Two Cents Worth

DeMeyer

My recent columns regarding theme restaurants as important, viable and potentially lucrative investment opportunities in the world of specialty entertainment projects have prompted a number of inquiries, and even debates, about specific comments I made. That is how it should be: the genre is very much alive, evolving and growing. Herein, as parting thoughts on the topic, I would like to respond to several specific questions and issues that have been raised.

My Favorite Restaurant and Why

For a few years now, my personal favorite has been Restaurant Kamon, a perfect Japanese restaurant and sushi bar located in a shopping center in the City of Industry, California. Why? It’s a simple, clean, well lighted, unpretentious physical environment with a chef-owner who cares about the quality of the food (spectacularly fresh fish in generous portions) and the well-being of his patrons above all else. Add modest prices to the mix - a downtown LA location would increase pricing by a multiple of 10, a downtown Tokyo location by 100 - and the result is incredible value. Kamon is a lesson in restaurant basics: food quality comes first, value to the consumer second, and everything else from theming to entertainment to retail to real estate and to any ancillary business opportunities must serve only to enhance the basic experience. That is my philosophical starting point.

Valuing a Theme

We first assess whether the theme is inherently compatible with a quality food experience, e.g., an airplane theme would be forever associated with bad food in a cramped environment. Does Crash Cafe serve road kill? Then we assess the theme’s inherent appeal as an escapist environment, its potential strength over time, its dynamic vs. static nature, its demographic/geographic appeal and the impact of all these factors on demand, average checks, alcoholic beverage sales, market/site selection criteria and number of units. Experience, an ability to discriminate, and sound judgement are required in this process, which necessarily combines both art and science.

Enhancing a Theme

If our clients pass the initial assessment criteria, we then analyze the extent to which the theme could be enhanced via integration of entertainment elements, and if so, at what cost-
benefit, e.g., what type, mix and nature of audio and visual entertainment - recorded vs. live music, theatrical shows/performances, sporting events, TV monitor usage, level of audience participation, etc. measured against the incremental cost of development and operation. This is obviously a dynamic and iterative process, requiring discipline in its execution. Handled correctly, ancillary businesses (e.g., retail sales) could prove to be a core business in a growth-oriented master plan.

Manifesting a Theme

In our opinion, even if a theme is potentially compelling, it must be executed in a manner that fulfills its potential. This is where R&D excels in evaluating viable alternatives, beginning with the category of restaurants as the platform for manifesting the product. In many cases we determine that the concept and/or idea is bigger than a food and beverage facility and can/should be manifested as a different real estate use in order to optimize, maximize or otherwise capitalize on its economic potential. Stay tuned for further details as we assist our venture partners in rolling-out a new generation of products.

We clearly believe in the future of themed/entertainment-oriented products across a wide spectrum of real estate property types and are effectively putting our money where our beliefs are. The ultimate payoff - in sales, profit margins and investor returns - are there for the taking by anyone willing to invest time, effort and capital.

J.Paul DeMyer is a principal in Rochlis & DeMyer. He is a leading theme and entertainment real estate consultant who has headed thousands of entertainment specialty projects throughout the world, including retail malls, hotels, resorts, restaurants, theme parks, entertainment centers, mixed-use facilities, sports complexes, and convention/civic centers. Mr. DeMyer may be contacted at Rochlis & DeMyer, 2607 24th Street NW, Suite 4, Washington, DC 20008; 202-588-0800, Fax 202-588-8005; e-mail: JPDeMyer@aol.com.