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David Chang's Plan to Save Restaurants Goes Beyond Covid-19

BobGhosh
·11 min read

(Bloomberg Opinion) -- This is one of a series of interviews by Bloomberg Opinion columnists on how to solve today’s most pressing policy challenges. This conversation has been edited and condensed.

Bobby Ghosh: You preside over 15 Momofuku restaurants worldwide. Since the start of the pandemic you’ve been a vocal advocate for much higher levels of government relief for the restaurant industry. And you’ve also just written a memoir — though I’ve heard that you originally set out to write a business-strategy book.

David Chang: That’s what I told myself. I think I knew I had to do a memoir but I didn’t really want to, so I tried everything in my power not to write one.

BG: How did you navigate the switch from a business-strategy book to a personal memoir?

DC: The first stories we fleshed out were moments in Momofuku’s history. Everything was restaurant-related for the first several months of working on it. We worked on that over three years. Then, in the last two years we were really shaping it into something personal — which wasn’t that hard because there was no separation between work and life.

BG: Anthony Bourdain’s death made you take the book in a different direction. Can you expand on that a little bit?

DC: That was really what shaped the book and its tone. I probably needed to touch upon my struggles [with depression and bipolar disorder], but I don’t think I would have done it so openly or willingly without Tony’s death. From then on I was like, I’m not going to hide. I can use this as an opportunity to be more open about it, to de-stigmatize it.

BG: The way you describe it, the restaurant business is extremely high-stress. Reading it, I felt like you were almost saying: Don’t get into this business.

DC: I don’t want people that get into this to only be spat out. People should walk into this business with eyes wide open, not eyes wide shut. Of course I want people to join this business and to find their calling in doing so, but too many people just don’t know what’s at the end of the rainbow. And I want people to realize there may not be a rainbow at all. To do this is sacrifice. We’re better off having a few people entering this business who are more committed to excellence rather than a lot of people who are treating this like they played a musical instrument in high school.

BG: Your thoughts about the difficulty of it all — I imagine they’ve been amplified by the coronavirus pandemic?

DC: Yeah, absolutely.

BG: Will young chefs now have to find a very different path, because of the way you came up is no longer possible?

DC: Well, we all have to pivot. We can’t do what we did before, because what we were doing before wasn’t working that well. A lot of chefs are asking themselves very serious questions, because they signed up to express themselves through food in a way that’s no longer possible. Dave Beran is a chef in Los Angeles and he just closed down Dialogue, one of the most intimate, best restaurants in the country, an expression of himself. He trained his entire life to do that, and that no longer exists. There’s no guarantee that comes back.

I’d be lying, straight lying, if I said I have the answers. But before we start asking the questions [about how to cope with the crisis], we need to ask what was working and what wasn’t working before, so we don’t repeat the same mistakes if and when we’re going to start over again. If you have a three-Michelin-star restaurant and you’ve had to close down, would you reopen the same restaurant?

I’m just trying to figure a better analogy. Do you watch any sports?

BG: I’m a soccer person.

DC: Alright. Let’s just say there’s no more television footage of Chelsea, or any Premier League club. That’s going to have a dramatic impact on sponsorships. And that changes the players’ salaries and the club revenues. Everything has to be recalibrated. It doesn’t take away the people’s love for the game but players ask themselves, “Can I make a career?”

And that’s where we’re at.

It’s not just the player. Say you’re the owner of the franchise: You always wanted to own a soccer team, and now you can own it but you’re not going to have the guaranteed revenue. There might be new ways to raise revenue, but you don’t know. That’s where we’re at: we just don’t know.

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BG: As an avid restaurant goer myself, I wonder about whether I’ll go back to a restaurant like Noodle Bar, where you’re sitting cheek by jowl with other people. That obviously has a bearing on the economics of restaurants. Are you having discussions at Momofuku about how to deal with these anxieties?

DC: I don’t have decision-making rights at Momofuku; that’s our CEO, Marguerite Mariscal. We have a great team in place.

Everyone’s doing what they can. Some people are thriving; most people are not. And I think it comes down to this basic math: If restaurants can’t get back to 100% occupancy, most restaurants are going to go out of business. We can wear masks, we can social-distance. But ultimately, it all depends on when there’s a vaccine.BG: So, how do you contend with that?

DC: We need to be prepared for the worst-case scenarios.

I feel like some of the responsibility is on the restaurant industry for not having had a lot more flexibility. If you were prepared in takeaway delivery beforehand, and had the marketing and the packaging, you were going to do well. Sushi, high-end Italian and pizza, and certain fast foods are doing really, really well because they were designed for that to begin with.

Now, people are trying anything and everything. But they should have been more open to new ways of doing business beforehand. I’ve been suggesting for a long time that delivery was something that restaurants needed to embrace. We need to fix the model of the delivery system and logistics, because delivery companies taking 30% of your top-line revenue is an unsustainable model. Not just for the restaurants, but also for the delivery company.

BG: So, the pandemic is more of a catalyst than a cause?

DC: The iceberg for restaurants wasn’t Covid-19. Something like that was going to happen, and change was coming. I don’t know if we were as prepared as we could have been. We couldn’t have prevented Covid, but we could have had more flexibility to mitigate the circumstances we’re in. I think that we were very stagnant and satisfied with the status quo. But we needed to drive revenue outside of the traditional four walls of a restaurant. That was abundantly clear.

What exactly we had to do, I wasn’t sure. But my intuition told me that it was going to be delivery of some sort. The entire restaurant model was making more money for everyone else except restaurateurs — whether you’re a credit-card processor, or Google, or Yelp, or a reservation system, or a purveyor of beef, or a lawyer, or an accountant. Everyone was making more money off of restaurants, with the exception of the restaurants themselves. Only the super high-end restaurants were able to adjust their prices accordingly. But for everyone else, there were limits to how much we could charge our customers.

There were ways of changing that. Look at what Stephen Starr did, with Roman and Williams, at La Mercerie: It’s a restaurant where everything is for sale, the plates, the décor, everything. I know people were thinking about that for quite some time, but why were we not doing that 10 years ago? Why weren’t we trying to figure out how to do sponsorship?

BG: At Bloomberg, we’ve spent a lot of time this year thinking about the future of cities after the pandemic. Momofuku restaurants are very deep-in-the-urban-jungle kind of restaurants. Can you imagine a future for your restaurants where people do not come back to the cities?

DC: The recovery of urban spaces and of the travel business are pressing topics for the restaurant industry. Whatever restaurant you operate — whether you’re a diner, deli, or high-end establishment — your livelihood is dependent on corporate business and corporate travel. And we know people aren’t coming back to offices before next summer. So, no business spending on catering or private dining-room bookings. And it’s not just about fancy restaurants: It’s lunches, office lunches. I was in New York for 9/11 and the Great Recession, so I know we’re looking at four to five years before there’s going to be a recovery.

BG: So what does your strategy look like?

DC: Everything’s on the table. And we’re not going out without a fight. We had a plan five years ago to focus on consumer packed goods. The goal was that 50% of Momofuku’s revenue had to come from outside the four walls of the restaurant.

We were researching and developing foods at our lab. We dipped our toes in the water with Ssam sauce for Kraft Heinz, to see how consumer packaged goods at a super-large scale would work. We learned a lot from that. And we had a plan for prepared foods, frozen foods… anything of that genre. We’ve just expedited that plan exponentially, and so it’s been very, very positive for us.

We’re going to continue to do other things. Over the years we’ve done equipment, we’ve done media, we’ve done everything under the sun in food to try to diversify our revenue stream. That’s always been our goal.

We’re always going to be in restaurants. That’s never going to go away. And I hope that all restaurants are going to survive and thrive. Not just our restaurants; I hope anyone who’s in the food business is going to survive this.

I hope that we can all keep our head above water until we get relief, whether through legislation or through the eradication of this virus. But until then, all options are on the table and I’m not giving up hope on anything.

BG: You’ve been very eloquent about the way the restaurant business treats its people, which can be very exploitative. Can you talk a little bit about how the pandemic has affected this?

DC: Well, I think it would be a shame to rebuild the restaurant industry in the pre-pandemic image of itself. We have an opportunity to do it differently. So much of the focus of the restaurant industry has been about the restaurants. But this industry doesn’t exist without the workers.

It’s clear that we need legislation. This can’t happen simply with restaurant owners talking to other restaurant owners, or consumers talking to owners. Change can only happen for the industry and for the people that work in the industry with legislation, whether for higher minimum wages, paid time off, healthcare or other benefits. I hope that we can see that change happen.

BG: But at the other end of the spectrum, consumers have to be willing to pay more.

DC: I’ve seen consumers willing to spend more. In Australia, people spend more money for food. The taxes on alcohol in Canada are quite crazy. You go to a ballgame it’s like $20 for a beer. That sucks. But it sucks less knowing that the workers have universal healthcare.BG: So what’s the bottom line? What do restaurateurs have to do to survive in the post-pandemic age?DC: Whether it’s chefs digging deep into why they’re really in the profession, designers re-envisioning dining spaces, owners revolutionizing their revenue assumptions and models, and all of us looking at how to treat our workers better, there’s no going back to the way things were. We need to be open to anything and everything.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Bobby Ghosh is a Bloomberg Opinion columnist. He writes on foreign affairs, with a special focus on the Middle East and Africa.

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