Chefs prefer to grow business on home turf

NEW YORK (Reuters Life!) - Within blocks of one another, Manhattan chef Mario Batali owns a Roman-style trattoria, a pizzeria, a wine-focused eatery and his flagship luxury Italian restaurant.

Batali and a handful of other New York restaurant owners have built their food serving empires locally, preferring to diversify their businesses at home instead of expanding across the United States.

This model, particularly in a still shaky economy, has now spread to chefs in cities across the country including Los Angeles, Chicago and Portland.

“The idea of restaurateurs opening restaurants in the same vicinity or city of their existing restaurants makes sense from both a brand building and economical standpoint,” said Kim McLynn of market research firm the NPD Group.

Chicago chef Paul Kahan started his first restaurant, Blackbird, in 1997. After this high-end New American cuisine restaurant became a hit, Kahan built a casual, small plates restaurant next door, and a large Belgian-style brasserie a few blocks further. He also has a stake in a Taco shack and an upscale cocktail lounge.

Kahan and his partners have been approached to open new places across the country, but have been reluctant to lose the home turf advantage.

“We’ve looked around the country so many times ... probably 30 different places,” Kahan said in an interview. “And what it comes down to, after you put all the numbers down on paper, it’s like we know our town the best.”

“We know how to get the best deals here on real estate, we have the most bargaining power because of what we’ve accomplished in this city and people want us in their real estate, so it’s almost pointless to go to another city.”

Local expansion can also allow a restaurant owner to pool resources among properties in order to save costs, as well as gain greater control over products. Kahan said he plans to build a bread-baking operation in order to furnish all his restaurants with in-house loaves.

Restaurant public relations expert Ellen Malloy, who is based in Chicago, said the push toward local expansion has also come because more savvy customers expect the chef to be in kitchen, or at the very least in the neighborhood.

“To me, remote expansion is really little more than the licensing of a name,” Malloy said. “If you are needed in a hour, you are needed in an hour, or your staff just starts to design systems that don’t include you.”

“Expansion locally makes sense for the chef who is interested in making more money without the potentially damaging effects remote expansion can have,” she said.

In Los Angeles, chef Suzanne Goin and her partners have built a steadily growing restaurant group serving rustic French food and seafood ranging from casual to upscale. Cooks there will move from one restaurant to another throughout their career, diversifying their skills.

At the end of the day it may boil down to control.

“Mario may have a giant empire but he can still walk or ride his motor scooter to every restaurant and at least get his eyes on them and make sure things at least seem they’re going right,” Kahan said.