Philippe by Philippe Chow's Stratis Morfogen: "Gansevoort Sucked the Air Out of Our Restaurant"

Philippe by Philippe Chow is scheduled to open any day at its new SoFi location. The restaurant/celebrity magnet abruptly left its location at the Gansevoort Miami Beach back in June, announcing it would open a Boca Raton location, as well as move farther south on Miami Beach.

We spoke with Stratis Morfogen, CEO of the Philippe Chow Restaurant Group about the re-opening of Philippe by Philippe Chow Miami Beach and what led to his decision to leave the Gansevoort.

last spring, which surprised a lot of people. What happened?
We

signed the lease about five years ago. It was spring of 2006. We were

dealing with Michael Achenbaum and the Chetrit family. They were

customers of Philippe and they said they wanted us to come into their

new property in Miami Beach. I had a lot of respect for these families.

I saw the models, I saw the plans, and we made a deal.

They gave us the whole spiel that this was going to be a five-star resort, that they were putting in hundreds of millions of dollars.

Then they said something that was interesting. At the negotiation

table they wanted me to put up a bond because they wanted to know that I

was going to have enough money to finish the restaurant.

I said "How do I know you're going to have enough money to finish

this? "

I told them that right now we're in a bullish economy,

but I believe in the seven-year itch. Every seven years there's a market

correction. And they laughed at me. They said the economy is booming.

And I said I'm not putting up a bond. I'll put up a personal guaranty

here and there, but that's it.

So we did the deal and we opened the restaurant. But that conversation

stuck with me.

How did the restaurant do?
We did some big

numbers. We also made a hundred reservations to put guests up at the

hotel and the first year everything went really well, except that a lot

of the hotel guests weren't happy with the service at the hotel. But

it's a new hotel, they have to iron some kinks out. That's the kind of

things that you can expect.

What were some of the "kinks"?
From getting a cup

of coffee to getting your bed turned down was a struggle. So I went to

the owners of the hotel and I said I made a lot of reservations with you

guys and there are complaints about the customer service. They said

that they didn't have the correct facilities. They were using a 200

square foot shed for room service for about 300 rooms. It's impossible

to service them correctly the way they were operating.

Achenbaum bought out Chetrit eventually. We were still doing a good business under their flag.

Then the market crashed and the Achenbaums and their company

were evicted and Credit Suisse took over and thought they knew how to

run a hotel. But the guys running the hotel for Credit Suisse were

credit analysts running a monster like the Gansevoort Hotel.

I kind of missed the Achenbaums after they left, because I never thought

it could get worse. But it did.

How did it get worse?
Four

out of six weeks at three different times of the year the water lines

would break down and we had no air conditioning in the restaurant. When

we complained that people were walking out of our restaurant, they would

say that the water chiller lines broke and they're getting to it. Truth

be told they never maintained it after the foreclosure. And so my past

complaints about room service seemed petty.

Then it took 30-40 minutes to get your car from the valet and pay $30 for the privilege.

Then the fire alarms would go off. The restaurant's smoke alarms

are attached to our hood system and every time the alarms went off,

which were a few times a week, our front doors would swing wide open,

the kitchen doors would swing open and all the air would be sucked out

of the kitchen. All the air in the restaurant would be sucked up to

smother a fire that didn't exist. So our guests were being smothered. I

didn't know that breathing was a luxury. The whole restaurant would

totally lose their air flow. The Gansevoort was sucking the air out of

our restaurant -- literally.

Under Michael Ackenbaum's flag we didn't have these issues. I

think the hotel was too big for them, but after they left that's when

the nightmare started.

What did you do?
So all the

tenants went on a rent strike. And we joined them. We stopped paying

them rent from January 2010 to the day we left.

And you left in the spring, right?

We left July 1st.

I still would have stayed, but I got a call from Taverna Opa's

owner, Peter Tsialiamanis. He said we haven't gone to market yet, but

we want to get out of south of fifth and we want to make a deal with

you. I said the only way I would do this is to buy the property and

control my destiny.

Right now I had a few million dollars

invested in The Gansevoort but I could justify walking away in the long

run if I had another space. To make a long story short. I sent him a

deposit, we made a quick deal, he gave me a fixed option to buy the

property and I convinced my partners that there's no reason to stay at

The Gansevoort.

Let's control our own valet parking, let's

control our own air conditioning system, let's control our own smoke

evac, let's control our own customer experience, because at The

Gansevoort we had no control.

It was hard for us to walk away from a 2 1/2 million dollar investment,

but we had to.

It's funny but we had a lot of customers that

live in Miami Beach six months out of the year and New York six months,

and I reached out to them because I never saw them at The Gansevoort.

And they said that they wanted to stay south of Fifth and they didn't

want to deal with the valet parking and wait 40 minutes for their car.

Now it's exciting because these people are calling to make reservations.

At your Boca Raton location, you've announced that the prices are lower than Miami. What's the strategy behind that? 
It's

the same feel as a Philippe. Its got the same food, the same

atmosphere, the same portions, but I pay less rent in Boca for a larger

space. 

For example, the cocktails are $10-12 in Boca for the same glass. It's

economics. Look, the prices at the new Miami location will be less than

they were at The Gansevoort.

But not as cheap as Boca. Why not charge the same at both restaurants?
I

can't. In Boca we've got an 11,000-square-foot space that seats 500

people and I pay $20,000 a month in rent. The Taverna Opa space is 5,800 square with about 200 seats. With  taxes I pay about $25,000 a month.

Technically double. These aren't numbers that I grabbed out of thin air.

We did a lot of number crunching as to where our prices had to be.

At

the Gansevoort we were more expensive but that's where we needed

the price point to be. Bottom line is we have to make our rent. There's

an entire process on how much to charge for a bowl of soup, a glass of

wine. 

At our new location, the entrees are anywhere from 10-20 percent cheaper than

at the Gansevoort. Some as much as 30 percent less. In general the experience

with drinks and food will be roughly 20 percent less than the Gansevoort.

Value

was always the stepchild when it came to Miami Beach, but now it's front

and center.

You want to see a menu, you want to receive what you ordered, and you

want to see an itemized bill. Unlike some of our competitors where the

waiter will substitute a glass of house champagne for a $40 glass. We

don't do that.

Last question. Will you have your famous noodle show at the Miami Beach location?
We're doing a noodle show every night at 8:30. It's going to be great.

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