If you could cut a full 25 percent off your costs to expand to an additional location, why wouldn't you? In the restaurant business, though, many companies, especially national chains, don't. They'll go into a new space, build it out to cookie cutter specifications, and give exactly the same experience, with the same layout, foods, and drinks.
Then there's Bar Louie, which started in Chicago in 1990 and now has 108 units. Instead of the same old same old, the chain believes in tailoring spaces and offerings to the neighborhoods of the locations -- and in saving money at the same time.
Leveraging existing spaces
Last year, two-thirds of the new locations were placed in restaurant spaces that had gone out of business. "There's probably a 25% benefit of going into second generation spaces," says John Neitzel, CEO of BL Restaurant Operations, the brand's corporate owner. Grease traps, walk-in coolers, bathrooms, and vent hoods are expensive investments. If they are already available in a pre-existing space, why not make use of them?
"One of the things that's important is how do you build a bunch of Bar Louies without looking like a big chain?" Neitzel asks. There are no prototypes and no two locations look exactly the same. Not that the company avoids all common factors. It does need to maintain a brand identity.
"I would say we have about a dozen elements that are the same in every location. How we use it are different," Neitzel says. That includes the basic lighting package, a choice of 250 black and white photos, and furnishings. But things are placed differently and worked around the existing space. "We're able to reuse local finishes," he said. "If there's a lot of brick or wood or what have you from the old place, we challenge ourselves and say, 'How do we make use of it?'"
It may sound like common sense, but it's not how many chains do it. Neitzel was at TGIFriday's for 28 years. "You could go into anyone of those locations and table 33 would be in the same place with the same photo above it," he said. "You could take 28 steps and be at the ladies' room or the men's room."
Freedom within a framework
The menu is the same, but the company believes in "freedom within a framework." So, out of 30 beers on tap, a dozen are mass domestic beers that are generally popular. For the rest, the location chooses what's locally popular. The rest of the bar is similar. Each location will carry the same brands of liquor to make the chain's signature cocktails, but then will add additional selections to match local tastes over a demographic of 25 to 54 split evenly between women and men.
"We have a really open culture and communication between our franchisees and operators and the folks who work in [central corporate] innovation are really strong," Neitzel says. "A third of the items -- and I'm ballparking this -- a third of the items are generated by our locations."
The chain swaps out menu specials every eight weeks. Some are seasonal offerings. Others are new items being tested, which lets the chain get innovations quickly to market, rather than needing a year to change a menu.
Risk versus reward
"What we're willing to do is take more risk," Neitzel says. "On the continuum of risk and speed is how much risk you're willing to take. If 25 percent of what we try doesn't work, it's no harm, no foul." There's always a chance in another eight weeks to try something else.
Even promotions can vary. The chain develops multiple programs and lets franchisees and operators mix and match what will work for them. On New Year's Eve, for example, some locations had patrons who wanted to watch sports. Others had entertainment and a fixed price menu. Still others operated as usual but then added a midnight toast, entertainment, and breakfast after for $15. There is also a selection of eight weekly promotions. Each location picks three.
"Not everybody can thrive at Bar Louie," Neitzel says. "If you're the type of individual, whether a franchise owner or manager, who wants to be told what to do and how to do it and not live in an environment where there's freedom to make decisions, you'll be frustrated. We want people to think locally what will be best for them."