When a customer walks through the doors of the 50,000 sq-ft Eataly on Madison Avenue, the first thing he will see is masses of people. With 10,000+ visiting this location alone every day, it’s hard to ignore the fanfare. But once he decides to journey through, he is immediately transported across the Atlantic to a traditional Italian marketplace. An impressive butcher shop sits aside a mecca of cheese wheels, which is bookmarked between walls of olive oil and homemade pastas, all behind the grab-and-go gelato station, around the corner from the plush produce section and six different restaurants. You get the point. Eataly is a museum of Italian food, but one that allows the customer to taste, smell, learn and buy. It’s an experience! And certainly one that customers are willing to pay for…
Founded by Oscar Farinetti, Eataly boasts 27 locations, some considered the largest Italian marketplaces in the world. Eataly has seen incredible success to date because it effectively drives alignment between its business and operating models. Its core competency lies in its ability not only to re-engineer what the ultimate food experience should look like in 2015, but also to execute this mission.
Eataly’s innovative business model is a product of three things:
- Evolving consumer preferences: consumers are becoming ever more demanding of their dining experiences, often expecting more than just a meal. Willingness to pay for customization, customer service, variety, and unique experiences has increased exponentially with the rise of social media. Eataly capitalizes on this trend by offering a multi-outlet concept where customers come to the marketplace for more reasons that just a meal.
- Ripe high-end culinary market: Survival and even success through a recession by gourmet grocery shops such as Whole Foods and Dean & Deluca is unyielding proof that there is a developed market for high-end gastronomy. Along the same line, “foodies” have played a large role in commercialize some of the more obscure food items and restaurants via social media. Eataly’s incredibly high-quality food products and experiential components fit the mold for these consumers.
- Commitment to traditional Italian cuisine: There is a reason Italian restaurants find their way into every international city. The culture and cuisine warrant attention. But Eataly has taken the Italian culinary experience to an entirely different level, differentiating itself from restaurants and markets by elevating the concept of food retail. Eataly has pledged to capture the essence of Italian culture not only through its restaurants, but also through its vivid displays, home-style product offerings, exceptional customer service and transfer of knowledge.
Eataly’s business model is an incredibly attractive value proposition that has proven to be innovative, successful, and scalable. A business model, however, is only as good as its execution. Luckily, Farinetti got it right.
Eataly utilizes enormous spaces in high-traffic areas to translate what is an innovative business into bottom line profits. These large spaces help fulfill the three tenants of Eataly.
- EAT: Eataly offers plenty of outlets for consumers to get their hands on Italian cuisine – from full-service restaurants, to to-go counters, to standing fast-casual tables. Their product offering is extensive and everything “traditional Italian” one might think of – think gelato, pasta, fish, cheese, meat, produce, coffee, pastries, Nutella and wine. The full gamete is designed to broaden potential market size. This is most obvious in Eataly’s range of price differentials (from $ to $$$$) among eating establishments. Additionally, the eating spaces offer different types of experiences, such as indoor or outdoor, standing or sitting, and food or liquor-focused.
- SHOP: There are numerous retail opportunities throughout Eataly, representing the marketplace. Although not as high of a revenue-generator as EAT, the shopping component of Eataly certainly racks in a large sum of profits as well as loyal customers who might find time to EAT and LEARN as well. The shops also provide the restaurants flexibility as they can immediately address any shortage of inventory.
- LEARN: Eataly provides many opportunities for both staff and consumers to learn about Italian cuisine through demonstrations, tastings and special events. These are all heavily promoted in-store and via social media.
This operating model enables Eataly to offer a unique experience for its customers while maintaining extremely high-quality service and products. Eataly’s successful integration of business and operating models has been met with handsome rewards, with the New York location alone taking in over $85mm in annual revenue last year. Rewards are beyond just monetary for Farinetti though. He’s got bigger fish to fry ahead.
- Eataly, https://www.eataly.com/
- Eataly Charms the World with Italian Fare and Flair, by Austin Carr, http://www.fastcompany.com/3041563/most-innovative-companies-2015/eataly-charms-the-world-with-italian-fare-and-flair
- Eataly Elevates Food Retail, Tastes Success. What’s Next? by Jason Ankeny, http://www.entrepreneur.com/article/238389
- Eataly: Retail on a mission by Jessica Bicknell, http://name-aam.org/uploads/downloadables/EXH.spg_11/9%20EXH_spg11_EatalyRetail%20on%20a%20Mission_Bicknell.pdf
- The Business of Eataly: How Restaurants & Retail Drive Revenue Together, by Olivia Terenzio, http://openforbusiness.opentable.com/features/the-business-of-eataly-how-restaurants-retail-drive-revenue-together/