Episode 16: Owning the World’s Best Restaurants as a Billionaire Hobby — Lars Seier

Aman 0:31
Welcome back to another episode of The Eccentric CEO podcast. I’m your host, Aman and for today’s episode, I have once again a truly fascinating guest. He’s Lars Seier. And while Lars is well known for many things in many industries. For our purposes today, he is the owner of two of the best rated Michelin star restaurants on the planet, right. The first one is Geranium in Denmark in Copenhagen with three Michelin stars, which was recently rated as number two among the 50 best restaurants. The second is Alchemist, which is also in Copenhagen and it got two Michelin stars in its very first year. And believe this, it has a waiting list of more than two years, is that correct?

Lars 1:25
Well, hi, nice to meet you. We don’t really quite do it that way. We open the restaurant for three months at a time. But last time we tried to open for booking we were sold out in a minute and we had about 35,000 people on the waitlist if you will, so we have like a 1000 people on the waiting list, which is a bit of a problem when you only have a 50 spaces.

Aman 1:51
Wow, a 1000 people on an average day for 50 places. And that’s a restaurant, you know, it’s not like Miley or, it’s not like the Beatles came back to life and are doing a doing a concert or something. That’s interesting. And you also own some other food and hospitality, luxury businesses, right? Can you give us a quick overview of those?

Lars 2:12
Yeah, I would say those are my two sort of flagship restaurants. I own a very iconic cafe in Copenhagen, which was one of the first cafes to open in 1977, sort of Parisian style. And it had bad time. So I took it over a couple of years to try to restore it. And then I’m also a big shareholder in something called Parkins sport and entertainment, which owns a variety of businesses, the most famous one is probably FC Copenhagen Football Club. But we also there, of course, we have a lot of hospitality for a big match, we have about 4000 Eating guests. So maybe I can send some of the people there. But we also own some big Aqua parks, you know, you know, big, huge swimming pools where, of course, there’s a restaurant element as well, there’s maybe, I don’t know, 20 restaurants in each of those centres. So, yes, I have a few things. But it’s actually not my main business. My main business is technology and blockchain.

Aman 3:22
Yeah, yeah. You know, Lars is a serial tech entrepreneur and investor. So yeah, Larse will be our teacher today. And we will discuss an aspect of the food industry that doesn’t get talked about much, which is being a high end luxury investor in these things, right. Not an operator, not a chef, but an investor in this market. But I’ll begin with a slightly more informal question Lars. Who are the top two or three funniest people you’ve ever worked with? And what makes them funny?

Lars 4:02
Hmm, that’s sort of a nice one to have in advance. But I actually try to generally work with people that I like, you know, I would never invest in something where I didn’t feel that we could go out and have a beer together or go to a restaurant together. So I will say, most of the people I work with are a nice people, I think, most of the time, right. I have a particular marketing guy I work with a long time. Actually, we currently focus on on studios and professional video productions. So we have six studios in Copenhagen and we’re going to start rolling out internationally this year actually. Tom, as he’s called, I’ve worked with him on and off, for maybe 27 years or something. Apart from having done a lot of interesting things over the years, We also have a tremendous laugh together when we’re not working. Even when we are working. So he’s a good example of somebody that is both a long standing loyal partner and in many different respects. But also a guy that I can have a lot of fun with.

But in general, in general, I think you need to like the people you work with, to trust them, obviously, if you’re not operationally involved. So I look a lot at the people when I invest, in fact, I think they’re more important than the project itself, because the projects will tend to pivot change, tend to change a little bit over the years, but the people stay the same. Unless, of course, you have to change them. But that’s why I go into a business. I go into a business to invest in the people that introduced me to it. So I very much try to avoid the situation where things get so bad that you have to have a discussion about whether they’re the right ones to run the business, because that kind of defeats the whole project. Because I don’t want to run these businesses, I want to invest in them, have fun with them, be interested learn something new and work with the people that actually introduced me to the business.

Aman 6:13
It’s interesting, right? Because you made most of your fortune in the finance and technology space, right? More like finance, right. And finance is considered by most people to be more of a stuckup, boring, you know, like everybody throwing buzzwords around and jargon and everything. That’s why most people don’t want to deal with investment bankers on a day to day basis, or that sort. So it’s interesting of you having that philosophy of still working with only fun people, no matter where you are.

Lars 6:44
I will say we had our own bank, you know, which is very different. Me and a partner formed a bank back in 1992. And I spent 25 years prior to selling out my last shares since 2018. So I will say we were not the typical sort of mercenary type that you find in some of the big investment banks. Some of these people, I don’t like too much either, to be honest, I mean, but normally they have even those kinds of guys have a lot of client relationships and entertainment responsibilities outside of advisory etc, to bond relationships. So they do very well, they tend to be quite charismatic, you know, you want to be careful to watch what they do with with your money, but you can still have a good laugh with them. And I think even in even in banking, we can have fun. But, I will say our bank wasn’t quite a typical, you know, it was more of a trading platform and I have actually met, obviously, over those 25 years, I have met some of my best friends also, and they can certainly be very entertaining.

Aman 7:55
So now we, let’s switch gears a little bit. And, you know, for most people, I think even the entrepreneurs and some of the investors who are listening to this podcast it’s hard to create a context around what a Michelin star restaurant really is, Right? For a lot of people especially. So for quick context, let’s go through a quick rapid fire questions, right? If I take your restaurants, Geranium and alchemist, what does one meal typically cost with or without alcohol?

Lars 8:33
They’re very expensive, but we’re also in a very expensive location Copenhagen, where people are not being paid by tips like in the US, but are being paid by real salaries. So salaries are high, the VAT rates, the tax that goes on top is high. So the meals would always end up being expensive. And those rates were probably about $450, a Geranium and a little bit higher at alchemist just for the food. Then typically people would typically buy would buy wine menu or something which would add 250-300 bucks to the to the bill. So the average spending in these restaurants is probably close to $1,000 which is obviously not something you want to do every day. But because there’s those special experiences we actually know that a lot of, even young kids save up for months, just to go and have the experience. I do have to say that in Geranium you get 20 dishes and then Alchemist you get 50 dishes. So you do get something for your money, right? On a per dish cost basis, I don’t think it’s too bad actually. And I think I always had that view that well that’s a lot of money. Think about what you pay for a nice suit or a nice bag for your daughter or for a nice car. I actually think that You get world class experiences for obviously a high price. But compared to many other things, I would anyday rather spend my money there then on many other things that are far more expensive.

Because you have to think when you’re talking that kind of level, particularly Geranium, but I think Alchemist will eventually get there as well. But the geranium chef is probably one of the world’s five best chefs, right. And he’s there and he’s making your meal for you. And imagine any other industry, if you want to be together with a top five guy basketball or football or tennis, it’s going to cost you a lot more than 800 bucks, right. So I actually think in context, it’s not that expensive. And that’s proven by none of these restaurants being highly profitable. Because if it was a very high price, of course, we’d have a big bottom line. But you have to think in Geranium, we have 36 guests and about 40 staff. In Alchemist, we probably have about 50 guests and 100 staff. So it costs a lot of money to produce these experiences, right? It’s not just cooking a big bowl of pasta for250 people, right. So I think seen in the right context, I actually believe that gourmet dining is one of the cheaper luxuries in this world compared to many other things you can spend your money on.

Aman 11:25
Yeah, I agree. And, you know, it reminds me when I was a long while back, I was a broke, you know, just really broke. And I had my first Michelin star level, you know, sushi experience in New York City. It was actually a surprise because one of my friends didn’t tell me it was a that kind of, like $200 per plate kind of a sushi place. He just took me there like, yeah, we’re gonna have some sushi. I sat down and had to cough up like, it really small menu with like, five items, very traditional Japanese place. At that time, I felt like, ‘Oh my God, what did I get myself into, I have to spend like 200 bucks on one plate of sushi. You know, this is like a disaster this whole days, you know, this gone completely insane.’

Lars 12:14
I’m a big sushi fan and, and some of these fishes, very rare and very hard to get and they get flown in from various places. There’s a reason for everything. I mean, I think what is sort of the proof in the pudding is that the vast majority of the restaurants are not very profitable. If you want to have a profitable Empire restaurant should do something completely different. These things cost a lot of money to produce at that standard. To be honest, you don’t really as an investor, do it to expect a big return you do it for the love of the food and because you like to give people a great experience.

Aman 12:54
Yeah, I mean, what I like to tell people is that, it’s been many, many years since I had that meal at a sushi place. I still tell people about it. Because it was that good and that unique. Although it was not something I prepared for. But I can I get a story that I can tell for many, many years. Right?

Lars 13:17
You just told it again, right? Yeah, you’re still getting the return on your 200 bucks. But I think that’s absolutely right. What we’re selling here is a meal, but it’s also a memory, maybe you were there with some great friends, and that those can be some of the most wonderful moments in your life, if you also have an outstanding experience with the food. So in that sense, again, I think it’s just like watching one unique sports event that will linger with you for many years. But here, you’re pretty sure. As I said, I’m involved in FC Copenhagen, and I was just watching a European game Thursday, where we played 4-4 and against the Antov. And in crazy match that I will remember for the for the rest of my life, I think right? But other games against a low ranking team in Denmark and we play nil-nil. You will not remember that for very long, in fact, you will try to forget it right. But here at least you know, if you go to a top restaurant, that you’re not going to get a nil-nil match, you’re going to get that 4-4 match everytime.

The other thing that is spreading in the industry so you don’t get those kinds of surprises is that when you’re running a tight margin business, it’s a disaster if you have people not showing up at the last moment. So you sit there and you lose 4-8 seats. That certainly puts you into a loss for the night. Because it’s so hard to get by these restaurants, it’s a trend that people would book several restaurants and see what they could get. Maybe they got the preferred one at the last moment. So today many of these restaurants actually charge you for the food upfront or at least take a substantial deposit to avoid that because it’s very bad for the restaurant. At least you won’t get the surprise. If you don’t like the bill you can say ‘Oh I’ll cancel the restaurant’. People know what they’re getting into. I think a lot of people are willing to pay a lot for for a really great experience. As I say this, it’s our experience that it’s not just wealthy business people. It’s also actually, students may save up for months and months, because they just want to try this unique thing just once, in their student times. It’s a variety of people. That’s actually why we don’t price it even higher because if you imagine that I have 1000 people on the waitlist, the very easy way to reduce that to 200 people on the waitlist would be to double the price, right? But then you get through, then you get to a point where you’re excluding a large part of the people that you also want to see there. So you have to find this balance. Of course, it cannot be just an economic black hole where you’d have to lose millions of dollars every year. On the other hand, you don’t want to make it so elitist that only rich people and business people can go there. I think I think most chefs think think like that. I’m trying to find a balance between delivering value for for the prices that they charge.

Aman 16:11
Yeah, there’s many themes here that I would like to dissect here. The first one you’ve mentioned is that, at the high level, of course, the easy way to reduce the waiting list is to just charge high, like demand and supply curve. Simple as that. But on that front as well, there’s a risk that, if you charge that high, the standards just go up. A lot of Michelin star restaurants get a lot of negative reviews from people. Because they say, “Oh, this is a Michelin star restaurant, I paid this much. Now it’s not that special.” Right? And a lot of chefs, I think, have started also refusing the Michelin stars, in some very unique cases. Because this don’t want to handle the pressure of having to lose a star again and keep fighting for it and keep charging higher and higher and keep investing. Drive themselves crazy.

Lars 17:01
Yeah, I agree. I can tell you that there are not many chefs in this world that wouldn’t love to add three Michelin stars no matter what they tell you. That’s the ultimate goal. I also agree that occasionally somebody that’s had it for a while can afford to be relaxed and say “no, I don’t need them anymore.” But I tell you, a young chef has a dream of getting three Michelin stars, and should have. Because it’s just like you want to play for, you know, you want to play for Real Madrid, right? So if you don’t have that dream, you probably will not be a great chef, right? That being said, there’s only about I think 133 star Michelin restaurants in the world. So and that’s probably estimated 20 million restaurants or something like that. It’s a very hard pinnacle, to get to. But you are right, that of course, it comes with an obligation that if you’re charging people a lot of money, and you’re a three star Michelin restaurant and you want to maintain those three stars. It’s not like you get them and then you have them forever, you have to qualify for them every year and you see occasionally people being downgraded.

Aman 18:10
That’s when you lose your restaurant usually, right? Like if you get downgraded in Michelin, usually the restaurant shuts down. Typically.

Lars 18:16
I wouldn’t say that. But yeah, maybe you have to change a little bit of your arrogance. You know, because our restaurants that live have that reputation and maybe get a little bit lacks on something. Then they of course they deserve to get downgraded. Maybe that’s a wake up call, and they get moving again. But of course it can be a disaster to lose that status because it’s also a way that people find you. There’s a group of people that look for Michelin stars when they go around. If you’re not visible, those clients are not going to come to you. Right, but I would say, I don’t know many chefs that don’t have a dream that they will have three Michelin stars one day. Of course, they have and they should have. You’re also right that at least the way we run it and we worked very hard to fight negative reviews on either of my restaurants. Because we do see it as a responsibility to give people an outstanding experience and think that they will remember for years and.

I think we succeed with that in both restaurants. So of course you have an obligation when you charge a lot of money and you raise expectations you should do your utmost to meet them. I will say whenever we have because these restaurants obviously started at zero Michelin restaurants as as you go up that up that hill you probably also do that a little bit extra every time right. Actually Geranium, which is, as you said, both three Stan and number two in the world on the top 50 list. We just launched an entirely new menu. We didn’t have to right? I mean we’re already at the pinnacle. Nevertheless, this guy, during the pandemic, spent the time to elaborate a completely new manual, which is even even more fantastic than, I don’t know how he keeps raising the level. I tested it a couple of weeks ago, it’s absolutely outstanding. So how a guy that’s already the best of his business gets even better. But he still has a drive. I think that’s important. And at least, we work very hard to make sure that people get that outstanding experience that they will talk about years later on. I know they do sometimes.

Aman 20:39
Hmm let’s talk business again. Right? What would you say is the success rate and the failure rate; which I think are two different things, the failure rate is, how many of them shut down within one year or two years, right. The success rate I would say is, how many go above just borderline survival in the first couple years, whereas those who actually go above the baseline, and do really well for themselves, make a name for themselves? So failure rate versus success rate? How would you compare those in Michelin star restaurant and aspire for Michelin stars in that status?

Lars21:18
Well, if you look at the restaurant business as a whole, that’s a huge failure rate in restaurants, but that’s due to numerous things. It’s also a business where many amateurs go in. They did something else all their life, but they have this dream; it would be nice to have a restaurant go around and talk to the guests. But it’s not always you can move your competencies from one area to another that quickly. So I believe it’s a number that one in one in three restaurants close down, again within a couple of years, which is quite a high failure rate, right?

Aman 21:53
In the US, it’s even higher. It’s like almost like 80% in the first year. And then 90% in the second year or something like that. It’s really crazy in some really competitive markets.

Lars 22:05
Yeah, absolutely. And of course, the pandemic hasn’t helped either. Staff costs going up, bizarrely. Actually, now in our States, it’s more expensive to hire people, for restaurants and prior to the pandemic. To revert to your question, if you’re talking the very, very high in the three star Michelin restaurants, I don’t think many of them are making a lot of money. If they are making money, that’s because they have a second restaurant and a third restaurant and a brasserie, or they sell stuff to a supermarket based on the brand. So whatever, right? The core, the core restaurant itself would rarely make a lot of money. But of course, you can build some spin off effects on it. I would also say they’re some very intangible things, I often take business partners, etc, to my own restaurants.

I have to say that if you’ve been sitting working on a proposal or contract all day, and you then take them to your own three star Michelin restaurant in the evening, it doesn’t exactly reduce the spirit of the meeting, right. There can be some intangible effects. Also because my restaurants are so bust we always, of course, keep maybe one table till quite late in case we have a big besting chef, or somebody really close friend of the house or something. And of course, sometimes I can help people with getting a table there, even when it’s near impossible, right. That also gives you an opportunity to make some people happy, make some friends happy and, and maybe also help a business associate some once in a while. That’s some intangible effects of that thing that may actually you know, swings and roundabouts. Right? You don’t make a lot of money here. But maybe, that creates the base of some other activity or business opportunity in the future that you are nice to each other. Right. So I think there are many aspects of it. I don’t see a lot of top top restaurants failing, I would have to think more about it. But if you’re at that level, there’s not many sort of three stars that just close the door.

Aman 24:23
The biggest example for that, you know, which people keep throwing around is El Bulli, right, which was in Spain. The top eight shut down after so many years because it never made enough.

Lars 24:36
Without knowing the details I can’t form an informed decision. Those guys have gone on to make other restaurants, they actually have a big food fest in Barcelona. In fact, the alchemist is quite inspired by El bulli and Ferran Adria, whose iconic figure from there has said nice words. about it. Yes, there’s probablity that El bulli lost money, more or less consistently, but they had a range of associated activities that I think in the end just became more important for them. They had been there done that there, were a number one restaurant three or four times in the world. Today, actually, they, he and his brother run several restaurants in Barcelona. They have this food lab where they develop various things. So I don’t think it’s necessarily driven by financials that it’s shut down, although I don’t know with certainty. But I think it was more change of focus, because it’s still around. It’s not like they went bankrupt or anything, as far as I know.

I’ll say the other thing and this is spreading a little bit is that there’s some kind of some kind of enthusiast involved in the ownership, right. I think this is spreading widely. I’m obviously an example. My restaurants, if they had no Lars Seier, they would have had problems during the pandemic, that’s clear. Clearly, we lost money the last couple of years. They would have had to find that somewhere. In this case, it was easy because I was there and I believe in the restaurants and we kept everybody employed during the lock down, because we thought we also had an obligation to them. They worked very hard for us to achieve. And this was the other way around, they couldn’t contribute. So we didn’t fire people or anything, which meant we had 150 people on the payroll for many, many months without having an open restaurant, right. So obviously, that cost money. If you hadn’t had somebody that was willing to put that bill, it could be different. Then a few restaurants also bigger ones, I think have been shut down by the pandemic, but that’s also such a

Aman 26:47
Black swan kind of event, which is not, you know, not atypical… What I was asking more about was, even before the pandemic, there was like this, a lot of talk. But that makes sense. Restaurants don’t always, Michelin level restaurants don’t always shut down because of financials, but more about this. It’s also an art form. It’s like kind of like Broadway as well, in its own little way, right? Where you have a creative energy that you have to invest in this artistic establishment. The people behind the restaurant have a certain stamina for doing a certain thing for so many years. Of course, if you’re talking about the average Mom and Pop restaurant, usually it’s completely a financial decision, right? They go out of business because they can’t get enough covers per night. For Michelin starred restaurants is usually, you might be booked a year in advance and you still might close down in a few months.I

Lars 27:47
I think you will see that the sort of the top chefs even if they shut down they pop up somewhere else six months later, right? So it’s not the necessarily because, well it could be because it’s not working out financially, but then they move on to something else. So it could be that they felt they chosen the wrong or that the time has run out for a given concept, and now they want to try a different concept, or they didn’t get recognised by people around them so now they try to do things in a different way. But you’re very right about the Mom and Pop thing and I think that’s really the more heartbreaking part of of this pandemic. Because I know a number of people that were not ever trying to get three Michelin stars because they didn’t have the skill set for that but they had put off a couple or 10 years and all that money into something. This was what you said a black swan and after having sold the house and trying to keep it alive, they still go go down and that’s supposed to be extremely sad. Particularly when that happens due to absolutely no fault of your own right.

So I think that’s the more heartbreaking part of this because these guys typically don’t pop up again somewhere else right? They will say oh my god this is really terrible. Let me go back to my old job or something like that you know. That I think are the people that you should feel most sorry for in this particular Black Swan event. Whereas the professionals, yes it’s been very tough, but you tend to pop back up again in some way shape or form or if you’re fortunate enough that you have investors that want to back the restaurant under such conditions, then you can kind of move on. For me I would say that was never question. These restaurants, I love them both, I love all three of them. I love the cafe as well similar situation, but it’s hard for me so there’s no way I could let people that has spent years from building this status and this level of brilliance; that we would just let them go because we hit a hard time right. So you know, that obligation is a little bit to also help out when when times are tough, right?

Aman 30:01
Yeah,when you look at the luxury market, and there’s of course, the general luxury market that includes everything from handbags, to luxury cars and everything- In the industry, when people try to segment luxury kind of markets, they have three types of, what they call luxury, right? One of them is premium, then they call it fashion, and then they call it true luxury. So premium, what they say is thing that are more expensive, but more value for money. You’re still trying to appeal to the logical part of the brain, “Hey, this is gonna last you 10 years than two years. That’s why it’s expensive,” right? Then there’s the fashion, which is the trendy like, Hey, this is really hot right now, everybody’s doing it, which is why this is expensive. So usually in fashion, and also in many other products, you see this trend, everybody’s investing or buying a certain thing, because some celebrity or some popular figure, or it’s really been talked about. Then there’s the luxury part, which is, it has more of a timeless quality. It’s more about storytelling, it has nothing to do with trends, it has nothing to do with more value for money, even though that’s built in to a Michelin star meal. But it’s more like you’re paying for it because this is unique. You can’t get this anywhere else. It’s rare.

When you talk about most Michelin restaurants or more restaurants in general, which are that kind of price tag, kind of value? Do you put them in more luxury? Or do you put them more in premium? And the backside of this is- How does that affect the way you market and promote a restaurant, given thesem different types of ways that people try to segment?

Lars 31:57
Well, I think you’ve probably see the same thing there you see, like nightclubs, opening and shutting down all the time, because they’re not fashionable. Then the crowd moves on six months later to the new fashion place. That’s, I would say the equivalent of fashion, right. That goes to some extent for some restaurants, not so much in places in Europe, but I guess in the States, they also they tend to go in and out of fashion if you following some kind of immediate desires in the market, right? I’m not really in that space, I would say, I do understand that I have five daughters, so fully aware of both fashion and luxury and premium, I tell you. So I know what goes on there. But obviously, for me, it’s not a question of following the latest trend. It’s well beyond that. I think the top notch quality guides have been around for a long time, right? You see like Paul Bocuse died recently. I’ve seen that guy in the restaurant when he was like, I think 87 or something. He’s still walking around saying hello to guests and stuff like that. So they’re quite long term. Long term sustainable.

Actually, famously, what we talked about before, a couple of years after barbecues restaurant was still best, his name lost one of their three Michelin stars, which created an outrage because that was like the original three star restaurant. I think they recovered it this year. But there is a certain consequence if you drop off a little bit, which maybe they had, but now they’re very, very good again. Maybe that was the right kick in the backside. Right. So that sense, it also works, but I think of course, you have to renew yourself. In an elegant way. One of those changes that geranium here was actually that we removed all red meat from the menu and there wasn’t an awful lot to start with. Maybe two out of the 20 dishes, but actually, the chef himself doesn’t like meat very much and I do like it a lot. It’s not some kind of political greatness from my side, but he didn’t like meat a lot. I can understand it’s not fun to have to stand and invent year after year wonderful meat dishes if you don’t really want to eat them. Right. I respected that.

Hence, you’re sort of moving into a new paradigm there. Also, funnily enough, I think that was more spoken about in the media than any of the three star that top two or anything because that was really something people notice. But it wasn’t actually meant to start there was basically because the chef is not a meat eater himself read the data, and he didn’t really feel very fulfilled to have to work with meat.

Aman 35:01
That reminds me of lar Parrish in Paris, right, which is the traditional, famous restaurant that went completely meat free for a long time completely. I think completely vegetarian or something like that. At that time, like everybody was just sending fire at them. Especially in France, where it’s a very meat butter heavy culture. That restaurant, I think Alain Ducasse, that the name or maybe some other chefs.

Lars 35:31
He’s a good example. I think of somebody that’s profitable. He has a whole range of restaurants wearing his name, or at least under his leadership and ownership. Robuchon was another one that are also business people on top of being chef. Robuchon had 33 Michelin stars or something across his empire. Yeah, I think that was a very profitable empires. He also sadly died not so long ago, but by excellent restaurants that I also believe were quite profitable, right. But then he was shifting into a different paradigm. Because obviously, if you have 11 or 12, restaurants, it’s a different story. You’re not there. It’s not the chef coming out speaking, it’s not the big guy coming out speaking to you when you’re getting one of your dishes. So, did you enjoy your meal? So that’s a little bit of a different area where you have to maintain a very high standard, but where you’re not directly involved every every day of the week Right?

Aman 36:30
Do you think that those do you think that those, you know, like, you’re talking about premium versus luxury, of course, fashion, maybe, as well, but when it’s when you come to a restaurant, like let’s say alchemy, right, which has a very, from what I gather, I’ve never been there, of course, but from what I gather, it’s like it based on a stand, a standing, a positioning, so to speak, right, a stance that you take, versus geranium, which is again, they have a stance, they want you to be close to nature and and stuff like that. And versus if you had, let’s say 11 Different Geranium, you know, like more like a Momofuku kind of thing, like when you have 11 or 12, different Geraniums. When you talk about marketing and positioning in that regard? How does that change? Like what is your end, using the failure rate, or the lack of success is higher? Like if you have 11 restaurants and they’re Robuchaun, a couple of them, you know, get off and on like, after a while? What do you think? How do you how do you think that change happens, where the positioning of the restaurant changes a little in the market.

Lars 37:34
I think it’s a different story, if you’re Robuchon then you can try various concepts, you know, you can do something that’s a little more low mark, down mark, and something that’s very high end, like what’s it’s called? I think it’s studio, but Robuchon which is a different concept in Paris. If I remember correctly, we’re trying something else. Then you have the sort of high end in some other restaurants and obviously gives you more scope for, for experimenting, whereas my, my two chefs that I collaborate with, I think, are both very focused at this point in their career. The marketing there is to have three stars, is to be on the top 50 list, is to become an item in the foodie circles in your local market, of course. It’s a different story, if you’re running 11 restaurants and then they’re not all on the top 50 list. You know, you have a more direct marketing, but in this space is really wrecking the recognition that it is also the marketing to a large extent, because if you’re in Copenhagen there’s two three star restaurants, which there isn’t many years, we were the only one but no more. also recently got three stars and congratulations to them, they did a lot for for Daini a huge lot for dailies recognition around the world. So I’m very happy for them that that they also got three stars but if you’re in Copenhagen for three days, you know, and you like food, that’s what you’re gonna go after. And then of course, you’re gonna get great experiences. But if you don’t happen to be that clearly visible that way, you will be missed, right? They want they want to get to your restaurant.

And then we have many other excellent restaurants in Copenhagen that don’t have three stars or even two stars or maybe even one star right. So, that sense, that pure visibility from that and I use it myself, you know, because I do like to try different restaurants and if I’m in a foreign city for me, it’s natural to look into Michelin Guide or look at the top 50 which is incidentally a top 100 But we’re normally only looking at the top 50. But if you can find one of those restaurants you consider that a fairly safe bet, right that you’re gonna have a great experience. Whereas if you rely on you know TripAdvisor or hotel Kinshasa it has a good friend down the road, it’s a little less safe. I think in particular, I think if a restaurant gets three stars and Michelin Guide that that is a solid endorsement and I, of course I’ve had better and even fantastic, but I’ve never had a really disappointing experience in a three standards mean restaurant because they do their homework and Michelieng and I say once you’re down to like one star, it can be a little up and down. But I guess it’s also because people change their concepts. Whereas you know, if you want three stars and you want to retain it, you shouldn’t completely go from vegetarian one day to steak house the next day to sushi the third year, right, and you’re never gonna get three stars, because visually only awards three stars for extremely high quality and consistency.

You have to remember why everybody knows what the Michelin Guide is historically, but it’s actually existed for a very, very long time. Then there was a Michelin tire company that basically wanted at a time when they were 4000 cars in France, they issued the first Michelin Guide in 1903, or something like that. And they wanted people to use more tires. People, here’s a nice restaurant you can go to, and the classification is that, what is it, if you one star means it’s worth doing a little detour to get it. Two stars means you can you can assign a holiday. The three star means journey. Yeah, exactly. So that’s kind of the base of it. That’s funny because I got as a gift one, some of the way original Michelin guides, which are quite extensive from from I mean, very detailed back in the early 19/20 century, it’s quite fascinating to see. But at that time, it was really a tool. If you had an automotive mobile, there were not many, what could I do with it because many roads.

Aman 42:01
But it’s worth a journey, using your new tires.

Lars 42:04
But because of that, of course, they didn’t want to write in the guide. Well, this is a wonderful restaurant of that nature. And then when he got there, it was a pizzeria or something. So everybody knows that when I get to the really two top of Michelin Guide, you need to show consistently over a long period, right.

Aman 42:23
And also, one thing to mention for anybody who’s not familiar, the Michelin Guide from what they say is that it’s the stars are only awarded based on the food on the plate is what they claim. And they say that the ambience and all doesn’t really, of course, you have to have good ambience when you’re serving $1,000 meal. But the emission guide itself the the judges or whatever you call them, the reviewers, they only decide based on the food that they were served in the wine, that division, right. Let’s let’s come back to the theme that you were discussing about the positioning. A quick question. If you had to do like an 80/20 distribution of the type of guests, is it 80% business type guests who have a really important meeting and want to impress their guests, make a booking at the restaurant? Or is more like, ‘Hey, I have my mom’s birthday on that day. And I want to prepare in advance or I have my girlfriend on Valentine’s Day’ or something like that. What would you say is the distribution.

Lars 43:26
It’s a combination, but it’s also very much guests for tourism. People that actually travelled to eat, was their primary purpose. They come to Copenhagen, they plan to go to four or five restaurants and next week they go to San Sebastian. And then they try three restaurants as a guest or tourism is very important. Which has been a problem with a pandemic, apart from the times that we were shut down completely, which is obviously a problem. A lot of those gastro tours have been very active for a long time, then you have the business people, I believe that’s going to be a reducing segment as we go forward. Because while restaurant companies have an increasing focus on how much you can spend, and not least how much you can spend on another client, right? In the banking sector, for example, if we would be beginning to be near impossible to bring out clients to such expensive venues because they don’t want any kind of any kind of inkling that maybe maybe they are helping the relationship in an unhealthy way when you’re talking interbank trading and stuff.

Secondly, I think the pandemic has, has taught, us a lot about you can actually do international meetings in many ways, benefiting from that. And that studio project I mentioned at the beginning of the programme because that’s going through the roof. Everybody wants to do virtual meetings and presentations and stuff in a proper studio because one, there’s a big company, they want it to look nice, but they do see a benefit of not having to send people all over the world and pay for separated flights and a lot of wasted time and hotels and this and that. So actually think into their least international business dommers will be going down in the years to come for a number of these reasons, then. So there’s a lot of guests for tours.

And I would say in both of these restaurants, under normal conditions, it’s at least 50% of the guests that are not from Copenhagen, right? Particularly at Geranium, because they get a deeper sense of awe, at least I’ll say Geranium, it’s probably more like 70-80% in periods that I guess through tourism or foreign visitors, because it’s such a famous restaurant and people, people just want to try the big restaurants around the world. And I understand that, I know that for myself, I can go to the city, just to try a couple of restaurants right? So that’s normal. But of course, you have also of couples that want to go out have a nice time. These venues are not typically suited for like boisterous, my 50th birthday or my 60th birthday. You can rent the whole restaurant for that on occasion if you want to, but we don’t actually encourage bigger groups that are noisy and disturbing to the guests. It’s not very good for them, because they get disturbed by by a waiter all the time trying to explain what the wine is what the food is. If you’ve if you’re celebrating something with your friends, and that’s not necessarily what you want. This sort of boisterousness loudness can also be negative for the other guests. So we don’t particularly encouraged that we have separate rooms, so that people really want to do it.

But the main restaurants we like to keep, not boring and quiet, but we just don’t want a very boisterous group in there, right? So that’s, that’s a balance, because you got to think about the other guests, when they have paid that kind of money that we talked about before, they shouldn’t get disturbed by a loud group or something like that. So we have to balance that. But in some cases, people rent the entire restaurant. And then, of course, it’s up to them what they want to do with it within reason, right?

Aman 47:06
Wow, because if you’re if 50%, of your market of your market, so to speak, is international guests. It sounds like, what you were saying is, the only real marketing that works is to aim for higher status in the established guide, like the Michelin Guide, right? Or the established like your food critic. It sounds like the local food critics in the city, unless they have a global following, they can’t really move the needle. Like, what do you think of food critics? What do you think of marketing in position? Like the press of general?

Lars 47:42
I mean, for neither of these restaurant do we run advertising campaign. We don’t, we don’t need it, we wouldn’t have this space anyway.

Aman 47:53
Yeah, you won’t find them on Groupon or something like that, of course.

Lars 47:58
There’d be no reason to do it, right? At least not in the current status, it can change of course, things go up and down. But I would say the status on any kindness by now quite a lot, you know, this Michelin top 50 is very important. That is the best chefs awards as yours best restaurant, there’s an audit guide. So there’s multiples of these that some people read more or less this so that one, right, so that standing is important, because that is the main international visibility. Then you’re right food critics, people that post qualified on Instagram and then because they have big followings as well, if they’re if they’re like, well known foodies, and the more formal food critics, of course, we also very happy if they write a nice review. Because that will mean that the business people and the those types of people will read it and think about maybe I should go there next time. So there’s a balance, but it’s not. social media advertising or newspapers, in the running ads in the newspapers or anything like that. I don’t think it would work anyway. But but it’s not needed. But the reason it’s not needed is because of all the other things right.

Aman 49:16
Yeah. Do you think do you think the food critic the former food critic party is kind of, like this is the influencer generation right now. The influencer marketing is gone up in you know, in general. So, do you think the formal food critics who will just write articles for a magazine back, let’s say 10 years ago, 15 years ago. Do you think those are still recognised authorities for most of the people who show up to a restaurant? Do you think they matter anymore?

Lars 49:44
It’s hard to generalise but I will say in Denmark, for example, Copenhagen, we have a couple of very established food critics that I think are generally fair in the session.

Aman 49:57
And they can move the needle. They can move the needle if the write a good review versus a bad review, you’d see the difference.

Lars 50:02
I will say, if we wrote a really bad review, that could probably move the needle. But when you are anyway sold out, it’s very difficult to say that it moves the needle. But I guess it’s this constant long term, confirmation that you will get a good experience if you go there. So we take that seriously, we are happy when they are happy. They are very independent. So there’s nothing you can really do to influence them. They will do what they have to do. But generally, because the restaurants are very good, they generally write nice reviews. But they can also come with a criticism and and then if they do come with a criticism, maybe you consider it right, because maybe maybe they’re right, and you’re wrong. The people that you respect in that business you take seriously.

Then of course there’s a few wannabes that you don’t take too seriously. Then that’s the other group, which I would say, modern generation influences influencers, but that’s a little bit of a different kettle of fish. They don’t write formal write ups. Typically they post pictures as well. This was fantastic. So those are also important in that way. And I think this idea of spreading the views of a very beautiful basis are very interesting dishes also helpful so people get the aspiration that they want to go there, right. So people are welcome, for our sake, welcome to post all the food pictures that they that they want. We don’t make it to photograph other people and stuff like that, because people should have their privacy but, but if they want to, you know, get an overall impression of the room or are they want to post some of the dishes, be our guest. Because we are happy that they like it and they tell people about it.

Aman 51:56
Okay, this is interesting. I’m gonna switch gears really, like a certain twist, a certain turn in the conversation. Let’s say we are going to start a new restaurant, you and me, together. Right? You’re of course the the main investor and I’ll do all the legwork. We will start the restaurant in not Copenhagen, let’s say another city where you don’t have any, any- Name a different city where you would like to start a restaurant, for example.

Lars 52:27
Okay, we won’t do that because I don’t want to start another restaurant.

Aman 52:31
For conversation sake.

Lars 52:35
I live close to Zurich. So Zurich,

Aman 52:38
Okay, we start a new restaurant in Zurich. What would your thought process be? Right? ‘That, hey, I want to start a new restaurant in Zurich?’ Is it more like you go out and look for a chef? Or is it more like usually ‘I come to you like, hey, largely, you know, I want to start a restaurant. Do you want to fund it?’

Lars 53:01
There’ll be the latter I first of all, I’m quite happy with what I have. I’ve stumbled into both of those a little bit. Before I bought Geranium in 2015, or bought a part of it, I had no ambitions to have a restaurant. I’m a banker and spend my time in blockchain focused guy. So I don’t go around looking for restaurants. But if somebody comes to me, and says ‘We could do something completely exceptional, what do you think?’ Then I would give it a look. But it would have to be truly exceptional before I would even want to have another restaurant. Because I’m not on the lookout. Come to me, I think ‘Wow, that’s outstanding. That could be fun.’ And then maybe I’ll do it but it would have to be very outstanding for me to do another restaurant. I think you can find people that would be more obvious investors and me it’s same thing with my cafe. That was my favourite cafe when I went to high school, right. I love the place and it reminded me of my youth and it was up for sale, it had fallen a little bit off a cliff in terms of service and quality. I said ‘okay, let’s let’s get this thing back to life,’ and then I spent an inordinate amount of money on making it look nice and it’s now very much my little playground. They have good wine, they have good cocktails, they have stuff that I liked the play etc music my youth right? So that’s all my own hobby project that there you can almost say I am the restaurant owner because I do of course have a manager etc. But that one I own 100% and there is no great chef or something that runs that. That’s more of a of a nice hobby project, I would say.

Aman 54:47
So when you look at a new restaurant concept that comes to you with a pitch ‘Okay, Lars. I want to start a new restaurant I have you know, I have this really amazing new chef and he lives Let him make a meal for you.’ Beyond them like yeah, okay, the food is really good, you know, really cool. Thank you so much amazing food, what goes on from an investor’s craft perspective? Because you don’t want to invest in something just based on ‘he makes really good food,’ right? What do you look for, give us a peek into your your psychology in that regard.

Lars 55:21
I would say I don’t think really I would want the guy to come and cook me one meal because anybody can do that. I can even cook you a decent meal if I prepare. But I couldn’t do it to 50 people and I couldn’t keep inventing new stuff. And I would have to read chef’s cookbooks to get good ideas. But I could actually cook you a pretty decent meal if I really prepared. That doesn’t mean I’d be a great restaurant, great guidance chef in a kitchen because it’s totally different skill set. Going down that line of thought this would be somebody where had tried the food in an environment seen that you will not waiting half an hour for a small dish and then an hour for the next one. Right? And that there was a there was a movement in the restaurant that shows in the kitchen that these guys know what they’re doing, right? Because a nice meal most people can do with the help of good produce and a good cookbook to be honest, it’s not that difficult.

Aman 56:21
But then that’s an existing concept, a new concept where somebody says I want to start something new.

Lars 56:26
No, not necessarily. Because if I get requests to that nature is typically because they want to start a new concept. But if you’re asking me, I come out of cooking school, I have a great idea. I’m not gonna invest, I’m not gonna do it. It doesn’t interest me because I’m not a not a not a restaurant investor. I’m a guy that happens to have a couple of restaurants that I really love. And if another such one came by, from somebody I truly respected, I would consider it. I would probably say no, but I would consider it. But if somebody just say, ‘Oh, I think we can do a great restaurant by doing this and that’ and it wasn’t one of my own favourite chefs or somebody I knew, I wouldn’t consider it because I’m not that type of investor. I know other people that would consider it but I wouldn’t personally. I could say just to be very specific, there’s one thing I can say I’d consider, I would like to make a really, really high end sushi bar. It may cost more than $200. But, I would like to make one really great sushi by either ensuring a Copenhagen. But that would imply that you went out to Japan with friends help and found a really world class sushi chef and convince them to come and stay six or eight years in Europe in order to build something fantastic. And that’s because I really enjoy Sushi and everything around it. I enjoy the Japanese kitchen without knowing too much about it. That I would like to maybe live out but it’s not a high priority.

So it’s not something where, you know, I would fly out to Japan here now to do it. But if the right combination of the stars was there, top notch Sushi chef wanted to do that, then I think there would be a high probability that I would I would go ahead with it. But that’s nearly the only thing I can imagine. Because I have a really fantastic. I wouldn’t say classic restaurant but but somebody that combines all the refinements of cooking in Geranium.I have this, obviously more experimental but still good tasting, which I think is important. You can experiment so much that the taste goes away, right? So I have a completely different restaurant there. And if I was to do a third one, that should also be completely different. I’m not in the business of having 2 or 4 restaurants.

Aman 58:48
What do most restauranters who are actually professional that are actually trying to start one restaurant after the other? What have you heard from them? Because you probably are friends with a few or meet with a few often who come to you with ideas? What do they look forward to, they get excited about when they think of a new restaurant concept?

Lars 59:10
It can be many things right? But I think when it comes to me they come for the stability that if they had a bad getting they would survive, right? Because they’ve seen that happen, I guess to other projects that I’m willing to support them for the long term right? So I don’t think they would come to me for any particular expertise or anything because I don’t have that. You know, I’m not a chef.

Aman 59:38
What are they excited about when they are looking at a new restaurant concept?

Lars 59:42
Anything’s the it’s a lot in recent years, I seemingly it sent us a lot about the totality of the experience, that it’s not just a table and a plate with food, but they have lots of ideas for how the environment should be, there’s a lot of sustainability aspect. there’s a lot of additional stuff to just cooking a nice meal. So I will say, it’s very difficult to generalise because as I said, there’s 20-30 million restaurants in this world. And they’re very different. But if I should say trend is, of course sustainability, people want to find various ways of producing their food in very sustainable ways. Authenticity that is, something that comes from the area or has a certain storytelling is produced the right way, et cetera. And then there’s sort of all income passing experience where it’s a little bit more than just the food. Maybe it’s a loungey feeling, maybe it’s sort of visual experience, like the one we build in the Alchemist, but it’s hard to generalise because really a lot of people with a lot of ideas out there, and I don’t get that many business plan, it happens.

Aman 1:00:56
It sounds like you know, the feeling of getting as you describe it, which is fascinating, because I expected something totally different, full disclosure. I expected something like a complete like framework that you would have like, ‘hey, these are the things I look at.’ It sounds more like the restaurant business is even more outlier oriented than venture capital investing. It’s like, ‘Whoa, I have, I have this idea. I think this is gonna work. And I’m really passionate about it. Let’s go for a home run, let’s swing the bat as hard as we can.’ What are the levers that you use to reduce the risk involved with a massive investment like this one? And let’s go back to Geranium and Alchemist.

Lars 1:01:42
First of all, I think you have to understand that the restaurant’s was less than 5% of my portfolio, right? So, (of course, of course) it’s not my key area, if it was 100% portfolio, I can guarantee you I’d have very, very specific rules for how we did it, because then I would really work with that, right. But for me, this is more about I believe in the quality of this guy, I believe he knows how to run it, I believe he can create exceptional experiences. Let’s give it a shot, right. And then as I said, these things happen fairly random, where that I got involved in and if I had met two other fantastic chefs and other conditions, maybe it would have been two other restaurants, right. So I don’t have a specific idea for a restaurant should be like this, and that I like experience that they have shown, that they also can deal with the logistics of a restaurant.

Because again, cooking a nice meal is not that hard. It’s about having, having the right raw materials, you add a little caveat you, you do this and that you can read it in a cookbook, and you can make a nice meal. It’s not a problem, right? I do it occasionally. But it’s nothing to do with running a restaurant, it’s nothing to do with the system making sure that you actually have all that rope produced whenever you need it, that you have it in the right quantity. So your kitchen percentage holds up, that you can manage a large group, in this case, large group of employees, keep them motivated, keep them happy feel that, that they also on a travel, which means that one day they can open a fantastic restaurant, which actually we do see the spin offs, really good restaurants. We’re happy when I would see one of our chefs going out and doing something for himself. Because that’s great, because that’s why he’s been with us for five or six or seven years. Is that one day he wanted to move on? Right? And that’s great, that’s fine. So so that’s, I would say is at least as important as being able to cook well, that you can do all those things, right? I don’t insist on we have to do everything to achieve profitability, because as I said, there can be intangible values of having something nice, let alone now we sit here talking about it. Probably a few people see it, maybe they think, ‘Oh, I got to try that restaurant one day.’ Or maybe ‘Didn’t you say he was building a blockchain? Maybe I should have a look at that.’ I mean, that could be a lot of intangible effects of these investments, right.

And I know other people that are really really smart operators, they run 1520 restaurants, every one of them is profitable. They have they built the synergies from from buying all the stuff at the from one supplier they for a given item. They know how to optimise the space usage. They know when they should sell this cocktail and what time of the day they should start something else. They’re like machines like professional so that’s, that’s a completely different game. So if you had a really good idea for a restaurant in Copenhagen, I would say ‘no, thank you’, but go speak to my friend because he would maybe be interested. But he wouldn’t you wouldn’t spend maybe 50% more, I like I did an alchemist to make the last last little thing look fantastic, right. I guess you’ll see maybe you’ve seen the famous door that’s outside of this restaurant. It’s very commonly known. It’s a Danish artist. And I got the choice; ‘Do you want this in, in full, solid brands? Or do you want it in a, in a layer of brands with a cheaper material behind? Nobody can ever tell the difference’, right? But I knew in my heart, what’s in the door, right? So you can probably guess which one I went (Oh wow!). So that’s my way of doing it. But if you rank profitability high, which, of course you have to do if it’s your core activity, you probably have chosen the other door. Right. And I think that’s probably a very good view of it.

So I’ve invested in this stuff with passion. I think there’s some intangible values around it that maybe be this is quite a good investment, actually, because of all the associated aspects. But I’m not a guy that has an ambition to own 20 restaurants and squeeze through maximise profitability in each of these restaurants. First of all, I don’t know how to, and it will be a learning curve for me. And secondly, that’s not the restaurants I want to own. I would love to go and eat if they’re great restaurants. I don’t, I don’t have to go to the Michelin restaurants all the time. I like, I like a good steak. I like a Japanese meal. I
like an Indian meal. I like many things. But it doesn’t have to be three star Anyway, nice Spanish car, mom and pop shop on Italian mom and pop shops phenomenally good at cooking, but never gonna get even one star right. But it can still be fantastic meals with having them with fantastic friends. Right.

Aman 1:06:45
So what I can visually, what I can imagine is your relationship with chefs compared to, professional, or restaurant owners how they have their relationship with the chef, yours might be a much more, relaxed, hands off, champion, kind of relationship wise. Because I’ve seen a lot of situations where the chef and the owner, kind of have this tug of war going on. Sometimes, right?

Lars 1:07:15
You see that? I think I think in any business that I go into is to give people comfort that they believe in what they’re doing, I will support it reasonably, if they come and tell me they would like something extra for, for doing this so that. If they hit a really bad patch, it’s not the end of the world, we will find out how we survive that together. Right, which I think has been helpful. I think I help them have a little bit more peace of mind, which means that they can focus on the stuff. That doesn’t mean wasting money or something, I might find it out and say couldn’t we do this a little bit smarter? because at the end of the day, we also want the restaurant to at least be breakeven or reasonable profit, right. But I think that sort of peace of mind that if something goes horribly wrong for for a couple of months, then I’m out of business, and I’ve sold my house and what am I gonna do? I think I removed that from people, which I think makes them better chefs because they can focus on their on the matter at hand. Right?

Aman 1:08:20
Thank you so much Lars, of course, we could go forever. It’s just a fascinating topic. But thank you so much for your time, and I’m sure people have learned a lot from this conversation. And I hope that some of them, including myself, get a chance to visit Copenhagen and check out in front of your restaurant.

Lars 1:08:38
Even if you can’t get a table, you should still go to Copenhagen. It’s a lovely town and have many, many great restaurants where you can get a table. But if you all want a good time, that’s always a good idea. But Copenhagen is one of the food capitals of the world. And that’s not just about the top three restaurants. That goes way deep down and there are many great, great restaurants and it’s a lovely town to spend a long weekend. So come and visit us.

Aman 1:09:05
Thank you. Thank you.