Polished Silver

on

April 3, 2016

On a mission to help its guests eat healthier, the Silver Diner has transformed its menu, increased annual sales by 45 percent over the last seven years, and opened an upscale American brasserie.

“We have a moral obligation to change the way America eats”

“We have a moral obligation to change the way America eats,” asserts Chef Ype Von Hengst, co-owner of Silver Diner, as he passionately seeks to inspire like-minded chefs and restaurateurs around the country. He speaks from the vantage point of one who has transformed the traditional menu of a classic American diner into a contemporary phenomenon, where healthy options dominate and fresh, local ingredients reign supreme. Chef Von Hengst talks with FSRabout what it takes to effect positive change, and the positive momentum that led to annual unit volumes between $3.5 million and $8 million (in a restaurant where the average check crests at $14) as well as the creation of a new concept that extends the brand into an upscale-polished arena.

That’s a dramatic call to action you’ve issued for the industry—can you elaborate?

We have so much obesity in the U.S., and so many foods are ill-prepared and filled with chemicals—I feel it is my moral obligation to change this and it should be all of ours.

If you have one restaurant it is almost expected that you do farm-to-table and local [sourcing] and have healthier options, but it’s a poor excuse to say, “We have multiple locations, so we can’t do it.” That’s just b.s. Multi-unit restaurants just have to work harder at it and make it happen.

When did you begin to make it happen, that transition at Silver Diner to serve healthier options?

It was around 2008, and we were the first in D.C., maybe one of the first in the U.S., to do zero trans fats. We had 12 locations then, and of course the economy was going down and we saw casual restaurants like Panera Bread taking away chunks of business.

Also, our customers were starting to change: The Baby Boomers are getting older and starting to retire, and as a restaurateur you have to keep in touch with your public. You have to create food that will attract the next generation as well as your current guests. What was good yesterday is not necessarily good tomorrow. When the world changes in the way that people eat, then we as chefs and restaurateurs have the obligation to work with that, and actually set the tone.

That’s what Bob Giaimo, my business partner, and I have done. That’s why, after 27 years [Silver Diner opened in 1989], we have gotten a 45 percent increase in sales over the last seven years. And, our dinner sales have gone up 20 percent—that is because we keep reinventing ourselves. It’s because we stay current, but we don’t go trendy. I hate the word trendy. We stay current and we lead the way America should eat.

If you stay in touch with your guest, in touch with what’s going on in the industry, and you provide the right products, then people will keep coming. When the economy was faltering, we started seeing a decline in our business, and we realized young families were going other places. That’s when we transitioned the menu to farm to table, with fresh and local ingredients.

How was it received?

Even within the company, some were very skeptical and said, “People don’t come to a diner for healthier food.” But we took the gamble and were right! People nowadays want better, healthier, and cleaner food—and we can do that with great-tasting, contemporary diner food. In a diner, we are about choices. We offer 600-calorie items on the menu and we offer pancakes as well. It’s my obligation to make all the foods better, healthier, and more wholesome.

Healthier pancakes?

Yes! Our pancakes are made from unbleached flour so they have nutrients. That’s part of the obesity problem in this country: People eat all this food that is stripped of its nutrients and the brain tells you to eat double the quantity to get the nutrients you need. And then, guess what happens? People become overweight because they overeat. So when you come to Silver Diner and have a sundae, with strawberry or peach topping, the toppings are made with agave—never corn syrup.

Overall, I try to use better and healthier products in everything. A diner is still a diner, and guests come to a diner for pancakes and for turkey and meatloaf, but we always use better products. Like with the turkey, instead of heavy bread stuffing, we serve fresh veggies and a beautiful cranberry sauce made in-house.

We did the same with our kids’ menu, too. Fresh veggies and salad for sides instead of french fries, and milk instead of soda. All restaurants should be doing this, so people can all live better and healthier and longer.

What kind of operational changes were necessary?

Most importantly, we introduced the healthier menu with higher-quality products and vegan, gluten-free, and low-calorie, 600-calorie items.

We [underwent] a tremendous education program inside our four walls. We learned that any food without preservatives spoils more quickly, and since it has a shorter shelf life, we needed to change the way that those products are ordered. We also had to improve the execution, and we did this by shortening the menu about 35 percent. We trimmed down the menu to focus on quality instead of quantity, but we still remained a diner identity—just with a shorter menu. Most importantly, we introduced the healthier menu with higher-quality products and vegan, gluten-free, and low-calorie, 600-calorie items.

When we did this, we invested over $750,000 in food costs just in the first year. It was money we really couldn’t afford to spend, but we were serious about making this happen, so we needed to invest in it.

How did you communicate this message to your guests, and did they embrace it or did you have to convince them?

First, it was about getting the message out to the staff. We made role-playing videos with servers describing the new menu items, mentioning the farms, and telling guests what the benefits are so the staff could see how to relate this information to our guests. And we conducted surveys and asked our guests, “Would you be willing to pay 25 or 50 cents more if you knew your eggs were farm-fresh eggs? Would you pay more for local goat cheese, or for a meatloaf made with all grass-fed and Black Angus beef?” Those were the questions we asked our guests. We made a tremendous investment in live research on the floor with our customers, and the overwhelming response—even in a time like 2008 and 2009 when the economy was going down—was that the guests told us they are willing to pay for a quality product.

Do you think that was because people already wanted to eat healthier?

Some, but I think one reason they said this was because they already had it in mind that the economy was going to be tighter and that would mean going out less often, so when they go out they’d be more selective and the experience would have to live up to higher expectations. Today, the guest demands more of restaurant experiences, and the changes we made at Silver Diner gave them what they wanted. That’s why our sales have increased, and now it’s just amazing: I walk through the diner and people thank me for what we have done.

One person told me about the weight he lost and the improvements in his health and blood pressure since he’s been eating from our 600-calorie menu. … I’m not a doctor; I’m a chef. But it makes me so happy to see the impact we’ve had on our guests’ health. When people tell you those stories, that’s confirmation you are on the right track. That’s why I say to other chefs and operators: “One step at a time, let’s change the way America eats.”

What about the response from children?

We have to keep our kids healthy, and we’ve done a tremendous amount with our kids’ menu. It now has items 600 calories and under, and the food is higher quality, like we have a nitrate-free hot dog. The sides are strawberries and fruit and veggies; we took french fries, home fries, and soda off the kids’ menu. If they want those things, the mom can order it. We’re not going to dictate what people have to eat, but we can influence their choices by not putting these items on the menu. Since we’ve done this, there’s been about a 26 percent decrease in kids ordering sides like french fries. Now they are eating berries or salad with their hamburger.

Are you doing things internally to encourage healthier lifestyles among your staff and the chefs who work for you?

It’s so funny you ask that because tomorrow we have an all-day managers meeting and we have a trainer coming to talk about healthy lifestyles. We provide gym memberships for our general managers and managers, and for our operating partners we offer [personal] trainers, because it is important to us that they look healthy and represent the Silver Diner well through the way that they look. … We have health tips online for all of our associates—there are 1,100 to 1,200 associates working for us so we can’t offer everyone a [personal] trainer—but we relay the message to everyone that it is important for yourself and for your family to lead a healthy lifestyle and be more active. I try to do it myself. I’m 230 pounds, but I work out five days a week and I’m fit and trim. I turn 65 this year and my goal is to be ready for a “Body Building Over 65” contest in December. I want to show the world life isn’t over at 55. So that’s on my bucket list, and I’m going to work for it five days a week.

When you transitioned to healthier menus, did you adjust the portion sizes?

When we label an item 600 calories, people automatically assume portions are going to be smaller. Yes, we adjusted portions somewhat, but mainly we adjusted the ingredients. Guests are still walking out full, but with healthy proteins and healthier carbohydrates [in their bodies].

What are the most popular menu items?

Cobb salad used to be our most popular salad; now the most popular is our Warm Roasted Veggie Salad with Brussels sprouts, beets, squash, kale, pecans, and dried apricots in our house-made Champagne vinaigrette. And our Bison Huevos Rancheros have like a cult following. It has crispy multigrain tortillas with chorizo hash and organic bison, farm-fresh Amish eggs over-easy, peppers, salsa roja, scallions, cilantro, goat cheese, and mashed avocado. Who would have thought a diner would have this on the menu, and it would be one of the best sellers for breakfast? It makes me proud people aren’t just eating French toast and pancakes anymore—but again, I’m not sending anyone home who wants to eat pancakes.

It’s all about everything in moderation, everything in balance. Diners are known for breakfast, and for meatloaf and turkey. We have all those things, and we have dishes people don’t expect to find in a diner, but once they have them they just keep coming back. Like our fresh Sedona Salmon—we can’t keep salmon in the house. I roast the salmon with a cinnamon chipotle seasoning and serve it over quinoa with artichokes, roasted veggies, scallions, cilantro, and a house-made lemon garlic sauce that doesn’t have one bit of fat in it.

How do you manage inventory and deliveries?

We have 15 locations [including Silver] and every location gets its own food. When I first talked to my distributors, it was a little bit of an uphill battle when I told them I wanted to have local produce, because they don’t have that all the time. … I had to convince companies like Sysco to work with me on this. But the smart operators realize people want more organic foods, more gluten-free and vegan options, so they have worked with me to get those products. Today if you tour our restaurant, you will see that our storerooms are way too big. There are paper products in there and things for to-go service, a small amount of dry goods and condiments, but you’ll see empty shelving. And then when you go into the refrigerators, those are crammed full of fresh and perishable ingredients. In some of the stores that have a high volume, we’ve added an extra delivery a week so that goods come in on Monday, Wednesday, and Friday. That’s because we had a problem storing enough of the fresh product, so we adjusted our deliveries.

Is it becoming more manageable?

Yes, it’s gotten easier. And, we’re still running at 26 percent to 27 percent food costs, while we’ve gone up 20 percent each year in dinner business. Dinner used to be a struggle for us because people always look at a diner for breakfast or for lunch items. Now that we have entrées like fresh salmon and bison and local steaks, people are confident we can pull off dinner.

Tell us about the new concept, Silver, that opened last fall in Bethesda.

With Silver we wanted to create a brand extension, not a totally new brand. We wanted to create a more upscale-polished experience in a smaller footprint.

There was an evolution at Silver Diner over the years: People used to compare it to IHOP and Cracker Barrel, then it was [considered] more like a Mimi’s Café, and now we have positioned ourselves much more in the polished-casual segment and with upscale-polished dining where people compare us to P.F. Chang’s, Bonefish Grill, and Founding Farmers. With Silver, we’ve put ourselves firmly in that Founding Farmers segment.

What is the menu at Silver?

At Silver Diner there are about 100 items on the menu, and at Silver a little over 40 items. We took about 35 percent of the best-selling items at Silver Diner and put those on the Silver menu, then 35 percent of the items at Silver are updated versions of the diner selections, just a little more upscale and more refined, and the rest of the Silver menu is totally new. For instance, we don’t serve scallops at the diner, but there are wonderful scallops with lemon sauce served over spinach with Feta cheese at Silver. And the meatloaf at Silver is a truffle bison.

So, we’ve been kicking it up a notch, and it is working out really well. In January, Silver did close to $100,000 in one week, and we’ve only been open since September. Serving breakfast all day is a big competitive advantage. We’re looking to do $5 million at Silver, in about 140 seats. Both restaurants serve breakfast, lunch, and dinner, and the entrées at Silver run between $15 and $25, compared to $10 to $17 at the diner.

How does the setting compare?

When you walk into Silver, it looks like a New York City restaurant from the 1920s so the look and feel is more art deco. The diner is more like a place in the 1950s.

Another [defining] element is that we are serving great drinks at Silver. We created cocktails in line with the food: Just like we’ve gone fresh and local with our food, we are going fresh and local with our drinks as well. A lot of the bitters are made in-house. We use all fresh purées with fruits, and we’re using local gins and tonics. Guests come to Silver Diner for an all-natural milkshake; guests come to Silver for a craft cocktail.

What are your plans for expansion?

This year we will open a classic Silver Diner in Frederick, Maryland. Next year we would like to open one of each, a Silver and a Silver Diner. Then, we would like to open two Silver locations and two Silver Diner locations the following year. Our big-picture goal would be to double [in size] in five to six years and have 30 locations, maybe adding 10 Silver and five Silver Diner—or the other way around. We will be opportunistic.

Is it easy to find optimum locations for the Silver concept?

One of the [strengths] of the new concept is that we can put it into a smaller footprint: A diner needs around 6,500 square feet, where a Silver needs around 4,500 square feet. So, Silver can fit more easily into an urban location or in a downtown space.

Are you planning to franchise either concept?

All of the locations are company-owned, and we don’t have plans to franchise at this point. That’s because we always—maybe to a fault—want to control our quality, our food, and our service. Our most important ingredient is our people, and we have managers who have been with us 15, 20, 25 years. The gentleman who is running our flagship Rockville restaurant started out with us 26 years ago as a receiver of food, then a dishwasher, and worked his way up to line cook and a prep cook. He became a kitchen manager, then a general manager, and now, he is one of our best operators. That Rockville location serves 13,000 people a week, every week! And it’s doing close to $8 million this year.

If you came to one of our operating partner meetings, everyone around that table has either come from being a server, a dishwasher, a cook, or some operational level in the company. That is the biggest success of the Silver Diner, and it is the management that has kept us from becoming a franchise operation. We are proud to have our name on the door and even prouder of the managers and associates we work with because they are part of us. We don’t want to give that away with the problems that franchising brings. Not to say we would never do it. But this is how we started, and it is why we are so successful today.

Will you continue to open in the Mid-Atlantic?

Yes, D.C. is so big we could probably put 30 restaurants in this area. Eventually we are looking at Miami and Philadelphia—mainly we are looking at Florida for expansion. Both concepts could go to Florida, and the restaurants can be 3 miles away from each other. You could have Silver in an area like Bethesda, close to one of those huge outdoor malls, and 3 miles away at the crossroads of highways in an area with high-density population I could see a Silver Diner.

Do you anticipate opening more airport locations?

Yes! Our Silver Diner in BWI [Baltimore Washington International] is an amazing success story, and it’s going to do $8.1 million to $8.2 million in sales this year. People are so happy to be able to eat healthy food at an airport.

We started this conversation talking about your call to action for other chefs; what is the message you want to leave with everyone?

What people eat is their choice, but it’s my choice what I put on the menu.