CASUAL GETS COOL

Gina LaVecchia

Concepts of Tomorrow

Growth Strategies For Emerging Full-Service Restaurants

Bar Louie, Chicago’s hip bar-restaurant

with a neighborhood groove.

CASUAL GETS COOL

Who is Louie, and more importantly, why name a restaurant after him?

To the operators at Restaurant Development Group in Chicago, owners of the 11-unit Bar Louie chain, the name had the ring of the guy next door; your average city-dweller; a customer with the inclination to visit casual dining establishments with regularity and who is still young enough (even if just psychologically) to toss back martinis or chomp on a cigar late into the night. These Louies are Bar Louie’s target customers, and as such, they butter the bread of the RDG Group.

So why not name the restaurant for them?

RDG is a 13-year old partnership between restaurateurs Roger Greenfield and Ted Kasemir. And although Bar Louie is shaping up to be the largest chain and the primary growth vehicle for the company, it’s only part of RDG’s portfolio of restaurants located primarily in the company’s hometown of Chicago, but increasingly, beyond Illinois. Its other concepts include The Grillroom, Bluepoint Oyster Bar and Nick & Tony’s Italian Chophouse, which, though growing at a slower rate than Bar Louie, is another expansion vehicle for RDG.

Greenfield and Kasemir opened the original Bar Louie in Chicago’s River North neighborhood in 1991. It was the second restaurant the partners launched under the RDG umbrella. At first the idea was centered, as the name suggests, on drinks. The goal was to create a hip bar-restaurant that, with its intimate, neighborhood feeling, moderate prices and short menu of sandwiches, pastas and pizzas, appealed to everyday Joes and Janes–or Louies–living in the neighborhood.

And it was a hit, both popularly and financially. Bar Louie’s annual sales run from $2.5 to $2.7 million per unit. But despite the concept’s early success and relatively low opening costs, it was only after seven years, and several other concepts, that RDG decided to clone Bar Louie. The idea to do so stemmed from the realization that customers were regularly visiting "this little 1,200-square foot neighborhood bar" from far outside that little bar’s neighborhood, says Greenfield. In 1998, he and Kasemir located a space in Chicago’s Bucktown neighborhood and opened the second Bar Louie.

In addition to marking the beginning of Bar Louie’s expansion from a single unit to a chain, that second opening was significant in that RDG used it to reinvent the concept. They redefined Bar Louie by placing more emphasis on the food, and less on drinks. Tweaking the concept, they lowered the tables from bar height and added an entree section to the menu, helping not only to define Bar Louie as a restaurant, but also giving it more ammunition at lunch and dinner, complementing its already strong late-nights.

"Deluxe-style bar food" is how a local magazine once described Bar Louie’s menu. "Yeah, I’d say that’s right, says Greenfield. "We’re trying to make it better and better as we go on, to refine it, improve presentation and upscale it as we open new units...If you go in thinking it’s a bar, you’ll be surprised by the food quality." Check averages run $11 at lunch, $16 at dinner and $17 to $18 late night. Food costs are 31%, and the food-liquor ratio is 60/40.

As it continues to grow, Greenfield says Bar Louie will pull market share from the national bar-restaurant chains like Houlihan’s and T.G.I. Friday’s. But there’s an important difference between Bar Louie and those concepts. With a more upscale, sophisticated orientation, it commands higher price points and has succeeded in creating a casual dining chain at which it’s cool to be seen, a place urban folk want to eat, drink and hang. It’s just a bit more hip than the standard shopping mall mega-chain. That sophistication is reflected in elements such as tall velvet half-circle booths, intimate lighting, and walls simply adorned with black and white photographs.

"Its a more upscale, hip alternative to those things," says Greenfield. "The whole Tiffany lamp thing is a little old." That’s not to say he’d mind Bar Louie becoming one of those profit giants. "Don’t forget, Friday’s started as a bar in New York," he says.

Though each location is designed to fit its unique space and, to some extent, reflect its neighborhood’s personality, design elements unify the brand from store to store. These include black and white tile floors, cracked mosaic designs, funky light fixtures, liberal use of wood and those big booths. Customization can be seen in small touches. The Wrigleyville unit sports a mural of Wrigley Field above the bar, while the South Loop Bar Louie takes advantage of its building’s (a 19th century train station) architectural elements, including terra cotta friezes and tall, arched windows.

Bar Louie’s menu serves as another point of differentiation between it and many of its competitors. Items like fried onion rings dusted with Parmesan cheese typify Bar Louie’s somewhat atypical pub grub. Don’t ask for stuffed potato skins. Bar Louie guests start with appetizers like the Mediterranean Plate of hummus, tabbouleh and tsaziki, or maybe some Cajun popcorn shrimp with chipotle mayonnaise. Bar Louie’s more unique sandwiches are popular, especially New Orleans muffaletta of sesame bread stuffed with salami, smoked ham, provolone and mixed olives. Desserts include creme brulee and tiramisu, as well as sweet martinis, such as a "Dreamsicle" made of Stoli orange, Godiva white chocolate liqueur and cream.

Despite its re-orientation toward the restaurant side, Bar Louie did not lose the night-time angle from which it was born. In fact, Bar Louie straddles the bar-restaurant fence with aplomb. In many units, non-smoking dining rooms purposefully separated from the bar preserve the restaurant experience for dining customers, and nullify any veto votes from party members averse to smoke. The same goes for noise. By design, dining areas in newer units remain quiet, no matter how boisterous the adjacent bars become. In those drinking areas, however, each Bar Louie has not only a sizable bar, but lounge space where couches and comfy armchairs invite guests to settle in for the evening with Bar Louie’s signature martinis or a cigar. It’s easy to see why Bar Louie profits from this dual identity. The split personality creates lots of dayparts–lunch, after work, dinner, and late night–maximizing RDG’s leases. Bar or restaurant? Greenfield says Bar Louie is whatever the customer wants it to be, depending on the given occasion.

One must wonder if Greenfield has considered that as Bar Louie grows, its sheer numbers will diminish the unique, local quality that gives each Bar Louie its competitive and cultural edge. No, says Greenfield. The reason is attentive unit management. GMs don’t hide in their back offices. Instead, they do things like work regular shifts behind the bar. They also have the freedom to tailor their menu offerings to suit their locations. The Sammy Slammer Martini featured at the Wrigleyville unit is a good example.

The past four years have seen the addition of 10 Bar Louies to the Chicago area and beyond. The city locations were chosen like the first two Bar Louies, for their dense urban neighborhoods–Lincoln Park, Wrigleyville, West Loop and Dearborn Station–all of which opened in 1999. A controversial move–one that some said would never work, or if it did, would ruin Bar Louie’s panache–came in 2000 with the opening of a Bar Louie in the suburb of Wheeling.

"Everyone said, ‘It won’t translate to the suburban market,’" recalls Greenfield, "but we’ve been packed in Wheeling and in Evanston (which opened September 2001). So we’ve shown that it can travel to the suburbs." What about vying for market share in the casual dining-saturated ’burbs? "The suburbs are dying for something slick," says Greenfield. "Look, traffic’s a nightmare. (With Bar Louie) they don’t have to drive all the way into Chicago to go to something a little more urban. They can have that right in their neighborhood."

While additional downtown and suburban Chicago locations are slated for 2002, RDG has, for the first time, taken the concept outside Illinois. In December, they opened Bar Louie in Tempe, Ariz. Next, the concept heads to the Northeast, with an opening in Pittsburgh some time this year. Thereafter, "Were looking to do concentric circles around Chicago, then additional Midwestern cities–Cleveland, Cincinnati, Minneapolis and Milwaukee," says Greenfield. Also, success in Evanston, Ill., near the Northwestern University campus, prompted the decision to target select college towns, as well.

So far, all Bar Louie growth, (in fact, all RDG growth), has taken place in existing leased spaces (ranging from 1,200 to 8,500 square feet), not new construction. This allows for physical distinctiveness from unit to unit, but it’s also an important part of the company’s financial strategy. "I don’t see the reason to build from the ground up. With every dollar we spend, we have to make $10 to get it back...We get all the benefits of the first guy, then just do our design job," says Greenfield. RDG will bend this rule however, embracing new construction when the landlords foot the bill. What does all of this boil down to? It costs RDG only $250,000 to $500,000 to get a Bar Louie up and running. These low costs are allowing the company to fund its expansion internally.

Is there an exit strategy? Not yet, although RDG has proven to be unable to pass up a good offer in the past. They bit in 1999 when Phoenix-based Main Street and Main bought RDG’s then-six-unit New-Orleans inspired Redfish concept. (An RH Concept of Tomorrow, December 1998).

Today, however, they’re content to hang out with Louie. "Were happy growing this," says Greenfield. "Its fun."