Crate & Barrel to add restaurant concept to up to 15 stores

UPDATE: Sept. 17, 2019: Crate and Barrel's first restaurant in Chicago did so well that the retailer plans to open 15 full-service restaurants inside its stores, CEO Neela Montgomery said during Fortune's MPW International Summit. She said the concept turned a profit by the second month. Montgomery didn't indicate a timeline for opening these restaurants.

Dive Brief:

Crate and Barrel opened its first full-service restaurant, called The Table at Crate, yesterday at its Oak Brook, Illinois store, according to a company release. The concept is a collaboration with Cornerstone Restaurant Group, which is the company's first foray into retail. James Beard-nominated chef Bill Kim will lead the eatery.
The restaurant will give the retailer a unique space to showcase its products, and guests can take signature cocktails into the adjacent Crate and Barrel retail space as they shop. The store is also looking to host chef demos, cookbook dinners and other experiential events in the restaurant.
The Table's plant-forward seasonal menu is sourced by local farmers and producers.

Dive Insight:

Consumer demand for unique branded experiences is blurring the line between restaurants and retail, and giving foodservice outlets new avenues to reach consumers without investing in real estate.

Crate and Barrel is not the only retailer looking to bolster its brand with a high-end eating experience. This fall, Nordstrom is launching a flagship store in New York that will include six food and beverage concepts rather than the typical Nordstrom Cafe. The retailer is teaming with James Beard Award-winning chef Tom Douglas and Seattle-based chef Ethan Stowell to create the in-store restaurant experiences. The concept will boast the most dining options of Nordstrom's store portfolio, which currently includes 253 restaurants across 119 "full-line stores."

Earlier this year, Neiman Marcus opened a flagship in New York's Hudson Yards that includes three restaurants led by a former Eataly chef.

In the past, the National Restaurant Association has named retail-host restaurants as one of the fastest growing segments for restaurants, and the concepts raked in sales of more than $42 billion in 2017, according to the U.S. Census Bureau. According to Statista, the category accounted for over $29 billion in 2009. The uptick makes sense. As the restaurant industry becomes increasingly crowded, restaurants are hungry for points of differentiation and nontraditional expansion strategies that aren't tied to costly brick-and-mortar real estate startup costs.

By entering existing retail space, whether it be a department store or grocery outlet, restaurant companies can experiment with how they connect with customers and amplify their brand presence at little cost. It can also get restaurants in front of a new diner base, and these businesses can benefit from the brand halo of their host company, especially if their food values align, such as Whole Foods' partnership with Next Level Burger. This can also be achieved via kiosks in supermarkets rather than full-scale eateries, as Yo! Sushi is doing through a partnership with supermarket SnowFox.