When restaurateur Philip Scotti, Arnold Penner and a group of investors bought P.J. Clarke’s in 2002, they had no other plans than to resuscitate the then-bankrupt New York institution known since 1884 for burgers, beer and conversation.
But in the restaurant world, Scotti said, “There’s always a surprise or two.”
Since closing, renovating and then reopening the iconic bar and restaurant in 2003, The Clarkes’ Group has opened five new P.J. Clarke’s in cities as diverse as Washington, Las Vegas and São Paulo, and the business has grown from $1.2 million to close to $15 million. And in February Scotti and John Murphy, one of the P.J. Clarke’s investors, launched Clarke’s Standard, a fast-casual burger spinoff.
“I saw the market change a bit. There was starting to be space between McDonald’s and a white-tablecloth restaurant, and I just thought I could do it better than anybody else,” Scotti said of the decision to enter the fast-casual segment.
The expansion of P.J. Clarke’s was opportunistic — locations were determined more by the right offer in the right place than by design. When other businesses were still reluctant to open in lower Manhattan after Sept. 11, 2001, Scotti opened the second P.J. Clarke’s in the Financial District. Washington came about because Scotti had a friend in real estate there, and São Paulo was the result of some wealthy P.J. Clarke’s fans who wanted to bring the brand to their country.
In contrast, Scotti said the growth of Clarke’s Standard is calculated and will be funded by the investor group in the near term.
There are two Clarke’s Standard’s open in New York — one in Midtown and another in the Financial District. Three other branches are set to open around Manhattan in the coming weeks.
Scotti has a strong connection to beef, having grown up in the Genuardi’s Family Markets, a 76-unit Philadelphia-based chain owned by his family, which also includes a number of butchers. Clarke’s Standard stores are designed to evoke the old-school butcher shops Scotti frequented with his father, minus the blood and meat hooks. For example, the 48-seat Financial District store features white tiled walls, a vintage-style meat scale and butcher-block tables.
The current stores, opened in former locations of the Goodburger chain, range from 900 to 1,400 square feet, while all new locations will have a slightly larger footprint of about 1,750 to 2,000 square feet. Projected annual revenue per store is forecasted at $3.8 million, Scotti said.
The menu is burger centric and features a variety of Angus beef burgers, a selection of hot dogs, as well as nonbeef sandwiches such as the House-Made Veggie Burger and the Buffalo Chicken Sandwich. Sides include such items as Natural French Fries, Cheesy Tater Tots and Butchers’ Chili, as well as milk shakes and cups of ice cream served from converted vintage ice makers.
“We have other things to introduce — one or two more [menu] items,” Scotti said. “It has to be simple and easy.”
Part of what sets Clarke’s Standard apart is the high quality of Angus beef, Scotti said, adding, “We have our own inspectors.” But, like the food-business family he grew up in, he’s also adamant about exceptional hospitality.
“When I go into a QSR, [I see] a couple of kids in T-shirts and [get] no sense of hospitality,” Scotti said. “You don’t have to spend $50 to get a smile and a thank you.”
Going from being a multiunit full-service operator to opening up a fast-casual burger joint isn’t a trailblazing idea. Other notables that have made the move include fine-dining chef Bobby Flay with his Bobby’s Burger Palace; Danny Meyer’s Union Square Hospitality Group with Shake Shack; and, most recently, Red Robin Gourmet Burgers with Red Robin’s Burger Works.
But while not unusual, making the shift from full service to limited service can be challenging, said Dennis Lombardi, executive vice president of foodservice strategies with Columbus, Ohio-based WD Partners.
“There’s a lot more energy and a lot more focus on the development process [as well as] issues around training, hiring [and] changes around span of control issues, especially if they’re thinking about franchising,” Lombardi said. “Success is going to be how good are you at playing in that segment in fast casual and what leverages you can bring to it from your full-service [restaurants].”
At P.J. Clarke’s the infrastructure was minimal, and Scotti had his hands in just about everything.
“The infrastructure for P.J. Clarke’s came slowly to me,” Scotti said. “I just didn’t know how. I was sort of forced into creating it. [I realized] the business could do better if we had more managers.”
With the rapidly expanding Clarke’s Standard, Scotti has leveraged that knowledge. He created a totally different infrastructure, with everything separate from P.J. Clarke’s — the chain has its own accounting office, someone dedicated to real estate development, a construction manager and so on.
“You can’t look at it the way you look at a full-service restaurant,” Scotti explained.
What Scotti and his team are still trying to figure out is the optimal management scenario.
“You really have to watch the progression of service, creating the most effective [management] structure,” he said. “We’re debating that.”
In the meantime, the expansion of Clarke’s Standard continues. There are signed contracts for 10 new locations — six in New York and four in Washington — all of which are slated to open in 2014. The goal, he said, is to eventually grow the chain to more than 100 units.
As for P.J. Clarke’s, Scotti said it’s not done growing, either.
“We get offers every day, but we don’t do them,” he said. “[P.J.] Clarke’s doesn’t belong every place. It belongs in [major cities like] London, probably ... Dallas, Philadelphia.”