Are single-focus venues the future?

Single-focus venues are common across a number of international markets. In some countries, they’re considered the norm, and the concept has recently started to gain momentum in Australia. There are a handful of local venues that are ahead of the game and making a mark on the food scene with their niche offerings.

FOCAL POINT

The ST Group is behind a number of ubiquitous food concepts — think PappaRich, Ippudo, Gong Cha, Hokkaido Baked Cheese Tart (HBCT) and Pafu.

While some of these businesses offer extensive menus, others maintain a tight roster of products. HBCT and Pafu are textbook examples of the single-focus venues widespread throughout Asia.

The decision to focus solely on cheese tarts and apple turnover puff pastries is not a gimmick; there’s a wealth of market research and trend analysis behind them. “We look at the local consumer market and try to establish a profile of gaps that are available,” says Jason Leong, HBTC business development manager.

According to Leong, the key questions to ask are, “Is there anyone out there selling a niche product? Would this niche product fit the taste profile of Australian consumers?”

Data gathered through this process helped the group realise what they could bring to a market saturated with bakeries that offer a wide variety of pastries, bread and so on.

Jenny Pham is the co-founder of giant squid venture Ika8, which recently opened in Melbourne, and noticed the prevalence of squid in Asian markets such as Singapore.

“Squid is often on menus, but it’s rarely the hero,” says Pham. “There seems to be a growing audience in Australia at the moment, so it felt like the right time.”

However, market research suggested the offering would need to be more versatile. By launch day, the squid-centric menu featured not just giant options, but small bites too.

For other businesses, the decision to pursue a sole focus — and what to focus on — are the result of research and serendipity. For Sydney-based venue Smoking Gun Bagels, such was the case.

“We signed a commercial lease on the space for five years and after two, we decided not to do what we were originally going to do [a coffee roastery],” says David Young, Smoking Gun co-founder. “We looked at the market and saw that no one was doing Montreal-style bagels, and it just so happened the codes for the wood-fired oven flue are the same for the flue that was [in the building] from when it was Toby’s Estate.”

Together with co-founder Mark Treviranus, Young travelled through the US and Canada, researching the concept before bringing it back to Sydney.

DIVERSIFICATION

More than an industry buzzword, diversification is a necessity for food businesses looking to increase revenue. So, how do venues that have made a name on sole offerings stay afloat?

“We are always working to diversify our menu and offerings albeit at a controlled pace,” says Leong. “In time, there’ll be more new flavours [of tarts and puffs] and new products [like soft serve] that you’ll see in our outlets.

“Aside from the retail space, we also cater to bulk orders for weddings and corporate events, so we may expand the catering arm down the road.”

While Smoking Gun sales are still predominately made through the shop, a move to wholesaling and retailing are beginning to pay off.

“We want to be the best at one thing and that’s bagels,” says Treviranus. “You sit there and go ‘we could be making more money if we were doing poached eggs, scrambled eggs, salads’, but that’s not what we’re about. We’re building a bagel business and offering salads isn’t building a bagel business.”

“It’s tempting,” Young adds. “[However], marketing turns it into a brand play and then it’s like what are you doing to the brand — ‘Smoking Gun, the place where they do wood-fired granola?’ Nope.”

Beyond developing new products within a niche range, operators can diversify their businesses in myriad ways — it’s just a matter of developing the right method to suit the model. For concepts like Ika8, HBCT and Pafu, it’s necessary to stay front of mind.

“Marketing is extremely important for us,” says Pham. “We’re in Melbourne where there is wealth of culinary options. Luckily, we’re new and that provides a bit of interest. If anything, it’s raising awareness where squid doesn’t have to be that second option.”

For HBCT and Pafu, marketing is crucial. “All our engagements are mostly through our social media pages,” says Leong. “It’s where we communicate with our consumers and the main channels of promotions and advertisements.”

Social media also allows the brand to stay on top how its audience is evolving, with customer behaviour dictating decisions about what to do next.

CHALLENGES

Pros and cons abound when it comes to single-focus models.

“All attention goes into polishing it, which allows us to deliver a quality product,” says Leong. “Customers can expect a certain standard, but offering a niche product also means casting a narrower net that catches a smaller percentage of the market.”

Population and costs of doing business are key challenges for HBCT and Pafu, with the population in ST Group’s other markets denser and higher compared to Australia.

“Businesses [in Asia] are presented with more opportunities to grow at a quicker rate due to those factors,” says Leong. “In Australia, we have to be mindful to control the pace of growth. Grow too quickly, and businesses face the risk of an early burnout.”

Wholesale and retail avenues might be a move to build the Smoking Gun business, but increasing revenue never comes easy.

“For us, the struggle with wholesale is that most people will sign up to suppliers and get all their bread products from one place — whereas we only offer one thing,” says Young.

Staffing is also a challenge for most hospitality businesses — is it more or less of a problem for single-focus venues?

“Another component that is always a challenge in the industry is the cost of labour,” says Leong. “Nonetheless, our business model of selling a single line of product allows us to reduce labour intensity compared to other F&B retailers such as restaurants and cope with the cost demands.”

The cost of labour is just one concern. Finding any kind of labour is another widespread concern which is often magnified by single-focus venues that require specific skills.

It’s been near impossible to find trained bagel bakers in Australia, meaning Smoking Gun has trained each and every baker on their roster. During their North American travels, Treviranus and Young spent weeks learning the ins and outs of bagel making and connecting with bagel-makers across the continent.

A meeting with the owner of Montreal’s St-Viateur Bagel led to securing one of their bakers, who came out to develop the recipe and train bakers in Australia for six weeks.

“At Baker’s Delight they turn up and turn on the deck ovens, set the thermostat and that’s it,” Young says. “We’re like, ‘By the way, you’re going to have to chop wood, stack wood, light the wood fire and roll everything’. There’s more labour [involved] and it’s a lot harder than what people are prepared for. We’ve got guys who are excited by all that now, but it took a while for us to get them.”

Although Ika8 is just setting out on their journey, Pham is conscious about the challenge of retaining staff. “We acknowledge that having them specialise in a certain area can become quite regimented overtime,” she says. “We need to consider what we are doing in the wider business to ensure they’re enjoying and are motivated in different ways.”

Ultimately, single-focus venues are the result of operators’ passion for a specific product — a characteristic that lends itself to success and makes the challenges well worth it.

This article originally appeared in Hospitality’s November issue. Subscribe here.