In What Business Are We?

Viet Nam (SANEPR.com) May 21, 2008 -- Over the past ten years a noticeable shift has taken place in the hotel restaurant business with strong emphasis on designer restaurants and celebrity chefs. The trend started in 1998 when the Hyatt in Singapore opened Mezza9 and interior design firms like Super potato, Tony Chi, Philippe Starck and P 49 where the new, internationally acclaimed companies everybody wanted to be associated with. It became the age of show kitchens – high tech stainless steel kitchens with top end finishing touches were suddenly out in the open for everybody to see all encased in glass. The kitchen turned center stage and cooks were perpetually live on stage. A restaurant designed and conceptualized by a well established design company certainly attracts a fair amount of clientele - even if the food is mediocre. Celebrity Chefs have reached Rock star status.

“Experience Dining” is a self styled fad that lasts a few years than it is over. We are leaving in a world of plenty so customers are looking for (short-term) excitement. A clever marketing person thrives on this trend and optimizes earnings – albeit in the short term. So the crux of the problem is who, as an industry, we are or rather who we are becoming? We are witnessing something that is actually not new to society; we experience a sort of overindulgence of everything - a paradigm shift in affluent levels of society. We are now so used of living in a world that is dominated by excess ,excess in appliances, good looks, cool fashion, the media pretty much decides what is HIP and in and what is not. A few years ago Insider Restaurants where just that, places where the rich and famous jet setters would go for a variety of reasons i.e. to meet the “right people“, be different, experiment something new, knowing a place that only insiders knew. Now we are experiencing “Designed Synthetic Insider Restaurants where an instant mass appeal is a must for success – irrespective of food quality. In today’s vain society it does not matter what to eat but where and by whom you get seen, it’s almost like the Emperors new cloths. And it becomes our professional duty to cater to these needs and requirements of our guests.

Are we compromising décor, style, functionality and food quality for sleek and sexy looking restaurant design? If this is what the Zeitgeist dictates then investors brace themselves that their dollars are wisely spent. The notion of what constitutes luxury or contemporariness is highly subjective and subject to different interpretations. Luxury, in this case, should be defined as a state of mind rather than an object or entity that appeals to the senses. The unspoken conventional wisdom in the restaurant industry states that if you don’t have a cool funky looking restaurant investors and owners are doomed to fail as recent trends indicate a tendency towards a minimalist approach with emphasis on style but too often short on substance. Whilst there is undoubtedly a causal correlation between a cool looking restaurant, good food and a profitable income statement there are as many designer restaurants that look visually very attractive with their cutting edge lighting fixtures, floor to top glass panels and sophisticated background music from BOSE surround system that serve however uninspirational food boringly presented without flair and passion.
Ultimately, however, quality and consistency, and not being hip, is the best long-term investment strategy. Classical examples are SPAGO, Alain Ducasse, Joël Robuchon and La Tour d’Argent . The paradox is that some of the best Michelin rated restaurants in the world are actually not designed by any of the great Interior Design Firms but are rather simple. Restaurants like Taillvant in Paris, Tantris in Munich and Le Gavroche in London owe their success mainly to impeccable service standards and food that is immaculately and passionately prepared by chefs who love what they are doing.

The early adopters of an en vogue restaurant or more aptly described as the trend setter crowd determines the initial success. Once the initial euphoria subsides the real success of the restaurant emerges. What consumers desire and expect is food that tastes like food, attractively arranged and above all tasty. Some of these expensively and super cool designed restaurants never justify the returns on the investment. The situation of generating decent returns in excess of 25% is further compounded that the life cycle of a stylish, contemporary designed bar or restaurant in one of Asia’s metropolis is no more then 5 years. Apart from return on capital what other invest metrics can be applied to judge the profitability of an investment that can cost several million dollars? A good measurement would by seat turnover and NPV versus what income streams the restaurant would generate if no changes apply. The problem with these indicators is that they are lagging indicators that react slowly to economic changes of the past, and therefore has little predictive value; they are historical in nature as it reflects a historical performance.

Consumer behavior (and taste) is notoriously difficult to predict and subject to changes as demographics, different ethnic groups and the social fabric of a city or nation change intermittently – a classical example would be Kuala Lumpur, Singapore and Hong Kong. How many of these new super designer restaurant concepts are supported by solid market research! What happened to the “conventional” marketing concept (according to Philippe Kotler) to provide value to customers!

So the original question of, in what business are we in still remain unanswered. Are we, as hoteliers and business managers, in the business to design cool looking restaurants or should we concentrate on our core competency and focus on serving tempting food, palatable presented in a contemporary environment? Or are we in the entertainment business creating memorable, long lasting experiences. I admit there is probably no perfect answer and the truth lies somewhere between. Restaurants have to be much more than just a dining outlet; consumers want to be exposed to a variety of different options. Hotels function as a social center piece, a market place, a Mediterranean agora where people watch and want to be seen – organized chaos. The social status of a person is determined where he or she dines, nowhere is this more prominent than in Asia and increasingly the oil rich nations of the Persian Golf where designers like Super potato, Tony Chi, Adam Tihany and Spin become regulars. Thus, the birth of the lifestyle restaurant / bar.

Combining western style grill room ambiance with Asian food components, notably Thai and Japanese, accentuated by contemporary design all jazzed up with sophisticated entertainment and complemented by the ubiquitous private rooms and the Cigar-Whisky-Cognac corner, and a gourmet counter offering an eclectic selection of take away delicacies.

Dietmar Kielnhofer

HCM City, March 2008