MICHELIN’S STAR QUALITY HELPS PUSH ITS GUIDES INTO ASIA
▶ Renowned as the definitive authority on restaurant quality, the company is looking east as its network expands
Michelin, facing fierce competition from lower-cost Chinese tyre makers as it expands in Asia, is counting on a little luxury splash from haute cuisine to boost its brand image.
The French company is introducing its eponymous restaurant guide for Bangkok in December as part of a broader effort to increase the brand’s appeal in Asia. In July it bought a 40 per cent stake in the Robert Parker wine guide, based in the United States, which hosts tasting events on the continent, including in Singapore, Hong Kong and Macau, where Michelin already has food guides.
While selling tyres may seem to have little to with finding a tasty coq au vin at a fancy restaurant, Michelin sees the unprofitable guides as helping to position its brand as high quality as it goes up against China’s Shandong Linglong Tyre and Aeolus Tyre. The company is also moving upscale thanks to high-tech connected tyres such as its airless prototype resembling coral, or light tyres designed for electric vehicles.
“The guide is part and parcel of our brand image in mature countries,” the chief financial officer Marc Henry tells Bloomberg. “In emerging countries where more and more people are buying a car for the first time, we see that we can recreate a bit of this brand attraction.”
Expanding in Asia will help to reduce the company’s dependence on Europe and the US, which together account for more than three-quarters of its sales. Michelin is also diversifying into services such as fleet management and insurance.
The so-called red guide was created in 1900 by Andre and Edouard Michelin. At a time when cars were not yet popular, it became a tool to encourage people to drive for longer distances and to stop at restaurants and hotels.
The company’s reviewers award stars based on creativity, quality and service. Three stars means the cuisine is akin to art and “worth a special journey”, two mean excellence and talent that are “worth a detour” and one means that the restaurant is good in its category, with top ingredients and flavours.
The guide is still a benchmark in the industry, says Pierre-Yves Chupin, in charge of the rival publication named Lebey. Restaurants can as much as double their revenue when they receive their first rating from Michelin, according to the company.
Getting or losing a star can result in widely publicised controversies for chefs: Sebastien Bras, who about 10 years ago set up a timekeeper in his kitchen to make sure his aides did not work longer than the mandatory 35-hour work week, recently asked Michelin to withdraw the three-star rating of his Le Suquet restaurant in southern France because of the pressure it entailed. Bookings are still sold out, with menus between €143 (Dh611) and €227, according to an aide.
“It’s hard to quantify, but it’s a fact that the Michelin brand is known worldwide thanks to the guide,” says Michael Foundoukidis, a Natixis analyst. “Michelin has a premium image in almost every country, contrary to most of its European competitors.” According to a YouGov poll, Michelin ranks fifth among the French’s most favorite brands.
Michelin also is eyeing the US market, where it already has guides for New York, San Francisco, Chicago and Washington DC’s restaurant scenes.
In the Michelin Guide 2018 out this month, New York has been usurped as America’s premiere gastronomic destination, at least in terms of a three-star ranking, AFP reports.
In the 2018 edition celebrity chef Jean-Georges Vongerichten suffers the indignity of being downgraded from three to two stars, leaving the US cultural and financial capital with just five three-star restaurants. And San Francisco? It has seven. Seventy-two New York restaurants were awarded stars by the culinary guide, down from 77 in 2016. Michelin said several previously ranked restaurants had been dropped from the list because they had since closed.
But most notable was the loss of three-star status for Vongerichten’s flagship Jean-Georges, one of the most glittering restaurants in New York and situated in the Trump International Hotel and Tower overlooking Central Park.
San Francisco now has the most three Michelin-starred restaurants in any US city. Chicago has two three-starred restaurants. Washington has none. New York is home to 56 one-starred restaurants. Six new restaurants joined the star selections, three of which feature Japanese cuisine, the guide said.
Michelin’s red book is available
in 26 countries and is bound to expand as the company aims to double revenues from services by 2020, from €1 billion in 2016. Michelin had total sales of €20.9bn last year, according to Bloomberg.
The French company is investing in the guides even as it cuts costs amid fierce competition in the tyre market, leading it to plan for some 2,000 job cuts by 2021, mostly in France. The chief executive Jean-Dominique Senard aims to make the guide and mapping unit, known as Michelin Travel Partner, profitable. He moved its headquarters from Paris to a close suburb and reduced headcount. Michelin does not disclose sales for the business, although it said in a filing that revenue rose sharply last year.
Rating apps such as Yelp or TripAdvisor are not a threat to the guide because the Michelin inspectors who review restaurants are independent, anonymous and pay for their food, says Claire Dorland Clauzel, the Michelin executive vice-president who oversees the guides.
“In a world full of fake reviews, we realise that the reassuring nature, the seriousness and the quality of the brand does matter,” she says. The company has expanded to online reservations, including with the purchase of UK-based BookaTable and Spain-based Restaurantes last year, and is considering other acquisitions.
Ms Dorland Clauzel declines to provide any figures for the business, but says paid events such as tastings should help the guide become profitable within a few years.
In any case, the guide is a cheap marketing investment and does not weigh on the share price, says the senior Bloomberg Intelligence analyst Michael Dean. Michelin shares have returned 30 per cent in the past year including dividends, outpacing the 26 per cent return for the Stoxx 600 Automobiles & Parts Index.
“The guide is an extraordinary tool for our brand,” says Ms Dorland Clauzel. “It’s in our DNA – as much as tyres are.”