Entrepreneurs

New York icon Katz’s Deli is expanding after 128 years

How does an iconic restaurant that's been serving customers for more than a century expand without losing what makes it special? For Katz's Delicatessen, the answer is simple: Focus on the food.

After 128 years in Manhattan's Lower East Side, the restaurant, which is known for its pastrami and a cameo in "When Harry Met Sally," is in the process of opening up a second outpost for the first time ever. It's a decision the family-run business didn't take lightly.

While it's had numerous opportunities to expand over the years, the family passed on them because they couldn't do it the right way, said the company's 29-year-old "Top Dog" Jake Dell.

A pastrami on rye sandwich is displayed in Katz's Deli.
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A pastrami on rye sandwich is displayed in Katz's Deli.

But now they think they've cracked the recipe for replicating the quality of its food elsewhere and plan to open a take-out only location in Brooklyn this fall.

"It's a way to reconnect with our regulars who are finding it harder and harder to come over here," Dell said. "And it's a way to bring the tradition and the food just a little bit closer to people who already know who we are."

The restaurant opened in 1888 as a small deli called "Iceland Brothers" at a time when Jewish establishments dotted the neighborhood. Its name changed to "Iceland & Katz" and then to "Katz's Delicatessen" after the Katz family bought out the Iceland family. Katz's would later move across the street to its present-day location that today seats 300 people.

Katz's Deli, the iconic New York deli, in New York City.
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Katz's Deli, the iconic New York deli, in New York City.

Katz's would undergo another ownership change when Dell's family bought out the remaining Katzes in the 1980s, a period in which the restaurant struggled due to the closure of a nearby bridge that made it more difficult to visit, and increased crime that dampened tourism in the area.

Opening up a second location is a big deal for a business that is known for being the restaurant equivalent of a time capsule.

"Over the last 128 years, we've had a couple things change," Dell said. "Thirty years ago, we added a Reuben. That was a big deal for us." (Mixing dairy and meat violates kosher standards.)

"Ten years ago, we added a cheesesteak. That was also a pretty big deal," he continued. "We upgraded our cheesecakes because we weren't so happy with the desserts. That's pretty much it. We're a little afraid of change here because it works."

Jake Dell, Katz’s Delicatessen owner, sits down with CNBC to discuss the family business
Sophie Bearman | CNBC
Jake Dell, Katz’s Delicatessen owner, sits down with CNBC to discuss the family business

Sticking to these classics is part of what Dell thinks has helped Katz's become a New York institution — in addition to the restaurant's nostalgic tug on customers and a fun atmosphere, where customers frequently recreate the iconic "When Harry Met Sally" scene that occurred at the restaurant.

Katz's ownership of its own restaurant building, a relative rarity in New York, has also helped it stick around. In 2014, the restaurant sold its air rights — or the right to use its unused development space above the restaurant — and two neighboring properties for an undisclosed sum to help ensure it would be around for decades to come. It used some of the proceeds to expand its food shipping business and open the Brooklyn location.

"Ultimately it was the right decision for the right time," Dell said. "It protects this building."

Katz's Deli, the iconic New York deli, in New York City.
Getty Images
Katz's Deli, the iconic New York deli, in New York City.

For now, no more additional locations are in the works.

"One at a time," Dell said. "Let's crawl, then walk, then run. Then we can evaluate other things in the future. We're pretty happy and have our hands full."

As many as 4,000 customers walk through the doors daily to sample its traditional deli fare, including its pastrami sandwiches, the restaurant's most popular dish.

So what makes a great pastrami sandwich?

"There's really only one thing that makes a great pastrami sandwich: It's Katz's pastrami," Dell said. "It's the way you prepare it, it's the way you cure it, it's the way you cook it. It's the way you slice it."

While Katz's will prepare its dishes any way customers want, Dell's preferred order sticks with the basics.

"For me, it's simple — on rye with mustard," he said. "That's all you do. You don't need all that extra stuff."