Vancouver’s 102-restaurant Keg Restaurants Ltd.plans to open 10 new restaurants in the next 18 months as owner David Aisenstatrebrands one of his previously independent restaurants and works with landlords and city planners to speed openings.
“It’s my optimistic view that we will open that many,” Aisenstat told Business in Vancouver April 13. “In Canada our business has been fantastic.”
He added that future Keg openings depend on developers completing new buildings on schedule.
This month Aisenstat plans to start renovating the interior of a Keg restaurant in Laval, Quebec. He said the project is way behind schedule because the site’s developer was delayed in building the site’s exterior. Completion of the Keg restaurant at the corner of King Street and Spadina Avenue in Toronto might also be delayed because construction on the building it’s in has just started. It was originally slated to open within 18 months.
Aisenstat plans to replace his former Shore Club bistro at the corner of Dunsmuir and Seymour streets with a Keg.
He’s aiming for an October 1 opening so that the new restaurant can be added to the Keg Royalties Income Fund’s (TSX:KEG.UN) pool of restaurants in January 2013. If it opens after the first Monday in October, it won’t be added to that pool until January 2014.
Aisenstat’s Keg Restaurants Ltd. pays the income fund a royalty equal to 4% of the sales of all Keg restaurants in the royalty pool. Proceeds are then distributed to unit holders monthly.
Gross sales for the income fund’s pool of 102 restaurants rose 4.3%, to $472.3 million, in 2011.
Aisenstat intends to keep smaller Shore Club restaurants open in Toronto and Ottawa. However, he’s not planning to open any new Shore Clubs.
Aisenstat decided to close his independently owned five-year-old Vancouver Shore Club on March 29 and turn it into a corporately owned Keg because:
•he believed the 13,000-square-foot Shore Club was too big for a steak and seafood restaurant that had average cheque totals twice that of a Keg;
•he recently spent an undisclosed amount to buy the Joe Fortes, which also has average cheque totals that are higher than the Keg and which also specializes in seafood and steaks; and
•he wanted to replace the franchised Keg Caesars restaurant at the northwest corner of Hornby and Dunsmuir streets, which closed in 2010.
Keg Caesars franchisee Gary Troll, who once won a $14 million Lotto 6/49 jackpot, had reached retirement age and wanted to exit the restaurant business.
Aisenstat considered taking over the site, but he was unable to get the landlord to agree to a lease term that was long enough to justify spending the money needed to compete with the nearby Cactus Club, which owner Richard Jaffray spent approximately $7 million to build in the Bentall 5 tower in 2008.
“There is no better street presence and physical dot on the map for a Keg [than in the former Shore Club] given where the Yaletown Keg is and where the Thurlow Keg is,” Aisenstat said. “The corner of Dunsmuir and Seymour is a great spot for a Keg. So it really came down to either work really hard and basically not do much better than just paying the rent at the Shore Club or make it a Keg.”
Toronto’s 15,000-square-foot Keg is the largest in the chain, although Vancouver’s Yaletown Keg has about 13,000 square feet of inside space in addition to a patio.
Most Keg restaurants are between 8,000 and 10,0000 square feet.
“They vary because finding good real estate is one of the trickier things about the restaurant business,” Aisenstat said.
Restaurateurs such as Jaffray, Glowbal Group owner Emad Yacoub and Earls Kitchen and Bar owner Stan Fuller agreed with Aisenstat that a restaurateur can do everything right but if the location is bad, the restaurant will fail.
“It’s all about location,” Fuller said. “In our business, you can be one block the wrong way. It’s incredible how important location is.” •
