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Crave New World

National expansion? Over. Experimenting with concepts? Done. But look out, Fargo!

Crave New World
Kaskaid Hospitality CEO Kam Talebi. Photograpy by Eliesa Johnson

They don’t have a food truck. They are not chef-driven foodies. Many of their restaurants are in shopping centers and malls, an increasingly tough spot for retailers everywhere. Their national expansion plans lie in ruin. Numerous concepts outside their core brand have been short-lived.

Yet Kam Talebi’s Eden Prairie–based Kaskaid Hospitality empire is still standing, 12 years after launching the first Crave in the Galleria in Edina. Talebi, 50, is CEO. (Brother Keyvan is a partner, while Dave Sincebaugh has been Kaskaid’s COO for a decade. “He’s my right-hand guy,” Talebi says.) Kaskaid has a portfolio of more than a dozen restaurants and, skeptics be damned, is continuing to find ways to grow.

In the wake of local and national failures, Kaskaid has refocused its business plan on the Crave brand and is expanding, but only in the Midwest.

“We lived and learned,” Talebi says. “Not everything is going to be a hit.”

Kaskaid opened Crave’s eighth and newest Twin Cities location last fall, in Maple Grove. Despite national struggles, it has never closed a Twin Cities Crave.

This month, Kaskaid will also open a Crave in Fargo, N.D., at the West Acres shopping mall. They also plan to open a second event center, Quincy Hall, in northeast Minneapolis this winter. Plans call for a new Crave in Rochester to open in February in the new Hotel Indigo, an overhaul of the downtown Holiday Inn. One other, not-so-small detail: In a surprise to many, Kaskaid bought Brit’s Pub, a long-standing institution in downtown Minneapolis, at the end of June. It pledged to make no changes to the iconic bar/restaurant.

“Why wouldn’t you buy Brit’s Pub?” Talebi says. “It’s in a sector that we’re not in.” He declined to disclose the price or terms of the deal.

Talebi says the company’s revenue is now “north of $80 million.” But is it profitable? He pauses. “A little,” he says with a smile.

When the plot to take over the world ends

According to the oft-told legend, the Talebi brothers came out of nowhere, with zero experience in the hospitality business, to open Crave and start building a bigger company.

Not exactly.

The first mention of the Talebi brothers in the Star Tribune was 1996, when they were identified as owners of the South Beach nightclub in the Minneapolis Warehouse District with partner David Koch. In its day, the three-story club was very popular. “It was during a time frame when I was actually on the East Coast,” Talebi says. “I was a passive investor.”

The brothers also partnered with Koch on two other ventures, Escape Ultra Lounge and Bellanotte, both located on Minneapolis’ Block E during its “entertainment complex” days. The high-end Bellanotte was known for celebrities and pro athletes among its clientele. Escape closed in 2007, Bellanotte in 2009 after a five-year run.

The Kaskaid Empire

8 metro Crave locations 2 regional Crave locations, operated under management agreement

Union Restaurant, downtown Minneapolis

Rev Ultra Lounge, downtown Minneapolis (same building as Union)

Brit’s Pub, downtown Minneapolis

Burger Burger, Mall of America

Cowboy Jack’s, Mall of America; owned outright, operated under a license agreement

Muse Event Center, North Loop, Minneapolis

Crave Catering

Piggy Bank, Uptown Minneapolis

Union Depot, downtown St. Paul

Urban Eatery in the Calhoun Beach Club, Minneapolis (principals)

Operates BLVD Kitchen & Bar, Minnetonka

Talebi’s previous background wasn’t in food, but in tech. In the 1990s, he was CFO for Prometric, a Baltimore–based firm that helped pioneer computerized testing. He later started and sold two tech startups.

“I was not a coder,” Talebi says. “I was the business guy behind the technology and taking it to market.”

In a way, Kaskaid has functioned as serial entrepreneurs within one company, testing a range of new ideas and concepts. Some are kept, some are fine-tuned, and some—like the company’s efforts to take Crave national—are scrapped.

Kaskaid’s national plans were ambitious and expensive. They opened and closed seven Crave locations: Las Vegas; Bethesda, Md.; Omaha; Coral Gables, Fla.; Austin, Texas; Cincinnati; and Orlando, Fla. The last of those were shuttered in 2018.

Talebi says that there were different problems in different markets. “For certain locations, like Omaha, the lease ran its course and we decided not to move on.”

Sarah Baker Hansen, who covers food and restaurants for the Omaha World-Herald, recalls that Crave opened in a new lifestyle center, Midtown Crossing, in 2010. The Omaha location closed in 2018.

“Crave was one of the original tenants. Other restaurants turned over several times. For some time, they had a pretty successful brunch,” says Baker Hansen. “It outlasted many of the other restaurants.”

The Florida market was a different story: “At the end of the day, we do not go into the right locations … we didn’t have our own people evaluating sites,” Talebi says. “We took an ‘A’ concept and put it into ‘C’ and ‘D’ locations.”

In some cases, Kaskaid turned spaces back to their landlords. But Talebi says Kaskaid was able to coax some flexibility out of normally adversarial tenant/landlord situations. “We’re proactive and we sort of plan around it with our landlords.”

National expansion tends to look easier than it is to successful regional restaurateurs. “Oftentimes, operators think ‘I’m very successful in Minneapolis, I could be successful in this market too.’ Well … maybe,” says Dean Small, founder and managing partner of Synergy Restaurant Consultants in Newport Beach, Calif. “You go into a market where nobody’s heard of you before, you’re starting from scratch.”

Small is not familiar with Kaskaid or Crave but speaks to what he has seen in the industry over decades: “If the restaurants are spread out too far geographically, it’s very hard to support them from the home office.”

Open, close, repeat

Beyond Crave, Kaskaid has piloted many unsuccessful local concepts: Sopranos, Zio, Boneyard, the revived Figlio, and Avenida Cocina & Bar.

Crave Twin Cities Timeline

2007
Galleria, Edina

2009
Shops at West End, St. Louis Park

2010
Mall of America, Bloomington

2011
LaSalle Plaza, Minneapolis

2015
Woodbury Lakes, Woodbury

2016
Eden Prairie Center, Eden Prairie

2017
Rosedale Center, Roseville

2018
The Shoppes at Arbor Lakes, Maple Grove

“There was a lot of experimenting. We lived and learned, and at the end of the day, we’re smarter for it,” Talebi says. “We’re a lot more selective in terms of where and what we pursue for growth.”

If there’s a theme to what didn’t work, one theory posited is that the failed concepts focused on specific cuisines—Italian, Mexican, Southern—with which Kaskaid has little experience.

“We’re done experimenting,” he says.

One of those experiments was trying to revive Figlio, an Uptown institution for 25 years that closed in 2009. Kaskaid licensed the name from Edina–based Parasole Restaurant Holdings. It lasted about two years.

“They were stand-up folks to do business with,” says Phil Roberts, Parasole’s co-founder and principal.

Parasole has had its own share of concepts that didn’t pan out. “It hurts. You really can’t afford to have failures if you have small revenues,” Roberts says. “The bigger you get, the less it hurts. It’s a risky business; you’re not always right.”

Kaskaid has been either extraordinarily shrewd or lucky in the wake of its closures. It seems to have largely avoided being stuck with big, empty spaces in the Twin Cities or long-term leases out of town.

When Sopranos closed at the West End in St. Louis Park, Kaskaid promptly replaced it with Figlio. When Figlio shuttered, they sold off its assets to another operator for The Loop Bar + Restaurant. After Zio closed, it was replaced with a Cowboy Jack’s owned by Kaskaid. While the company was weighing options for the Avenida space in Minnetonka, Olive Garden approached the site’s landlord and is now building a new restaurant there.

Talebi says that Kaskaid has had the resources to ride out bets that didn’t pay off. “Cash flow and previous wins have allowed us to have the endurance to be able to keep the company moving.”

Designed for dining

Crave debuted in 2007 at the Galleria, Edina’s upscale shopping mall. Since then, most Crave locations have been in shopping malls or retail centers—Eden Prairie Center, Mall of America, Woodbury Lakes, and Rosedale Center. “We’ve always had a concept that’s been retail-friendly,” Talebi says.

Crave feels kind of fancy, but not too fancy. The expansive menu is largely mainstream American fare that tries to offer something for everybody with sandwiches, salads, burgers, flatbreads, some chicken, some seafood—and sushi, a key component. Talebi says that Crave updates its menu twice a year; this year it added a plant-based menu catering to vegans and vegetarians. There’s a kids’ menu. There are private dining spaces for corporate and other events.

“We’re not chefs,” Talebi says. “We certainly brought the know-how of how to build businesses.” Crave restaurants are big places. Talebi says the business model is based on 250 to 350 diners. “When you look at the mechanics of the business, the costs to be able to run a Crave and execute its menu, you ultimately do need to be able to have more seats to be able to generate the revenue it takes to have a successful restaurant.”

Minneapolis–based Shea Inc., which specializes in restaurant design, has worked on nearly every restaurant created by Kaskaid, still a client. Shea principal Tanya Spaulding recalls that she and firm founder David Shea first met with the Talebi brothers when they had signed a lease at the Galleria.

“It hurts. You really can’t afford to have failures if you have small revenues. The bigger you get, the less it hurts. It’s a risky business; you’re not always right.” —Phil Roberts, co-founder, Parasole Restaurant Holdings

“They really did want to create something that would be a multiunit brand,” Spaulding says. She says that Talebi has strong gut instincts for the business.

“The thing that I will say about Kam: He’s got two very important qualities for any restaurateur to have. No. 1, he’s a risk-taker, and No. 2, he’s not afraid to say, ‘This isn’t working.’ ” The latter trait speaks to why some of its restaurants haven’t lasted long: Kaskaid will pull the plug rather than beating a concept to death.

Spaulding acknowledges that Crave doesn’t get much love from foodies. “I think a lot of people in the restaurant business are critical of Crave. Other chefs can be critical of the food or the approach,” she says, but argues that there is a place for Crave in the market. “It was designed that way. It wasn’t designed to win any culinary awards.”

Crave’s future: regional brand, smaller markets?

For now, there are no plans for any additional Craves in the Twin Cities. When Burger Burger first opened at Mall of America, Talebi acknowledges he had “aspirations” of building it into a chain. But that’s off the boards.

“As we’ve grown and matured as a company, we have a much smaller footprint for a growth strategy,” Talebi says. “We’re staying disciplined and focused on what that is.”

Kaskaid is still looking outside of the Twin Cities for new Crave locations, but not where you might expect. A Crave opened in 2016 in Sioux Falls, S.D., followed by a 2017 opening in Sioux City, Iowa.

“We’re not chefs. We brought the know-how of how to build businesses.” —Kam Talebi, CEO, Kaskaid Hospitality

They are not your typical Craves. One is in a hotel, the other is adjacent to one. Kaskaid doesn’t own the restaurants, but instead has a management agreement with Sioux Falls–based Hegg Companies Inc., a commercial real estate investor. Kaskaid is paid a fee to operate the restaurants but doesn’t have the risk of ownership.

“We provide the brand and we run the restaurant,” Talebi says. “It provides another venue [for] growth.”

Paul Hegg, president and CEO of Hegg Cos., says that Minneapolis is a frequent travel destination for his family and that they would often dine at Crave while visiting the Twin Cities. Hegg thought that it could be a fit for the company’s Hilton Garden Inn in Sioux Falls.

When Hegg first pitched the idea, Talebi told him that the market was too small. But Hegg and a partner flew to the Twin Cities in a private plane to pick up Talebi and COO Sincebaugh to fly to Sioux Falls for a pitch. “We hit it off,” says Hegg of Talebi. A deal came together.

Hegg says that the previous restaurant in the hotel was generating about $1.5 million per year in sales. Crave is now doing more than $4 million. Hegg calls it a “game-changer” for the hotel. The Hegg group then acquired a Hilton Garden Inn property in Sioux City and added a Crave there under similar terms.

“At the end of the day, that revenue is mine. I’ve got a bottom line to meet, I’ve got investors,” Hegg says. “Kam’s commitment to us has been great.”

Kaskaid will own its next two restaurants. The West Acres mall in Fargo is locally owned and operated, with approximately one million square feet of retail space. Crave will be part of a new area called The District at West Acres dedicated to restaurants replacing the mall’s former Sears store.

“We are confident that Crave will do well. Many people in our market are already familiar with that brand and experience,” says Alissa Adams, senior vice president of marketing and business development for West Acres.

With the planned openings in Fargo and Rochester, that will give Crave a total of 12 regional sites.

“The wins have exceeded the losses. Have the losses hurt? Absolutely. Not everything you touch is going to turn into gold,” Talebi says. “We’ve had our share of punches that we’ve taken. Have we lost a few battles? Yes. We feel like we’re winning the war.”

The Saga of 2841 Hennepin

Everyone wants to be in Uptown, right? Maybe. But not everybody wants to be at 2841 Hennepin on the north side of the Midtown Greenway. The Old Chicago beer and pizza chain held down the spot for 19 years, but closed the location in 2013. Kaskaid then leased the space, and its follow-up concept, the Southern-focused Boneyard, lasted less than a year.

Boneyard was replaced by a series of unsuccessful sublease ventures: a branch of Salsa a la Salsa (closed 2016), Game Sports Bar (closed 2017), and Lotus Uptown (closed in 2018).

Kaskaid’s Piggy Bank is now the fifth restaurant there over the last six years. But if Kaskaid is through experimenting, what explains Piggy Bank, which opened last December? “We had a lease commitment,” says Kam Talebi. “Unfortunately, the space came back to us.”

Stuart Chazin, who owns and manages commercial real estate, bought the building in 2010 when Old Chicago was still a tenant.

“Kam has been there for over five years. … They still are the tenant,” Chazin says. Kaskaid signed a 10-year lease for the space. Chazin says Kaskaid are “good people to work with,” adding, “Kam’s a nice guy. Honorable.”

Kaskaid is not sitting still on the site. Talebi says he is contemplating adding live music at Piggy Bank.

Burl Gilyard is TCB’s senior writer.

 

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