Restaurant Groups Are the New Chains

Have you ever walked into a restaurant and it felt familiar? Maybe there’s a vibe to the service, or something about the way the space has been designed that rings a bell. Maybe the food flirts with a similar theme as another popular place you went to recently. Now that you think about it, were the servers wearing the same aprons? And then you realize… It is a “sister” restaurant to another place in the same city, and the family is spread farther and wider than you ever realized.

It is increasingly rare to walk into a hot new restaurant that hasn’t been spawned from another hot restaurant, or that isn’t one of a few projects from the same central team. Successful sandwich shops branch off into fine dining spaces, or fine dining restaurants go for more casual concepts. Sometimes these projects are tethered by a cuisine or ethos, sometimes just by the accounting team that handles the business back end. Regardless, it is increasingly true that a concentrated few businesses drive the restaurants within a certain market, giving a small number of people disproportionate power to shape an entire city’s culinary landscape.

“You can’t be a one-restaurant chef anymore,” chef Eric Huang recently told the New York Times. The numbers seem to back him up. According to the Franchise Times, the top 200 restaurant groups in the country reported $53.3 billion in revenue in 2022, more than pre-pandemic levels. Back of House wrote in 2022 that the “restaurant group” model was more popular among owners than ever, and Nation’s Restaurant News notes their popularity has only grown as the restaurant industry has become, astoundingly, more volatile. “You have to have a brand, you have to keep feeding the beast and keep your employees and keep the trains running,” says Huang. “It’s handing out W-2s and paying bills and figuring out how to store the garbage over the holiday weekend.” And as Luke Fortney writes for Eater NY, “Restaurant sales haven’t bounced back to pre-pandemic levels, but commercial rents have, owners say.” Those involved with restaurant groups say the multipronged structure has made the relentless work of running an independent restaurant more sustainable. If you’ve ever eaten out at your town’s 20-year-old Applebee’s while the independent places open and close in quick succession, this is something you intuitively understand.

A bunch of restaurants run by the same core business entity is sometimes referred to by another name: a chain. Colloquially, “chain” has a negative connotation, evoking sameness, a lack of creativity, stamping one concept over and over instead of allowing chefs and staff the freedom to experiment and thrive. For some, the distinction between a restaurant group and a chain is that the former runs separate, independent concepts, while the latter opens the same one over and over. But many restaurant groups do duplicate concepts — take Major Food Group and Carbone, for instance, or Joint Venture’s Jon & Vinny’s around LA — and according to Christopher Muller, professor of the practice of hospitality administration at Boston University, that distinction is moot anyway. “Technically, as multiunit, multisite, and multi-concept operators, all with more than three independent restaurants and a single company headquarters, yes, they are chains,” he says. “Does it matter that they choose to use a different word for their businesses? No, not at all.”

These groups would never compare what they do to the business operations of, say, Domino’s; the point, for them, is to allow chefs to thrive and diversify with the benefit of a safety net. But when a small group of people, or sometimes just one, amasses the capital and influence to open up restaurant after restaurant, it — like a chain — still risks flattening the restaurant scene under the visions of a select few.

The team behind San Francisco’s Rooh, for instance, has also opened Bay Area restaurants Pippal, Alora, and Fitoor just this year. In New York, groups like Unapologetic Foods and Hand Hospitality have defined what’s cool in dining and nightlife with spots like Semma, Dhamaka, Ariari, Atomix, and Her Name Is Han, while Union Square Hospitality’s Gramercy Tavern and Blue Smoke remain classics. In New Orleans, sandwich shop Turkey and the Wolf begat Hungry Eyes and Molly’s Rise and Shine. Chicago behemoth Lettuce Entertain You has dozens of concepts, from the new Tre Dita with chef Evan Funke to the more casual Beatrix. And chef Ann Kim of Vestalia Hospitality has opened Pizzeria Lola, Kim’s, and Young Joni, among others, in the Twin Cities.

Most groups begin with the vision of one chef or restaurateur, who starts by opening one restaurant, and then slowly takes advantage of opportunities to open more. Dustin Lancaster operates 15 restaurants under Drumm Hospitality in Southern California and Oklahoma, places like L&E Oyster Bar, Capri Club, and Bar Arbolada. He describes the birth of his restaurant group as coming from his own intuition. Though he did not plan on beginning a group, after opening Covell in 2010, “I wanted to open all these other concepts, if something came into my mind that I thought was needed in a neighborhood,” he says. And what unites them is basically him, whether the restaurant was a concept he came up with himself, or whether other people came to him with an idea. “They ask me for my advice, and I sort of consult for [a stake in] ownership in that — give them my Rolodex and know-how,” he says.

Kelly Whitaker of Id Est hospitality in Colorado never intended to start a restaurant group, either. He says he started Basta in Boulder with the dream of just running that spot. But the location was out of the way, he says, and he wanted to create “a little satellite” that could point diners back to his other restaurant, but also be straightforward enough to run without him being in the kitchen every day. He created Cart-Driver, a pizza and oyster concept that he’s since parted ways with, but which led to other restaurants like Bruto, the Wolf’s Tailor, and Hey Kiddo.

Aside from a singular person, what connects most restaurants in a group is the “home office,” says Whitaker — basically a centralized HR department that provides resources across locations. Tim Stannard, founder and partner at Bacchus group, which runs restaurants like Spruce, the Village Pub, and La Connessa in the Bay Area, similarly says that while each restaurant is independent, HR, accounting, marketing, and payroll are all usually managed by the same team. “When you’re an independent restaurant, you can’t afford to have your own HR or your own payroll account,” he says, leading them to seek third-party firms who may only give them a sliver of attention. With a concentrated team, the business end of owning a restaurant is essentially taken care of, leaving the team at each concept to focus on food and service.

One benefit everyone I spoke to brought up was the ability to help workers grow within the company, who would otherwise have to move out to move up. “Because I can move them from restaurant to restaurant when they’ve achieved a certain level of base knowledge and skill set, they don’t have to leave the company” if they don’t want to, says Stannard. “They can continue to expand their career.” This is a rarity in an industry where servers and cooks are often bouncing around restaurants trying to find better pay.

Grouping also provides some financial stability for the restaurants as a whole, though the groups are quick to note it’s not just a matter of shuffling money around. Lancaster explains there’s not one big bank account all the profits go to; even though they’re part of a group, each restaurant in any group is a standalone business, so “you can’t commingle funds,” he says. However, he notes that as a co-owner being paid profits from multiple locations, he could decide to inject personal funds to keep a restaurant afloat, and that comparing data from multiple restaurants allows him to make better decisions for the whole group. “I can look at the trends that are happening at other places and go okay, well, it’s not just this one. This is down over here as well. If you just have one restaurant, you can’t copy anybody else’s notes.” And as NRN notes, multi-concept groups have more purchasing power than a single-unit restaurant.

Whitaker says having multiple restaurants in a group gives them a little buffer to figure out what’s wrong if one place is floundering. “We’re not raising capital at the entity level, but we are controlling profits at the entity level,” he says, so Id Est may decide to lower the fees it charges a restaurant, or float a loan to a concept to help it out for a bit, so they have more time to figure out if the restaurant was just facing a bad few months, or if they need to cut their losses. Which is a runway most independent restaurants don’t have.

None of the restaurant groups I interviewed would describe what they do as building chains, nor would name a downside of the model on the business side. In exchange for being part of a group, a restaurant gets the support and resources it needs to have a better shot at success. “The group allows some stability,” says Whitaker, “and from a brand perspective, even if one location is breaking even it’ll help the overall sense of the group.”

However, having the same team behind a group of restaurants means there is going to be some vibe cross-pollination. Sometimes the similarities are very clear — Unapologetic Foods, for instance, focuses on regional, uncommon-in-America Indian cuisine, though it has now applied that model to Naks, a Filipino restaurant. Still, at most of their restaurants, servers are wearing the same shirts emblazoned with the group name, so you know exactly who is behind your meal. Golden Age Hospitality’s restaurants like Le Dive, Deux Chats, and the Nines ooze Downtown cool meets an imagined Paris, all martinis and oysters and cheeky cigarettes outside. Major Food Group is about Mob Wife opulence, whether it’s via a seafood tower or chicken parm. But even at groups with more disparate restaurant styles, it’s the same team, or sometimes just one person, training the servers, choosing the decor, and deciding what restaurants to even build.

“I kind of appreciate the fact that I know what I’m getting into now when I go to one of their restaurants,” says MacKenzie Chung Fegan, restaurant critic at the San Francisco Chronicle, of groups like Unapologetic and Rooh. “There are some things that are a hallmark, that I know that I can reasonably expect if I’m there.” For diners, eating out is increasingly a serious expense, and there’s hesitation to waste a night on somewhere new if there’s a chance you’ll have a bad time. But groups provide, essentially, a brand guarantee — if you liked one of our restaurants, you’ll probably like them all.

Lancaster describes the connections like a movie trailer: “One thing we have going is reputation, so every time we open something, it’s like ‘from the same people that brought you X, Y, and Z.’ There’s an instant hook.” Much like the movies, it’s easier for established producers to fund projects and find an audience, leaving the same cluster of people deciding what shows up on the big screen.

But at a certain point, the excitement from seeing a restaurant you like open a new place can curdle into an “oh God, another one?” dread. If it’s like the movies, “there is an effect similar to the Marvel-ization of Hollywood,” says Fegan. Opening four or five restaurants in a city of millions may not seem like much of a drop in the bucket, but Lancaster’s Drumm has more than 15 concepts, and many have more — there are seven Carbones alone. There are also groups that concentrate their influence in a single neighborhood, completely defining, and sometimes monopolizing, its scene.

Fegan notes that in the cutthroat world of restaurants, investors are more likely to give their money to a proven concept, or a proven team, than a first-time restaurateur. This can be great if the group wields that power to open new and exciting concepts, and give platforms to underrecognized cuisines and chefs. But that isn’t always the case, and “potentially you do end up with this situation where you’re getting restaurant deja vu. Like, Don’t we already have this?,” she says. That power to draw investment and keep opening new places also means the power to draw attention. “I think it’s noteworthy that three of the biggest, well publicized openings in the past three months [in San Francisco] are from the same restaurant group,” says Fegan, “and frankly, two of them got reviewed… they are taking up a lot of reading room.”

Restaurant groups may not create the cookie-cutter sameness of traditional chains, but they do concentrate influence. Think about the structure, and you start to wonder what’s not there. What restaurant could exist but didn’t fit into a restaurant group’s vision? Who had a line on a space but was edged out by a bigger company? As Lancaster says, he decided that a certain kind of restaurant was “needed” in a neighborhood. What if someone else had a different idea? Even in the name of protecting restaurants, it means fewer people deciding what’s available for you to eat.

Right now, groups appear necessary to combat the costs and travails of running a restaurant. But maybe one day the risk of eating somewhere new won’t feel so great, and neither will the risk of opening, or investing in, a place that doesn’t already have a reputation. Maybe instead of brands, there could just be restaurants.

Fact checked by Kelsey Lannin
Copy edited by Cynthia Puleo