Say, “Union Square Hospitality Group,” and people think New York. Say, “Fox Restaurant Concepts,” and the area around Scottsdale, Ariz., is the stronghold. And, of course, Lettuce Entertain You Enterprises dominates Chicago.
For years, multiconcept operators have laid claim to specific markets or regions, building powerhouse companies characterized by innovative brands that spanned cuisines and price points for consumers and offered employees numerous possibilities for professional development.
But many are now stepping beyond their familiar territories, lured by the siren song of growth. Their expansion strategies are as varied as their holdings, with some leaning on a breakout concept and others scouting far and wide for new acquisitions and investments. The goal for each is similar, however: to reach audiences in new markets — and perhaps even become a national player.
“It’s going to be interesting when one of these guys really hits it; we haven’t seen that yet,” said Tom Dillon, president and chief operating officer of the bicoastal Patina Restaurant Group.
Here’s a look at how some of the major multiconcept players — categorized by the mode of growth — are branching out.
The concept creators
Many of the best-known multiconcept companies develop their new restaurant concepts and brands in house.
Danny Meyer’s USHG has long been known for its New York-focused higher-end restaurants, such as Union Square Cafe, Meyer’s original concept that opened in 1985; Gramercy Tavern; and Eleven Madison Park. The company currently operates nine unique restaurant concepts in the city.
Meyer opened the Shake Shack burger concept in 2004 and found a growth vehicle that is taking USHG well outside of the New York market.
USHG now operates 11 Shake Shack locations in the United States, with No. 12 expected to open before the end of the year. Two Shake Shacks also have opened in the Middle East, and more are planned.
Next year, three more locations are confirmed: a second unit in Miami, a first for Philadelphia and one in New York’s Grand Central Terminal, said Theresa Mullen, a USHG spokeswoman. All are corporate owned and the company has no plans to franchise, she said.
Richard Coraine, USHG’s senior managing partner for new business and development, said it made sense to grow Shake Shack, given the popularity of better burgers and the concept’s broad appeal.
“It took us five years to get the second Shake Shack open, but we wanted to be confident that we could execute well,” Coraine said. “Now, we have the systems and people in place, so we feel we can move the needle much quicker.”
USHG is also looking to grow some of its other concepts. The company is opening a second location of the casual Blue Smoke barbecue joint in New York this December. And Untitled at the Whitney Museum of American Art is another with broad appeal that the company may multiply, Coraine said.
One of the key drivers in growing such brands is the need to build in career opportunities for employees, Coraine noted.
The limitations for employees in building a standalone restaurant could be illustrated by Meyer’s recent decision to sell Eleven Madison Park to the restaurant’s general manager, Will Guidara, and executive chef, Daniel Humm.
According to The New York Times, Guidara and Humm wanted to launch their own restaurant company, but they also wanted to stay at Eleven Madison Park. Rather than asking them to resign and then having to rebuild the team, Meyer agreed to sell them the restaurant.
Last year, USHG also experienced the first loss of a concept with the closure of Tabla. But USHG at the end of December is expected to launch a new restaurant called North End Grill with Tabla’s chef, Floyd Cardoz.
North End Grill will be a casual bar-and-grill-style venue that Coraine said would stand out for “the quality of ingredients and the warmth of the welcome.”
The bicoastal Patina Restaurant Group is also continuing to develop unique concepts, while looking to multiply existing brands within its portfolio.
With a complex history and an established presence on both the East and West coasts, Patina is the result of a multiconcept merger of venues created under New York’s Nick Valenti, now chief executive, and Los Angeles chef Joachim Splichal. With more than 60 restaurants and revenues of $186 million in 2010, according to the Nation’s Restaurant News Top 200 census, the company is known for restaurants in high-volume cultural and entertainment centers.
Two of the company’s concepts were recently named among Esquire magazine’s Best New Restaurants 2011: Ray’s & Stark Bar at the Los Angeles County Museum of Art and Lincoln Ristorante at New York’s Lincoln Center.
Patina also is looking to multiply its Naples 45 brand, Dillon said. A casual pizzeria, the Naples 45 Ristorante e Pizzeria location in New York’s MetLife Building averages about $8 million per year. And two variations of the concept in Disney theme parks together average about $10 million in annual sales.
The challenge for multiconcept operators, said Dillon, is knowing when to “really put your weight behind one thing.”
The key is identifying a unique concept with broad appeal and economics that work, Dillon said. Then, a company must deliver consistent quality and food, even at high volumes.
“If you can check all of those boxes, then you probably have a concept you can grow,” he said
Richard Melman’s Chicago-based LEYE also has a handful of its brands on a growth track. With 80 restaurants reflecting 42 brands in eight states, LEYE is known for its collection of one-of-a-kind concepts, mostly in the Chicago area. Only a few LEYE brands have multiple locations — though the company gave birth to both the Maggiano’s Little Italy and Corner Bakery brands, which were spun off early and grew to become large chains.
Now, Kevin Brown, LEYE president and chief executive, sees the four-unit Wow Bao and four-unit M Burger concepts as scaleable, and the company also is looking to grow Mon Ami Gabi, Paris Club and Hub 51.
In addition, new LEYE concepts are coming. Last month, the company’s Foodease food court concept debuted in downtown Chicago, and the company recently unveiled Saranello’s, a casual Italian restaurant in Wheeling, Ill.
Sam Fox of Fox Restaurant Concepts has shifted his focus entirely to multiplying existing brands.
“I think we have enough concepts today,” he said.
Fox has 33 restaurants among 12 concepts across five states. None were specifically designed to be a growth vehicle, he said.
“It has always been about opening one great restaurant,” he said. “It was about [scratching] our creative itch.”
However, Fox has identified five brands within his portfolio for growth: True Food Kitchen, North, Sauce, Zinburger and Culinary Dropout. And the company is moving beyond Arizona, California, Colorado, Texas and Kansas, where it has traditionally operated.
The health-focused casual-dining brand True Food Kitchen has four locations and $10 million in financial backing from P.F. Chang’s China Bistro Inc.
Fox also recently sold licensing rights to Zinburger, a four-unit casual wine-and-burger bar, to The Briad Group, one of the largest franchisees of the T.G.I. Friday’s brand. Livingston, N.J.-based Briad last year opened a Zinburger in Clifton, N.J., and more are planned for the East Coast, said Fox.
The 10-unit Sauce, a fast-casual pizza concept with a $9 check average, also has potential, but Fox said growth is likely to be more organic than strategic.
“We don’t have a plan to open 50 or 100,” he said. “We’ll just go to another city, and if it works, we’ll keep going.”
Fox just opened the sixth location of the casual Italian concept North with an updated menu and decor. Two more locations of the single-unit gastropub Culinary Dropout are also planned.
“That’s the environment right now,” said Fox. “People want things casual.”
