Medium Raw

You knew things were going to get bad when Steve Hanson, without warning or visible regret, announced that he was going to shut down his restaurant, Fiamma. A few months of unsatisfactory receipts, true—but they’d recently won a very effusive three stars from the New York Times; the chef, Fabio Trabocchi, had been getting a lot of favorable attention and a lot of goodwill from the blogs and the food press. It was just before Christmas, no less, and there was every reason in the world—in an ordinary year—for an owner to find reason to believe things would get better, to hang on. But not this year. Hanson had examined the numbers, glanced at the headlines, taken a quick but hard look at the future—and decided he didn’t like what he saw. He shut the doors on Fiamma and another of his restaurants, the Times Square Ruby Foo, in the same week.

Whatever people might think of Steve Hanson’s restaurants, no one has ever credibly accused the man of being stupid. Evil, perhaps. Unlikable, probably. But even his detractors won’t deny his intelligence. If Hanson was choosing this moment, and this time—before the holiday season, no less—to drop the hammer on his show pony, arguably the best of his restaurants, the one all the opinion-makers actually liked, this meant something.

This was a warning sign. To seasoned restaurant insiders, this was a blood-chilling indicator that things were not just bad—but that they were going to get a whole helluva lot worse.

In a business that lives and breathes dreams, delusions, superstition, and signs, where everybody, from the busboy to the owner, is always trying to figure out what it all might mean—Why are we busy today? Why not yesterday? When will we be busy again?—everybody scrambled to battle stations, trying to figure out what it all could mean, and what they could do to stop it, hopefully before “it” (whatever “it” was) happened.

The year 2008 was the annus horribilis, as they like to call such times, the year of the Disaster—The Fear. The stock market plunged, retirement funds became worthless, the rich became poor, the gainfully employed jobless, the eminently respectable suddenly targets for indictment. In a flash, thousands of loud, over-testosteroned men flush with cash and eager to play “whose dick is bigger?”—the secret-sharers, the hidden backbone of the fine-dining business—vaporized into an oily cloud, possibly/probably never to return. What “it” meant in real terms was that, nearly overnight, sales were dropping in the neighborhood of 30 percent. Or worse. Most chefs you talked to admitted to 15 to 18 percent. A few more honest ones would grudgingly admit to upwards of 30—while trying to keep the concern out of their voices. This was fixable. No reason to panic, they insisted. To admit how bad things were—and how absolutely petrified with fear many of them were—was bad luck. The accumulated wisdom of the restaurant business dictates that admitting such things, publicly accepting reality, is bad ju-ju. It only makes things worse, spreads the fear, worries creditors—and, worst of all, frightens away potential customers.

But it was worse than that.

It wasn’t just that sales were down at the medium-range and up-market restaurants in town—it was which sales were down. It’s one thing to take in $20,000 in receipts on a given night. It’s another thing if most of that money represents food

sales. What a lot of people won’t tell you is that, for many full-service fine-dining restaurants (the kind with elaborate service, freshly changed floral arrangements, “chef ’s tables,” and a private dining room), the prevailing business model before the crash was the reliance on the “whale customer,” the regular patronage of the kind of customers who’d spend a few hundred dollars on a meal—and ten thousand (or more) on wine. The percentages on wine are generally excellent—and it requires relatively little in the way of labor or equipment. The margin on food, however, is razor-thin in the best of times—even when the prices on the menu appear to be outrageously expensive. The best ingredients cost a LOT of money. The quality and sheer number of personnel needed to handle those ingredients also require a lot of money. And by the time those ingredients are trimmed down, cooked off, sauced, garnished, and accompanied by the kind of bread, butter, and service one would expect them to keep company with—there’s not a lot of profit left over.

The many in the finer of the fine-dining rooms of New York were, in some sense, being subsidized by the few who spent big dollars on wine. A few years back at Veritas, a bar customer was pointed out to me. He’d blown through as much as $65,000 in one month, giving out tastes to fellow oenophiles and strangers alike at the bar. That kind of customer can help a chef be a little more generous with the truffles.