Features, Grocery and Food

It’s a Store, It’s a Restaurant, It’s…Eataly

A friend wanted to recreate a delicious pasta dish we had in Sicily last spring. It was a strozzapreti—“strangled priest” or “priest strangler,” an elongated variation of cavatelli pasta, with a simple broccoli sauce that was one of the most delicious things we’d ever tasted. But the strozzapreti pasta was nearly impossible to find.

I’m no foodie, and while I’d heard of Eataly, which opened its first American outpost in New York’s Flatiron district to great fanfare in 2010, I’d never been there. Seven years later my search for strozzapreti led me to the now 56,000 square-foot Italian food hall. A guest services worker met me in the pasta section and helped me go through what seemed like hundreds of varieties of packaged pasta (there is also fresh-made pasta) until she located the strozzapreti. There was an entire row of strozzapreti and more than one brand to choose from. This helpful associate then led me through the crowds, past the Lavazza coffee bar, the bakeries—both breads and cakes—the candies and sweets, the fish, the vegetable and meat markets, the cheese stations, the wine shop, the cookbook and cooking utensil section, the fresh pasta and fresh mozzarella departments, the prepared food area, the olive oils—labeled by region with taste descriptions for each—the sauces, the cooking classes, the gelato bar, and six of Eataly’s seven restaurants to the checkout.

It was a good experience and I was intrigued. The place was loaded with customers, eating, drinking, shopping and having a good time. Eataly is not well lit and somewhat cavernous, but the customers, tons of them, of all ages, shapes, sizes and nationalities, were engaged and a-buzzing. Eataly is a boisterous, adventurous place, billed as a trip to Italy without the plane ride. To a certain extent, it is like a trip to Italy, or that is what customers have been encouraged to believe it is, and as far
as I can tell, it is succeeding.

The Founding Father Has a Mission

Eataly was founded in 2007 by Oscar Farinetti, the son of a third-generation pasta maker, and native of the Piedmonte region in northern Italy. Oscar, now 62, joined the family grocery business, UniEuro, in 1978. He focused on its electronics department and is credited with “transforming” UniEuro into Italy’s largest electronics retailer. He opened 150 stores between 1978 and 2003, the year Oscar sold the chain for 500 million (reportedly) euros.

Before he invested 20 million of those Euros to start Eataly, Farinetti was involved in the Slow Food movement, founded in 1986 by his friend, Carlo Petrini. Slow Food is an international non-profit culinary educational organization that stresses a combination of fair pricing, sustainability and local products. The polar-opposite of fast food. After the January 2007 opening of the Farinetti’s first Eataly in Turin, in a 30,000 square-foot repurposed vermouth factory, Farinetti told The New York Times, “Eataly’s goal is to make high-quality Italian foods available to everyone, at sustainable prices and in an informal environment where they can shop, taste and learn.” Writing in The Atlantic in May 2007—an article sub-headed, “A new exciting bazaar makes Whole Foods look like the A&P,” Corby Kummer, an award-winning food writer and author of The Pleasures of Slow Food, said: “Eataly is an irresistible realization of every food-lover’s gluttonous fantasy, paired with guilt-cleansing social conscience—a new combination of grand food hall, farm stand, continuing-education university, and throbbing urban market.”

A Vision Expands

Ten years and 31 Eatalys later, Farinetti is making good on his promise. Eataly now has nine locations in Italy, including a 2012 entry in Rome—a 170,000 square-foot extravaganza located inside an abandoned rail terminal originally constructed for the 1990 soccer World Cup, an 80 million-euro investment that includes 18 restaurants. There are three Eatalys in the Arab world, including Dubai, Riyadh and Doha; one in Istanbul, opened in 2014 and featuring a restaurant by Massimo Botturo, considered the best Italian chef in the world. There are Eatalys in Japan, Seoul, Munich and Monaco, with plans for Moscow in the works.

Eataly’s first American outpost opened in New York’s Flatiron neighborhood in August 2010 in what was formerly the International Toy Center—previously occupied by Cipriani, who’d tried unsuccessfully to make it a catering hall. New York’s mayor at the time, Mike Bloomberg, surrounded by Archbishop Timothy Dolan and Italian dignitaries including the president of Liguria and the mayor of Turin, Eataly’s hometown, talked about New York’s “love affair” with Italian food and simpatico with “the great cities of Italy.” It’s true, New Yorkers love Italian food. But I think Eataly takes you beyond what even a food lover expects.

Partners Make Perfect

In a stroke of genius, Farinetti partnered with the B&B Hospitality Group to open Eataly in the United States.

The B&B Hospitality Group is a partnership between the celebrity chef, writer and media personality Mario Batali; the winemaker, author, television producer and TV food judge, Joe Bastianich; and his mother, Lidia Bastianich, the highly regarded Italian-born chef, restaurateur and PBS food star. Together they own and operate 30 restaurants globally, including the highly rated Babbo in New York—one Michelin Star and three from The New York Times—as well as New York’s Del Posto, one of only five 4 Star New York Times restaurants and the only Italian restaurant ever to receive 4 stars from The Times.

Batali and the two Bastianichs are to food what Ryan Gosling and Emma Stone are to movies this season and Mick Jagger, Beyoncé and Lady Gaga are to music. These three are the rock stars of the food world. There is no question that their star power brings in the business. Food shows are popular entertainment today and have brought more sophisticated food ideas along with the desire to cook what is new and fresh—simple or special—to American kitchens. Just watch Mario Batali on his latest show, Multissimo. He is a natural, compelling television personality, going to the market, cutting herbs, chopping vegetables, cooking and talking to his guests, explaining as he goes. Batali and the Bastianichs pride themselves not just on the quality of their restaurants but also on sustainability, which is also central to Farinetti’s vision. You can even hear a TEDx talk given in 2011 by Elizabeth Meltz, Director of Environmental Health at B&BHG, who ensures that all their restaurants, including those at Eataly, practice the sustainability they preach.

Think Local, Be Italian

At Eataly in New York, much of the produce sold is grown locally, with flour from upstate New York and fish from the Fulton Fish Market. Dry goods, including pastas and olive oils, are imported from Italy. Eataly stocks 100 varieties of extra virgin olive oil from “producers that exclusively harvest in Italy” and boasts “the largest selection of boutique, single-estate olive oils.” Eataly even has a resident oleologist—olive oil expert Nicholas Coleman, a Columbia graduate who became fascinated with olives and olive oil and has built a career on it.

Nicola Farinetti, Oscar’s son, came to New York to be CEO of Eataly in the U.S. after managing Eataly in Bologna. Nicola, along with the brothers Alex (Eataly’s CEO) and Adam (COO) Saper, also have a partnership stake in the U.S. operations and oversee all aspects of Eataly’s U.S. retail business. The B&B Hospitality Group takes care of the restaurants. While Batali seems to be the primary “face” of the business, and most people believe Eataly is “Batali’s food place,” B&BHG does not actually run the business, which is as complex, if not more so, than a typical retail establishment and one that is growing. Eataly Chicago, 63,000 square feet, is Eataly’s largest U.S. outpost to date.

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Eataly Chicago opened in 2013, with 23 eating areas, one fine dining restaurant, 700 employees, including a vegetable butcher—someone who will prepare the vegetables you buy in case you don’t know how to chop an artichoke or clean a mushroom. Chicago Eataly reportedly reached sales above$50 million by 2015. A Boston Eataly, 45,000 square feet, opened on three floors of the Prudential Center in November, 2016. A Los Angeles location is in the works for this year, Toronto for 2018. The same team also operates Eataly in Sao Paolo. They seem to have the Western Hemisphere covered.

By the second anniversary of Eataly’s Flatiron store, Mario Batali indicated that Eataly accounted for one third of B&B Hospitality Group’s $250 million sales. A second New York location in the Financial District at 4 World Trade Center—45,000 square feet overlooking the Freedom Tower, with gorgeous views of the Hudson, and the 9/11 Memorial sites, opened in August 2016. At the time, Alex Saper told Bloomberg News Eataly’s U.S. sales were $130 million, with an expectation of $260 million by year-end and $550 million worldwide.

Eataly’s New York flagship Flatiron reportedly hosts between 8,000 and 10,000 customers a day on weekdays and 12,000 to 13,000 on weekends. It is said to be Eataly’s highest grossing store in revenues, with sales per square foot estimated to be around $1,700, an extraordinarily high number for the food sector (Kroger $672) and significantly higher than any fast food restaurant —Shake Shack leads at $387, Chipotle follows at $250. Eataly even approaches traditional retail sales per-square-foot where Tiffany, $2951, follows the leader, Apple, $5546.

La Scuola: Learn

Eat, Shop, Learn is Eataly’s organizing principal. All its restaurants are open kitchens so customers can watch the food being prepared. Eataly also has a school, La Scuola, with classes designed by Lidia Bastianich, to help customers learn about what they are eating and how to prepare Italian food. Education is central to Oscar Farinetti’s mission. Eataly’s La Scuolo serves about 10,000 customers a year. Classes range from fresh pasta and mozzarella preparation to family-style entertainment like the regularly scheduled Kids Kitchen—“bring your parents to La Scuola”—$90 for one parent and one child; it is usually sold out. Classes include hands-on techniques, lectures and tastings, with pairings of food and wine and cheese from various regions of Italy. Two-hour Chef’s Table dinners of four courses, featuring the food and wine from a region like Sicily or Tuscany, last two hours and are priced at $125 per person. There is a class every day at every Eataly on some aspect of food and wine. Recipes and shopping lists are included so students can shop for what they’ve learned to prepare at home. The classes take place on the selling floor among the restaurants, the customers, the butchers and the bakers. All of this adds a sense of excitement and fun to the atmosphere.

Learning at Eataly is not just for customers. Employees, both food and restaurant, are instructed regularly on what’s new, what’s planned, and what’s important to know so they can pass their knowledge on to customers. You can see groups of employees being instructed on the sales floor. Associates are encouraged to discuss products or explain cooking techniques with customers.

Customer Experience

I surveyed customers about their Eataly experiences. Most thought Eataly was fun and exciting, “an adventure and a fun day,” “special,” “authentic,” “a place where you can find Italian products you can’t find anywhere else.” A New York tech entrepreneur who enjoys going for coffee regularly on Tuesdays at 11:00 AM when it is not crowded, described Eataly as “lively, colorful, festive, noisy, exuberant, joyful—Italians at their best.” Others, New Yorkers all, objected to the crowds, especially the tourists, “you have to deal with the meandering tourists and hectic atmosphere before you can get to the food offerings … I have walked out of the Flatiron location without a purchase because I couldn’t deal with the crowds.” One downtown Manhattanite explained, “I think they have a difficult position—as a tourist destination that is also trying to be a regular shopping resource for New Yorkers.”

Consumers respond positively and negatively about the restaurant experience. “There were people sitting and eating, but it didn’t look appetizing because of the noise and the crowds.” One found the restaurants “sub par.” The fine dining, reservations-only restaurant, Manzo, was described by one customer as “a bit pretentious, considering you are in a food court.” Yet, at peak hours, most of the restaurants are full.

I enlisted my niece, a cosmetics executive, to join me for dinner at Eataly. On a cold, dreary February evening we went to the Flatiron store. My niece encouraged me to see the roof garden restaurant, Baita, an Italian Alps beer garden, ski lodge-themed restaurant with a retractable roof on the 14th floor, which she has enjoyed with friends in summer “whiling away the afternoon with a bottle of rose, and then another.” Baita was bustling at 8:00 PM on this cold February night. With no reservation, it would have required a half-hour wait. Back downstairs I was surprised to find that the other restaurants were full at 8:00 PM. Finally, we were seated at the counter of the pizza and pasta restaurant, La Pizza & La Pasta—I was craving a big bowl of spaghetti with meat sauce, which the vegetarian restaurant did not offer; yes, Eataly has a vegetarian restaurant. We sat next to a consultant who travels from Dallas to New York weekly for business and eats at Eataly nearly every night. I would describe our meal as very good. Equal in quality, and as expensive as a good New York Italian restaurant, and comfortable, once acclimated, considering you are sitting on a stool in front of a pizza oven in the middle a 50,000 square-foot space.

The Future

On October 1, 2015 Andrea Guerra, former chief executive of Italian eyeglass maker Luxottica—owners of LensCrafters, RayBan, Sunglass Hut, Oakley and others—and senior adviser to former Italian prime mister Matteo Renzi, became executive chairman of Eataly. Guerra, 51, joined Luxottica in 2004 as CEO and departed in 2014 after Luxottica’s founder, Leonardo Del Vecchio, 81—the second-richest man in Italy —assumed the executive role himself. During Guerra’s tenure at Luxottica, sales grew from 2.8 billion euros in 2003 to 7 billion euros in 2014. He reportedly left Luxottica with 40 million euros and now has a five-percent stake in Eataly.

Last year, Italian merchant bank Tamburi valued Eatalty at 618 million euros, based on sales of 380 million euros and profits of 30 million euros. They also have a stake in the company. In May 2016, Andrea Guerra told Reuters that Eataly will list about 30 percent of the company on the Milan exchange within the next two years.

Guerra offers serious management capacity to Farinetti and Eataly along with successful experience running an Italian public company with a substantial U.S. presence. Eataly’s Flatiron store is the chain’s largest-grossing, and there seems to be significant expansion opportunity in North America, with an already successful team and partnership in place—Batali & Bastianich, Nicola Farinetti and the Saper brothers—to execute it.

Food is a connector of people. A unifier. And like all people, Americans have a taste for food and want community and connection, especially in these uncertain times. Americans have embraced Italian culture, La Dolce Vita, since the liberation of Italy in World War II. Italian food has become an American staple, and a symbol of family and community. I think Eataly is in the right place at the right time, poised for a continuing and successful expansion, here and globally. One of Eataly’s mottos is: Eat well, live better. Something everyone needs these days.

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