Post #806666 by Prikli Pear on Tue, Nov 29, 2022 11:11 AM

how is it there's a massive tiki revival happening, and yet Trader Vic's just keeps closing locations?

This is a vexing one, for sure. There are several big reasons that I'm aware of (I'm sure others with more insight can offer more). Firstly, the Trader Vic's-as-a-restaurant business model has a LOT of overhead. It's costly to run, period, and although the laws vary from state to state, as a rule more than 50% of the revenue has to come from the food. Secondly, the cocktails are the most profitable element, but if cocktails generate 50% or more of the revenue, then minors aren't allowed. Restaurants that also serve cocktails and bars that also serve food are two different types of liquor license and aren't interchangeable. That's why all of the new tiki spots popping up around the country are primarily bars that may or may not serve food. These can be smaller, employ a smaller staff and generate impressive revenue despite elaborate build-outs. Restaurants generally have to be physically larger to be profitable as well. I mean, there's a reason why nobody's opening places to rival the Mai Kai these days.

Thirdly, Trader Vic's pretty much leases all their properties. From a strictly business perspective, this makes a lot of sense but it puts them at the mercy of the landlord. The London Vic's isn't closing because it's losing money, it's because the new management at that particular Hilton wants them out. That's also the reason for worry about the Emeryville location--the lease expires at the end of this year and rumor had it the property owners wanted to redevelop it into condos or somesuch for quick $$$. The recent letter from corporate seems to downplay those fears, but unless TV actually owns the properties, that's always going to be a risk.

Trader Vic's is generally doing fine overseas. The San Jose airport location is an attempt at developing a new marketing strategy, creating a smaller space with less overhead and higher profits to succeed in the U.S. market. Such an approach has worked in the past--Dobbs House Luau thrived at Love Field in Dallas for more than a decade before DFW airport opened and killed off the foot traffic in the 70s. I with TV well with the venture and hope to see more innovation from them. But unless they dramatically alter their corporate strategy, I doubt we'll see bar-only TV's popping up.