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Why Barnes & Noble's restaurant experiment is struggling

The bookstore chain’s challenges operating full-service locations prove not everybody can do it, says RB’s The Bottom Line.
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The Bottom Line

Last week, the chairman of Barnes & Noble admitted on a conference call that the company has struggled to operate restaurants.

As my colleague Heather Lalley reported, Len Riggio said that the bottom line of the company’s five, full-service restaurants is “awful.” He said that the idea’s expansion is not “a done deal” and that the bookstore chain is working on smaller footprint locations that don’t have space for a “full-boat restaurants.”

Barnes & Noble’s foray into the business generated a fair bit of attention. Many in the industry saw it as an example of yet another competitor muscling into the already competitive restaurant business, vying for the food dollar.

In theory, it should work. The concept got good reviews, including one from my colleague and food expert Pat Cobe, who said that she liked the restaurant's New York City location. "You can order a glass of wine and sit in a comfy chair while you read magazines for free," she said.

The company already had some food offerings at its shops, and therefore a full-service concept seemed a natural evolution.

And it’s hardly unusual for a non-food retailer or entertainment destination to venture into the restaurant business. Costco and Ikea both have highly successful, in-store restaurant ventures. Entertainment concepts such as Dave & Buster’s and Punch Bowl Social have succeeded in part by combining games with food, as have movie concepts such as Alamo Drafthouse and iPic Entertainment.

So why not books and food? We have a few theories, and also recruited some help from our Twitter followers.

This is an important point. Barnes & Noble is a retailer. People go there primarily to buy books. They are not generally there to sit and read the books, even though the concept has long had some food and drink and people do actually sit and read or do homework.

Movie theaters such as Alamo and iPic have people sitting there, watching the movie. Dave & Buster’s was created in part because its two founders individually operated a restaurant and an arcade and discovered they had the same customers.

Indeed. Full-service concepts like the kind Barnes & Noble tested are fundamentally entertainment destinations, especially in 2018. They require social gatherings, for the most part, and video games, movies and bowling pairs well with that.

People read books alone. And they usually read them in a quiet place. That’s not a full-service restaurant.

Well, that’s another point. After all, Barnes & Noble’s same-store sales fell 6.1% in the quarter the conference call was discussing. You need people who want to read books if they’re to go to a restaurant.

But what about Costco and, especially, Ikea? Both of those retailers operate successful restaurant companies. Ikea, in particular, would seem a natural example for a company like Barnes & Noble.

Yet those restaurants are cheap, counter-service operations that come at the end of a visit to a gigantic retail operation. In both cases, it’s clear that the retailers are the primary destination and that the restaurants, though they are certainly alluring in their own right, are designed to complement that retail shop.

The problem with the Barnes & Noble restaurant idea is that it’s a full-service operation. Customers have to be willing to spend time, effort and a bit more money. The restaurant might be wonderful, but it’s not why people go there.

The lesson here isn’t simply that the restaurant business is hard, which it is. It’s that a retailer or entertainment or any other business looking to add a food element has to do so carefully, ensuring that the restaurant pairs well with its primary business.

What works for an arcade, in other words, doesn’t necessarily work for a bookstore.

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