A Student Union for Adults, Since 1989
“My parents were New Yorkers who believed that New York was the center of the world. I believed, as I had been taught by my parents, hat [sic] the best ingredients in the world were shipped to New York and Paris.” When Martha, Patachou Inc.’s founder, relocated to central Indiana, she quickly noticed how close proximity to farm ingredients could affect food quality, “The best tomatoes, melons, wheat—the best beef, turkeys and pork—were being raised on the farms in Indiana.” In fact, Indiana, with 83% of the state’s land dedicated to farms and forests, ranks tenth in total value of agricultural products sold among US states and is in the top five for pork, corn, and soybeans. An opportunity existed, “I was dumbfounded that a restaurateur in Indiana could not make the leap from the best ingredients to the best food.” and so Patachou Inc. (Patachou) was born.
Founded by Martha Hoover in 1989, Patachou opened its first location, Cafe Patachou at the corner of 49th and Penn in Indianapolis, IN in 1990. In the 25 years since, the business has expanded to four restaurant concepts, a catering and packaged goods business, a food truck, and Martha’s restaurant consultancy while retaining its goal of preparing simple food using high quality (often local) ingredients.
The Operating Model
Cafe Patachou, Patachou’s original restaurant concept, currently has 86 food items on its menu, including seemingly endless combinations such as build-your-own omelet, custom soup and salad combinations, and 20 mix-in or add-on ingredients. Despite the sheer number of menu options offered to customers, Patachou limits inventory of raw ingredients to a manageable level. First, all raw ingredients are repurposed in several menu items to reduce the number of ingredients required. Indiana Kitchen’s Bacon, for instance, appears on the menu 16 times. Second, local producers provide frequent (usually daily) shipments directly to each restaurant while minimizing travel distance. This eliminates the need for large refrigerators, freezers, and pantry spaces to hold raw materials and reduces energy consumption at the restaurants.
Patachou operates a ‘no refill’ drink model. When guests arrive at Cafe Patachou, they help themselves to one of five artisan coffees while relaxing in the cafe’s ‘buffer’ lounge for a table. At the table, guests are provided a 1.5 litre bottle of filtered tap water to share and can continue to help themselves to unlimited coffee. Soft drinks (or as they say in Indiana, ‘Pops’) are provided in cans and require repurchase for refills, an inconvenience customers do not seem to mind given the restaurant’s European feel. All of this is in place to reduce/eliminate the need for servers to refill guest’s drinks while maintaining the ‘student union’ atmosphere and guest satisfaction.
For Cafe Patachou’s downtown and airport locations, where real estate comes at a premium, Patachou selected retail spaces adjoining massive common spaces. Since these spaces double as a rent-free waiting areas for guests, Patachou eliminated the lounges and placed the coffee and cocktail bars near the lobby and terminal entrances.
The Business Model
Patachou’s customers expect made-from-scratch dishes prepared with premium often organic local ingredients. Dishes are prepared and served by well-trained team members. Premium ingredients and service help Patachou justify higher than market prices. One breakfast sandwich, with salmon and bacon, will set you back $17.50 (high by Central Indiana standards).
Patachou’s commitment to community builds trust and loyalty with customers. The Patachou Foundation serves “meals to children impacted by homelessness and hunger.” All proceeds from Public Greens, the firm’s newest restaurant concept, and Cafe Patachou’s “The Full Bellied Pig” sandwich fund the foundation. In addition, Patachou’s sourcing strategy helps other local businesses and producers, while green initiatives also contribute to the firm’s surplus of goodwill.
Bringing it all together.
In most ways Patachou is a winner. The firm’s operating model like frequent shipments of local ingredients adds to the company’s brand and product quality. Its commitment to community and sustainable business practices build customer loyalty. However, scalability is difficult with local sourcing. Growth through expansion requires the firm to choose between high cannibalization when building near existing restaurants and decreased operational efficiency and quality when building far away. For these reasons, expansion has been slow and has largely come from growth in the Indianapolis metro area with new restaurant concepts, a strategy aimed at reducing cannibalization.