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RSE heads Matt Higgins and Stephen Ross surrounded by their spoils

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Why Momofuku’s Billionaire Investor Is Aggressively Funding NYC’s Top Restaurants

RSE Ventures, an offshoot from the founder of real estate behemoth Related, is throwing its weight behind companies like Milk Bar and Bluestone Lane

In mid-July, billionaire Stephen Ross’ Hamptons mansion was filled to the brim. A mixture of the founders and high-ups from a slew of companies were assembled for 48 hours under one roof: SoulCycle, Momofuku, the Drone Racing League, PureWow, Bluestone Lane, &Pizza, Equinox, VaynerMedia, Resy, Milk Bar, and other buzzy start-ups.

They went to a spin class. They listened to a best-selling author speak about power in the digital age. They ate every meal together. They talked business.

It might seem like an odd hodgepodge of people, but they all had one thing in common: Private investment firm RSE Ventures has invested tens of millions of dollars into their companies.

The focuses range — the collection includes hair growth upstart Hims, organic tampon brand Lola, and cult exercise shop SoulCycle — but in recent years, RSE Ventures has aggressively gotten into the restaurant business. So far, it’s financed dessert shop Milk Bar, David Chang’s Momofuku, reservation service Resy, coffee shop Bluestone Lane, and fast-casual pizzeria &pizza, many of them getting significant cash. RSE handed over $21 million for Bluestone Lane and $19.5 million for &pizza.

The money has allowed for drastic expansions, turning local New York brands into national ones. Bluestone Lane, for instance, is targeting 60 locations from its current 30. Milk Bar launched an e-commerce business that has made it available nationwide.

It’s all the vision of Ross, along with CEO Matt Higgins. The venture is solely financed by Ross, who has a net worth of $7.6 billion and also owns real estate group Related, the Miami Dolphins football team and stadium, and gym powerhouse Equinox, powerhouses in their respective fields. Now, in this newer stage of their company, they’ve become major players in the restaurant industry, too.

Together, the two men are quietly shaping who gets to be at the forefront of the hip, modern fast-casual restaurant revolution. And that Hamptons event explains why. They’re doing it with the help of (and because of) those other, non-food businesses — a web of companies that ultimately funnels cash back to one source: RSE.


Restaurants have long been considered a poor investment. The oft-said statistic that 90 percent of them fail in the first year is inaccurate, but it remains a famously risky industry. Still, it’s one that venture capitalists, private equity firms, and newer private investment firms have been going at hard in the last couple of years.

Besides RSE, hospitality titan Danny Meyer launched a similar private investment firm with $200 million in 2017, Panera’s founder Ron Shaich just announced a $300 million investment fund specifically for restaurants, and two former finance guys run Kitchen Fund, which has invested in places like By Chloe and Sweetgreen. Other more traditional firms include L. Catterton, Roark, and Karpreilly, which have invested in restaurants like Chopt and Arby’s. It’s a newer trend in restaurant investment to go after these highly branded fast-casuals, and though RSE is clearly not alone in the space, hospitality consultant Steven Kamali, who has worked with restaurants like Cote, Jean-Georges, and Colicchio & Sons, calls RSE the “most active.”

These firms are a little different from many traditional investment firms. A classic venture capitalist or private equity firm invests in companies with the goal of selling at a profit after three to five years. It expects quick returns and often has say in financial and operational decisions. RSE and these new funds, on the other hand, get involved with the plan to stay with the companies for much longer. The goal is to invest in the long-term success of a business, thereby ensuring the investment firm’s long-term success, too. Profit matters, Higgins says, but it’s not an immediate priority.

Initially, RSE didn’t plan to do restaurants; the decision grew out of another business focused on entertainment: sports. Higgins and Ross figured that with Ross’s ownership of the Miami Dolphins and the stadium, they already had a captive audience of people willing to spend money. Their first investments were in digital agency VaynerMedia with media mogul Gary Vaynerchuk in 2014 that focused on testing out newer social media technologies on football fans, and a public relations firm with Jesse Derris, called Derris, that made those launches successful.

Fast forward four years, and the company has funded a drone racing league and created a club soccer tournament, tapping into Miami’s passion for soccer and using the already existing stadium as a resource.

“Big picture, the revelation was ... you could be on both sides, and your underlying assets of the team and the stadium will get better,” Higgins says.

Milk Bar &pizza collaboration
Milk Bar &pizza collaboration
&pizza/Facebook

That same maxim is what led RSE to get into restaurants, too. They realized in 2016 that RSE could use its existing resources — namely real estate know-how and access — to fund restaurant growth.

Here’s how it works in New York: Ross’ main business is real estate mammoth Related, which is developing the huge Manhattan west side neighborhood Hudson Yards. Related’s headquarters will be there, and all of the RSE restaurants have slots in the development as well (Milk Bar is close to closing its deal). Ross is also an owner of Equinox, which will build its very first hotel in Hudson Yards. VaynerMedia and Derris were started with RSE money, and they now provide services to several RSE brands. Related brokers find spaces for the restaurant concepts. And the relationship continues to Miami, too. Ross’ Hard Rock stadium houses outposts of Fuku and &pizza.

Higgins sees that conglomerate of businesses as the result of Ross’ business savvy — Ross is a mastermind of “connecting the dots,” Higgins says.

Restaurants in RSE’s portfolio get to capitalize on those connections, and the founders of every restaurant with RSE say they’ve had some benefit. Bluestone Lane did a pop-up in Related’s headquarters, and now its many brokers are more familiar with the brand, keeping it top of mind for potential spaces across the country. Out of just 25 available restaurant spaces in Hudson Yards and all the brands clamoring to get in — an estimated 30 million people are set to visit each year — four of those valuable spots are going to RSE brands. Fuku and &pizza were able to get into Hard Rock stadium and use it as a test space, leveraging that experience to get into other stadiums. Fuku is now in six arenas; Chang says some could not have happened without RSE’s help.

The RSE brands have also formed their own connections, like with a combo Milk Bar and &pizza opening in Boston, or with Bluestone Lane’s and Milk Bar’s executive teams getting together for a day to troubleshoot industry issues such as talent retention and ingredient sourcing.

“The money, to me, is really the smallest part of the equation,” Higgins says. “I don’t think there’s anybody we’ve invested in that couldn’t have taken money from somewhere else. It’s the access to Ross and everything that he’s built.”


Stephen Ross in 2010
Photo by Marc Serota/Getty Images

Ross is the 205th richest person in the world. The amount of money he is able to invest in restaurants and brands is enough to fund major growth and change, and access to that is not thrown around lightly.

Higgins boils down RSE’s strategy for choosing businesses to finding “premium, unique, and scaleable” fast-casual restaurant chains that have strong profitability. He also prioritizes founders. Higgins and his mother were on food stamps when he was a teenager, which motivated him to drop out of high school early, get his GED, and enroll in Queens College at 16 for better job opportunities. Fast forward almost 30 years, and this Sunday he’s a guest investor on Shark Tank. It was what he calls an “unconventional” path, one that informs his eye for talent as not needing to have followed the traditional lane. Higgins compares &pizza founder Michael Lastoria to former Starbucks CEO Howard Schultz, while he says Chang’s potential is “uncapped.”

“We only invest in special. One could take any issue with any concept that we’re invested in, but it would be hard to argue that it’s not special,” Higgins says.

It’s an ethos that means businesses need to already have a few locations for RSE to take real notice — and that model is seemingly employed at other venture capital firms, too. Meyer’s Enlightened has money in quirky ice cream shop Salt & Straw and California casual lunch chain Tender Greens, and Kitchen Fund has invested in irreverent San Francisco bakery Mr. Holmes and heavily branded vegan calling card By Chloe.

Beyond the benefit of cash for the businesses, the clamoring for these brands is making other, more traditional financiers sit up and take notice, experts say.

For instance, banks historically have not been willing to lend restaurant owners money, but this is slowly changing in part due to the investments, says Hospitality House’s Kamali. When banks see companies like RSE and Enlightened putting millions in restaurants, it incentivizes them to do the same.

Plus, in the last 10 years, the value of many publicly traded restaurants, like Shake Shack and Chipotle, has more than doubled. Stats like that, in addition to RSE money and other private investment, create a point of reference for other investors to consider and show that food brands bring value beyond just profit, like in Ross’ Hard Rock Stadium, according to Kamali. “Those are things that stabilize this business and over time it builds similarities to other traditional industries and doesn’t feel like the wild, wild west,” Kamali says.

Christina Tosi and Matt Higgins
Christina Tosi and Matt Higgins
Courtesy of RSE
David Chang and Matt Higgins
David Chang and Matt Higgins
Courtesy of RSE

In this new world of restaurant investments, it might seem like a no-brainer for aspiring empire builders to gain the attention of RSE or its industry counterparts. But not everyone is trying to hop on the private investment train.

New York City Chinese noodle chain Xi’an Famous Foods has vocally refused investment. Co-owner and CEO Jason Wang says that though he’s been approached by “many, many” firms and individual investors, he has resisted in order to keep “complete autonomy” over his company. The company, which started in 2005 as a Flushing market vendor and now has 13 locations, is wildly popular and one of NYC’s most beloved chains, but Wang says they have only wanted to expand when they can do so with their own cash — a way to “make sure we do not exceed our means or market size,” he says.

“I think it’s important that there is no one that can breathe down my neck and dictate what we do day-to-day to hit goals they set as outsiders,” he says via email.

The Kati Roll Company co-owner Anil Bathwal agrees that loss of control can be a downside to taking on corporate, or any, outside partners. After 13 years, his fast-casual Indian wrap restaurant with seven locations is only now in serious talks to find a potential investment firm. Besides growth, he and Wang both strongly believe in keeping focus on sourcing quality food and paying employees a living wage, and say that outside firms often try to do away with that first in order to cut down on costs.

“Those usually are the two main costs, and [a firm] would emphasize to cut or control those costs, but certain things for us are non-negotiables,” Bathwal says. “Those are the things you want to align on. The connection has to be there.”

Higgins, Tosi, Stone, Chang, and Lastoria, for their part, all maintain that RSE does not make such demands of its brands, as RSE wants to “ensure that the operator has primacy over the endeavor,” Higgins says.


Higgins says RSE in its current form has capacity for 10 restaurant concepts. That means there are six spots left in their roster — six eventual business people or brands that could grow to tons of locations with RSE’s money and connections. There are hundreds of chains with strong brands across the country that could theoretically qualify, based on RSE’s past interests: Los Tacos No. 1, Cha Cha Matcha, Bolivian Llama Party, Arepa Factory, and Joe’s Pizza, to name a few in New York City alone. He hasn’t said what they’re eyeing next, but they’re always looking.

“There’ll always be another thing. There’ll always be another concept. There’ll always be another sector that’ll emerge,” Higgins says, invoking one of many analogies he speaks in: “Going back to connect the dots, if you wanna see where I’m going, imagine where the puck is going and that’s probably where we’re gonna skate to.”

Analogy or not, if Lastoria and &pizza turn into Starbucks, RSE grows along with it. And if Chang’s potential is unlimited, then so is RSE’s — and Higgins’ and Ross’ and Related’s and the stadium’s and on and on.

Milk Bar Nolita

246 Mott St, New York, NY 10012 (855) 333-6455

Momofuku Ssäm Bar

207 2nd Avenue, Manhattan, NY 10003 (212) 254-3500 Visit Website

Bluestone Lane

1100 23rd Street Northwest, , DC 20037 (718) 374-6858 Visit Website

Fuku

30 Rockefeller Plaza, Manhattan, NY 10112 (917) 201-7098 Visit Website

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