Hot Concepts: Boning Up on Bonefish Grill
With a tight format, fresh-fish strategy and cash from Outback, Bonefish Grill is making a national play.
By Charles Bernstein, Editor-at-Large -- Chain Leader, 5/1/2004
 Bonefish Grill President John Cooper (l.) and co-founder Tim Curci plan to keep the brand separate from Outback Steakhouse. |
How does a restaurant attract the attention of a $2.7 billion-in-sales multiconcept operator? Tasty food, an upscale-casual environment, a good return on investment and a segment untapped by other national players.
Supported by the experience and capital of Outback Steakhouse Inc., 4-year-old Tampa, Fla.-based Bonefish Grill is carving out a niche that it calls polished casual. With a $25 average check, Bonefish positions itself above the likes of TGI Friday’s and Olive Garden, says President John Cooper, but is not fine dining. The cuisine and service “have more sophistication and redefine casual restaurants,” he declares.
Whereas Outback has a broad menu with depth in steak, Bonefish features a broad menu that specializes in fresh fish. Key to the concept’s menu strategy is offering fish in season, enabling it to not only offer the freshest product but also keep costs down.
Outback executives saw opportunity. “No large players are in that space, and Bonefish can get there first,” asserts Chief Financial Officer Robert Merritt.
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Chris Sullivan, Outback chairman and CEO, declares that Bonefish has received “amazing early acceptance. We liked it from the minute we saw it.”
Outback signed a 50-50 joint-venture agreement with Bonefish late in 2001, paying $1.5 million for the concept and committing $7.5 million for development.
Growing Up
With 42 units, Bonefish expects to generate $100 million in sales this year. In 2003 same-store sales rose 2.6 percent, and Cooper says they could be up to 5 percent this year. Merritt credits the concept with the best returns in Outback’s portfolio.
Bonefish opened 22 units last year, plans some 30 more by December, and has 30 to 35 units slated to open each year after that. “At our current pace,” Cooper affirms, “we have the capacity to open 275 to 375 restaurants throughout the U.S. within the next 10 years.”
The company operates Bonefish in nine states and hopes to double the number of states over the next four years. Florida leads the way with 18 units, and the others are in Alabama, Indiana, Kentucky, North Carolina, South Carolina, Tennessee, Virginia and Washington. Pennsylvania, Michigan and Illinois are among those next on the list.
“Bonefish may have the legs to eventually become a $1 billion brand if it doesn’t break down from too much expansion,” says restaurant analyst Bryan Elliott of St. Petersburg, Fla.-based Raymond James Associates. “But Bonefish seems very careful about that. Considering the sales and costs of the initial round of restaurants, Bonefish seems an exceptional return on investment. They are growing it reasonably fast, and I am bullish to the point where they could eventually open as many as 40 or 45 units annually. Despite this type of rapid growth, the Outback Steakhouse Inc. joint-development structure is certainly solid enough to handle it.”
 At $1.8 million to build, Bonefish restaurants average 5,500 square feet and seat about 140 in the dining room, another 60 in the bar. |
Meanwhile, New Orleans-based Mark Sheridan, Johnson Rice Company’s restaurant analyst, describes Bonefish’s performance as “strong based on its stepped-up development.” Bonefish now has the “the capital, the confidence and aggressive plans,” he says.
Cooper is ready to go. “We have molded together a dedicated team and are well-positioned for the baby boomers,” he says. “We have value, quality, affordability and lots of potential.”
History Lesson
A native Floridian, Cooper, 51, began his restaurant-management career in 1974 at Steak and Ale and then joined Bennigan’s in 1978 as a Florida operations director. From 1989 to 2000, he developed 13 Outback Steakhouses in Orlando, Fla., as a joint-venture partner. He joined Bonefish in 2001 with the Outback deal.
Bonefish first opened in January 2000. The concept’s founders, Tim Curci and Chris Parker, had three units when Outback made the commitment. Curci, 38, recalls how he and Parker “worked all day, every day and almost all night for 18 months” opening the initial restaurants. Curci and Parker were equal partners. “We didn’t have any titles then, we just did the job,” he says.
One of the founders of Hops Restaurant Bar & Brewery, Curci developed an operational system of more than 60 Hops in 10 states. A Culinary Institute of America chef, Curci emphasizes that while Hops parent Avado had a large corporate structure “interested entirely in the bottom line, we just don’t believe in that at Outback and are passionate about this business. We live by our principles in this company, not just by the bottom line.”
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Parker, known for his passion in restaurant operations, died at age 37 in a boating accident in January. Curci still serves as Bonefish research and development and purchasing chief.
Fresh Demand
Since the first Bonefish opened, Curci has demanded fresh ingredients. The fish is flown in, inspected and hand-cut daily in each restaurant. The company reprints menus every few months to account for seasonality and availability. Restaurants also offer a daily menu, from which 25 percent of entrees are ordered.
Within the framework of some 50 menu items, “we have nine varieties of special seafoods, a wide choice of sauces and a high value component in fresh-grilled fish,” Cooper notes. The leading species sold are mahi mahi, Atlantic salmon, rainbow trout, gulf grouper and ahi tuna.
Beyond fresh fish, the chain specializes in market-fresh ingredients, including hearts of palm, pine nuts, artichokes and sun-dried tomatoes. It also features beef, chicken and pasta dishes. Entrees, which come with a salad, two side items and dinner rolls, range from $12.50 chicken dishes to $18.90 Chilean sea bass.
As the concept matures—and as it adds more appetizers—the check average may rise above the current $25. Alcohol comprises 25 percent of sales.
Inside the Box
With 140 seats plus 60 seats at the bar, the units appeal to women who often mingle at three community tables. “It certainly is female friendly with a wide variety of wines,” says Curci. “And it has a comfortable feeling.”
To be distinctive, designers pick meaningful artwork that tells a story. This includes taking a real fish and painting it, and 3-D pieces depicting fishing scenes and the Tampa Bay Bridge. Instead of decorating with plants, an artist created metal mangroves. Bonefish’s polished-casual approach also features glass lamps and its hip blue neon sign with a fish head and skeleton icon.
The restaurants average 5,500 square feet. A few of them are already doing $4 million in sales; two of the $4 million units are just under 5,000 square feet. Bonefish’s success lies in the relatively low size of the boxes and the ideal 35 percent size of the open kitchen.
Thus Bonefish has flexibility in choosing its units. It also keeps equipment and labor costs down, which is crucial to the whole operation. At $1.8 million to build, an average unit garners a 35 percent return on investment and $3.2 million in sales.
Outback Senior Vice President Tim Gannon points to its “considerably lower investment needs and steadily rising sales.” He says Bonefish’s smaller space is ideal and “more convenient than Outback’s larger space.”
Teach Your Children
Bonefish management has benefited from Outback’s owner-manager system. Each manager receives 10 percent ownership of that restaurant. Meanwhile, 10 percent ownership of each unit goes to the market managers, who control an average of at least four or five restaurants.
Looking ahead, how-ever, Cooper has no ambitions to open any overseas units as Outback does. And all future Bonefish restaurants will be company-owned, he says. They started with a few franchised units, and currently have five.
But thanks to Outback’s support and Bonefish’s steady returns, the chain now has enough capital to stick with only company-owned units.
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