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What started out as a story about a new restaurant in Yountville — asking, what’s the food like at RH? — morphed into a much bigger story about what this somewhat baffling complex comprises — and why.

RH Yountville

The ambiance and design of the new 9,000-square-foot Restoration Hardware (RH) restaurant and design galleries in Yountville are exceptional. The food, however, is a diffe rent story.

But the food experience does not appear to be what these new RH design galleries (there are six of them throughout the country, with a seventh planned) are all about. Instead, these design studios/wine bars/semi-retail centers/upscale food halls form — at least in the case of Yountville — what amounts to a cacophonous collection of eye candy that appears focused on transforming the RH brand into one that appeals to a younger, albeit affluent, clientele that is drawn more toward a swanky New York hotel that doubles as an artsy disco at night (e.g., Le Bain with a few more trees and a lot more chandeliers) and away from its original clientele, who leaned more toward a wealthy-American-farmer ethos.

‘Activating all the senses’

“RH Yountville is an integration of food, wine, art and design,” Chairman and CEO Gary Friedman said during a recent interview with the San Francisco Chronicle. “[It’s also] an experience that activates all the senses — one that cannot be replicated online.”

Friedman, the company’s only spokesman, was unavailable for a comment, but his previous description to the Chronicle seems certainly true. The entire complex consists of a tasting room, multiple design galleries and a restaurant with a wine bar at one end. Outdoor open patios intersect with each building, the overhead branches of ancient and gnarled olive trees forming a lacy ceiling.

The restaurant space spills streetward with outside seating accessible through sliding doors. Each of the dining room’s interiors is glass-enclosed with white stone fountains at the center, their water cascading over upper basins to form silvery curtains around pillars of regal open-mouthed lions. Majestic olive trees stand columnlike at each of the room’s corners with a collection of crystalline chandeliers lighting the area.

Comfortable booths that line the edges of the rooms and small marble tables with rolling chairs create the effect of a chimerical Paris cafe.

The juxtaposition between the open glass walls and ceiling, flashy Las Vegas-like light fixtures, European-feeling tables, fantastical twisting trees and the rush of splashing water is stunning but more akin to a Disney ride than a relaxing spot for an intimate dinner.

Restoration Hardware — the company

Before Friedman took over RH in 2001 the company was near bankruptcy. Today RH is a publicly traded company worth over $3 billion, with nearly 90 outlets selling luxury home furnishings that include furniture, lighting, textiles, bath accessories, decor, outdoor and garden design elements, as well as baby and child products. Integrated across multiple channels of distribution — stores, catalogs and websites — the Corte Madera-based company has become known for its clean and stylish designs and its ginormous annual mail-order catalog that in 2014 reached a whopping peak weight of 17 pounds.

“No one has an offering remotely comparable,” Friedman said in explanation of the catalogs’ large size while being interviewed by the Chicago Tribune in 2014. “The catalogs are a physical manifestation that communicates the dominance and unique point of view of the brand in a way the retailer can’t online.”

This same philosophy of distancing themselves from the competition appears to manifest itself in their newest brick-and-mortar stores, too.

From brick-and-mortar to ‘lifestyle galleries’

In 1994 the online retailer Amazon debuted. At the time brick-and-mortar businesses had the lock on the $200 billion U.S. retail sector. Now retail is an over $500 billion market, with online transactions accounting for roughly 10 percent of sales and Amazon a dominant force. The result of this shift in consumer behavior to online has been devastating to many retail stalwarts such as Toys R Us, Sears and The Limited, all of which have filed for bankruptcy protection over the last few years. And there appears no end in sight for this trend. CNBC quoted a Moody’s report that listed J. Crew, Neiman Marcus and J.C. Penney also at risk of defaulting on loan payments in 2019.

Within these shifting sands RH has found itself in what amounts to a retail arms race to stay relevant and maintain as well as grow market share. One of their approaches has been to create what Friedman has referred to as “lifestyle galleries.”

With the help of the St. Helena design firm Backen, Gillam & Kroeger, within a few short years RH has built six such galleries — Chicago, New York, West Palm Beach, Toronto, Nashville and Yountville, and a seventh is planned for Corte Madera — each one containing a restaurant. Beyond these galleries the company has expanded the number of retail stores and discount outlets and has also introduced a membership model similar to Amazon Prime or Costco ($100 a year for 25 percent off all sales) that, according to the New York Times, had 405,000 members and accounted for 95 percent of yearly revenue as of September 2018.

The strategy seems to be centered around the galleries. As Friedman said during an investor presentation after the first such opening in 2015, these “next-generation design galleries” act as showrooms for the brand and help develop a relationship between online and physical platforms.

Gary Friedman — the CEO

According to The New York Times, Friedman grew up in Sonoma and was only 5 when his father passed away. He was raised in a one-bedroom apartment by his mother, who was schizophrenic and unable to work by the time he was 15. To make ends meet, Friedman worked at the Gap while he went to a community college. Taken under the wing of Millard “Mickey” Drexler, the veteran retailer who transformed the Gap into a multibillion-dollar business, Friedman rose quickly as store manager and eventually became the youngest regional Gap manager. Later, hired away by Williams Sonoma, the rising retail guru spent 14 years helping to build the billion-dollar home-furnishings brand Pottery Barn before becoming CEO of Restoration Hardware in 2001.

Now in his early 60s, Friedman is often featured as the face of the RH brand. Nicely tanned and yoga trim, he is frequently pictured wearing denim jeans, rustic-looking boots and a clean white shirt. His wrist bracelets and one of his many vintage watches provide a curated impression that reflects the clean but subtly sophisticated look of the RH brand itself. One of his homes is located in Yountville.

But the food…

The menu at the 54-seat RH Yountville restaurant is a creation of former Chicago-based chef turned RH hospitality president Brendan Sodikoff (Au Cheval, Doughnut Vault).

The food, according to the website, is “seasonally driven” and “an elevated interpretation of timeless classics that pay homage to the region’s relaxed refinement.” But to which season and what region this is referring to is unclear.

Although Sodikoff is the inspiration behind the menu, the Yountville location initially hired a chef to oversee the operations. Galen Kennemer (Denver’s Wild Catch, Old Major) opened the restaurant but he soon departed, supposedly because of the lack of creative freedom.

All of the RH restaurants around the country have nearly identical menus, each with slightly different pricing. According to the website, a kale salad costs $17 at the Yountville RH but only $14 at the Chicago RH — strange, given the weather in the Midwest. When I asked a Yountville server where the kale was farmed he proudly reported that it was “grown locally.” When I pressed as to where the farm was located he was unsure, noting reluctantly that it came from somewhere in California and arrived on a delivery truck in a plastic clamshell.

Sodikoff’s Chicago Au Cheval is known for its cheeseburgers, a version of which is offered at all the RH restaurants, costing $22 in Yountville and $24 in New York. In terms of flavor the burger is fine, but it is certainly not better than other Napa Valley examples such as that at The Charter Oak, which is both more exceptional in terms of flavor and juiciness and is also $2 cheaper.

I have eaten at RH Yountville five times. I’ve gone more times and spent more money than I normally would to ensure that my findings were not just a function of a single day, the chef/cook who was on duty or the restaurant’s having been open for only a few weeks.

The food quality has bounced around from poor to decent but has never wowed or inspired. Salads have come to the table wilted and overdressed; vegetables have been expensive and overseasoned. The meats and fish have been fine but are overpriced. The Atlantic Dover sole with brown butter, lemon and parsley has always been sold out the times I’ve been there, but it would have set me back $58 and is definitely not local. Exceptions include two appetizers: the burrata and roasted tomato salad ($22) is bright and creamy with a hint of smoke, and the crispy artichokes with rosemary aioli ($19) are crunchy, seasoned well and are a dish I’ve never encountered before but hope to again.

The ‘Wine Vault’

The restaurant’s wine list has a selection of Napa Valley producers (TOR, wines from Paul Hobbs, Opus One, Dominus, etc.), many of whom can also be found at the adjacent old Ma(i)sonry’s now turned “wine vault” across the amazingly tight parking lot from the restaurant. The focus of the list is on common varietals: Cabernet Sauvignon, Chardonnay and Pinot Noir. Corkage at the restaurant is $25 a bottle and limited to two bottles.

The entire Ma(i)sonry building has been transformed into a two-tiered tasting room surrounded by a stylish patio with dozens of sitting spaces, a large outdoor fireplace, more olive trees and an outdoor wine bar. Guests at the wine vault can sip on a curated collection of wine flights that range from $50 to $100. Initially guests could join a wine club, but on a recent visit this option seems to have been dropped. Bottles or cases can be purchased directly at the site, and on Saturdays a DJ plays “chill music,” as Friedman has told the Chronicle.

The wine vault is a conundrum to anyone who considers the business model. The numbers just don’t seem to make sense: How much wine would RH need to sell to justify the $4.1 million price tag on the Ma(i)sonry building they paid in 2015, plus what must have been millions more spent on the renovation of the building and grounds (e.g., old olive trees such as those transplanted at the site typically cost around $15,000 to $25,000 each, and there are dozens of them)?

Because of parking concerns, the town of Yountville only allows a maximum number of 30 people in the wine vault at a time and does not allow the sale or consumption of food at the wine tasting room — “At least for now,” one server told me with a wink.

Once one starts to ponder the perplexing economics of the wine-vault space, the entire RH complex becomes confusing.

The evolving use of the RH space

Four main buildings make up Yountville’s RH complex: the restaurant, the wine vault and two design showrooms.

According to an April 14, 2015, report from Yountville’s zoning and design review board, the initial plan presented by RH representatives was to develop “Building one (the RH restaurant) [to] house the limited service restaurant element as well as gallery space with 2 rear buildings set up as design showrooms…” The old Ma(i)sonry was to “maintain wine tastings and wine sales with a limited food offering…” As for parking, there would be “the construction of 30 parking spaces,” and “RH would provide valet parking in order to manage the vehicles so that residential neighborhoods in proximity would not be impacted by parking.”

But as news of the plan began to trickle out to the residents of the small hamlet of roughly 3,000 people with a fear of excessive traffic and parking on the already tight streets, the original permit restrictions were modified in an attempt to reduce the number of daily visitors. As reported by the Napa Register, the town required an increase of the total number of parking spaces to 39 and shifted the food service from a more casual concept of ordering from a counter and eating throughout the complex’s numerous garden patios to a sit-down restaurant. The changes were meant to reduce the number of daily patrons that had grown to an estimated 1,240 per day (i.e., more than one-third of the town’s population) to a still-impressive number of 486.

Most of the projected visitors would either eat brunch, lunch or dinner at the restaurant or taste wine at the wine vault and cruise around the various showrooms, which the company hoped might inspire purchases online. According to one waiter, “all items” onsite are for sale, “even the chandeliers.” However, items must be “ordered and delivered to the customers’ homes”).

Built-to-suit lease

Over the last few years RH has been “…creating spaces that are more home than store,” Friedman told the Chronicle. “[Because] hospitality has been an evolving part of our truth.”

To achieve the realization of this new truth, RH has been expanding its gallery presence, building multiple multimillion-dollar complexes in the span of only a few years. To do this the company has largely used debt to cover the costs, such as for the $50 million RH Manhattan gallery and restaurant, according to Forbes.

As with any debt-based project, the debts must be repaid. According to 2018 financial statements, the RH company has over $300 million due in 2019 and over $200 million due in 2020. Beyond these looming debt repayments, the company has been using “build-to-suit with a sale to leaseback” to help fund construction projects. In essence a leaseback allows a company to build and then quickly sell the new building (often back to the construction company who built it). After the sale RH leases the building back and incurs a “minimum lease commitment” on their balance sheet (the cost of the lease over time). According to note 19 in their 2017 10-K statement, the long-term minimum lease commitments for RH as of Feb. 3, 2018, amounted to $787,983,000.

RH Yountville gallery complex is for sale

For $25 million the RH Yountville gallery complex can be purchased in what will be another sale-leaseback, adding to the company’s commitments. The potential purchaser of the complex will have a tenant (RH) with a lease and a built-in “10 percent increase every five years,” according to LoopNet. The new owner will get the stylish RH company as a lessee, but they might wonder what they’d do if the interior olive trees ever withered and needed replacing.

The future of RH Yountville

A 12-foot solid-wooden fence shrouded the evolving RH Yountville complex while it was under construction. Painted in large letters across the dark-gray barrier was “Every act of creation is first of all an act of destruction — Pablo Picasso.” That was followed by “See what destruction hath wrought spring 2018.”

Although the opening was delayed until the end of 2018, we can now all see the result. And yet the story of Yountville RH is still being written because so far it seems that the company, community and culinary execution have not quite jelled.

Questions remain: How will the company manage its debt and future lease commitments? Who will purchase the building? Will Yountville ever allow increased visitation or food service at Ma(i)sonry? Will the food program find its footing and its role within one of the finest culinary towns in America? Time will tell.

To set the tone during construction RH chose a Picasso quote. However, another quote they might have used was one from Carlos Fuentes, an influential Mexican novelist and essayist who won the UNESCO Picasso Medal in 1994, in an essay titled “Myself With Others”:

“There is no creation without tradition; the ‘new’ is an inflection on a preceding form; novelty is always a variation on the past.”

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