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How independent operators are embracing change and reaping the rewards

As the industry stabilizes, operators of RB Top 100 restaurants are taking advantage of renewed consumer interest and greater opportunities for their brands.
Photograph courtesy of Taste of Texas

This year’s Restaurant Business Top 100 Independents list reflects what was happening inside restaurants across the United States in 2021.

Yelp’s 2022 State of the Industry described 2021 as a transitional period for the restaurant industry. Restaurants were experiencing rapid change after 2020, clawing themselves out of one of the worst financial periods on record. Today, many restaurant operators find that the work they put in helped them to exceed their own expectations.

South Beach, Miami’s MILA (No. 5 on this year’s list), which completed its first full year of business in 2021, was originally designed to handle a volume of $9 million, according to Greg Galy, founder and CEO of Riviera Dining Group. The restaurant more than tripled its revenue during 2021, topping $27 million in gross food and beverage sales.

Similar stories have emerged from the Southern region, where pandemic mandates were less restrictive at the start of 2021, resulting in many restaurants reporting their best sales year ever. “Versus 2019, we’re up 7% in guest count and 23% in sales,” says Tim Fulton, manager at Old Mill Restaurant in Pigeon Forge, Tennessee (No. 50 on the list with gross sales growing from $13,726,748 in 2019 to $16,702,024 in 2021). “The sales increase is up because of required menu [price] increases driven by rising food prices.”

Noticeably absent from the list this year: more than a dozen familiar East Coast restaurants that are usually featured due to early-2021 closures and lower-than-normal sales.

Some areas of the country benefited from the mandates on an unequal basis, according to Robin Gagnon, CEO and co-founder of We Sell Restaurants. “By 2021 we started to see aggressive movement into the south and the sunbelt, whether that was from the lockdown, crime, school closures, or because people are choosing somewhere else to live,” says Gagnon. “But overall, people made some decisions about lifestyle and that's impacting our restaurant industry.”

Data from BizBuySell’s Insights Report shows that sales of restaurant properties were rebounding in 2021, but leaned more toward certain regions of the country, namely southern states such as Florida, Texas and Tennessee.

“We saw a huge influx of domestic travelers coming to Miami, which had less restrictions than most other parts of the country,” says Chris Cuomo, COO and partner at Groot Hospitality with three restaurants on the list (Komodo at No. 1, Swan at No. 3 and Papi Steak at No. 18). “We also had new businesses and people move to the city from everywhere, especially the West Coast, New York and Chicago, who seemingly had more disposable income, so, in turn, we saw larger check averages across the board.”

By mid-2021, most capacity and masking mandates were lifted or reduced, and restaurants, for the most part, were on even ground. Consumers were ready to return to restaurants more than ever. Despite restaurant labor shortages and economic inflation, consumers still craved new experiences, opportunities to dine out (both indoor and outdoor) and were willing to spend more to get more.

This year’s list of Top 100 Independents illustrates how being open to major change and ready to roll with the punches can pay off in spades.

Making dining an experience

Two of the most common attributes shared among this year’s top earners is multi-level design and interesting guest experiences. In fact, three newcomers to the list (MILA at No. 5 with $27,350,000; Papi Steak at No. 18 with $22,000,000; and Hampton Social at No. 75 with $13,430,746) all stand out for their unique offerings.

“At the core of what we do is to create an exceptional guest experience that touches on all the senses, from state-of-the-art sound systems to the lighting, plateware and design of the space, says Groot Hospitality’s Cuomo. “Everything is working together to create a special moment.” One of the most talked about offerings from the restaurant group is the $1,000 beef case at Papi Steak in which a tomahawk steak is delivered to diners in a golden, bejeweled briefcase and then branded at the table.

MILA’s Galy says it was important for the restaurant to set itself apart when it entered the Miami market as a newbie in 2020. “It starts with the culinary and service experience, but beyond the restaurant, it’s about entertainment,” Galy says. “We added fire shows that happen on a nightly basis in the water feature outside the restaurant.” This year, with the help of its growing VIP database, MILA will open a dedicated members-only space downstairs.

After debuting in November 2019 and pulling in $344,000 in gross annual sales for the year, The Hampton Social in Nashville (No. 75), returned post-pandemic to garner 2021 gross sales of $13,430,746. The trendy restaurant features three levels of experiential dining: a first-floor “Rosé all day” lounge, a second-floor dining space and rooftop terrace with indoor/outdoor seating and weekly events such as live music, pizza parties and brunch.

Events are a creative way to attract locals to restaurants that traditionally cater to tourists or road trippers. “Events like our Cars & Coffee, Sip & Savor, and Winemaker Dinner help create synergy and help people get to know our property,” says Brad Reynolds, general manager of Harris Ranch Inn & Restaurant (No. 33 on this year’s list, growing from $17,599,468 in 2019 to $18,848,657 in 2021).

Embracing technology

Operators and consumers were reintroduced to an array of technologies in 2021, all designed to make ordering and prep easier and dining more enjoyable. Whether it was handheld POS machines for servers; kitchen display screens for chefs; or beefed-up reservation systems, QR code menus and pay-at-the-table technology for guests, restaurant tech ruled 2021.

“We introduced a handheld POS system from Toast in 2021 that allows our guests to pay their check tableside,” Cuomo says. “It’s had a huge impact with our staff and has led to operational improvements such as expedited service, quicker conversion rates with tables and, since guests are getting their drinks faster and ordering more drinks, it leads to a higher check average.” 

“We’re always looking for better ways to interact with our guests,” says Al Zehnder, CEO of Zehnder’s of Frankenmuth (No. 46), in Frankenmuth, Michigan. “We have a full-time IT staff that’s on it every day and very focused on all our social media platforms. We have an email list of 250,000 guests and send out regular email blasts to make it easy for guests to include us in their experiences or family vacation.”

Harris Ranch’s prime location off Interstate 5 in Coalinga, California, caught the attention of another kind of tech company recently. “Tesla was courting us to put in the largest Tesla charging station in the world,” Reynolds says. “Tesla just installed 80 new charging ports, so that puts us at 98, plus we have six Electrify America charging units.”

Getting creative with staffing

Restaurants large and small were faced with labor shortages long before 2020, but recent events have caused many to investigate new recruiting and hiring techniques and alternative incentives for employees such as tuition programs, career advancement and 401k’s.

Zehnder’s of Frankenmuth, one of the largest (1,500 seats hosting 908,951 meals in 2021) and oldest (open since 1928) restaurants on the list, dropped its staff count from 925 to 80 within a week during 2020, according to Zehnder. “I had a weekly video that went out to our employees, keeping them in touch and connected,” Zehnder says. “I wanted to keep them engaged, because I felt that if they felt connected, we’d have an easier time getting them back.”

When it reopened in 2021, Zehnder’s hired more people than it needed, so that by the time the busy season hit, it was back up to 900 people on staff. The company culture embraces a work-life balance, with no one working more than 40 hours per week and enjoys a turnover rate under 10%. “Even though we were closed the first 30 days of 2021, it was the biggest sales year in the history of our company,” Zehnder says. “I’m proud that we didn’t lose any key people and we got most of our general staff back.”

MILA currently employs around 230 staff members, thanks in part to hiring internal and external recruiters to handle the restaurant’s growing staffing needs, according to Galy. “Before the pandemic it was hard to find staff, especially for back of house, but since the pandemic, and after, it’s been harder because so many people have shifted away from the food and beverage industry wanting to explore other avenues and industries,” Galy says. “We even work with temporary agencies when we’re not able to find anyone.”

At the height of the pandemic, Harris Ranch went from 500 employees to 90, according to Reynolds. To help with staffing, the restaurant took its two kitchens designed to handle three dining venues and consolidated them into one. “Moving forward, we’ve divided the restaurants back up, but have streamlined our menus to create a universal kitchen,” Reynolds says. “We also strategically moved our hostess podium, so we only need one instead of three now.” The restaurant is back to full staff, but the cross-training and streamlining have helped with operational efficiencies overall.

At Groot, Cuomo says that for anyone who works at the restaurant, there’s room to grow their career, if that’s what they want. “Some employees are here for an end goal like working through school; for those employees, we still support them through their journey,” Cuomo says. “We also offer consistent employee recognition, celebrating birthdays, and anniversaries, providing bonuses and soon, a new 401k program.”

Catering to new customer demands

While the restaurant industry was busy transitioning in 2021, so were restaurant customers.

The restaurant guests of today expect more: higher-quality food, top-notch service and a stellar experience. They assume they’ll have a choice of indoor or outdoor seating when they arrive to dine in, and they want an equal level of service and consistency when they order food online for delivery. Perks such as online reservations, special events, and VIP access to the dining room are extras that many consumers are actively seeking out.

Restaurants may look different than they did five years ago, but at the end of the day the hallmarks of a great restaurant will always be the same: A warm, quality experience that leaves guests feeling like their expectations were exceeded and they can’t wait to return.

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