WEBVTT - Smith & Wollensky's Kim Lapine on Expanding the Brand (Audio)

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>I'm Charlie Pallot. That's a Bloomberg business flash. This is

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<v Speaker 1>taking stock with Gadlin Hayes and Gim Fox on Bloomberg Radio.

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<v Speaker 1>We are broadcasting live from Boston's Atlantic Wharf site of

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<v Speaker 1>Smith and will Lensky's, and we're gonna be talking about

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<v Speaker 1>hospitality in the restaurant industry. Do you know that the

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<v Speaker 1>restaurant industry in the United States is worth and estimated

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<v Speaker 1>seven hundred and eighty billion dollars a year and employees

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<v Speaker 1>more than one and a half million people. Here to

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<v Speaker 1>tell us more about the hospitality business is Kim Lapine.

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<v Speaker 1>She is the senior vice president of marketing for Smith

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<v Speaker 1>and Bolensky's. Kim, thank you very much for having us

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<v Speaker 1>here and welcome to the program. Welcome. Tell people about

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<v Speaker 1>a recent transaction having to do with a Bunker Hill Capital,

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<v Speaker 1>which was previously the owner of Smith and Wilensky and

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<v Speaker 1>what is happening to this iconic branch. Sure well, UM,

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<v Speaker 1>as many people know here in Boston, on Bunker Hill Capital,

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<v Speaker 1>private equity firm located here in Boston, they took ownership

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<v Speaker 1>of Smith Lensky back in oh seven, UM, pre recession

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<v Speaker 1>and then of course the recession. UM, their focus really

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<v Speaker 1>was to kind of right the ship and position the

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<v Speaker 1>company and UM very turbulent times. UM very difficult economy.

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<v Speaker 1>UM luxury brands like Smith Lensky of course had to

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<v Speaker 1>take a hard look at themselves and how to survive

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<v Speaker 1>in that atmosphere. And we really just stayed true to

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<v Speaker 1>our our brand, the the integrity, the quality of the

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<v Speaker 1>product in the service hospitality of course was a number

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<v Speaker 1>one focus, and just UM making investments in our procedures

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<v Speaker 1>and our tools to operate the business and kind of

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<v Speaker 1>right the ship and make sure that the equity remained

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<v Speaker 1>and that the company remained solid for future purchase UM

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<v Speaker 1>which of course this past spring, UM dan new partners

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<v Speaker 1>based in Dublin. Longtime fans of the brand, customers of

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<v Speaker 1>the brand UM. They like to get around about how

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<v Speaker 1>they UM cut many deals cutting into Smith Valensky, staying

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<v Speaker 1>over the past cup of decades, so huge admirers of

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<v Speaker 1>the brand UM. They had known some of the key

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<v Speaker 1>players both at Bunker Hill and in our operations and

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<v Speaker 1>even in New York City, and UM really approached us

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<v Speaker 1>to UM franchise the brand over in the UK and

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<v Speaker 1>open the first international location, which they did back in

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<v Speaker 1>two thousand fifteen. So what does this portend? More international expansion,

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<v Speaker 1>more US expansion. What's the business model like now for

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<v Speaker 1>Smith and Olinsky, well, clearly they saw some value in

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<v Speaker 1>the brand, enough so that they invested quite a bit

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<v Speaker 1>of money to open in the UK with the intent

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<v Speaker 1>of eventually buying the company outright. UM. If that went

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<v Speaker 1>well and if the relationship remained and and everything um

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<v Speaker 1>UM remained as positive as it was, they purchased the

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<v Speaker 1>brand back UM this this past spring. So now they

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<v Speaker 1>own all the locations here in the US except New

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<v Speaker 1>York City UM and then of course the London location,

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<v Speaker 1>with the intent of first investing UM new capital and

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<v Speaker 1>much needed funding and the locations that we have here

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<v Speaker 1>in the US UM, then maybe exploring some new domestic

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<v Speaker 1>opportunities in some major cities like we were talking about

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<v Speaker 1>earlier here in the US, and then of course looking internationally,

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<v Speaker 1>and just to look at the US footprint right now,

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<v Speaker 1>you've got Miami Beach, Chicago, Las Vegas, Columbus, Houston, and

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<v Speaker 1>two in Boston. Is any of the funds. Are any

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<v Speaker 1>of the funds going to be used to do renovation

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<v Speaker 1>or build outs of existing location? Yes, as a matter

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<v Speaker 1>of fact, we're beginning renovation plans for Miami Beach as

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<v Speaker 1>we speak. UM. Construction should begin sometime very soon as

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<v Speaker 1>well as Columbus is next on the docket. We've also

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<v Speaker 1>UM recently invested a great deal of funds in the

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<v Speaker 1>Chicago location, both in renovations of the Smith Wilensky brand

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<v Speaker 1>proper and then downstairs the launch of a new sort

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<v Speaker 1>of FETO concept. We call it Lensky's Grow. So, you know,

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<v Speaker 1>it seems to be one of things Smith and Wolensky

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<v Speaker 1>has that you know, you established the nineteen seventy and

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<v Speaker 1>I think that's almost what forty years the whole Uh,

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<v Speaker 1>the foodies in this country, so many people, so much

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<v Speaker 1>more fine dying around the whole country, not just in

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<v Speaker 1>a few major cities. So you have, it seems more demand,

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<v Speaker 1>a bigger market potentially, but there's also so much competition.

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<v Speaker 1>How do you stay on top? How do you keep

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<v Speaker 1>a brand premier and a brand that a company in

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<v Speaker 1>Ireland would want to buy exactly exactly? And you know,

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<v Speaker 1>and that's what we really faced during the post recession.

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<v Speaker 1>You know, how how are we going to remain competitive?

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<v Speaker 1>There's so many new players in the marketplace, especially in

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<v Speaker 1>the cities that we were in UM, and we took

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<v Speaker 1>a hard look at ourselves and said, you know, what

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<v Speaker 1>do we learn over that recessionary period, what do we

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<v Speaker 1>learn about Smith and Lensky that remained a constant, remained

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<v Speaker 1>a driver for the core customers that we were able

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<v Speaker 1>to maintain. And it, you know, came down to a

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<v Speaker 1>few UM what I call brand pillars. It's about the

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<v Speaker 1>quality of the product, the commitment to U s D

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<v Speaker 1>A dry aging, hand butchering and dry aging on site,

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<v Speaker 1>which a lot of steakhouse brands don't do. UM. We

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<v Speaker 1>have a strategic partnership with a facility and i AA

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<v Speaker 1>where we secure and procure the only the very best

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<v Speaker 1>USDA Prime beef, m Black Angus beef. These folks are

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<v Speaker 1>committed to family farm feeder UM relationships, so a network

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<v Speaker 1>of family farms located right outside of Iowa. So again

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<v Speaker 1>committing to the product, the sustainability of it, the the

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<v Speaker 1>quality of it, the hospitality itself, and then the integrity

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<v Speaker 1>of the brand and and just committing you know, all

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<v Speaker 1>of our resources and our attention around those brand pillars

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<v Speaker 1>and not trying to be something that we're not UM

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<v Speaker 1>and remaining true to our heritage and our brand that

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<v Speaker 1>that's really sustained us and it's I think what Dan

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<v Speaker 1>new saw in in our brand and the um growth

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<v Speaker 1>and potential in the future. Just quickly, just want to know.

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<v Speaker 1>One of the other things that's changed in nineteen seventy

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<v Speaker 1>seven are the prices. What does a what does a

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<v Speaker 1>Smith of Olansky top tier state go for now? Um

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<v Speaker 1>depends on the stake that you're talking about, but you

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<v Speaker 1>know we're somewhere in their forty two range depending on

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<v Speaker 1>the steak um. And again we are again still one

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<v Speaker 1>of the only steakhouse friends that dry ages and hand

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<v Speaker 1>butcher's on site. There's obviously an added expense to that process.

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<v Speaker 1>We believe it's something that differentiate to product and it's

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<v Speaker 1>it's something that our customer appreciates. So it's something that

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<v Speaker 1>we're willing to continue to invest in. Gets outside, stay

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<v Speaker 1>on top and brow. You hold onto all the great

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<v Speaker 1>traditions of the past. You upgrade the facilities more modern.

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<v Speaker 1>Were beautiful. Chimlippine, thank you so much for joining you. Okay,

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<v Speaker 1>thanks for joining us. Kicking off our live broadcast here

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<v Speaker 1>Smith and Malensky, where she is senior vice president of marketing.

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<v Speaker 1>We're in Boston, down Atlantic work. Could you hear the

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<v Speaker 1>seagulls in the background for a minute. Boy, oh boy,

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<v Speaker 1>what a beautiful spot. I'm Kathleen Hayes along with pim Fox.

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<v Speaker 1>This is Bloomberg coming up on taking Stock. Our conversation

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<v Speaker 1>about behavioral finance, also new technology and the spending patterns

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<v Speaker 1>of millennials. Can we look at the future of the

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<v Speaker 1>financial services industry that's next