Tuesday, August 31st, 2010

Richard Layman: Richard’s Rules for Restaurant Driven Development

[ I’ve linked to Richard Layman’s wonderful Rebuilding Place in the Urban Space blog many times. He writes on a variety of topics in an always insightful way, but I’m particularly impressed with his knowledge of urban commercial district revitalization. I was privileged to get to tour Logan Square with him during one of his visits to Chicago and his knowledge of neighborhoods and small business economics and operations is impressive. He graciously allowed me to share one of his older posts with some of his thoughts on restaurants and neighborhood revitalization, with examples from DC, explaining why super-high end or trendy places aren’t an absolute necessity. There’s plenty more where this came from on his blog, which I highly recommend you check out as a place to bridge theory with practice – Aaron. ]

All neighborhoods and commercial districts can be categorized as healthy; transitioning, emerging; and distressed (using criteria developed by the DC Office of Planning). And each type probably can be further split into early, middle, and later stages.

Healthy commercial districts are not without issues, but the issues vary. Even a district like Adams-Morgan is probably considered transitioning, as is Barracks Row. In some respects, Richard’s Rules for Restaurant-Based Revitalization apply more to transitioning, emerging, and distressed commercial districts. But that makes sense, since those are the districts most in need of “revitalizing.” (For issues regarding problems engendered by the Late-Night Economy, see this entry, “Restaurants and liquor licenses“, from April.)

My rules are focused on building business from the people who are already present in your retail trade area, people who aren’t patronizing your commercial district, because in their opinion “there’s nothing there.”

It’s our job as revitalizers to make sure that “the there is there.”

Chef-driven restaurants aren’t necessary to drive revitalization, although they are nice to have and can be decent draws–but really how great was La Brasserie at driving the growth of the 300 and 400 blocks of Massachusetts Avenue NE? Downtown is still pretty bleak at night despite the number of high quality restaurants such as Occidental, Red Sage, and others. (7th Street is a different story, see below.)

Revitalization is dependent on restaurants. A complete destination has places to see and things to do, things to buy at interesting places to shop, and places to dine.

Without restaurants, where are people going to be able to go to the restroom? If they can’t go to the restroom, they won’t be able to linger and spend time in your commercial district. Patrons of your commercial district will end up being very purposive–when they visit it is for a specific reason, and they leave when they are finished, without taking the time to explore and patronize other retail and service businesses in your commercial district.

Restaurants that augur revitalization have five characteristics, and these characteristics support high patronage amongst a core group of customers that will frequent the restaurant from 2-5 times/month, at least in the beginning. This level of patronage is necessary to provide the cash flow needed to stabilize the risk involved in opening up in a secondary market. Remember the 80/20 rule?–80% of your business comes from 20% of your customers. Ignore this at your peril.

Green Apple Bar and Grill
T. Levette Bagwell/AJC. Willie Broughton and his wife, Ruby, owners of the Green Apple Bar and Grill, show off a fried chicken salad on the one-year anniversary of their opening. Before he retired, Willie Broughton already had determined that he eventually would open a bar at the site.

The rules are:

1. Relatively appealing cuisine that isn’t too specialized; food that is attractive to a large number of people–Italian, Mexican, and “American,” seem to work best. You want at least 100 customers/nite. These days Thai food is moving into this category. Chinese seems to have lost its appeal. Restaurants like Indian, Caribbean, etc. are just a bit too specialized, and therefore don’t get the weekly or at least a couple times/month patronage that such restaurants need especially when they are located in emerging commercial districts.

Think Banana Cafe, La Loma, La Lomita vs. Capitol Hill Tandoor or Phish Tea–the latter two have a cuisine specialized enough that local patrons come maybe once every couple months, so they need to draw on a much larger trade area than restaurants that have a more “approachable” cuisine.

2. Good food; it doesn’t have to be stunning but it better be good. (Perhaps Mexican restaurants illustrate this point the best.)

3. Good, good plus, or better service; waiting isn’t fun, and neither is dealing with a server that doesn’t help you get what you want with a modicum (ideally none) of problems.

4. Competitively priced; you can’t have drinks at $8 or most of your entrees costing $13-$20. If your prices aren’t competitive and maybe a little less expensive than the market, you won’t get that frequent patronage that is necessary for your success. Pitchers of margaritas or sangria are good, maybe not pitchers of beer, which seem to attract a rowdier more alcohol-centered clientele.

5. Nice interior; it doesn’t have to be stunning or a $300,000 interior renovation, but it can’t be threadbare, and it has to be appealing.

IMO, restaurants in the area like Banana Cafe, La Loma, and La Lomita exemplify these characteristics. Other restaurants and coffee places that are leading the revitalization of their commercial districts include include Tryst and The Diner which have brought life back to Adams-Morgan during the day, Boss Shepherds (now Peppers) on 17th Street NW in Dupont Circle, Dos Gringos in Mt. Pleasant (they have an absolutely killer Vegetarian Chili), and Mocha Hut and Colorado Kitchen in the greater Brightwood area.

Probably the best example in Washington, DC is Jaleo on 7th Street, which anchored the revitalization of the East End of downtown and is as significant, if not more so, than the MCI Center. Jaleo opened in 1993, years before MCI. Somehow, this restaurant is just as trendy as it was when it opened, and most every weekend they go through $100,000 worth of food (wholesale cost). Now there are a dozen top notch restaurants within a couple blocks of Jaleo, some owned by the same company like Cafe Atlantico and Zaytinya, and these restaurants rely very little on events at the MCI Center for driving patronage.

I have worked in hospitality for awhile, and I find that what distinguishes quality operations from those that struggle is a failure to focus on the guest and the guest experience. The restaurant industry is one of the most competitive retail categories but is still a retail category where independent businesses can thrive and the “barriers to entry” are surmountable.

There is a great resource for restauranteurs, a subscription website called Restaurant Owner, with scads of resources. Reading trade magazines at the very least (Restaurant Business, Fresh Cup, Specialty Coffee Retailer, etc.) is a good place to start because as I say “to stay the same is to fall behind, because your competitors are constantly improving and new places are always opening.” If you don’t go anywhere else, or read anything, how do you learn?

Soda Jerk
“Soda jerk” passing ice cream soda between two soda fountains / staff photo by Alan Fisher New York World Telegram and Sun archives. Library of Congress.

Quality restaurants share some other characteristics:

1. Understanding that you work for the guest, because after all, that’s who pays everybody. (I know a restauranteur desperately trying to build his bar business, but he adamantly believes that “soft rock”–remakes of the Beatles and Supertramp, and the occasional Carpenters song is the music that should be played. Compare that to the jukebox at the soon to reopen Capitol Lounge.)

2. Listening to guests and employees.

3. Taking in and responding to this feedback. If you don’t respond, listening doesn’t matter.

4. Never fool yourself about what quality is. We all know the saying “You can fool some of the people all of the time, but you can’t fool all of the people all of the time.” Well, if you are the proprietor of a small business, you can never afford to fool yourself. If you don’t provide quality and you refuse to accept the truth, whose fault is failure?

5. Focus on what matters. Until you ensure that your production, service, and ordering and inventory systems work and are robust, gloss (such as balloons) is a waste of your time and energy.

6. Developing robust training and production systems. This sets you up for success by reducing the likelihood of error. The Restaurant Owner website is full of downloadable templates, manuals, and worksheets that can be customized. Weak systems put you behind before you even open your doors to today’s customers

7. Having a sound business model. Understand your metrics and dayparts. Have a (business) plan based on reality and develop your business and marketing plan accordingly. It’s possible to (re)build service and production systems if they are flawed. But a business model that can never yield profits is unworkable.

8. Perseverance and continuous process improvement. To repeat: to stay the same is to fall behind, because your competitors are constantly improving and new places are always opening.

Restaurant

This post originally appeared in Rebuilding Place in the Urban Space. Reprinted with permission of the author.

8 Comments
Topics: Economic Development
Cities: Washington

8 Responses to “Richard Layman: Richard’s Rules for Restaurant Driven Development”

  1. I don’t know if this was intentional, but the juxtaposition of “Restaurant Driven Development” and “Transit-Oriented Development” is… interesting.

  2. John Morris says:

    I met Richard Layman back when I had a gallery (don’t ask) and he was consulting for the local area development corporation. He certainly seems to take his time and back his thoughts up with effort to see the facts.

  3. Pete from Baltimore says:

    Reading the Adam’s Morgan neighborhood of Dc mentioned reminded me of when i was a kid in the early 70s in
    P.G County. My parents had a freind that ran a youth center in Adams Morgan , and we visited him sometimes. maybe it was because i was young.But i remember that part of Dc as being extremly rough.This was around 1973-77. The 68 riots had happened just a few years before.

    I was amazed a few years ago when i heard that it is now a “hip” neighborhood.

    I have heard the same things about the H Street corridor. I remember working as a day laborer in the late 80s and our day labor van picked up the homeless at 14 th and H Street. They lived at Peirce Shelter at 14th and H. Blair shelter was around the corner as i recall.

    Its good to see that the neighborhoods have gotten safer. But i wonder about the guys that i used to work with. Many lived in the shelter or rooming houses on Benning Road. I sometimes wonder where they live now that the neighborhood got trendy.

  4. Lynn Stevens says:

    Coincidentally Aaron, “Richard’s Rules…” was the first of Richard’s posts that I linked to on my blog. Back then he also wrote of the similarities between Logan Square (Chicago’s, not to be confused with D.C.’s Logan Circle) and H Street, NE: http://urbanplacesandspaces.blogspot.com/2008/06/peopling-places-in-chicago-and.html . That was back before we met.

  5. John says:

    Without restaurants, where are people going to be able to go to the restroom? If they can’t go to the restroom, they won’t be able to linger and spend time in your commercial district. Patrons of your commercial district will end up being very purposive–when they visit it is for a specific reason, and they leave when they are finished, without taking the time to explore and patronize other retail and service businesses in your commercial district.

    Does that imply that public restrooms can help revitalize a place?

  6. John Morris says:

    Well, it’s not quite the same vibe sitting on a “thrown” as sitting in a restaurant. I mean, most comercial districts not only lack places to go the bathroom, they lack places to sit down, talk, make plans etc..

    Coffee shops and Restaurants fill that need. However, there’s often a good case for putting out benches and other amenities.

    Also, In America, Commercial districts mean noise and traffic so you need escapes from that.

  7. David says:

    He’s got a point. I eat out in Barracks Row, Logan Circle, and Adams Morgan frequently, and rarely go to white tablecloth restaurants. What they all have are low-key beer halls which have more personality than suburban chains, but plastic menus, wood tables, and a good selection of brews on tap.

    Stoney’s, which moved a few years ago from downtown to Logan Circle, is a good example of this. H Street, NE, which is under construction now with new sidewalks going in, and is the leading edge of DC gentrification, similarly has the H Street Country Club (features an indoor mini golf course), and the Star and Shamrock (combining a Jewish Deli and an Irish Pub).

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