The Washington PostDemocracy Dies in Darkness

Urban Outfitters is getting into the pizza business. Here’s why.

Pedestrians walk past the Urban Outfitters store in San Francisco. (David Paul Morris/Bloomberg)

Urban Outfitters — a retail empire built on skinny jeans, band T-shirts and tunic dresses — is getting into the pizza business.

The retailer, which owns its eponymous apparel chain as well as Anthropologie and Free People, announced Monday that it is to acquire The Vetri Family, a group of Italian restaurants with locations across Philadelphia, the city where both companies are based.

Investors balked at the marriage of maxi dresses and margherita pies, sending the company’s stock down more than 7 percent before Monday’s trading session ended. But whether or not the deal ends up being a lucrative one, the retailer’s move reflects fast-changing patterns in how consumers are spending money.

“Spending on casual dining is expanding rapidly, and thus, we believe there is tremendous opportunity to expand the Pizzeria Vetri concept,” said Richard Hayne, chief executive of Urban Outfitters, in a statement.  

Hayne is right that the foodservice industry is picking up steam.  Restaurants have seen some of the strongest growth of any retail category this year as consumers are dining away from home more frequently. The fast-casual category, which includes restaurants such as Chipotle and Panera Bread, has seen especially explosive growth as diners increasingly gravitate toward menu options they perceive as being healthy.

Meanwhile, Urban Outfitters hasn’t exactly been on a hot streak: Foot traffic to its stores has been down for several quarters. In its most recent quarterly earnings, reported Monday evening, the company said it saw a modest 1 percent increase in comparable sales, a measure that excludes stores that opened or closed recently.

Many of the company’s apparel industry peers have seen similarly lackluster performances, including Macy’s, which saw sales dive in the third quarter, and Nordstrom, whose executives attributed its gloomy earnings to weak foot traffic in stores.

Put simply, consumers right now are shelling out money for experiences such as dining out even as they’ve remained more tight-fisted about ponying up for apparel and accessories. So you can see the calculus that Urban Outfitters is making here: It is betting that an experience-based retail concept might be a boon for an ailing business whose stock has tumbled some 36 percent this year.

It’s not clear yet how Urban Outfitters plans to develop the restaurant business, though executives said they believe there is “tremendous opportunity” to expand Pizzeria Vetri, a casual dining concept in the Vetri Family portfolio. Urban has previously experimented with building restaurants into some of its Urban Outfitters stores, including in its store in the Williamsburg neighborhood of Brooklyn. If it were to try to incorporate Pizzeria Vetri concepts into its existing stores, it could end up being a way to cultivate foot traffic in stores that sorely need it.

It’s also worth noting that Urban Outfitters has long said it believes there is only room for about 200 to 250 stores each of Urban Outfitters and Anthropologie in the United States. (Any more than that, executives say, and the brands will suffer from overexposure.) With 240 Urban stores and 214 Anthropologie stores already dotting America’s malls and urban shopping corridors, the retailer has all but hit its self-imposed limit.  So if the company is to see serious brick-and-mortar growth stateside, it is going to have to come from new concepts.  That is likely why it has launched Terrain, a home goods brand, and BHLDN, a bridal boutique.  And it likely helps explain the pizza acquisition, too.