Michelin Stars: A Blessing and a Curse for Restaurateurs

On Sunday 19 November, before the packed stands of Turin's Pala Alpitour, Novak Djokovic and Jannik Sinner played the final match of the ATP Finals. It was no coincidence that the cameras lingered for a long time on Antonino Cannavacciuolo, the Neapolitan chef and owner of the three-Michelin-starred Villa Crespi, situated on the shores of Lake Orta. Chefs are not only celebrities within the star system, but also the kings of their kitchens. Earning one or more stars from the Michelin Guide, the most prestigious of gastronomic handbooks that has been evaluating restaurants around the world for over a century, means adding an entirely new dimension – a stellar one, in fact. This distinction comes with much pride and, oftentimes, burdens, as explained by Giada Di Stefano – Associate Professor at Bocconi's Department of Management and Technology, as well as author of numerous studies on the creative industry, including the restaurant industry.

Why is acquiring a Michelin star so important for a restaurant?
There are numerous gastronomic guides, each with its own rating system. The Michelin Guide is not only international and the oldest, but the one in which all chefs aspire to appear. Earning the first star propels you into another dimension; it is a status recognition that allows you to enter an elite market.

With some burdens and, above all, a lot of expectations...
A study that we did in 2022 observed the behavior of restaurants that have been included in the Michelin Guide in cities where the Guide was not previously present. Not only does there seem to be an increase in prices, but even the way of writing the menu becomes more sophisticated. The same applies for information regarding the techniques used and names of the raw materials' suppliers. The restaurants actually meet customer expectations, which grow tremendously with the awarding of a star.

Some restaurants do not make it and fail. Why does this happen?
They greatly increase investment, sometimes too much, in order to be able to compete at a higher level. Daniel Sands, a colleague currently working at University College London, has a working paper in which he observes the effect of earning a Michelin star on restaurants in New York. Unfortunately, although one would not expect it, many of them close – partly because of the higher investment I mentioned earlier, which cannot be compensated for by rising prices.

According to some studies, however, the real risk is going from one to two and then three stars. What are the reasons for this?
The world of one-Michelin-starred restaurants is wide and varied. Placed beside truly upscale restaurants, you find others that are not at all. The going gets tough when the second star comes along, propelling you into the limelight. In that case, there are many risks – especially if you are in a large city such as Milan and Rome, where costs are high and the competition is very fierce. While it is true that high prices allow you more leeway in terms of experimenting, for example, with different dishes, on the other hand, expectations increase and the clientele changes. It is no longer the loyal base you have always had, but a new one composed of customers who purposely come to your restaurant even from other cities and sometimes, from abroad. If, however, your restaurant is located in a small town off the beaten track then it is a different story. There is less competition and financial commitment required, therefore offering a better chance of survival.

By the way, many Michelin-starred restaurants are losing money. How is it possible to move forward?
The culinary world, and therefore the most famous chefs, have become immensely popular in recent years. Owning a Michelin-starred restaurant allows you to diversify and expand your sources of income, including: TV, advertising, partnerships, books, design opportunities and in-person events. Very often you can make ends meet with the help of these. There is also the recent trend that is becoming increasingly popular – placing Michelin-starred restaurants in large hotels. They not only give prestige to the hotel and offer an extra service to a demanding clientele, but they can also afford to be at a loss because the hotel's sources of income are diversified.

There are upstanding examples that make their way into university classrooms. One is that of Davide Oldani and his D'O, a two-starred restaurant on the outskirts of Milan.
Yes, I talk about it to CEMS students in my Global Strategy course. Oldani's is a case where there is a maniacal focus on cost and the local element; a focus on having people in the kitchen who rotate in function. These are people selected after a very long process in which you commit to helping them grow. They then remain with you for many years, which also means less turnover and therefore lower costs for staff training and more.

Stars are earned and sometimes lost, even turned down at times. What happens in this case?
I was talking about this with PhD student Clara Depalma, who deals with such issues and speculates to observe two typical reactions: there are those who lose the desire to compete, to stay in the game, then there are those who are motivated by the loss and multiply their efforts to recover it. On the matter of chefs who give up their stars, Gualtiero Marchesi comes to mind. These chefs reach very high levels of culinary fame, and rightly believe that they have already demonstrated that their cuisine is of a certain level, and so perhaps they want to make room for others. However, it is a luxury that few can afford.

Green stars are a recent phenomenon.
Yes, for the past few years the Michelin Guide has introduced this recognition, which considers broad parameters – from work on materials to more managerial aspects. In times of increasing attention to sustainability issues, it is a coveted recognition, and there are several restaurants that place a green star alongside the traditional ones. We are working on this topic together with Clara Depalma; we will discuss it further soon!