Lucien Law is the founder of Savor Group, whose establishments include Ostro, Ebisu, Fukuko, Tommy’s Champagne Parlour and Seven at Britomart. He also owns Ponsonby’s Azabu, Parnell’s Non Solo Pizza, and started up a new food operation at the Auckland Fish Market last year. Here, he speaks to Britomart’s Jeremy Hansen about how his operations are adapting to the COVID-19 outbreak.
JEREMY HANSEN: It’s Alert Level 3 at the moment, and you’ve been offering delivery and takeout options from Ostro and Ebisu, as well as two of your restaurants outside Britomart, Non Solo Pizza and Azabu. How’s that been going?
LUCIEN LAW: It’s been a mixed bag. Takeaway is going well – some restaurants are doing the equivalent of 120 tables worth of delivery, but not all restaurants can put what they do in a box. Ostro, for example, is a lot harder to package and send on a 15-minute journey. Our Japanese eateries have gone well, but that might be because fewer people have the skill set to create sushi and sashimi at home, for example. And we’ve sold out our Mother’s Day high teas from Ostro, and sold a lot of our lobster kits and roasts. But then you have to think of all the labour costs, and how we’re not selling alcohol with those meals, which is where a lot of the profit comes from. It has been a learning curve. We’ve done everything we can to handle the demand.
What are you thinking things will look like at Alert Level 2?
I’m not sure. It just doesn’t work if you try to run your restaurant model like you were running it before, but with half of the tables. With less revenue because of fewer people, I can’t see how that will work. At Level 2 bars don’t work very well, they’ll struggle. And in restaurants, there’s all the contact tracing – you don’t start jumping tables and celebrating when you’ve been confronted with requests for contact details. What is the experience you’re paying the money for? We’re thinking about how we pivot the restaurant experience to what people might want after this lockdown. Restaurants that rely on high office flows and tourism will have big challenges. Neighbourhood restaurants will do OK.
Does it seem like too much to contend with?
It’s going to take an effort from everyone to make it work. I am positive about it. You’ve seen everyone getting takeaways from everyone from McDonalds to Sidart; it’s one of the things they’ve missed most outside human interaction. So I don’t think it’s an impossible situation. I think it’s going to be a prolonged agile process where we take that footprint we have and think about other products and services we can sell people. Is the menu the right menu? What made people come before this crisis? How can we provide better value and give our customers what they really want? What does that look like now? We don’t know how big the unemployment problem is going to be, and we don’t know how much money people are going to have to spend. We’ve got through recessions before, but this one is going to be bigger than the last.
You’ve been sending me some interesting articles from restaurateurs in London and New York and Taiwan over the past couple of weeks. How do you feel your situation compares to theirs?
The ways South Korea, Hong Kong and Taiwan have been dealing with it have been quite interesting. I’m hearing from Hong Kong that lunchtimes are looking very normal. I’m hearing about Yardbird, which is a fantastic Hong Kong restaurant which now has screening between tables, no bar area and you wait outside – I can see how that might work. So the reading that I’m trying to do is about how the Asian places are coming out of this. The Asian countries have dealt with SARS and so on so I guess they are maybe more used to having some of those hygiene standards, people wearing masks and that kind of thing. Yardbird gives you an envelope to put your mask in while you’re dining, a small adjustment. But if you read about the New York places you just want to throw your keys away. The situation seems pretty catastrophic, but they’ve been dealing with huge rents for a long time. They have big restaurants not making it.
Your company, Savor Group, was purchased by Moa Brewing Company last year. Has being part of an NZX-lsited company changed the way you’ve reacted to the COVID-19 situation?
Not much has changed from a structure point of view. The idea is to get more vertical through the restaurants, through some beer and wine and we’ve also had some investment from a gentleman with a farm-to-fork model from beef investments. We’ve got fabulous restaurants that make good money in good times, but how do we make more of a margin by going more vertical? We’ll be continuing on that at great speed. We’ll always work with our great suppliers but we do have an obligation to go further down the line and control some more of that supply chain. We are potentially in a situation to start activating that a lot more than we were.
You mentioned the situation in New York and London, where restaurant owners have said they’ve been squeezed by higher costs for everything – rent, wages and produce – and a perceived inability to pass that on as price risees to the consumer. Is that happening here too?
Produce prices were going up, rent was going up, and we’ve seen wages going up a lot. We struggle to put our prices up in a way that’s acceptable to customers. So there’s been a feeling that it’s getting unsustainable. We have people who have been working for us for seven years and are on what I consider market-leading salaries, but they might have to come down. I don’t mind paying more when we make money – we’re under no illusions that our businesses are built on our staff. That’s simple for us. A number of them now have shares in the company through the transaction [with Moa] and that sets us apart. So if we’re all going to work for a little bit less to be around when the tide turns, so be it.
Is this a chance to somehow reset the financial model so the business feels more sustainable?
How a restaurant breaks down is that rent should be roughly 10 percent of total revenue, the cost of goods should be 30 percent, and wages should be about 30 percent of the total – so you’ve got a good profit at 20 percent, but if you’ve got a business doing five percent you’ve got a real problem. The model has got broken because if any of those things get out of wack you don’t have enough to play with. You just have to be working so fixed costs can be realistic as a percentage of your turnover. This means that some places just won’t be able to carry on. There is some optimism out there, but if you were struggling going into this then it’s not going to get any easier and you’re really going to have to rethink what you’re selling.
Have there been moments during this crisis you’ve wished you’re in a different industry?
Not so much a different industry, but I wish I’d been in another time period! The 80s looked good for 10 years. It feels unluckly to go through a GFC and a global pandemic in your working career. [laughs] I’ve worked in advertising before and they’re going into a hell of a hard time. Who isn’t? I’m pissed off I don’t own a supermarket, but otherwise it doesn’t look that pretty for anyone. But people come out and do well from these things, and maybe there are somethings that can realign and we can get back into building mode. We just have to be really quick to adjust to what the new normal is. But I do think everyone is going to have to work together.