Italian Michelin-starred restaurants are a lot less profitable than people think
New study reveals that revenue - and especially profit - doesn’t really justify the cost(s)
Over the last decade, we’ve become obsessed with celebrity-hosted cooking shows but a new study reveals that while some of these chefs have certainly made an exorbitant amount of money, they did it by marketing their public image, because their restaurants remain largely unprofitable despite boasting eye-watering prices.
A recent study conducted by JFC Consulting reveals that Michelin-starred restaurants in Italy aren’t nearly as profitable as people think. The fact that Italy has one of the highest corporate tax rates (income tax is even higher) in the EU certainly doesn’t help, but that’s just a fraction of the story.
According to the study, the average Michelin-starred restaurant (at least 1 star) had a revenue of €775,000 (before taxes. In this tax bracket, the rate is close to 43%) in 2019, with 6,318 customers (yearly, on average), each spending €112 - €178 if the restaurant has two starts, €250 if the restaurant has three stars.
It sounds like a lot, and it is, but there a few major issues. The overall cost of building, opening and operating a kitchen to support a top-notch restaurant is around €300,000, and a chef that’s qualified to work in such a restaurant will cost the employer €40,000 [net] per year.
It’s important to point out that, in Italy, the employer has to pay income taxes on behalf of the employee - on top of the taxes that the employee pays himself/herself. In simple terms, if you’re the employer and you’ve got a chef working for you at €40,000 a year, your actual yearly cost is close to €70,000-75,000 after taxes. And then you’ve got to pay rent, bills, suppliers, etc.
Valerio Visintin, an Italian food critic, said “Restaurants often rely on additional income [the owner’s, ed.] from TV shows, cooking events and sponsors to stay afloat.”
“The truth is menus are looking more and more like F1 drivers’ racing suits: full of sponsors,” said Visintin.
Michelin-starred chefs also argue that it’s very difficult to balance quality and expectations. ”People are surprised when they see a €65 risotto,” said Vincenzo Candiano, 2 Michelin stars with his restaurant Locanda Don Serafino in Sicily. “But the truth is raw materials alone cost me €30 [for this risotto]. People think we’re rich, but running a restaurant is incredibly expensive.”
Some people, both within and outside the industry, are beginning to question the utility of Michelin stars and the transparency of the awarding process.
”Italy has the second most Michelin stars in Europe [after France], but the way these stars are awarded is perplexing,” said Visintin. “There are 80 inspectors who travel to different countries to award these stars - because they can’t award stars in their own country to avoid a conflict of interest. Each year, on average, each of these inspectors has to dine in 330 different restaurants. It’s too much.”
Candiano also laments double standards when it comes to things like hygiene. “They set incredibly high standards for us [in Europe], but then they settle for lower standards in other parts of the globe.”
A growing number of restaurant owners openly say they don’t want stars anymore. Italian chef Carlo Cracco was recently stripped of one of its stars and he reacted by saying “they did the right thing.”
Takashi Saito, owner and chef of what some consider to be the best sushi restaurant in the world [Sushi Saito in Tokyo] deliberately renounced three stars when he changed the way he accepts reservations in 2019.
Some don’t even apply because it would mean upgrading your kitchen, your personnel, your wine selection but the increase in costs isn’t met with an equivalent spike in revenue.