STARR Restaurants: Stephen Starr. How a Non-Foodie Built Thriving Restaurants on Gut Instinct

0:09 I saw something that you talked about in this business and it it would just stress me out so much, which is Somebody might go to your restaurant five times love it and then the sixth time, something might happen that is big enough that they'll never go back and they're really mad. Yeah. You know, the more you say what you just said, the more I realize what a stupid business this is to be in. One of our landlords, Seymour Rubin, said to me, goes.

0:32 Why would you want to be in a business? where one guy, a dishwasher, could just stop the whole operation. Yeah. One guy That's it, I'm leaving. And the whole restaurant falls apart that night. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.

1:01 they built. I'm Guy Roz, and on the show today, how Steven Starr built one of the most beloved and lucrative restaurant groups in the country. One hit? At a time. Compared to almost any other small business, owing a restaurant makes almost no sense.

1:29 The start up costs are high. You have to take out a long term lease. Your inventory is perishable. Finding staff is a nightmare. The hours are crushing, the customers can be demanding and annoying. And if you execute well

1:44 At the end of the month, your net margins are around five percent. Ten if you're lucky. If you really want to make money in the restaurant business, you're better off trying to buy a Taco Bell franchise where margins are closer to 20%. Or you can do what today's guest, Steven Star, has done. Build really awesome restaurants that serve lots of guests, do it consistently, and replicate the model multiple times.

2:10 Right now, Steven Starr own nine of the 100 highest grossing independent restaurants in the United States. These include places like Pastis and Utican in New York. but diplomat in Washington, DC, and Makoto in Miami. In each one of Star's 40 restaurants, you'll find a unique, dazzling design in addition to great food. And together, these restaurants pull in nearly half a billion dollars a year in revenue.

2:37 Now you may have heard the statistic that around half of all restaurants in the US don't make it past year five. Even Steven Starr has had to shut a few restaurants down over the years. But his incredible track record at building restaurants that even 10 or 15 years in are still hard to get a reservation at? Has a lot to do with so many things that most of us don't even notice. The lighting, the temperature inside.

3:02 The music in the background, the way you're greeted when you walk in. These are things Steven's been obsessed with ever since he opened his first restaurant, the Continental, back in 1995. And here's the other thing. He's not a foodie. He doesn't really know much about cooking at all.

3:20 In fact, before he even got into restaurants. He had a whole first chapter as a comedy and music promoter. And as you'll hear For a guy who's launched such forward facing crowd pleasing businesses, He kinda prefers to stay in the background.

3:35 Which makes sense when you consider his childhood. Steven Starr grew up in the mid-1950s and 60s in New Jersey, just outside of Philadelphia. He says he didn't have many friends when he was young, so he had to create his own entertainment. You know, I was surrounded by televisions'cause my fo my father was a television repair guy. So

3:56 The whole house had TVs everywhere. I watched every T V show in the world and uh Very much fell in love with the Dick Van Dyke show back then. And I wanted to also be a comedy writer.

4:08 Mm. You know, what I watched on T V was the shows, but you know what I was more obsessed with? The credits. Like I knew the producers. I knew the writer. I remembered hey. Sheldon Leonard. He did that other show too.

4:22 And you know, I had a real and real a real to real tape recorder. And I created my own little environment in this room. I know, I was obsessed with music, mainly the Beatles and Elvis Presley, so I I have my little fantasy imagination periods where I would do Beatles versus Elvis.

4:39 And I do that for three hours. I play one song. versus another song and I rate them. Mm-hmm. So Basically.

4:47 Loved TV. Uh, I used to do my own skits and and radio shows and then then I became sort of intrigued by being an announcer on the radio. So like radio was a thing that you were really want and you actually got a license I I read, like when you were a teenager, like to be on the radio.

5:04 Yes. I went to the federal courthouse in Philadelphia. I took my test. And I passed. And what I used to do I used to go in and sneak into a college radio station

5:16 And in one part of the station at night. The the young college kid was who was seemed like an old guy to me, was on the air, and I would kinda sneak in and go into the production studio. And then I learned how to do production by myself just by trial and error, and I'd take the albums from the radio station and I would do my own audition tapes. One day, however,

5:39 the guy that was on the air caught me. And I thought, Oh boy, I'm in I'm in big trouble. And he said, Listen, you can't let just sneak into a radio station like it's not cool. You can get arrested or whatever. He says, But listen, I'll help you. And then I came in like twice a week.

5:55 And he taught me how to edit splice tape. And all that. And I just made all my little audition tapes. I pretty much mimic the FM DJs of the time. You know, bye.

6:06 Talking this is Steven Star at W M M Right. And then I wanted to be a concert promoter, and I promoted my my first big concert. In my high school. Which was a band called Mata Hoople. Oh yeah. Which has had a hit record called All the Young Dudes. All the Young Dudes, right. Right. Written by David Bowie.

6:25 I got that bug of wanting to be a concert promoter. I loved it. Became friends with the band. Brought the band to my house. My mom cooked them dinner. So the entertainment bug was now really in me. I'm just wondering, as an 18 year old or 17 year old high school kid, how did you become a concert promoter? I mean who's gonna

6:45 Like How did that work? I don't understand. I'm just imagining today. An eighteen year old saying, Hey I wanna bring Mott to Hoople or That's not

6:53 Just you can't just snap your fingers now, I'm a console promoter. I wanted to break out of the normal lifestyle that I was in in New Jersey. It was boring. It didn't Satisfy me. Do big things.

7:07 I became the student council president of the school. And somehow they allowed us to have a concert. Once a year. Ah. So we had the opportunity to book Moby Grape.

7:18 Alice Cooper, who wasn't big yet. We're not the hoop on we chose. Mata Hoople. Um Steven, when your

7:25 I know that you went to Temple. to study communications. Um But I also know that Your You lost your mom at a pretty young age, you were just nineteen.

7:38 Um. Which I can't imagine How I mean with that would have been like to be s a kid and

7:46 And for that to happen. I mean it was it was awful. I was nineteen, I had younger sisters, three younger sisters, six, seven Thirteen, something like that. That was horrible. And uh

7:59 It definitely did something to me that made me Want to work really hard. And maybe try and forget. But even prior to that. When I went to college

8:09 My goal was to be I wanted to be rich. 'Cause we didn't ha we had a middle class family, but we didn't have much. And I wanted to take care of everybody. And uh

8:18 I remember sending my Typing a letter to my mother. Telling her that. Don't worry about it. By the time I'm twenty one, Mom.

8:27 I will be a millionaire. Hm. Okay. And there's there's conflicting I've heard conflicting things that you did graduate or that you left before you graduated. First of all, let's just clarify that. Did you f you finish or did you leave early? I left early. I left uh like the third year.

8:43 Because my m my sisters were young. And I couldn't I had to be there and help them. So it was uh I had no choice at that point. But I guess from what I gather in nineteen seventy seven Right. So you are roughly

8:58 twenty one years old. Um, you open a diner and a comedy club in Philadelphia called Grandma Minnie's. Tell me the story of how you of how that came about. What was the idea for that?

9:12 I just wanted to do something that could make some money for myself. And Not that I thought it was beneath me, but it just wasn't in my DNA. To like w work in a restaurant.

9:22 Or be a waiter. So I went to this deli. And the deli was callma mini's and I befriended the owner. I said, You know what? At night here. What do you do? He goes, Nothing. We closed.

9:33 I think I have an idea. What if you did comedy? 'Cause I have been going to New York to see uh Comedy shows that catch a rising star in New York City. Mm-hmm.

9:43 And uh He said, Sure, I mean I'm open to it. So I started going back to Catch Rising Star. And I'd watch the show. And the the comedian would get off the stage and you go over to the bar and I'd say, Hi, my name's Steven Starr.

9:56 I'm gonna think I'm gonna open a comedy club in Philadelphia. Would you be interested? And they all go, Yes, of course, and I get their phone numbers. And then f we finally had our first show. And uh I start booking comedy there. Alright, so just one back. So Grandma Minnie's was a an existing diner. It existed. It was a deli. It was a deli. We put a stage up, like when after it was closed, there was enough room in there. How b how big was it? It probably only hold around eighty, ninety people.

10:23 That's it. And you you just got to know the owner or you And he said, Yeah, you can use d this place at night and we'll just split the ticket sales or something? Like w how how did that work? No, basically no. No, he said you keep the door. And I'll keep the bar and food. Got it.

10:38 And how did you s like again, you're s so such a young guy. You know, sometimes you hear about, you know, young people in their eighteen, nineteen, twenty who are doing these things that you often hear people in their forties doing and and then you find out that well, maybe they looked older, they were taller, they were bigger, they they had a presence that kind of enabled them to kinda get away with it.

11:00 Did you have any of those things? No, I I was I didn't look older, I wasn't like special in that way. You know what I think it is? This is why I heard you're you're a good interviewer. You're like Barbara Walters.

11:11 I mean my kids have asked me that question, my My um Wife, wife I have a couple wives. Have asked me that question. I do believe I must have had charisma, people liked me.

11:24 You know, I remember one guy in the very beginning when I first open my first real nightclub. He was the guy that owned that building. And he was a tough guy. And he told me, he says, You know what? You're very disarming.

11:37 That was the word he used for me. He goes, You're very disarming. I just think I was I had a thing. Yeah. Oh there's another p there's another piece here.

11:45 I also worked on the boardwalk in Atlantic City, which is a big piece of Who I am. And how I Became who I am. You were on the boardwalk when?

11:55 And when I was sixteen and Fifteen, sixteen, seventeen. Yeah. Boardwalk in Atlantic City as a salesman. In a store that sold everything. It's sold.

12:06 Watches, rings. Stereos. And I learned so much. From working on the boardwalk in Atlantic, I learned about human nature. I learned how to to talk to people. I learn how to sell.

12:18 You know, we were paid on commission. And we got paid based upon how much profit we made. On each item that we sold. We felt terrible. We didn't know how to do that. We

12:29 You know, a ring that was worth twenty bucks. We were being encouraged to try and sell for two hundred bucks and we thought that was wrong. But eventually, just like You know? A Navy SEAL or a Marine.

12:41 We got to be trained killers. And we learned. How to sell and how to uh So I think that's a good thing. The ability to feel confident, my confidence.

12:51 Was Being a salesperson on the boardwalk in Atlantic City. Yeah. Okay, so you have this burgeoning comedy club at Grandma Mini's and you start to bring comics and how does it do? It became very popular.

13:05 And then the gentleman. Oh, on the place. Then all of a sudden one day he goes, You know what? This doesn't make any sense for me. I could I uh you you're keeping the door, I could do it. I want you to leave.

13:16 I'm doing this myself. Oh, he said he was gonna say why am I why why are you making all the money? for booking these gigs, I'm gonna just book the comics myself. And he threw me out. I was devastated.

13:29 Yeah. I then said, you know, kinda like Rocky. I said, You know what, I'm gonna I'm gonna Can I curse on this thing? Yeah, yeah, sure. Yeah.

13:39 Uh I was gonna say, you know, fuck him. I'm gonna come back and I'll fucking put you out of business. Okay. Because I was I was the one that knew these comics, you know, I'm the the people I had befriended. So I started I start looking for a place to open another club. I found a bankrupt building that was a restaurant.

13:57 Somehow convinced the bank. I had no money. To sell it to me. Where was it? That's second and Bainbridge Streets in Philadelphia.

14:06 Price was one hundred and fifty thousand dollars. Okay, and how are you gonna buy that with zero collateral and zero assets and I didn't even know what collateral was. I Saw the sign on the building, somehow got the appointment with Continental Bank at the time, met with the man And uh Told him my idea. What was your idea? What was the what was the pitch you gave him?

14:27 Pitch was to open a comedy club like I had opened. For someone else. Why would a banker even take you seriously as a twenty two year old with no collateral and no cash? I have no idea except That I think it was a time

14:44 That wasn't Like I think people still believed in people. Like bankers still would go on an instinct or a feeling. Yeah. So it was probably a sort of a dead building. maybe he couldn't lease it or rent it or sell it for a long time. And this kid came in that sort of disarmed him, to use that word. So he let us he lent me forty thousand dollars.

15:06 And then s there was someone else, I forgot who it was. Borrowed or whatever ten. And for fifty or sixty grand I piecemealed this thing together. Yeah, it's so interesting because I've heard we've had stories like this on the show in the past, like where people got a property or

15:23 Elise in the seventies or early eighties. And It's so clear the contrast between that time and today. You know, the the red tape today, the regulations, the Corporate owned banks.

15:39 I could never do what I Yeah, I mean it's just a different so alright, so you And what did you call this club, by the way? Uh So there was Catch a Rising Star in New York, which was really the godfather of all comedy clubs.

15:53 I call it stars. S T A R S And presumably you could get some of the comics from New York to come to Philly,'cause it's only an hour and a half, two hours by train. Oh yeah. I mean I'd already l known them and lined them up. So tell me some of the people you you brought in.

16:08 So the fur I believe the first show. Was uh Richard Belzer. Who went on to be on law and order, right? Yeah as the cop. Uh Pat Benatar.

16:20 Pat Bennett are the singer. Yeah, but she was known as Patty Benatar back then. She was a comic? No, no, no. She wasn't a comedian. Musical act. Ending with a headlining comedian. Okay. And Patty Benatari back then was she sang all cabaret songs.

16:37 It wasn't like rock and roll then. So that that was one of our first shows. Uh About uh Jerry Seinfeld played there. He was a uh The host of Amateur Night.

16:47 I paid him seventy five dollars. Bob Sagitt started in our club. Wow. So I tried to run it seriously, but had no idea what I was doing. Classic story is the opening night.

16:58 We put all it sold out. put all the cover charges, which I forgot what they were then, five dollars, eight dollars. We put'em on the check as opposed to taking the cash at the window. Oh, put but the cover charge on the check. And the people drank and they ate.

17:13 On the check. Around sixty five percent of the audience walked out on the check. That opening night. Mm. So they didn't pay and they didn't and I had no money.

17:22 I remember crying that night. What did I do? 'Cause I didn't have the money to pay the comedians. And how did you m do the food side of it? I mean, again, like That's a different business. How did you even know what to do?

17:34 I didn't I I hired a chef. He was a young guy. I don't know how good he was, but we figured it out. This is why like even today with all the restaurants I own, I see what we do to open a restaurant. the tens of thousands of dollars we spend on training.

17:50 And this and that and audio visual and crazy stuff that we do. And I look back at what how I did this and I say to myself, What the fuck? I didn't we never did any of this now. All this training. It was just you just say come come into the door, you ha you have a young chef, but he would say, Hey, we need a deep fryer, we need a grill, we need uh prep space, and and you would say, Well uh just do what you need to do, just make it happen like I mean I learned as I was going along And we kept the food late. I mean we we did burgers and fries and whatever we did. So it was it wasn't very complicated. I I remember at one point, this is the sad sad story. You know how when when you open a new business in the old days, you put the first dollar

18:32 Like you hang it on the wall. Yeah. Right. That first buck. So at one point. It got so bad we couldn't pay our bills. I had to take the money down off the wall.

18:43 To use it to pay for something that that was like C O D. Yeah, I mean I imagine that a comedy club even with a two drink minimum You got staff, you've got right you've got to pay back the loan. I mean And from what I've read about it about it, stars, it just as awesome as it sounds like it was, I wish I was there. I wish I was there right now.

19:05 But as a business it doesn't sound like it it was sustainable, that it it was not hemorrhaging money. Yeah, it wasn't sustainable. I wasn't making any money. Maybe I I was able to eke a couple hundred bucks a week for myself. But the I was always getting behind the eight ball. And then

19:20 Eventually that comedy club evolved and morphed into a club that did Mainly music. So you just kinda switched it over the same venue. The same exact place. And still called the stars?

19:32 Call it stars and did some mind blowing shows, man. I mean great jazz uh artists, uh Nina Simone. Buddy Rich and the Four tops and temptations and then The punk thing started. So then we started doing the Ramones. The clash.

19:48 And all kinds of punk bands. This very, very memorable shows and it's such an intimate environment. How many people could you fit in? And then I'm going to go to the city. Like a hundred and twenty. Okay, so this So you switch over to music and how did that do as a business?

20:05 It did okay and it really was the thing that it was the catalyst for me to become a real concert promoter. And that motivated me to look for something bigger, which I did, and um stars eventually went You know, went away. Okay, so this was the transition to a new venue, I think called Ripley Music Hall, right? Yeah. And from what I read it's five hundred C.

20:23 venue, so it's a bigger place. Also in center city in Philadelphia. Yeah, a few blocks away was on South Street. Okay. Going back just quickly to stars, you got a loan from a bank in seventy seven to open it up. Did you were able to pay that back? I don't think so.

20:38 No. I didn't pay it back. I was too stupid to realize I c I just walked away from it. 'Cause I mean the building was a hundred and fifty thousand dollars. I should have tried to sell it.

20:49 But I didn't, I just walked away. And nothing happened. It was nobody gonna get sued or Right, the bank just repossessed and then they probably figured out, okay. Got again, amazing, different time, right? Because today that could have ruined you for a a while, right? Like it just it it's No no but it's it's true. When people ask me, hey what what's your advice? I I feel so bad because

21:11 The way things are Constructed now. There's very little Room for entrepreneurship. Yeah.

21:20 a lot of money or your family has money. I mean just And have virtually no money. It's hard, man. It's hard. Uh it's not the same it's not the same country. Yeah.

21:32 Okay, so you you go uh move to music. So now music really becomes your thing. Ripley music hall. Mm-hmm. This is the early eighties, you're bringing in I've read U two and

21:45 Bruce Springsteen and Cindy Lauper and Miles Davis and I mean James Brown, Ray Charles. Just incredible artists to a five hundred seat club. Yeah. I had this thing in my head that really the carried on to the restaurant business that I never wanted to do the same thing. Every day or all the time. So every night

22:05 It was my goal was to have something different. So One night you'd have Ray Charles and the next night you'd have, you know, your rhythmics. It was like my own Ed Sullivan show. And just to kinda go back on the business side, how were you able to finance the Ripley Music Hall? Like how I'm assuming you didn't buy that building, maybe you leased it, but how were you able to do that? I did that one um initially kinda on my own, similar to Star's. But

22:32 Eventually I got an investor who was participated in transitioning to concerts. 'Cause when you did concerts you needed real money. For deposits and stuff like that. And Stephen

22:43 Here's m what I'm wondering about. I mean Running a a music venue, it's hard, right? And and you were not a guy out of business school or you know, you were really kinda learning as you were going along. But it sounds slight. Again

22:59 Just Figuring out how to make this sustainable was tough for you at that time. Like you didn't It was not easy to make a profit doing this. No. Or actually you weren't making a profit.

23:10 No, very little. And if I if I hadn't been if I had gone to business school, I never would have done. Is You're almost an imposter. Yeah.

23:23 You're pretending to be something that you're not. You know, I was this promoter bringing in this act, that act, we're doing great convincing somebody to play for me as opposed to my competitor When at the end of the day what was left over was very little. But a lot of The brand started developing, right?

23:41 People started. Knowing that I was the success, but I wasn't. What about you? I mean, this strikes me as a kind of a business which really depends on relationships. Like I'm in San Francisco, so I think of Bill Graham, the legendary promoter here, right, who lived here. And um I mean what gave you an advantage, do you think? I mean, were did you have particularly good music taste? Were you like quote unquote cool? Were you just like why why do you think you were able to even successfully bring these artists into Philly? Of course I was obsessed with music. I loved music

24:16 Many of the promoters back then were older than me and they were not in it so much for the music as they were in it for the business of it. Right. You know, I met I met Bill Cramp a couple of times. And I think he was the real deal. But a lot of these guys were just in it'cause it was a good business and they can get chicks and, you know, do drugs. That's what I was getting at. Like you don't strike me maybe I'm wrong. Like you don't strike me as that kinda guy. No, it wasn't me. Girls I always liked and tried to get, but not drugs and all that. No. That wasn't my motivation. And at the end of the day I was always very, very uh good to the bands. I gave the bands not just what they asked for.

24:54 But more. I always felt I had to perform. Better than my competition. Because I was younger, not as successful. So

25:02 I just tried harder. Right. And um There's one other thing here that you may have read also. That A lot of my motivation.

25:10 When I was in college, I had a girlfriend. You know, my mom. had died. And uh around nine months after my mother died. The girlfriend.

25:21 Who I was in love with. Left me. Broke up. Messed me up. For a long time.

25:28 That may have been a more of a catalyst for my success. Than my mother actually dying. In the end, my motivation to open that club. was two things. To get her back. Or to like say, Fuck you.

25:41 Look, I made it. So I have to tell you that'cause that's such a big part Of what motivated me back then. It's like that Michael Jordan line in the in his Hall of Fame speech where he talks about another f another log on the fire.

25:53 Maybe you were motivated by proving yourself, maybe even being a little angry or having a little chip on your shoulder. Yeah. For sure. Um

26:02 Alright, so from what I gather The Ripley music hall business side was just not sustainable, and that eventually closed, I think, in the mid eighties. But you stayed with being a concert promoter. That re really became your From what I've read, your main thing. Like and it sounds like that was actually a much more sustainable, profitable business to do.

26:24 Yes, because the nightclub part of it, the Ripley music hall. All that really was was a way to get the big Agencies to do business with you. So they have a new act. They say, Listen, we have this new ban in excess. Or R E M.

26:39 We need you to book them. For three thousand dollars. You'll probably lose money, but Stick with us because if you do us a solid When they get big, we're gonna take care of you.

26:50 And that's so we ended up just losing money to hopefully make money later. It was like a loss leader thing. Right. So the club didn't work out after a while. It was it was just too much. It was hard to make a living there. And then I continued with the concert promoting and did Did fairly well with that. And for people who don't really know what that means

27:07 So if you had a like a Madonna,'cause I know you did promote concerts for Madonna in Philly. Like a huge act like that, right? You know, there's a minimum guarantee for her and maybe a a share of the profits and then There's all the ticket sales and you gotta do the promotion. You're not you're not paying for the venue. That's a different cost, right? No, no, no. You pay for the venue. You pay for the venue. Okay. So basically they're saying, hey You're like the contractor of for my house. You're doing everything Right. You're handling the whole thing.

27:35 And then whatever's left is yours. What what would be a sort of a good margin you could make on on that? I think you make after all the expenses are over, you're only making around fifteen percent. So You know, and nowadays it's a whole different thing. Nowadays the act gets Everything.

27:52 And then the promoter, which is really basically one promoter, Live Nation now. They own a lot of the venues, they get the parking. And they because they own Ticketmaster, they get the ticket charges. Back then when I was doing this, we only got the The ticket sales. So it'd be a modest profit.

28:08 But you probably were making more money than you were running comedy clubs. Oh, absolutely. Right. Absolutely. Much more. And did you it seems like a very like sharp elbows business. Like you kinda kinda have to be a son of a bitch a little bit to succeed. Is that true, do you think? Hmm. No, for me

28:26 It was different. Because I was uh David and and there was a Goliath in town. Who was you know, had been there longer. And more entrenched.

28:36 I had to be the good guy. I had to be the schmoozer.'Cause in the end the bands only cared about one thing. How much you gave'em. Money. And w and what the catering was backstage. It was pretty a simple formula. And what about like dealing with the egos of like

28:52 You know, when you I'm always amazed by like real estate agents. They have this ability'cause they're dealing with people who can be really Petty and just petulant and difficult, and they're generally very common, because they're in the client services business. Similarly, when you're dealing with artists, they can be jerks, right? They could just be and their people around them can be worse.

29:14 Okay. It never bothered me. Honestly, I I looked at it like um The acts themselves were so they were bigger than life. They were not even real. They were almost like cartoons. And whatever it is they wanted that was

29:29 Overwhelming or overbearing. It was part of the game. I knew I w I was playing the game. I was enjoy it was fun to be in the game and have And act tell us. Don't look at us when we walk down the hallways.

29:43 The people that weren't fun were the people that worked behind the scenes. The agents. Yeah. Those were the real assholes. Back then, obnoxious because you know there was a food chain.

29:55 Mm The concert order was the lowest on the food chain. We were at the Bottom. I mean I I think there's also something just Like a sort of um

30:04 intrinsic temperament that some people have. Like I couldn't do that. I would lose my mind, you know? I mean, do you lose your temper? Do you or you just kinda even keeled all the time? No, not even killed. I lose my temper. The restaurant business is what brings out the temper in people. Yeah. That's when you become like a dictator. Like uh Saddam Hussein. But the music business. No, I didn't lose my temper. It was

30:29 It was stressful, but it was fun. And you know, when you're watching something that you love happen. Music. Comedy. It's so satisfying. And you could put up with the other stuff. Yeah.

30:40 But it was also it was ch a challenge. How do I get this guy? Who is treating me like shit. who is not giving me the acts that I want. How can I convince him somehow, some way That I'm better at this.

30:56 than my competitor. And I was young, so I love that challenge. And by sheer. Force of my will. I was able to turn people's

31:07 Minds around. I was able to take I was the to be a nobody In this music business and convince the biggest agents in the world. To take me seriously. And that to me.

31:18 Well I won. You know, it's interesting'cause you mentioned that as a kid you would be in your room with a reel to reel and on your own a lot of the times and maybe even a bit of an introvert. But you were doing a job that really required'cause you just you mentioned this idea that I'd I to sh out schmooze these people.

31:38 But you don't strike me as somebody who really likes to do that or feels comfortable doing that. So am I right about that? You're right and you're wrong. No, I don't like going to parties and Hanging out and let's have dinner. Let's go out for a drink. I hated that part. Yeah. Yeah, but see you know in in the in my b ever since I was a kid

31:57 And then the music bus the um nightclub business. The music business and now the restaurant business. We're always throwing the party, right? I've been throwing the party for years. But I'm never in the party. I know exactly what you mean by the way,'cause I love throwing parties. We throw parties all the time and I'd cook

32:14 And I make sure one's glasses filled and I'm just making sure that somebody has somebody to talk to. But I actually am not in the party. I totally and I actually like that role a lot more. I used to be sad about it'cause I I remember going to the I own nightclubs, I s went to shows and I'd be like in the back my arms folded watching everybody.

32:35 Just watching them. And I thought I was pathetic. You're not having fun, you're not part of the event. But eventually I I like you just said. I kinda like that role.

32:45 I was watching over my little creation. And everybody was happy. That was my satisfaction. So

32:54 I read and I don't know if the the year is exactly right, but around nineteen ninety. You sold this company, this promotion company and production company. Electric factory concerts. I imagine you did it because the offer was pretty good. The offer was pretty good.

33:12 Also, I saw the way the music business was going. The bands were getting more. They were all sometimes getting a hundred percent of the door. Mm. And if we didn't have some sort of ticket master deal, which I didn't have It was gonna be harder and harder to compete.

33:28 So yeah, I sold my company to my competitor. I felt bad about it. But I felt it was time. Make sense because you could see where this industry is going.

33:37 Um what were you thinking about doing? I mean w did you think, all right, I'm done with the music business and I've gotta find something new, or did you already when you sold the business, did you already have an idea in your mind? No, I had no idea. I pretended I was still in the music business'cause I kept the office. I would go to work every day and Look at my Rolodex and

33:57 make some calls and then go out to uh Delhi and have coffee and go back to my office and look at my Roller deck. And then became They hit me, Oh shit, I'm not in this business anymore. So at that point I had a c child. So I spent a lot of time with my daughter, Sarah.

34:13 A lot of time going to the gym, a lot of time pretending I was still in business. And then But eventually I said I gotta do something. 'Cause you didn't have like money for the rest of your life, right, from that sale. Rest of life money? No. No.

34:27 So again. Just through travelling and Stuff. I was in New York one night and went to this restaurant called Global Thirty Three on First Avenue. Mm-hmm. And I f I just was

34:39 Totally. Blown away by this place. It was so cool. But we're so cool about it. The walls were cool. They were padded like vinyl walls that were beige and

34:49 There were greens and The curls extremely good looking and the I saw these like martini glasses. And I didn't even know what a martini was, really. Never drank martinis. And There was a DJ there.

35:02 And I said to the Stej, So w what is this? He goes, It's a Smartini bar. And uh I went back again a couple of times and it was packed. Line to get in.

35:12 Mm. I said this is somet I gotta try and do something like this in Philly. When we come back in just a moment, Steven opens his first bar and restaurant, even though the food part Really scares him. Stay with us, I'm Guy Roz, and you're listening to How I Built This.

35:50 Hey, welcome back to How I Built This. I'm Guy Raz. So it's the mid-1990s, and Steven is looking for something new to do after selling his concert promotion company. He's inspired by a martini bar he visits in New York City, and he starts looking for a location in Philadelphia to do his own version. I saw this diner. It's second of Market Street in Philadelphia. It's called the Continental. And the g it was a Greek guy.

36:15 That owned it. His last name I think was Pulos. And I said, You know what? Would you ever think about renting this out to me? He goes, Why? Why would I do that? I said'cause I think I could do something here.

36:25 Because what are you gonna do? I'm doing three thousand a week. What are you gonna do? Five. Six. Eventually he gave in because he was well, he wasn't busy.

36:34 And he he leased it to me. And it had this I don't want to jump ahead too much. Neon sign out front that said Continental. Yes.

36:42 And it was built in nineteen sixty two. So it was a six it wasn't a fifties diner. Fifties diner would not have been cool. This was a sixties diner. Different vibe to it. And I say that

36:52 about the neon sign, because anyone who's been to Philadelphia knows that restaurant now. That sign was there. It was called the Continental Diner. So I went through several different ideas, talked to a few different designers, and came back to the idea of doing The martini bar. And

37:10 I hired the guy that did Global Thirty three. His name was Miguel Calvo. He happened to be the DJ. He was both the designer of the restaurant and the DJ back then. Okay. Friend of mine named Owen Kamahira.

37:25 Who was a artist. In Philadelphia. And the three of us put together the idea and the concept for the design of the restaurant. So I did the whole thing for ninety thousand dollars. H w drywall? Home depot?

37:40 So the diner was the diner. We took the existing booths and reupholstered them in green. Olive, right? Green. With red piping, there's the pimento. Yeah. So existing booths reupholstered. The bar top which was for Micah we encased it in concrete, kept the bar stools, and reupholstered them in red and green.

38:01 And then Owen Kamahira, the artist Brilliant idea. Brilliant idea. He created lighting fixtures that were big. Olives. With giant toothpick through the lighting fixture.

38:14 So from the street. It was this incredible postcard that you could see through the blinds. And uh Miguel came up with this we had a drink rack, uh glass rack above the bar. And all the martini glasses, he filled them in uh Lose sight.

38:29 So all the cocktail glasses were hanging above you and they look like they were full. Ninety grand to do all that. Ninety grand and I remember the heat the heater would go out every f twenty minutes. I have to run down and light the pilot. Because I didn't have money to replace the heating system. You opened it in nineteen ninety-five.

38:48 And How what happened? Open in ninety five. Had this A lot of incredible build up. I put these like full page ads in like

38:58 These. So the hipster local papers. Yeah. It was like Studs Turkle, like these little quotes. Um People just

39:06 They were sort of intrigued by this thing, Martini Bar. And it was packed from the day I opened it. There was a line around the block. And just like the concert business, I always thought You know, you knew when a show was a success than the first five minutes you put the tickets on sale. Hit that ticket machine, boom. You start seeing the tickets flying out. Done. You knew you had a winner.

39:29 I used to have the same theory about restaurants. If it wasn't packed from the day I opened the door. We're gonna fail. Had lines around the block to get in. People love the food. It was sort of global tapas food and it just was this huge, huge success. And this little restaurant that did three thousand dollars a week being this previous owner eventually ended up doing a hundred thousand dollars a week.

39:52 And I imagine like at the time. There were places like this in New York City, which is two hours from Philly. But there was probably not that much like this in Philly, so I mean, I lived in Washington, D C around that time. So I remember if something like that opened in D C everybody'd be like wow you know,'cause New York was the center of gravity, still is, in a lot of ways, but

40:12 I imagine it was so popular because it was so different from everything around around there. Absolutely. You know, and then that movie came out, Swingers. Swingers ninety six. It came out right afterwards, and man I said God is good to me. And then sex in the city and the drinking cosmos and that whole thing then it was all young people coming out. Who never knew what a martini was. They were getting drunk.

40:34 On Martinis'cause they didn't know how to handle them. Okay. In that bar, obviously Martinis were the star, but Was food I mean, actually before we I ask you about the food there. Are you a food person or like

40:47 And I I say that as somebody who is. I love food. I'm I'm a I'm gonna be a modest here. I'm a very good home cook. I have dinners at my house all the time. I love to cook. It's my I've worked in kitchens. It's a huge passion of mine. Is that who you are? Are you like a food person?

41:05 No, I w I certainly wasn't then. Back I was a rock and roll guy. I was a music guy. I was a loved comedy. And food was just something to do as part Like my social life.

41:18 I sort of matured and grew into it and now I know it very well, obviously. I have uh great respect and reverence for it. Back then, going to a restaurant was just something to do. It was like going to the movies. Right, but when when you opened the Continental, you you knew you you wanted the martinis to be great. Yeah.

41:36 And was food also important? Were you obsessive about food? Yes. And but there's another part of the story I hate doing this to you'cause we're s I'm skipping something. In between me when I was still in the music business, a friend of mine wanted to open a restaurant That was based upon a fifties concept, like Johnny Rockets or something like that. And I opened a place that was like a fast food restaurant.

41:58 It was called Shake Burger and Roll. Mm-hmm. Cool name. Um Great little design I came up with with a guy from uh a good interior designer from New York.

42:08 The place was packed, you couldn't get in. And it went out of business in nine months. Yeah. But why is that? I couldn't figure out how to run it. It's like Yogi Yogi Barra who said, Nobody goes there anywhere'cause it's too crowded. It was just so crowded. We couldn't get the food out. I mean, I remember one time

42:26 Uh, the local police department came over to to get like Forty burgers. Awesome. The burgers go out. The cop comes back twenty minutes later.

42:35 He goes, What the hell is this? He opens up the thing, he opens the bun. All the b there's forty buns. But no burgers inside the bun. The reason I'm telling you this story. I was scared to death of food.

42:47 I was afraid to do food. So when I did the Continental I knew I had to have it. But I actually was so scared, I just wanted to hire a chef And give him or her A percentage of the business.

42:59 Just to take care of it'cause I didn't know what I was doing. And is that what you did you would do? Oh I tried. They they all turned me down. They wanted a salary. They just wanted a salary.

43:08 Yeah. And thank God. I would have shot myself if I had given them like thirty percent of the business. And look, you know, you learn by making mistakes. And I knew all the mistakes I made and You know, I couldn't manage a restaurant. I remember at the Continental Sunday nights I was the manager. And I hated it.

43:25 Hated being there all night. I hated dealing with drunks. It was uh It was tough.

43:30 Yeah, it's a tough business. Um I wanna point something out because and I think it's important to point out, not everything you touch. As a restaurantur. was gold. Like you have had things that didn't work out. And I think early on you tried a a Soviet themed eatery that I'm assuming served Russian food or pierogis or maybe and and that didn't quite I guess it didn't quite work out. I hate using the word Soviet. Sounds very, very uh I feel like treasonous. Uh it was Russian.

43:59 It was called Cafe Republic. It served great cocktails, Russian vodka. We had the Siberian six pack, which was six little shot glasses of vodka, one of which was a brand name that I found called Karl Marx vodka. Hm. I'm sure he would have been proud. Yeah. And we had a statue of Lennon in the bar.

44:19 And we had Russian, beef Stroganov, Pierogis, uh Caviar. But it was in a weird neighborhood in Philly, had no parking. And uh it didn't work out. Meantime, the Continental was doing very well.

44:32 I mean Continental became An iconic restaurant in Philadelphia. It was I'd say the most popular restaurant in Philly. And It created a renaissance in the old city section of Philadelphia. It really was the uh The catalysts for that renaissance with restaurants and

44:49 Retail. Alright, so On the strength of that, you I guess see the potential. to really lean into restaurants, right? And You then open

45:01 Budican. Mm-hmm. Also in Philadelphia, which Describe it for people I've been there, but describe it for people who don't know What this restaurant is. Budakan the original Budakon was a pan Asian restaurant, so it was sort of fusion.

45:15 It's very theatrical in its design. And s centerpiece of it is a like, you know, twelve foot Golden Buddha. Again, I don't take credit for the culinary

45:27 Concept I did not create on my own. It started in uh with Wolfgang Puck. at the restaurant he had in a California called Chinois on Maine. Mm-hmm.

45:40 China Grill in New York. In a Miami. And I had gone to all these places. Loved the energy. And um I went and spoke with different designers to ask if they would design my restaurant, one of which was Philippe Stark.

45:55 Who turned me down? But said. There's ways of buying my furniture. Call these people. So I ended up designing myself. With my friend Owen Kamahira. It's the same guy who helped you to redesign the continental for ninety thousand. Owen, yeah.

46:10 And Philippe Stark in the late nineties was a I mean, he was doing hotels around the world and he had it a line with Target. Maybe not not then, but he would I mean he was already I mean, I can't imagine you could have afforded him at that point. I didn't even think about it, but he d he wouldn't do he didn't want to do it'cause I think it was in Phil it was in Philadelphia. But Owen and I said, Come on, let's do it. We bought his furniture, we made it look like his restaurant. Boom.

46:33 Again. When Owen and I walked out. Of that restaurant. Just got dark and we looked through the windows and we saw this thing and it was just like we got choked up. It was so Awesome.

46:45 And the cash flow from the continental could support opening booton or did you did you also no for Continental was all mine. Budacon, we got an investor. Okay. It was actually a friend of mine

46:57 Who had a uh venture capital fund. And one of his clients. was willing to do this. So this particular client put up uh I'm one point nine million.

47:07 Today kitchen's cost. One million. Just the kitchen. Just the kitchen and the restaurant, okay. Yeah. So All right. The interior it was gonna be like that was gonna be part of the experience, right? It was dark wood and moody and I was very much a part of that.

47:24 Where do you think that instinct came from? Because again, like if you were to do um I don't know, a profile, right? Like a an AI profile of a guy. or an a woman, anybody, who is uh gonna design a restaurant like this, you wouldn't say, um Yeah, this was a concert promoter and uh comedy club uh manager and uh, you know Like you wouldn't naturally s think like, Oh, that's the person who's gonna have these

47:47 amazing, interesting ideas. Where do you think that came from. You know, I wasn't the director, I was the executive producer. In the movie business. So I was uh you know Samuel Goldwyn. Right. But I kinda had an aesthetic of what the right aesthetic to know the right director to hire, the right lead.

48:13 actor and actress and maybe what the soundtrack sounded like. It just was there. I don't know where it came from. And you knew what you liked. I knew what I liked, but I also knew what people liked. And back then Restaurants were a little mundane. People wanted to feel sexy and escape.

48:28 And that's what we did in the beginning. We took you to another place. So you were sort of like the guy who could unleash other people to kinda make it happen, focus on the big picture, and then hire the right people, but they would still come to you with design schemes that you might suggest tweaks to or say, well Let's think about maybe something a little darker or maybe You know, teak wood instead of uh the light blonde wood. R is that fair?

48:58 Again, if you uh talk to any of the designers that worked with me, They'll tell you that I'm a unique client. In the sense that I respect what they do. Most business people, and I don't look at myself as a businessman. I think it's an it's insulting to be called a businessman. I'm I'm a creative person that happens to end up being a businessman because I have to be. But where a business guy will go

49:21 Those damn designers they spend money'cause they don't give a shit what they spend. They just wanna and I don't look at it like that at all. I look at it like give me the best that you can give me. If it's too much, I'll tell you. I wanna blow people away, man. Shock and awe. And you know, part of it is a bad thing'cause I have to be concerned with money, too, with budgets.

49:44 Yeah. When I saw that movie The Aviator with uh Leonard DiCaprio about uh what's his name? Howard Hughes. Howard Hughes, yeah. It scared me. Because it felt it felt like me because he cowered you just kept going. No, more. Let's do it again. Shoot that scene again. I don't care. Let's bring in the uh

50:02 And It was frightening because I said, Oh shit, I do stuff like this, but on a much smaller level with these restaurants. You know, you gotta control yourself at a certain point too. And I think it's just worth kind of noting a quality of of many successful entrepreneurs is not that they're the smartest or they have the best ideas or you know, they got the top grades. It's that they're very good at building teams. That's really critical.

50:27 Mm-hmm. And it sounds like that was a just a talent you had. I make all these connections to the music business. So it's like being an A and R guy. You know, you're you're out looking for new bands. Yeah. I'm really good at recognizing Talent.

50:41 Also Last night when I was on Instagram I saw this thing that Steve Jobs said that freaked me out'cause I say it all the time. He was being interviewed by Dan Rather. What's your business model?

50:53 The Beatles. Because these guys collectively We're the most brilliant people in the world. individually. They did really good work.

51:01 But nothing like they did when they were together. Yeah. I'm not Enough by myself. To have that.

51:08 group, that core. of two to three other people. made me stronger, made me better. Yeah. Alright, so you are

51:17 You now have And I I mean Just to put this into perspective, and again, I love Philadelphia, an amazing city, but It's not New York and it's not Los Angeles. It's not the focus of the world, and є.

51:31 This restaurant you were getting like major celebrities coming to Philadelphia. to eat at Budakon. Like I read that at a certain point the weight To get a table on a Saturday night was like two months. Yes, it was a it was like a nightclub. It was like studio fifty four of restaurants.

51:47 You know, back then people s were still uh Allowed to smoke. in the restaurants. Yeah. So we had a smoking section. But then there was like this whole singles thing at the bar and people It was surreal.

51:59 How popular it was. were you seeing profits pretty quickly from the get go, from continental on. Yeah. You know, I was still old school, didn't have computers. I w had a checkbook. And I remember uh

52:13 I just figured it wouldn't be that profitable and make some money out of it. I never thought it'd make a lot of money. And all of a sudden I remember telling my wife at the time I'd say, you know, I just looked at the checkbook last week. Shows you how much was in there. Thirty thousand. And then

52:28 Four weeks later I said something's wrong. Why? I have seventy five thousand dollars in the checkbook. Are you sure you paid everything? Yeah. So

52:36 It just kept growing and growing. When we come back in just a moment, Steven makes the big leap from Philadelphia. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

53:11 So it's the late 1990s, and Steven has another hit with Boudicon in Philadelphia. And he's realizing just how great that city is as a launch pad for new restaurants. But Philly, here's the deal. It was like the wild west. It was like opening It was like the West Coast when the New Yorkers all moved in and took over Hollywood and

53:33 There was nothing here. It was all old school restaurants. They were boring. So you open Continental people freak out. You open Budakon, they never saw anything like it. Yeah. Alright, so you you start to open a succession of Russian, I think between Ninety eight and two thousand one. After Budacon, you open Tangerine Blue Angel Pod Alma de Cuba in succession.

53:54 And In terms of like the Is the formula for a successful restaurant kind of I don't wanna downplay it, but is it basically like Get butts in the chair, keep costs low and

54:06 keep tables turning over? Like is is it as simple as that? I mean that no, that's not the formula, that's the goal. But The formula is m is a lot of it's magic. I mean, it just happens. You gotta do Basically you gotta do something that people really like when they walk in.

54:21 There's gotta be something that touches them. Like You have to hear that sound in their voice like Like that. Like i you take your breath away a little bit. And it could be from a light, a lighting, it could be from a vibe, a smell. Whatever.

54:35 And it's not And easy for it's not it's there's no recipe for it. So by two thousand one I think you at that point you had maybe Six. Maybe seven restaurants.

54:46 In Philadelphia operating. And you were according to to the reporting of the time, they were they were doing very well, thirty million in in sales, five and a half million in profit. Which is pretty great for restaurants. I mean a a restaurant is lucky if it's doing Ten percent. Yeah.

55:04 Pretty good. Like that ten percent is kinda standard, right? Yes. We were doing way more than that in the beginning. And that's because things again the world didn't completely change yet. You know, the same guy that was able to build a restaurant and open it for ninety thousand dollars was able to make a twenty or twenty five percent profit.

55:21 Today. Not possible. Today between the rent Labor cost, this cost, that cost, that regulation, this thing, that thing, whatever thing. You're lucky, like you said, to make ten percent.

55:32 And your restaurants were still I mean You still needed investors to help build the next restaurant. But did you have the same investors who helped you kind of finance the six or seven restaurants that you had in the city? Yeah. We all it was only mi myself.

55:47 And one other the the venture capital guy. Who had his client. It was just me and and them. In the beginning for the first ten, twelve restaurants. And a bank loan. So it was good. I mean, most people you t you read about or you talk to in the restaurant business, they got like fifteen people that invest money in them and it's a nightmare. 'Cause you y you don't want fifteen different people who think they own the restaurant.

56:10 How were you what were you doing on a day to day basis? Were you going from one place to the next place,'cause you weren't managing them. You you admitted you hate that part of it. So on a day to day basis, were you just like jumping from one place to the next and checking in on them? Like what tell me what you were doing. I had a staff of people under me, the directors that were basically if you look back at old uh They're checkers. I had a bunch of checkers. What does that mean? They go out and check stuff.

56:35 Go check that. Go check that go check that restaurant. Now they have fancy names, but they're just they're checkers. And That's what I did. I just uh checked on things, but My emphasis was on the food. Even though I was not a chef, I was not a uh self proclaimed foodie.

56:52 But I had a very good palate and good palette memory. So I remembered what things should taste like. And my obsession even to this day is to taste the food and make sure the food is consistent. I am the number one person doing that. But basically the the ambiance, the

57:09 people will tell you that work for me, I'm obsessed with the air conditioning, the lights, the sound. Along with the the food. Yeah, it's interesting because we don't always think of those things as diners when we're sitting in a restaurant. Um So at this point, I guess you decide that you want to expand out to New York City.

57:27 which is the restaurant capital of the country, so again it makes sense. And in two thousand six you you indeed you opened two restaurants in New York, UtaCon and Moramoto, which you already you'd already created in Philly. So I assume you're thinking like if I'm gonna expand and build, I've gotta go to New York, like where the action is. Yeah. And I wanted to do it. I wanted it was you know, I guess part of it was ego. I had also been nominated for James Beard Award a few times when I was in Philly.

57:54 And I would go there and then get nominated and I never would win'cause you know, there was I was I don't think I was really taken seriously. And I didn't think the people in New York, the chefs and the restaurant owners Took me that seriously either. I wanted to like make it.

58:09 Big apple. So we did it. We did it for Budacon. And Morimoto. Budakon. I got scared with Boudicon because Boudacon basically wasn't that novel. I mean

58:20 really was like kind of a a little bit of a knockoff food wise from China Grill. So I knew I had to change the food, make it different. Mm-hmm. And come up with a design that was Spectacular. So who did I go to? I went to Philippe Stark again.

58:34 And it just didn't work out. And I went to plan B and went to Christian Liagre, which is another French architect. Designer. Who's a genius. He agreed to do it for a giant amount of money.

58:46 And He put together. Probably the most spectacular restaurant that I've ever done. Buddha Khan in New York. It's just breathtaking.

58:55 I said. To people around me, I said, You know what, this is it. I said, What do you mean this is I said this I I I can't do any better than this. This is Sergeant Pepper. I just did Sergeant Pepper. How am I gonna do better than this?

59:06 It seems like Really what just gets you out of bed is working with teams to develop a concept and then like grinding and spending A year or two years just like Focused on

59:20 bring that concept to life. Like that's what you actually love doing. Absolutely. What gets me out of bed? Other than having to go pee now as they get older. Yes.

59:31 is the excitement of creating And after it comes to life, I'm not so excited anymore. But I love the process. I love the stress. You mean you love the process and once it actually opens.

59:45 Like then you're kind of over it. No. You would move on. Move on. It's sad. That's my sad time. When it opens. It's no longer I mean, of course I pay attention to it. I go to the restaurants all the time. I'm always eating the food, unfortunately. But the thrill is gone the day after it opens.

1:00:03 You know, I saw something that you talked about in this business and it it would just stress me out so much, which is You know, somebody might love you. And love you talk about how and then thirty seconds later, if something goes slightly wrong at the restaurant, they're gonna hate you with all their passion. Like you're in a business where somebody might go to your restaurant, five times, love it, and then the sixth time something might happen that is Correctable but is

1:00:25 Big enough that they'll never go back and they're really mad. Yeah. If very of all of you are honest with yourselves, you've done that before. You've gone to a place and then one time they kinda screw you. That's it.

1:00:38 Fuck them. And you can't physically make it great. Like you've got to rely on The waiter The Matre D

1:00:48 Every part of that Working How do you make sure? I mean I guess you can't guarantee it, but w are there things you can do to To try and get close?

1:00:58 Yes, you can and I'll tell you what they are, but you know, the more you say what you just said, the more I realize what a stupid business is this is to to be in. Uh You're right, you're right. Look one of our landlords, Seymour Rubin, said to me, goes Why would you want to be in a business where one guy, a dishwasher, could just stop the whole operation? Yeah. One guy. Could decide.

1:01:20 That's it, I'm leaving, and the whole restaurant falls apart that night. I said, You know what, Seymour, you're right. Stupid business. You know, when you send an army into battle The generals give you a statistic of how many casualties you're gonna have.

1:01:33 Like every so often there's gotta be something that's too salty, a waiter that was rude, a host that didn't look up when you walked in, there's gotta be a cook that walked out, a server that said that he or she were sexually harassed. I mean It happens all the time. I mean, I have a big staff of people now, but I'm still on the phone at eleven thirty at night dealing with Fires. Yeah.

1:01:54 You know what? It's made me a smarter, wiser person dealing with all this. And probably Hopefully. Will delay dementia.

1:02:02 quite a few years'cause my brain is constantly Having to think. As a opera, yeah. And then customers, right? Like in San Francisco. uh many restaurants add a fee for mandatory health care that they have to provide to And that's

1:02:20 is passed down to the customer who gets mad at the restaurant. It feels like there are so many Challenges. Yes. There is and and that's why I will say this, that I could never, ever, ever do this again. I don't think anyone could replicate what I did.

1:02:37 Without Having some giant Money behind them from the beginning. By the way. When we open new restaurants, I'm not financing them myself anymore.

1:02:47 We go in the landlord wants us to open. They have to put up a good significant m part of the money now. To open a restaurant that would cost sixteen, seventeen million dollars? It's impossible. So you know.

1:03:00 The best advice I have if you want to go I would say don't go into the restaurant business, but if you do Keep it smaller. There's a sweet spot. Of around I think uh Around eighty five to ninety five seats.

1:03:12 try and turn the tables two and a half, three times. And I think you're that's the best The best model right now. And if if I continue to do this, I'm gonna try and stay within that uh That model. Okay. I wanna I mean uh we can't mention all your restaurants, there's forty plus restaurants and and

1:03:29 you've got Michelin stars now in some of these restaurants and you've won a James Beard Award or uh for restaurant tour and I mean again, Michelin star is not something that I probably was even on your radar, right? No. Was that important to you to be to yeah. It wasn't important. It's still not important. I shouldn't say that'cause now they won't give it to me. No, they're now gonna they're gonna take your stars away. Yeah. No, but I mean it's still it's nice. Look.

1:03:52 The James Beard Award, that was the thing, man. It was like the Academy Award. Or an Emmy. Like people could say it's not important. It was important. It felt good. It was emotional. To be recognized like that.

1:04:04 For sure. Yeah. Okay. Let's talk about

1:04:08 A low point here. Covid. You've got to be a little bit more. At that point, almost forty restaurants, thirty seven, I think. And then

1:04:16 Overnight. This entire industry. And it's still in recovery in in many cities in the United States. Collapse. Yeah.

1:04:26 So this thing happened, I was devastated, of course, like everyone else. And then I looked and I said, How much um How much money do we have in the bank? A few million dollars. Five?

1:04:39 Seven. I said, Okay, cool. We're cool. Mm. They said, but what about the accounts payable? Fifteen.

1:04:47 Million. Well. Ten to fifteen million. So I said, How could we possibly ever b what are we gonna do? But what happened is that everybody was very n uh the all the uh vendors

1:04:59 It was very understanding. And we paid A little bit to everybody. So they know our intentions were good.

1:05:06 But I had and we laid everyone off, but I couldn't lay everybody off'cause we were too big. To do that. How many employees did you have at that point? No, four or five thousand. Five thousand.

1:05:18 Yeah. I mean, well the servers, managers. Wow. Yeah, couldn't pay them anymore. And we had to lay off most of the office, but I couldn't lay off all of the office because You can't lay off the controller. He had the books and I didn't even know how to pay a bill.

1:05:35 So There were th there were millions of dollars of salaries we had to s to continue to pay. And then I said, You know what? We know we used to do these gift certificate things every holiday. Always sold star gift certificates. So I said, You know what, let's what the hell. We need to raise a few hundred thousand, maybe a couple hundred thousand bucks. So I said let's do

1:05:55 Buy one, get one free. One meal get one free. Buy one yeah, one gift certificate, get one free. Well In like thirty six hours.

1:06:06 We did like Ten million dollars. Well it was very emotional because we had our people like believed in like it was almost therapy for them. It's a good deal. Let's take advantage of this star thing right now.'Cause

1:06:20 You know we're gonna come back from this thing. And then the thing that saved everyone was the PPP money, the government. Thing. Without that gone. We would have been gone. You think the star group would have been would have been gone.

1:06:34 Absolutely. No question. That saves us. No question. No question. Never could have survived it.

1:06:41 Because your restaurant, I mean your Your main asset is your brand, right? It's your aesthetic, your brand. It's not you don't physically own these buildings that you're in. Yeah. Alright, I wanna ask about opening a a restaurant today,'cause you still open restaurants, right? And you still have ambitions to open more, I imagine.

1:07:04 Are you are you probably working on restaurants right now, right? We're working on a few. I have some changes of mind here that I'll talk to you about. Yeah, tell me. I think that uh Again, I I'm gonna scale down the model. We still wanna make it special and sort of take your breath away in a different kind of way. But I think

1:07:21 Opening restaurants that are two hundred seats. The expense of those restaurants is just a It's too risky. And how many years does it take before you can Recover that money.

1:07:32 Yeah. It's you can't. In other words, if you open it up on your own and you borrow twelve million dollars. It's gonna take you. Ten years.

1:07:40 At least. Yeah. Not worth it. So That's why I'm not going to be able to

1:07:44 To open the things that I do, you have to have landlords that want you for other reasons other than your rent. You're helping get tenants and build neighborhoods. That's what it boils down to. Otherwise I just open small restaurants and you're better off doing something like that. Why did that happen?

1:08:00 Uh, I'm just curious to get your take on on why that happened and why you were able to do this thirty years ago. And now it's just even for you. It's so hard. Well.

1:08:11 Affordability, right? The key word in the next election. Things are too expensive. Covid happened, everything doubled, the air conditioning. What used to cost six hundred thousand is now one point seven, one point eight million. They said, Oh, it'll come down. It didn't come down. Kitchen.

1:08:27 Five hundred thousand dollar kitchen normally. One point five million. One point eight million. It it's it's just off the charts. And you know, minimum wage went up and

1:08:39 You know, I think minimum wage should have gone up. I think it's the right thing to do. But I think at a certain point, especially with tipped employees, I don't know if it should keep going up. 'Cause I mean it's gonna be impossible for restaurants to really keep To stay in business. And I mean, is there

1:08:54 I imagine that with forty six restaurants now. Yes. Is there a point where it stops or or is it just You just naturally are always looking for New opportunities. And new places and new concepts to open

1:09:08 More restaurants up. I think it naturally will stop. I mean it it's I mean I've done so much And uh You know, we'll see who if we sell or if my daughter, Sarah, or my son who's not old enough to do this yet, Julian, maybe they'd be interested. But the other thing I'd like to do is the opposite of what I've done. I'd like to do like a fast casual thing. Mm-hmm. Like Shake Shack.

1:09:31 Like what Danny Meyer did with Shake Share. Yeah. That's the sort of warrior in me. I'd love to compete. version or a different you know, something else. That's fast casual. Yeah.

1:09:42 Um you are Not quite seventy yet, right? Mm-hmm. Not quite. Not quite. Okay.

1:09:49 But approaching and so you mentioned your daughter who's involved in the business, um Is that your kind of hope that Maybe she will Take over the star group? No, I don't think she once. I don't think she would.

1:10:03 It's uh brutal. Real business. The best thing for everybody. is to have an exit. Right.

1:10:09 Uh Private equity probably be the last thing you want to do, but I would do it. The Perfect exit is to be acquired by a company. That has some sort of a

1:10:20 Synergy and relationship to what you do. Uh My fantasy You know, we run the Louis Vuitton restaurant in New York City.

1:10:29 would be that L VMH come in and acquire Star Restaurants or part of us. Luxury brand. Great taste, great design, aesthetic. I'd be proud. To have somebody like that come in and buy us.

1:10:42 Or even like a Disney. I know. I don't know why they would buy it. But a Disney, somebody like that. Somebody that I look up to that I Admire. You know, private equity. You know, it's about money. Who knows if they

1:10:54 Take care of it the way that I would. Well that's the thing. I mean your name is on the re I mean, your name is associated with these restaurants and there's a certain expectation. And so you know, there's always a risk that whoever buys it, even if they write a big fat check You know, and then within three years, you know, diners are saying, Oh, it's not the same, it sucks, the quality's gone down.

1:11:14 I mean that would hurt, but you know. It's like You know, when Bob Dillon and Bruce Springsteen sold their publishing. It hurt'em. But like

1:11:22 There were like a few hundred million of dollars. So that kinda At some point you gotta take care of yourself and your family. So you know. your restaurants generate over four million dollars now a year. I mean Even though they're not in every city in America, a lot of people know these restaurants. It's a uh you know

1:11:41 And for a guy who really Came from a completely different world, had no experience in this business. Uh, you know, you built something That's had impact. certainly in on the restaurant industry.

1:11:54 I mean, how much of of where you got to do you think had to do with your hard work and your you know, your skills and how much you think had to do with Being lucky, being at the right place at the right time. Percentage wise, I don't know, a lot of hard work, right? I couldn't not stand being bored.

1:12:12 I they always had to have something to do. So part of it was that But there's a lot of luck. A lot of luck. And again, back to the music analogy. You know, you talk to a Bruce Springsteen. about his career, he said it could never happen again. It was a different time.

1:12:27 Radio was a certain way, people you know, they toured, bands played clubs. It's a different time now. I couldn't do it. So a lot of it's luck. A lot of it. That's Steven Star. Founder of Star Restaurants.

1:12:43 By the way, if you've seen Sex in the City, the movie You might remember the rehearsal dinner scene. It was actually filmed at Boudicon in New York and after the movie came out. for about six months. Reservations there became almost impossible to get.

1:12:58 Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's totally free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyros.com or on Substack. This episode was produced by Alex Chung with music composed by Rumpin Arab Lui. It was edited by Neva Grant with research by Sam Paulson.

1:13:23 Our audio engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Carrie Thompson, Carla Esteves, Casey Herman, JC Howard, Sam Paulson, Chris Massini, Catherine, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

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