ESP Investment Advisor
Lessons Learned from Being Burned
by j. Paul DeMyer, ESP Investment advisor and ESP Brain Trustee
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There is an old proverb that goes... “The
wise person learns from his mistakes, but the truly wise person learns from the mistakes
of others.” So we should endeavor to benefit from the misfortunes of numerous themed
concepts such as Country Star, Dive!, Fashion CafÈ, Planet Hollywood and Television City.
Most theme restaurants offer items that are priced at a premium in comparison to the
competition. They justify the pricing with the “entertainment value” provided,
however, in almost all cases, the principal entertainment feature consists of a static
museum-like display of memorabilia or a repetitive audio-animatronic special effect
feature (versus dynamic and ever-changing live entertainment). After the consumer has
“been there and done that” and the novelty has worn off, the value of a static
entertainment offering diminishes significantly. The most important lesson to be learned is that theming should not be treated as an end in itself, but only as a supportive means to an end. The only reasons to utilize theming in a real estate context are to differentiate the product from the competition and enhance the core function/experience. |
In the restaurant industry, the categories of product are
well established by type (e.g., steaks, seafood, etc.), service level (e.g., fast food,
casual dining, fine dining) or ethnicity (e.g., Chinese, French, Italian, etc.). The core
function is the sale of food, while the experience is determined by the quality of the
food and the environment in which it is consumed. Theming should not be arbitrarily
applied. To use Fashion CafÈ and Planet Hollywood as examples, nothing in the worlds of
high fashion or Hollywood is particularly suggestive of a specific menu or type of food -
perhaps starvation diets (or at best a salad bar concept) in the former and high octane
beverages (so why not be a great bar concept?) in the latter. In these two concepts,
theming might certainly differentiate the facility from other restaurants but would appear
to be irrelevant to the core function/experience. Therefore, the high cost of developing
the themed environment would create an unnecessarily high threshold for sales and
profitability and reduce the likelihood of success.
Considered in this context, few theme restaurant concepts would be able to satisfy the
second objective identified above (enhancing the core function/experience) - and in our
opinion, that is how it should be! In comparison, despite the expense required for its
themed environment, Rainforest CafÈ has a more compatible concept and menu offering to go
with the theming, and the company’s recent problems appear to be more related to poor
site selection of some units and an unusually heavy emphasis on retail merchandise. Even
Hard Rock CafÈ’s rock and roll music theme is arbitrary in regards to food service,
but this concept works because it has a much longer history than most (and, therefore, has
the consumer-given stamp of “authenticity”), serves good casual food
(hamburgers, salads, etc.) and is not overpriced. It is a better concept than some of the
many competitive casual dining concepts such as TGIFriday.
The Proper Use of Theming
A good example of the appropriate use of theming in a restaurant context was provided to
me recently when I had the opportunity to dine at a famous steakhouse in Raleigh, North
Carolina - the Angus Barn. Opened in 1960 by the late Thad Eure Jr., the Angus Barn
differentiates itself from the major steakhouse chains such as Morton’s, Ruth’s
Chris and The Palm through the use of barn-style architecture as well as country and
western interior theming. This theming is compatible with the core function/experience and
includes: a) The Country Store, featuring an extensive variety of gift merchandise, pies,
cakes, candies, jars of the Angus Barn BBQ sauce, cigars, etc.; b) an extensive collection
of Colt guns, rifles, swords and other cowboy memorabilia in the lobby and; c) the
country’s largest collection of ceramic Wild Turkey bourbon decanters in the upstairs
Wild Turkey Lounge. Guests walk to their tables past an open kitchen where the sounds and
aromas of steaks sizzling on the grill stimulate their appetites and add to the fresh,
wholesome atmosphere.
The environment created is directly compatible with the primary menu selections - steaks,
chops and barbecued meats - and provides guests with a complete, memorable dining
“experience.” All these elements add up to success as the Angus Barn is
perennially one of the country’s top grossing restaurants in terms of sales and is
consistently ranked as one of the 100 best by national trade publications. But, if you
asked the owners, they would probably swear the Angus Barn was not a theme restaurant.
That’s why I maintain that theme restaurants are a winning category of entertainment
retailing with a bad reputation.
Facing The Future
In our opinion, most of the second-generation theme restaurant concepts will be relatively
simple concepts focusing on food and beverage quality and service. They will be reasonably
well received by the consuming public and the investment community, will alleviate or
eliminate some of the current negativity associated with the category, and will become
much sought-after as tenants in every theme retail environment, LBE, urban entertainment
center, destination resort and tourist attraction. However, some savvy entrepreneurs and
investors will re-evaluate the strengths (not just the weaknesses) of the previous big,
bold concepts - including the ones that failed - and the third generation of theme
restaurants will include some “big idea” concepts worthy of being considered as
anchor elements in a real estate development context.
J. Paul DeMyer is a principal in Rochlis & DeMyer. He is a leading theme and
entertainment real estate consultant who has headed thousands of entertainment specialty
projects throughout the world, including retail malls, hotels, resorts, restaurants, theme
parks, entertainment centers, mixed-use facilities, sports complexes, and convention/civic
centers. Mr. DeMyer may be contacted at Rochlis & DeMyer, 2607 24th Street NW, Suite
4, Washington, DC 20008; 202-588-0800, Fax 202-588-8005; e-mail: JPDeMyer@aol.com.