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Going Foodservice: The Restaurant Adventure

Date: 07/01/06 | Source: Specialty Food Magazine | Author: Laura Everage
Categories: Industry Operations; Foodservice
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Going Foodservice: The Restaurant Adventure

Specialty food retailers constantly search for the next method to expand their business. For many, opening a café or restaurant seems like the perfect extension, adding sales while increasing interest in the foods within their retail mix.

The restaurant industry claims nearly half of food dollars spent today, an estimated $255 billion. Adding a restaurant or café to an existing store is an opportunity to build upon synergies between foodservice and food retail, as well as help solidify a store as a destination. Those who do make the leap into foodservice can count on an adventure—one that often requires merchants to rethink current business practices.

Brand Building
Making the foray into the café business was a no-brainer for Rick Vernon, CEO of West Point Market, a pioneering specialty food store in Akron, Ohio. Vernon opened cafeteria-style Beside the Point Café to offer soups, “Main Event Salads, and sandwiches made with premium meats and cheeses. “We had been featuring made-from-scratch prepared foods for years, says Vernon. “It was only natural to create a place for customers to sit and enjoy the food. We look at it as a brand-building idea that emphasizes selections that are available in the market.

The retail-and-restaurant combination is a great way for customers to enjoy the high-quality foods you carry when at home or away, believes Thom Sehnert, proprietor (along with Jane and Liam Sehnert) of the Smokehouse Market and Annie Gunn’s restaurant in Chesterfield, Mo. The Smokehouse Market has been a landmark for nearly 70 years, both under its current name and as the Chesterfield Mercantile Company. The opening of Annie Gunn’s within the store created a new venue to promote the Market’s foods. Each builds upon the other’s reputation for a mix of meats, seafood, organic produce, condiments, domestic and imported cheeses and prepared foods.

With the tagline “food and wines inspired by the richness of country life, Annie Gunn’s was a way to maintain “eating as a celebration, says Sehnert. “Our customers love to cook and make food a lifestyle. The restaurant is another way to offer more of that experience.

Restaurateurs Turning Retailers
The concept can also work in reverse. Ann Quatrano, executive chef and co-owner of Atlanta’s Star Provisions, a cook’s marketplace featuring fresh baked goods, locally grown organic produce, fresh seafood, meat, poultry and rare packaged goods, opened the shop to complement her successful restaurant business. “I saw a definite need to create a place where customers could buy gourmet foods like those they enjoyed at my restaurant, she says. Today, the Star Provisions brand includes the retail store; Provisions to Go, a dine-in and take-out facility; and a four-star restaurant, Bacchanalia, all located in the Star Provisions complex.

Despite these success stories, the adventure can be fraught with challenges. Jerry Turci, who runs the Italian emporium Jerry’s Gourmet & More in Englewood, N.J., thought a foodservice venture would be a natural fit. Soon after Jerry’s Osteria opened in nearby Tenafly, N.J., to showcase Italian foods “made just like we do at home, Turci found that the concept did not translate.

“I got into the restaurant business because I love food, he says. “I wanted tooffer Italian foods prepared the authentic way. But I did not want to compromise when customers continually asked for larger portions, or butter for their bread instead of olive oil. So I closed Jerry’s Osteria after 21¼2 years to focus on my store where I can offer freshly prepared foods on a daily basis.

Feeding Off Each Other
A successful restaurant allows retailers to take advantage of myriad cross-merchandising opportunities. A restaurant is, in effect, a built-in tasting station where merchants have a captive audience.

From croutons made in the bakery to a sauce on a sandwich that can be purchased off the shelf, Vernon is diligent about promoting ingredients used in the Café that are also sold in the market, often highlighting the West Point private-label product line.

Likewise, The Weathervane, the successful restaurant counterpart of Chapel Hill, N.C.-based A Southern Season, serves as a promotion point for many of the store’s products. Recently, when The Weathervane began to offer breakfast, General Manager Briggs Wesche took advantage of the retailer’s well-known Cook’s Corner Grits brand. “We wanted to use the powerful brand name and let restaurant customers know that the grits were also available in the store, she explains.

Cross merchandising has also led to dramatic increases in in-store sales of olive oils that are used on the table in The Weathervane. “There is no reason we can’t take better advantage of these synergies, it just takes a bit of forethought, she notes. “For example, our customers who enjoy the Weathervane Buttermilk Cucumber dressing will soon be able to purchase it in the store.

The Education Factor
Customer education is an integral component to success in foodservice. For Owner/Chef Lisa Santos, the café at Southport Grocery & Café in Chicago, a single store offering the best of domestic foodstuffs alongside cooking tools and cookbooks, is an extension of the store as a learning environment. “The restaurant is education, says Santos. “It is a way to show our customers how to use products they buy from us. We are all about creating a learning environment, in the café and in the grocery.

At the Beside the Point Café, Vernon employs the same one-on-one educational tactics as in the market. In lieu of signage or a notation on the café menu, Vernon encourages dialogue between diners and staff. “Instead of making the customer read about a certain ingredient, we like to interact to tell them about the value of using real Parmigiano Reggiano, for example. It helps expose customers to products that they don’t know we carry.

Shedding the Retail Mentality
On paper, the interactions between food retailing and running a restaurant are evident. But one of the biggest challenges for store operators has been learning how to separate the two endeavors.

Quatrano admits to occasional accountability issues between the undertakings, but believes that her philosophy of running the store as she does her restaurant has paid off. “We operate our grocery and restaurants as one large business, transferring things from one area to the next when needed, she notes. “There would be a tremendous amount of waste if I didn’t use scraps of cheese or foods that were close to expiration. It is hard to run a boutique seafood department, or any other perishable department, without having access to ways to utilize it all.

A Southern Season’s Wesche believes trial and error and a lot of compromise are key. She recalls how, in its first few years of operation, Weathervane was not managed as well as expected and there was concern that it could reflect negatively on the successful brand already built by the store. “It took a bit of rethinking the way we treated the business as well as a slight reworking of the restaurant concept, she says.

“When The Weathervane initially opened, we thought it would be efficient for the two businesses to feed off of one kitchen, but that turned out to be a mistake, Wesche continues. The conflict of using the same inventory created headaches and the retailer needed to create a clear delineation between the two enterprises, yet allow them to work together.

“By building a system with accountability between departments, we were ableto improve natural synergies, says Wesche. Instead of borrowing ingredients from the adjacent A Southern Season, the system accounts for everything that moves between the businesses. If a customer in the restaurant asks for something that isn’t available on the menu, the waiter has the authority to retrieve that product from the store to satisfy the request. The waiter then charges the cost of the product to a house account. At the end of the month, an inventory of all that was “bought is run out and that is then transferred from that specific department’s inventory to the Weathervane inventory, at cost. “This helps control shrinkage in the grocery, but allows us to benefit from the relationship of having both businesses, adds Wesche.

Where to Put It
Restaurant location is a big question. From the start, Santos located the café in the confines of her shop, a move she believes contributed to its success. “Having the two in one space differentiates us, she says. “Eating in a grocery store is a great hook. West Point Market found increased success after the Café moved from its original space at the end of the deli. Still located within the store environment, the Café has become a destination. “It had become so popular that we often had overflow and long lines, he says. To expedite service, Vernon hired a hostess to direct people, pass out menus and promote certain items. After ordering, diners can sit and have their order brought out to them. The Café will soon expand to offer more booth space.

At A Southern Season, the original Weathervane incarnation consisted of a casual restaurant that offered primarily take-out foods, but was positioned within the store. When the retailer relocated to a larger space in 2003, Weathervane took up residence next door with a new seating capacity of 300 when the patio is open. The eatery—which can now accommodate private events and weddings—has created its own identity, while remaining connected to the retailer, says Wesche.

Making the Leap
Before adding a foodservice component, retailers need to familiarize themselves with the costs of running a restaurant business. “Think everything through on how to integrate. Too often, when I visit other retailers, the restaurant seems like an afterthought, says Santos. “There needs to be some correlation between the two to make it successful for the retailer, and to make it worthwhile for the customer as well. Great product, merchandising and customer service is often not enough in today’s competitive food retail environment. "You have to offer something different, a special experience," says Wesche. "The restaurant rounds out the experience for our customers.

Laura Everage is a freelance writer specializing in food and beverages and former managing editor of The Gourmet Retailer.

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Going Foodservice: The Restaurant Adventure

Specialty food retailers constantly search for the next method to expand their business. For many, opening a café or restaurant seems like the perfect extension, adding sales while increasing interest in the foods within their retail mix.

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