After running restaurants in five-star resorts all over the world, Chef Azmin Ghahreman opened his Laguna Beach, California, restaurant Sapphire with an adjoining retail store to market the spices and flavors he discovered from cultures across the globe. The restaurant and the store share some customers. But they serve different purposes and, oftentimes, different audiences.
In The Pantry, Chef Ghahreman says he can sell certain items like wine and beer for lower prices than on the restaurant’s menu, which offers globally inspired foods. And the store provides many grab-and-go items like yogurt parfaits in the mornings, prepared sandwiches, and cappuccinos and lattes. Chef Ghahreman says the proliferation of stores like Trader Joe’s and Whole Foods has helped to shape more sophisticated consumer palates, and this makes specialty shops like his viable.
For restaurants that choose to offer retail—either through in-house shops or by branding their own items to outside retailers—the strategy often proves to be a boost for consumers who are excited to purchase goods from their favorite restaurants.
Many brands have found success moving their products onto supermarket shelves: P.F. Chang’s and Wolfgang Puck are prominent examples. Done right, a retail presence can be a boon to a restaurant’s bottom line and its overall brand awareness, while product manufacturers regard the brand association as a way to make their products stand out in crowded aisles.
However, from the restaurant’s perspective, adding a retail component is often more of a supplement than a lifeline. Chef Ghahreman says The Pantry is only a fraction of his overall business and doesn’t compare in size or sales to the restaurant. Additionally, there is risk in retail, especially if the food on the shelves doesn’t live up to a restaurant’s standards, says Fred LeFranc, founding partner of the restaurant consultancy Results thru Strategy. However, he notes positive aspects, as well.
“The restaurant brand benefits from the halo and promotional effect, not to mention the [increased] cash flow with little time commitment once a product launches,” LeFranc says. “The initial work is the hardest part during the recipe-formulation stage. Once that is complete, there is little required of a company.”
Within a week of opening its first location in 2010, Jimmy’s Famous American Tavern in California was inundated with customers looking to take home a jar of the gastro tavern’s Bold & Smokey Chipotle Ketchup. Managing partner David Wilhelm was inspired to create the ketchup while on a safari in Africa seven years ago when he was served roasted potatoes accompanied by a ketchup-like sauce infused with cinnamon, garlic, and cloves. He created a similar sauce once he returned home for the restaurant’s three California locations. The ketchup’s popularity has catapulted it onto shelves at Gelson’s, a regional supermarket chain in Southern California; Whole Foods; and specialty retailer Sprouts Farmers Market.