A Sampling of Italy…from 23rd Street
Eataly’s Adam Saper and Mario Batali Visit Stern
1) Chef Mario Batali holds a Q&A with NYU Stern Professor Russell Winer. 2) Eataly CFO Adam Saper talks with NYU Stern marketing students about running New York City’s most popular “living market”. 3) Mr. Batali and Professor Winer chat with students before class. 4) Mr. Batali draws a packed Stern class for a discussion on restaurants, the food business and how Eataly found success.
(Photo credit: Keith Riegert for the Stern Opportunity)
Keith Riegert, Langone Managing Editor
Anne Gregory, MBA Class of 2017
In business, the best of times often come straight out of the worst of times. That’s the story behind the Flatiron District’s Eataly; in just six years, born in the wake of the Great Recession, the 23rd Street market has gone from a gamble at a precarious time to one of Manhattan’s most popular attractions.
On April 19th, sections of Stern Professor Russell Winer’s marketing class had the opportunity to hear just how Eataly ticks directly from CFO of Eataly USA, Adam Saper, and his business partner, and culinary star, Mario Batali.
The two entrepreneurs each spent ninety minutes talking about Eataly’s truly unique qualities—from the store’s principal shop-eat-learn philosophy and how it establishes partnerships with unique, small, Italian producers to how the company approaches developing talented employees. And while both Saper and Batali visibly beamed about Eataly’s accomplishments, they also discussed just how nerve-wracking it is to stake a claim in food industry—in which seven out of ten restaurants go belly up—even when things are going incredibly well.
Bringing the River Po to the Hudson
Gimmick-wary New Yorkers may try to dismiss Eataly as “inauthentic”; but the 23rd Street fixture actually has its roots in Torino, Italy, where retail entrepreneur, Oscar Farinetti opened the original 30,000-square foot Eataly market in a defunct vermouth factory. How Eataly then made its way to the states is, as Adam Saper would describe it, a little kismet and dash of financial catastrophe. In the heart of the 2008 meltdown, brothers Adam and Alex Saper, souring on working in tech and a crumbling
financial industry, discovered Torino’s Eataly and dove in headfirst. With half of Manhattan’s real estate underwater in 2010, the Saper brothers partnered with Farinetti (and his son, Nicola, Eataly USA’s CEO) and scored the enormous space kitty-corner from the Flatiron Building—a venture that, Saper admits, would be an act of lunacy in today’s rental market.
Lose Yourself in Aisles of Fettuccini
If you haven’t had the chance to slowly wander through Eataly, put it on the NYC bucket list. If you catch this “living market” at the right time of day, before the throngs of tourist crowds arrive, meandering through the endless aisles of pasta, past the in-house butcher, bread bakery, cheese monger, wine bar, pastries (it goes on) will make you completely forget you’re in the middle of Manhattan. Visiting the sprawling 50,000+ square-foot market/restaurant/culinary wonderland is not a shopping trip; it’s an experience. And that’s the whole point. Eataly combines shopping for groceries with the luxury of going to a great restaurant and the joy of learning to cook a fantastic dish. The concept is deeply rooted in traditional European marketplaces, the Slow Food movement and the belief, as Batali put it, that “finding pleasure in every day will add great value to your life.”
While both Saper and Batali point out that Eataly has something for everyone at every price range—you can go to the ever-changing rooftop restaurant for a pricey dinner or stop in quickly for a two-buck focaccia at lunch—a full shopping trip is going to leave a sizeable dent in your bank account.
Eataly’s prices tend to fly in the face of the prevailing “Trader Joe’s” and “cheaper price is just one click a way” trends in retail. By creating a sensory-packed shopping experience with high-quality products, Eataly has managed to substantially raise consumer willingness-to-pay—akin to other outlier companies like Apple—with superb results. When the store was launched in 2010, the partners, according to Saper, expected to do about $35 million in revenue for the year—the tally ended up nearly double that. Today, as Batali stated, Eataly is on the list of must-see New York attractions alongside the Met, Ellis Island and the Statue of Liberty; and it’s not yet a decade old.
What makes the success even more impressive is that Eataly spends very little on marketing. You won’t find billboards plastered in Penn Station, ads on television or banners in the New York Times; the company relies on quality and old-fashion word-of-mouth (and a photo-friendly policy) to bring in the massive daily crowds.
Eataly Comes to Your Home City…and Your Doorstep
As Eataly moves toward year seven in the U.S., there doesn’t appear to be any slowing its momentum. New stores are set to open downtown at the World Trade Center as well as Boston and Los Angeles (the Eataly in Chicago is already flying high). It would appear Eataly has tapped into a crucial solution to the panic consuming brick-and-mortar. They’ve actually made shopping a fun and exciting experience again.
That’s not to say that Eataly’s partners aren’t eyeing e-commerce as well. Saper and Batali both discussed the potential of a fluid e-commerce/brick-and-mortar hybrid for Eataly. The company is already testing one-click delivery with Amazon Prime in Manhattan; but it’s the business models created by online retailers like Blue Apron, which deliver ready-to-cook meals directly to your door, that have Eataly’s attention. (Try to keep from salivating at thought of all the ingredients for tonight’s bucatini alla carbonara landing on your doorstep along with cooking instructions penned by another Eataly partner, Lidia Bastianich).
Succeeding in a Tough Industry
From the glowing presentations by both Saper and Batali, it was hard not to be impressed with what Eataly has accomplished as well as the success both have experienced in what is a treacherous business. When asked about how he’s managed to make it in the food industry, Batali smiled and replied, “You don’t have to make all the money yourself.” The two components that matter the most, he said, are product and talent. “People don’t see the value of human hands,” he said, but when it comes to developing talented employees he’s always willing to take a shot on new recruits, knowing full well that talented hands can be earned, “no matter where they are, if they stay with us, work hard, are thoughtful and go further than what’s required, they will float to the top,” he says. In the end, Batali imparted the class with a couple no-holds-barred words of wisdom for every entrepreneur, “the worst thing to be,” he said, “is afraid of a setback or failure; but sh*t has to fail.” Eataly, it would seem, has very little to worry about in that regard.
In bocca al lupo.
