Will acquiring a pizza chain boost Urban Outfitters’ fortunes?

Discussion
Nov 17, 2015

Urban Outfitters, Inc., parent company of its namesake retail chain along with Anthropologie, Bhldn, Free People and Terrain, announced yesterday that it has entered into an agreement to acquire substantially all of The Vetri Family group of restaurants, including Pizzeria Vetri.

The Vetri group was created by Marc Vetri, a James Beard award winning chef. Food and Wine Magazine named Pizzeria Vetri the best pizza restaurant in the U.S.

"Spending on casual dining is expanding rapidly, and thus we believe there is tremendous opportunity to expand the Pizzeria Vetri concept," said Richard A. Hayne, CEO of Urban Outfitters, Inc., in a statement.

"Through this partnership, and the experience URBN has in scaling growth opportunities, the Vetri Family will now be able to focus on what we do best — run restaurants that make people happy," said Mr. Vetri.

Analysts at Stifel, via CNBC, see potential for Urban Outfitters to add Pizzeria Vetri to select stores to help drive additional traffic. "While we are surprised by the announcement, we believe there is cross-shopping potential between URBN retail stores and Pizzeria Vetri, given the similar customer demographic," the analysts wrote.

Pizzeria Vetri

Photos: The Vetri Family

Adding pizzerias to stores might not be completely out of left field for Urban Outfitters, which sees itself as "lifestyle specialty" company and not simply a clothing retailer.

As a recent article by Carol Spieckerman on RetailWire pointed out, Urban Outfitters has benefited from taking somewhat contrarian positions in the past, such as its decision to focus on selling vinyl records when the industry was going digital. Today, Urban Outfitters is the leading seller in this growing niche market.

Urban Outfitters, along with many of its peers has struggled this year. Per CNBC, the company’s shares are down 35 percent to date.

Will acquiring Pizzeria Vetri help boost Urban Outfitters’ retail sales or distract management from its core business? Do you see the company adding pizzerias to its namesake banner as well as Anthropologie, Bhldn, Free People and Terrain?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I’m surprised at how slow other retailer have been to introduce food concepts within their store environments, particularly ones that have obvious appeal to Millennials."
"This is not retail’s next secret sauce. Running a non-food retail chain is nothing like running a pizza business. This is a non-trivial distraction from core business despite any illusory projections on how pizza may boost the customer experience."
"Seriously? Urban Outfitters is in trouble with their main focus and they are going into the pizza business? What’s next? Will Sears and Kmart start selling cars?"

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17 Comments on "Will acquiring a pizza chain boost Urban Outfitters’ fortunes?"


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Bob Phibbs
Guest
6 years 6 months ago

Sorry, when you’re main business isn’t doing well, it’s not time to add a new line of clothing or worse … a restaurant … in hopes that it will sustain you. You have to get why business is down or the new element is just a distraction.

Besides, two totally different worlds and OPS needs. I’d see this as a miss.

Anne Howe
Guest
6 years 6 months ago

Given how focused everyone in American retail is on serving food everywhere all the time (even to already overweight shoppers), I get why Urban Outfitters thinks the Vetri pizza opportunity makes consumer sense. But it’s one thing to believe in an idea, and quite another to install high heat pizza ovens in free-standing or mall clothing stores.

Keep feeding those shoppers and the distraction will turn into sourcing more plus sizes.

Max Goldberg
Guest
6 years 6 months ago

Wouldn’t it have been easier to simply test pop-up pizza stands in Urban Outfitter stores? I can see the appeal, but cannot see how the acquisition of a pizza chain will help management focus on fashion retailing.

Carol Spieckerman
Guest
Carol Spieckerman
6 years 6 months ago

I’m surprised at how slow other retailer have been to introduce food concepts within their store environments, particularly ones that have obvious appeal to Millennials. Multi-sensory experience is the one big advantage that brick-and-mortar retailers have over their pure-play digital competitors. Given Urban’s careful-yet-innovative management of its brand assets, going the acquisition route makes perfect sense. Doing so will allow Urban to experiment and flex the Pizzeria Vetri concept across its portfolio rather than getting locked into a rigid model.

Mohamed Amer
Guest
Mohamed Amer
6 years 6 months ago

This is not retail’s next secret sauce.

Running a non-food retail chain is nothing like running a pizza business. This is a non-trivial distraction from core business despite any illusory projections on how pizza may boost the customer experience without addressing and investing in the core reason why a shopper enters an Urban Outfitters store or visits their website.

I highly doubt the Urban Outfitters decision will trigger a rush of retailers doing M&A with other pizza chains to boost sales or improve the shopper experience.

douglas haase
Guest
douglas haase
6 years 6 months ago

This is a 180, but we have instituted some 180 ideas in our own business to gain knowledge to help our total business. So I will say wait and see. I understand going out in deep water!

Ed Rosenbaum
Guest
6 years 6 months ago

Seriously? Urban Outfitters is in trouble with their main focus and they are going into the pizza business? What’s next? Will Sears and Kmart start selling cars?

Shep Hyken
Guest
6 years 6 months ago

I can see Urban Outfitters adding another line of retail stores, but a restaurant may be pushing retail limits. I’ve always believed in playing to your strengths.

I hope this works for Urban Outfitters, but I see it as a high-risk gamble. So roll the dice and try and beat the house! Good luck!

Cathy Hotka
Guest
6 years 6 months ago

Makes no sense to me. There aren’t synergies and there are no plausible opportunities to cross-sell or cross-promote. I don’t get it.

Lee Kent
Guest
6 years 6 months ago

While I like the thought, the execution remains to be seen. Remember Tommy Bahama introduced a restaurant and from my accounts, it has been successful. Not sure how many have gone into stores, but I sure have seen more free-standing Tommy Bahama Restaurants. That doesn’t speak to this concept though does it?

If URBN can open Vetri’s say next door to their stores with walk-throughs into the store, I can see how the concepts blend with their lifestyle thinking.

The jury and my 2 cents are out on this one.

Peter J. Charness
Guest
6 years 6 months ago

If it makes sense for lifestyle stores to have coffee shops as that creates a reason for their target customer to come in and spend time, then why doesn’t it make sense to do the same with some food items?

Unconventional for sure, but then conventional in this market means standing still and hoping someone doesn’t run you over. The operations isn’t easy, but you can’t tell me that the talent isn’t out there to run a small pizza joint at scale in some of their locations.

Look at the percentage of food that now occupies malls, in particular, the “outdoor – Main street” mall.

Mel Kleiman
Guest
6 years 6 months ago

When I read this, I had only two thoughts:

  1. It may be a good idea, but not a great idea. So all it will do is reduce focus.
  2. The restaurant business and the retail business are two very different businesses even though they look very similar.

BAD idea.

Martin Mehalchin
Guest
Martin Mehalchin
6 years 6 months ago

Urban Outfitters must have read the Forrester research that shows consumer discretionary spending moving away from apparel and other traditional retail categories and towards restaurants and entertainment.

However, I agree with the other panelists and don’t see this as a good move. Urban Outfitters has stumbled lately, including the shutdown of their last diversification play, the athleisure line Without Walls. The Vetri acquisition will only further distract from a focus on the core business.

Craig Sundstrom
Guest
6 years 6 months ago

Coincidently, METV had on the other day the “I Love Lucy” episode where the gang buys a diner, thinking how fun it will be to run, and end up selling it — eagerly — back to the original owner… for a loss. Just saying.

I agree with the others here, this seems like a brainstorm from some bright mind at HQ that no one has learned to say no to. Sounds great ’til they face the reality of lease and zoning restrictions, or someone drops a slice onto a rack of clothing … can marinara stains become the next hot seller?

Patricia Vekich Waldron
Guest
Patricia Vekich Waldron
6 years 6 months ago

I think it makes perfect sense! As a former Philadelphia resident, I loved Terrain, including the restaurant and coffee shop. And Vetri has a great reputation and huge following. This combination can increase traffic, grow guest traffic, frequency and sales, and give URBN a whole new set of “lifestyle experiences” that can differentiate themselves from competition.

While there are lots of operational challenges that will have to overcome to bridge corporate strategy and field execution, I think it’s exciting.

Eliott Olson
Guest
Eliott Olson
6 years 6 months ago

I love the smell of pepperoni on my jeans. The red sauce on my white shirt adds an eclectic look to my image. I can leave Urban Outfitters with a brand signature that not only outperforms Tiffany blue in eye glances, but brings notice with the aroma. Next time I will ask for extra garlic.

Lee Peterson
Guest
6 years 6 months ago

I think there will be some food in flagship or hi-pro stores, for sure. It’s a great idea. Remember, we don’t have to go to stores anymore … we have to want to go to stores. A simple expression, but think about it — does having stuff stacked up to the ceiling make you want to go to a store or does a ping pong table (saw that in an Outfitters store in Chicago), a piece of pizza and a cool shirt make you want to go to a store? All retailers should be thinking creatively like this.

Besides, like La Boulange (Bay Area) was for the Starbucks guys, I’m sure the Urban guys know a great piece of Philly pizza when they have one. And so far, Urban’s a brand i trust — I’ll have two slices, please.

wpDiscuz
Braintrust
"I’m surprised at how slow other retailer have been to introduce food concepts within their store environments, particularly ones that have obvious appeal to Millennials."
"This is not retail’s next secret sauce. Running a non-food retail chain is nothing like running a pizza business. This is a non-trivial distraction from core business despite any illusory projections on how pizza may boost the customer experience."
"Seriously? Urban Outfitters is in trouble with their main focus and they are going into the pizza business? What’s next? Will Sears and Kmart start selling cars?"

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