why it's so hard to run a sustainable high-end restaurant
- Written by Vaughn Tan, Assistant professor of strategy and entrepreneurship, UCL
For over a decade, Noma in Copenhagen[1] has been one of the standard bearers of the high-end culinary world. This “New Nordic[2]” restaurant made its reputation (and obtained its three Michelin stars[3] and position in the World’s 50 Best Restaurants ranking[4]) by focusing on culinary innovation, with a frequently changing menu driven by continual work by its in-house culinary research and development (R&D) team.
On January 9 2023, Noma’s Danish chef and co-owner René Redzepi announced an imminent and significant transition[5]: Noma would close as a restaurant in 2025 to focus on pop-ups and culinary innovation. Over a decade ago, El Bulli in Spain, one of the first innovation and R&D-led restaurants, made a similar transition[6].
Exploring the reasons behind the decision, an article about the upcoming changes at Noma[7] in the New York Times explained:
The style of fine dining that Noma helped create and promote around the globe — wildly innovative, labour-intensive and vastly expensive — may be undergoing a sustainability crisis.
“Sustainability” here means something broader than economics and profitability. It now also includes a business’s environmental impact and whether its people (staff, management and owners) work in physiologically and psychologically healthy environments. A sustainable business model in this sense is one which could persist indefinitely without losing money or depleting either the environment or its people.
In my book The Uncertainty Mindset: Innovation Insights From the Frontiers of Food[8], I explore why it is hard for innovation-centric restaurants like Noma to have sustainable business models. The answer boils down to how continual innovation requires engaging with “not knowing”, which is inherently at odds with consistency and efficiency – this is true not only in high-end cuisine but in any industry.
The high-end restaurant conundrum
Guests usually see a restaurant as somewhere to go for a great experience because other people are cooking and taking care of hospitality. For a restaurant to do this and still be a viable business, it must function much like a factory.
A restaurant has to be consistent, which means it must reliably produce what guests want to buy because they would otherwise go elsewhere. It also has to be efficient, producing with a minimum of wasted resources. This is because margins in the restaurant industry are thin[9].
In high-end cuisine, the problem is compounded because overheads are high and the food is complex. Every dish usually has many components, and each component’s recipe often features multiple ingredients and techniques. Refining a complex dish so it becomes well-understood, well-described and reliable can take many cycles of cooking and troubleshooting.
Cooking also draws on deep stores of tacit knowledge. Tacit knowledge is often the difference between cooking a recipe acceptably and cooking it transcendently. Anyone knows this who has tried to cook a perfect French omelette (creamy and on the cusp of being set inside but not liquid, yet completely uncoloured outside) for the first time.
Cooks only acquire such knowledge through extended training, and high-end cuisine is particularly demanding in terms of tacit knowledge.
Innovation is the enemy of consistency and efficiency
For high-end restaurants to become both efficient and consistent at producing complex dishes, the people who work in these institutions have to practise cooking the same dishes a lot. This is both to work out the kinks in recipes and to develop the tacit knowledge needed to cook them well. An efficient and consistent restaurant not only works better economically, it is also an easier place in which to work. The people who work there know what to do and how to do it fast and well.
This is why innovation is antithetical to consistency and efficiency.
Every new dish introduced means the restaurant has to figure out again how to be consistent and efficient. In many cases, even the kitchen’s organisation of roles and its network of suppliers may need to change to accommodate new dishes.
Innovation introduces uncertainty into how people work (and work together), the timings of processes, tacit knowledge and supply chains. This inevitably creates waste, failure, inconsistency and stress.
Innovating is even harder when consumers expect near perfection, as they do in high-end cuisine. For a high-end restaurant, this means even more resources (time, effort, money, product) must be spent refining new dishes before they can be allowed to go on to the menu. In practice, this often means there is a significant expense in creating, equipping and staffing a culinary R&D lab to support a relatively low-margin restaurant business.
Innovation makes the already tough business of high-end cuisine even tougher. Continual innovation may make a restaurant nearly impossible to sustain.
Sustainable business models around innovation
To be clear, it’s almost uniquely hard to build a sustainable restaurant business model based on continual innovation.
In cuisine, innovation is generally only protected by secrecy, tacit knowledge is of disproportionate importance, and innovations have a short lifespan. Whereas in other industries, innovation is protected by patents, explicit knowledge is more important for production, and innovations can be exploited for much longer.
In these sectors, business models built around innovation are more likely to make sense. This is the case in some parts of the pharmaceuticals, consumer hardware and entertainment (film, music, publishing) industries.
Back in the culinary world, Noma’s plan to focus entirely on innovation work and monetise without an attached full-time restaurant seems to have worked for other culinary R&D labs. The Cooking Lab[11] (publisher of Modernist Cuisine[12] and other books and media) and Chew Innovation[13] (a consulting food product development company) are two examples.
High-end restaurants like Noma must be both consistent and efficient at producing high-quality food in order to be broadly sustainable. Unfortunately, innovation is unavoidably harmful to consistency and efficiency. While most business models built on innovation may work, a restaurant business model built on continual innovation will always be at odds with itself.
References
- ^ Noma in Copenhagen (noma.dk)
- ^ New Nordic (en.wikipedia.org)
- ^ three Michelin stars (guide.michelin.com)
- ^ the World’s 50 Best Restaurants ranking (www.theworlds50best.com)
- ^ announced an imminent and significant transition (www.instagram.com)
- ^ made a similar transition (www.wsj.com)
- ^ an article about the upcoming changes at Noma (www.nytimes.com)
- ^ The Uncertainty Mindset: Innovation Insights From the Frontiers of Food (uncertaintymindset.org)
- ^ margins in the restaurant industry are thin (restaurant.org)
- ^ Everett Collection Inc/Alamy (www.alamy.com)
- ^ The Cooking Lab (modernistcuisine.com)
- ^ Modernist Cuisine (modernistcuisine.com)
- ^ Chew Innovation (www.chewinnovation.com)
