What Public School (The New Gastropub Chain) Can Teach McDonald’s

Public School 1McDonald’s might take a lesson from a small restaurant company based in Los Angeles.

Grill Concepts now owns three major brands, none with more than 18 locations. It started with The Grill On The Alley in Beverly Hills, which opened thirty years ago. The Grill is described on the company website as being “modeled after the great grills of New York and San Francisco in the 30’s & 40’s.” It quickly became a Hollywood destination for power lunches, drinks and dinners.

Based in large part on the success of The Grill, as well as a recognition of the growth of casual dining chains, the company opened a casual, value-oriented version of the flagship restaurant in 1989 called The Daily Grill. They describe it as “an approachable, everyday restaurant featuring classic American dishes made from scratch…with the same high standards for exceptional hospitality and quality as our sister restaurant, The Grill on the Alley…”

Indeed, the Daily Grill offered very good food, virtually indistinguishable from its upscale sibling, at very reasonable prices.

Launched in 1989, the casual/chic concept grew to more than 20 locations, but with the closing of several restaurants the total is now 17, the majority of which are in California.

Other factors could have come into play, but the closings seemed to reflect that the Daily Grill simply got tired over time. There was a noticeable change in service from attentive to extraordinarily slow in the Studio City location I frequented. My perception – and those of many others – was that food quality declined as well. This could simply be more feeling than fact, but it is certainly reflects a menu that has not changed significantly in 25 years. Relative to all the exciting new restaurants with innovative menus that have opened in this time frame, Daily Grill food is simply dull. Either way, The Daily Grill’s currency had declined.

The parallels to McDonald’s aren’t exactly the same. The Daily Grill does not sell what is perceived to be “junk food,” it is not being blamed for the obesity crisis, and it’s not drawing heat for paying its employees less than a living wage. Still, both are well along in their life cycles and have not made the necessary changes to keep up with a dynamic market place.

Grill Concepts might have chosen to refresh the brand in any number of ways, including a redesign of the restaurants, keeping the core of “classic American” dishes while introducing more adventurous fare, using only locally sourced, sustainable, organic meats and produce, a big push into craft beer and hand-made specialty cocktails, or any other number of options.

Instead, they chose a riskier, but ultimately much smarter strategy. Understanding how difficult it is to revive a restaurant concept on a downward trajectory, they put their resources behind a completely new concept far more in tune with food and restaurant trends.

The brand is called Public School, with each location modified by its area code. So far there’s Public School 310 (Culver City), Public School 818 (Sherman Oaks), 805 (Thousand Oaks) and 214 (Dallas). The company website says three more are coming soon in Las Vegas, downtown Los Angeles and Addison, Texas, a Dallas suburb.

The menus look like the composition notebooks you used in elementary school. Their tagline is “An Education in the Art of Food & Beer.” They know how to extend a metaphor.

Public school is a gastropub on steroids. In addition to a full bar, they’re got a wide selection of craft beers covering many styles. No Bud Light here. The menu offers the usual gastropub ingredients: burgers (beef, bison and lamb), kale, bacon, brussel sprouts, beets and quinoa.

Walk into a Daily Grill at 8PM on any given night, and you’ll likely see a three-quarters filled room of 50-year-old or older couples quietly having dinner. Go into a Public School and you’ll be in the middle of a lively, vibrant place buzzing with the animated conversation of singles and couples under 35. The contrast could not be more striking.

Public School might ostensibly be about the food, but my take is that the food is incidental to the drinks and the scene. The availability of community tables, a fun menu with quirky items ideal for sharing – Chicken & Waffles or a Nutella Cookie Sandwich with bacon brittle, chocolate chunk cookies, vanilla bean ice cream, for example – all enhance the energetic vibe and sociability.

The Public School concept is hot in L.A., and will likely remain so for at least the next year. And once the novelty of an exciting new hangout wears off and the next new thing comes along, it’s likely that Public School will thrive for at least another ten years or more, even after the restaurant industry inevitably moves on from the Gastropub phase.

For McDonald’s, creating an entirely new restaurant concept on global scale on which it now operates is certainly no easy task. Franchisees make it all the more challenging. But what are the alternatives? McDonald’s has too much baggage to launch premium items or become “healthy,” “sustainable” or “organic” in any kind of credible way. Their core customers might not even care.

Like the Daily Grill, though of course on a much grander scale, McDonald’s seems destined for a long, painful decline. They once owned 90% of Chipolte, a chain that has grown to $4 billion in sales and is literally eating McDonald’s lunch – especially with Millennials. If only they had it back, along with a Chipotle healthy/sustainable type Mexican chain, a new higher quality burger concept to take on Shake Shack and Five Guys, and perhaps a salad/vegetarian/vegan focused chain. That could get them well beyond their current $28 billion in global revenue.

Moreover, even if they milk the McDonald’s brand, cutting way back on advertising and limiting the menu to a core burger/fries/shakes offering like In ‘N’ Out, I would guess that they would still hang to a very good chunk of their current business, but with one major difference. It will be more profitable.

There is no silver bullet for McDonald’s, no quick fix to their current business or any single new restaurant concept that could possibly replace its current revenue stream. But even if they eventually lost half or more of their current business, it seems that they have the resources and the expertise to build two or three relevant, baggage-free brands like Public School and Chipotle to replace lost revenue and then some, setting the company on a path of growth and optimism rather than decline and despair.



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