Cover Story: The dish on how Trinity Groves helps newcomers serve up innovation

Trinity Groves’ recipe for building new restaurants defies everything the experts thought they knew about the industry

Serial restaurateur Phil Romano believes he knows the secret to satisfying the cravings of the restaurant market: Create something completely unexpected.

Romano was simply following the recipe that brought him decades of success when he teamed up with two business partners, bought a chunk of land in a neglected area of West Dallas and set out to create Trinity Groves, which may be the nation’s first restaurant incubator.

“There’s a whole new era that needs new concepts,” he said about the restaurant industry that’s now being heavily influenced by millenials. “They don’t like anything we did. They don’t like our food, clothes, government or to be told how to live their lives. They want to change the dynamics.”

That’s exactly what he and his partners, Stuart Fitts and Butch McGregor, set out to do: Feed a hungry market by serving visionaries with the necessary financial backing and resources to put something new on the plate.

Now, the 15-acre Trinity Groves has nine independent restaurant concepts, with seven more on the way. The incubator is expected to generate about $20 million in annual revenue this year. And it’s not only changing the way a restaurant company functions in Dallas, it’s garnering attention in cities across the nation. Charlotte, Baltimore and New Orleans are in talks with Trinity Groves to build similar revitalization projects.

“In every city, there’s an area that’s old … down and dirty,” Romano, 74, said. “We go there, clean it up and give the city a new place to go.”

The incubator also could represent a shift in real estate development. Romano’s team built the project backward. Typically, housing creates the foot traffic needed to sustain restaurants. They created Trinity Groves confident that foot traffic would follow.

They didn’t know how right they were. Now Trinity Groves and developers Roger Staubach and Robert Shaw are working on a $100 million plan to add 1,000 apartments — and eventually offices, retailers and an amphitheater — to the property.

Small wonder the Trinity Groves strategy has the area buzzing.

“Successes breeds success,” said John Crawford, CEO of Downtown Dallas Inc., adding the development has raised the real estate values. “As people are more exposed to that, they’re going to be more exposed to Bishop Arts and downtown.”

Trinity Groves’ first restaurant, Babb Brothers BBQ & Blues, opened in November 2012 and the incubator was in full operation by January of this year. But the idea for Trinity Groves started about 10 years ago when Romano called his longtime friend and venture capitalist Fitts, 49, suggesting they buy land near the Trinity River. At the time, the area was earmarked for future revitalization.

“We didn’t have a clue what we were going to do with it,” Fitts said. They believed it was where Dallas would expand next. “It was a long-term investment.”

The pair brought in McGregor, 66, whom Fitts knew was already investing in West Dallas. Over the next several years, the trio’s then-newly formed West Dallas Investments bought 80 acres of land for between $35 million and $40 million, Romano said.

Together, they developed a business plan for an incubator with a clear message for its new eggs: We’ll give you $500,000 in capital from a $9 million Trinity Groves Entrepreneur Fund, along with guidance and a back-of-the-house financial operations team led by Bob Sambol, founder of Bob’s Steak & Chop House, and 2,500 square feet of space. In exchange, the partners get a 50 percent share of every new restaurant. Each concept is expected to generate at least $1.5 million in yearly revenue to stay in the program.

For Romano, it was a restaurateur’s dream. Here was a chance to build a business without any capital that could expand to multiple locations.

“Right now it’s a very challenging marketplace,” said Bonnie Riggs, restaurant analyst for The NPD Group. She noted that the industry is expected to grow less than half a percent every year until 2020. “This sounds like a good launching pad to understand if you have a viable concept or not.”

The move garnered industry attention, but also raised a lot of questions.

“The restaurant industry relies on innovation to remain on the cutting edge to provide customers new and engaging experiences,” said Christin Fernandez, a spokeswoman for the National Restaurant Association.

But Jeffrey Yarbrough, former CEO of Brinker international and former president of the Texas Restaurant Association, says he wonders if the model allows the restaurateurs to thrive off the concepts they created.

He also wonders what kind of restrictions they face if they want to take on other projects.

“As an entrepreneur, I need freedom,” he said. “To an entrepreneur with zero experience, it might look like opportunity. But they should really make sure they look at every detail.”

It’s still too early to tell how Trinity Groves will fare in the long run.

Industry experts at NPD and the restaurant association haven’t seen anything else like it.

Even Trinity Groves’ founders are still trying to grasp exactly what they’ve created.

“We’re having to learn on the fly,” said Fitts. “We still don’t know how its all going to play out.”

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