The Perks of Cornering the Market

When it comes to opening new restaurants and bars, sometimes clustering them together makes a whole lot of sense. It's easy for owners to pop into places without dealing with D.C. traffic. Deliveries are more efficient since trucks can park in one spot and make quick runs into the restaurants. Plus, the neighborhood can transform into a destination for food-focused fans.

In D.C.'s restaurant scene, there are many players who have not one or two, but three or more restaurants and bars in the same neighborhood. Hilton brothers Ian and Eric have a mini-empire on the U Street corridor with recently opened Mexican beer garden El Rey, The Brixton, Den of Thieves, American Ice Company, and Satellite Room, among others. Josh Hahn is one of the principals of the EatWellDC team that have opened restaurants in Logan Circle before the restaurant boom there. Hahn's team has The Commissary, Logan Tavern, and The Pig under the team's growing restaurant portfolio. And Derek Brown is part of a team who has taken clustering to its logical conclusion after opening three places in 2013 — Eat the Rich, Mockingbird Hill, and Southern Efficiency — next door to each other. That's not even mentioning other neighborhood entrepreneurs like the Fedorchak brothers (Liberty Tavern et al) and Spike Mendelsohn (Capitol Hill).

These guys know what it takes to open businesses in the same neighborhood. And they all have reasons why they did it. But the one commonality is that they love the neighborhood their businesses are in and are committed to investing in the neighborhood to make it better.

To Eric Hilton, U Street "looked like a neighborhood with a heart and no other organs. You look at the 9:30 Club and you have hundreds of people there many nights of the week and abandoned buildings around it. It just looked absurd, especially to people who like to open bars and restaurants".

A similar love for the neighborhood is what drove Brown and Hahn to invest in Shaw and Logan Circle, respectively. Brown believes Shaw "used to be the center of the universe and then had fallen into hard times. And there's a stretch on 7th Street that was full of boarded windows. There's already historic recognition of the neighborhood. So from a business side, it made sense to create a third space here."

"We believed in the neighborhood," said Hahn of Logan Circle. "We are residents of the neighborhood. We had a connection to it and had a real sense of community. It's nice to run businesses in a neighborhood with people that care."

Love of place aside, some would worry about having multiple businesses in one area would cannibalize sales, sort of like a Starbucks on every corner. But when the concept for each place is a bit different, then that's an opportunity to lure in different kinds of customers. Ian Hilton knows that very well. "You might see people bounce around and see the familiar faces with Satellite and American Ice Company will have the same people. It's not necessarily demographic driven, but there are different crowds that go to our different spots."

For the EatWellDC team, people can hop from place to place and share their plates along the way. And Hahn knows just the way to do it: "You can have brunch at The Commissary with Ceremony coffee and Eggs Benedict. Then lunch at Logan Tavern with the chipotle chicken sandwich and fries. And then dinner at The Pig. The menu changes often maybe some pork cheek or something like that. It may sound like a lot of food, but you should always be sharing your food. Eating should be a shared experience."

Sharing resources, whether it's kitchens, employees, or owner's time, makes business sense. Ian Hilton sees it as a multiplier effect. "Another metaphor I steal from Eric is that these businesses are multiples where 1 + 1 = 5. And it is true. You bring more people to the area, and it benefits really all of the places. The people that are worried you're going to cannibalize your market, that's not what's going on. You're bringing more people to the area and creating more opportunities to succeed."

For employees, clustering allows more opportunities to learn new skills and make their paychecks bigger. "It definitely benefits our employees. Instead of working for one bar, you can work for two and your salary can be higher. If they have the bandwidth, there's the opportunities," says Eric Hilton.

But those efficiencies can't be a sole business driver, says Brown. "What we have realized along the way, there are some efficiencies along the way. But every place requires thoughts and money. And the idea that just lumping a space together and making it work is not going to happen." And it certainly benefits the consumer, especially one venturing into a new neighborhood, because it's less risky going to several bars in one place than "checking out that one random bar in that one random neighborhood."

But that doesn't mean their neighborhoods are all tapped out. There's always room for something more, however finding those opportunities is becoming more of a challenge as the restaurant offerings in the city grows. Hahn is thinking about what's next. "We have plans for growth and always looking to find underserved markets and underserved communities. We are alway trying to find a new concept and a new market. And everyone opening is trying to find their niche. To be a groundbreaker, it's getting harder to do. Finding the new frontier is getting more and more of a challenge."

However the conversations kept coming back to the love of the neighborhood and why investing in it was the way to go. Eric Hilton is all about "investing in a neighborhood itself. You know, I couldn't imagine if we wanted to have multiple businesses having them spread throughout the city. You would basically just be stuck in traffic getting from one place to another. You'd waste your time and energy. If you see a neighborhood with a lot of potential, just go heavy and invest in that neighborhood to make it better. That's our intention here."
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