The New Revolution

I have fairly low expectations of the business of running restaurants -- understanding all too well the lowest-common-denominator math involved in the profitable operation of a multi-unit empire. I've read Fast Food Nation and the Omnivore's Dilemma. I've managed the kitchens of chain outlets and worked in industrial production (those places where the food for multiple locations is prepped, packed and shipped). Hell, I've even driven the trucks and made deliveries, bringing tubs of salad mix and portion-controlled vac-pacs to chefs whose only real kitchen duty was the overseeing of rewarming and plating by a line full of cooks who weren't ever allowed to actually cook anything.

But what's happened at Piatti Locali (see review,) got me thinking all over again about the business of running restaurants. From the perspective of an owner, operator or corporate officer, giving local outlets control over their menus is ludicrous. It flies in the face of all conventional wisdom regarding chain restaurants, ignoring most of those presumed competitive advantages afforded by multi-unit concerns and economies of scale. The chain model limits food costs, maximizes labor and production hours, allows for below-market pricing due to cost controls, prizes consistency of product over specialization and demands top-down control of every aspect of the business. It is an autocratic system, fiercely controlled in the main, and generally successful as long as the despot at the top of the pyramid has some smarts, a little vision and very good accountants.

This is the model that has worked for decades, has been used by hundreds of companies with hundreds of billions of dollars in profit to their credit. And the Piatti Locali concept is a nearly pure refutation of all of it. Denver's Piatti Locali makes good food. But can the company that owns it possibly make good? To find out, I talked with both Susan Klos, a nine-year veteran of the Denver restaurant and now its manager, and Linda Salman, Piatti corporate's assistant director of operations.

I started out by asking Klos about the notion of corporate control and reporting -- the cornerstone of any chain restaurant's setup and the first step toward the standardization that's the ultimate goal of the multi-unit model.

"When I started," Klos told me, "there were a few core items on the menu -- maybe five or six across the chain." But in the early years, the Piatti brand was still finding its way, and individual locations were operated like fiefdoms. There was a king, and the king liked to know what was going on. For the most part, though, the day-to-day business of each outpost was left under local control.

That started changing in the late '90s, as the company grew and consolidated systems. "Things started getting a little more controlled by corporate," Klos noted. There was more oversight, more frequent contact with the home office, more orders being passed down from the top. "But we managers were entrenched in that kind of entrepreneurial mindset, you know? So we weren't comfortable with that."

And if that discomfort can be measured in the taste and menu and feel of a dining room on a Saturday night (which it can be), these were the years when Piatti began suffering, when everything about the place that had been so vital got snuffed.

The Locali concept -- locally controlled, chef-driven -- sprang directly from the dissatisfaction of the individual unit managers. "It was like coming back to the ideal," Klos recalled, and once control reverted to local managers and chefs, this Piatti's sense of individuality, its uniqueness, returned in a flood. "Something like this really inspires the chef, the staff. It inspires everyone to be even better than they are," she said.

True, there's still paperwork to be filed every day (Piatti corporate retains centralized control over bookkeeping and accounting -- the Locali model is groundbreaking, but not insane) and reports to be made weekly, but business websites that track such things assess the amount of time spent by local managers in direct contact with corporate at less than an hour a week. "I haven't spoken to anyone at corporate in more than, I don't know, probably not more than once a month," Klos said, and laughed. "I love it."

Allowing them their freedom made Piatti's managers and chefs happy, but what did it do for the corporate bottom line? Centralized ordering, distribution and menu control are one of the big reasons the chain model works. A standardized menu at multiple locations allows for standardized ordering from the large purveyors. Standardized ordering, in turn, allows a company to negotiate large-volume discounts from the suppliers that keep food costs low. One of the most common arguments against local control of ordering and sourcing product is that the moment a restaurant strikes out on its own, it becomes subject to the whims of the market and loses the advantage of bulk purchasing.

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Jason Sheehan
Contact: Jason Sheehan