ExpansionWire: Why Are New York City's Biggest Restaurateurs Heading to Washington, DC?

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CityCenterDC is a 10-acre real estate development in Washington, DC that will be home to condominiums, offices, and apartments. By the end of 2015, it will also be home to two restaurants from two well-known, NYC-based chef/restaurateurs: David Chang, who will be opening a Momofuku outpost next year, and Daniel Boulud, who will be opening DBGB Kitchen + Bar this Fall.

Chang's new DC restaurant will be 4,500 square feet. Where his Toronto expansion was four concepts inside one 6,600-square-foot glass cube, the current plan for DC is to do one large restaurant, bigger than any of his New York City restaurants and bigger than his restaurant in Sydney. Chang tells the Washingtonian that he purposefully set out do something big in DC: "I don't really want to do that [open in a smaller space]. It's too snobbish in a way." While perhaps not the main reason his group has settled on DC for their next location, Chang did grow up in Northern Virginia and still has ties to friends and family in the DC area.

Like Chang, Boulud also has a personal connection to DC. His first two years in America were spent in DC, and he tells Eater those years "were maybe the most important two years of my life because they defined the next 30 after." Although he's long considered a DC location, the selling point was for the upcoming restaurant was his ability to remain independent. The Dinex Group's NYC location of DBGB is in a real estate development called Avalon Bowery Place. The same developers were initially behind CityCenter, and Boulud jumped at the chance to work with them again. "We have a relationship with the developer," he explains. "We'd rather go independent [in DC] than open in a hotel, where the opportunity was before." The restaurants are comparably sized, with each able to seat about 200 guests.

Of course, Boulud and Chang are not the first chefs to see DC as an untapped expansion opportunity; New York to DC growth is nothing new. Now that major restaurant groups like Momofuku, Dinex, and Altamarea are setting up shop, it's time to explore why.

Costs

It's easy to assume that DC is an attractive move for NYC-based restaurateurs for cost reasons: New York City is a notoriously expensive place to operate a business. The facts on the ground, however, are a bit more complicated. On the one hand, Spencer Rubin, CEO of the DC-bound, NYC-based grilled cheese chainlet Melt Shop, says that real estate costs in DC are noticeably cheaper and adds that landlords seem to be more forgiving, "willing to throw in TI money and/or longer free rent periods."

But prime locations come with prime price tags. The DC location of Altamarea Group's Osteria Morini is approaching its first full year in business at a real estate development called the Yards, and CEO Ahmass Fakahany doesn't see a great savings between DC and NYC. "Costs are fairly similar," he says. "Only some ancillary services like cleaning and some utilities are a bit lower [than they are in New York]. But overall it is all in line." Daniel Boulud echoes that sentiment. He tells Eater that "DC is in line in New York [in terms of cost]," but that he "wouldn't have gone [to DC] if it were cost prohibitive and not sustainable."

There are other reasons why DC may not necessarily be a cheaper place to operate. Rubin notes that DC recently raised its minimum wage, potentially effecting labor costs. He also points out that menu pricing isn't necessarily the same as New York: "Food costs remain the same for the most part, but we are noticing restaurants charge less than in New York, so we are working on figuring out how to compete with that now." Boulud also says food costs are similar between the two cities.

Risks

Even with potentially decreased costs, a restaurateur in DC still has to worry about volume and sales. When Maoz — the falafel chain born in Amsterdam and popular in NYC — shuttered its DC expansion after only two years in business, owner Quinn Wallis told Bisnow: "People loved our food. But unfortunately, at the end of the day, we just weren't able to get enough people through the door."

In his interview with the Washingtonian, David Chang hits on another risk that well-known restaurateurs face when moving into DC (or really, any city): "It feels strange to be coming in and not be the underdog." DC-based chef and empire builder Mike Isabella describes the DC restaurant community as "tight-knit," but adds that the community also "welcome[s] a lot of new and visiting industry talent." Perhaps Chang has the right idea, choosing to focus on his relationship with the city (instead of what his arrival means or doesn't mean for the city's dining scene). According to Chang, "we want to be good neighbors."

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CityCenterDC. [Rendering: Facebook]

Precedent

Despite the challenges outlined above, New York City restaurant groups have a long history of expanding into the DC market. In recent years, the Chop't chain, Kellari Taverna, and Sophie's Cuban all expanded from NYC to DC. One example of a "hit" expansion comes courtesy Danny Meyer's Shake Shack: The ever-growing chain opened its first DC location in Dupont Circle in the Spring of 2011, and Meyer's entrance into the DC market took advantage of scale. The Dupont Circle Shake Shack opened with seating for about 175 and "the most flat-screen TVs of any Shack outpost," Eater DC reported at the time. Growth continues for Shake Shack in the DC market: It opened its fifth DC-area location earlier this week.

Another New York restaurant group that found success in DC is Hill Country Barbecue, which following a Spring 2011 opening quickly received two stars from Washington Post critic Tom Sietsema.

But most similar to the circumstances of the Boulud and Chang expansions is the case of chef Michael White. White and his Altamarea Group announced in 2012 that they would open a second location of their NYC restaurant Osteria Morini at the Yards, a 42-acre waterfront development; shortly thereafter, the group announced they'd also be opening a location of their NYC pizzeria Nicoletta on the same site. Where Osteria Morini in NYC has 100 seats, the 4,000-square-foot DC location seats 100 — just on its patio.

Osteria Morini opened in Fall 2013, earning a solid two stars from Tom Sietsema a few months later. While Nicoletta has had some trouble connecting with New York audiences (landing on Eater NY's Deathwatch last year), the group is doubling down in DC, bringing not one but two Nicoletta kiosks to the Yards.

Local Momentum

One key factor influencing the decision of New York restaurateurs is that DC already has a robust restaurant community of its own. "DC is probably one of the fastest growing culinary scenes in the country," says Isabella. The vibrant dining scene is part of what attracted Altamarea. Fakahany tells Eater that part of the reason they headed to the capital was because the group was "excited by the momentum of the food scene in DC." Boulud notes that along with a "lively" community, DC also has a history of outstanding culinary talent, citing chefs like Jean-Louis Palladin and Yannick Cam, and current "leader of the pack" José Andrés.

Isabella expands on another key reason why DC is such an attractive place for out-of-town restaurant owners: "DC is an economically stable market with high population density." Rubin agrees. Calling the DC market "dense and flourishing," the Melt Shop CEO tells Eater, "DC is booming and I think it is hungry for more start-up brands that focus on high quality ingredients and [from-]scratch cooking."

Isabella also points out real estate trends that are conducive to the business: "There is construction and growth across a lot of neighborhoods." This new construction certainly seems to be fueling the engines for groups like Altamarea, Dinex, and Momofuku, all three of which are tied to high-profile real estate developments. Boulud is positive about his group's DC prospects: "The challenge of building is almost passed, and the challenge of opening is now coming. But I'm very optimistic." As Isabella sums it up: "It's a great time to be in DC."

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