The restaurant industry is tough. Virtually anyone with decent cooking skills and a modest amount of capital can open one; the barriers to entry are quite low. Restaurateurs must also face an unpredictable customer base, as well as significant competition and substitutes. Against these obstacles, it is no surprise that many close shop after only a few years. It is simply a difficult business model to make work over the long run. And that is precisely why Chef Grant Achatz’s story is so rare.
Achatz is a testament to the impact that creativity and a little gumption can have on the odds.
I was introduced to Chef Achatz and his restaurants, Alinea and Next, by my colleague and self-proclaimed food enthusiast, Allison. A few weeks ago, she gleefully entered the room—bounded, if memory serves—and announced she had procured a table at Next, one of Chicago’s foremost restaurants. She had prepaid a significant sum via the “ticket” page on Next’s website, securing a meal for two for what is generally recognized as an epic culinary experience. This was intriguing.
What I subsequently learned about Next impressed me. Unlike other restaurants that change their menus infrequently, Next changes their entire concept every few months. Its inaugural menu featured Paris 1906, but Allison would be experiencing Modern Chinese—the 11th theme since their 2011 grand opening. This continual innovation not only keeps things fresh, but creates a fervent following amongst foodies. In fact, because demand for Next massively outweighs supply, the owners don’t use a traditional reservation system. They sell season tickets and individual pre-priced tickets in a fashion similar to theatre and sporting events. For the 2012 season, tickets were sold out within seconds and over 6,600 people queued for a spot.
From an investor’s viewpoint, this is simply brilliant business model innovation. It tackles the greatest challenge for restaurants: a steady flow of customers. Next creates a predictable revenue stream and puts itself in a negative working capital position by requiring payment upfront. It also addresses the risk of rapidly changing customer preferences by embedding innovation and variety into their offer.
But what makes this story even more compelling is Chef Achatz himself. Achatz was a rising star in the Chicago food industry and only 33 when he received brutal news. Although a non-smoker, young, and a highly improbable candidate, he was diagnosed with Stage 4 squamous cell carcinoma (those impacted by cancer know there is no Stage 5). Not only did Achatz face a life threatening disease, treatment would likely involve the loss of his taste buds or the removal of his entire tongue. A tragic diagnosis for a chef, indeed.
With the same gumption and creativity that he brought to his restaurants, Achatz fought his cancer. He did not settle on the first of many doctors he saw, all of whom wanted to immediately remove his tongue. Instead, he persevered until he found a team of expert oncologists at the University of Chicago Medical Center. These doctors administered a grueling regimen of chemotherapy and radiation on Achatz, the side effects including nausea with every meal, the loss of taste, and skin shedding off his tongue. But there would be no removal of his tongue unless absolutely necessary and, luckily for the Chef, it was not. Achatz triumphed over his cancer. Over the next year, Achatz regained his ability to taste and subsequently penned his ordeal with his business partner, Nick Kokonas, in his book, Life on the Line: A Chef’s Story of Chasing Greatness, Facing Death, and Redefining the Way We Eat.
In life, there are those that accept diagnoses at face value, and succumb to what tradition dictates as fate, and there are those for whom they are only a guideline. While it is valuable to know what the base probabilities are within a situation, it is important to not lose sight of the influence that you can have over your own situation.
Improving the odds is often difficult but it can be done. It is usually achieved through a combination of persistence, creativity and gumption. One does not necessarily need to take the well-worn path of others before them.