The Hybrid Model of Success
The lines between restaurant categories used to be distinct; customers could choose among quick-service, casual-dining, and fine-dining restaurants with clear expectations for what each experience might hold. Today, however, the lines between the categories have blurred. Fast casual emerged between the quick-service and casual-dining sectors, and later, chefs began exploring a limited-service structure that led to hybrid concepts combining the best of quick service and fine dining.
This year, we’re diving deep into the world of those hybrid concepts, exploring what potential this new category might hold for chefs across the country.
John Tesar is known for many things. There’s his eccentric personality, which once led to him being named “The Most Hated Chef in Dallas” by a local magazine. There’s his culinary pedigree, which has earned him three James Beard semifinal nominations. And there’s his celebrity chef status, which has been solidified by appearances on two “Top Chef” seasons.
Now Tesar might become known as the harbinger of troubles to come for chefs and fine-dining restaurants—and the guide to how chefs might navigate through those troubles with hybrid concepts.
This year, Tesar is opening a food-stall spinoff of his popular steakhouse, Knife. Knife Burger will open later this year at Dallas’ Legacy Hall, serving fries, shakes, and a few of Knife’s signature burgers, including The Ozersky, named after Tesar’s friend, the late food journalist Josh Ozersky. The move was necessary, Tesar says, because of the potential risk of a growing restaurant bubble in which there are too many restaurants opening and not enough customers to go around.
“With all of the experience I’ve had in the restaurant business, from working in the Hamptons to working in New York to working in Paris, doing all of this five-star and four-star stuff, no matter what restaurant I work in at that level, there’s always a level of struggle with consistency, with occupancy, and with revenue,” he says. “It’s a wise business decision to down-size in a city and nation where we’re building a restaurant bubble.”
By opening a hybrid concept with fine dining–quality burgers in a quick and affordable format, he adds, he’s able to run a much more profitable restaurant with fewer complexities than fine-dining establishments like Knife and his previous effort, the seafood restaurant Spoon. He points to the cost benefits of the food stall: In a 350-square-foot space that costs roughly $65,000 to build, he says, the business will do around $1.5 million in sales. It’s streamlined by touch-screen ordering kiosks that not only limit labor costs, he says, but also remove the need to search for quality employees—another difficulty in a competitive restaurant scene.
“That’s an amazing profit, as opposed to owning a seafood restaurant where I’m doing $3 million a year and I’m losing $80,000 a year because I’m flying everything in from New York,” he says.
At Knife Burger, Tesar hopes to introduce Texans to a better burger than those served in the fast-casual space. The meat is sourced from nearby 44 Farms, which he says is “really something special” and has “integrity.” Burgers aren’t too fancy; Tesar believes diners should taste the meat when they bite into a burger. The $8–$12 options include The Ozersky, which has American cheese and a red onion; The Magic, with Cheddar cheese, bacon, lettuce, tomato, and onion on an English muffin; and the Pimento Cheese, which has the namesake cheese and a grilled onion.
By serving such an American staple in the burger, Tesar says, he’s able to safeguard against any restaurant bubble threatening to pop. Another safeguard is his real estate model; Knife Burger will be set in a busy food hall with plenty of foot traffic, while Knife is located at The Highland Dallas hotel.
The hotel location in particular guarantees seats every night—especially when the hotel is at maximum occupancy—while also paying the bills through the restaurant’s revenue. By basing the restaurant in a hotel and choosing his own food and beverage director, executive chef, and pastry chef, he’s able to focus on the important details that make the restaurant stand out.
“If you go into a scenario like that and you can control those three figures, then you don’t have to worry about who the big boss is or who owns the hotel,” Tesar says. “All you have to do is execute, and that takes a lot of pressure off a chef and a restaurateur’s back.”
The chef believes he can re-create the dual hotel-hybrid model in other cities through licensing. He hopes that model—wherein the fine-dining restaurant maintains the security blanket of being based in a busy hotel and the hybrid concept is a sustainable profit driver—will help transition him from being a chef to being more of a restaurateur with business acumen and a sustainable and replicable platform.
Just don’t think he aspires to be the next Danny Meyer, who became a household name through the fast casual Shake Shack. Tesar isn’t promising to open hundreds of Knife Burger locations or to expand across the country. He’s simply looking at the hybrid concept as a safe business investment in a restaurant world that’s increasingly competitive, especially in foodie cities like Dallas.
“It’s not my sole business. I think it’s a great add-on,” he says of Knife Burger. “Who doesn’t want to make an extra $80,000–$100,000 a year and have people build something for you that possibly could be licensed and put in airports and yet also challenges the establishment at the same time?”