A New Meaning For ‘to go’ at Restaurants

2015-09-02_1535Peter Frost
(c) 2015 Crain Communications, Inc. All rights reserved.
http://www.chicagobusiness.com/article/20150822/ISSUE01/308229990/a-new-meaning-for-to-go-at-restaurants

Before Charlie McKenna opened Lillie’s Q in Bucktown in 2010, he knew his small-batch barbecue sauces would play a key role in his restaurant’s success.

He probably didn’t expect that, five years later, his line of regional-inspired sauces such as Carolina Gold, Ivory and Hot Smoky would be in 2,500 stores in six countries and rise to become the fastest-growing premium brand in the segment. His retail line, which has expanded to include kettle chips, rubs and bloody mary mixes, is on the shelves at Target, Whole Foods, Mariano’s, Crate & Barrel and more, and is growing nearly fourfold each year. Revenue from the products equals that of any of his four restaurants.

“At a certain point, we were selling so many bottles from our restaurant we decided to test the waters with small local stores, then local distributors, then national chains,” says Brian Golinvaux, who was brought in to run a new specialty food division called Lillie’s Q Sauces & Rubs. “I would compare it to what happened in the beer category years ago—craft brewers saw an opportunity that the big brands were not serving and took market share.”

While restaurant-affiliated retail products aren’t exactly new—Rick Bayless’ Frontera salsas have been around for 16 years—a growing number of chefs and restaurants around Chicago are rolling out pastas, breads, sausages and sauces of all types to sell. But where there’s opportunity to boost revenue and name recognition, there’s risk.

“It’s a tremendous opportunity for restaurants to familiarize more people with the quality of their products as well as the brand itself,” says Darren Tristano, executive vice president of Chicago-based market-research firm Technomic. “The danger is, if you don’t actively manage the quality of the product, you risk having a negative reflection toward the brand.”

Because restaurant-generated packaged foods fall into myriad categories, there’s limited data on how much of the market such brands represent, though Tristano says the trend is gaining momentum.

Although chefs have a built-in advantage here—after all, they’ve spent months, if not years, developing and perfecting recipes in their restaurants—producing them for a retail customer and in large volume is a different animal.

First they must have a tastier chip, a tangier sauce, a superior sausage to others in the market. Then they’ve got to find a commercial-scale producer to make, package and distribute it, which often involves months of trial and error. From there, they must get it on store shelves at a price consumers are willing to pay. And they must do all of it at the same quality as what comes out of a restaurant’s kitchen. Any misstep in the process could be fatal.

“If you look back through history, there have been lots and lots of chefs who have launched retail food products, and in many cases, it has wound up hurting their brands,” says Manny Valdes, chief executive and co-owner of Chicago-based Frontera Foods, which makes tortilla chips, salsas, seasonings and prepared frozen meals that are sold at more than 65 percent of grocery stores across the country, with sales rising by about 20 percent a year.

For instance, celebrity chef Wolfgang Puck’s frozen pizzas once were in virtually every high-end grocer. Now they have disappeared from the market.

Closer to home, Stephanie Izard of the wildly successful Girl & the Goat in Chicago launched a series of marinades and rubs with online retailer Abe’s Market in mid-2013. The products are no longer available at Abe’s, and an Izard spokeswoman says the chef is relaunching the line. BellyQ’s Bill Kim, who sold five signature bottled sauces at his Chicago restaurants and niche retailers, has stopped producing that line, with the hope of relaunching in coming months.

PLAYING IT SAFE

Still, chefs and restaurateurs keep trying to go retail.

Jared Van Camp of Element Collective started selling house-milled flour and dried pasta from Nellcote soon after opening the West Loop restaurant in 2012. From there, he has branched into a retail juice operation, Owen & Alchemy, which sells bottled cold-pressed juices at Eataly, Local Foods and its own store. Recently, he was in Louisiana working with a co-packer to develop and bottle a line of sauces used at his Chicago fried-chicken joint, Leghorn.

He plays it safer by keeping production low and selling his products in a small number of local retailers. “It doesn’t cost much, it’s free marketing and everything you sell contributes to the bottom line,” Van Camp says. “There’s no risk to that.”

Formento’s, an Italian restaurant in the West Loop, opened in January with built-in plans to sell its products in its adjoining takeout spot and store, Nonna’s, mostly as a marketing tool. But its marinara sauce is selling so fast that owner John Ross is talking with local grocers about carrying his products, too.

And then there’s the Publican, which through West Loop offshoot market-cafe Publican Quality Meats continues to expand its retail and wholesale offerings amid soaring demand. PQM sells branded ice cream, olive oil, honey and granola, the latter in collaboration with Chicago cafe Milk & Honey.

Its breads and sausages are sold at Treasure Island and Local Foods, as well as at restaurants around the city. The sausages, produced by Hometown Sausage in East Troy, Wis., can be found on the menu of Chicago-area Shake Shack restaurants, at two professional sports stadiums in Cleveland and at festivals like Lollapalooza. The restaurant estimates that north of 5 percent of its annual revenue comes from its retail and wholesale products, a figure that’s poised to grow.

“Originally we were just a small shop on the corner that took some of the pressure off the kitchen at the Publican,” says Bradley Smith, PQM’s retail coordinator. “But as you go along, you realize, ‘Oh wow, we can sell these sausages all over the place.’ It just keeps getting bigger and bigger.”

But they’re fighting the urge to get too big too fast. One slip and they risk winding up in the same place as Wolfgang Puck’s frozen pizza.

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