Urban Outfitters, the clothing empire built on skinny jeans, just announced an unlikely acquisition: The Vetri Family. This group of Italian restaurants is based in Philadelphia just like the clothing brand.
The seemingly sudden move was met with investor worry and company stock closed at more than 7% lower on Monday, The Washington Post reported. However, the reason behind the acquisition is nothing more than economics.
Urban Outfitters has seen decreasing foot traffic in its stores and its most recent quarterly earnings only saw a modest 1% increase in comparable sales. This measure excluded stores which have either recently opened or closed.
Meanwhile, restaurants have been showing some of the strongest growth of any retail category and consumers have been observed to be dining out more often. This, coupled with the lightning-fast rise of fast-casual restaurants like Chipotle and Panera Bread, which show consumer preference for healthier options, make the restaurant business a very attractive one.
The Vetri Family owns restaurants like Osteria and Alla Spina. And, as CNN Money described the group, “It's not exactly the type that hung-over college students order in the early-morning hours. Food & Wine magazine named Pizzeria Vetri as one of the best pizza places in the United States.”
Urban Outfitters is betting on the idea that people are willing to spend on experiences like dining out yet rein in spending on things like apparel and accessories. They are hoping “that an experience-based retail concept might be a boon for an ailing business whose stock has tumbled some 36 percent this year.”
Combining restaurants with shopping experiences is nothing new, as Quartz pointed out. Ralph Lauren opened the well-received Polo Bar earlier this year while Macy's has always had them. The company also has some experience running restaurants like their new UO Cafe in Herald Square, so this may have also emboldened their acquisition of The Vetri Family for an undisclosed amount.
