Seattle's Restaurant Elite Talk Rising Costs, Unique Experiences And How To Attract Millennials

Seattle loves its restaurants and retail, but running those businesses is as challenging as ever, according to the speakers at Bisnow's Seattle Retail & Restaurant event recently at Four Seasons Downtown. Costs are up, margins tight, and you'd better offer a unique experience to bring Millennials in, or someone else will.

The big challenge facing the Seattle restaurant business isn't capturing new customers, our restaurant panel speakers said—Millennials love restaurants and many of them in Seattle have the cash to pay for new experiences. Instead, the challenge on everyone's mind is what to do about the $15/hour minimum wage as it's phased in (here are the details).

Snapped: Seattle Pacific Realty partner Jeffrey Rosen, who moderated the restaurant panel, and Washington Lodging Association CEO Anthony Anton.

One thing not to do about the higher minimum wage, the speakers stressed, is panic. The industry is now busy trying to figure out a new business model for the new environment. For instance, will the tipping model be the same in the future? It's possible that it will be replaced with a service charge or commission or another solution (more on that here). The marketplace is experimenting, and customers will let restaurants know what works, but it will take a few years.

Here's Superette founder & president J.J. Gentile, who explained the Superette concept is a fast-casual take on a grocery/deli, looking to launch this year.

Regardless of the minimum wage, the restaurant business is going to remain a people business, our speakers said. The challenge then is how to maximize revenue/SF to afford the talent you need. To achieve that, a restaurant either needs to be small and focused, or larger and very efficient.

Black Bottle executive chef & partner Brian Durbin, who's working on getting a restaurant on Capitol Hill up and running.

To some extent, technology will help restaurants control costs and be more efficient, the speakers noted, and the rising generation of owners and operators is more open to new tech. Mobile and kiosk ordering in the quick service sector will be important, for instance, and sophisticated inventory management technologies are on the horizon. But as a people business, there's only so much tech can do. Automation might flip burgers soon, but robots aren't going to create unique dining experiences (more on automation here).

Here's Microsoft senior managing global dining Mark Freeman, who oversees about 90 different locations that serve food, including restaurants, cafés and espresso stands. He noted the company's food service is a key part of retaining the best and brightest.

Our retail speakers affirmed that the job growth in Seattle means there's a significant opportunity to improve retail offerings and the environment in which retail operates, such as on First Avenue as retail development heads along that connector toward SoDo. Pine Street has the potential to connect the core with Capitol Hill, depending on the design of the new convention center. Once those connections are made, there will be a stronger retail core in Seattle.

Here's C.C. Filson Co president Gray Madden, whose company dates back to the Klondike gold rush, and which recently opened a flagship store in SoDo at its manufacturing facility.

Too much sameness isn't good for retail in an age when Millennials want experiences, the panelists said. Stores need to be individualized as much as a particular location or development allows, to stand out in shoppers' minds. Toward that end, Seattle's design guidelines need to be updated to promote differentiated storefronts. The retail experience begins with the street-level experience, our speakers said, and increasingly that retail experience is an important part of making mixed-use work.

Here's Downtown Works principal Midge McCauley, whose organization formulates retail strategies for places large and small, including the Seattle waterfront.

Parking is a critical challenge for retail in Seattle's urban core, since people still come Downtown in their cars, and the reconnection of the waterfront with the rest of Downtown will bring even more people to the area. Uber and Lyft might help somewhat as those services become normalized, but even so, there need to be creative solutions to Seattle's parking challenges.

Here's Cairncross & Hempelmann attorney Sandip Soli, whose practice specializes in retail and restaurants and who moderated the retail panel, and Revolve Developments principal Dugan Earl, one of whose projects is converting the Lusty Lady Building into a hotel that will have a strong retail component.