Ultra upscale dining can hit customers with a severe case of sticker shock. But that isn't keeping big spenders away.
When David and Michelle Myers opened their chic Los Angeles restaurant, Sona, in 2002, it was slow going at first. The stunning interior, centered around a one-of-a-kind wine decanting table and fountain sculpted from granite boulders, along with the ambitious menu, were intended to appeal to deep-pocketed diners. But the public was still reeling from the effects of 9/11, and construction cost overruns had eaten into Sona's capital, leaving little money to invest in the first-class wine program and other perks deemed essential by the Myerses to command the prices they set.
Almost three years later, the 90-seat modern French eatery is booked six weeks out, attracting a mix of loyal locals and fans who reserve from as far away as New York, London, Paris, and Shanghai. They come for David Myers' nine-course "spontanee" tasting menu, and depart leaving behind about $120 per person.
No doubt Myers' well-reviewed food, service, and award-winning wine program (Sona's cellar now boasts 10,000 bottles and two dedicated staff members) go a long way toward filling the tables every night. But there seem to be other forces propelling dining dollars to the high end of the spectrum. The "restaurant collection" in the $1.7 billion Time Warner Center in New York City is also booming, with patrons dropping $300 per person for a sushi lunch at Masa and $175 each for the 15-course chef's tasting menu at Thomas Keller's Per Se. And customers must wait at least a month to sample a $250 dinner at Charlie Trotter's in Chicago or the "farmer's feast" ($95 without wine) at Blue Hill at Stone Barns in suburban Westchester County, NY.
It might be hard for a Denny's regular to fathom how a meal can cost as much as a monthly car payment. While the economy has rebounded, a good portion of Americans are still living paycheck to paycheck. And even the more affluent may be worried about how soaring fuel prices, rising interest rates, and stratospheric real estate prices will affect their pocketbooks. They're shopping for bargains in places like Costco and Target, and buying gas-efficient Toyota and Honda hybrids.
Despite this behavior (or maybe because of it), some of these same consumers will pay a high premium for products and services that deliver craftsmanship and status. Recent restaurant openings and pricing trends suggest that high-end fine dining is falling into that indulgence category. Enough people are currently placing sufficient value on the quality of the experience to fork over bigger bucks than many might have thought possible just a few years ago. "People in the middle are exploring both ends, trading up when they want to and can," says restaurant consultant Karen Karp. "Today's economic climate is one of extremes."
During February, 54% of fine-dining restaurants enjoyed a year-over-year increase in sales, according to the National Restaurant Association, which said the segment hasn't seen those sorts of figures since the record growth of 2000. Hudson Riehle, the NRA's SVP of research, attributes the change to a surge in real wealth—44% of households earn annual incomes over $50,000 (adjusted for inflation), up from the 34% of 20 years ago. "The environment for fine-dining is the best it's been in several years," says Riehle.
Perhaps that's because the people most able to afford it are getting richer—and more numerous. The number of millionaires in the U.S. jumped nearly 33% between 2003 and 2004, to 8.2 million households, according to the New York-based research company, the Luxury Institute. CEO Milton Pedraza predicts that the ranks of the super-rich will continue to grow, and so will their quest for luxury products and services, including "a connoisseur experience when dining out," he says.
Riehle sees other forces fostering the upscale shift in fine-dining. Business profitability in general is up, and there's a definite link between corporate America's health and the way Americans eat. Not to mention the influx of European money; the increase in business and leisure travel from abroad to cities like New York, Las Vegas, Los Angeles, Miami, and San Francisco directly benefits high-end restaurants. The favorable exchange rate makes a $150 meal seem like a deal to European diners.
"Overall, the strength of the economy is still solid," says Riehle. "Interest rates and energy costs may dampen spending, but they're not going to cause a lot of people to forego a fine-dining experience."
The fact is, while much of America continues to struggle with economic uncertainty, there's a swath of the population that has discretionary income coupled with sophisticated palates—and they're demanding over-the-top restaurants in which to spend it.
That's great news for Charlie Trotter, who waited 17 years to find the right situation to try another restaurant (his first venture, in Las Vegas, ended in relative short order because the food and prices were more ambitious than Sin City's norm at the time). He will join his elite colleagues in the Time Warner Center in October, where "business is way ahead of volume projections," Trotter says.
He feels that today's serious spenders are almost immune to outrageous prices. "When Alain Ducasse came to New York and charged $350 for dinner, people were shocked," he says. "Now Masa is here with a $500 dinner tab, and it almost seems acceptable. Higher ceilings are more the norm now."
While the food and trappings of ultra upscale restaurants is a draw, it's often the presence of a star chef that justifies the price in consumers' minds. Status seekers and sophisticated foodies alike —two of the core customer groups—demand genius in the kitchen. "Diners with deep pockets would much rather have a meal in a restaurant owned by Thomas Keller or Charlie Palmer than a group of wealthy foreign investors, and they're willing to pay for the privilege," says restaurant consultant Clark Wolf. "They will go out of their way for the mastery of Masa, the astonishment of a Per Se tasting menu, or the showmanship that accompanies dinner in Vegas."
At Per Se, for example, tables ordering any of the multi-course tasting menus rarely get the same item. While Keller and his cooks may present the same ingredient or idea with each course, each guest in the party gets a slightly different variation on the theme. Dinner for four might start off with a creamy vegetable soup, but one person would be served corn, another, onion, a third, asparagus, and the fourth, mushroom—each meticulously garnished and artistically presented in a unique way. And so it goes, through to dessert—a meal composed of tiny, expertly executed courses in which ingredients are seldom duplicated. Dinner can take four hours or more to consume.
David myers takes a similar riff-style approach to dazzle patrons of Sona. "Cooking should be done in a jazz environment—as improvisation—with chefs adapting and applying their skills to whatever seasonal ingredients are on hand and spontaneously tailoring each dish to suit the particular guest," he says. "This way, each dish becomes a new challenge, a puzzle." All this attention to detail translates to sky-high labor and food costs, which of course are passed along.
Michael Mina, chef-partner in several Las Vegas and San Francisco restaurants, also believes people are looking for that "wow factor" to get their money's worth. At Michael Mina Bellagio in Las Vegas (average per-person check: $110) and Michael Mina in San Francisco (average tab: $140), the menus are tailored to each city's clientele, but both include certain Mina signatures. His first courses of Tartare of Ahi Tuna (sesame oil infused with Scotch Bonnet chiles, $21) and Caviar Parfait with imported osetra and sevruga caviar (market price) are sought after by regulars, as is an entrée of Maine Lobster Pot Pie with baby carrots, fingerling potatoes, and black truffles ($59).
"Customers are much better educated about the importance of ingredients to a quality dining experience," Mina says. "I think Whole Foods has fueled that trend, and I love it."
He goes so far as to say that this is a contributing factor to the surge in ultra-high-end restaurants. With items like heirloom tomatoes, artisan cheeses, and day-boat scallops now appearing on menus in the heartland, the diner spending $100 and up for dinner wants to be pampered with more rarefied ingredients and razzle-dazzle. "To live up to expectations, I spend the majority of my job sourcing ingredients," Mina says. "I have to impress my guests by bringing drama to the table, by playing up flavor, style, presentation, a bit of everything."
Ultra-luxe restaurants are flourishing in tourist-driven locations and metropolitan hubs, and the long waits for reservations at places new and old suggest the market may be growing. But some high-end operators in other parts of the country have found too few patrons willing to break the bank on meals month after month. In Evanston, IL, Henry Adaniya is taking a U-turn with his concept, Trio, reinventing it as Trio Atelier with an average check of $50. Just a year ago, patrons were spending $180 per person for chef Grant Achatz's eclectic progressive tasting menus.
"Grant pushed the limits with his artistic expression and made a dramatic impact, but his tasting menus required very committed diners," Adaniya says. When Achatz left to open his own place, Adaniya felt it was time to do something less pretentious and less costly. "I wanted to serve food with a higher comfort level. It's more the way I like to eat, and I thought it would have greater appeal for people in this neighborhood," he says.
While the haute dining palaces are constructing elaborate multi-course extravaganzas, Trio's tasting menu has been deconstructed into a more casual format of small, medium, and large plates, giving guests the flexibility to compose their own meals, and raise their checks to whatever level feels comfortable. In the "medium" category, for example, Caraway Veal Cheek with braised root puree, mushroom, and lardon ($10) shares the page with a Croque Monsieur ($7), Beet Salad ($9), and Curried Shellfish ($12). Chef Dale Levitski's food is simpler, and the atmosphere, more relaxed.
"Guests can enjoy the prestige of really fine cuisine at a lower cost," says Adaniya. What's more, Trio can now do 180 covers a night in its 70-seat space, whereas before the average was 80 covers with 60 seats.
Consultant Wolf doubts the ultra-luxe restaurants will continue to grow the way they have in recent years. "We won't see the same confluence of trends that caused so many places of this caliber to open at the same time," he says.
But the highly publicized places and their celebrity chefs have certainly left their mark. They've awakened consumers to what could be—and have redefined fine dining in the process.
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