Crate & Barrel Betting Diners Will Eat a Meal and Buy the Table

(Bloomberg) -- Crate & Barrel is cooking up a new business strategy to draw people to its home furnishings, opening a full-service restaurant this month inside a suburban Chicago store.

Diners at “The Table at Crate” can have a meal on plates, chairs and tables, most of which are also for sale at the Oak Brook, Illinois, store. And if the concept performs well in terms of foot traffic and customer engagement, the company will consider bringing the eateries to more of its 100-plus stores, Chief Executive Officer Neela Montgomery said.

Crate & Barrel is yet another retailer seeking to bolster sales at its physical stores by providing consumers with experiences beyond shopping as buying habits shift online. A handful of DSW shoe stores have opened nail salons inside to increase sales of sandals, while teen apparel seller American Eagle has a Manhattan store with washing machines and dryers where students from nearby colleges can do laundry for free -- as long as they stay put during the wash cycle.

While eating and shopping have always been aligned, retailers are looking beyond the standard food court experience. Restaurants, they calculate, are a way to keep shoppers on the premises longer, potentially leading to more sales. While some Nordstrom Inc. stores have had restaurants for decades, the Seattle-based chain plans to open six within its New York flagship store alone when it debuts in October.

“It’s not like everyone comes to us once a month,” Montgomery said in a phone interview. “Having a restaurant will help us drive more frequency and more traffic to the store and also create a different level of loyalty by having that experience with us together.”

Staying Relevant

Crate & Barrel, which is closely held, has posted record sales the past two fiscal years, according to the company. While the stores draw more than 26 million visitors annually, about 45% of sales are online, so the restaurant strategy could be a way to keep its physical stores relevant.

“In that middle pricing zone there’s a lot more competition” with the likes of discounters Target Corp. and Walmart Inc. pushing deeper into home decor, Bloomberg Intelligence analyst Seema Shah said. “It’s very hard for these older legacy retailers to figure out where they fit in and how to attract the millennial customer so far.”

It’s not the first home furnishings chain to go that route. Ikea has been serving up its Swedish meatballs for years. RH, formerly known as Restoration Hardware, has a hospitality unit with upscale restaurants adjacent to several of its brick-and-mortar stores, including in Manhattan, Napa Valley’s Yountville, and Chicago.

For its first restaurant, Northbrook, Illinois-based Crate & Barrel is partnering with local chef Bill Kim and Cornerstone Restaurant Group, which also runs Michael Jordan’s Steak House, to manage the dining area. The menu includes kale Caesar salad, shrimp poke and avocado tartine. The space will also be used for other activities such as cooking demonstrations, Montgomery said. Employees at the eatery will not just be skillful about the menu, Montgomery said.

“We want our new restaurant associates to speak not only to what’s inside the bowl but also the bowl itself,” she said.

To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Kevin Miller

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