Retail therapy now caters for the hungry

IT'S only when you analyse Melbourne's hottest city restaurant, Thai-inspired Chin Chin, as a retail venture more in common with Spanish fast-fashion chain Zara than other chic eateries that colonise the central business district, that you truly realise the global ambitions owner Chris Lucas has for his cool Melbourne diner.

IT'S only when you analyse Melbourne's hottest city restaurant, Thai-inspired Chin Chin, as a retail venture more in common with Spanish fast-fashion chain Zara than other chic eateries that colonise the central business district, that you truly realise the global ambitions owner Chris Lucas has for his cool Melbourne diner.

Mr Lucas, who opened Chin Chin last year and its stablemate, Italian trattoria Baby two months ago, talks of business models not menu options, consumers not eaters, he ponders over social media not napkins and table settings, and speaks about retail products rather than food.

"I think the food game is a retailer, basically you come in here and buy a retail product - rather than wearing it you are consuming it," he says.

It's a business philosophy that seems to be working. While a typical restaurant might turn over 200 to 300 customers a day, Chin Chin and Baby are racking up 800 diners from breakfast to dinner and still turn away hundreds more each night with a no-booking policy only enticing people to queue for hours for a table.

"This is not a gentle evolutionary change, this is a revolutionary change going on in the food business, and there are a lot of restaurants that are sitting empty, literally empty, while we are doing on average 800 customers a day," Mr Lucas says.

Jetting off to New York and London last week, Mr Lucas wants to take his restaurant - or business model - to the world and is seeking fresh capital and partners to turn Chin Chin into the template of an international chain to rival upmarket Japanese franchise Nobu or global noodle bar Wagamama.

"There is a massive gap in the market for what we are doing, the top end is catered for, the mass market at the bottom end is catered for, but it's that everyday quality experience at affordable prices that hasn't been catered for, a la retailers like Zara or GAP or Top Shop," he says.

"I like to think of Chin Chin and Baby as the Zara of the food game."

The link to Zara is apt. Zara - the Spanish fashion retailer described by one industry executive as "possibly the most innovative and devastating retailer in the world" - has built a cash-cow empire on the concept of fast fashion.

Imitating cutting-edge designs straight from the catwalk and using good quality fabric, but priced at affordable levels, has made the 1700-store Zara a billion-dollar fashion juggernaut.

Mr Lucas has simply twisted and reshaped that model for food. He buys his produce from the same suppliers as his upmarket city competitors, he says, but where they might charge $50 for a main course, he is spinning dishes out from the kitchen at $15 to $25.

From his vantage point running two incredibly successful Melbourne restaurants, Mr Lucas sees the same destructive forces that are shaping and shocking the retail sector now turning their power on the restaurant game - with all the same consequences in terms of fabulous success and crashing failure.

"What's been going on in the retail sector for the last five years is going on in the food business right now, and that is the consumer is dramatically changing their behaviour in a number of ways," he says.

"Our object was to do what has happened to a certain extent in retail, that is, go from a low-volume/high-margin model, to a high-volume/low-margin model. Most top-end restaurants just aren't making enough money, hardly any margin, and for many their profit margins were around 5 per cent.

"In terms of our profit margin, we are probably tracking at two or three times the standard industry return, so 10 to 15 per cent and climbing. Our brands are so successful that our volumes are continuing to grow month on month."

The change in restaurants - much like retail - is being driven by younger consumers, Mr Lucas says, empowered by iPhones and tablets, people working non-traditional hours and eating at non-traditional times.

"It's not like the old days where our mother and father would go out at six for dinner, eat, have one drink and be home by eight, which is why probably nobody is watching free-to-air TV these days.

"We have become the new social hub. The kids - instead of going to the grungy nightclubs - are now coming to places like this, having a drink, some great food and it's safe and it's fun."

Mr Lucas says there are nights where he has turned away up to 1000 customers, although many plot a course for the bar beneath Chin Chin for a drink - another nice little earner for sure.

Social media have replaced word of mouth and advertising is done via platforms such as Facebook and Twitter. It's no surprise that among his 250-strong staff of chefs, waiters and dishwashers, Mr Lucas employs a social media officer.

The no-booking tactic is another example of the loosening of traditional formalities and, while it might have ruffled the feathers of some traditionalists, Mr Lucas believes it is a luxury (as well as a nuisance) that the restaurant sector can no longer afford to support.

"In the old days top-end restaurants would have a formalised reservation system. It was in fact an honour system," he says.

"But when you call an airline and book a seat, they don't give it [the booking] to you for free. Or if you turn up with three more people you don't get three more seats, and if you turn up with two less people they don't just grant you two less seats."

Sitting at his hip and humming Chin Chin restaurant - it's not even noon and already there is a queue of hungry city workers lining up for tables - Mr Lucas says he has learnt from the shock waves pulsing through the retail sector and is copying those retail brands that are beginning to dominate the new retail reality.

"So our model basically follows the same sort of principal, which is, I felt, that five or six years ago the restaurant business wasn't really delivering to the consumer what they wanted, which was value, a more relaxed, fun environment, less stiffness, less formality.

"It's about the way we conduct ourselves and the space we fit out, and the same is true for retail.

"So, no longer do customers want to walk through marbled Versace-style retail spaces that cost developers and retailers millions of dollars, they are happy to walk into a warehouse stripped back to its bones as long as it has got the product that they want - in other words, they actually don't give much of a damn any more about the physical space."

For those restaurants stubbornly clinging on to their traditional models of inflexible trading hours and costly reservation systems, Mr Lucas says their time might be at an end, much like the spate of retail collapses of the past two years.

"My view is that you embrace change or you get trodden over by the hordes that are driving the change," he says.

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