A retail marketing principle called “cumulative attraction” may explain why Sherman Oaks and Glendale have emerged as the Valley’s biggest restaurant hotspots. A culinary renaissance is taking place in Sherman Oaks, with upscale cuisines moving in from other parts of Southern California. Hollywood tequila lounge Te’Kila recently launched a food-focused counterpart in the neighborhood. Aaron Robins, who owns popular barbecue joint Boneyard Bistro on Ventura Boulevard, is bringing the neighborhood a taste of high-end dining less than a mile down the road at Soca, an upscale steakhouse that launched in March in the former site of Cafe Cordiale. And Ludo Lefebvre, the founding chef behind Petit Trois in Los Angeles, will open a second location of the French bistro in Sherman Oaks sometime this year. The emergence of Sherman Oaks as a dining destination was integral to Kevin Zadoyan’s decision to open Te’Kila there, he said. Despite nearby competition, the other restaurants create a fertile environment for attracting eager foodies. “We saw an influx of new amazing concepts coming into area, specifically what was happening along Ventura Boulevard,” Zadoyan said. “This was a way to cement ourselves in the neighborhood.” Yet just as the areas’ dining scenes are warming up, the rising cost of labor is threatening to turn down the heat. Some area restaurateurs worry that consumers will be left with “sticker shock” when establishments are forced to compensate for the minimum wage hike in July by raising product prices. “Guess what? High quality costs money,” Robins said. “When you use high quality (ingredients), coupled with the cost of labor right now … everything costs so much more on so many levels.” While demographics and walkability are key to the advent of restaurant hotspots, growth tends to beget growth. In keeping with a distribution principle of cumulative attraction, restaurants in close proximity can feed off one another’s success, explained Ira Kalb, assistant professor of clinical marketing at USC Marshall School of Business. “The idea is that by clustering, businesses can draw larger audiences and make more money because they become a center for restaurants,” Kalb said. “People can come to a location and make a decision on where to go more quickly, so everyone is better off.” The area around L.A. Live is another example of cumulative attraction in action, Kalb explained. The locale has numerous restaurants, and if lines at one eatery are too long, customers will go to another one, turning competition into camaraderie. Robins has watched the Sherman Oaks restaurant cluster evolve since he opened Boneyard Bistro 12 years ago, and his new Soca venture is based on what he sees in the market. “At Boneyard we’ve been able to listen to customers and hear what they want, and they’ve been expressing for years that there are not a lot of options when it comes to upscale dining,” Robins explained. A few miles down the 101, Glendale is emerging as a dining destination. The city over the last six months has witnessed a bevy of restaurant openings, including Bacari G.D.L. under Robert and Danny Kronfli’s Kronfli Bros. Restaurant Group. Bacari G.D.L. was designed to offer a more polished dining experience than its over-the-hill counterparts Bacaro L.A. and Bacari P.D.R., with the added bonus of being pedestrian-friendly thanks to its location at the Americana at Brand, retail developer Caruso’s center on Brand Boulevard. “(The first two locations) are off the beaten path – they’re more destinations,” Robert Kronfli explained. “We wanted to move somewhere that was more densely populated with more people walking around.” Bacari G.D.L. is among several restaurants to move into Caruso’s Glendale properties during the last six months. The third outpost of brunch spot Eggslut opened March 23 at the developer’s 252 S. Brand, joining Shake Shack, Philz Coffee, Mainland Poke and Greenleaf Gourmet Chop Shop to round out the street front center as a dining destination. Across the street at the Americana, Bacari G.D.L.’s launch was preceded by that of ramen purveyor Tsujita Artisan Noodle, which opened in November. “The restaurants in the Americana were performing so well from a sales standpoint, it really made us want to open more,” Kloe Colacarro, executive vice president of leasing at Caruso, said. “We track consumer spending and requests in terms of types of eateries, and we saw that street front tenants were requested frequently.” Parts of Glendale unaffiliated with Caruso are seeing more restaurant action as well, according to the city’s Principal Economic Development Officer Jennifer McLain. “Foodie culture” has been on the rise in the area for several years but appears to have picked up pace, she said. “It has really hit its stride especially in the past year,” McLain said. A similar situation has been playing out in Sherman Oaks, though with a more robust trend toward upscale dining. Zadoyan originally intended for his second outpost of Te’Kila to be a clone of the first, but later pivoted to emphasize food over booze in order to suit the neighborhood. “In Hollywood we based the brand around fun and loudness, because on Hollywood Boulevard you’re in the thick of the action – you get a lot of tourists and party animals,” he explained. “Sherman Oaks is more about quality. We’ve come to a place now where we feel like we’re doing something really cool, and it’s nice to know that the concept can evolve with location.” The Kronfli brothers felt similarly about setting up shop in Glendale. “We felt Glendale is kind of an up-and-coming neighborhood in terms of the food scene,” Danny Kronfli said. “We knew it was something we wanted to be a part of.” Trouble ahead? Being part of up-and-coming restaurant scenes has protected owners in Sherman Oaks and Glendale from some challenges faced by the industry as a whole, such as slowing sales due to declines in lunch traffic. Still, the rising cost of labor is putting a damper on owners’ spirits. “The minimum wage issue is real, very real,” Robert Kronfli said. “Restaurant owners are all on our toes to see how the industry is going to change in the coming years. We’ve already had to make some serious adjustments to our business model to survive.” Such compromises include the addition of a 3 percent service charge to every bill, as well as higher prices on plates overall. While being part of an upscale shopping destination in a relatively affluent neighborhood has permitted Bacari G.D.L. more wiggle room with pricing compared to its sister restaurants, a breaking point is on the horizon. “There’s only so much you can raise your prices before the customer says, ‘I’m not going to pay that’ and instead goes and eats at home,’ Robert Kronfli said. Adding to the frustration is a law that prevents the kitchen staff from sharing tips with front-of-house workers, said Robins at Soca. Saddled with debt from cooking school, chefs are choosing to move to lower-cost cities like Portland over Los Angeles, where the price of rent is rising at the same time as the minimum wage. “Cooks no longer cost (what they used to) – they cost a lot more, if you can even get them,” he said. The direct consequences of rising labor costs are only the start of the problem, Robins explained. The price of products has risen as suppliers’ operational costs have risen along with higher wages. The “ripple effect” means that a $15 burger will have to become a $20 burger to make up the difference – a consequence many customers do not understand, he said. “Everybody (in the restaurant world) is saying the same thing: There is no way around it. Prices absolutely have to go up, and they are very concerned that the consumer is going to be sticker-shocked and will retract,” Robins said. “What do people expect us to do?” Kalb, the USC professor, said a location in a restaurant cluster will not protect entrepreneurs against rising labor costs. Instead, restaurants must focus on product and performance to create an image that is compelling enough to withstand consumers’ sticker shock. “The thing that protects you against pricing is your positioning,” Kalb said. “If you can create an image that your product and pricing are unique, then you can charge a higher price.”
