The restaurant business is not the avenue for success if one is looking for steady and predictable. Just ask any restaurateur who has been in the industry for any length of time. Tastes change, neighborhoods transform, and the latest and greatest are soon overshadowed by the new eatery down the street.
It’s hard to imagine, but even celebrity chefs, whose names, faces, and restaurant establishments are plastered across our flat screen TVs, are not immune to the fickle finger of this industry.
The last two years saw a long list of celebrity-owned chef restaurants fall by the wayside.
A Few that are Throwing in the Towel
Scott Conant, the popular judge on Food Network’s Chopped, is a chef known for his modern take on classical Italian cuisine. After leaving his first two restaurants, he opened Scarpetta in Manhattan in 2009. It was nominated by the James Beard Foundation for “Best New Restaurant in America.” When he extended his vision to Beverly Hills, the Los Angeles Times voted him “The Best New Chef in L.A.”
In 2014, he officially ended his ties with Scarpetta in New York. In 2015, this same restaurant as well as Conant were named in a wage-theft lawsuit filed by both present and past employees. (Conant denied any involvement in this area of the restaurant). Then, 2016 arrived, and with it came the fall of Scarpetta in Beverly Hills. This was followed a year later by the opening of Fusco—an independent restaurant in New York—which lasted just over a year before closing its doors in July of 2018.
His New York restaurant is but one of many celebrity-owned restaurants in The Empire State that have found they’ve overstayed their welcome. Guy Fieri, the chef with the outgoing personality and star of Diners, Drive Ins, and Dives, closed Guys American Kitchen & Bar in December of 2017 amid both fan’s raves and critic’s bashings.
One chef who seems to have taken the fall exceptionally hard is Jose Garces, made famous by Food Network’s Iron Chef, who opened his first tapas restaurant, Amada, amidst an onslaught of rave reviews in 2005. Just four years later, he had a total of four restaurants and went on to open 12 more around the U.S., including his old home, Chicago.
And then, 2014 struck and the Revel casino in Atlantic City closed its door and took with it four of the celebrity chef’s restaurants. 2017 brought the unimaginable when it became apparent that Jose Garces’ restaurant group was in trouble—big trouble—one that included lawsuits for unpaid bills and signed over deeds for a home and farm that would act as collateral on a $7 million loan. In May, Garces filed for bankruptcy. In July, word came out that an agreement had been made in a U.S. Bankruptcy Court and that Ballard Brands and David Maser, a Philadelphia investor, would be purchasing the restaurant group for $8 million.
If you’ve turned on your TV this summer, you’ve undoubtedly heard about the closing of three of Mario Batali’s restaurants in Las Vegas following sexual harassment allegations by four women. This celebrity chef came into the public eye via Iron Chef America and managed to create a restaurant empire. The restaurant group that Batali co-founded has acquired his shares.
Jamie Oliver, known for his time on The Naked Chef, recently closed 12 of his 37 restaurants.
The Changing Times
What’s creating the instability for what use to be an almost certain success equation? There are several changes in the existing landscape that seem to be at the root of the waning celebrity chef movement.
Demographics. One of these is the newer generations. Next year, the Millennials are expected to surpass the Baby Boomer population by one million. While considered “foodies” by many, they are also drawn to authentic, worldly, responsibly-sourced food, and, very often, casual dining.
Overleveraged. Not surprisingly, celebrity chefs tend to veer toward high-profile locations and big venues that go along with their famous status. This, to say the least, can be costly. Millions can go into one operation and financial advisors, seeing the potential of a well-known name, can over-expand.
Kevin Sbraga, winner of Bravo’s hit Top Chef, opened five restaurants and then proceeded to close them all in a matter of just six years. According to Philly Mag, Sbraga was quoted as saying that if he “had it to do over again, he wouldn’t have grown so quickly.”
The bottom line: TV fame brings with it lots of opportunities, in some cases, too many. It’s a good idea to spend time perfecting your first restaurant and learning from your mistakes before opening a slew of establishments.
High Costs. Restaurants are facing an increase in operational costs at all levels, from labor to rent and product. While a 15 percent profit margin was at one time the norm, today’s venues are often faced with a mere 5 percent.
Keep in mind, if you’re feeling a tug on your heart strings for these famous chefs, that many rise and fall only to rise again. While they may be down a restaurant or two, or three, many of these high-profile individuals are still worth millions. Guy Fieri is still a very wealthy guy with a net worth that comes in at about $8.5 million. Mario Batali tops that figure at about $25 million. And guess who was recently named the richest chef of all? Jamie Oliver, with a net worth of $400 million.
The truth is, the median lifespan for a restaurant is under five years. If you want stability, owning a restaurant may not be your best bet. If you’re looking for excitement, social engagement, and days and evenings that are never the same, the restaurant business may just be your calling.
When Marketplace asked Curtis Stone why he loved the restaurant business, he answered, “I think it’s always just an inch from a disaster and that’s kind of exciting.”