Punch Bowl Social CEO Robert Thompson has stepped down from the trend-setting eatertainment concept he launched in 2012, a move that both reflects the challenges the segment faces amid social distancing mandates and leaves the company in uncertain territory.
At the beginning of the year, Punch Bowl announced its plans to expand into the hospitality space and become a lifestyle brand. At the time, Thompson hoped the chain would open its first hotel by 2022. The company also had a $140 million investment from Cracker Barrel under its belt from when the restaurant chain took a minority stake in the eatertainment brand last summer.
But at the end of March, Cracker Barrel cut ties with Punch Bowl, which had closed all of its locations at the time, laid off nearly all of its restaurant and corporate employees and faced foreclosure. In June, the chain was forced to permanently close two locations when it was unable to come to new lease terms with a landlord. Today, the chain has 16 locations with six more in the works. And despite a challenging pandemic environment, Punch Bowl has begun to reopen locations with modified floorplans, contactless solutions and increased sanitation efforts — providing a peek at what the eatertainment concept of tomorrow may look like.
Thompson is confident that consumer demand for social experience will hold steady, or even grow, even as other behaviors change. He spoke with Restaurant Dive about how he plans to continue developing concepts for millennials outside of Punch Bowl, the products his new incubator Thompson Growth Group has in the works and how he predicts the eatertainment space will evolve.
This interview has been edited for clarity and brevity.
RESTAURANT DIVE: Tell me more about the timing of your exit.
ROBERT THOMPSON: I resigned effective yesterday, and this is related to COVID-19 — no one could suggest that's not the case. This company traded one year ago at $185 million enterprise value. And I did not think six months ago that I would ever be thinking about — this year, anyway — leaving the company that I founded and I've been its only CEO. The company is in a certain situation, but for me, I'm thinking the universe is sending me a message that the dream that I have always had of creating an incubator for national growth products in the restaurant and hospitality space, the time is now. I'm standing here today at 49 years old, at the peak of what I would call my executive years, and my ability to create and drive a body of experience and into the future... as odd is it may sound, now is the perfect time to do that.... Because of COVID-19, this is absolutely the ideal time to be developing new product to come out of the ground as opposed to trying to manage a back forty of assets that are being pummeled.
What will these new products be?
THOMPSON: The company is called Thompson Growth Group. It is an incubator and holding company based here in Denver. Denver hasn't had an incubator in our industry that launches new products in the way that Phoenix and Scottsdale have with Sam Fox Restaurant Concepts and Chicago with Lettuce Entertain You, Stephen Starr out of Philly, Front Burner Dining Group in Dallas. Denver has evolved enough for this to be a great location for launching national growth products. And while I have a half dozen concepts that are in development stage, I have three that are dialed in, and are coming out of the ground starting next year.
The largest one, and the one that is most closely related to the success we've had with Punch Bowl just because it's a big box, is a 40,000- to 60,000-square-foot concept called Nobis. That's a Latin phrase that just means "we" or "us." Nobis is a private club oriented for millennials, with a private restaurant and private craft cocktail bar, a coffee program, a health club and a remote office space. What we're seeing is... large companies have figured out that their employees can be very efficient working from home and remain productive. So they're gonna cut back on their office square footage, but we also figured out through COVID-19 that we can't work at home five days a week. People need a third place, and we think that Nobis can be your social club, your health facility, and a place for you to go and [work in a] remote office. And it may even expand into co-working if the trade area demands it. We're looking nationally — we're looking at deals in Miami, Montreal, Vancouver, Los Angeles and Denver for where the first location will be. Concepts like Nobis and Punch Bowl usually take like two years to develop, so the first Nobis is probably in 2022.
...But next year, one of the products that will come out of the ground is something called Dinette Fine Foods. I jokingly refer to it as an urban Waffle House for millennials and Gen Z. It's this small-box, all-day format that is very much design-forward, but also with a 26% delivery and takeout component. The irony is I didn't develop that in response to COVID-19, but I do wish I developed it a few years ago. I wish I had it open on March 16. That's a 225-location growth product, in our estimation.
At the beginning of the year, Punch Bowl Social announced plans to expand into hospitality and open a hotel in the next few years. Is that still on the horizon for the company?
THOMPSON: I will say that I was always the effort behind that, so I don't know whether the company [will pursue that]. With my resignation I don't have any say over that. I personally am going to move into the hotel space. I will bring a boutique hotel out of the ground at some point in the not-too-distant future through Thompson Growth Group.
How do you think the pandemic will change eatertainment and diner behavior?
THOMPSON: I think from a macro perspective, you can say that when you look at all of the demographic cohorts combined, sure there's measurable consumer pattern change. But I sort of object to the notion that millennials are going to have material consumption pattern changes. Millennials are barely changing their consumption patterns in the middle of a pandemic. Some people are calling this the millennial pandemic, because millennials are the ones that are going out there... bars are not allowed to open in many municipalities because millennials won't stop going to them. So, on the other side of this, I see millennials as having ravenous, pent-up enthusiasm to get back out, and especially to get back into social spaces... I think that we could enter a new heyday. Maybe not until late 2021, but this category — which we like to think at Punch Bowl that we defined the modern version of this category — we think it's gonna continue expanding. And I for one am not done with the experiential food and beverage space myself. Nobis may have eatertainment-like features to it, but it will certainly not be its core product.
A few months ago, Punch Bowl Social faced some obstacles with landlord agreements. Has that continued to be a challenge?
THOMPSON: I think landlord situations are fluid for most in the restaurant industry. If landlords had better options, they would have already evicted all of us and signed new leases. They don't. There hasn't been enough demand. Most restaurant companies are still negotiating what the go-forward plan is with their landlords, and we very quickly determined we were not going to come to terms with [some of our landlords], and we shook hands and parted ways... I won't be part of any of the decisions on whether any more stay open or close. But I want to say that Punch Bowl has a senior lender that was sort of the first to make a move in the COVID-19 world to protect themselves. But we worked extremely constructively with our senior lender through this process. And I take my hat off to them... there are certain landlords that we've been working with that I applaud, that have a macro-perspective on this situation, they're not just trying to ratchet up their position.
Has the company chosen your successor?
THOMPSON: No. The company has a developed executive team that I'm leaving there... I won't be a part of [what the board decides] because I'm resigning from the board as well. The board will decide who needs to be put into place to sort of guide it through, because we're not out of COVID-19 yet. Who may be the right CEO next year may not be the right leader this year.
Any last thoughts on your time at Punch Bowl Social?
THOMPSON: I guess my parting thought is I created Punch Bowl Social during the Great Recession... I guess this is the Great Pandemic that has caused the second Great Recession. My point is that great things can come out of the eye of the storm. If I brought Punch Bowl out of the Great Recession, these products from Thompson Growth Group can come out of this global pandemic. There's no doubt that loved ones have been lost across the world, and this is a terrible situation. But I am incapable of only seeing the downside. And I think it helps us all emotionally and psychologically to try and figure out what good can come out of it... I think we all as leaders need to sort of build hope for those around this, and this is in part what I'm trying to do. This is not a dark day with me leaving Punch Bowl. This is a positive day because I'm starting something new, and I'm gonna hire a whole new group of people, create new jobs, new economic opportunities and enthusiasm for modernizing the restaurant space. That's how I see it.
