Philly's trend-setting restaurants hike their hours but not their profits

When you sit on prime land, does it make sense to operate as a morning coffeehouse, a lunch counter, and a restaurant?

Venues such as Double Knot, Talula's Daily, and Hungry Pigeon are making a run of it.

All three attract a broad clientele all day. But risks are high. Restaurateurs can lose their lunch, so to speak, if it's not executed carefully.

While hybrid all-day restaurants are nothing new, the concept is growing more common. "This has been a very prevalent trend," said Vincent Stipo, hospitality specialist at Philadelphia brokerage MSC Retail. It arrives as coffee, beer, and wine "have turned craft" and met similar demands as food and cocktails.

Diners have offered three meals forever and many restaurants are open for two. But these recent hybrids cover all three: breakfast, lunch and dinner. High Street on Market, an artisanal bakery/restaurant, and Res Ipsa, an all-day café that serves southern Italian dinners, also fit the mold.

Experts say that tastes have evolved and that Americans no longer eat at traditional times, emboldening risk takers.

"To us, it was about creating an unrivaled experience," said Nina Tinari-Schulson, chief operating officer of Schulson Collective, which owns Double Knot, the venue that she and her husband, chef Michael Schulson, opened last year. But, she noted, longer hours raise costs.

These places say labor makes up about 30 percent to 35 percent of their budgets. They generally know what to expect, based on history and demand, and can send hourly workers home during slow times. "A simple example is the snowstorm," said Ellen Yin, owner of High Street Hospitality Group, which runs High Street at Market. "We expected lower business so we reduced the number of hourly paid staff that day."

That works up to a point. At Hungry Pigeon, a café/restaurant on Fabric Row in Queen Village, the longer day has been "better for sales, definitely. Better for costs, no way," said night chef Scott Schroeder, who shares duties with his partner, pastry chef Pat O'Malley. "Labor is double what we expected, sales are not. Queen Village is a great neighborhood and there weren't too many options for breakfast and lunch. Dinner is good, but we would like that to build some. It's still a bit of the missing piece that would make the labor make sense."

With rental rates rising here, longer hours come with advantages, at least in theory.

"Restaurants have fixed occupancy costs while labor is variable," said David Orkin, head of CBRE Inc.'s restaurant practice for the Americas. A longer day enables owners "to maximize the investment."

Double Knot's day goes like this: Act 1 at 7 a.m. as coffee shop with house-made baked goods on the counters; Act 2 at 10 a.m. as a fast-casual lunch destination; Act 3 is happy hour from 4 p.m. to 7 p.m.; and Act 4, after 5 p.m., is a candlelit venue.

"Dinner has the highest check average, followed by lunch, and the softest is breakfast, as there is a lot of competition," Tinari-Schulson said.

This is not for the fainthearted. "I have seen this model fail due to a lack of successful marketing and PR behind a dual brand," Stipo said. The morning coffee drinker "is very different from the customer that stops by for a cocktail and dinner at 9 p.m."

Another disadvantage? It requires more staff.

During the day on weekdays, there is counter service at Hungry Pigeon, much like a coffeehouse with a barista, cashier, and food runner, Schroeder said. "Evenings and brunch have servers, bartenders, as well as a food runner, barback [bartender's assistant], and barista.

"It operates completely different and requires totally different staffing," he said.

At Double Knot, an opening manager, baristas, and pastry chef and team make the pastries and danishes in the morning. For lunch, food runners, servers, and cooks are added to complement the baristas. When happy hour hits, Tinari-Schulson said, more servers and bartenders are added upstairs. At 5 p.m., a full staff deploys upstairs and downstairs, consisting of sushi chefs, more managers, bartenders, barbacks, servers, and runners.

"We do not get the cost savings because we aren't serving the same product throughout the day," said Tinari-Schulson, who noted that bulk discounts come from having multiple restaurants. Last fall, she and her husband also opened Harp & Crown on Sansom Street, a bar-restaurant with two bowling lanes.

At Talula's Daily on Washington Square and next door at Talula's Garden,  coffee baristas run the morning. Cheesemongers are in slots at times when cheese sales, pickups, and catering are necessary. Baking is done 12 hours a day to keep batches small and fresh.

The entire operation employs about 150. It's a place where you can get a $4 drink, $7 sandwich, or a $150 birthday dinner for two, noted co-owner Aimee Olexy. The Daily is more a.m. volume;  the Garden serves more the dinner crowd.

"Purchasing can be more difficult with predicting velocity and sales for two large and dynamic businesses," Olexy said. "Staff scheduling has the same volatility."

Efficiency occurs "when one phone call can get the order done for both businesses."