Looking ahead to 2017, SF Weekly explored several trends we expect in the year to come. Read the other stories, about the resurgence of protest songs, the banning of cellphones at concerts, and the feasibility of time travel.
The phrase “empire-builder” is overused — if a restaurateur opens a third location, suddenly everyone treats them like they’re sacking Gaul — and chefs often dislike its proto-corporate connotation of treating food like widgets and seeking growth above quality. But San Francisco has more than a few restaurant groups that, like the five makes of car once produced by General Motors, stake a claim in every stratum of the dining world, from one dollar sign to four. And none is more successful than Back of the House Inc., headed by Adriano Paganini. The number of high-profile restaurant implosions this year — largely in SoMa and Mid-Market, most of them capacious venues plating dishes at a higher price point — underscores how successful Paganini’s model has been.
Starting in 2009 with the industry favorite, Beretta, Back of the House opened a number of casual, affordable restaurants, from the Roman-style pizzeria Delarosa to New American brunch-atorium Starbelly to the relatively upscale Argentine steakhouse Lolinda (with its rooftop bar, El Techo). Burger joint Super Duper has since grown into a mini-chain with six locations in San Francisco, plus an additional four elsewhere in the Bay Area. After the October opening of the Bird, a fried-chicken spot in SoMa that’s only blocks away from sister taqueria Uno Dos Tacos, Back of the House wasted no time launching Flores, another Mexican restaurant in the Marina, last month. (An unnamed project at 450 Hayes St. is next.)
Strictly speaking, only three Back of the House ventures qualify as fast-casual: the Bird, Super Duper, and Uno Dos Tacos. The rest are full-service restaurants with less potential to clone themselves. But to Paganini, the formula is simple.
“It’s really, ‘Do the volume,’ ” he says. “If you have a certain concept, and you have a certain volume, you’ll do well. The rents are getting such that you have to be doing a lot of business, and at the end of the day, there are only so many people.”
While declining to comment on any particular closures — the rash of which would unsettle even the most prosperous restaurateur — Paganini is clear on one point: There are too many restaurants.
Isn’t that an odd belief for someone with 20-something to his name?
“Obviously, there are too many,” he says. “How many have you seen close this year? The ones that are closing down may be good, but may not be particularly right for the location, a little too expensive.”
The restaurants that will succeed, Paganini says, are “the restaurants doing exactly the right product at the right price at the right time at the right location.”
It sounds almost effortless — and yes, in retrospect, maybe installing hundreds of tables within 500 yards of Jack Dorsey’s desk within a single year and expecting success was silly. But it’s not as though 2016’s prominent closures were led by unseasoned newbies. You could write off Oro, Jason Fox’s promising, two-floor stunner as a casualty of the arguably unappealing qualities Mint Plaza possesses by night, but Fox’s Commonwealth has held a Michelin star for years — and it’s on Mission between 18th and 19th streets, hardly that neighborhood’s most affluent block. There is arguably an alchemical component to which restaurants thrive, and which do not — and Paganini believes his emphasis on value gives him a better shot at beating the odds.
Opening a spacious restaurant is also not necessarily an act of hubris, even today.
“In the restaurants we own, the ones that are successful are because they’re large,” Paganini says, singling out Flores, which occupies the space that used to be Betelnut (and which is right next door to Belga, another Back of the House property).
“We are going to have to have the ability to accommodate the number of people that we need for us to get to the sales we need,” he continues. “If we had a smaller space, we may not be able to do so. At the opposite end, on Chestnut, I have a Super Duper that does really well. It’s only 1500 square feet, because for that type of business that’s all I need. You can’t make a blanket statement and say, ‘It’s just smaller spaces.’ ”
Many chefs and owners have cited labor costs as a drag on profits, and certainly the robo-quinoa that Eatsa produces with zero front-of-house staff sent ripples through the industry that automation was inevitable. But Paganini expresses reluctance to go that route.
“I don’t know about robots that make burgers, but something milder, a tablet where you place your order instead of a line, an app. … In fast-casual, you only have a couple touch-points with your guest: when you talk to them in line, when you drop off the food, someone going around cleaning up tables. You get to look at them or smile. The question is, do we want to reduce that even farther? I’m not sure it’s positive.”
Still, you can’t stay on top of rising costs by passing them off in total to the customer.
“The prices that we can charge people to come in for lunch or dinner are not growing as quickly,” Paganini says. “We can’t just add the same percentage that we are paying for insurance or labor — we can’t do that because whoever has just done that hasn’t done so well.”
To develop an instinct for what works, he dines out and observes. Or he’ll sit at the bar in his own restaurant and make notes. Paganini admits to a bit of a competitive streak, gleefully comparing the crowds that the Bird drew upon opening to the lack of a line at other, similar places. But you can’t always listen to the advice you receive. Take Lolinda, which he claims was his most “dangerous restaurant.”
“What was the danger there? It was the one with the most probability of not working, the least obvious,” he says. “The press never really got that, but the guests did. The guests absolutely love it, and the business is growing.”
“Simple is complicated,” he adds.