Many talented chefs and restaurateurs use Breadcrumb Point of Sale and we want to celebrate their unique stories. This month Francis Lam, editor at Clarkson Potter, judge on Top Chef Masters, and columnist for New York Times Magazine interviewed Nick Kokonas, owner at Alinea, Next, and Aviary, and valued Breadcrumb Point of Sale customer.
A sommelier sabers an enormous, biblically-named bottle, and soon Champagne is fizzing in glasses. All the restaurant’s guests are in the kitchen. Grant Achatz lifts his voice, somewhat reluctantly, to address the room. It’s midnight, the clock turning to Alinea’s 10th anniversary, and he says, “10 years ago, we had all these expectations that we never knew we were going to meet…”
“Oh no,” a voice interrupts him. It’s Nick Kokonas, Grant’s business partner in all their restaurants. “10 years ago, you stood in this kitchen and said, ‘Anything less than this, less than exactly this, would be unacceptable.” Grant looks up to the ceiling, saying, “Ok, see? I told you. You do the talking.”
And Nick has never been afraid to do some talking. For all of Achatz’s acclaim as a chef, the mark he makes on gastronomy, Kokonas is poised to make his own on the business of restaurants, most famously with his new company Tock, pioneering prepaid online ticketing for meals. Kokonas has opened their restaurants’ books and evangelized about the viability of tickets for all kinds of operations, becoming one of the most eye-opening voices in the dining world.
But how does a derivatives trader, someone who had never worked in a restaurant until he owned one, become so in-tune with what guests want…or will accept? We talked about how being an outsider to the industry may have helped him, and how the business side of restaurants can be a creative space. And we talked about some of the lessons behind hospitality – how to understand the behavior of a guest or someone you’re conducting business with, and how to make business work better for everyone in the deal.
Francis Lam: Some people learn how to change industries by growing up in them, some people by showing up all of a sudden. You were pretty new to the restaurant industry when you opened Alinea. How has being an outsider helped you see this world differently than a career restaurateur?
Nick Kokonas: The day Alinea opened was my first day working in a restaurant. Which is a pretty good place to start! But I didn’t think I’d still be working on it 10 years later. I’d met Grant, and this guy was clearly going to be one of the best at what he does. So I wanted to invest some money and time to help him—I’d help get it going, and then people who knew how to manage a restaurant would take over.
But when I got to the industry, I started looking at the software people use – POS, online booking, etc. And it was salesmen showing up with some brochures and a chunky laptop and showing you this software from 1995—this was in 2004—and as late as a couple years ago, it still felt exactly the same way. There wasn’t a lot of innovation, there were a few players who dominated it, and people would install some bad software, everyone would learn it, and it would just stay there.
FL: And you could see that was weird, because as an outsider you didn’t come up through the ranks just working with this stuff?
NK: Yeah, we didn’t buy any of it. I wrote some spreadsheets, like we’d use in the trading firms where I’d worked. And eventually Grant said, “You’re not going anywhere.” A few years later, while we were building Next, I starting thinking that I knew what I was doing, and thinking that lots of these traditional methods could be better.
FL: And that includes your push to move from reservations to prepaid tickets. What made you think that would actually…work?
NK: What’s great about Alinea, and our group in general, is that people have really out-there ideas. So we often say, “Sure, let’s try that on some guests, what the hell?” And guests actually feel special if they know you’re doing something unique for them. So we have that kind of spirit.
Tock was born out of this kind of situation: We’ve only got a six top available, so the guest says to the reservationist, “Sure, we’ll take that.” And they come with two, because they only meant to come with two. So there were huge inefficiencies with food cost, planning, lost revenue. How do you work smarter?
So when we started Next and Aviary, we thought we could solve some of those problems. By using prepaid tickets—or even just taking a small deposit, 10 bucks to guarantee your table—no-shows would disappear. I knew people in the industry who said tickets were a terrible idea. Our own managers were like, “You’re not really going to do that, right?” But at some point it seemed obvious to me, and we sold out in the first 24 hours.
And everyone shows up on time. At Alinea, we thought no one would come for a 5:00. But once we started booking tickets with Tock, we moved our first seats from 5:30 to 5:00, and people still show up on time. And that meant we could serve 12 more guests a night. We don’t really even stress it, but it’s because people are already conditioned to buying tickets for a show, knowing it starts on time, and so they make sure they’re there.
FL: So it’s about understanding the psychology and the behavior of the guest, knowing the triggers that cause you to act a certain way. That seems like a useful skill in business. Is that pure instinct? Or do you study and analyze opportunities?
NK: I certainly don’t have a checklist. My dad was an entrepreneur by necessity—his father died young— and he felt all business is personal. I learned that you invest in people, not products. And as a trader, you had to know who was honorable—the traders that might lose $20k, but look at you straight and just own it.
Then you get into the general business world, and you see in that more people are just trying to get the deal done, regardless. Here’s a classic example: you’re selling our house. At some point, you realize that the real estate agent makes their commission if they close, so they don’t really care about getting you your maximum price, because they really just want to finish the deal and move on. Lots of business works that way. It’s the classic principal-agent problem. But it’s ok—you just have to think of ways where you can improve your deals with people around you.
So we sold tickets for meals ahead of time, and it was like, “Ok, now we have all this cash on hand, what do you do with it?” Most people would put it in the bank – great! You can pay your bills. But what if we called our meat purveyor and asked, “What if we prepaid you?” We were going to order 400 pounds of dry aged ribeye per week. I thought maybe he would give us a five percent discount, which would be great, compared to what we’d get in the bank. And he said 35 percent! Because he has to figure out how much people want to buy, and he’s got 35 days until no one wants to buy the beef, and he’s chasing people down for payment. So he’s happy to make a much better deal if we cut him a check ahead of time.
So we realized that if we can get better terms for our vendors, they love us. And guess who gets the best products along with the best deal? So we can do a 14-course meal at Next right now, including Iberico ham, for $85.
There’s no way I would have thought of that 5 years ago. I’m sure there are larger restaurant groups who do that. But would I have gotten to that idea without selling my house? Probably not. So now, I try to invert the perspective. If I’m the farmer, if I’m the purveyor, what do I want?
FL: Inherent in any creative choice is an element of risk. What have been your biggest mistakes?
NK: Grant will laugh if he reads this, but look at the mat plate [where the chefs plate guests’ final course directly on their tables– Ed.], which is kind of iconic to the restaurant now. The chefs were talking about how to make people feel childlike. And I went to a science museum with my kids, and they had this giant table, plate, chair, all that, at the size that would make an adult feel like a kid. And so I thought, “What if we had a giant plate?”
Grant was so busy that I couldn’t get a meeting with him, so I had to grab tweezers and plate next to him on the line to talk with him. I would be pissed because his plates would always look better than mine, because there’s a real skill there. And I thought, guests would love to see the chef plate in the dining room. So we should make giant plates and have him plate in the dining room.
So for a year, nothing. Martin Kastner and I were mocking up giant plates you can bring into the dining room, but none of them worked, until Martin brought in this silicone material, and suddenly Grant was working on it.
And then the manager said, “You can’t do this anymore, because when you do one, every table wants it.” And some guests complained that the table next to theirs got to have the chef come give them special attention. So then they had to work out a way to make sure every guest gets that experience.
So the first 10 iterations of that were… mistakes. But they weren’t mistakes, they were unformed ideas. The problem with a lot of modernist cuisine is that when someone figures out a cool new idea, they throw it on the menu right away, and it doesn’t quite work yet. And we’d practice it for months or years. And the challenge is: how you stay current and innovative, while also presenting your ideas after they’ve matured?
The same with tickets—now we have more sophisticated ways to use them. If you are an a la carte restaurant and take 85% reservations anyway, sure, just keep doing that. But now you can blend in tickets to book the PDR, or book that occasional chef’s tasting, and it’s been fun to watch the idea change as it gets applied from a $20 walk-in restaurant, to a 500 people-a-night restaurant, to an Alinea. So it’s great to have the attitude of: It’s not a mistake, it’s just not a finished idea yet.
FL: That’s an awesome attitude to have, but there’s got to be a difference between that and just being naïve.
NK: Well, that’s all about your team. Two days before Next was going to open, I was concerned about the food. The execution just wasn’t 100 percent killing it at the test dinners. So Grant and I had been arguing a lot – I never, ever argued about food at Alinea but at Next I knew what I wanted. Suddenly the guy who does the math was talking about what he wanted in the food, and it was tough for us.
I got in early that morning for a meeting, and Grant was at the restaurant all by himself. He had all these saucepans going, all numbered. They were all sauce Choron, which I was saying wasn’t right, and they were all slightly different in a progression, from 1 – 20.
So he goes, “Which one should it be, Chef?” I knew he was annoyed, so any one that I would pick would be wrong. So we decided to both taste all 20, write down our favorite, and show each other. I wrote down “5 or 6.” He wrote down “5 ½.” And we laughed. And then I realized that when you work with amazing people, you always need to remember who you’re working with.