Here’s How Michelin Stars Actually Affect the Restaurant Business
Receiving a Michelin star doesn't always guarantee instant success. In some cases, a restaurant’s business suffers.
The Michelin guide has long been the defacto authority on the world's best dining. But as gourmet culture reaches peak mainstream popularity and old culinary hierarchies remain in flux, how does gaining, losing and (gasp) renouncing a star actually affect a restaurant’s business?
Historically, receiving a single Michelin star has led to an increase in customers for restaurants. Take chef John Fraser, whose New York restaurant Nix joined the Michelin star rankings this year (and whose website features “Proud new owner of a Michelin star” as a central banner). He said that receiving a Michelin star “has drastically increased business at both Nix and Dovetail.” An added bonus? “With the stars, I do feel now we are able to retain a higher level of staff than before.”
With each additional star awarded, restaurants often see an incremental increase in business. Master of the Michelin-star game Joël Robuchon, who holds the title of being awarded most Michelin stars in the world, broke it down for us like this: “With one Michelin star, you get about 20 percent more business. Two stars, you do about 40 percent more business, and with three stars, you’ll do about 100 percent more business. So from a business point ... you can see the influence of the Michelin guide.”
Since being awarded three Michelin stars for his Las Vegas namesake restaurant housed in the MGM, Robuchon’s formula of stars-to-increased patronage has proven true. “When we received the third Michelin star in this restaurant here in Las Vegas, the restaurant was instantly recognized, and since then the restaurant is always full,” he said.
There is, however, a large difference between being housed in a world-class casino in a city known for people balling out and running your restaurant in a smaller town or the countryside. The market is different, and a star isn’t necessarily going to offer the same staying power to your business.
Shaun Rankin, chef of the one Michelin-starred Ormer in Jersey, U.K., explained to The Staff Canteen just how important it is to understand your specific market instead of wishing on your star to bring in customers. “We are not located in the middle of London, so we don’t have a 20 million population; we have a population of 85,000 in Jersey,” he said. “You need to be really careful regarding your business model and your market. You can have a star, amazing, but if you’ve got an empty restaurant, you’re not going to be successful in business, then you’re going to close.”
As pointed out by Fortune, while some restaurants have reported an upswing in business after the addition of a star, researchers at the Bordeaux Business School have found that in order to maintain the perceived standards of the Michelin guide, restaurants often feel the need to invest significantly more in things like service and décor, sometimes straining the business itself. What’s more, according to a study published in Cornell Hospitality Quarterly, nearly half of the sample group of 26 two- and three-Michelin-starred restaurants from across Europe were found to not be making a profit, regardless of their ranking.
And if you thought that not making a profit with a star was bad enough, what about what happens after losing a star? According to a report in Irish Independent, when chef Kevin Thornton’s restaurant in the Fitzwilliam Hotel in Dublin, Ireland lost its star, profits declined 76 percent, eventually forcing the restaurant to close in late October 2016.
Meaning: Getting caught up in the star game can be a sharp double-edged sword if owners don’t navigate the win with a sound market understanding.
Then, there are those don’t want anything to do with stars because of how they inherently influence the restaurant. While Eater illustrates a long-standing tradition of chefs from Marco Pierre White to the more recent Sébastien Bras “giving back” their stars for reasons ranging from wanting to have fun with food again to not wanting to compete any longer, the choice of refusing a star may also be a viable business tactic for some beyond the desire for more artistic freedom.
Just last week, Boath House in the Scottish Highlands, which has held a Michelin star for ten years, spoke out about wanting to be stripped of their star because of the economic-pressures it placed on the restaurant. Now, they’re switching up gears with a simpler menu. Owners Don and Wendy Matheson told The Telegraph that while the decision will likely result in the loss of the star, they needed to relieve the economic pressure.
“The economics of running a restaurant to Michelin standards had meant their establishment had run at a loss for years and they were only able to stay in business because of revenue from Boath House’s guest rooms,” reported The Telegraph.
Purposefully stepping away from maintaining or receiving a star in the first place just might be the trick for more restaurants burdened by financial pressures— and that’s perfectly fine. After all, we live in a time where more and more a ‘gram from the latest hot chicken spot can hold just as much social currency as the establishment-acclaimed four-hour dégustation menu.