While the world’s wealthiest snap up mega-yachts and sports teams, some have recently settled on another expensive hobby: owning a hangout in the Hamptons.
With rents through the roof and a business calendar that’s painfully slow outside the summer, only the bravest entrepreneur would consider opening a bar, restaurant or coffee shop on Long Island’s posh East End.
That’s why deep-pocketed hobbyists with money to burn are becoming increasingly important players on the scene, sources told On The Money. What’s more, they are going all out, finishing their venues with eye-poppingly lavish decor and furniture.
“These billionaires are offering an exquisite experience — you are sitting on gorgeous leather, the table you are sitting at probably costs more than someone’s car, and the plate probably costs more than what you are wearing,” Sen Japanese restaurant owner Jesse Matsuoka said.
“The food is the cheapest thing you are experiencing — you are paying for the atmosphere and the staff,” adds Matsuoka, who also operates K Pasa as well as supplying the food at Lobster Inn and the Sag Harbor Cinema.
“The architecture in these restaurants is designed like someone’s home,” another source said. “These people are not changing the awning and seat covers, they’re creating an exciting experience – and that’s what people are used to.”
The imported marble from Italy in Carissa Bakery, for example, costs more than many coffee shops could hope to make in a year. The commercial real estate which will house Jack’s Coffee on Main Street cost $7 million for the space alone, according to sources close to the deal. That’s a lot of lattes.
Le Bilboquet in Sag Harbor is owned by billionaire Ron Perelman and investor Steve Witkoff. Duryea’s in Montauk and Lulu Kitchen and Bar in Sag Harbor is owned by CEO of Apollo Group Marc Rowan. Carissa’s Bakery was started with funding from Alexandre Chemla, who started travel agency Altour International.
Alden Global Capital’s Heath Freeman owns posh hotel EHP Resort which includes popular restaurant SiSi and Donna Karan owns Tutto Il Giorno. Buzzy new restaurant Mavericks Montauk was just launched by a consortium of investors.
“It does help with relevance,” a source adds. “You’re always going to have people texting you asking for the corner table.”
At the recently opened Léon 1909 in Shelter Island, created by Valerie and Robert Mnuchin (sister and father of former Treasury Secretary Steve Mnuchin) the wood chairs are collector’s items created by German-Austrian cabinet maker Michael Thonet, the dining room tables are created by a local Shelter Island vendor, and the leather chairs are Spanish made Sol and Luna which sell for north of $1,000 each.
“I thought about the interiors of the restaurant like I would be decorating my home. Elegant, comfortable, warm, and someplace you would want to relax, stay a while, and eat great food,” Valerie Mnuchin told On The Money.
The median home price on Shelter Island is $2.3 million, which means most staff are forced to live off the island and must not only own cars but also take a $30 ferry every day. That adds up quickly when it comes to payroll.
“We’ve seen a lot of restaurants come and go but the staying power is with people who have deep pockets to get through slower seasons like the winter,” Matsuoka added.
Indeed, many operators trying to make a bottom line simply can’t operate out east. Unlike New York City, restaurants in the Hamptons have fewer than 16 weekends a year to make their money which means prices during the summer typically skyrocket.
Competing with the 1% makes it difficult for other restaurateurs to keep up.
“They can hire people at rates that are uncompetitive… that’s not a fight I can win,” Jesse adds. “I can’t compete when they’re paying servers well over $2,000 a week.”
These people have had to consider more creative ways of attracting employees.
“We offer yoga classes through the season, we do barbecues, and pool parties. We also offer affordable housing year-round.”