State of Innovation - The Restaurant Genome Project - AHIC 2015
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Innovation as a by-product of robust decision-making. Applications in Restaurant Innovation. Two perspectives: (1) the real-estate developer perspective and the (2) data scientist perspective. Used fresh case studies to illustrate points, inclusive of prestigious names (Noma, El Bulli, The Fat Duck) and celebrity chefs. Introduces the research focus of Cain Hospitality Innovation (CHI) for 2015: The Restaurant Genome Project.
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State of Innovation - The Restaurant Genome Project - AHIC 2015
- 1. STATE OF INNOVATION IN HOTEL RESTAURANTS
- 2. DEVELOPER PERSPECTIVE PART ONE IS IT BETTER TO IMPORT RESTAURANT CONCEPTS OR TO GROW THEM AT HOME?
- 3. MOVABLE FEASTS PART ONE A WAY TO MINIMIZE THE RISK OF IMPORTING CONCEPTS BY ALLOWING YOU TO TRY BEFORE YOU BUY STRATEGY ONE
- 4. Redzepi, René Noma Copenhagen, Denmark JAPAN 2015 Blumenthal, Heston EUROPE The Fat Duck Bray, United Kingdom AUSTRALIA 2015
- 6. INCUBATING CONCEPTS PART ONE A WAY TO MINIMIZE THE RISKS ASSOCIATED WITH CREATING HOMEGROWN CONCEPTS STRATEGY TWO
- 10. VISIBILITY
- 11. SPIN-OFF CONCEPTS PART ONE BECAUSE YOUR EXISTING PORTFOLIO OF BRANDS MIGHT BE A GREAT SOURCE OF INNOVATION STRATEGY THREE
- 13. DECISION SCIENTIST PERSPECTIVE PART TWO BECAUSE INNOVATION IS A BY-PRODUCT OF ROBUST DECISION MAKING
- 14. THE HUMAN GENOME PROJECT
- 16. DECISION POINTS AND CYCLES ELEMENT ONE KNOW YOUR KEY DECISIONS, HOW THEY CONNECT, AND WHEN IT IS TIME TO REVISIT THEM
- 17. (Re) Define Context (Re) Conceive Physical Venue (Re) Define Value Propositio n (Re) Structure Business Model (RE) DEVELOPMENT DECISION CYCLE THREE TYPES OF INNOVATION PROCESS PRODUCT BUSINESS MODEL
- 18. Adrià, Ferran
- 19. OPTIONS AND OPPORTUNITIES ELEMENT TWO ADVANCES IN KNOWLEDGE AND TECHNOLOGY CREATE SPECIFIC OPPORTUNITY SPACES AND NEW SETS OF OPTIONS
- 20. Adrià, Ferran El Bully Roses, Spain Blumenthal, Heston The Fat Duck Berkshire, UK Gaignaire, Pierre Pierre Gaignaire Paris, France INNOVATION – CUTTING EDGE
- 23. Attala, Alex D.O.M São Paulo, Brazil René, Redzepi Noma Copenhagen, Denmark Ben, Shewry Attica Melbourne, Australia INNOVATION – BACK TO BASICS
- 26. Bottura, Massimo Osteria Francescana Modena, Italy Blumenthal, Heston Dinner by [HB] London, UK Balancing Italian Heritage & Modernity Recreating British Culinary History INNOVATION – BRIDGING PAST & FUTURE
- 27. Amber Hong Kong, China Villa Joya Albufeira, UK Dutch Chef cooks French in China Austrian reinvents Portuguese Cuisine INNOVATION – BRIDGING HERE & THERE
- 28. FOOD JOURNEY
- 29. CUSTOMER EVOLUTION ELEMENT THREE CUSTOMERS ARE CHANGING, BUT SO IS OUR ABILITY TO TRACK AND UNDERSTAND WHAT DRIVES BEHAVIOR
- 33. CUSTOMER JOURNEY
Editor's Notes
- Ladies and Gentlemen, good afternoon. My name is Catalin Cighi. I am the founder of Cain Hospitality Innovation. For then next fifteen minutes, I will talk about innovation in hotel restaurants – as I see it.
- There are two parts to my presentation. The first is a quick & easy approach, representing the perspective of a real estate owner or developer. The second part represents the perspective of a decision scientist and is just a brief overview of a project I am working on. ---- Consider a debate we have in Dubai: Should we continue to import concepts, or should we try harder to develop our own? Both options have merits. Both have risks. Here are three alternative approaches when thinking about these choices.
- An idea for minimizing the risk of importing concepts by allowing you to test before you buy.
- Consider these two names. The Fat Duck has been in the World’s Top 50 restaurants every single year, for a decade. It just relocated to Melbourne for six months. Noma, the greatest restaurant in the world in 2014, has been on the top of that list four times. It just finished a one month residency in Japan. Fun fact: their had almost 60,000 people on their waiting list for that month. That got me thinking: what did it take to host an entire travelling restaurant, arriving with most of their equipment, a full team, and a bunch of egos? And taking that further, what would it take to build a real estate asset that is optimized to host a constant stream of visiting restaurants? The challenge would be for architects and designers to create a venue with extreme adaptability. But the effort would pay off. Even if you won’t always attract a Noma or a Fat Duck, you will still benefit from a destination that constantly renews itself. And more importantly, from a way to test a concept in the local market before committing to it.
- Where to look?– the cities with the World’s Best 50 restaurants in 2014. The larger the font, the more restaurants in that city. Look – Dubai is also on that list, because of Zuma & Le Petit Maison. ------- As you may know, they were created by the same gentleman: Arjun Waney. He also created Coya and the Arts Club. Coya just opened in Dubai at Four Seasons. I wonder when we’ll see an Arts Club in Dubai? -------- BUT a more important lesson to consider: Dubai is quickly becoming the safest import source for other cities in the Arab World. Think about it – the concepts that make it here are pre-validated. Our cities could play the role of test lab and incubator for the Middle East.
- To reduce the risks associated with homegrown concepts, consider incubation. Two sources of inspiration here.
- Inspiration #1: Marriott recently invited entrepreneurial chefs to apply for a residence at one of 16 hotels across four continents. If chosen, the participants could build out and test their food or beverage ideas in the hotel-based labs. In Dubai, the participating property was Marriott Marquis and they specifically asked for Night Club concepts.
- Inspiration #2: A growing trend in the US – to have separate restaurant concepts that share the back of the house. The example you see is from Chicago, but I found several others in Boston, Washington D.C. and Philadelphia. Customers experience two different restaurants, but there is one owner, one kitchen, one chef, one alcohol license etc. They do it to save costs, appeal to wider audiences, and hopefully move their profit margins in the double digits (US average is currently at ~ 8%).
- Look at the progression. Marriott reduced risk by crowdsourcing the concept stage and picking their favorite from several alternatives. The US. Trend suggests a way to reduce costs and appealing to a wider audience. What if we combine the approaches and we amplify the effect to create a real estate asset optimized for F&B incubation? Reality check. It’s difficult enough to produce two separate menus in the same kitchen, so there are a few more considerations to address if you want to incubate so many concepts in one location. And if we wanted to try, where should an incubator like this be located? I did a bit of research to identify potential locations. I looked at 12,000 restaurants in the GCC, selected the 250 with the highest online visibility, and identified the hotel operators and malls associated with these restaurants. This is what I found:
- These are the top ten hotel operators associated with high visibility in Dubai (Zomato + Trip Advisor reviews only). In GCC, alcohol restrictions and seasonality make hotels the ideal incubation environment. And different brands would make for better environments according to the dominant value proposition you want to incubate.
- When debating imports v. homegrown, consider a third option.
- Bice, a 90 years young concept launched two spinoff brands in Dubai. This should be easy to replicate by anyone with international brands in their portfolio. With a well executed localization exercise applied to an imported brand, the potential of creating local spinoffs is high. So, dear owners and investors, check your portfolio. Depending on your relationship with the brand owner, there may be a potential to co-create, co-own the new brand, and even join forces for an international expansion.
- My goal for this section is to avoid going into details. I just want you to know about this project I am working on. I hope you will find it interesting enough to ask me about it after the conference. A decision scientist always starts by defining the terms. The economist defines innovation as fresh thinking that creates value. I like this definition because it’s short. Catchy. Elegant. Easy to tweet. It’s also quite unhealthy. It perpetuates the illusion that fresh thinking is ALL that is needed to create value. That there is nothing in-between. I look at things a bit differently.
- Consider the human genome. A complete set of instructions for building a human being. It has over 3 billion individual decision points, organized in 23 areas of decision making. Thanks to the Human Genome Project, we are now much better able to prevent, diagnose and treat diseases. We can improving wellness, performance, and increasing our life spans. Taking control of our own evolution is no longer just a theoretical possibility. So I ask you, how hard can it be to do the same for a restaurant?
- I give you The Restaurant Genome Project. I started this about a year ago. Its goal is to identify the optimal decision process for making a restaurant commercially successful. The idea is to map all the decision points in all the areas of decision-making related to a restaurant. And then to expresses them in economic terms that make visible the impact of each decision on the ROI of the restaurant. Same goal as the human genome project – improve performance, control evolution. The theoretical part is over, and for the next ten months I will be mapping the genome of about 20 individual restaurants. As I skim through the slides, I will try to explain only one of the main points it makes, in a sentence or two. The full explanation would take half a day. I offer client workshops on this theme. Note to self: ** at USD10k/workshop - I only give a few workshops per year – am I pricing this too high or is it because I do not market at all?
- ---------- Ecosystem mapping is where we want to understand the context in which we make decisions. Here we try to identify and minimize the typical blind spots that affect us. Value proposition, the most critical area. Here we decide who we want to serve and what value we want to provide. We want to achieve problem-solution fit, which can only happen if we truly and deeply understand our customer. This where we create the heart of our restaurant. Around this heart we build a body – the restaurant venue. Here are decisions about space, facilities and FF&E, architecture and design… We want to create the ideal shell for the bundle of products and services we have planned for our customer. We want to achieve product-market fit, to make sure we actually create value for them. But that’s not enough – we also want to create value for ourselves, the investors. So we need a business model. With select key partners (brand, operator, key supplier). We define key activities and the resources necessary. We deal with intellectual property. Channels of distribution. Everything that affects cost structures and revenues streams. We want to be able to express in economic terms every decision we’ve made so far. That’s the only way to get a realistic understanding of what ROI we can expect. If we have social or environmental objectives, we need to embed them into the business model from the beginning, so that they become a source of competitive advantage, not a drain on resources. We repeat this decision cycle as many times as needed to ensure we are aligned with business realities – then we keep monitoring stuff, to ensure we are ready to adapt when needed, so we stay aligned.
- Case in point: El Bulli, the world’s greatest restaurant that never made a profit, because its business model was designed as for a restaurant serving a niche of culinary explorers and doing research to keep the menu fresh – when in reality, it was always a culinary research institute who also happened to serve guests. * Note to self - Memory: Eating at El Bulli feels like falling down Alice’s rabbit hole. Every dish is a work of art requiring the use of all 5 senses, plus a sixth one that keeps you guessing at the nature of what you feel.
- It is important to understand the way our options evolve over time. On one hand, knowledge and technology constantly expand our range of options. We want to pay attention to that so we don’t become outdated. On the other hand, we we have the human factor, and the enduring importance we place on comfort and control. If we forget that, we risk becoming out of touch. So how do we balance these forces in search of innovation? By creating new opportunity spaces in-between restaurants and other sectors, such as retail, entertainment, education and so forth. This is a dynamic of convergence that I explore under the theme “Breaking Silos” But there is a different force at play here. An easily overlooked truth - that technology's theoretical possibilities are ultimately less important than convenience and control. A good restaurant, most of the time will be about the simplest of things. Mr. Lander here writes a lot on that theme. I explore here just a few ides under the name “Back to Basics.” And a final point: innovating at the extremes involves risks, because you will be pursuing niche markets. The most commercially successful restaurants do two things: They appeal to diverse audiences by pursuing different kinds of balance. See the section “Bridging Divides” They understand that at any given time, there is a sweet spot where they can appeal to the maximum size of addressable audience. This sweet spot can only be achieved by understanding the evolution of customer expectations. It is constantly on the move.
- Some of the most famous chefs are innovating at the cutting edge of culinary science. These are just some of the names…
- And this
- And this.
- They do it by constantly researching an experimenting with local, seasonal ingredients they forage from seashore and forest. They are champions of sustainability. ------- Alex Atala (D.O.M - São Paulo, Brazil) - part-historian, part-botanist, he takes foraging trips into the Amazon to test potential ingredients for his menu, and has become a champion of sustainability and ethical practice. René Redzepi (Noma – Copenhagen, Denmark) - the standard bearer for the New Nordic movement" / recognized for his use of local and seasonal ingredients foraged from the seashore and forest. Ben Shewry (Attica – Melbourne, Australia) – (New Zealander)
- These are some of their dishes.
- These are some of their dishes.
- Some chefs bridge past and future, each in its own way. The skinny Italian chef splits his menus to appeal to traditionalists and adventurers alike. Blumenthal takes recipes from the 1300 and gives them a 21st century makeover with contemporary ingredients and new-age techniques. Finding a way to balance opposites allows chefs to be financially successful – they successfully cater to several distinct audiences. Pierre Gagnaire gives his mission statement as the wish to run a restaurant which is 'facing tomorrow but respectful of yesterday’. Massimo balances the demands of Italian heritage and modernity and has created a restaurant where traditionalists and those seeking something entirely new. He bridges past and future with a menu separated into three distinct parts, catering to three distinct groups of people. Heston methodically recreates British culinary history. Recipes from as far back as the 1300s are given a 21st-century makeover with contemporary ingredients and new-age cooking techniques, resulting in a menu that takes diners on a journey full of wonder and discovery.
- Others found success by bridging East & West, or North and South. Consider the Dutch chef cooking French food in China, or the Austrian who reinvented Portuguese cuisine.
- Notice how my points so far have barely scratched the surface on just some of the general areas of decision making related to the food journey. Most innovation happens by constantly experimenting with new combinations but my research suggests that restaurants become most profitable when they find new ways of balancing elements that belong to different dimensions. A way to bridge certain divides. Talk about the importance of a constant when playing with variables.
- Restaurant development centers on the customer experience, making it more important than ever to understand how it evolves. Two insights here that can be a source of inspiration for innovation: Have you heard of Daniel Kahneman? Nobel laureate. Founder of behavioral economics. He reveals how our "experiencing selves" and our "remembering selves" perceive happiness differently. His insights have profound implications for the decisions we make when we conceive restaurants, starting with the realization that we are talking to aspects of a guest personality that function by completely different rules and react to completely different stimuli. Building on his work, I suggest a third distinct entity – that of the anticipating self. To add to the complexity, consider the effect of technology permeating an increasing portion of our lives. I don’t know about you, but I find that living unwired is now something I need to plan for. What is the effect of a wired state. Being wired changes a customer’s perception of time – and lowers their tolerance for waiting, heightens their expectations about the availability of knowledge, the option to personalize every aspect of the experience etc. Implications for innovating in restaurants: What we call experience begins and ends outside of the restaurant Most of it is mediated by technology – creating the need to formulate online and offline strategies for engaging in conversation with these guests (and at least six of the aspects of their personality). Incorporate Wellness, Sustainability, Mobile, Seamless
- How being wired becomes the status quo…
- … and how to be unwired becomes something you need to plan for, work for. A conscious and often uncomfortable effort.
- ** Talk about the strange and important insight that the customer choices that have the highest impact on the ROI of a venue, are actually happening outside of the venue, in a space that restaurateurs or hotels do not fully understand. A space they do not yet invest in. Not enough. Not yet. Share how there are ways to bring some of these key choices under our control or influence? Not enough time…
- ** Summarize here what CHI tries to achieve. Should I share how I focus on research and development and how I fund this efforts myself? I could use some help, but realistically, who cares about innovation? Who would want to contribute to the effort? People just want to reap the benefits…
- ** Give them a way to find you. Just in case…