Milk & Honey Café debuted in Beltsville, Md., in 2015 and garnered a tremendous word-of-mouth reputation. That word eventually reached Warren Thompson, CEO and founder of Thompson Hospitality, who went to check it out on a Monday around 2 p.m.
“It was a really hot day, and what I noticed first is people were waiting in line to get in there,” Thompson said during a recent interview.
That was intriguing enough for him to reach out to the owners about acquiring the brand. The owners weren’t ready at that time, but Thompson Hospitality agreed to license one unit. Eventually, in 2020, the company bought all the units and the brand. The Milk & Honey founder is still involved, working as a consultant, and is focused on the menu.
“The secret sauce of the brand is just great food. People will travel 45 minutes to come to Milk & Honey for lunch, brunch, and dinner,” Thompson said.
That said, work needed to be done on the service side. To make progress there, the company implemented its operating partner model, which provides managers with the opportunity to have an equity position in year five. This program attracts a better, more dedicated leader, Thompson said.
“We are paying more to get better people and the volumes and efficiency of these restaurants are allowing us to do that,” he said. “The stores we purchased all had good rent structures. They were able to go into a C+ location and do great volumes. So that’s also the secret sauce behind the model; because of the strength of the brand, you don’t have to put it in an A location to do well. If you can pay lower rent and use those dollars to reinvest into the people, paying higher wages, the model works very well.”
Thompson knew Milk & Honey was going to be one of his company’s strongest brands once the service model was put into place, and he was right. He defines a strong brand as one that can generate about $1,000 in sales per square foot. Milk & Honey is currently averaging about $1,200 per foot, with some that do close to $1,700-$1,800. So a 4,000-square-foot, full-service restaurant generates close to $5 million. The Wharf location in Washington D.C. is about 4,200 square feet and he expects that to hit close to $6 million. EBITDA (earnings before interest, taxes, depreciation, and amortization) is between 20-22%.
“We’re really happy with the performance of Milk & Honey, and in fact of all our restaurants, Milk & Honey and Wise Guys Pizza are the two best performing restaurants today when I look at the metrics,” Thompson said.
Because of this performance, the company is bullish on the brand’s growth and is targeting the Baltimore, D.C., and Virginia markets for growth, as well as South Florida in the next year. Thompson anticipates 5-6 new units per year and will also convert any underperforming restaurants in the Thompson portfolio into a Milk & Honey if need be.
“We converted a Willie T’s (Seafood Shack) in Silver Spring about six months ago and it just hasn’t hit the mark,” Thompson said. “It hasn’t performed where we’d like it to be, so we will convert that to a Milk & Honey Express by the end of the year. We’re always looking at our portfolio and saying, ‘What’s the best use of that site?’”
Milk & Honey’s momentum should continue as long as it maintains its food quality, which is the biggest driver of its success, Thompson said. The brand is also focused on its service and its ambience — making sure it’s comfortable for everyone. Notably, the definition of “everyone” has changed a little bit. When Thompson first got involved, for instance, Milk & Honey was catering primarily to brunch customers. The company expanded hours to also focus on dinner, which is now the largest daypart.
Additionally, Milk & Honey’s asset base is diverse and includes an express concept at about 1,500 square feet, a hybrid express/full-service concept around 2,500 square feet, and full-service restaurants at 3,000-5,000 square feet. This allows the brand to fit into a variety of markets and spaces, and better enables the brand to find second-generation real estate that can be more easily converted into the concept. Thompson Hospitality has also experimented with dual-branded format; for example, in Silver Spring, Md., the restaurant opens at 8 a.m. with Milk & Honey and switches to its Matchbox brand at 11 a.m.
“It added quite a bit of revenue to that particular location, so we plan to continue to do some of that in places where we have a large restaurant and we have a brand like Matchbox that may not be perceived as a breakfast/brunch location so much as it is a great pizza, lunch, dinner, happy hour, bar type of restaurant,” Thompson said. “Milk & Honey will be a good complement as we continue to develop.”
Like it does with its other brands, Thompson Hospitality will leverage its scale and existing footprint to support growth and drive efficiencies. The company is opening Milk & Honeys close to other restaurants to maximize maintenance work and is tapping into its labor pool to raise awareness across the roster. At The Wharf, for instance, a Milk & Honey is situated next to a Maker’s Union, and if the wait gets too long at one, the host will recommend the sister concept next door. The company will also leverage scale for marketing opportunities, for example rotating ads throughout the Thompson Restaurant portfolio.
“It will allow us to buy sponsorships, so if we want to partner with the (NFL’s Washington) Commanders, we can partner with them as Thompson Restaurant Group and then we can feature the various brands at different times. Now, rather than a 12-restaurant chain trying to buy advertising and spending marketing, we can do it across the portfolio and split that cost. It just makes it a lot more palatable,” he said.
All of these pieces are swiftly moving into place to position Milk & Honey as a Hot Concept and one that Thompson is especially optimistic about. That optimism includes the potential to maybe attract some investors someday.
“When you look at the success of First Watch and other breakfast/brunch driven brands, it’s clear that market is wide open. It’s growing, it’s a great opportunity, and I think Milk & Honey has an ability to take its rightful place in that market,” Thompson said. “Our ultimate plan five years from now is to break off the best performing restaurant brands and take them public. If we were doing that today, it would be Milk & Honey, Big Buns, Wise Guys, Makers Union, and Matchbox. Will those be the same five years from now? I don’t know. But I can bet Milk & Honey will be part of that extremely well performing group of restaurants that the public market would want to invest in.”
Contact Alicia Kelso at [email protected]
Hear from Thompson Hospitality director of operations Zandrique Harrold and other Hot Concept founders at CREATE: The Experience, Oct. 1-3 in Palm Springs, in a panel sponsored by The Coca-Cola Company.