Are In-Store Restaurants Smart Investments For Experience-Driven Retailers?

  • September 18, 2019 at 1:57 PM EDT
  • By Retail TouchPoints Team
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Only two
months after opening its first Table at Crate restaurant in a Chicago store,
Crate & Barrel
could open as many as 15 full-service
restaurants within other stores, according to CEO Neela Montgomery. This expansion is yet another example
of retailers leveraging restaurants as a part of their overall brand
experience. While Montgomery hasn’t offered a timeline for the restaurant
openings, she revealed that the first concept turned a profit in only its
second month of operation.

Restaurant
guests can take select signature cocktails into the Crate & Barrel store
while they shop. The retailer also is looking to add to the food-themed
experience by hosting chef demos, cookbook dinners and other experiential
events in the restaurant.

The RTP
editorial team discusses the strategic thinking behind Crate & Barrel’s decision
to expand its restaurant business, shares potential complications of the
business’s growth and explains if and how other retailers should approach
restaurant experiences.

Debbie Hauss, Executive Director, Content: Gaining a
competitive edge using experience is a high stakes game in retail today. We
know that food and drink can be a smart way to draw shoppers in and inspire
them to purchase. Crate & Barrel is the latest in a line of retail
brands taking a bite out of retail competition by serving up food items using
many dining, kitchen and design products available for purchase within the
store. A great fit, as is the Blue Box Café literally offering Breakfast at Tiffany’s. It’s an obvious natural fit for
those two brands, but I would caution others to be sure the connection between
their hospitality and retail offering is cohesive. As stated in a recent Washington Post article, retailers are trying
to get customers to “Come for the avocado toast. Leave with some jeans.”

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Adam Blair, Editor: Putting restaurants into
retail stores makes loads of sense: eating is a live-and-in-person experience,
just like brick-and-mortar shopping, and these eateries offer a win-win:
convenience (for consumers) and a longer visit (for retailers). My caveat is the
same as it is for other retail hybrids: make sure there’s significant
overlap in the audiences for both the restaurant and the store
. Opening a
restaurant with an aesthetic and a customer base that doesn’t match up with the
retailer’s is, pardon the pun, a recipe for disaster. Retailers need to do
their homework, and as with any in-store deployment, test, test and test
again
. Is the restaurant bringing in new shoppers, and perhaps even more
importantly, are they spending in the store as well as enjoying a meal? Retail
square footage is a precious commodity, so even a feel-good amenity like a
restaurant has to pull its weight.

Alicia Esposito, Senior Content Strategist: Crate
& Barrel’s success makes one thing clear: If brands want to resonate with
customers on a deeper level, they need to offer far more than products on a
shelf and a pretty store. In this case, opening a restaurant makes sense; it
ties into Crate & Barrel’s broader expertise in creating beautiful homes
and helping customers entertain and delight their guests. I could see these
restaurants being especially valuable for their registry business. Imagine
hosting a “shopping party” for couples, their friends and family, beginning the
event with a lunch touting an assortment of Crate & Barrel products. This combines
education, inspiration and delight in a powerful way. But as some of my
colleagues have noted, it really needs to make sense in the broader
story you’re trying to tell for your customers. This is why lululemon has been so
successful with its expanding line of self-care/wellness products, yoga classes
and meditation workshops. Glenn Taylor and I will be spotlighting
a few more examples in a webinar
, so I encourage readers interested in this
topic to attend and (hopefully) get inspired!

Glenn Taylor, Senior Editor: If Crate & Barrel
has had enough success in two months that it feels confident in expanding, then
go for it. As with any retail store experience, customer service,
presentation, product quality
and location are all going to play a
part in how well it does. I don’t think retailers can rely on restaurants to
save declining business models though. It just feels like a reach for some of
them to pivot to food in an attempt to either expand their business horizons or
bring back consumers they lost. A restaurant business on its own isn’t exactly
the easiest to develop, due to the thin profit margins even successful ones operate
under, so there’s plenty of risk when tying them to retail businesses that already
have margin issues of their own. The introduction of restaurants also mostly
seems to be a “flagship” or “major urban center” occurrence — these
eateries almost always appear to be in or adjacent to the stores that are
likely driving the most traffic and sales anyway. The store-specific regionality
of this scenario always makes me a little skeptical about most retailers’
ability to position the restaurant as much more than a novelty.

Bryan Wassel, Associate Editor: I must admit I’m a
little confused about the “full-service” side of Crate & Barrel’s idea. A traditional
retail café works for a reason, and a small bar makes sense as well —
if you have a drink in hand, you’re going to spend time walking around and
browsing rather than just rushing through. However, a full-service restaurant
implies that visitors will be sitting down and enjoying a meal, and after
spending an hour inside a store I’m not sure how much more time they want to
spend idly walking the aisles. The idea behind grabbing a meal while shopping
isn’t wrong —
Costco’s
inexpensive roast chickens are seriously popular
 — but the benefit comes from making a
quick dinner the impetus for a larger shopping trip, not forcing your customers
to make plans before stopping by. We’ll see how well Crate & Barrel’s plan
works once the novelty wears off.

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