Kailis sets table for the long game
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Hospitality operator George Kailis has signalled a move to tap into the accommodation sector on top of adding up to 10 restaurants to his company’s portfolio.
In an exclusive interview with Business News, Mr Kailis detailed the future of Kailis Hospitality Group, which he leads as managing and creative director.
Mr Kailis revealed his long-term goal was to eventually pursue hotels as an extension of the restaurant experience.
“It’s like a restaurant, it’s a transformative experience but it’s next level because you’re staying there,” he said.
“So that whole idea is just an elevation of the hospitality that we’re providing in our restaurants but into the accommodation sector.
“From a boutique sense, there’s a big gap in the market. I feel like we can deliver a really interesting product in some really cool locations.”
However, the hospitality director remained tight-lipped on locations he has been eyeing for the proposed boutique hotel offerings.
Mr Kailis said he had no specific timeline to launch the first accommodation project, only when he found the right property.
He admitted the growth of the Kailis Hospitality Group’s portfolio was slow, but deliberate.
“We want to remain boutique, so we don’t want to grow into 30 venues,” Mr Kailis said.
“The site selection process for me, it’s a very long, difficult process. I might look at 100 things in a year and maybe, I’ll like one.
“It’s very much the different models or different assets that we look to acquire or look to potentially either buy, in a leasehold or freehold scenario, they just don’t come up that often.
“Long story short, our approach is slow and measured, looking for premium sites mostly and then backdooring really great and unique concepts into those locations.
“We’ll look to probably grow maybe to five to 10 more venues, and then to go into the accommodation sector, so boutique hotel eventually is the space we want to be in along with having restaurant assets.”
Kailis Hospitality Group could be divided into two divisions – restaurants and fast casual, Mr Kailis said.
“We don’t, at the moment, operate bars, nightclubs or pubs. We’re specifically food focused,” he said.
“The team is split into [the] two divisions with about 150 odd people in each and we’re focusing on those two markets.”
Strategy
Kailis Hospitality Group recently announced plans for two Cottesloe projects within a week of each other.
A high-end seaside brasserie and grill, named Gibney, will be the hospitality tenant at Curtin Heritage Living’s Waterfront Cottesloe at 40 Marine Parade.
Mr Kailis said the proposed premium dining space would be the first for WA and was set to be different to fine dining.
“Nearly every capital city around Australia and then every city in the world has a premium dining market and Perth doesn’t really have one,” he said.
“Just like any great restaurant in the world, it’s probably more going back in time to that old school, formal and traditional type of venue. That just doesn’t exist in the local market space.”
The group’s unveiling of Gibney came a week after Mr Kailis announced plans to transform the former Barchetta restaurant on 149 Marine Parade.
KHG is proposing to rebuild wellness store Magic Apple at the site, for which it was chosen as Town of Cottesloe’s preferred operator.
The Magic Apple Wholefoods brand will join the Kailis portfolio, with a product line also on the cards.
Mr Kailis said this was in line with the group’s aim to tap into another different, yet major, industry.
“The whole foods industry is massive, it’s a $1.5 trillion market globally,” he said.
“With respect with what we’re doing in a hospitality perspective, trying to create different, interesting and unique brands that kind of fit differently into each market segment.”
The two Cottesloe venues will join The Shorehouse in Swanbourne, Island Market and Canteen in Trigg and Kailis Fish Market café in Fremantle.
Despite a common theme with the locations, Mr Kailis rebutted the notion KHG only opened coastal venues.
“Everyone just says that,” he said.
“View locations and most iconic locations have some sort of a river view or sea landscape.
“Anything in that sort of realm for me is something that we’d look at, but we typically also look at sites where there’s no real imminent threat or competition near or around us.”
COVID-19 has impacted on the announcements of these recent projects but Mr Kailis said he was constantly in research mode.
“What we’ve probably all seen, particularly coming out of COVID, is an absolute explosion in the neighbourhood wine bar market,” he told Business News.
“It’s a great space and I love going to them, but for us because of the explosion in that market, and … for all the right reasons, there’ll be more and more opening – we wanted to move away from that.
“We don’t see the point going into a market that’s already becoming, I don’t know if it’s saturated, but let’s say it’s becoming popular.”
Mr Kailis said Marine Parade was the most expensive coastal real estate in WA.
“Understanding the market intimately, particularly from operating The Shorehouse, and I live in the area as well, I knew what locals wanted and I knew what the wider community wanted,” he said.
“Cottesloe is the most famous beach in Western Australia.
“When people get off a plane and go to whatever hotel they’re staying at, they go to Cottesloe at some point.”
Both Magic Apple and Gibney are set to open in 2024, with the latter to launch in March.
Mr Kailis said the big picture for KHG was that there was no end game.
“I’m not sitting here going, ‘I want 20 venues, then I’ll stop’,” he said.
“Next year, obviously with these two venues, they’ll be our focus. I doubt I’ll be looking at much more in the next 12 months.
“Ten to 20ish venues and then into the hotel space for me is kind of the trajectory we’re on at the moment.
“But there’s a lot of great sites and a lot of underutilised property in Western Australia.”
Why restaurants?
Mr Kailis can easily pinpoint the moment he knew he would be working in the hospitality sector.
“I was only a kid, but it was in Melbourne – it was Caffe e Cucina, which was Maurice Terzini’s first restaurant and one of the most famous iconic restaurants in Australia when it was established,” he said.
“It was more about the buzz of the dining room … because Perth didn’t have anything like it, it was a bustling European bistro vibe.
“My parents were in awe, and I was, as a kid, looking at them going, why are they so enamoured by what’s going on in this space but … everyone was freaking out.
“We felt special just being there. For me, that was my first introduction to it.”
The hospitality sector has taken a hit in recent years, particularly from the impact of the pandemic, labour shortages and general cost increases.
In June 2022, the Australian Bureau of Statistics found businesses in the accommodation and food services industry were most likely to have trouble finding suitable staff to fill jobs.
The sector makes up about 51 per cent of employing businesses in Australia.
The ABS also found the accommodation and food services sector had one of the highest proportions of businesses experiencing supply chain disruptions, at 64 per cent.
The future of the hospitality sector seems uncertain but Mr Kailis said he saw the industry as being future-proofed.
“Industries are changing and being wiped out by technological advances,” he said.
“The old-school approach going in a restaurant being served by someone and being cooked a meal by a bunch of artisan chefs in the kitchen, it’s never going to go away.
“Everyone’s going to always want a great restaurant experience, that’s not going to be replaced by a robot.
“It’s really important, talking more broadly from a hospitality operator’s perspective, that the industry won’t be replaced by anything ever.
“Restaurants will always be restaurants and if anything, I feel people will flock to them more with everything that’s going on in the world.”
Mr Kailis said he had long-term plans for the continued operations of KHG’s venues.
“We’re here for the long term, we don’t get in and create a brand and then sell it,” he said.
“A lot of restaurants, particularly the traditional model of a restaurant, is that your overhead component could be very high.
“Years one to three is ok and then years three to 10, your rents start going up.
“That’s why you’ve noticed that there’s very few restaurants that are more than 10 years old in Western Australia.
“The barrier to entry into hospitality is very easy. You go and lease a space and come up with whatever concept, hire a chef and off you go.
“It’s not just years one to three we’re looking at; I’m looking at the 10th year.”
Family ties
Though he has spent years making a name for himself in the hospitality sector, Mr Kailis admits he has yet to escape the family name.
Kailis Hospitality Group was founded by Mr Kailis’ father, Victor.
Kailis Hospitality Group is not connected to Kailis Bros Leederville, now operating as KB Foods, or MG Kailis Group.
Michael George Kailis and his wife, Patricia, established the first Australian South Sea pearl farm in Broome in the 1970s.
His descendants have since branched out to different industries, with the Kailis name now known in WA for multiple things, including jewellery, seafood and hospitality.
Mr Kailis said the Kailises were as distant as third cousins.
“Firstly, people always confuse me, particularly with the fishing side of the family,” he said.
“That’s the Kailis name whereas I’m hospitality focused.
“If anything, the brands that we’re building here, none of them really have the Kailis name involved and nor will they [be] moving forward.
“There’s a connotation and I guess a bit of a stigma attached with the name because people go straight away, you’re the fish people.
“And I go, no, no, that’s not me.”
However, Mr Kailis still credited his Greek heritage for the “hospitality gene”.
“I love what a good restaurant experience can make you feel,” he said.
“We valued Sunday lunch, we value sitting around the table, sitting and talking and eating great food.
“That’s part of the culture, the European culture and the restaurant experience is just an extension of that.”
The business continuing to be a family operation might also be on the cards for KHG.
“I would love my kids to be involved at some point if they’re interested, but they’ve got to be passionate about it,” Mr Kailis said.