ABC Stores Ventures into Upscale Dining with Dukes Lane Market & Eatery

When a retail giant like ABC Stores gets into the restaurant business, there’s more to the story than meets the palate.

By mari taketa

Kualoa oysters chilling at the raw bar.

Photos: steve czerniak

At the corner of Seaside and Kūhiō avenues, in a spot once known for occasional nightclub brawls, the surprise isn’t the brand-new food hall with a 150-seat restaurant, raw seafood bar, gourmet market and bakery turning out fresh doughnuts and brioche. It’s not even that Dukes Lane Market & Eatery opened in July between two other new food halls. The surprise is that it’s the creation of the chain that’s saturated Waikīkī with 35 convenience stores—except on this corner, where there isn’t an ABC Store in sight.

SEE ALSO: These 3 Upscale Food Courts Are Worth the Trip to Waikīkī

Welcome to ABC’s new era. This one’s not about postcards and macadamia nuts. “If we keep doing the same thing we’ve been doing, we’re going to go backward,” says Paul Kosasa, ABC’s second-generation president and CEO. “We have to get out of our comfort zone and do something bold.”

But there’s more to it than food. On the next block of Kūhiō Avenue is The Street at International Market Place, a food hall whose vendors are nearly all Mainland-based. Across Seaside Avenue is Waikīkī Yokocho, whose 15 restaurants come from Japan. Dukes Lane, like ABC Stores, is as local as it gets. It sources from local farmers, ranchers and fishermen; the only outside businesses there are Honolulu-based Il Gelato and Teapresso. Basalt, its anchor restaurant, is named after the bedrock of Hawai‘i.

In Waikīkī, where Mainland and international brands dominate, Dukes Lane is a statement. And for ABC Stores, there’s more coming.

ABC CEO Paul Kosasa: “We have to get out of our comfort zone and do something bold.”

Photo: Aaron K. Yoshino

“I didn’t know you did food,” was Kelly Degala’s reaction when Kosasa approached him two years ago about opening a restaurant. Like most outside the visitor industry, the Kalihi-born chef knew ABC Stores as a place to stop for mats and slippers when he took his kids to the beach. Then Kosasa filled him in.

Nearly a decade ago, not long after ABC founder Sidney Kosasa retired and Paul had taken his father’s place, a space opened up for a high-end grocery in Waikoloa on the Big Island. ABC was already expanding its convenience stores beyond Hawai‘i to Las Vegas, Guam and Saipan, but with Food TV driving a new kind of tourism and Mainland and Japanese visitors seeking out Spam musubi and plate lunches, both generations of Kosasas knew that food was the future.

It didn’t hurt that after decades of interconnected business ties, ABC’s roots across the Islands ran deep. At Queens’ MarketPlace in Waikoloa, KTA Super Stores’ Barry Taniguchi and Derek Kurisu helped the O‘ahu-based chain set up Island Gourmet Markets. Now ABC was selling groceries alongside a full-service deli and bakery—it even had a wine bar complete with pūpū and happy hour.

That was the intro Kosasa needed into the food world. He had on his shoulders the legacy of his parents, who opened their first store in Kaimukī in 1949 and whose vision of Waikīkī as a budding destination drove the company’s early strategy and fueled its growth. Being prescient, and being aggressive about it, were part of the legacy.

Photo: david croxford

After Waikoloa came similar stores in Wailea, Maui, and Ko Olina, with plans for another this year in Kapa‘a on the Garden Island. When buying grab-and-go items like Spam musubi and sandwiches from outside vendors got too expensive, ABC built its own commissary kitchen in Kaka‘ako. Deli counters in the convenience stores were expanded. The chain was still the state’s biggest seller of macadamia nuts and souvenirs; now it was also selling garlic chicken, Hawaiian plates, quinoa salads and parfaits.

It would be easy to say that the 13,000-square-foot space at the corner of Seaside and Kūhiō fell into Kosasa’s lap. But the new landlords of the old Waikīkī Trade Center, where ABC not surprisingly had a tiny store, had been watching the chain’s expansion into food. And Kosasa, who had steered the expansion into high-visibility food spots in resort areas but not ABC’s home base of Waikīkī, had been waiting for a space to open there—for a gourmet grocery, maybe. The offer of the anchor spot in the new Hyatt Centric Waikīkī Beach changed the equation.

“The vision was to have a food hall and restaurant in Waikīkī where people can walk in and have choices.” –Paul Kosasa

“The vision was to have a food hall and restaurant in Waikīkī where people can walk in and have choices. It’s very accessible, it’s easy and enjoyable and social,” he says. “And to the extent that we can support local businesses, vendors, farms—more power to us and them.”

It was a natural next step, but a scary one. Dukes Lane Market & Eatery would constitute the biggest investment in ABC’s history. A green light from Willie Nishi, the now-retired chief operating officer who had opened the chain’s first grocery stores and commissary, gave Kosasa confidence. Do it right—with a good operation, good service and a focus on Island cuisine—and it could work, Nishi figured.

The Makaweli Ranch Lamb Burger, with zaatar-scented ground lamb, caramelized onions, zaatar aioli, tomatoes and lettuce on a charcoal brioche bun.

That was the story Kosasa would end up summarizing for Degala. The chef had opened Gordon Biersch in Honolulu and worked with culinary icons Charles Phan (San Francisco’s Slanted Door) and Seattle-based Tom Douglas on the West Coast. Now, as part of a task force opening new Starwood hotels in the U.S. and Canada, Degala was putting together a restaurant at the new Westin in Denver and was on track for promotion to executive chef. He had no intention of coming home.

“The only reason I took this job was because Paul told a story about the next step he wanted to take this company to. He really wanted to see the interaction of food, beverage and the guest. He wanted to create a new experience for retail. He said that with a lot of passion,” Degala says. “He waited for me to give an answer. Paul is a very patient guy. Usually a CEO, a president, you have to do this and this, prepare a tasting, and do it quickly. Paul wasn’t like that. He was very rare.”

It was Degala who suggested surrounding Basalt with the deconstructed elements of a kitchen. That was how Dukes Lane came together: In addition to gelato, milk tea and coffee bars, in addition to a high-end wine shop and a locally sourced grocery, Dukes Lane would have a restaurant, a burger-flatbread-rotisserie counter with an all-day menu, and a bakery making not only artisan bread and pastries, but burger buns, pizza dough and dinner rolls for the whole operation. It was a big deal.

To some locals it might look like the chain just burst onto the restaurant scene, but ABC Store has been building up to this moment for a while. It’s just that, as with many things it does, it likes to stay low-key.

Corporate chef Kelly Degala runs the kitchen, bakery and all-day counter, serving burgers, flatbread pizzas and rotisserie plates.

Photo: Aaron K. Yoshino

How big is ABC Stores? Before Dukes Lane it had 75 stores; now the payroll tops 1,500 people. The privately held company’s website describes it as Hawai‘i’s 37th largest company—which, when you compare it against Hawai‘i Business magazine’s 2016 Top 250 ranking, suggests sales of more than $230 million last year.

Numbers like that always seem to surprise locals. They surprised Sheldon Simeon. The chef-owner of Maui’s Tin Roof had just shot Season 14 of Bravo TV’s Top Chef last year when Kosasa asked for a meeting. “It’s kind of crazy that you don’t think of ABC as a Hawai‘i chain, but that’s what they are,” Simeon says. Kosasa wanted to talk about opening a restaurant. A veteran of Top Chef Season 10, Simeon knew that when the series aired, similar offers would flood in from across the country. He signed on anyway. “From the beginning it was, you guys do your thing and we’ll be here to support. It just seemed real. It was pretty easy to do a handshake.”

When Calabash opens at the Shops at Wailea this winter, it will serve updated twists on the local and Filipino dishes of Simeon’s childhood. Shared small plates will be sold from dim sum carts rolled past diners as they eat—a concept modeled after San Francisco’s State Bird Provisions.

PHOTO: DAVID CROXFORD

There is a parallel with what ABC is doing on Kaua‘i, where its purchases of Coconut Marketplace in Kapa‘a and tiny Sueoka Store, founded 99 years ago in Kōloa, seem wildly dichotomous. Coconut Marketplace spans 66,000 square feet on 7 acres. It made ABC a significant landlord, and a patient one: Five years later, the mall is still 70 percent empty, partly because Kosasa wants to fill it with Kaua‘i businesses. He says he’s keeping rents low and waiting for local businesses located elsewhere to finish out their leases before moving into the complex. And he’s set aside two kiosk spaces so budding retailers at Kaua‘i Community College can incubate their ideas rent-free for a year. “We were a small business once. We had the good fortune of having decent landlords,” he says. “Kaua‘i has its own DNA. It doesn’t need more Mainland businesses. It’s still a pristine rural place, although it’s changing kind of fast. There are opportunities for entrepreneurial people.”

“There are certain things worth preserving. Culture. Identity. Social capital.” –Paul Kosasa

In Kōloa, the fourth-generation owners of Sueoka Store were surprised when Kosasa showed up in his usual dress shirt and tie and sat down over chicken and musubi. He had a personal interest in keeping alive the tradition of old-time mom-and-pop stores, he said. This one was in a particularly good spot, at the end of the tunnel of trees connecting Pō‘ipu’s resorts with Kōloa town. At lunchtime, locals and tourists line up for the burgers and loco mocos. The family agreed to sell the store to ABC with the proviso that they keep running it through its 100th year. After that, Kosasa will keep the name, though he’s not sure yet what he’ll do with the rest of the business.

“There are certain things worth preserving,” he says. “Culture. Identity. Social capital. People having small gatherings, cashiers knowing your name. It preserves a bit of humanity.”

That might sound strange coming from a CEO with 1,500 employees. It might also be visionary. The Islands are dotted with aging mom-and-pop stores with uncertain futures and generations of social capital. Kosasa won’t say whether he’s looking at any others. Which means it’s worth staying tuned to find out.

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