STARR Restaurants: Stephen Starr. How a Non-Foodie Built Thriving Restaurants on Gut Instinct

26:19You're pretending to be something that you're not. You know, I was this promoter bringing in this act, that act. We're doing great, convincing somebody to play for me as opposed to my competitor. When at the end of the day, what was left over was very little. But a lot of the brand started developing, right? People started knowing that I was this success, but I wasn't. What about you? I mean, this strikes me as a kind of a business which really depends on relationships. I'm in San Francisco, so I think of Bill Graham, the legendary promoter here, who lived here. And, I mean, what gave you an advantage, do you think?

26:57I mean, did you have particularly good music taste? Were you like, quote unquote, cool? Were you just like, why do you think you were able to even successfully bring these artists into Philly? Of course, I was obsessed with music. I loved music. Many of the promoters back then were older than me. and they were not in it so much for the music as they were in it for the business of it. Right. You know, I met Bill Graham a couple times and I think he was the real deal. But a lot of these guys were just in it because it was a good business and they can get chicks and, you know, do drugs. That's what I was getting at.

27:33Like, you don't strike me, maybe I'm wrong. Like, you don't strike me as that kind of guy. No, it wasn't me. Girls I always liked and tried to get, but not drugs and all that. No, that wasn't my motivation. And at the end of the day, I was always very, very good to the bands. I gave the bands not just what they asked for, but more. I always felt I had to perform better than my competition because I was younger, not as successful. So I just tried harder. Right. And there's one other thing here that you may have read also, that a lot of my motivation, when I was in college, I had a girlfriend. You know, my mom had died.

28:13and around nine months after my mother died, the girlfriend, who I was in love with, left me, broke up, messed me up for a long time. That may have been more of a catalyst for my success than my mother actually dying. In the end, my motivation to open that club was two things, to get her back or to say, fuck you, look, I made it. So I have to tell you that because that's such a big part of what motivated me back then. It's like that Michael Jordan line in his Hall of Fame speech where he talks about another log on the fire. Maybe you were motivated by proving yourself, maybe even being a little angry or having a little chip on your shoulder.

28:55Yeah, for sure. All right, so from what I gather, the Ripley music called business side was just not sustainable, and that eventually closed, I think, in the mid-'80s. But you stayed with being a concert promoter. That really became your, from what I've read, your main thing. And it sounds like that was actually a much more sustainable, profitable business to do. Yes, because the nightclub part of it, the Ripley Music Hall, all that really was was a way to get the big agencies to do business with you. So they have a new act and they say, listen, we have this new band in excess or REM. We need you to book them for$3 ,000.

29:39You'll probably lose money, but stick with us because if you do us a solid, when they get big, we're going to take care of you. And that's, so we ended up just losing money to hopefully make money later. It was like a lost leader thing. So the club didn't work out after a while. It was just too much. It was hard to make a living there. And then I continued with the concert promoting and did fairly well with that. And for people who don't really know what that means. So if you had like a Madonna, because I know you did promote concerts for Madonna in Philly. Like a huge act like that, right? You know, there's a minimum guarantee for her and maybe a share of the profits.

30:14and then there's all the ticket sales and you gotta do the promotion. You're not paying for the venue. That's a different cost, right? No, no, no. You pay for the venue. You pay for the venue. Okay, so basically they're saying, hey, you're like the contractor for my house. You're doing everything, right? You're handling the whole thing. And then whatever's left is yours. What would be sort of a good margin you could make on that? I think you make, after all the expenses are over, you're only making around 15%. So, you know, and nowadays, it's a whole different thing. Nowadays, the act gets everything.

30:48And then the promoter, which is really basically one promoter, Live Nation now, they own a lot of the venues. They get the parking. And they, because they own Ticketmaster, they get that ticket charges. Back then, when I was doing this, we only got the ticket sales. Right. So it'd be a modest profit. But you probably were making more money than you were running comedy clubs. Oh, absolutely. Right. Absolutely. Much more. And did you, it seems like a very like sharp elbows business. Like you kind of have to be a son of a bitch a little bit to succeed. Is that true, do you think? No, for me, it was different because I was David and there was a Goliath in town who was, you know, had been there longer and more entrenched.

31:32I had to be the good guy. I had to be the schmoozer. because in the end, the bands only cared about one thing, how much you gave them, money and what the catering was backstage. It was pretty a simple formula. And what about like dealing with the egos of like, you know, when you, I'm always amazed by like real estate agents. They have this ability because they're dealing with people who can be really petty and just petulant and difficult. And they're generally very calm and because they're in the client services business. Similarly, when you're dealing with artists, they can be jerks, right? They could just be, and the people around them can be worse.

32:11It never bothered me, honestly. I looked at it like the acts themselves were so, they were bigger than life. They were not even real. They were almost like cartoons. And whatever it is they wanted that was overwhelming or overbearing, it was part of the game. I knew, I was playing the game. I was enjoying, it was fun to be in the game. And have an act tell us, don't look at us when we walk down the hallways on our way to the stage. The people that weren't fun were the people that worked behind the scenes. The agents. Yeah. Their booking agents. Those were the real assholes back then. Obnoxious.

32:50Because, you know, there was a food chain. The concert provider was the lowest on the food chain. We were at the bottom. I mean, I think there's also something just like a sort of an intrinsic temperament that some people have. Like I couldn't do that. I would lose my mind, you know. I mean, do you lose your temper or are you just kind of even keeled all the time? No, not even keeled. I lose my temper. The restaurant business is what brings out the temper in people. That's when you become like a dictator, like Saddam Hussein. But the music business, no, I didn't lose my temper. It was stressful, but it was fun.

33:28And when you're watching something that you love happen, music, comedy, it's so satisfying. And you could put up with the other stuff. Yeah. But it was also a challenge. How do I get this guy who is treating me like shit, who is not giving me the acts that I want, how can I convince him somehow, some way, that I'm better at this than my competitor? And I was young, so I loved that challenge. And by sheer force of my will, I was able to turn people's minds around. I was able to be a nobody in this music business and convince the biggest agents in the world to take me seriously. And that, to me, I won.

34:17You know, it's interesting because you mentioned that as a kid, you would be in your room with a reel-to-reel and on your own a lot of the times and maybe even a bit of an introvert. But you were doing a job that really required – because you just mentioned this idea that I'd out-schmooze these people. But you don't strike me as somebody who really likes to do that or feels comfortable doing that. So am I right about that? You're right and you're wrong. You know, I don't like going to parties and hanging out and let's have dinner. Let's go out for a drink. I hated that part. Yeah. Yeah. But, you know, ever since I was a kid and then the music, the nightclub business, the music business and now the restaurant business, we're always throwing the party.

35:01Right. I've been throwing the party for years, but I'm never in the party. I know exactly what you mean, by the way, because I love throwing parties. We throw parties all the time. And I'd cook, and I'd make sure when glass is filled, and I'm just making sure that somebody has somebody to talk to. But I actually am not in the party. And I actually like that role a lot more. I used to be sad about it because I remember going to nightclubs. I went to shows. And I'd be like in the back, my arms folded watching everybody, just watching them. And I thought I was pathetic. You're not having fun. You're not part of the event.

35:37But eventually, like you just said, I kind of liked that role because I was like, I was watching over my little creation and everybody was happy. And that was my satisfaction. So I read, and I don't know if the year is exactly right, but around 1990, you sold this company, this promotion company and production company to a bigger or different promoter. To the big guy, Electric Factory Concerts. I imagine you did it because the offer was pretty good. The offer was pretty good. Also, I saw the way the music business was going. The bands were getting more. They were sometimes getting 100 % of the door.

36:17And if we didn't have some sort of ticket master deal, which I didn't have, it was going to be harder and harder to compete. So yeah, I sold my company to my competitor. I felt bad about it, but I felt it was time. It makes sense because you could see where this industry is going. What were you thinking about doing? I mean, did you think, all right, I'm done with the music business and I've got to find something new? Or did you already, when you sold the business, did you already have an idea in your mind? No, I had no idea. I pretended I was still in the music business because I kept the office.

36:50I would go to work every day and look at my Rolodex and make some calls and then go out to a deli and have coffee and go back to my office and look at my Rolodex. And then it hit me, oh, shit, I'm not in this business anymore. So at that point, I had a child. So I spent a lot of time with my daughter, Sarah, a lot of time going to the gym, a lot of time pretending I was still in business. And then eventually I said, I got to do something. Because you didn't have like money for the rest of your life, right? From that sale. Rest of life money? No, no, no. So again, just through traveling and stuff, I was in New York one night and went to this restaurant called Global 33 on First Avenue.

37:34And I just was totally blown away by this place. It was so cool. What was so cool about it? The walls were cool. They were padded like vinyl walls that were beige. And there were greens. And the girls were extremely good looking. And I saw these like martini glasses. And I didn't even know what a martini was really. I never drank martinis. And there was a DJ there. And I said to this DJ, I said, what is this? He goes, it's a martini bar. And I went back again a couple times. And it was packed, lined to get in. And then I said, this is something I got to try and do something like this in Philly.

38:15When we come back in just a moment, Stephen opens his first bar and restaurant, even though the food part really scares him. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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41:36Hey, welcome back to How I Built This. I'm Guy Raz. So it's the mid-1990s, and Stephen is looking for something new to do after selling his concert promotion company. He's inspired by a martini bar he visits in New York City. And he starts looking for a location in Philadelphia to do his own version. I saw this diner at 2nd and Market Street in Philadelphia. It was called the Continental. It was a Greek guy that owned it. His last name, I think it was Poulos. And I said, you know what? Would you ever think about renting this out to me? He goes, why? Why would I do that? I said, because I think I could do something here.

42:11He goes, what are you going to do? I'm doing$3 ,000 a week. What are you going to do? five, six. Eventually he gave in because he wasn't busy and he leased it to me. And it had this, I don't want to jump in too much, it had this neon sign out front that said Continental? Yes. And it was built in 1962. So it wasn't a 50s diner. 50s diner would not have been cool. This was a 60s diner. It had a little different vibe to it. And I say that about the neon sign because anyone who's been to Philadelphia knows that restaurant now, but that sign was there. It was called the Continental Diner. Right, exactly.

42:48So I went through several different ideas, talked to a few different designers, and came back to the idea of doing the martini bar. And I hired the guy that did Global 33. His name was Miguel Calvo. He happened to be the DJ. He was both the designer of the restaurant and the DJ back then. Okay. And then a local friend of mine named Owen Kamahira, who was a artist in Philadelphia. And the three of us put together the idea and the concept for the design of the restaurant. So I did the whole thing for$90 ,000. Well, drywall? What was it? Home Depot? So the diner was the diner. We took the existing booths and reupholstered them in green, olive, right?

43:32Green with red piping. There's the pimento. Yeah. So existing booths, reupholstered. The bar top, which was Formica, we encased it in concrete, kept the bar stools, and it reupholstered them in red and green. And then Owen Kamihira, the artist, brilliant idea, brilliant idea. He created lighting fixtures that were big olives with giant toothpick through the lighting fixture. So from the street, it was this incredible postcard that you could see through the blinds. and Miguel came up with this great drink rack, glass rack above the bar, and all the martini glasses, he filled them in loose sight.

44:15So all the cocktail glasses were hanging above you, and they looked like they were full. 90 grand to do all that. 90 grand, and I remember the heater would go out every 20 minutes. I'd have to run down and light the pilot because I didn't have money to replace the heating system. You opened it in 1995, and what happened? Open in 95 had this a lot of incredible buildup. I put these like full page ads in like these sort of hipster local papers. Yeah. It was like Studs Terkel, like these little quotes and people were just, they were sort of intrigued by this thing, martini bar. And it was packed from the day I opened it, there was a line around the block.

45:00And just like the concert business, I always thought, you know, you knew when a show was a success and the first five minutes you put the tickets on sale. Hit that ticket machine. Boom. You start seeing the tickets flying out. Done. You knew you had a winner. I used to have the same theory about restaurants. If it wasn't packed from the day I opened the door, we're going to fail. So this place had lines around the block to get in. People loved the food. It was sort of global tapas food. And it just was this huge, huge success. And this little restaurant that did$3 ,000 a week, being this previous owner, eventually ended up doing$100 ,000 a week.

45:38Wow. And I imagine, like, at the time, there were places like this in New York City, which is two hours from Philly. But there was probably not that much like this in Philly. So, I mean, I lived in Washington, D.C. around that time. So I remember if something like that opened in D.C., everybody would be like, wow. You know, because New York was the center of gravity, still is in a lot of ways. But I imagine it was so popular because it was so different from everything around there. Absolutely. You know, and then that movie came out, Swingers. Swingers, 96. It came out right afterwards. And man, I said, God is good to me.

46:11And then Sex and the City and the Drinking Cosmos and that whole thing. And it was all young people coming out who never knew what a martini was. They were getting drunk on martinis because they didn't know how to handle them. Okay. In that bar, obviously, martinis were the star. But was food, I mean, actually, before I ask you about the food there, are you a food person? And I say that as somebody who is. I love food. I'm going to be a modest here. I'm a very good home cook. People listening to the show know I talk about it. I have dinners at my house all the time. I love to cook. I've worked in kitchens.

46:46It's a huge passion of mine. Is that who you are? Are you like a food person? No, I certainly wasn't then. I was a rock and roll guy. I was a music guy. I loved comedy, and food was just something to do as part of my social life. I sort of matured and grew into it, and now I know it very well, obviously, and I have great respect and reverence for it. Back then, going to a restaurant was just something to do. It was like going to the movies. Right, but when you opened the Continental, you knew you wanted the martinis to be great. Yeah. And was food also important? Were you obsessive about food?

47:26Yes. But there's another part of the story. I hate doing this to you because I'm skipping something. In between, when I was still in the music business, a friend of mine wanted to open a restaurant that was based upon a 50s concept, like Johnny Rockets or something like that. And I opened a place that was like a fast food restaurant. It was called Shake, Burger, and Roll. Cool name. And great little design. I came up with a guy, a good interior designer from New York. The place was packed. You couldn't get in. And it went out of business in nine months. And why is that? I couldn't figure out how to run it.

48:03It was like Yogi Berra who said, nobody goes there anymore because it's too crowded. It was just so crowded. We couldn't get the food out. I mean, I remember one time the local police department came over to get like 40 burgers. Awesome. The burgers go out. The cop comes back 20 minutes later. He goes, what the hell is this? He opens up the thing. He opens the bun. There's 40 buns, but no burgers inside the bun. So the reason I'm telling you this story, I was scared to death of food. I was afraid to do food. So when I did the Continental, I knew I had to have it. But I actually was so scared. I just wanted to hire a chef and give him or her a percentage of the business just to take care of it because I didn't know what I was doing.

48:47And is that what you did? You would do? Oh, I tried. They all turned me down. They wanted a salary. They just wanted a salary. And thank God I would have shot myself if I had given them like 30 % of the business. And look, you know, you learn by making mistakes. And I knew all the mistakes I made. And, you know, I couldn't manage a restaurant. I remember at the Continental Sunday nights, I was the manager. And I hated it. I hated being there all night. I hated dealing with drunks. It was tough. Yeah, it's a tough business. I want to point something out because, and I think it's important to point out, not everything you touch as a restaurateur was gold.

49:26Like you have had things that didn't work out. And I think early on you tried a Soviet themed eatery that I'm assuming served Russian food or pierogies or maybe, and that didn't quite, I guess it didn't quite work out. I hate using the word Soviet. It sounds very, very, I feel like treasonous. It was Russian. It was called Cafe Republic. It served great cocktails, Russian vodka. We had the Siberian six-pack, which was six little shot glasses of vodka, one of which was a brand name that I found called Karl Marx Vodka. I'm sure he would have been proud. And we had a statue of Lenin in the bar. And we had Russian food, beef stroganoff, pierogies, caviar.

50:09But it was in a weird neighborhood in Philly. It had no parking and it didn't work out. Meantime, Continental was doing very well. I mean, Continental became an iconic restaurant in Philadelphia. It was, I'd say, the most popular restaurant in Philly. And it created a renaissance in the old city section of Philadelphia. really was the catalyst for that renaissance with restaurants and retail. All right. So on the strength of that, you, I guess, see the potential to really lean into restaurants, right? And you then open Budokan, also in Philadelphia, which describe it for people. I've been there, but describe it for people who don't know what this restaurant is.

50:56Budokan, the original Budokan was a pan-Asian restaurant. So it was sort of fusion. It's very theatrical in its design. And a centerpiece of it is a 12-foot golden Buddha. Again, I don't take credit for the culinary concept I did not create on my own. It started with Wolfgang Puck at a restaurant he had in California called Xinhua on Main. Then another gentleman opened a place called China Grill in New York in Miami. And I had gone to all these places, loved the energy, and I went and spoke with different designers to ask if they would design my restaurant, one of which was Philippe Stark, who turned me down but said, there's ways of buying my furniture.

51:45Call these people. So I ended up designing it myself with my friend Owen Kamahira. This is the same guy who helped you redesign the Continental for$90 ,000. Owen, yeah. And Philippe Stark in the late 90s, he was doing hotels around the world. Huge. And he had a line with Target, maybe not then, but he would. He was already, I mean, I can't imagine you could have afforded him at that point. I didn't even think about it, but he didn't want to do it because I think it was in Philadelphia. But Owen and I said, come on, let's do it. We bought his furniture. We made it look like his restaurant. Boom.

52:18Again, when Owen and I walked out of that restaurant, it just got dark. We looked through the windows and we saw this thing and it was just like we got choked up. It was so awesome. And the cash flow from the Continental could support opening Budokan or did you also? For Continental, it was all mine. The Budokan, we got an investor. Okay. It was actually a friend of mine who had a venture capital fund and one of his clients was willing to do this. So this particular client put up$1.9 million. Today, kitchens cost$1 million, just the kitchen. Just the kitchen and the restaurant. Yeah. So, all right, the interior, it was going to be like that was going to be part of the experience, right?

53:05It was dark wood and moody. Absolutely. I was very much a part of that. Where do you think that instinct came from? Because, again, like if you were to do, I don't know, a profile, right, like an AI profile of a guy, or anybody who is going to design a restaurant like this, you wouldn't say, this was a concert promoter and a comedy club manager. And, you know, like you wouldn't naturally think like, oh, that's the person who's going to have these amazing, interesting ideas. Where do you think that came from? The design aesthetic is something that was just in me that I unleashed once I started seeing things.

53:44You know, I wasn't the director. I was the executive producer. In the movie business, so I was, you know, Samuel Goldwyn. Right. But I kind of had an aesthetic of what, the right aesthetic to know the right director to hire, the right lead actor and actress, and maybe what the soundtrack sounded like. It just was there. I don't know where it came from. And you knew what you liked. I knew what I liked, but I also knew what people liked. And back then, restaurants were a little mundane. People wanted to feel sexy and escape. And that's what we did in the beginning. We took you to another place. So you were sort of like the guy who could unleash other people to kind of make it happen, focus on the big picture, and then hire the right people.

54:28But they would still come to you with design schemes that you might suggest tweaks to or say, well, let's think about maybe something a little darker or maybe teak wood instead of light blonde wood or whatever. Is that fair? Yeah, but I, again, if you talk to any of the designers that worked with me, they'll tell you that I'm a unique client in the sense that I respect what they do. Most business people, and I don't look at myself as a businessman. I think it's insulting to be called a businessman. I'm a creative person that happens to end up being a businessman because I have to be. But where a business guy will go, those damn designers, they spend money because they don't give a shit what they spend.

55:11And they just want to, and I don't look at it like that at all. I look at it like, give me the best that you can give me. If it's too much, I'll tell you. I want to blow people away, man. Shock and awe. And, you know, part of it is a bad thing because I have to be concerned with money, too, with budgets. Yeah. When I saw that movie, The Aviator, with Leonardo DiCaprio about, what's his name, Howard Hughes? Howard Hughes, yeah. It scared me because it felt like me because he coward used kept going, no, more. Let's do it again. Shoot that scene again. I don't care. Let's bring in the. And it was frightening because I said, oh, shit, I do stuff like this, but on a much smaller level with these restaurants.

55:54You know, you got to control yourself at a certain point, too. And I think it's just worth kind of noting a quality of many successful entrepreneurs is not that they're the smartest or they have the best ideas or, you know, they got the top grades. It's that they're very good at building teams. That's really critical. And it sounds like that was just a talent you had. I make all these connections to the music business. So it's like being an A &R guy. You know, you're out looking for new bands. Yeah. I'm really good at recognizing talent. Also, last night when I was on Instagram, I saw this thing that Steve Jobs said that freaked me out because I say it all the time.

56:34He was being interviewed by Dan Rather. What's your business model? He went, the Beatles. Because these guys collectively were the most brilliant people in the world. Individually, they did really good work, but nothing like they did when they were together. Yeah. I'm not enough by myself to have that group, that core of two to three other people made me stronger, made me better. Yeah. All right. So you are you now have Budokan has really proven the concept. Right. And I mean, just to put this into perspective, and again, I love Philadelphia, an amazing city, but it's not New York and it's not Los Angeles.

57:14It's not the focus of the world. And yet this restaurant, you were getting like major celebrities coming to Philadelphia to eat at Budokan. Like I read that at a certain point, the wait to get a table on a Saturday night was like two months. Yes, it was like a nightclub. It was like Studio 54 of restaurants. You know, back then people were still allowed to smoke in the restaurants. So we had a smoking section, but then there was like this whole singles thing at the bar and people, it was surreal how popular it was. Were you seeing profits pretty quickly from the get-go, from continental on? Yeah.

57:53You know, I was still old school, didn't have computers. I had a checkbook. And I remember I just figured it wouldn't be that profitable. I'd make some money out of it. I never thought I'd make a lot of money. And all of a sudden, I remember telling my wife at the time, I'd say, you know, I just looked at the checkbook last week. She goes, you know how much was in there? I said$30 ,000. And then four weeks later, I said, something's wrong. Why? I have$75 ,000 in the checkbook. Are you sure you paid everything? Yeah. So it just kept growing and growing. When we come back in just a moment, Stephen makes the big leap from Philadelphia to New York City.

58:32Stay with us. I'm Guy Raz and you're listening to How I Built This.

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1:01:17Hey, welcome back to How I Built This. I'm Guy Raz. So it's the late 1990s, and Stephen has another hit with Budokan in Philadelphia. And he's realizing just how great that city is as a launchpad for new restaurants. With Philly, here's the deal. It was like the Wild West. It was like opening. It was like the West Coast when the New Yorkers all moved in and took over Hollywood. There was nothing here. It was all old school restaurants. They were boring. So you open Continental, people freak out. You open Budokan, they'd never saw anything like it. Yeah. All right. So you start to open a succession of restaurants.

1:01:54I think between 98 and 2001, after Budokan, you open Tangerine, Blue Angel, Pod, Alma de Cuba in succession. and in terms of like the is the formula for a successful restaurant kind of i don't want to downplay but is it basically like get butts in the chair keep costs low and keep tables turning over like is is it as simple as that i mean no that's not the formula that's the goal but the formula is is a lot of its magic i mean it just happens you got to do basically you got to do something that people really like when they walk in there's got to be something that touches them Like, you have to hear that sound in their voice like that.

1:02:37You take your breath away a little bit. And it could be from a light, a lighting. It could be from a vibe, a smell, whatever. And it's not an easy for it. There's no recipe for it. So by 2001, I think you, at that point, you had maybe six, maybe seven restaurants in Philadelphia operating. and you were, according to the reporting at the time, they were doing very well, 30 million in sales, five and a half million in profit, which is pretty great for restaurants. I mean, a restaurant is lucky if it's doing 10%. They're not lucky, but it's like, it's doing pretty good. Like that 10 % is kind of standard, right?

1:03:16Yes, we were doing way more than that in the beginning. And that's because things, again, the world didn't completely change yet. You know, the same guy that was able to build a restaurant and open it for$90 ,000, was able to make a 20 or 25 % profit. Today, not possible. Today, between the rent, labor costs, this cost, that cost, that regulation, this thing, that thing, whatever thing, you're lucky, like you said, to make 10%. And your restaurants were still, I mean, you still needed investors to help build the next restaurant. But did you have the same investors who helped you kind of finance the six or seven restaurants that you had in the city?

1:03:54Yeah. It was only myself and one other, the venture capital guy who had his client. It was just me and them in the beginning for the first 10, 12 restaurants at a bank loan. So it was good. Most people you read about or you talk to in the restaurant business, they got like 15 people that invest money in them. And it's a nightmare because you don't want 15 different people who think they own the restaurant. How were you, what were you doing on a day-to-day basis? Were you going from one place to the next place? because you weren't managing them. You admitted you hated that part of it. So on a day-to-day basis, were you just like jumping from one place to the next and checking in on them?

1:04:33Like what, tell me what you were doing. I had a staff of people under me, the directors that were basically, if you look back at old, they're checkers. I had a bunch of checkers. What does that mean? They go out and check stuff. Go check that, go check that restaurant. Now they have fancy names, but they're just checkers. And that's what I did. I just checked on things. But my emphasis was on the food. Even though I was not a chef, I was not a self-proclaimed foodie, but I had a very good palate and good palate memory. So I remembered what things should taste like. And my obsession even to this day is to taste the food and make sure the food is consistent.

1:05:14I am the number one person doing that. But basically the ambiance, the people will tell you that work for me, I'm obsessed with the air conditioning, the lights, the sound, along with the food. Yeah, it's interesting because we don't always think of those things as diners when we're sitting in a restaurant. So at this point, I guess you decide that you want to expand out to New York City, which is the restaurant capital of the country. So again, it makes sense. And in 2006, you indeed, you opened two restaurants in New York, Budokan and Morimoto, which you already created in Philly. So I assume you're thinking, like, if I'm going to expand and build, I've got to go to New York, like where the action is.

1:05:55Yeah. And I wanted to do it. I wanted to, you know, I guess part of it was ego. I had also been nominated for James Beard Award a few times when I was in Philly. And I would go there and I'd get nominated and I never would win because, you know, I don't think I was really taken seriously. And I didn't think the people in New York, the chefs and the restaurant owners, took me that seriously either. I wanted to like make it big apple so I did it we did it for Budokan and Morimoto Budokan I got scared with Budokan because Budokan basically wasn't that novel I mean really was like kind of a little bit of a knockoff food wise from China Grill so I knew I had to change the food make it different and come up with a design that was spectacular so who did I go to, I went to Philippe Stark again, and it just didn't work out.

1:06:46And I went to Plan B and went to Christian Liagra, which is another French architect, designer, who's a genius. He agreed to do it for a giant amount of money, and he put together probably the most spectacular restaurant that I've ever done. Budokan in New York. It's just breathtaking. He said to people around me, I said, you know what, this is it. He said, what do you mean this is it? I said, I can't do any better than this. This is Sergeant Pepper. I just did Sergeant Pepper. How am I going to do better than this? It seems like really what just gets you out of bed is working with teams to develop a concept and then like grinding and spending a year or two years just like focused on bringing that concept to life.

1:07:31Like that's what you actually love doing. Absolutely. What gets me out of bed other than having to go pee now as I get older is the excitement of creating. And after it comes to life, I'm not so excited anymore. But I love the process. I love the stress. You mean you love the process and once it actually opens, like then you're kind of... I'm over it. No, no. You want to move on? Move on. It's sad. That's my sad time when it opens. It's no longer... I mean, of course I pay attention to it. I go to the restaurants all the time. I'm always eating the food, unfortunately. But the thrill is gone the day after it opens.

1:08:12You know, I saw something that you talked about in this business, and it would just stress me out so much, which is, you know, somebody might love you and love you. Talk about it. And then 30 seconds later, if something goes slightly wrong at the restaurant, they're going to hate you with all their passion. Like you're in a business where somebody might go to your restaurant five times, love it. And then the sixth time something might happen that is correctable, but is big enough that they'll never go back. And they're really mad. Yeah. Of all of you are honest with yourselves. You've done that before.

1:08:43You've gone to a place and then one time they kind of screw you. That's it. Fuck them. And you can't physically make it great. Like, you've got to rely on the waiter, the maitre d', every part of that working. How do you make sure? I mean, I guess you can't guarantee it, but are there things you can do to try and get close? Yes, you can. And I'll tell you what they are. But, you know, the more you say what you just said, the more I realize what a stupid business this is to be in. You're right. Look, one of our landlords, Seymour Rubin, said to me, he goes, why would you want to be in a business where one guy, a dishwasher, could just stop the whole operation?

1:09:27Yeah. One guy could decide, that's it, I'm leaving, and the whole restaurant falls apart that night. I said, you know what, Seymour, you're right. It's a stupid business. You know, when you send an army into battle, the generals give you a statistic of how many casualties you're going to have. Like every so often, there's got to be something that's too salty, a waiter that was rude, a host that didn't look up when you walked in. There's got to be a cook that walked out, a server that said that he or she were sexually harassed. I mean, it happens all the time. I mean, I have a big staff of people now, but I'm still on the phone at 1130 at night dealing with fires.

1:10:03Yeah. You know what? It's made me a smarter, wiser person dealing with all this. and probably, hopefully, will delay dementia quite a few years because my brain is constantly having to think. As an upper, yeah. And then customers, right? Like in San Francisco, many restaurants add a fee for mandatory healthcare that they have to provide to their employees, and that is passed down to the customer who gets mad at the restaurant. It feels like there are so many challenges. Yes, there is. And that's why I will say this, that I could never, ever, ever do this again. I don't think anyone could replicate what I did without having some giant money behind them from the beginning.

1:10:51By the way, when we open new restaurants, I'm not financing them myself anymore. We go in, the landlord wants us to open. They have to put up a good significant part of the money now. to open a restaurant that would cost 16, 17 million dollars, it's impossible. So, you know, the best advice I have, if you want to go, I would say don't go into the restaurant business, but if you do, keep it smaller. There's a sweet spot of around, I think, around 85 to 95 seats. Try and turn the tables two and a half, three times. And I think that's the best model right now. And if I continue to do this, I'm going to try and stay within that model.

1:11:33Okay. I want to, I mean, we can't mention all your restaurants, just 40 plus restaurants and you've got Michelin stars now in some of these restaurants and you've won a James Beard award for restaurateur. And I mean, again, Michelin star is not something that I probably was even on your radar, right? Was that important to you to be? No, it wasn't important. It's still not important. I shouldn't say that because now they won't give it to me. No, they're going to take your stars away. Yeah, no, I mean, it's nice. Look, the James Beard Award, that was the thing, man. It was like the Academy Award or an Emmy.

1:12:07Like people could say it's not important. It was important. It felt good. It was emotional to be recognized like that, for sure. Yeah. Okay. Let's talk about a low point here. COVID. You've got, at that point, almost 40 restaurants, 37, I think. And then overnight, this entire industry, and it's still in recovery in many cities in the United States, collapses. Yeah. So this thing happened. I was devastated, of course, like everyone else. And then I looked and I said, how much money do we have in the bank? A few million dollars? Five? Seven? I said, okay, cool. We're cool. They said, but what about the accounts payable?

1:12:5615 million. Wow. 10 to 15 million. So I said, how could we possibly ever pay? What are we going to do? But what happened is that everybody was very, all the vendors, except for maybe one, was very understanding. And we paid a little bit to everybody. So, you know, our intentions were good. But I had, and we laid everyone off. But I couldn't lay everybody off because we were too big to do that. How many employees did you have at that point? Oh, four or 5 ,000. 5 ,000? Yeah. I mean, well, the servers, managers. Wow. You know, couldn't pay them anymore. and we had to lay off most of the office, but I couldn't lay off all of the office because he couldn't lay off the controller.

1:13:41He had the books and I didn't even know how to pay a bill. So there were millions of dollars of salaries we had to continue to pay. And then I said, you know what? We know we used to do these gift certificate things every holiday, always sold star gift certificates. So I said, you know what? Let's, what the hell? We need to raise a few hundred thousand, maybe a couple hundred thousand bucks. So I said, let's do buy one, get one free. One meal, get one free. Buy one, yeah, one gift certificate, get one free. Well, in like 36 hours, we did like$10 million. Wow. It was very emotional because we had our people like believed in, like it was almost therapy for them saying, you know what?

1:14:25It's a good deal. Let's take advantage of this star thing right now because, you know, we're going to come back from this thing. And then the thing that saved everyone was the PPP money, the government thing. Without that, gone. We would have been gone. You think the Star Group would have been gone? Absolutely. No question. That saved us. No question. No question. Never could have survived it. Because your restaurant, I mean, your main asset is your brand, right? It's your aesthetic, your brand. It's not, you don't physically own these buildings that you're in. I own a couple of them. I mean, it would be great to own a lot of them, but we only own two or three.

1:15:05Yeah. All right. I want to ask about opening a restaurant today because you still open restaurants, right? And you still have ambitions to open more, I imagine. You probably are working on restaurants right now, right? We're working on a few. I have some changes of mind here that I'll talk to you about. Yeah, tell me. I think that, again, I'm going to scale down the model. We still want to make it special and sort of take your breath away in a different kind of way. But I think opening restaurants that are 200 seats, the expense of those restaurants is just – it's too risky. And how many years does it take before you can recover that money?

1:15:42You can't. In other words, if you open it up on your own and you borrow$12 million, it's going to take you 10 years. At least. Yeah. Not worth it. So that's why to open the things that I do, you have to have landlords that want you for other reasons other than your rent. You're helping get tenants and build neighborhoods. That's what it boils down to. Otherwise, just open small restaurants. You're better off doing something like that. Why did that happen? I'm just curious to get your take on why that happened and why you were able to do this 30 years ago. And now it's just even for you. It's so hard.

1:16:19Well, affordability, right? The key word in the next election. Things are too expensive. COVID happened, everything doubled, the air conditioning. What used to cost$600 ,000 is now$1.7,$1.8 million. They said, oh, it'll come down. It didn't come down. Kitchens,$500 ,000 kitchen normally,$1.5 million,$1.8 million. It's just off the charts. And, you know, minimum wage went up. And, you know, I think minimum wage should have gone up. I think it's the right thing to do. But I think at a certain point, especially with tipped employees, I don't know if it should keep going up. Because, I mean, it's going to be impossible for restaurants to really keep, to stay in business.

1:17:01And, I mean, is there, I imagine that with 46 restaurants now? Yes. Is there a point where it stops or is it just, you just naturally are always looking for new opportunities and new places and new concepts to open more restaurants up? I think it naturally will stop. I mean, I've done so much. And, you know, we'll see who, if we sell, or if my daughter, Sarah, or my son, who's not old enough to do this yet, Julian, maybe they'd be interested. But the other thing I'd like to do is the opposite of what I've done. I'd like to do like a fast casual thing, like Shake Shack. Like what Danny Meyer did with Shake Shack.

1:17:42Yeah. It's the sort of warrior in me. I'd love to compete with Shake Shack and do my own version or a different, you know, something else that's fast casual. Yeah. You are not quite 70 yet, right? Mm-hmm. Not quite. Not quite. Okay. But approaching. And so you mentioned your daughter who's involved in the business. Is that your kind of hope that maybe she will take over the star group? No, I don't think she wants. I don't think she would. It's a brutal, brutal business. The best thing for everybody is to have an exit. Right. Private equity probably be the last thing you want to do, but I would do it.

1:18:23The perfect exit is to be acquired by a company that has some sort of a synergy and relationship to what you do. My fantasy, you know, we run the Louis Vuitton restaurant in New York City, would be that LVMH come in and acquire star restaurants or part of us. luxury brand, great taste, great design, aesthetic. I'd be proud to have somebody like that come in and buy us. Or even like a Disney, you know, I don't know why they would buy it. But a Disney, somebody like that, somebody that I look up to that I admire, you know, private equity, you know, it's about money. Who knows if they'd take care of it the way that I would.

1:19:06Well, that's the thing. I mean, your name is on the, I mean, your name is associated with these restaurants and there's a certain expectation. And so, you know, there's always a risk that whoever buys it, even if they write a big fat check, you know, and then within three years, you know, diners are saying, oh, it's not the same. It sucks. The quality has gone down. I mean, that would hurt, but you know, it's like, you know, when Bob Dylan and Bruce Springsteen sold their publishing, it hurt them. But like, there were like a few hundred millions of dollars. So that kind of, at some point you got to take care of yourself and your family.

1:19:39So, you know, your restaurants generate over$400 million now a year. I mean, even though they're not in every city in America, a lot of people know these restaurants. And for a guy who really came from a completely different world, had no experience in this business, you know, you built something that's had impact certainly on the restaurant industry. I mean, how much of where you got to do you think had to do with your hard work and your skills? And how much do you think had to do with being lucky, being at the right place at the right time? Percentage-wise, I don't know. A lot of hard work, right?

1:20:19I could not stand being bored. I always had to have something to do. So part of it was that. But there's a lot of luck, a lot of luck. And again, back to the music analogy. You know, you talk to Bruce Springsteen about his career. He said it could never happen again. It was a different time. Radio was a certain way. People, you know, they toured. Bands played clubs. It's a different time now. I couldn't do it. So a lot of it's luck. A lot of it. That's Stephen Starr, founder of Starr Restaurants. By the way, if you've seen Sex and the City, the movie, you might remember the rehearsal dinner scene.

1:20:58It was actually filmed at Budokan in New York, and after the movie came out, for about six months, reservations there became almost impossible to get. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's totally free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at GuyRoz.com or on Substack. This episode was produced by Alex Chung with music composed by Ramtina Arablui. It was edited by Neva Grant with research by Sam Paulson.

1:21:32Our audio engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Carrie Thompson, Carla Estevez, Casey Herman, J.C. Howard, Sam Paulson, Chris Messini, Catherine Seifer, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

1:22:07Is Love