A tight labor market, mandated wage hikes and markets flooded with new competitors have wreaked havoc on many restaurants’ bottom lines. Despite all that, operators ranked in this year’s Top 100 Independent Restaurants generally figured out how to beat last year’s numbers, fill staffing gaps and even branch out and grow.
For Alicart Restaurant Group, which has five restaurants in the Top 100 (four Carmine’s locations and one Virgil’s Real Barbecue), rising wages and rent are always nipping at the heels of profit. “We’re fighting a battle, trying not to raise menu prices to cover our rent,” says COO Randy Talbot. The two New York City Carmine’s units are considered icons, and that status has helped a bit in lease negotiations because property owners like to have a traffic magnet. Alicart’s approach to covering rent increases is to squeeze more out every seat—more efficient seating practices and slightly extended hours have helped.
“We use a lot of technology, and we’re very focused on getting the staff to be better salespeople,” Talbot says. “We’re also relying on delivery and off-site orders to get more business.”
Leaders by major market
Loyalty in the workforce
In Nashville, new restaurant and hotel openings are outpacing the area’s population growth, says Lauren Morales, COO of TomKats Hospitality Group, which operates Acme Feed & Seed (No. 60) and The Southern Steak & Oyster (No. 88). All those new projects are dipping into the same well of talent, so established operators do what they can to hold on to their best players.
TomKats focuses on staff recognition through perks such as half-off dining discounts, family meals, shoutouts, birthday celebrations and gift cards for good reviews. But health insurance for the entire staff, from bussers up to managers, creates the most loyalty. “A lot of employees have said they stick around because of that,” Morales says. TomKats also offers a 401(k).
Gibsons Restaurant Group, with seven Top 100 concepts (three Gibsons Bar & Steakhouse locations, Gibsons Italia, Quartino and Hugo’s Frog Bar, all in the Chicago area, and The Boathouse in Orlando, Fla., which it manages) boasts a team turnover rate of 45.6%, about half the industry average. Partner Stephen Lombardo III points to careful vetting of potential hires, above-average pay, generous benefits and a stable company reputation—Gibson’s has never closed a restaurant—as factors in staff loyalty. “When we find people whose values line up with our values and who have a service mentality, they tend to stay longer,” he says.
Chris Cuomo, director of operations for Groot Hospitality (No. 18 Komodo), agrees that careful vetting of potential employees is essential. At Groot, that means checking references and not hiring in a hurry—no easy task when hundreds of candidates are being vetted for a new restaurant. Competitive salaries, weekly paychecks and the ability to offer a career path—Groot just opened a new restaurant in Miami Beach and is developing four additional restaurants—also encourage loyalty. “We sat down with some of our line cooks and explained, ‘If this is what you want to do, in the next 12 months we will have up to 16 new sous chef openings,’” Cuomo says.
“Pay will get employees 65%-70% of the way happy; another 30% is scheduling and knowing they can get 40 hours a week, and 10% is about the culture that you build. People want to be happy where they work,” he says.
“Five years ago, if we advertised for a hostess, there would be 10 wonderful people lined up,” says Lee Maen, founder and partner of Innovative Dining Group (IDG), operator of No. 84 BOA Steakhouse. Those days are gone. Finding new help has gotten harder and pricier, “and you can’t raise prices enough to equate to the increased labor costs,” he says. To prevent staff from straying but keep a lid on wages, he says IDG restaurants work on operating more efficiently and pay the top performers more. “The best person can do 125% of what someone else does, so you can have fewer people,” Maen reasons. Service charges, where legal, have helped defray some of the additional labor costs, as have strategic menu price hikes.
“Pay will get employees 65%-70% of the way happy; another 30% is scheduling and knowing they can get 40 hours a week, and 10% is about the culture that you build. People want to be happy where they work.” —Chris Cuomo, Groot Hospitality
For IDG, survival often translates to innovation. In the case of BOA Steakhouse, the most successful menu update in 2018 was the addition of a vegan menu section. “More and more people are going vegan or thinking about it, and LA is a hot spot for that,” says Maen. “We saw the demand from both vegans and people who just want to try it out, and we said, ‘Why not offer them the BOA experience?’”
Vegan menu choices include plant-based Impossible chili burgers, chiles rellenos, and lasagna made with a dehydrated olive oil standing in for Parmesan. The additions have been so well received that IDG is working on ways to expand the choices and incorporate more plant-based fare at other concepts. The company’s Japanese-themed Sushi Roku, Katana and Roku, for instance, now offer a vegan omakase option, which started as a special but worked its way into the regular rotation. And the innovation doesn’t stop there: IDG has been testing a mocktail menu that will be rolled out at all of its restaurants.
“Certain things will never change,” Maen acknowledges. “But people want to try new things, and new generations eat differently.”
Cuomo of Groot says opening three new concepts in the Miami area, where it already operates seven restaurants and nightclubs, means considering new directions for menus and overall themes. “We study the market and look for areas where there are gaps,” he says. Groot’s current portfolio includes nightclubs, a modern European restaurant, an Asian concept and a coffee shop, among other spots. A New York-style steakhouse, Papi Steak, recently opened in Miami Beach. In the works are sushi/fried chicken, diner and dessert cafe concepts, along with a Dallas location of Komodo.
“We want people to be able to go to all of our venues and not get tired of them,” Cuomo says.
“Our job is making people happy. … You’ve got to treat every customer like royalty. I’m not saying we do, but we try to.” —Stephen Lombardo III, Gibsons Restaurant Group
Knowing—and growing—their niche
Having a well-developed identity has helped some of the highest-grossing operators thrive. Alicart is known for its consistency (No. 2 Carmine’s has had the same menu for 27 years) and good value, and its dining areas are purposely designed to accommodate groups.
“At a lot of restaurants, you get the sense that you’re meant to just eat, and you get rushed out in 50 or 55 minutes. That’s called eating to survive,” COO Talbot says. “If you come to one of our restaurants, you’ll see large tables. You rarely see deuces or four tops. People are eating to celebrate.”
A local experience drives some of high-volume restaurants’ success. “Ten years ago, everyone wanted to see a celebrity chef,” Cuomo says. “Now people want locally driven spots that they can’t go to in other markets.” In Nashville, where a rash of new restaurants “can make it tough to shine amid the clutter,” Morales agrees that authentic food, music and cocktails help TomKats’ concepts stay competitive. “We have the flexibility to make it hospitality first and make it real Nashville,” she says.
Lombardo says Gibsons management debates whether it’s smarter to follow trends or stick with the tried and true—and tried and true usually wins. “Our real philosophy: We have one job, to make every customer leave happy,” he says. An empowered staff bends over backwards to accommodate requests, even if it means sending out for something that’s not on the menu to placate a picky eater, and they are rewarded for their efforts. Despite the fact that the original Gibsons opened 30 years ago, the group doesn’t rest on its reputation. With an estimated 60 steakhouses in Chicago alone, the competition is fierce, so the company reinvests in facilities to make sure they stay fresh, neat and clean. And there are small changes, such as upgrading steak knives, made as well.
Going forward, expect to see the Gibsons brands pivot beyond its home base of Chicago. A Quartino is poised to open in the Grandscape lifestyle center north of Dallas. The group is also considering Dallas proper, Nashville, Washington, D.C., and Florida. These markets, Lombardo says, tend to have lower taxes, fewer regulations and a more welcoming attitude toward business. “They all happen to be booming markets, and I don’t think the two are unrelated,” he says.
The sheer capacity of Alicart’s typical facility—at least 400 seats—limits where it can expand, but Talbot says the company is scouting possible locations in Boston and Philadelphia. Regardless of where the company opens, success boils down to a simple formula, he says: “Keep it simple, offer value, provide great service and keep it food-centric, because people are going out to have great food.”