Hartford Business Journal

HARTFORDBUSINESS.COM | AUGUST 19, 2024 11 Brand loyalty Subscription-based businesses, particularly restaurants, are growing in popularity, said Richard R. Colloca, a partner with national accounting firm EisnerAmper LLP. "I think one of the factors that has really driven it is that the pandemic created opportunities for restaurants to reengineer them- selves," Colloca said. "Restaurants are trying to increase their brand loyalty, increase foot traffic, and come up with innovative ways to enhance the customer experience." He said memberships engender brand loyalty, as members gain an affinity for a product or service, and in turn, spend more money on it. The restaurant industry's move toward subscriptions harkens back to the explosion of supper clubs in the 1940s and 1950s. But their popularity dwindled from the 1970s to 1990s, as the restaurant space became more competitive. "Over time, more often than not, you see retro concepts come back and blend with current culture," Colloca said. Bespoke experience Attorney Ryan O'Donnell, chair of Bridgeport-based law firm Pullman & Comley's hospitality practice, said patrons who are drawn to membership-based restaurants are seeking a more traditional, customized experi- ence — contrary to the impersonal transaction of a fast-food drive-thru or drop-off delivery. "These private or semiprivate type concepts really appeal to the hospi- tality traditionalists," O'Donnell said. "I think these folks want the host, or the hostess, to know their names, they want the bartender to know their drinks. They're for people who want a little bit more bespoke experi- ence. And I think that's a really cool idea to engage guests who want the opposite of automation." Most of the membership-based restaurants that have opened recently are in densely populated cities like New York City and Boston. O'Donnell said he'll be interested to see how Josie & Tony's plays out in Connecticut because the concept is untested here. There are social benefits to membership programs, which can create a sense of common identity among participants, making a restaurant feel like a second home. "You feel like it is your go-to place, where you'll have a really good cultural experience," said Colloca, the accountant. Recurring revenue Not all subscription models are for luxury goods. Colloca said subscrip- tions have been gaining traction for a long time because they help engage and retain customers. Over the last 11 years, subscrip- tion-based businesses grew 3.7 times faster than the companies in the S&P 500, according to research by enterprise software company Zuora, which Colloca cited in an article he co-authored. "Across the board, subscription businesses have grown substan- tially, and you know they're going to continue," Colloca said. "When you look at Sam's Club and Costco, they have similar models, where they want you to continue to come back. You pay a fee to be a member of that club. And because it's creating brand loyalty, you continue to go there. On the restaurant side, it is very innovative to tap into that model." However, while demand for dining out remains strong — Americans spent 34.1% of their total food spending at restaurants in 2022, a 16% increase from 2021 — many restaurants are struggling. In an industry where competition is tight and margins are thin — exacer- bated by inflation and the workforce shortage — membership fee struc- tures can give restaurants a new stream of recurring revenue. "That is a great way of adding some certainty to a very uncertain, unpre- dictable industry," said O'Donnell, the attorney. "Bad weather, snow, another event in the area — all things you can't predict — eat into profits because when you're staffing the restaurant and you're ordering food, you don't know how many folks are going to show up. There's always a risk involved there. So, week-to-week, it's very difficult." With revenue and accessibility in mind, Mesnik recently added an Arthur Avenue-style sandwich shop and deli to the front of Josie & Tony's, which offers high-quality products using the same ingredients as the supper club. "It was important to me to have some sort of accessible, quick-service option attached to this fine-dining restaurant, in giving myself as many chances to succeed as possible, because a lot of restaurants fail," Mesnik said. As membership grows, it may become more difficult for non-mem- bers to secure reservations on Friday and Saturday nights, but he doesn't want to turn people away. Mesnik said he wants Josie & Tony's to be inclusive, despite its aura of exclusivity. "I want it to be accessible, but I also want people to be able to have this ultra-luxury product at the same time, if they choose it," he said. Josie & Tony's owner Josh Mesnik purchased modern kitchen equipment from Pasta Nostra, the previous tenant of 20 N. Main St., after the restaurant closed. The executive chef at Josie & Tony's, Marcelo Flores, was the chef at Pasta Nostra. Josie & Tony's members can have their caricature displayed in the restaurant, drawn by renowned artist Mark Hill, formerly of Pixar. HBJ PHOTO | STEVE LASCHEVER HBJ PHOTO | STEVE LASCHEVER Richard R. Colloca Ryan O'Donnell

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