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On the waterfront: Hoboken, N.J. offers an alternative to the crowded Manhattan restaurant scene.

In 1846, Hoboken, N.J. hosted the first official baseball game for elite Manhattan spectators. Since then, Hoboken's industries and population have reinvented themselves several times over. But the town's ties to Manhattan and the popularity of the city as a bedroom community never have waned.

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Hoboken is an urban community located just 10 minutes across the Hudson River from Manhattan. Its myriad bars and restaurants--with more than 150 liquor licenses within one square mile--are a holdover from its nineteenth century shipyard days. The city also was a major manufacturing center, home to German and Italian immigrants, the birthplace of Frank Sinatra and, since the 1980s, a haven for young adults seeking alternatives to escalating Manhattan rents.

Hoboken's population started to diversify in the mid 1990s, but many of the city's square mile of casual bars and restaurants still targeted a younger populace. After 20 years of governmental haggling, a mixed-use Hudson River waterfront development to address the area's changing demographics finally was built. A few years later the project's restaurants were hit by the biggest recession in 25 years--in a town that many Wall Street workers call home. The project's big draw, a new W Hotel, did not open until March, 2009.

"Hoboken used to be about casual bars where people would go in jeans and sneakers," says Kerri Ann Sweeten, general manager and managing partner at 3 Forty Grill, a waterfront seafood establishment that serves Martinis and is doubling its wine list. "People would get married, have kids and leave. Now there are a lot of children and an older crowd due to all the condo development."

3 Forty, one of the project's first restaurants, opened six years ago. Sweeten and other tenants had to wait more than a decade for the project to be approved. But Hoboken's plethora of "grandfathered" liquor licenses already was three times the state quota. This and other issues put the $600 million development on hold. Plans also called for residential towers, office space, the 300-room W, development of two large piers and seven more acres of waterfront parkland.

In the late 1990s, it was decided that six waterfront operators would be granted liquor licenses, along with the W, since 100-plus room hotels are exempt from the licensee count, says Michael Stone, senior director of retail services for Cushman & Wakefield, one of the project's leasing agents.

Ground was broken in early 2000. Today, the project is roughly 80 percent complete. There are four full-service waterfront restaurants plus the W Hotel. The W's restaurant, Zylo, was designed by Bentel & Bentel. It includes Salumeri, a bar and lounge area, and a 50-seat dining room. The Living Room, a lobby bar and the Chandelier Room, a traditional bar and lounge, also are part of the W, which is part of the White Plains, N.Y.-based Starwood Hotels & Resorts.

NEW JERSEY VIEWS

Located on Sinatra Drive, restaurant spaces offer loading docks, dining space and covered parking. All have sidewalk cafes and floor-to-ceiling windows with direct views of the Manhattan skyline and Hudson River. Most of the historic buildings on Washington Street, Hoboken's main drag, lack these amenities.

While food and beverage menus vary, all the waterfront restaurants emphasize extensive wine lists, upscale cocktails and small batch spirits. Most entrees are under $30; cocktails hit their ceiling at about $13. Decor leans toward the sophisticated and eclectic.

Michael Barry, president of Ironstate Holdings, LLC, an affiliate of Hoboken Hotel LLC, developer and owner of the W Hotel, believes restaurants--and the new W--are cost effective alternatives to Manhattan dining. In general, Hoboken products and services cost 30 percent less than their Manhattan counterparts.

"It's not like a top New York City restaurant where you're going to spend a fortune and go every now and again," adds Barry. Unlike the young Washington Street crowd, waterfront customers are in their 30s, 40s, 50s and beyond.

Waterfront restaurants also are privately owned, including the franchised Melting Pot and W's leased operations. Most owners also own businesses in Manhattan or Hoboken and the surrounding towns.

THE DINING MIX

Many diners come from Hoboken and surrounding New Jersey towns. Availability of parking has been a big impetus for the latter group. Many guests venture to the waterfront instead of Manhattan.

"You would pay a lot more for waterfront dining in Manhattan," says Richie Brown, owner of ship-themed seafood restaurant The Quay's Bar & Restaurant. Restaurants, he adds, are seeing some New York City tourists and tour groups coming to take in the views.

Warm weather also brings diners, particularly on Saturday and Sunday afternoons. "There's always something happening along the waterfront," says Bob Margait, franchise business consultant, Northeast, for the fondue-themed Melting Pot, an approximately 140-location chain based in Tampa, Fla. Lunch, he adds, is part of Melting Pot's Hoboken business, which is usual for the concept.

Still, weekdays are slow. While everybody says business is holding its own, it is clear operators are concerned about foot traffic. The waterfront is off the beaten track from Washington Street. Plus, the recession has not been kind to many of the financial sector workers who call Hoboken home. Most waterfront restaurants stage happy hours and other discounted drink events on week nights. Bar menus offer burgers and other foods for under $13.

A few have revamped their entire pricing structure; the Quay's entrees were priced in the upper $20s, and they included red snapper and Chilean sea bass. These now have been replaced by salmon and cod, priced around $24. "We look fancy, but we try to stay away from the high end," he adds.

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The W reengineered pricing at its bars and restaurants before the hotel even opened. "With the market collapsing, we had to scale back," says Joan Kremer, Starwood's director of food and beverage for North America. "But we are still going into Hoboken aggressively."

THE W FACTOR

Most operators view the W as their saving grace. They expect it to beef up high-end and mid-week traffic. "We're hoping the W will bring extra mid-week business," says Brown, who also owns Oddfellows, a restaurant featuring Louisiana fare. Statistically, he adds, mid-week hotel guests stay an average of three nights. They eat at the hotel one night and "venture out" on the other two.

Operators also should benefit from the W's marketing machine. Melting Pot's Margait believes that the W, along with the whole waterfront development, needs to be aggressively promoted as a Manhattan alternative. This must be done nationally. "Our survival depends on promoting the project outside of Hoboken ... But, we are certainly in a decent financial position to grow once we get over this bubble."

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While some operators seem frustrated with the waterfront's slower than expected performance, all are seasoned restaurateurs who knew they were making long-term investments.

"A lot of people looked at these spaces. They knew it would be a few years before the hotel opened, and wondered if they would survive until then. We take it day by day. It's not bad at the moment, and the landlords have worked with us when times were hard."

While conditions are not perfect, the waterfront is a far cry from the mass of rotting wooden piers and washed up river debris of just a decade ago. "A few years ago, [partner] Jerry [Maher] and I were looking at the space," says 3 Forty's Sweeten. "We were looking outside and there was nothing there."

Deborah A. Garbato is a New York-based freelance writer and a former editor of Cheers.

Another Round

Discover the Hoboken wine scene at 3 Forty Grill and elsewhere by visiting Cheersonline.com/more.
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Title Annotation:Market Profile
Author:Garbato, Deborah A.
Publication:Cheers
Date:May 1, 2009
Words:1271
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