When Philly-based retailer Urban Outfitters announced that it had bought the Vetri Restaurant Group on Monday, it sent the business world laughing.
Its stock price dropped 7.4 percent on the news.
Why, some asked, would a retailer known for marketing to millennials and hipsters with homes buy a restaurant group known for it’s pizza?
The answer may be Amazon.
The Philadelphia-based company said Monday on its 3rd-quarter earnings call that store traffic in North America had dropped 6 percent. The company says that’s because there is a “lack of newness in fashion” and that its furniture and home-goods sales are going fine.
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But some analysts point to declining store traffic at other clothing retailers, and they are wondering if consumers are increasingly relying on the internet to get what they need.
How does Vetri figure into that?
“It’s a perfect match,” says Partner/Chef Marc Vetri in a statement.
Food and Wine Magazine last year named Vetri the best pizza spot in America. And the company has already opened cafes in some of its stores.
By expanding into pizza, Urban Outfitters actually put a bigger spotlight on its existing business, Simeon Siegel, a New York-based analyst at Nomura Securities told Bloomberg.
In other words, come for the pizza, stay for the shopping.
Executives at the company point to a concept in Houston, called Space 24, that incorporates a Pizzeria Vetri, along with a burger joint, an Urban Outfitters store and a live music venue.
The company says that they could expand Pizzeria Vetri as standalone restaurants, but it’s likely that these restaurants will be incorporated into what executives call “retail-restaurant complexes.”
URBN chief development officer Dave Ziel told Philly.com that consumers are increasingly spending their money on food over retail.
“URBN will get a jump on the food game,” as part of the deal, Philly.com reported. “Integrating restaurants next to its clothing stores in so-called lifestyle centers.”
Spending on casual dining is expanding rapidly, and thus, we believe there is tremendous opportunity to expand the Pizzeria Vetri concept,” CEO Richard A. Hayne said in a statement.
Urban Outfitters Inc. owns the clothing store which shares a name, along with Free People and Anthropologie.