Houston's prepares to make its mark in Manhattan

Nation's Restaurant News, August 19, 1996 by Milford Prewitt

Houston's is coming to Manhattan.

We might have made that a front-page headline five to six years ago. It would have been right up there with "Little Caesar inks franchising pact with Kmart," stories that foretold of brand-new ways of doing business by breaking with tradition.

In Houston's case the 32-unit company signed a 15-year lease for 7,800 square feet in the eclectic retail shopping concourse called The Shops, at Citicorp Center, which is also the headquarters of Citibank on East 54th Street between Lexington and Third avenues.

Houston's management corps, which plays close-to-the-vest and typically keeps a low press profile, is widely respected as strong operators in the foodservice industry. They are not known for picking poor sites. That might explain why the chain enjoys some of the highest average unit volumes in the segment, about $4.9 million, on check averages of $16 to $18.

The company expects to open its prototypical, 200-seat, Frank Lloyd Wright-inspired restaurant in April.

As newsy as the Houston's maiden launch here may be, what is far more significant is the economic and social shifts that are changing the way national dinner-house chains perceive and penetrate New York City. Consider that just five to six years ago, Houlihan's and T.G.I. Friday's -- which was born here -- were the only national casual dinner-house chains with units in Manhattan.

Back then, to most of the national casual dinner-house operators, New York City was a no-man's-land, the last place on earth they'd ever want to do business. In those days New York's slow recovery from the recession, higher costs for real estate and labor, and the maze of regulations and inspections kept the big dinner-house chains at bay. And while most of those conditions have not changed, many restaurant consultants and retail brokers say Manhattan is losing its image as a forbidden zone for strong operators.

Although Houston's itself is somewhat of a Johnny Come Lately, in following California Pizza Kitchen, The Olive Garden and the Crab House as some of the national players to pioneer the market, others are on the way.

"What's going on right now is that a lot of the national dinner-house chains see the demographics of Manhattan and appreciate the kind of business they could do here," says Faith Hope Consolo, senior managing director of Garrick-Aug Associates, a store leasing and retail consulting firm in Manhattan. "And if they can find a landlord who will work with them, in a package that makes a deal viable to do business here, they will come."

Consolo said that even though Midtown commercial rents are about 15-percent higher than they were a year ago, Hooters of America and the Rainforest Cafe are two concepts she currently is working with to find space for in Manhattan. At the same time the Rattlesnake Bar and Grill is said to be opening in Manhattan within the next 60 days, and despite a community board's rejection, the House of Blues still is reconnoitering the market.

A Houston's executive who requested anonymity said the company wanted to open a unit in New York City for years and was never put off by the real-estate costs or the competition. Pointing out that Houston's already has three other units in New York suburbia, the executive said what mattered more was the right location, which was provided at Citicorp Center -- a skyscraper that has to be one of the city's most recognized and photographed landmarks with its polished metal skin and ski-jump slanted roof.

"In so many parts of New York, you either do lunch, or you do dinner," he says. "Here we have the promise of doing a strong lunch business with the office crowd in the neighborhood, and we have the promise of good dinner with upper-income residential.

"And since it is one of the best-known buildings in the city, we'll get a lot of tourists. We think we are in the heart of a great area when you look at all the other neighboring retail along Lexington Avenue."

The executive said that while the costs of the project would hold true in regard to New York's image as an expensive place to do business, what is untrue so far is that famous, surly "New York attitude."

"We think what you hear about New York being unfriendly and difficult to deal with is a myth," he said. "Everybody from the designers, the landlord, the code people have worked with us and helped us get around problems.

"So it's just as Liza Minnelli said: We want to be part of it."