The explosion of delivery apps, rising labor costs and the seemingly endless number of new competitors has made it even more challenging for restaurants to make it these days.
Twin Cities restaurateur Matty O’Reilly is hoping a new membership program he launched this week will help restaurants like his have a better chance.
Borrowing inspiration from Netflix and gym memberships, he is offering a limited number of memberships to his four restaurants — Bar Brigade and Foxtrot Burger Spot in St. Paul, Sandy’s Tavern in Richfield and Republic in Minneapolis. For $99 a month — or $1,000 a year — members will be able to get one free menu item per day at any one of those spots.
“I really don’t know how it’s going to go,” he said. “But I see very little risk in giving it a try.”
It is a model he hasn’t seen before for restaurants and one he thinks can bring a more consistent cash flow to restaurants year round, especially during slower months. And he hopes it will help turn occasional customers into regulars, who may also bring their friends and buy more food and drinks beyond the free item.
“All we want to do is to see people more frequently,” he said. “Converting people to come to your restaurants is harder than it’s ever been because there are so many more restaurants than ever.”
For now, he’s capping the number of memberships at 50 to make the sure the economics work out the way he expects. The deadline to sign up is the end of this month. But if it goes well, he may open up more memberships next year.
O’Reilly’s four restaurants are doing well right now, he said, with sales up year over year at two of them, flat sales at another. He took over management of the fourth, the 80-year-old Sandy’s Tavern, and reopened it at the end of November.
But as someone who has owned more than a dozen restaurants over the past 16 years, he has seen firsthand how difficult it has become for even seasoned restaurateurs to succeed in the current environment.
He came up with the idea for the restaurant membership model a year ago when brainstorming a final project for his executive MBA program at the University of St. Thomas. Instead, he ended up pursuing a restaurant consulting firm, which he turned into an actual business in August with the launch of Banner Year Advisors.
But he never stopped thinking about a membership program and decided it was time to give it a shot.
He acknowledges his membership program is not for everyone.
“A lot of people don’t live near our restaurants,” he said. “And a lot of people also like to mix it up” and eat at a different restaurant every time they go out.
His program is geared toward people on a budget, who want to support local restaurants instead of chains, and people who are frequent or regular customers, he said.
He plans to offer additional promotions to members, such as a 2-for-1 drink special in January, a typically slow month for restaurants given New Year’s resolutions.
As for members who might make the most of the membership and come in every day for a free item? O’Reilly isn’t too worried about that possibility since he’s limiting the number of memberships.
“The incremental sales that could happen are worth the risk if someone who is a member brings someone else in who isn’t a member,” he said.
For customers to get their money’s worth out of the membership, they would need to eat four to six meals at Bar Brigade or roughly seven to eight meals at his other locations.
“We’ll be filling seats and adding vibrancy,” he said. “It’s going to be a great learning experience for us and hopefully will provide inspiration for others to get creative, too.”