Money may not make the entire world go round but it has over the past eight years influenced the restaurant world more than any single ingredient, recipe, design or individual chef.
The principle that those who have made money elsewhere now turn their attention to the world of good food and wine they enjoy so much has not changed, but its application has grown many times. That small band of hedonists who put their money behind the Roux brothers at Le Gavroche and Pierre Koffman at La Tante Claire almost 30 years ago now find their example followed by investors and major hotel groups in most of the world’s major cities – a phenomenon that despite the uncertainty of the past three months does not look like slowing down significantly in 2002 (although as one chief executive of a publicly quoted restaurant group once confided to me, ‘You journalists only get the press releases about restaurant openings. You never get sent them about the ones that close.’)
The vast amount of money that has flooded into restaurants has undoubtedly facilitated many new openings – I only remember the experience trying to finance my own restaurant in 1980 as Dickensian and one that I would like to forget. But new money has bred new dividends: analysing what a restaurant will deliver financially is no longer as simple or as obvious as it used to be.
As it has affected financial rules, so this new wave of money has also affected the structure. The image of an individually owned, comfortable 40-50-seater restaurant with affordable prices is rapidly fading. They may continue to exist but not on their own – their financial future lies in small groups where, like so many other small businesses, a significant contribution to continued profitability comes via pooled management, shared overheads and greater buying clout.
These are groups that tend to be led by passionate individuals such as Paul Heathcoate with his Lancastrian brasseries, Claudio Pulze (Al Duca and Zaika) and Rebecca Mascherenas, (Sonnys and The Parade) in the UK and Danny Meyer (Union Square Café and Gramercy Tavern) and Daniel Boulud (Daniel and Café Boulud) in the US whose continued example and success are to be hoped for. Their offer is straightforward and unchanging but they may be the examples of a bygone era.
The problem is that the traditionally run restaurants which investors want to be seen in week in and week out simply do not produce a big enough return. They have had to transform themselves, to break out of the mould, to generate larger income streams and consequently reshape the industry.
It is impossible to do this without a bar, ideally with a licence until 2am. Bars have always served the very practical purpose of serving aperitifs and digestifs and accommodating those who arrive before their tables are ready, but now they are essential to capture the 25-35-year-old market, to boost profitability most effectively through the sale of cocktails and to give the restaurant a secondary but equally important meeting space. None of London’s most high-profile restaurants of the past decade – Quaglinos, Mezzo, Nobu, The Atlantic or Harvey Nichols Vth Floor – would have generated the same money or column inches without their respective bars. By generating 40 per cent profitability rather than the kitchen’s normal 10-15 per cent, bars go a long way to repaying the investors quickly.
Ironically, as wealthy, private investors have turned to restaurants as never before the banks themselves have yielded some of the most exciting locations. Nobu, New York, Prism in the City, Bank in the Aldwych, Just St James on St James’s Street and various branches of Pizza Express are now located in former banks, their quiet halls transformed into noisy restaurants and their subterranean vaults once full of paper into prep kitchens, cold stores and wine cellars. (Most insensitively perhaps Admiralty restaurant shares the lovingly restored Somerset House with the head office of the Inland Revenue which supervises the collection of our hard-earned money.) Wherever successful these restaurants employ more people and certainly generate more goodwill than their original incarnations.
And that is the most obvious consequence of this new influx of money: that it has allowed chefs, and restaurateurs to a lesser extent, to use their restaurants to make even more money in ways that were unimaginable a decade ago.
These new activities all take place outside the restaurant’s four walls as the original restaurant business is metamorphosised into cookery books – in an ideal world tied into a television series – personal appearances (when the top chefs can earn as much as a top operatic star) or the endorsement of anything from a supermarket to a bottle of wine. These activities generate far more money, interest and potential future business than even the most laudatory review and successfully promulgate the cult of the chef.
The tsunami of new money which has flooded into the restaurant world has democratised the industry, simultaneously making restaurants more accessible to a younger audience whilst making it possible for chefs to make their personal fortune in a shorter time than ever before, quicker even in certain cases than a chef’s traditional apprenticeship. Whilst these effects may be particular to restaurants one other consequence is shared with many other businesses which have become so highly fashionable and this should be borne in mind by any potential future investor – the gap between the successes and the failures is now wider than ever.