FOOD BUSINESS SPECIAL ............................How Restaurants in Lima and Copenhagen Became Best in the World

How Restaurants in Lima and Copenhagen Became Best in the World

Harvard Business School professors Anat Keinan, Mukti Khaire, and Michael I. Norton deconstruct ground grasshoppers, upscale Peruvian cuisine, and other surprising elements that create the perfect culinary experience.

Great chefs, like great artists, go far beyond their materials (in this case, food) to provoke an experience that fulfills their creative vision. Unlike artists, however, they are running a business that requires putting diners in the seats, balancing costs, and managing overhead in order to turn a profit. How do these chefs express the full extent of their culinary innovativeness while at the same time as creating a return for investors?

Two recent Harvard Business School case studies explore this tension through the experience of two high-profile chefs who came up with different answers to these questions.

Located in Copenhagen, restaurant Noma routinely tops best restaurant lists. That's in large part due to the singular vision of chef-owner René Redzepi, who is obsessive about using local ingredients (only coffee is sourced outside Scandinavia) as well as creating unusual dishes such as ground grasshopper miso and live shrimp dipped in brown butter. In doing so, he has resuscitated Nordic cuisine, spawning new restaurants all over the world and expanded his own repertoire of super-local cuisine with a pop-up restaurant in London this year and another to open in Tokyo next year.

Just as much a cultural pioneer, Peruvian Gastón Acurio and his wife founded upscale restaurant Astrid & Gastón in Lima 20 years ago, and has since spread their dining empire. Now consisting of 32 restaurants in 11 countries, organized under nine different brands, Astrid & Gastón has helped to popularize Peruvian cuisine throughout Latin America and increasingly the world. "The big mission is to use Peruvian food as an instrument to put our culture in the world," Gastón Acurio has said.

Despite their success, both restaurateurs have struggled at times to grow and expand their businesses while staying true to their cultural roots. We sat down with Associate Professor Mukti Khaire, lead author of Noma: A Lot on the Plate; and Associate Professor Anat Keinan and Professor Michael I. Norton, authors of Gastón Acurio: A Recipe for Success, in a wide ranging discussion about food, business, and artistic vision.

HBSWK: Both cases are about chefs that are pioneers in a certain kind of cuisine, faced with the issue of how to expand while remaining true to their culinary roots. How do you see them meeting those challenges?

Khaire: The key founding motivation behind Noma was René's notion that in Denmark, people had lost sight of Danish cuisine, and he wanted to see if it could be done inventively. The Noma menu is, to use a cliché, his canvas. His goal is to say this is what the earth has to offer around here, and ask, "Can we stay within those constraints?" But that can't be done elsewhere because of the importance of local ingredients. They could do different local ingredients, but then it would have to be a place with enough of a deep culinary tradition where the ingredients are varied enough that it is exciting for René to do something different with them.

Keinan: It's interesting that both of these chefs may have different passions and solutions, but that [they] started not only business ventures, but ventures with larger visions or missions behind it. It's a very interesting dilemma of how do you balance financial goals with this passion or mission you have—and both creators found different answers to that. Acurio was maybe more pragmatic and found a way [that would] allow him through these separate brands to do his high-end restaurant but also appeal to different dining occasions and different targets.

Norton: Think of them as artists. They simply could have made food for themselves, but for both there is a public-facing quality of wanting to show their vision to the world. It's making money from their passion that often creates the tension with the vision.

Khaire: In the literature it is called a "blending strategy." The idea is there are multiple worlds in our society, and people are judged differently in each world. Take any individual and she behaves differently and has different values in the family realm than in, say, the work realm. The idea is this: There is a market logic, which has rational economic calculations, and an artistic logic where one is doing something for self-expression. So how do you blend those two worlds? Noma does it by charging a high price where people are paying $500 for lunch—though not necessarily a high margin. That's similar to a fashion brand like Chanel (though fashion brands have higher margins). Acurio is following a portfolio logic, similar to, say, Penguin, which has Penguin Classics and all kinds of genre fiction like steampunk and romance that make a lot of money, but it also has Viking, its literary press, which any serious author would be over the moon to get a contract with.

HBSWK: What would you say is the biggest conflict Noma faces?

Khaire: When you as a firm are depending entirely on the chef's creativity for the product, how do you grow? You can't clone the person; you can't create multiple Nomas. Obviously, there are some restaurant chains that do that, like Danny Meyer, but after awhile Danny Meyer is an investor, not the chef, and René would not like to do that—he likes to cook.

Norton: Look at it as a continuum, where one end is Wolfgang Puck's airport kiosks. The interesting question is, where do you fall on that continuum? Acurio is probably more on the commercial end, because he is trying to create a brand to launch in other countries—it's not that he's trying to make money, necessarily, but he wants to be known.

Khaire: There's a difference in how each one wants to be known. Noma wasn't founded with the idea of bringing Danish food to the world; they wanted to bring Danish food to Denmark. At the same time, Noma wants to become part of the public discourse—how eating locally has other benefits or eating insects as a protein source. Suddenly there are protein bars made of ground-up crickets, and it is palatable because people are like, 'if the best restaurant in the world can do it, then there must be something to it.'

Norton: There is mere awareness, and then there is actually experiencing something. Different artists feel differently about it. Some are comfortable with being known because there is some mission that they are trying to communicate, and others truly need consumers to experience the art itself. In the latter case, the chef needs to be able to scale up production for mass consumption.

Keinan: Acurio has also had a huge impact on the economy of Peru, where so many people work in the industry. If you want to have that kind of impact, it's not enough for people to admire and appreciate what you are doing—you have to have the numbers.

HBSWK: What would you say Acurio's main difficulties have been?

Keinan: He sees himself as a gastronomic ambassador of Peru; he has this mission to promote Peruvian cuisine. The question is how is that aligned with the business of profitability and growth, [and] so how does he stay authentic. Does he stay true to Peruvian cuisine or adapt it to local tastes. I think that's a fascinating dilemma in marketing.

Khaire: You see that a lot with food. If you've never eaten pizza in Italy it's a rude shock when you go and see this thin thing with barely any cheese on it. If Olive Garden markets itself as authentic Italian food and that's what people think it is, they will most likely not like the real thing.

Keinan: That is what's interesting about both cases—these are artists with a vision, passion, and a mission, but they are also good at marketing, promoting, and positioning their brand. It's not by accident these restaurants have been successful. At Noma, for example, they let you keep the menu after the meal. I think that's clever—people are there for the experience, and they are there to document it.

Khaire: And many times they stumble upon these good business practices. At Noma, one of the most popular things is the kitchen tour at the end of the meal. It started as somebody asking worriedly 'Can we do this?' and the chef saying, 'Oh, sure.' And they realized that people liked it, and it had huge benefits.

HBSWK: Why do you think things like the keepsake menu and the kitchen tour are so important yet have nothing to do with the food?

Khaire: But it's part of the experience. You are paying almost $500 for lunch, so being made to feel part of the in crowd is actually really beneficial and important. [Noma] has one four-hour seating for lunch, everybody greets you when you enter, they all say hello, and the chef gives you a hug. It's part of the myth, not the myth because it's reality but it is part of the legend of Noma and makes people want to go there.

HBSWK: Do you think those added things are part of the creative vision, or are they added to sell it more as a business?

Khaire: I got the sense they were part of [Rene's] vision. Really good makers of things are enthusiastic about sharing them, and this is a way for them to interact with more people. There is a pride in transparency, and it also happens to work as a way to get loyal, adoring customers to spread the word.

Norton: There is an interesting difference between artists and product designers. Artists don't necessarily want you to be happy. They want you to have an experience they designed for you. They are not trying to make you smile with something delicious—they are trying to provoke you and surprise you. And artists can't see if they have been effective unless they interact with people.

HBSWK: They want to see their audience.

Keinan: It's really interesting to think of the motivations of consumers as well. They are the same—they don't want a delicious meal. They want to be provoked. They want a special experience. They want something authentic. They want something different.

HBSWK: It's like the difference between going to a Mexican restaurant and having a burrito you know you will like, and going to a Peruvian restaurant where you'll get something out of the ordinary.

Norton: They are consuming things that go far beyond the food. The food is necessary so you are not staring at an empty table, but it's a vehicle for provocation and experience.

Khaire: On the reverse side, that gets overused. Every other day in the newspaper you read, 'We are trying to create an authentic experience,' which is sort of difficult to stomach most of the time.

Khaire: For me the reason this promise of authenticity works [is because of] things like at Noma, when a person with allergies comes in, they go to outrageous lengths to accommodate the person. The idea is it's a once-in-a-lifetime experience for most customers; they don't want them to come in and just eat three dishes. That's also what makes growth issues harder—it's much more cumbersome to re-create. But anything less than the Noma experience would have to be called something else. As a business manager in these situations, you have to let the chef or other creative person be in the driver's seat, and figure out what he feels he can put his name behind. That's the only way it can be successful. Anything else doesn't have the same—again to use an overused word—heart in it.

HBSWK: Did Acurio end up changing his cuisine for local tastes in a way that was a compromise for him, or was he able to get out of that dilemma with franchises?

Keinan: The fact that he has different brands allows him a lot of freedom. He can have the high-end brand that gets him the Michelin stars and is on the list of [the world's] 50 best restaurants, so he gets his reputation and prestige, and then he could leverage that to promote Peruvian cuisine more broadly.

HBSWK: Don't those other brands dilute his vision over time?

Keinan: He has a different image from Noma. His vision is to promote Peruvian cuisine; it's not just to serve a small group of high-end customers.

Norton: He's lucky in the sense that there is a high end and a low end to Peruvian cuisine, so he's not being inauthentic in the way that some luxury brands are when they go downscale. But you are right, brand dilution is often a huge risk in going that route.

Keinan: In this case, the goal of the different brands is to complement each other, so they don't compete or cannibalize each other.

HBSWK: And what about Noma? You mentioned that margins aren't very high, and in the case you talk about investors coming in and wanting to increase them. Have they been able to do that without hurting the prestige?

Khaire: That portfolio approach is much harder for René, but it's not impossible. One of the ways Noma is experimenting with this is through pop-up restaurants. Even though they have to shut down the main restaurant for a time, they make a big chunk of money from hotels like Claridge's in London or the Mandarin Oriental in Tokyo that pay a subscription fee up front to have Noma set up shop.

Norton: It's interesting to think about what cities he could go to where consumers would say, "He's just doing it for the money"—Vegas, Macao.

Khaire: He couldn't do Dubai, but he could do Istanbul. Maybe even Hong Kong or Shanghai because those places have culinary traditions.

Norton: You as a customer have to believe that he is genuinely curious about the cuisine.

HBSWK: What about Acurio? Has he been successful in spreading his franchises to different cities, or are there places he's run into difficulty?

Keinan: The challenge he has had is educating consumers who are not familiar with Peruvian food. He's been successful in Latin America and in Miami, but the challenge is to promote Peruvian cuisine beyond where he has the prestige or reputation.

Norton: Even so, the case includes an exhibit documenting all the openings and closings of franchises around the world, and it's been mostly openings. Once they open, they are usually successful in maintaining the business.

HBSWK: Are there any lessons from these restaurants that can be applied to businesses outside the culinary world?

Keinan: I don't think it's a coincidence we see these cases coming out at the same time. They represent a very important trend in consumption, where—especially in the luxury industry—experiential consumption is becoming very important and growing faster than product consumption. Consumers are looking not just for experiences but also for experiences that are meaningful, authentic, once-in-a-lifetime.

HBSWK: Which is the danger of it—that it risks becoming this new commodity.

Keinan: It's particularly relevant to the restaurant industry. One of the reasons it's so fragmented and you see so many brands is because people don't want to keep going to the same restaurant. They want to keep trying new things and collecting new experiences. But they are also looking for something that represents a point of view. They need to feel that by going to the restaurant they can be, first, part of a meaningful experience, but also part of a movement, something bigger that the brand stands for.

Khaire: For me, it's the power of the idea as opposed to the power of the product. If you go to Noma, a lot of the stuff materially is weird, right—you are eating a live shrimp or ground grasshoppers or something like that. But what these entrepreneurs in the cultural arena are able to do is leverage an idea to make the most of it. It's not the wriggling shrimp; it's the idea of what's behind it. Or in the case of insects as food—or entomophagy as it's called—it's the idea that we are depleting natural resources, but we need protein, so we can elevate that.

HBSWK: To achieve environmental sustainability.

Khaire: So now these ground grasshoppers in miso sauce are not just grasshoppers, the ick factor is taken away, and it's this bigger idea.

Norton: To me the key is the "not just." It's not just ground grasshoppers, it's also an idea that you are consuming.

Khaire: In all these cases, entrepreneurs have leveraged or monetized an idea that is much more a symbol than a material product. If you think of an airplane as an idea that we can fly, then how you do that is a matter of engineering. It's the same thing here. You have the notion of sustainability through food as an example, which is not the only idea in Noma but it is one idea, and then how you do it—through locavore cuisine or entomophagy—becomes the nitty-gritty.

Norton: One of the things you notice when people describe these restaurants is they don't use words like 'delicious'—or describe how the food tasted. They describe what the food was like and what the experience was like, using words like 'amazing,' 'interesting,' and 'fascinating.'

Khaire: 'Mind-blowing,' 'innovative.'

Keinan: That's why it's like art—people use the kinds of words they'd use at a gallery. 'It moved me.' 'It inspired me.'

Norton: You don't say, 'It was really yellow.' The experience goes far beyond the material elements.

Khaire: It's the same thing with songs and movies. They are not products, they are not just words strung together—constructed to become the next hit pop ballad. The ones that change the world and change the way we think are ideas first, and [then] someone manages to make a market for them, get them to audiences, and do something different.

by Michael Blanding

http://hbswk.hbs.edu/item/7601.html