SCT
Gordon Ramsay North America’s stalled expansion kicks into gear February 1, 2021
During one of the most pivotal periods in the restaurant industry and, says Norman Abdallah, one of the most opportune, Abdallah has come out of retirement to join Gordon Ramsay North America Restaurant Group as CEO. In September 2019, the CEO of Del Frisco’s Restaurant Group had arranged the company’s sale to private equity investors. He took a trip to Costa Rica and then had dedicated his retirement time to sports fishing with buddies. For those counting, it’s his third unsuccessful stab at retirement. “I guess I’ve found out that I’m just not that type of guy,” said Abdallah, who started in the restaurant industry at age 14.
Gordon Ramsay North America Restaurant Group’s plans also were interrupted — by COVID-19. Midway through 2019, private equity firm Lion Capital bought half of the company in a $100 million deal that included equity and growth capital. The plan was to add 100 restaurants in the U.S. over five years before COVID-19 entered the picture. Abdallah talked to SCT contributing editor Joe Gose about igniting the delayed expansion. While Gordon Ramsay North America operates 10 restaurants in an agreement with Caesars Entertainment, the new restaurants, now more likely to number 40 or 50 within five years, will be owned and operated separately.
What was it about Gordon Ramsay North America that appealed to you?
It’s a lot like the Del Frisco group, in that it has multiple brands and consumers aren’t going to the restaurants just to be fed, but to have an overall experience. Right now, this is an incredible time to grow because you can get reduced rental rates and higher tenant-improvement dollars. And you have quite a few landlords that would want the Gordon Ramsay name in their development.
You’re jumpstarting growth. How do you see it playing out?
Each concept will be a little bit different in terms of the pace that we grow. Gordon Ramsay Fish & Chips, a fast-casual premium brand, will expand faster and in more cities in our target regions of the Southeast, Mid-Atlantic and the Northeast and what I call the Southern Central region like Dallas. With our fine dining concepts, like Hell’s Kitchen and Gordon Ramsay Steak, we’ll go very slow into triple-A sites across the country, and we’ll build about two or three casual restaurants a year. I would say the bottom range is about 40 to 50 new restaurants across all concepts over the next five years. Right now, it’s about getting letters of intent in place and leases executed.
“This is an incredible time to grow because you can get reduced rental rates and higher tenant-improvement dollars”
You’re working to find locations. What’s the ideal site?
We want to be in heavy-footfall locations, and we’re identifying second-generation sites [closed restaurants and those that are unable to pay rent] because they can help speed up development. A Gordon Ramsay Fish & Chips in [Orlando’s] Icon Park opening this year will be our first owned property.
How does the site-selection process work?
You have to maintain discipline in your growth to be successful in this industry. When it comes to real estate, what you’re building is not a one-time expense; these are capital expenses that last 10, 15 or 20 years. So I always put a real estate committee in place from the management team where there are four of us that need to sign off on a site, and I believe in having one or two people from the board on the committee. It’s not just me saying, ‘Go do this site,’ but I’ll tour every location just as our chief operating officer and chief development officer will. We get very analytical and feed data into our model, but it’s really part art, part science.
How much are you concerned about the long-term effect of COVID-19, especially on the psychology of dining out?
People interested in an experience are still going to eat out, and there are a lot of operators reporting positive comparable sales versus before COVID. But now we also have intel on what happens during a pandemic. You have to have different facets and stations so that you can offer grab-and-go, takeaway and delivery, and you have to spend money on outdoor dining spaces that are very comfortable in cold and hot weather.
What, in your view, is the silver lining of the past year’s challenges?
Our industry was saturated, and now, that oversupply is being reduced. Our restaurants won’t start opening for the next 12 to 24 months, but we’re excited because we’re focused on giving opportunities to people that just don’t have them today. Workers that are out of a job or that are at a restaurant that is very slow could come to our team, see an increase in wages and be a part of something really cool. We’re also putting programs in place to hire homeless people on the street because of what has happened.
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