Illustration by Jean Jullien

3d. The More Restaurants You Own, the Easier It Gets
By Alan Sytsma

�We were a little more rock and roll in the beginning,� says the chef Andrew Carmellini. After opening Locanda Verde in 2009, he and his partners Luke Ostrom and Josh Pickard decided to open the Dutch without any backers. Delays set in (it finally opened in 2011) and costs soared to $3 million (not unheard of); they ran out of money. “When I say we were out of money,� Carmellini says, �I mean we were out of money, because we had no partners.� He had to sell $75,000 worth of his musical instruments and recording equipment to help with the cash flow and finished some of the carpentry work himself.

Noho Hospitality Group now operates seven full-service restaurants, including blockbusters like Lafayette (which cost $5 million) as well as Bar Primi and Little Park, both new this year. It also manages the food at the Public Theater and has licensed Carmellini’s brand to airport restaurants and Madison Square Garden’s Sausage Boss kiosks.

The trick, Carmellini says, is to keep growing. �One to two restaurants is hard. Two is more difficult than four-plus.” A rapid rate of expansion forces you to implement systems and infrastructure that you wouldn’t have otherwise��coordination of VIPs and guest lists, a team dedicated to opening restaurants, in-house PR for the whole company, and a staff that’s largely been promoted from within. Each restaurant maintains its own balance sheet (Locanda Verde and Lafayette bring in the most money); one or 2 percent of gross revenues get reinvested into maintenance, and the majority of the profits go toward expansion efforts elsewhere in the company.

Carmellini and his partners say it makes more sense to reinvent the wheel each time, and to let locations dictate the final concept. �Where people have the most trouble in a city like this, one that’s so competitive and real-estate-market driven,� says Ostrom, �is when they potentially find a real-estate space and they try to squeeze their vision in a space that maybe is not the best.� Better to be opportunistic. Taking over existing restaurants and giving them a face-lift, like they did to turn Peels into Bar Primi, can keep capital costs low, too. �That’s pretty key when you’re trying to keep the check average down so it’s more of a daily type of restaurant and not $100 per person.� Little Park is also part of the Smyth, which means a lucrative deal for the hotel’s entire food operations.

The partners swear they have no concrete plans for new projects next year. But they were in a similar situation a year ago and then almost doubled their business. And they haven’t entirely ruled out the idea of a casual operation that can be replicated in lots of different locations. �If we’d thought of Shake Shack and rolled that out,� Ostrom says, �we’d probably be pretty happy.�