In casual dining, there’s a sweet spot between value-based corporate chains and higher-end restaurants.
Stephen DeSousa believes Tavern in the Square has found that sweet spot. He is CEO and co-founder of the 21-unit chain, which was acquired by Authentic Restaurant Brands (ARB) last year.
At the time, Tavern had 17 units, scattered around New England, and the deal included four other independent concepts, though one has since closed (The Derby, in Salem, Massachusetts). The remaining independent sister brands have proven to be a resource for the growing Tavern brand, but more on that later.
Co-founded by private-equity firm Garnett Station Partners, ARB also includes the brands Pollo Tropical, Primanti Bros., P.J. Whelihan’s, and Mambo Seafood. ARB earlier this year hinted that an initial public offering could be in its future, so the growth of Tavern in the Square could be a key factor.
After years of building Tavern and the one-offs on his own under Broadway Hospitality Group, DeSousa said he appreciates now being part of a family of brands.
“I have the advantage of having four other CEOs on four other brands that I can collaborate with on a daily basis that are in different markets,” said DeSousa. “To be able to pick up the phone and ask somebody who’s doing it in another market is an amazing opportunity for me. It’s been very helpful.”
And ARB is looking for growth.
It has only been a year and a half, but ARB has opened four more Taverns, with five or six planned for next year, including the chain’s first move outside of New England. All are company-owned.
Next year, the company plans to open in North Carolina for the first time, which will test the model further.
For the first half of the year, Tavern’s same-store sales are up 6.5% year-over-year, with traffic up 5.5%, DeSousa said.
The chain’s average unit volume has grown from roughly $7.5 million to $12.5 million, though that’s attributed in part to the opening of larger restaurants. Originally, Tavern restaurants were about 7,500-square feet, but now the company is building them at around 10,000- to 11,000-square feet, targeting the suburbs.
“I’m a suburban dad now,” said DeSousa. “I was a city guy. And you know what’s important to me, with my two kids? Easy to get to, and plenty of parking. And out in the suburbs, we all go to dinner between 5-6 p.m.”
It has been quite the evolution for Tavern, which DeSousa and partners Joey Arcari and Renato Valentim first opened as a sports bar in 2004 in Cambridge, Massachusetts.
It was the glory days of the New England Patriots dynasty, said DeSousa. The partners opened two or three very slowly, arguing about a lot of things, he noted. (Arcari and Valentim exited with the acquisition by ARB.)
In time, DeSousa wanted to move away from being a sports bar, which he felt was too limiting. Sports bars are busy only when games are on, and people expect cheap food and drinks. Women are less likely to want to go to a sports bar, he said.
So Tavern began to evolve into what DeSousa now calls polished casual.
At Tavern today, people will feel comfortable in a business suit, or in a T-shirt and baseball cap, he said. The atmosphere is upscale but not pretentious.
The menu includes dishes like Bang Bang Broccoli, fried tempura-style with a spicy chili-garlic sauce, as well as classic burgers, chicken sandwiches or bowls alongside mains like steak frites or fish and chips. But everything is elevated, he said.
Tavern also is positioned for guests with specific dietary needs, like no dairy or gluten-free.
DeSousa said there is tremendous demand out there for more allergen-friendly options. About 20% of receipts have allergy notes on them.
“I have dairy-free children, so I want every guest to feel comfortable,” he said.
Tavern has also been able to stay cutting-edge on menu trends, in part because of the one-off sister brands, which include The Broadway, The Playwright and Mercantile.
Two are in South Boston (Broadway and Playwright) where loads of younger consumers go to eat, drink and play. It’s at those restaurants where DeSousa can identify and test trends.
“I need the ideas of these younger people,” he said. “’This is what’s hot. This is what people like. We need to get this product, or this is on trend.’”
The ideas from those restaurants can inform everything from what’s on the menu, to cocktails and what uniforms or merchandise should look like, he said.
“We’re incredibly vulnerable as a [chain] brand to not make a mistake, because of the impact it may have. But with an independent, I can run something differently. I can do something that’s on trend. I can follow something that’s starting to happen in other parts of the country, and we can run them as kind of an experimental place in these locations and see how they work,” he said. “And, if they do have traction, then we can bring them to the bigger brand of Tavern.”
Tavern, for example, had things like espresso martinis on tap, and an Aperol spritz program long before those trends hit the mainstream, DeSousa said.
And, unlike most at the lower end of casual dining, Tavern doesn’t discount, except through the loyalty program, he said.
Portions are large, so guests have a perception of value. There are also varying menu-price entry points. Appetizers range from $10 to $16. There’s a basic margarita on the menu at $12, for example, and a more premium option at $18. The average check is about $36 per person, with a drink.
Before the acquisition, DeSousa said he was “bootstrapping it,” struggling to grow.
Now he can hire the people he needs to grow the business more quickly, he said.
“I have probably the best partners that I can ever imagine in my private-equity group,” said DeSousa. “There’s no forced plan by them. There is no target that you need to do this many this quickly. They let me drive that.”