Ynot Italian, a seven-unit chain based in Virginia, is gearing up for a major growth phase. But why is now the best time, given that COVID still grips the majority of the U.S.?
It’s because CEO Tony DiSilvestro has been at this game since 1993, when he and his wife Cyndi opened the first Ynot in the Great Neck neighborhood of Virginia Beach. The nearly 30-year-old chain has witnessed multiple economic downturns, including the Great Recession that plagued the U.S. from 2007 to 2009. Although the characteristics of the COVID pandemic aren’t quite the same, DiSilvestro is familiar with the obstacle, and he knows what’s on the other side—pent-up consumer demand.
He’s leaning into expansion because there’s no time to wait. More than 100,000 restaurants have closed, opening the door for other brands to obtain market share. DiSilvestro used the pandemic to fill his C-suite with the right talent to carry out the growth strategy.
So the real question really isn’t why the restaurant should start expanding. The better question is Ynot?
In addition to more full-service units, the restaurant will add off-premises only, express models to its footprint. Ynot will target more markets in its home state of Virginia, as well as key areas in North Carolina, Maryland, and Florida. More specifically, DiSilvestro named Hampton Roads, Newport News, the Virginia Peninsula, Richmond, Fairfax, and Raleigh, North Carolina, as potential destinations. He anticipates three openings in 2021 and as many as two full-service and five to 10 express units each year beginning in 2022.
“I think for the next 10 years, I think where the restaurant industry is going, it’s going to be pretty strong,” says DiSilvestro, referring to the future express stores. “So I believe it’s a great time to do it. It’s a great time to lease.”
“50 to 100 locations is definitely possible,” he adds.
Ynot has discussed opening express-style stores for three to four years, and spent that time developing processes and making sure numbers were correct. Then COVID forced the restaurant’s hand. When Virginia disallowed on-premises dining in the early months of the pandemic, Ynot essentially transformed all stores into de facto express models.
“COVID hit and it really tested the systems and the process of an express unit,” DiSilvestro recalls. “So we were able to actually see it live.”
Ynot is offering full-service units in the range of 5,500 square feet to 6,000 square feet, and express locations in the range of 1,500 to 1,700 square feet. The investment of the casual-dining operation is $484,900 to $978,850 while it costs roughly $250,000 to start the off-premises only model.
The restaurant is known for its create-your-own menu, including custom sandwiches, pizzas, calzoni, stromboli, pasta, and salads. The menu is 70 percent Italian and 30 percent pizza, according to the CEO. Full-service and express stores will basically have an identical menu. The main difference is that full-service restaurants have 50 feet worth of pastries and baked goods. That will be condensed to a grab-and-go situation in the off-premises only model.
DiSilvestro expects 70 percent of future stores to be express units. Each target market will be filled with both location types.
“Our express stores are really gap locations for us,” DiSilvestro explains. “We’re still a full-service delivery restaurant in our big units. We do everything—we deliver, pickup, and full service—and then the express units fill in the gaps of areas that we can’t reach with our big units. So that actually gives us the ability for 100 percent coverage of an area.”
There are key benefits to both prototypes, the CEO says. With the casual-dining operation, there’s experience and repetition. It’s a business that Ynot has succeeded in for 28 years, and one that DiSilvestro knows well. As for the smaller express unit, it may be new but operators will enter markets at a lower cost. Ynot will use the quick-service restaurant to establish the brand, and follow that up with the bigger risk of opening a full-service restaurant—but with much less of a burden due to the brand awareness.
“For me, everybody always asks who’s your competition. I say anybody with a seat,” Ynot Italian CEO Tony DiSilvestro says. “So it’s a matter of how well do we do our job to take advantage of the opportunity that’s coming ahead.”
DiSilvestro estimates that express locations will do roughly one-third less in sales compared to full-service units, but these smaller stores also come with 60 to 70 percent less in expenses. The express stores’ EBITDA should be somewhat comparable even with a lower level of sales, the CEO notes.
The growth will come exclusively through franchising, a program Ynot started in 2010. DiSilvestro prefers multi-unit operators, especially in bigger markets like Richmond and Raleigh, because it makes scaling and training much easier. As for the personality of the operator, the CEO wanted business-oriented franchisees. But also, the candidate must understand the importance of community.
“The three qualities of our brand are family, quality, and community,” DiSilvestro says. “So it’s one thing to have a quality person and quality food, but another thing to understand that you’re investing in a brand that’s very, very focused and dedicated to the community that we’re in.”
As Ynot opens more locations, one major issue will be the labor shortage, which is hitting restaurants across the quick-service and full-service segments. DiSilvestro employs roughly 70 to 100 workers in his full-service restaurants and he anticipates 40 to 50 team members working at the future express units.
He expects hiring to be much easier for the quick-service restaurants for multiple reasons.
“[The express units] don’t have to have the front-of-the-house mentality of servers and hands-on customer service right at the table,” DiSilvestro says. You can typically go with somebody that’s ran another [quick-service restaurant], whether it be Jimmy John’s or Pizza Hut, Domino’s. So that actually makes it a lot easier because you don’t need that full-fledged dynamic GM that’s used to running big operations, 6,000-square-feet restaurants with 100 employees. So operationally it’s definitely easier to hire for. And the pool of employees is bigger.”
DiSilvestro, for one, believes the labor crunch will be short-lived. He adds that after stimulus checks were dispersed, Ynot experienced a tough hiring period of three to four weeks, but the situation improved afterward as people settled back into their normal lives.
The CEO explains that new express stores will actually double as a retention tool. Ynot, which is big on rewarding talent and promoting upward mobility, will give employees the opportunity to possibly own an express unit.
“I think that we still have probably six months of difficulty with hiring. But you know what, we make it through and with our employees, we invest,” DiSilvestro says. “So when we say family, we don’t just mean external families coming in. Our employees are our family. We have health benefits for all of our employees, we have 401k for all of our employees, so we invest in our staff. And that’s what really helps us differentiate ourselves.”
A year ago at this time, DiSilvestro says COVID “hit us all on the side of the head.” But he’s proud of the way Ynot pivoted amid the unprecedented environment. The chain entered COVID with a 50/50 split between off-premises and dine-in, which of course changed to 100 percent off-premises for a stretch. When Virginia began allowing dine-in, the ratio switched to 85 percent off-premises, 15 percent dine-in. By the end of 2020, Ynot captured nearly 90 percent of its prior year sales. The momentum has continued even further throughout 2021.
The availability of real estate has increased and rates have become more attractive, the CEO says—opportunities that likely wouldn’t have been there 13 months ago. As if that weren’t enough to fuel Ynot’s optimism, vaccines are growing, jurisdictions are loosening restrictions, and consumers are more confident about eating out. DiSilvestro says it’s a recipe for success come summer time.
“For me, everybody always asks who’s your competition. I say anybody with a seat,” DiSilvestro says. “So it’s a matter of how well do we do our job to take advantage of the opportunity that’s coming ahead.”