Salt & Straw accepts substantial investment from New York restaurant group

Salt & Straw investment from Danny Meyer's Union Square Hospitality Group and Affiliates

Salt & Straw, the Portland-based chain of small-batch ice cream shops known for its handsome shops, friendly service and unconventional flavors, has accepted a substantial investment from noted New York restaurateur Danny Meyer’s Union Square Hospitality Group and Affiliates, Salt & Straw CEO Kim Malek told The Oregonian/OregonLive.

Some details of the investment, including the amount, were not immediately disclosed. Malek said the funds initially would be used to hire and train staff and shore up infrastructure, including building “state-of-the-art” commercial kitchens in Portland and San Francisco. Kim and cousin Tyler Malek, Salt & Straw‘s co-founder and head ice cream maker, will retain majority control of the company.

“We actually have long-term contracts and plans in place,” Kim Malek says. “We’re not going anywhere. If anything, this was an investment in us personally.”

In the short term, Salt & Straw will complete plans to open its first Seattle location and a second in San Francisco, joining five in Los Angeles and three — plus the Malek’s lone soft-serve shop, Wiz Bang Bar — in Portland. The Maleks are scouting for a commercial kitchen in San Francisco, a prospect that could cost “millions of dollars” alone, Malek says. And later this year, the company plans to move its Portland production to a new 15,000-square-foot kitchen in the Central Eastside Industrial District.

But future growth is in the cards. Despite his background in mid- and upscale dining, Meyer is probably best known outside New York for Shake Shack, the fast-casual burger chain that has gone from a food cart to a public offering and locations in 18 states and 12 countries across three continents. (Meyer also made national headlines two years ago by ditching tipping at many of Union Square Hospitality Group’s restaurants.) The group’s first external investment was in Joe Coffee, a New York-based specialty coffee roaster that went on to announce plans to open five new Eastern Seaboard cafes. Salt & Straw is the group’s first investment outside New York.

Thursday, the Maleks will be on hand at Manhattan’s Daily Provisions, the casual cafe and bakery next to Meyer’s Union Square Cafe, scooping New York-themed Salt & Straw ice cream flavors including a Salted Caraway Rye and Strawberry Cheesecake made in Portland using Oregon strawberries and Daily Provisions bread. According to New York magazine’s GrubStreet blog, plans are underway to roll out single-serve cups and scoops at the Meyer-run restaurant and cafe at New York’s Whitney Museum of American Art.

Though signs seem to point to an upcoming Salt & Straw expansion to New York — or, perhaps, Salt & Straw ice cream at Shake Shack restaurants worldwide — Malek says that’s not in the immediate future. During meetings with Meyer and his team this week, Malek plans to talk about “slowing down a little bit, investing in infrastructure to support future growth.”

“I can sincerely tell you that that (a New York location) is really far away,” Malek says. “I like to stay a little closer to home. I suppose we could be talked into whatever, but there are no site plans right now.”

Like Shake Shack, Salt & Straw debuted as a food cart, serving scoops on Northeast Alberta Street near the company’s still-under-construction original shop and drawing instant buzz for their locally sourced ingredients and occasionally outlandish flavors. (Anyone for more Salted Caramel Thanksgiving Turkey?) From there, the Maleks expanded to Southeast and Northwest Portland, then to Los Angeles, drawing lines almost everywhere they landed. Last year, Kim Malek’s former boss, Starbucks then-CEO Howard Schultz, toured Salt & Straw’s Portland facilities, coming away impressed. Danny Meyer has visited Salt & Straw’s Los Angeles locations, but has yet to come to Portland.

Malek says her relationship with Meyer goes back to the early days of Salt & Straw, when she and store manager Casey Milligan flew to New York to attend the group’s hospitality training course.

“I looked at Casey and said, ‘You know what this is like, it’s like when you go to doggie obedience school and it dawns on you, it’s not for the dog, it’s for you,'” Malek says.

Tyler Malek took the course six months later, and soon Meyer’s hospitality manifesto, “Setting the Table,” became required reading for Salt & Straw staff. Milligan came up with the idea of a “Salt & Straw University,” a quarterly management training session inspired by Union Square Hospitality Group’s program. All the while, the Maleks peppered Meyer’s team with questions: how to structure their HR department, how to set up a supply chain, how to negotiate their deal to open a kiosk in the Trail Blazers arena.

“Every time we would call them they would point out the right person in their company and spend a not insignificant amount of time helping us,” Malek says. “They are sincerely generous at all different levels.”

But they didn’t know Meyer was interested in investing until he called.

The question before the Maleks now is how to grow Salt & Straw without sacrificing its culture. Over the past five years, Portlanders have watched beloved food businesses such as Kettleman’s Bagel Co. and Stumptown Coffee Roasters get gobbled up by out-of-town giants. The equation gets further complicated by the way these businesses are linked to and draped in Portland identity. How does Salt & Straw get bigger without sacrificing its “farm-to-cone” philosophy?

According to Tyler Malek, that process starts by continuing to produce ice cream in small batches, folding in ingredients by hand and developing localized menu for each new city they open in. Despite plans to move into a Southeast Second Avenue showroom kitchen four times the size of their current digs, the Maleks say they’ll continue using their three five- and 10-gallon ice cream machines.

“I was laughing,” Kim Malek says,”thinking of all the money we’re investing and then not buying a single new machine.”

And Kim Malek says there’s no better partner to help Salt & Straw navigate this rocky terrain.

“Now we have money, we can open stores, we can open kitchens, but people is the hard thing,” Malek says. “They’re sharing with us how they do goal setting and how they evolve people into manager roles, and it’s such a gift to get to learn all of this. They really do know what they’re doing.”

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