Are in-store restaurants good for retail? Tommy Bahama thinks so.
Dining is having a moment in the retail world. But Tommy Bahama has been in the restaurant business since 1996.
Shoppers, today’s retailers understand, are hungry for new experiences in stores. And often, they’re just straight up hungry.
To satisfy both cravings, many retailers are opening restaurants in their brick-and-mortar stores. Last month, the furniture and design company Roman and Williams Guild opened a restaurant in its store in New York City’s SoHo. Tiffany & Co. opened a cafe in its flagship store in Manhattan in November. In 2015, Urban Outfitters bought Philadelphia’s Vetri Family group of restaurants, including the Pizzeria Vetri chain.
Dining, clearly, is having a moment in the retail world. But the notion of incorporating food service in stores isn’t a new idea. Nineteenth-century American department stores, including Macy’s, often included restaurants. And some of today’s prominent retailers have been dishing out meals for decades.
Tommy Bahama, for one, has been in the restaurant business since 1996. Twenty-two years ago this month the purveyor of tropical-style apparel and home goods opened its first store — and restaurant — in Naples, Florida. Since then,the brand has opened about one new restaurant per year.
While restaurants have worked well for Tommy Bahama, they aren’t necessarily a recipe for success for every retailer. For more, IBM spoke by phone with Tommy Bahama Executive Vice President of Restaurants & Bars Rob Goldberg.
IBM: Why did Tommy Bahama open a restaurant in the first place?
Goldberg: The original founders of the brand were opening their first store in a space in Old Naples and the landlord told them they had another space adjacent to it. The founders were like, “We don’t know much about restaurants, but it would be cool to have a place to hang out and serve drinks and food.” So they brought in some friends and opened a restaurant and it really took off right from the start, and they learned it was really powerful to have guests come in and be able to fully immerse themselves in the brand. I think there’s something there that the restaurants have created that people might not be able to put their finger on but it’s created this destination in a consumer’s mind. For a lot of people, Tommy Bahama is where you go to have a drink and get away.
What impact does having a restaurant have on the brand’s bottom line?
There is no doubt where we have our restaurants sales are higher in retail. There’s a very clear correlation. We’ve had times where we’ve remodeled a restaurant but the retail store where it was located was still open and the retail sales there declined quite a bit.
Tommy Bahama opened its first store — and restaurant — in Naples, Florida more than 20 years ago. Since then, the brand has opened about one new restaurant per year.
What’s the key to that success?
Some retailers lease out space in their store to restaurateurs. That might be a nice amenity but it’s not going to do too much for your brand if you’ve got someone else’s vibe in your store. We’ve made a conscious decision to not lease out to different vendors. Our retail side and restaurant side are joined at the hip. Even from the site selection level, I have to stack hands with my counterpart in retail and say we’re both in. Both of us are held accountable for the success of the whole business.
A lot of retailers today are opening restaurants in stores. Why do you think that is?
A lot of retailers are figuring out that it’s is a really great way to deliver on experience. If you can make a dining experience relevant to whatever it is you’re selling — whether you’re Restoration Hardware or Tommy Bahama or Ralph Lauren — it can be a winning combo. Retailers have figured out it’s advantageous to spend more time with their consumer, which is what restaurants permit. In a retail store, you might spend 10 to 15 minutes with consumers, while in a restaurant you get them for a couple hours and you can use that time to learn about them and understand them.
Where retailers have failed is they completely underestimate the complexity and the difficulty of the business at large. It’s not easy. You’re dealing with cash and alcohol and late nights and all kinds of obstacles to success. We’ve made a conscious decision to say we’re not a retailer with a restaurant, we have a restaurant company and we’re fully invested in ensuring it’s great. So I think when it comes to dining either you’re in or you’re out. If you’re going to get into the business you have to do something remarkable, otherwise you’re just lost. If a retailer thinks they’re going to build their business with maybe a little wine and charcuterie and some hummus and pita, it’s not going to happen. There’s too much of that out there.
So what should retailers keep in mind if they’re embarking on a restaurant venture?
If you approach it from the standpoint that the landscape is competitive, and that that the dining experience has to be remarkable, then there’s a chance you succeed. But it also has to make sense for the brand too. It wouldn’t make sense for us to serve Ethiopian food or super high end French food. So I think whatever you do, you have to take the same attributes, characteristics, and ethos you have built your company with and apply them to the food.