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Skift Restaurants Forum 2018 Magazine
Months earlier, we had brought Kristen Hawley, founder of the Chefs+Tech newsletter, into the Skift family because we loved what she did — explaining the ongoing evolution of the business of dining out — and how she did it — an addictive weekly newsletter.
But we also knew we wanted to invest more in it and grow the brand into something new. The first step was a new name, which turned out to be not so hard. Skift had already become synonymous with change and transformation in the travel industry, and we thought that putting it side-by-side with "table," one of the more traditional symbols of hospitality, was the right fit.
To kick it off, we invited Danny Meyer of Union Square Hospitality Group and René Redzepi of the growing noma empire to speak at our Skift Global Forum last September. Under the newly christened banner of Skift Table, they shared insights about the restaurant industry to 1,000+ professionals from hotels, startups, tourism boards, airlines, and more.
But we wanted more. And that "more" was our own event, for which you've joined us today.
Like year one of Skift Global Forum or our events in London, Berlin, San Jose, and (next spring) Singapore, Skift Restaurants Forum is a one-day, single-track event packed with leaders from across our industry.
You already know a lot about them from their own achievements and you can read more about them at the back of this magazine.
What they all have in common is they are helping us look at the business of restaurants, and everything that makes up this complicated and wonderful industry, in new ways. We have restaurateurs and chefs, designers and technologists, founders and more. They're here not because they are uniform in agreement, but because they — like the people gathered in the audience — are striving to make things better despite the challenges we all deal with.
That's something we have been striving to do this past year at Skift Table too. From interviews with key players to a series on reservation tech to deep dives into the challenges of the tip credit system in the U.S., we're trying to understand more about what makes the modern restaurant work and what's needed to make it work better in the future.
Thank you for joining us in year one. We can't wait for year two and beyond.
If you want to understand the state of the modern restaurant, let us cut to the chase and look at the bottom line. The good news: spending at restaurants is up, according to the U.S. Commerce Department. It rose over the summer, setting a new record.
Of course, that’s a general figure that captures big brands and independents from across all price spectrums. And it doesn’t capture the complexity of consumer behaviors that, as we know, all restaurants need to truly understand who is coming through their doors.
The bad news: this is but a small bright spot in industry news this year, where headlines have been dominated by revelations of terrible behavior by once-leading figures at every level of the industry, f rom local celebs, to star chefs, independent restaurateurs, heads of restaurant groups, pizza delivery pitchmen, and more.
Many of us have behaved like professionals. Some of our heroes, as well as just our basic, everyday players, have definitely not.
As much as factors such as celebrity chefs, private equity investment, and an overall shift to legitimacy at all levels of restaurant work (not just the fancy places) play in, the industry is still stuck in a system here: a mix of low pay, long hours, and stressful conditions. Demand for restaurants is high, but people aren’t exactly lining up around the block to pay higher prices in order to support better working conditions or higher-quality ingredients. The difference between a $10 burger and a $12 burger has never been pronounced commercially, let alone editorially.
But back to the good news. Plenty of restaurants, technology companies, designers, and other industry professionals are working to solve the smaller problems industry wide. By enacting new forward-thinking policies, procedures, and ideas, the future is visible, and it’s positive.
The key to all of this is collaboration. Not solely in the technical sense of partnerships and deals, but also in the all-encompassing, human-centric concepts of listening, idea-sharing, and iterating to move forward together.
This is not a call to get along by ignoring reality. In fact, it’s the opposite: a reminder to be realistic, working within industry constraints like time, money, laws, and regulations. There are real challenges to deal with, more reckoning of bad behavior, more challenging labor conditions.
Collaboration 101: when you don’t know, ask. Nowhere is this more evident than some of the larger-scale tech partnerships we’ve seen recently. Grubhub’s recent acquisition of LevelUp (page 16) is the prime example. Grubhub noticed its own weaknesses (in this case specifically, loyalty, point of sale integration, and in-store pickup) and chose to acquire a company whose technical capabilities outpaced its own in those areas. The result? A stronger company with wider-reaching capabilities.
“I have been summarizing 2017 as the year of the restaurant technology pilot,” Mike Wior, CEO of restaurant tech company Omnivore told Skift Table in an interview earlier this year. “Looking forward to [this year], we’re starting to see it’s time for restaurants to pull the trigger and make decisions on these technologies.” In this case, it’s the small changes — the ones that can be quickly made and implemented — that start to have the biggest result. Ideas and the promise of what’s possible via restaurant technology are bright, shiny, and exciting. But we’ve moved past the point of simply getting excited about what is possible to the ability to make real changes with what we already have.
This is not a call toget along by ignoring reality. In fact, it’s the opposite: a reminder to be realistic, working within industry constraints like time, money, laws, and regulations. There are real challenges to deal with, more reckoning of bad behavior, more challenging labor conditions.
This isn’t a kind time for workers, either. Under the current administration in the U.S., some restaurant employees are under constant threat by a hostile immigration authority. Minimum wages are rising, which is good news for low-wage workers, but tougher to swallow for smaller employers. At the same time, all costs of doing business — from real estate to food costs — are rising, making it tough for everyone.
But, plenty of businesses are doing great work in the space, from Shake Shack and its near-legendary employee retention programs to Union Square Hospitality Group’s “hospitality included” program — a way of eliminating tipping that’s encouraged other restaurants, from bigger groups to one-off independents, to change their own structures. (Of particular and important note, this is not the right solution for everyone, but is a solid example of creative problem-solving.)
Top companies have implemented robust employee training programs, leadership initiatives, and fair wage structures to help retain a happy and engaged workforce. More large restaurant brands, from Applebee’s to Panera Bread have agreed to end so-called “no-poaching” policies that greatly restricted where restaurant workers, often making little more than minimum wage, can work. These harmful policies often trapped workers in low-wage jobs, with little hope for advancement.
And, of course, no topic has been more top-of-mind than fair, non-discriminatory, and legal hiring and employment practices. Stories of harassment and bad behavior dominated headlines leading to lawsuits, high-profile splits, and even official state attorney general investigations. The first tangible results of the #metoo movement in restaurants are starting to come to light: revamped (or perhaps just enforced) policies from human resources departments, greater support for victims who speak out, and a renewed commitment to single out these bad actors.
Here’s where the healthy dose of reality comes in. It is unrealistic to expect a complete change overnight. But small changes, new ideas, creative implications, and, frankly, being a good and responsible human through all of this will affect true change.
A collaborative approach has influenced Brooklyn-based pizza purveyor Paul Giannone’s, aka Paulie Gee’s, namesake restaurant since its inception. Leading up to his eponymous shop’s Greenpoint debut in the spring of 2010, the former IT pro knew that he wanted to support other local businesses when he officially transitioned into Neapolitan-style pie slinging by not only including, but featuring, ingredients from them on his menu. From the get-go, this included produce from nearby Eagle Street Rooftop Farm, as well as a not-exactly-sanctioned-by-the-city local market that was shut down by the health department... but not before Paulie befriended a vendor selling bacon marmalade there. Together, he and the vendor came up with a pie that featured the unique preserves and remained on the menu until the jam-maker moved to Mallorca. A similar relationship with Mike Kurtz of Mike’s Hot Honey soon followed: Mike wanted to make pizza with Paulie, and Paulie wanted to serve pizza topped with Mike’s homemade wares, so Paulie invited Mike to use his restaurant’s kitchen space when the restaurant was closed on Mondays. Eventually, Mike’s Hot Honey production scaled enough to require its own dedicated space, and Paulie extended the invitation to use his kitchen to other budding food businesses, like Ovenly.
Paulie Gee’s Greenpoint location is now open seven days a week, but Paulie’s commitment to helping food communities grow by serving locally-made, high-quality products hasn’t changed. In the eight-plus years since the original shop opened, locations have expanded to Baltimore, Chicago, Columbus, and Miami, where menus vary in their specific offerings, but not in their collaborative efforts: in Chicago, there are pies topped with brisket by Butcher and Larder, and Lillie’s Q bbq sauce; in Columbus, Ray Ray’s Hog Pit brisket is served atop crostini from Laughlin’s Bakery. And Mike’s Hot Honey can still be found on all five locations’ menus (hopefully Kurtz doesn’t relocate to the Mediterranean anytime soon).
— Ally Spier
From corporate partnerships to smart, employee-centric growth strategies, here’s what “better together” looks like at large public companies.
“We've been moving at a pace which is unprecedented in the McDonald's system. Last July, delivery was available at about 7,800 McDonald's restaurants around the world. We continue expanding and now delivery is available for more than 13,000 restaurants through 60 markets on six continents. Customers are responding. Delivery is becoming a meaningful contributor to our sales. In several of our top markets, delivery now represents as much as 10 percent of sales in those restaurants offering delivery.”
— Stephen Easterbrook, CEO, McDonald’s, July 2018
“We're in the process of redesigning our forecasting and labor scheduling tool. This is a significant undertaking but necessary for us to have accurate sales forecasting and deliver the right amount of labor at the right time to meet the needs of our guests. The new tool will have a best-in-class sales forecasting component that will leverage machine learning to remove the guesswork of determining sales and labor needs for our business. In addition, our team members will have the ability to see their schedules remotely and swap shifts from mobile phones, taking these tasks out of the hands of the manager. We believe leveraging technologies such as this makes us a more desirable employer as we work to create a better experience for our crew members.”
— Brian Niccol, CEO, Chipotle, July 2018
“We're going to open in Nashville, Tennessee where minimum wage is $7.25. We're going to start people at $13 an hour. That's what it takes to get a great team member that can build and bring the hospitality that Shake Shack will bring to that market. And we're super excited to pay that. But that's a high rate, right? It impacts our labor line over time. A number of our markets have the most expensive wage rates in America. All of our major markets are going to continue to increase. So what are we doing about it? You know what, we're continuing to be a great employment brand. We're continuing to offer solid benefits, solid starting rates. Most importantly, opportunity to develop. [...] As we grow, we're going to need a lot of leaders, going to need a lot of people, and we're going to pay for them.”
— Randy Garutti, CEO, Shake Shack, August 2018
“They're learning labs. We're happy with what we see. We've got some really doing well and we've got some that need some more work, but they're labs. We clearly see an opportunity in this business, both from a fill-in delivery trade area opportunity, but also from a opportunity to maybe be in some markets that we may not be able to be part of. It's a lab and it's too early right now to say really how many or how big the size of the prize is. But we are very interested to see how this develops.”
— David Deno, executive vice president and chief financial officer, Bloomin’ Brands, July 2018
From an effectiveness standpoint, you've got a ton of reach when you get onto TV, but you've got to personalize communication when you get into the digital space. So, having a nice balance between those, not that the spend's 50-50, but having a balance of how you have those two complement one another is really important. A big credit to our team and our agency for really making sure that our messages that hit mainstream on TV media are then really complemented and accentuated when you get into the digital space. There’s power, when those two things connect.
— Todd Allan Penegor, CEO, Wendy’s, February 2018
We're in the early days of testing with Grubhub. We are seeing what you'd expect us to see, which is incremental transactions, we are seeing higher check. We've not unleashed the marketing muscle behind it, so we think there's a lot more transaction growth to get. In that sense, we feel good about delivery. We'll obviously work with Grubhub in order to grow this opportunity. Nothing better than a new occasion and a higher check. That's all good for us. We'll continue to support that and make that a big deal going forward.
— Greg Creed, CEO, Yum Brands, August 2018
Skift Take: Culture around harassment and fair treatment in the restaurant industry and beyond is changing — but it takes effort and action to continue to move toward a post-harassment ideal.
It’s been a year of ups and downs in the restaurant industry’s #metoo movement as the strength and resilience of survivors is on display alongside the disappointment of troubling accusations and reports of abuse and harassment.
Karen Leibowitz, co-founder and partner at San Francisco-based restaurants The Perennial and Mission Chinese Food, is ushering working kitchens across the country into what she called the “next stage in our culture” and the message is clear: sexual harassment will not be tolerated.
Her medium: a bright, approachable poster (designed by Brooklyn designer Kelli Anderson and partially funded by Cherry Bombe magazine) tailor-made for restaurant kitchens, inspired by the choking posters displayed in New York restaurants.
“At first I was thinking of it in terms of the posters in the back of the house that say your rights to minimum wage or a break,” she said. But those posters, full of text that are the opposite of exciting to read don’t mention a safe work environment when it comes to harassment. “I thought it should. And then I thought we should make it nice-looking so that people actually look at it.”
Volunteers offered to translate the poster into Spanish and Chinese — the two most common languages for kitchen workers in San Francisco — and Leibowitz is hopeful there could be more translations to come. “A lot of the conversation around #metoo has been about finding voice. And it’s important to include voices that are often silenced because they’re not in English. I thought it was very important to make this information available to people who work in kitchens who don’t always make the headlines,” Leibowitz said.
Leibowitz also has a larger message here about the importance of good communication in the workplace. “There’s a certain kind of PSA that we have out in the world that’s for the public — and another kind of notice in the back in private for our workers. I think there’s some value to bringing that PSA orientation to communicating within an organization and strictly to the workers — not just for the broader public.”
Reception was immediate and positive, earning press mentions from the New York Times to the female-targeted website Ref inery29. (Leibowitz was even named one of InStyle magazine’s Badass 50, which “celebrates women who show up, speak up and get things done.”) But perhaps even better is when Leibowitz sees the poster hanging in working kitchens herself.
“I was [in New York City] visiting a bakery called Hot Bread Kitchen, which specifically works to train people with an interest in food but often a lack of access to good jobs. I saw my poster in their back of house. It was really exciting to see it so far from my home and also as part of a larger project of making work a force for good in people’s lives,” she said.
The poster, a true collaboration created through volunteer and below-market-rate work, is available for free download at cherrybombe.com/86 this; prints can be purchased at cost.
Created by Brooklyn designer Kelli Anderson
Skift Take: The deal provides some insight into both Grubhub and LevelUp’s businesses, but it says even more about the future of restaurant technology.
In late July, Grubhub CEO Matt Maloney announced Grubhub’s intent to acquire restaurant technology company LevelUp. On the surface, the $390 million cash offer seems almost straightforward: large, public delivery company buys small but popular loyalty technology startup to increase its capabilities.
“LevelUp's world-class technology and team will expedite Grubhub's integrations with the nation's top restaurant brands, provide more tools to help them attract new diners and position us to accelerate order growth on the Grubhub platform,” he said on the call.
When Skift Table talked to Michael Hagan, LevelUp’s chief strategy officer, in April, he explained what makes his company attractive to a larger organization like Grubhub. “We’re seeing success because we can say to a [restaurant] brand, you need to be thinking beyond the brand loyalists. You need to be thinking, how do I extend my menu and my ordering capability? And how do i push that into other places that have large audiences?” The company bills itself as a “growth engine for restaurants.”
Beyond the quick-hit headlines, though, the deal offers some insight into not only the future of Grubhub’s business but the future of restaurant technology, collectively.
Editor’s note: as of press time, this deal has not yet closed.
Delivery is just one small slice of the pie for most restaurant businesses. In fact, when we talk growth by leaps and bounds in the delivery market, we’re actually talking about something much larger than just a fleet of couriers arriving to transport food from points A to B. Companies like Grubhub and its competitors offer restaurants robust technical solutions handling everything from orders to payment — and pickup is a huge part of this offering.
“Currently, all of LevelUp's orders are pickup,” said Maloney. “if you think about how the features of LevelUp can potentially grow Grubhub's platform, the fact that they have 100,000 or so pickup transactions a day is really interesting. We said before, pickup currently is in the mid- to high single digits of our overall transactions, but it's obviously a huge opportunity.”
Maloney said Grubhub would work hard to take advantage of pickup, especially in markets where curbside pickup is the norm.
LevelUp’s power lies in its white-label technology, that is, building digital tools for restaurants, not consumers. But when we’re talking building advanced technology and attracting valuable consumer attention, a larger consumer audience is paramount to success.
While you might be familiar with the QR codes associated with restaurant loyalty in in-store locations, LevelUp largely operates in the background. “many ofyou are, in fact, already using their platform without even knowing it,” Maloney told investors on the call. (It currently processes over 100,000 daily orders and about $400 million in annualized restaurant sales.)
“One thing [LevelUp] is not able to do is drive demand from a platform the way that we are,” he continued, noting that Grubhub’s marketplace and delivery capabilities have the potential to drive a huge audience to restaurants currently on the LevelUp platform — and those to come in the future.
As Hagan explained in April, the nature of LevelUp is what makes it exciting to consumers. “You can really create magic when you have a beautiful experience with an app and you tie it seamlessly to both payment and loyalty,” he said. “And in a single action you have this customer paying quickly, tracking loyalty, redeeming points and having a beautiful experience.”
Of course, along the path to creating said beautiful experience. LevelUp collects data about you, the customer. For a large company like Grubhub, heavily invested in making sure that customers get what they want when they want it, understanding as much as possible about each customer using the platform elevates the experience. The product can surface restaurant or dish recommendations based on your order history and preferences. It can suggest new businesses to try. It knows which in-store experiences you prefer, and it knows how to speak to you.
Large regional and national restaurant chains have jumped onto to the online ordering and delivery bandwagon, largely partnering with existing companies to accept and deliver orders. Large chains need efficiency, which often translates to point of sale integration technology. LevelUp’s technology already works with most existing POS systems, giving Grubhub a serious leg up on integration into the highly f ragmented market.
According to Maloney, once completed, the acquisition will add more than 200 live clients with point of sale integrations. (In fact, Maloney said that LevelUp’s POS integrations were enough to justify the acquisition on its own.)
Combine all of these things and you can start to see the restaurant technology company of the future: it’s thorough and comprehensive; it follows customer behavior online and off, meeting customers where they are.
“LevelUp's technology and expertise will enable Grubhub to create products that will help restaurants grow while easing the operational cost of managing more online orders. With support for over 10,000 locations of well-known brands on Grubhub right now, and the potential to support tens of thousands more, we see tremendous opportunity to unlock growth and increase efficiency for our partners, maximizing their opportunity across the online channel,” said Maloney.
Skift Take: The best guest chef dinners take careful planning that begins weeks, if not months, in advance of the big night. But the real magic comes from the kitchen, mere days and hours before service.
For Dominique Crenn, inviting some of her favorite female chefs to cook at Petit Crenn this year had little to do with the #metoo movement. Special events like these are as much about camaraderie as they are about inspiring both her staff and customers. It just so happened that for Resy’s recent Women In Food series, she could invite not only friends, but incredible award-winning chefs from around the country that she admires, including Nancy Silverton, Niki Nakayama, Judy Hoo, and Barbara Lynch.
Like any night in her restaurants, for everyone to enjoy the experience, these one-off dinners need to go off without a hitch.That begins with careful planning months in advance, with the expectation that more details will come together as the big night approaches. There’s little room for error, and sometimes it can be a little stressful, but no more than any other night in the restaurant. First and foremost it’s about hospitality.
“It’s not just they come in and they cook,” Crenn said. “Having someone come in from another restaurant, we want them to know it’s very organized and easy for everyone. The number one thing is making all feel welcome, making sure they know that this is their kitchen, that they can do whatever they do and we’ll get anything they need. That helps alleviate the pressure. Otherwise, it’s so much fun.”
Whether it’s for Women In Food or the upcoming series planned for Atelier Crenn in 2019, Crenn curates the guest chef list, personally invites all of the participants, coordinates the menus, and tours the markets with her visitors to see what’s available for their dishes. From there, details are organized down to the wire, f rom prep to f ront-of-house training.
Menu planning comes first. In order to alleviate any crossover dishes or too many repeat ingredients, Crenn works with the guest chefs to ensure a seamless dinner. There are a lot of conversations during weeks leading up to the night, with few parameters. To represent her restaurant Petit Crenn, for instance, Crenn regularly serves only vegetables and seafood, no meat, with a focus on California produce.
Typically, Crenn gives the chefs a list of local farms and seasonal ingredients before they arrive, so they have something to go off of when planning their dishes. The crew heads to the farmers market two days before the event, which often triggers new inspiration. But Crenn likes to keep things fluid: if the visiting chef finds something different than originally planned, there’s still time to tweak the menu accordingly.
Once the dishes are settled and ingredients purchased, training the kitchen staff can begin. Two days before the dinner, the guest chef will sit down with the kitchen staff to explain each dish in detail, both its history and technique. While the kitchen begins prep work for the main event, the beverage team is already at work with wine pairings. By the day of the dinner, there’s a tasting with the entire staff.
What she loves most about the collaborations is that they end up being a learning opportunity for everyone involved: her chefs, the team, the visiting chef and even herself. “When you bring new ideas into a space, to Atelier Crenn or Petit Crenn, the team gets super excited. It allows them to discover something new,” she adds. “It’s all a part of the education of working in a restaurant. It’s about caring and sharing and exchanging ideas.”
For Atelier Crenn, a guest chef series will include talent from all over the world, many of whom she hasn’t cooked with before. And they’re not all women. “I want to show people that yes, you can have amazing male chefs too,” she says. “An all-female series was needed, but we want to continue sharing ideas and sharing with people from all over the place. I want them to look at them as chefs, not just as gender.
No matter how much planning goes into the dinners — or how high-profile the event — chefs must leave wiggle room for adjustments. Christopher Kostow hosts several guest chef dinners a year at The Restaurant at Meadowood in Napa Valley, but the most elaborate is the annual Twelve Days of Christmas celebration every December. Now in its 10th year, the restaurant brings together an impressive roster of chefs from all over the world with proceeds going to different charities. Pulling off such a feat takes careful planning that begins as early as February for him and his team.
“It’s our most intensive offering, the scope and ambition making it the biggest of our guest chef dinners,” Kostow said. “It’s not a great time of year for chefs to travel, so not everyone we want to come can. We’re pretty plugged in by now on what has to happen, though.”
The 10-month process starts with a dream list of chefs, about 20 that gets whittled down by the summer. Kostow said getting the chefs on board can be the most daunting for various reasons, including communication. “Some simply don’t have the infrastructure to return participation agreements or remember scheduled calls to go over menus,” he said.
But once he knows who can participate, the basic tenets of the dinners come together easily. A few months out, Kostow personally talks to each chef about menu and event basics. A little later, he sends the guest chefs lists of what’s growing in the Meadowood farms, what’s coming out of local waters, and what proteins they’ll have available. Ordering begins about a month out.
Most training and ingredient preparation happens when the guest chefs arrive. Some things, like a long ferment, have to happen early, but there’s usually some element of instruction with the Meadowood team. “That said, even when the chefs get there, we have to really piece things together,” he said. “It’s like a jigsaw puzzle.”
Most chefs arrive with just themselves; others might bring spices, ingredients, or tools to use. “That’s part of the fun for the home team,” said Kostow. “The main reason we do these kinds of dinners is for the education of our staff. We do it to see different techniques and ingredients. Keeping the kids constantly learning is the most important thing.”
The day of the event, the chefs plate sample dishes for each of the seven to ten courses, and tweaks are made as needed. Because things are always adjusting, and they have to wait for the final menu for pairing, the beverage team jumps on board pretty close to the event. For servers, they only need specific training if a guest chef creates something with tableside service.
Just like any night in the restaurant, a successful guest chef night of any caliber, whether it’s in a small bistro or elaborate Michelin-starred dining room, it’s all about keeping your ducks in a row. “It also helps to not invite any a**holes,” Kostow joked.
Skift Take: Fantastic restaurant design sets the mood and conveys a message about the food well before customers sit down and pick up the menu. To take a vision from a spark of a concept to the restaurant’s opening night requires a mastery of communication to foster collaboration and manage practical expectations.
Four-year-old hospitality design firm the MP Shift defines itself by unconventional design principles, whether that’s purposefully avoiding a signature style or leaving behind imperfections in their work. In practice, the firm has proven that their way works: the MP Shift won a James Beard Award for restaurant design this year, and has a client list that includes Union Square Hospitality Group and The Plaza’s food and beverage programs. Here’s how co-founders Amy Morris and Anna Polonsky approach new projects, sell clients on design concepts, and their definition of success.
Collaboration is a must, as much with your teammates as with your clients. It helps us avoid a signature style by drawing out the client’s vision. Collaborating with our clients helps us get to know them better and brings the best ideas forward to easily solve any challenge. For success, the constant is clear communication. We love that everyone on our team feels free to bring constructive thoughts to the table. Disagreement and debate trigger the best final product.
The MP Shift was built out of a desire to offer the equivalent of Creative Artists Agency for hospitality. We see our clients as partners and aim to take the anxiety out of the process and help them articulate their vision from concept to launch.
We found that when you ask a chef or restaurant owner to tell you about their brand or concept, it's usually just a spark like “latin food” or “wine spot.” The brand is the foundation of all else that follows: logo, copy, interiors, customer service, launch strategy and more.
Our process includes starting with a brand Q&A and spending time talking with the client. Two questions we always ask are, “What is your dream headline if The New York Times were to review you?" and “What do you want a customer to say to their friends when they talk about that night at your space?”
To us, a design is successful if it’s on brand, aligned with both the founder's vision and location and environment, not just with the latest design trend of an architect’s fantasies. It’s also imperfect. The MP Shift is always thinking about how we can weave a bit of imperfection into the design, to make the space feel lived in and expressive. A restaurant should feel like a home, not like a set.
One of our favorite branding projects recently was Le Petit Grain, which opened earlier this year in Paris. It is a new destination bakery from the team behind Le Grand Bain, Edward Delling-Williams (a St John Bread & Wine alum) and his partner Edouard Lax. They serve some of Paris' best sourdough and British-inspired pastries. The client really wanted to work with us because he liked our approach and energy, but he was concerned we were going to use a lot of colors or modern graphics. We heard him and created a visual language that was subdued and elegant but added a hint of the unexpected by dipping a slice of bread in ink.
Selling a creative. As designers, it’s easy for us to imagine how a visual concept will develop into a fully formed space or brand book, but it takes a lot of process, psychology and confidence to make a client believe in the seed of a design.
Also, reinventing oneself. The motto of the MP Shift is to not have a signature style. We see ourselves as partners to our clients, not artists. We’re here to develop their vision. It’s a constant challenge to ourselves to make sure we don’t just impose something we like because we like it, but rather something we know will support the client’s story and bring something new to the table each time.
Our first Paris project, Botanero, is the city’s first mezcaleria. It’s opening in late September, and we did the interiors and the graphics. There’s also a new market and deli, Three Owls, that’s opening in the West Village later this year. It’ll bring an old European purveyor vibe and wholesome recipes to the classic New York delicatessen tradition. We’re also involved with a new wine bar from one of London’s top chefs, opening near Borough Market in the fall.
This interview has been lightly edited and condensed for clarity.
Skift Take: From private equity firms to casual investors, the way restaurants are funded is changing. Sometimes the best results come from a focused, albeit nontraditional, strategy.
When Jim Balis dropped into the driver’s seat at Norms, a small chain of beloved casual diners sprinkled across southern California, the job was not his usual fare. Balis had previously run a restaurant management consulting firm which specialized, in part, in restaurant chain turnarounds, whether that was reversing sales declines at a regional 20-unit concept or helping a franchisee with over 50 locations navigate bankruptcy proceedings.
Norms, however, was different. Founder Norman Roybark and his family had owned and operated the small diner chain since the first location launched in Los Angeles in 1949. In 65 years, it had grown to 18 locations and, while it wasn’t the most efficient or sophisticated restaurant operation, it was far from bleeding cash.
When the family behind Norms put the business up for sale, Balis came calling. He bought the chain in December 2014 in a deal fueled by restaurant-focused private equity investment firm CapitalSpring, where he is the managing director of the strategic operations group. CapitalSpring declined to disclose the value of the Norms investment, but the firm’s deals generally fall within the $10 million to $100 million range, with core investments in the $25 million to $75 million range.
Once the papers were signed, Balis took over as CEO of Norms and he brought in Mike Colonna, who he had previously worked with at his consulting firm, to oversee all departments as president of the chain.
“Norms was an anomaly,” Colonna said. “Casual family dining is tough right now, and Norms is a 24-7 concept with a made-from-scratch menu and it doesn’t sell alcohol. Yet, it was still doing extremely well.”
Erik Herrmann, the managing director and head of restaurant investment at CapitalSpring, had also been vetting the deal and overseeing the proceedings from the firm’s side.
“We see a lot of opportunities across the restaurant landscape, hundreds a year,” Herrmann said. “What was great about Norms was that it was really punching above its weight class in terms of awareness in the market. It’s a fantastic brand with great product, and there was a real opportunity to go grow this. It’s rare to f ind this.”
The leadership team quickly identified Norm’s two-phase plan for growth. The first phase? Don’t grow, but rather spend 18 months updating existing locations.
It’s not the fastest way to make money back on an investment, and Herrmann credits the breathing room that CapitalSpring gave to Norms to the fact that the f irm is wholly focused on restaurants. The f irm’s leadership team comes f rom restaurant operations, and understands the time it takes to truly grow a restaurant brand.
“When you think about growth, you need to have systems that you can leverage,” Herrmann said. “If you double the locations, the model has to be scalable. You can’t just do it by brute force. Professionalizing the model was the first step in laying the foundation.”
As the top person directing operations on the ground, Colonna took the lead on that charge. Modernizing a concept that is treasured for its nostalgia factor is not easy (Norms’ original location was recently designated as a historical monument in L.A.), and when news of the acquisition and new plans for growth hit the local press, there was some hand-wringing over whether this was the end of Norms as customers knew it.
“We had to be very respectful of the heritage that this brand had,” Colonna acknowledged.
Some of the biggest upgrades that Norms needed weren’t customer-facing. The team installed a new payroll system that could be integrated with new recruiting and onboarding software, and added new reporting systems to manage labor and food costs. An IT director, a facilities director, and a training director were brought on board.
To modernize the customer experience, Colonna spent time building out Norms’ marketing strategy. Under family ownership, Norms had dumped its entire marketing budget into TV advertising, but Colonna broadened the reach into radio, neighborhood billboards, social media, and introduced a diner loyalty club.
On the menu, Colonna and Norms’ executive chef David Cox knew not to mess with the restaurant’s core offerings, including buttermilk hotcakes, steak and eggs, and a patty melt sandwich developed by Norm himself. The value pricing and generous portion sizes at Norms had always been core to its success as well. So, the kitchen extrapolated on what already worked. Norms’ famous Bigger Better Breakfast, a $7.99 dish of eggs, bacon, sausage, ham, hash browns, and hotcakes, was the jumping-off point for Bigger Better Gobble Gobble (a turkey bacon option), and Bigger Better Extra Bacon.
Some ideas were a harder sell. The menu at Norms is so expansive and the portion sizes so hefty that it took many tries before Colonna and Cox figured out how to sell dessert. They tried everything: inexpensive desserts, extravagant desserts, carnival staples like fried Twinkies and mini pies. Finally, the chef came up with a dessert partnership featuring Cheesecake Factory cake slices and Ben & Jerry’s ice cream. The trick was brand recognition combined with elevating the quality and keeping the price low, Colonna explained. Dessert sales shot up by 20 percent.
Now, Norms has moved into actual expansion. The company is on pace to open two to four new locations each year, significantly growing its restaurant footprint. While there won’t be a Norms on the east coast any time soon, the team could see the restaurants expanding out of California and into the American southwest.
At this point, CapitalSpring provides input on the high level decisions — new locations for expansion, figuring out the best way to break into delivery — but Colonna says that in most situations, he’s asking more for forgiveness than permission on the day-to-day level.
“We know what we’re good at, and how to be effective together,” CapitalSpring’s Herrmann explained. “It’s all about building relationships that are a two-way street and then leveraging it in the best possible way.”