Rewards temper risks for restaurants opening in New York

From angling for prime real estate to fierce competition for customers, opening a restaurant in Manhattan, New York City’s most densely populated borough, comes with a host of challenges.

But it also comes with a bevy of potential benefits. It is, after all, a big city with a vibrant food culture recognized around the world.

“It’s obviously one of the global centers of the world, so it gets a lot of different sorts of people through it,” said Wayne Homschek, co-founder and chief executive of Pie Face, a Sydney, Australia-based sweet and savory pastry chain. “It’s a very high-profile city. If you’re in the right location in New York City, you’re basically a global brand.”

Pie Face has two restaurants in Manhattan, and Homschek hopes to have eight open by June 30. A third location is opening on Feb. 19. “The biggest challenge we’ve found in New York is definitely getting the stores open,” he said. While it is possible to find sites, he said, it’s not always easy to prep them and shape them into restaurants.

The fact that consumers tend to walk through the city rather than drive also makes it appealing, he said. “There’s plenty of locations that can open up in one city,” he said, adding that he doesn’t see why Pie Face couldn’t open 100 units in New York City.

Beverly Hills, Calif.-based Fatburger plans to open its first New York City location in April and has plans to open 10 more restaurants there in coming years.

Fatburger is partnering with franchisee the Riese Organization Corporate Group, a franchisee familiar with the region, said Andy Wiederhorn, chief executive of Fatburger Corp. “They know how the rules work. They know the system,” he said. “Honestly, they wanted to focus on bringing New York the neighborhood burger joint, and that’s what we are in L.A.”

“Everybody wants to have a bicoastal presence in the New York and Los Angeles markets,” Wiederhorn said. “We felt like we really wanted to establish roots in New York,” he added, noting that the city has the right mix of population and demographics to help Fatburger thrive.

Moe’s Southwest Grill, part of Atlanta-based Focus Brands Inc., opened its first New York City location on Jan. 31. Franchise partners Glenn Buchholz and Frank Ferrantelliown operate the location and plan to open two more in the coming years.

“We’ve got a lot of franchisees in our system that love that market, so they have a desire to grow there,” said Moe’s president Paul Damico. “The amount of people that frequent restaurants in Manhattan is sometimes tenfold what it would be in a suburban shopping center…the cost of real estate is sometimes five times greater than that of suburban shopping centers.”

Space is also a factor. The average Moe’s location in a suburb might be 2,600 square feet. In Manhattan, the space might measure 1,500 to 1,800 square feet. “You have to be able to generate three times as much sales in a little greater than half the square footage, but you accomplish that with the density of population,” he said.

Damico also recognizes that the competition in New York City is fierce. The “share of stomach,” as he called it, is slim given the population-to-restaurant ratio.