You have to pick your size right," he adds.

Gambling on Change

On a Las Vegas visit in 2005, George Hauer, Trey Foshee, and Mark Oliver—partners in Top 100 member George’s on the Cove in La Jolla, Calif.—noted the emphasis placed on the quality of the restaurant environment and experience. Hauer and his partners knew that the strength of their business lay in its food and service, but they concluded that if they wanted to be around 20 years down the road, they would need to make significant cosmetic changes to their restaurant.

A year later, the operators renewed their lease and "took this restaurant down to the studs and rebuilt it," Hauer says. They invested $3.5 million on a redesigned space that features three dining tiers: a fine-dining restaurant, a more-casual bistro and a bar.

Hauer now likes to say that the space is "comfortable for any occasion or none at all." Dress codes have been relaxed for patrons and for servers, and the traditional trio of appetizer, entrée and dessert has given way to smaller plates that lend themselves to do-it-yourself tasting menus. "You’re going to get professional service, relaxed service, but also service that reflects what California is all about," he says.

In the renovation process, George’s at the Cove lost some regular customers, particularly older diners, but Hauer doesn’t regret the decision to retool. This year he expects George’s to see $12.5 million in sales, up from $11.5 million last year. "We’ve made it clear that we’ve committed ourselves to the future. Has the gamble paid off? Thirty-five- to 50-year-olds have replaced the ones that left, so then it’s resoundingly yes."

‘21’ Club heard complaints when it made ties optional for male guests at lunch in 1995, says McGuire. "People who are regular patrons have a tendency to grow accustomed to a certain style, and they don’t like to see changes," he says. "The flip side of that is if you don’t stay contemporary and reinvent yourself, it could work against you."

Gradual change ensures that the landmark restaurant maintains its relevance, its heritage and its regulars, McGuire believes. And in taking the long view, this year’s Top 100 Independents seem poised to maintain success.

"Long-term, I’m an optimist," Stillman says. "If you look out two years or more, I believe the United States will be in good condition, with good job growth and with people who will want to eat out more and more and more."