The height of the Great Recession was hardly an ideal time to launch any sort of new business, let alone a restaurant with a special appreciation for craft food and beverages. At the time, cash-strapped consumers were turning to the value-driven offerings of fast casuals, and the idea of craft-anything hadn’t yet caught fire.
Nevertheless it was then in 2009, that Justin Nedelman and Paul Frederick decided to leave their careers as real estate developers and jump into the world of restaurants. The switch was prompted by an intersection of these two fields; a shopping center they had built in Redland, California, was feeling the economic strain from the crash and having trouble keeping one of the spaces filled.
“We had a vacancy in a 2,000-square-foot restaurant where multiple tenants had gone bust,” Nedelman says. “Instead of letting the property fail, we created Eureka to fill that dead space.” The name came not from the Northern California city some 700 miles away, but rather the street where the shopping center resided.
A dozen years later, that first restaurant still stands. Nedelman serves as CEO and Frederick as chief development officer.
Eureka’s origin story became something of a blueprint for future growth. Three-fourths of its locations were born out of existing spaces where other restaurants had failed. The brand initially focused on repurposing existing buildings and equipment, but eventually, it moved to a more aggressive retrofitting approach. Since, as Nedelman points out, the restaurants ended up replacing so much after opening, it was more efficient to gut from the get-go.
True to its real estate roots, Eureka subscribes to a “location, location, location” mentality. It aggressively targeted underserved markets like Fresno, Claremont, and San Obispo. But that’s not to say that the brand doesn’t succeed in urban areas.
“The unique thing is that Eureka has worked in downtown Berkeley and has also worked in a suburban outparcel next to a Target in Bakersfield. I could not imagine two more different demographics,” Nedelman says.
In the dozen years since that first Redlands location debuted, Eureka has grown to 24 units spanning the length of California plus outposts in Seattle; Las Vegas; Boise, Idaho; and Austin, Texas.
From the beginning, the selection of American classics (think: burgers, shareables, sandwiches, tacos, and salads) distinguished it from competitors in its emphasis on craft. Today the term “craft” has, like “farm to table,” become mainstream; offering high-quality food and beverage is now the expectation, rather than the exception. But just a decade ago, foodie culture was still somewhat on the fringes, and craft beverages—be it beer or spirits—were just starting to curry favor with a new generation of consumers. In short, Eureka struck while the iron was hot.
“We’re only American; we’re only craft; we’re only small batches,” Nedelman says. “At the time, we were told we’d go out of business for not having some of these mainstream spirits on our list, but we’ve found that to be the biggest trend over the last 11 years.”
As a product of the Recession era, Eureka has a certain tenacity baked into its DNA. It survived—even thrived—when times were tough, so Nedelman views the current crisis as a back-to-basics journey for the brand. For example, Eureka’s menu was cut in half at the start of the pandemic—a way of trimming what Nedelman calls “menu bloat.” The selection now comprises just shy of 20 items. The brand may add a few more back, but not too many. (Nedelman is especially partial to the idea of 21 menu items in homage to the amendment that repealed prohibition.)
The menu isn’t the only thing that might be whittled down in favor of a leaner, more cost-effective operation. Over the years, Nedelman has shifted his mentality when it comes to keeping existing stores open. It used to be that Eureka would bend over backwards to keep underperforming locations open even if they were a drain on collective resources. Now, Nedelman says, he’s far more willing to close certain units should it be in the best interest of the company. In fact, the brand shuttered two stores amid the crisis last year.
Along a similar vein, Eureka is, at least temporarily, dialing back its growth plans. “We will choose not to launch new markets in the next two years. It will all be filling in existing markets,” Nedelman says. “So really leaning into California and leveraging our existing supply chain and infrastructure here and letting our Texas, Seattle, and Idaho stuff kind of marinate on its own.” He adds that even though California markets are extremely competitive, Eureka performs well in them.
Eureka’s path forward may be less linear than the average emerging chain. Future possibilities could include pop-ups, biergartens, and even consumer packaged goods.
“We’re going to survive a really tough winter because of the hard decisions we made; we chose to look at the landscape in a longer-term view. … The short term is more about cash preservation and really being smart about infrastructure,” Nedelman says. “But the brand will grow. I think we have a lot of expansion opportunities.”