Read how a highbrow, charismatically challenged chef built a restaurant empire and cashed out big.
How a highbrow, charismatically challenged chef built a restaurant empire and cashed out big
In July 1997, entrepreneur Sheldon Adelson, who had made a fortune by creating and then selling the Comdex trade show, sent his private jet to ferry a few guests from Los Angeles to Las Vegas. The occasion was the groundbreaking of his new venture, the Venetian hotel and casino. By erecting the billion-dollar Venetian alongside a huge convention center that he already owned in Las Vegas, Adelson was aiming to capture the lion's share of business visitors to the city, which is the #1 venue for conventions and trade shows in the country. In the plane he was importing some live bait: a few celebrated chefs who, he believed, could open restaurants that would lure businesspeople to the Venetian. "By the time we're built out, we're going to have 25 or 30 of the finest brand-name restaurants in the United States," he boasted to the audience at the lavish groundbreaking party.
Not so long ago, Adelson's phrase finest brand-name restaurants would have been an oxymoron. As late as the 1970s, the only branded restaurant chains were joints like Howard Johnson and Denny's. But over the past decade the best chefs haven't been content to build a single epicurean temple. "These guys are all finding ways to expand," says Paul Frumkin, senior editor at Nation's Restaurant News. "The quintessential fine-dining-restaurant operator used to be André Soltner at Lutèce, who never left his restaurant. Now if you've got one, go for three."
An old-fashioned chef like Soltner (who until his retirement, in 1995, was one of the most famous restaurateurs in New York City) was chained to his stove six days a week, 11 months of the year. The newfangled chefs create restaurants where their daily presence is not required -- and then if they are really successful, they demonstrate their entrepreneurial prowess by cashing out of the business. To achieve that goal, chef-entrepreneurs face a knotty strategic question: How can they, as craftspeople whose value seems to lie in their own hands, create a brand that transcends themselves?
On board Adelson's plane was America's premier brand-name chef, Wolfgang Puck, who more than anybody else had in the 1980s elevated the standing of his profession so that leading chefs, onetime scullions, had become stars and media celebrities. (Puck's wife and partner, Barbara Lazaroff, had literally elevated him at their first restaurant, Spago, by designing an open kitchen that served as an eye-catching stage for the chef's performance before diners.)
Building on that success, Puck had gone on to redefine what it meant to be a successful chef. First he and Lazaroff opened a number of white-tablecloth restaurants. Then they created the Wolfgang Puck Food Co., which is both a chain of more than 20 moderately priced restaurants and cafés, and a producer of a $40-million line of frozen and canned foods. Having scored with Spago Las Vegas at Caesars Palace, Puck had agreed to bring to the Venetian a version of his much acclaimed San Francisco restaurant, Postrio.
Also riding on the plane was Joachim Splichal (pronounced splee-SHAWL), who with his wife, Christine, owned what was arguably the best French restaurant in Los Angeles, Patina. The Venetian very much wanted Splichal to open another Patina in Las Vegas. He was resisting that notion. However, the Splichals also had a group of casual restaurants that offered a moderately priced (and less expensive to make) product. Those restaurants, which were branded "Pinot" -- as in Pinot Bistro, Pinot Blanc, Café Pinot, and so on -- were designed to be easy to replicate. Splichal was thinking of opening a Pinot in the Venetian.
Puck had led the way to Las Vegas, establishing a Spago there in 1992, when the city was a culinary desert known mostly for all-you-can-eat hotel buffets. Spago Las Vegas became his highest-grossing venue, and now everybody wanted to be there.
Puck's example loomed large as a model for how a chef-entrepreneur might build a brand and maximize its value. He had turned himself into a public personality with a name that sold his product. Puck is a born showman and a natural host. He is sociable and funny without being brassy, so whether he is schmoozing with customers at one of his restaurants or tossing vegetables on the grill during a regular appearance on Good Morning America, he is the ideal brand emissary.
Compared with Puck, Splichal is a recluse. When pulled out of his kitchen, he can seem like a snail plucked from its shell. "I'm not a promoter," he says. "I hide in the kitchen." Uncomfortable when he is chatting up strangers and too polite to ignore them and just greet old customers, he usually doesn't emerge at all from backstage at Patina. As for television, he is allergic to it, and cedes the field to Puck and to chefs like Emeril Lagasse and Mario Batali, who have scored on the Television Food Network. "If they call me for television, it's just not something I'm very interested in," Splichal says. "Those guys are pros at that. Any exposure helps, but I don't want to spend my life in front of the television cameras."
Only a small fraction of the people who have heard of Puck would recognize Splichal's name. And even Splichal's loyal customers at his jewel-in-the-crown Patina and his more casual California-French-style Pinot restaurants wouldn't cite the chef's personality as a reason for frequenting his establishments. Although he is witty and charming once you get to know him, most people never do. Splichal has the flattened nose and understated pugnacity of a prizefighter. His head is round, his beard is graying blond, and he looks out from behind tortoiseshell glasses. His speech has the guttural accent of his native Germany. He is not flashy, but he is solid. Overall, he has the gravity and density of a rolling boulder that is not easily budged off course. He also has an ambition that would not allow him to rest in one kitchen.
"When I met Joachim, he was driving a Porsche, and then he had a 325 BMW," Christine recalls. It was the early 1980s, and the high-flying young chef had already made a name for himself in Los Angeles, first at the Regency Club and then at the Seventh Street Bistro. He was doing so well that in 1984 a customer set him up with a minority stake in a restaurant of his own, Max au Triangle. "The food I had at Max au Triangle was as good as any French food I've had in America, ever," says Ruth Reichl, who was the restaurant critic for the Los Angeles Times and is now editor-in-chief of Gourmet. "I was truly astonished by it." But the financial management of Max was as terrible as the food was wonderful, and the restaurant tanked. "After Max, we had a Honda Civic that we shared," Christine says. "The day the check was due for the mortgage, we thought, 'Where is it coming from?' "
Luckily, Christine, beneath her warm and bubbly surface, was just as steely as her husband. "To make payroll I would have to pretend that I was booking a $5,000 party with my American Express card," she says. The couple struggled for five years after the restaurant closed. To pay the mortgage Splichal accepted consulting jobs; the first one, at Quo Vadis, in New York City, required him to spend long stretches of time away from home. "We only ate eggs and potatoes," Christine says.
At the time of the Max fiasco, the Splichals had been married for less than a year, having found each other through culinary connections. Joachim was introduced to Christine Mandion by pâ tissier and chef Michel Richard, who went on to found Citrus and its offspring, the Citronelle restaurants. Richard was a friend of Christine's parents, who own a bakery near Biarritz, and she was on her way to her first semester at business school in Phoenix. (She now holds a doctorate.) "I was a rebel, and all I wanted to do was travel, travel, travel," Christine says. Joachim was also fleeing his roots. Born in Swabia, in southern Germany, he dropped out of school to become, in Christine's words, "a ski bum." In those days he would find a hotel job in Switzerland for the winter and then travel -- to Morocco, Canada, Israel -- and obtain a kitchen job to support himself. He was good enough to get a job in Nice at the Hotel Negresco with the famously talented and temperamental Jacques Maximin, who was the first to recognize his ability. "He made me sous-chef when I was 23," Splichal recalls. "It taught me a lot in leadership." Splichal was a German in a kitchen of Frenchmen, some of them veterans of World War II. "For a year they gave me hell," he says.
The experience of the Negresco, as well as the ordeal of Max, toughened Splichal. When he got a chance to start over, in 1989, with a new restaurant, Patina, he was determined not to fail. It was a tribute to Splichal's reputation as a great cook and a diligent worker that he was able to raise $650,000 from investors, many of whom had been loyal patrons of Max au Triangle. "I knew he would do whatever was required to get the job done," says John Winthrop, founder and CEO of Veritas, an importer and distributor of high-end wines and spirits for restaurants and hotels, and an early investor in all Splichal's restaurants except Max. "He was a phenomenally good businessman, able to see opportunities that other people pass by. His talents enable him to cook as well as anyone in the world, but he's always emphasized the business aspect of it. He doesn't let his ego get in the way. If the customer wants iced tea, the customer gets iced tea. If the customer wants Caesar salad, he gets it."
An integral part of Patina's success was attributable to Christine. Joachim has been able to be so retiring because Christine isn't. Beautiful and gracious, she welcomed all the regulars by name; less visibly, she managed the staff. "Joachim is the concept," Christine says. "He is the one who sees what needs to be done, how much money we need to make. I was the doer, handling crisis situations, dealing with personnel." Or, as Joachim puts it, "I go out and make the deals, but behind the scenes there are all these things that have to be done. She creates the balance."
Winthrop's confidence in the Splichals was justified. Patina paid back its investors 110% in 15 months. (During the 11 years since it opened, the investors have recouped 600%.) Once they had reimbursed their investors, the Splichals assumed a 50% ownership. With the restaurant so successful, they had second thoughts about their lease, which required them to pay a percentage of the gross in rent. The next year they exercised an option on their lease to buy the building and parking lot, which came at a reasonable price, since the restaurant is located in a fringe neighborhood. "We saved $70,000 in rent the first year," Joachim says.
But one successful restaurant wasn't enough for Splichal. "He said early on that he didn't want to wind up like André Soltner, sautéing sweetbreads at age 65 behind a stove and then retiring and moving to a small place in France without a lot of money," Winthrop recalls. "He wanted to make some money. To do that he needed to have restaurants where he didn't have to be in the kitchen himself."
However, Splichal's success in creating a high-end restaurant was no guarantee that he could establish a business with numerous restaurants. The name of Patina was becoming well-known, at least among the Los Angeles elite that patronized such places. But what Splichal had was essentially a couture name without the talent or even the desire to make himself into a public personality. Could he reach a broader audience?
His friend Puck had branched out a year after opening Spago in West Hollywood by starting, 15 minutes away in Santa Monica, a restaurant -- Chinois on Main -- that was both more ambitious in cuisine and more elaborate in decor. Since then, with his wife, Puck has gone on to expand his empire of white-tablecloth restaurants to a current total of 11.
During that time, the couple has proceeded on a lower road, to reach a less affluent market. In the same year that they gave birth to Chinois, they also inaugurated the Wolfgang Puck Food Co. The business was originally a manufacturer of rich frozen desserts but has evolved into a $90-million company that produces frozen and canned foods for sale in upscale supermarkets and operates a network of casual-dining restaurants and fast-food joints. What binds together the company's disparate elements is the overarching and exceptionally appealing personality of Puck.
Lacking that charisma, Splichal progressed in a more focused and deliberate way, waiting for the right opportunities. In 1992 such an opening presented itself. Splichal read in the newspaper of the closing of Lasserre, an old-fashioned French restaurant that had been an entertainment-industry watering hole in the San Fernando Valley. "I went to see it," he recalls. "Within two hours I had a deal." This time he raised $1 million from about 50 investors to establish Pinot Bistro, a moderately priced restaurant serving the kind of French food with a California accent (salads and light entrées) that Puck had popularized at Spago. Having established a track record with Patina, the Splichals crafted a more favorable deal for Pinot Bistro. About 40% of the Patina investors went in; many of the rest were neighborhood residents or television executives working nearby. "They are your best PR agents, your investors, if you treat them well," Christine says. They bring their friends, they talk the place up, they turn it into a neighborhood hangout. After the Splichals had paid back the Pinot Bistro investors, in two and a half years, the couple assumed a 60% ownership.
In the Splichals' strategy, Patina was a unique restaurant that relied on the day-to-day presence of one chef -- Splichal -- who could exploit his talents and express himself in the kitchen. By design, Pinot Bistro was a concept that could be replicated easily. Just the act of opening a second restaurant represented a critical development in the Splichals' mind-set, a shift from the chef as artist to the chef as entrepreneur. It was an opportunity, but with it came a danger.
Ideally, the reputation that the Splichals had established at Patina would burnish the Pinots; the risk was that the reflection would work the other way and that Patina, once it was associated with a group of more casual restaurants, would lose some of its luster. There was also an initial confusion in the mind of some Patina customers, who unrealistically expected to find the same food at a lower price at a Pinot. "At Pinot they only pay $14 for the chicken, but they have the same expectations as at Patina," Splichal says. "You go five notches down, basically half price. You have high standards, but it's a different product." However, as the Pinot brand matured, Splichal's customers began to recognize that the two experiences were distinct, that a Pinot chicken could not be a Patina chicken -- and that that was all right.
Since he couldn't be in two kitchens at once, Splichal needed a staff he could rely on. "It was most difficult going from a single unit at Patina to a second at Pinot Bistro," says Octavio Becerra, who started with Splichal at Max in 1984, when he was 19, working as a dishwasher and prep chef. To open multiple units, an entrepreneurial chef must find talented people and keep them. In Becerra, the Splichals had discovered one such person, and he became the executive chef at Pinot Bistro and has gone on to train chefs for other restaurants. Like Puck, who has led the way in recognizing that the way to keep ambitious people is to give them a stake in the enterprise, the Splichals rewarded their key people. Becerra is Splichal's right-hand man; he was given a 0.5% share in the business. He's also now the Pinot group's corporate executive chef.
Once again demonstrating his real estate savvy, in March 1995, Splichal ventured into downtown L.A., then thought to be a sinkhole for restaurants, with Café Pinot. "Going downtown next to the library -- most people thought that was preposterous," says investor Winthrop. "Sure, you will do a lunch business, but people don't drink at lunch. You'll have lots of revenues but no profits." As it turned out, Splichal did a lively dinner business, serving the lawyers and bankers who didn't escape from their glass towers until late at night. Capitalizing on their success in downtown L.A., the Splichals went on to colonize the neighborhood with a small café, Patinette, at the Museum of Contemporary Art; a luxurious steak house, Nick & Stef's, named after their twin sons, who are now four years old; and a rustic Italian restaurant and takeout shop, Pentolino, which shares some kitchen space with Nick & Stef's. "Our company right now controls a majority of downtown," Splichal says. "We do 400,000 covers a year in downtown L.A. alone. We touch everything from a sandwich in Pentolino to a $32 New York strip steak in Nick & Stef's, everything from a takeout of water to a $3,000 bottle of wine."
The Splichals' one failure -- Pinot at the Chronicle, located near their home in Pasadena and later rechristened Pinot Restaurant and Martini Bar -- just never caught on. They made the tough decision to close it in September 1999. Splichal is rueful but pragmatic. "We tried and tried, and eventually came to the conclusion 'Let's just cut the loss,' " he says. He found jobs elsewhere in his organization for most of the employees, and the building was converted into a kitchen for the Patina Group catering operation. It was a backhanded recognition of the fact that catering, because it had the greatest growth potential, was arguably the most important part of the business.
It is ironic but typical that the catering division had been another opportunity that fell into the Splichals' laps. In 1991, two years after the opening of Patina, a loyal and extravagant customer asked them to cater his daughter's wedding, which led to other commissions from Patina regulars. The business began to take on an independent life in 1995, when the Splichals hired Stephanie Edens, who had worked for a party-planning business, as catering manager. She solicited and won the Emmy Awards dinner the next year. "That was the time that people stopped thinking of us as something that Patina did on the side," Edens says. When she started, the catering business was taking in $1 million a year. It has since doubled annually, reaching $6.2 million last year.
Competing successfully for contracts for both the Emmy dinners and the Los Angeles County Museum of Art, the Patina Group beat out a larger, New York City-based company, Restaurant Associates (RA). Intent on expanding to the West Coast, RA won a contract with the Music Center in Los Angeles five years ago and another one, with the War Memorial Opera in San Francisco, two years ago. The company viewed those contracts as beachheads into a large and lucrative market, but to the frustration of its president and chief executive officer, Nick Valenti, the RA invasion of California never took off. Valenti realized that he had two choices: develop his management structure in California or acquire someone else's. The Patina Group was the likeliest candidate. "The catering business is an integral part of our business and an integral part of theirs," Valenti says. "It may be the most important element."
The Splichals had not been thinking of selling at that time, although they were scrambling to cope with their company's growth. In July 1998 they had consolidated their catering operation with all their restaurants, rolling everything up into the Patina Group. "If you have a consolidated company, it's much easier than having five or six small companies when you're looking for money," Joachim explains. Still, he was not happy about personally guaranteeing bank notes for $1 million or more. When RA made an offer in November 1998, he took it seriously. "It was ridiculously low," Christine says of that initial bid.
The couple conferred with a "kitchen cabinet" of Patina investors who had financial backgrounds. At their suggestion, the Splichals retained an investment bank that specialized in the hospitality business. The bank found other prospective suitors, which ultimately jacked up the price. (Joachim says it almost doubled. Valenti says it increased but not by that much.) "It has been Joachim's goal that we are growing the company and we will need to sell the company," Christine says. "That was the exit strategy, but that was not the immediate goal. We saw it 5 or 10 years down the line."
But it seemed that once again an irresistible opportunity was presenting itself to the Splichals. RA was an attractive partner. "We didn't want someone to put a gun to our throat and say, 'Do five Pinots a year,' " Christine says. Valenti promised that that would not happen, although that stipulation is not in the written agreement. The Splichals also liked the fact that RA was based in New York. "It was not like they were on our turf and were going to bulldoze everything and say, 'This is how to do things,' " Christine says. "We would be their subsidiary on the West Coast."
Valenti was sympathetic to the Splichals' position because of his own company's history. Founded in 1959, RA for a time owned the Four Seasons, as well as other upscale restaurants. From restaurants it had moved into catering for big investment-banking and law firms, and for prestigious sporting events like the U.S. Open. In 1998, RA merged with the much bigger Compass Group, which is the largest catering and food-services contractor in the world. RA was now part of Compass Group USA, a $2.3-billion company, but was operating as an independent subsidiary -- the same kind of arrangement that it was offering to the Splichals.
Over the years RA's luster as a restaurant operation had dimmed slightly, so the attraction of a star chef like Splichal was apparent. "It's good for the company," Puck observes. "Now they have a famous chef." Valenti could count on Splichal, whom he signed to a five-year management contract, to oversee the Patina Group. "He focused on the basis of the business," Valenti says. "After all the splash and dash and excitement, meals have to be cooked and served, and it has to be done profitably. He chose to take a more conservative, prudent approach to building his business."
Splichal agonized over whether to sell. "After certain nights I would wake up in the morning and say, 'Maybe I shouldn't do it,' " he admits. Christine never wavered. "I was all along, 'Do it,' " she says. "This is America. This is what people do. I am French. People in France don't do it. Your work is your life, and this is what you do, and you pass it on to your children. You have your business and your house for life." (Her parents are fourth-generation bakers on both sides, and they are passing on their bakery to Christine's younger sister.)
On December 9, almost a year after Valenti's initial approach, the Splichals signed the agreement. They had cashed out. They had sold the company, of which they had owned nearly three quarters -- and which employed 700 people and grossed $35 million annually -- in a complicated deal worth about $40 million. Splichal had demonstrated that big-time chefs today can be up-to-date businesspeople. He had achieved the final stage of modern American entrepreneurship: building equity in a brand that a bigger company values highly enough to pay big bucks for.
What's more, he had done it his way. Without creating a celebrity persona, he had constructed a business. He had proved that he could not only create cutting-edge dishes in the kitchen but also develop restaurant concepts that took on lives of their own, supervised by personnel that he had chosen and trained. He had also demonstrated that the restaurants could coexist despite their divergent identities. Because his empire never depended on his public personality, he was able to restrict his visible appearances to Patina, which retained a rarefied reputation above that of its Pinot siblings.
Meanwhile, Puck, who with four Las Vegas restaurants is still the dining king of that town, has nevertheless failed to reach the end point of the entrepreneurial game -- cashing out. He and Lazaroff considered taking all their businesses public back in 1995 but decided they wanted to hold on to the white-tablecloth restaurants. Instead, they groomed the Wolfgang Puck Food Co. to be a spin-off. However, the food company has suffered some setbacks recently, including the departure of the company president, Frank Guidara, after a difficult tenure. In addition, the company's ambitious but ill-defined, and now-closed, ObaChine pan-Asian restaurants -- there's one each in Seattle, Phoenix, and Beverly Hills -- suffered from bad real estate deals, high menu prices, and a formula (unlike the Pinots') that was too upscale to be easily replicated. It may be that the food company's octopuslike character undermined its salability. "With Joachim, his brand is more defined than our brand," Puck says. "A restaurant company wants to buy restaurants. We also have frozen foods, canned foods."
Although he has cashed out, Splichal, for the moment anyway, follows a schedule as grueling as Puck's. In the wake of the merger, he hops regularly to Las Vegas, where the Pinot Brasserie grossed close to $6 million last year (compared with $3.7 million at Patina), and to the East Coast, where in September he will be opening two Nick & Stef's steak houses, in New York and Washington, D.C. Before the buyout, he was already doing a Mediterranean tapas restaurant in the Disney Downtown development in Anaheim; now he is also opening a Neapolitan trattoria that he inherited from RA. He has taken over the management of the food service at the Performing Arts Center of Los Angeles and the San Francisco War Memorial Opera. "We are going very fast," he says. "I feel like the bullet train."
Back in 1997, Splichal had said in an interview, "I don't see myself at 60 standing behind a stove and cooking for a few regulars. At that point I want to be sitting out on the terrace on the Cô te d'Azur with a pastis in my hand." He has since revised his ambition slightly. Last spring Splichal, who turned 46 in July, was in the south of France scouting out a vineyard to buy. He knows himself well enough to realize that his entrepreneurial spark will never flicker out. In his "retirement" years, he wants the glass in his hand to be filled with a wine that he has produced himself.
Arthur Lubow is a freelance writer based in New York City.
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