How New York’s iconic Katz’s Deli mastered nostalgia to maintain its cult following for 132 years — and get away with a $23 pastrami sandwich

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Little has changed since brothers Morris and Hyman Iceland founded the deli in 1888. Courtesy Katz’s Deli
  • New York’s iconic Katz’s Deli hasn’t changed much since opening its doors in 1888.
  • Current owner Jake Dell, whose grandfather took over the business in 1988, says leaning into New York Jewish, Kosher-style culinary nostalgia is the secret to its long-lasting legacy.
  • But pastrami sandwiches and matzoh ball soup aren’t the only reason Katz’s Deli has endured for 132 years.
  • It has a strong financial legacy that any entrepreneur planning for long-term survival will want to emulate: real estate ownership and investment in nation-wide shipping operation.
  • Visit Business Insider’s homepage for more stories.

Pull open the door to Katz’s Delicatessen on the corner of East Houston and Ludlow Streets on the Lower East Side of Manhattan, and you’ll be hit with the powerful smell of garlic.

Carvers in all white — collared shirts, aprons, and paper caps — slice and stack towers of brown and red slow-cured meats on bread smeared with yellow mustard into a Kosher-style sandwich just like Grandma made, if she were a resident of the neighbourhood in the early 1900s.

A red neon sign mounted to the window blinks, “Katz’s, that’s all.”

When it comes to the secret behind the deli’s enduring legacy, this sign nails it. Little has changed since brothers Morris and Hyman Iceland founded the deli in 1888. The menu, decor, and operations remain consistent, even today as many businesses ditch their brick-and-mortar presence, pivot to digital, and adopt ecommerce to endure the pandemic. Current owner Jake Dell, whose grandfather took over the business in 1988, says leaning into New York Jewish, Kosher-style culinary nostalgia is the secret to its long-lasting legacy.

“It’s an old food tradition and people are really excited to see the classics,” said Dell, 32. “It’s also the fact that it hasn’t changed in 132 years. The sights are the same, the sounds are the same, and the smells are the same.”

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Current owner Jake Dell, whose grandfather took over the business in 1988. Courtesy Katz’s Deli

One of those smells is the meat’s 30-day slow-curing process, not fast-tracked like other delis, according to Katz’s website. But the melt-in-your-mouth pastrami sandwiches at $US23 a pop and steaming matzoh ball soup for $US8 isn’t all that’s kept Katz’s Deli afloat through the 1918 pandemic, the September 11 terrorist attacks, Hurricane Sandy, the Great Recession, and changing trends and technologies. It has a strong financial legacy that any entrepreneur planning for long-term survival will want to emulate: real estate ownership, and investment in nation-wide shipping operation.

And it’s kept customers lined up to grab one of its famous order tickets for a simple reason: good old nostalgia.

‘Who the hell was up this year?’

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A snapshot of Katz’s bustling operations before the pandemic. Courtesy Katz’s Deli

Since World War II, Katz’s has been shipping sandwiches, soups, and other Jewish specialities around the country, Dell said. “Send a salami to your boy in the Army” — which rhymes in New York — was its classic catch phrase at the time.

But even for businesses with ecommerce operations, 2020 wasn’t a year to grow; rather, to survive. Dell declined to share financial figures for the 200-person company and, when asked if revenue increased since 2019, said, “Who the hell is up this year, other than Amazon?”

Profits may be lagging, but Katz’s has some security: The business owns its building.

“It’s a life-saver and I’m not sure we’d be here without it,” Dell said. “We’re lucky that someone had the foresight to do that a couple of generations ago.”

In addition to owning the brick and plaster valued at $US3.3 million according to Property Shark, Dell in 2015 sold two neighbouring properties and the deli’s air rights — or the rights to the space above the building — for about $US17 million, according to The New York Times. The deal allowed Katz’s to set up a 30,000-square-foot facility in New Jersey in 2017, which supports nationwide delivery and especially came in handy this year as many restaurants were forced to temporarily close in-house dining and pivot to online-only orders.

Dell also said that thanks to those banked funds, he was able to keep employees on staff during the pandemic.

Just like Grandma did it

Katz's Matzoh Ball Soup
$US8 matzoh ball soup, just like Grandma made it. Courtesy Katz’s De

In a city like New York, where your favourite cafe can disappear overnight and a pop-up artisanal pickle shop can sprout in its place, Katz’s consistency is unusual.

Its menu consists of six sandwiches and a handful of Jewish classics like latkes, knishes, and matzoh ball soup. It hasn’t changed much since the 1980s. Five years ago Dell added a reuben sandwich by popular request.

“The truth is, reubens aren’t even a deli sandwich, it’s a bullshit sandwich,” Dell told Eater in 2015. “You would never have meat and cheese together on a sandwich at a Jewish deli. We didn’t even have cheese at all in this deli until 40 or 50 years ago.”

Some employees might remember those days. Dell told Delish many have worked behind the counters for decades, longer than he’s been alive — watching the wallpapered photos of Wu Tang-Clan members and Sarah Jessica Parker yellow with time.

Nostalgia is a powerful and compelling force for consumers, said Tom Meyvis, a professor of marketing at NYU Stern School of Business who pointed to Katz’s leveraging of its authenticity in recipes, decor, and neighbourhood involvement.

“If somebody else made the exact same products as Katz’s, in the exact same way, and in a new place, it wouldn’t have the same authenticity,” Meyvis said. “You can’t just copy that.”

For business owners who want to sculpt emotional bonds with customers in less than 132 years, Meyvis suggests determining what makes the brand special and crafting a strong narrative. “You have to figure out what you’re known for and emphasise what is uniquely you,” he said. Long histories are good, but not required for garnering interest.

“It’s enough to have a narrative,” he said.

Being present, even in the darkest of times

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The corner of East Houston and Ludlow Streets. Courtesy Katz’s Deli

What’s more, said Meyvis, business owners should establish a connection to their neighbourhoods on a hyperlocal level, as a way to strengthen their identity and authenticity with customers.

Katz’s community ties extend beyond its physical presence on the corner of East Houston and Ludlow Street: It’s fed customers through crises that have plagued New York City and the nation.

Days after September 11, 2011, a 13-year-old Dell watched as his grandfather and father served sandwiches to emergency workers for little-to-no charge. When Hurricane Sandy hit Manhattan in 2012, three years after Dell took over operations, he sliced “thousands of pounds of meat” and gave it away to residents.

Now, in the midst of the coronavirus pandemic, Katz’s has partnered with organisations that support food-insecure individuals and frontline workers. To date, it’s donated more than 2,000 meals to healthcare workers across 20 hospitals in New York City, according to Katz’s Deli.

“The key is to put your head down and take care of the community, the neighbourhood, and the person right in front of you asking for a sandwich,” Dell said. “Then, when things get back to normal, the neighbourhood supports you.”

Very little has changed about Katz’s traditions in light of today’s crisis. There is no in-store dining but tables and chairs are now outside of the deli. Newly erected protective barriers separate customers from the carvers.

“It’s just about surviving and not trying to change to adapt,” Dell said. “You’re trying to do minor things that make it easier or more enjoyable, but you’re not changing who you are at the core.”