By PAM GEORGE
Special to Delaware Business Times
When it comes to expansion, many Delaware restaurateurs are taking a north-south approach. Iron Hill Brewery & Restaurant, for instance, is scheduled to open in Rehoboth Beach in May. The concept started in 1996 in Newark, and until recently, it’s expanded in the Greater Philadelphia region. However, a site will also open this spring in Greenville, South Carolina.
In southern Delaware, Rehoboth Beach-based La Vida Hospitality, which opened Crooked Hammock Brewery in fall 2015, is eyeing Middletown for a second location.
But it’s not always easy to set up shop across city, county or state lines. “Every state is different,” said Kevin Finn, president of Iron Hill Brewery & Restaurant, “and when you add the brewery component, it makes it even more complicated.”
Expansion has been part of Iron Hill’s mindset from the start. After Newark, the company opened in Media and West Chester, Pennsylvania, before debuting an Iron Hill on the Wilmington Riverfront.
The growth accelerated after Iron Hill partnered with the Connecticut-based investment firm A&M Capital Opportunities in 2016. When the current projects are complete, Iron Hill will have 16 locations.
Iron Hill is going south partly because there aren’t many properties in the Philly region that can handle its footprint, Finn said. The Rehoboth site, built from the ground up, will occupy 8,500 square feet. The South Carolina restaurant is over 7,500.
Finn said the growing number of full-time beach residents also helped prompt the decision to open in Rehoboth.
Demographics and liquor licenses
But for a beach restaurant, heading north can help offset seasonal fluctuations. Launched in Rehoboth, Big Fish Restaurant Group opened its second Big Fish Grill on the Wilmington Riverfront and a third in Glen Mills, Pennsylvania. (A fourth Big Fish opened last year in Ocean View near Bethany Beach.)
Ambitious restaurateurs also look for opportunities to plug a niche. “What restaurants are there? Would my restaurant work?” said Lisa DiFebo-Osias, owner of DiFebo’s, a Bethany Beach staple since 1989. She recently opened in Berlin, Maryland, after finding success with a Rehoboth Beach site.
Demographics are particularly important for a brewpub. Delaware only allows three of any one concept. Crooked Hammock’s design includes a play area for adults and kids. Family-friendly Middletown seems like an ideal area for a second site, said Josh Grapski, managing partner of La Vida Hospitality.
Pennsylvania has no restrictions on the number of brewpubs. But there are other issues.
Restaurants and brewpubs must work with the Pennsylvania Liquor Control Board. “It’s a challenge for lots of reasons,” Finn said.
The PLCB controls the sale of spirits and wine and grants liquor licenses. Based upon the 10-year census, one retail liquor license is available for every 3,000 inhabitants in a county. Once the quota is met, no new liquor licenses are issued. (Hence the high number of BYOs in Philly.)
Wages and blood alcohol limits
Finn is concerned about bills in the Delaware Legislature that might lower the blood alcohol limit and raise the minimum wage.
When he opened in Berlin, Jeff Hamer of Fins Ale House & Raw Bar didn’t expect Maryland’s minimum wage to rise to $10.10 an hour from $9.25, which happens July 1.
“It artificially drives up everybody’s pay,” Hamer said. “How do you make up the difference without raising [food] prices?” It will affect hiring in that area, said Hamer, who has locations in Bethany and Rehoboth and is looking at Milford next.
Restaurateurs opening in different cities, counties and states must also adjust to the area’s dining personality. Because Fins Ale House & Raw Bar in Berlin is a neighborhood spot and not a tourist destination, burgers, chicken-and-dumplings and sandwiches sell well — despite the fact Fins is known for seafood.
DiFebo-Osias sees differences even between Rehoboth and Bethany Beach. “One of my best sellers in Rehoboth is my rabbit dish,” said DiFebo-Osias. “I couldn’t sell rabbit in Bethany Beach to save my life.”
DiFebo-Osias, who lives in the Bethany Beach area, can easily get to Berlin or Rehoboth to oversee operations. There are other advantages to living near multiple restaurants. When Warren Rosenfeld opened a second Rosenfeld’s Jewish Deli in Rehoboth Beach, he used the same contractors who worked on the original Ocean City, Maryland, location.
Rosenfeld, who lives near Ocean City, has been considering a North Wilmington site, but the distance might be an issue. “There’s no replacement being on site couple of days a week,” he said.