Founded by Brit Jonathan Segal, The One Group is the US hospitality company famed for its STK steak restaurant chain, but not so well known in the UK – a state that looks set to change in the next few years.
Speaking at a briefing last week in the ME Hotel in London’s Strand – the One Group runs all the F&B in the hotel – Jonathan Segal outlined plans for the future, as well as some of the thinking that underpins both STK and One Group’s hospitality division.
Segal opened the first STK in 2006, after a careful analysis and critique of the steak house ‘scene’ in the USA. Having proven his concept, STK has grown to a current total of 29 venues and group turnover of around£75 million.
STK
STK challenged the traditional steak house model from the start: aimed at a wider demographic – and notably more women (55% of customers) – and more entertaining and casual, with less traditional decor and widened menu options.
And – of crucial significance – STK uses music to create the right environment and atmosphere, stimulating sociability amongst guests, even using a resident DJ to ‘read’ the room and ensure that guests enjoy the music and are encouraged to stay on after their meal.
The result? Guests do indeed stay longer – they also eat and drink more than at competitors’ restaurants: average spend per head in STK is around £65. At the same time, high margin liquor sales amount to 43% of turnover.
STK’s outlet within the ME London hotel, where One Group runs all F & B operations – has flourished and demonstrated the concepts success across the Atlantic.
STK expansion
From its present 29 outlets, Segal sees STK growing to no more than 50 worldwide, occupying 9-10,000 square feet premises, and aiming at turnover around $11 million each. Having expanded to and proven the concept in London, next opening is Milan. However, only New York and London could sustain as many as three STK outlets – Knightsbridge and Canary Wharf both being additional target locations in London.
Rebel by STK is the new ‘under brand‘ concept that STK plans to introduce in 2015, and a concept that other steak restaurant brands such as Del Frisco, Morton’s and Smith & Wollensky are also pursuing.
Using smaller sites and a lower price point (average spend per head around £35), Jonathan feels that there is the potential to have as many as 150 to 175 around the world. The UK, for example, could have six Rebel branches across London and the major regional cities such as Manchester, which is planned to be its first outlet in the UK. The format allows a more rapid expansion in the trend to casual dining that Segal feels is stronger than the fine dining at which London has excelled.
One Group Hospitality Division
As indicated above, One Group is running all F & B within the 5-star ME London hotel in the Strand: from the Cucina Asellina, to the Radio rooftop bar, to banqueting and room services.
A taxing challenge, one would think, but clearly one that Segal and his team relish since they are actively considering a number of other approaches and opportunities within hotels in the UK and elsewhere.
Again, such hospitality deals require hotels with the right facilities, locations and ambitions: having proved they can handle such operations successfully in New York and London, One Group can look to expand where the right opportunities and terms arise – which is unlikely to be more than 3 to 4 hotels even in London or New York.
The recognition by at least some hotel groups and hoteliers that they struggle to deliver the quality of food and beverage that actively attracts both guests and visitors has created this opportunity for One Group: third party operators who really understand what is involved across all activities (bars, restaurants, banqueting, room service…) are rare but very valuable to such hoteliers.
Such deals also make sense to owners and property developers: Service Level Agreements and guaranteed income, as well as positive impact on room occupancy, all help to deliver ‘bankable’ value.
One Group has now developed the systems and processes that are necessary, as well as the contractual terms that make it work in practice over a typical 10-year period: from equipping the central kitchen that can serve multiple restaurants, to SLA terms, to share of profits.
We await the next hotel to sign up.
Poised for expansion…
As can be seen, One Group has developed twin revenue streams that are well placed to expand rapidly as confidence in national and international economies grows.
STK not only has the ability to selectively grow the original brand, it also has the interesting potential of its ‘Rebel’ under brand to develop.
And One Group’s Hospitality Division appears to have equally attractive opportunities to work with high quality hotels in the right locations in major cities.
H&C News and no doubt many readers will be watching developments with real interest.