What Are Restaurants Today?

Assets in hedge fund accounts or investment portfolios.

It’s true.  We’re at the early to middle stages of a financial “revolution” in the hospitality industry that is a lot like what took place in the entertainment, healthcare, and sports industries about forty years ago.  Investors have identified correctly that the hospitality industry is undervalued and in need of business models that will generate profits that maximize the value of the asset.

And there you thought it was about food.  About GMO’s, sustainability, humane slaughter, and organic produce.  Nope, those are marketing terms.

What this means pragmatically is that most restaurants that want to survive and have a future will join up with investment groups that will create for them the capital to expand, save for the future, and allow the chef to develop projects that are not immediately profitable.  That is the real meaning of sustainability.

Those restaurants that do not get financial backing at that level will become like small record labels or indy music bands.  Some will attract investors–think of the bands, “Beirut,” or, “Arcade Fire”–and benefit from investment.

What this means for cooks emerging from culinary schools or years of on-site training in restaurants is that unless they can get attract the attention of the hedge fund managers or big investment groups, they’ll be broke most of the time.  Cooking good food maybe, but broke.

 

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