Kings of Cool

Patricia Hochwarth

When the hip young Los Angeles restaurateurs of Sushi Roku and BOA fame debuted their latest venture, Katana, in 2001, their following was so big that the owners held two grand opening galas to appease the throng of Hollywood celebrities and social elite clamoring for an in.

The four thirty-something partners were riding a wave of success that began in '97 with the birth of their first concept, the nouveau Japanese Sushi Roku, which married high-style design, attentive service and superb cuisine—an innovation at a time when most sushi joints focused on style or food, but rarely both.

In quick succession, the partners opened three more Sushi Rokus in Southern California before creating BOA, their fresh, hip take on the traditional steakhouse, with locations in West Hollywood, Santa Monica and Las Vegas. Then came Katana, which presented, yet again, a traditional concept (in this case, Japanese robata-yaki cuisine) in a smart, sexy setting. Score another home run for the group.

Today, these guys (dubbed the foodie-Rat Pack by one trendy mag) are flying high with eight units, 1,000 employees, A-list celebrity investors and projected revenues this year of $40 million for their Innovative Dining Group company.

We have to wonder, how do they do it? And will their good fortune endure? Everyone knows how hot trends flame out as fast as they ignite, especially in the restaurant business, and even more so in attention-challenged L.A.

LESSONS FROM THE BAR BUSINESS
But hey, this gang of four knows from L.A.'s fickle food and nightclub scene. They cut their hospitality teeth in the bar biz. They knew that to make it long-term they'd have to back up the style with substance and a keen business sense. So far, they look to be succeeding, although founding partner Lee Maen takes nothing for granted ("It could all end tomorrow," he says matter of factly.)

"That's something the nightclub business teaches you," continues Maen. "Many successful restaurateurs started in the bar business. You learn that you have to get people's money and make them happy in a very short time. You learn how to grab the public's attention, and to be this creative engine, to give them an experience. I think those ideas translate very well to restaurants."

It doesn't hurt to have a degree in economics and an MBA under your belt, as Maen does.

Back in the mid-'90s when Maen was pursuing his MBA while working as a commercial real estate broker (racking up transactions totaling over $30 million in four years, by the way), he founded The Gem Bar & Lounge, one of Hollywood's most popular nightspots, with pal Craig Katz. After hooking up with Philip Cummins, a former investment banker turned nightclub impresario, they decided to ditch the bar business ("It's too dependent on the owner always being there and there aren't many opportunities to grow a big business," says Maen). They wanted to create the kind of cool-vibed restaurants they liked to frequent—a modern sushi restaurant in their case—but they needed a sushi expert to show them the ropes. The group coaxed Michael Cardenas from his managerial spot at Matsuhisa (he managed it for five years, and helped open Nobu in New York and London), and the quartet was complete.

The L.A. Rat Pack now has 8 units, 1,000 employees, A-list celebrity investors and projected revenues of $40 million.

"We're definitely a management-driven company, versus chef-driven," says Maen. "We're more along the lines of what Jeffrey Chodorow and Rich Melman do. We're all involved equally in operations although we each have our specialties, be it finance or design and construction. We have our hands in everything— maybe too much, but it seems to work. When it comes to hiring managers and chefs, food tasting or menu development, we all have a say."

The group has cultivated a posse of limited investors (including some moneyed celebs) which has " followed us along the way," says Maen. "They might own 30 to 40 percent of a restaurant and IDG the rest."

CONCEPTS FOR TODAY'S GENERATION
Food and operations is the specialty of IDG partner Mike Cardenas. To put it mildly, this man is mad for Asian cuisine. Cardenas was born and raised in Japan. His father was a Mexican-American who stayed on in Japan after serving in the navy during the Korean war and marrying Cardenas' Japanese mother, whose family was in the restaurant business.

Cardenas spent his early career as a teppan chef, eventually joining the Nobu Matsuhisa team. His experience with the iconic Matsuhisa was an early career highpoint that has impacted his vision to this day. Of course, when Cardenas lured some stellar staff from Nobu, "he wasn't happy and we didn't talk for about seven years, but now we're on friendly terms again," Cardenas relates. "Nobu's my mentor. He took me around the world, taught me values. I want to be like him someday."

AT IDG, Cardenas' passion for excellence and innovation is evidenced in the company's reputation for topnotch cuisine, in addition to a cool dining experience with price points reachable for the average diner. He has his hand in everything, from purchasing and menu development, to choosing the sakes and overseeing staff.

"While the ambiance, service and food are important to the success of the restaurants, the business end is crucial," says Cardenas.

Cardenas travels back to Japan three to four times a year to stay on top of the trends there. He brings ideas back, like robata-yaki (see below for an explanation), and tailors them for the American market.

Concept development "starts out as an intuitive process, and then we do the research," says Cardenas. Recalling the development of Sushi Roku, he says, "whereas customers could spend $80, $90 or $100 a person at Matsuhisa, I said let's go for those who can afford a $40-$50 meal. We brought the price points down and increased portions by maintaining a 26-27 percent food cost, mainly through bulk purchasing.

"After we had three of the Sushi Rokus going, the four of us were sitting around wondering what to do next. We had all our eggs in one basket with the sushi concept and that's when we came up with the idea of a contemporary upscale steakhouse. We'd all grown up with the Mortons, the Ruth's Chris kind of places, the very masculine steakhouses and we thought 'let's do a cool steakhouse for our age group, and something that's more feminine-friendly, too.' We dined at all the steakhouses in town and some in Chicago and New York."

Everything starts with "borrowing" in this business.The key is taking it and oneupping the last guy who used the idea.

Cardenas readily admits to "borrowing" ideas from other successful restaurants. "Everything starts with copying in this business," he says. "It might start with one dish that evolves into something a restaurant then establishes as a signature item. Imitation, copying and regurgitating is a given. The key is taking it and one-upping the last guy. So now you see lots of people doing the updated steakhouse concept."

With Katana, continues Cardenas, "we wanted to do another Asian concept without infringing on the Sushi Roku concept, so the partners all went to Toyko for four days, where I took them to a robata-yaki house. We had talked about the concept before the trip, but the other guys couldn't really grasp it until they experienced it."

For those who aren't familiar with the ancient style of cooking, here's a quick primer: In the past, Japanese fishermen would cook their catch over an open flame and share it with others by passing the food on oars from boat to boat. At Katana, skewers replace boat oars and the robata items arrive at the table with three dipping sauces (soy mustard, ginger and ponzu).

"Sushi has been around the states now for about 25 years and I think it's at the tail end of its longevity," says Cardenas. "I think it's time for other types of Japanese cuisine to come along, like robata-yaki. Plus, there's a limit to sushi's appeal because a lot of people won't eat raw fish, and this is a great alternative. It appeals to middle-America."

"It's a difficult concept to pull off and expand on," adds partner Maen. "It needs the right location and the right amount of space and energy. Katana's probably not a growth concept like Sushi Roku but more like a one-off in major cities like Las Vegas, Chicago, Miami and New York.

"We're debating growing Sushi Roku across the country or doing it more geographically," continues Maen. "We're getting advice from some mentors in the business we talk to, like Rich Melman."

IDG has no plans to franchise its concepts in America, but, says Maen, "we'd definitely look into a licensing agreement with someone in a country we wouldn't expand to, like China."

Sushi's popularity has had its effect on the ability of restaurants to source high-quality ingredients. "There's close to 2,200 Japanese restaurants in southern California now," says Cardenas. "As products get scarce, you have to start sourcing things by buying shrimp directly from Vietnam or toro from Japan, for example. Prices for ingredients have skyrocketed. Whereas awhile back toro cost $12-$15 a pound, now we're looking at $40-$60 a pound. This year we'll probably purchase about $1.5 to $1.8 million worth of sushi-grade quality ingredients."

ANTI-CORPORATE CULTURE
The last thing the IDG partners want to be thought of is as rigid corporate types. "We want the restaurants to run like mom and pop local operations," says Maen "We're all about the repeat business, serving the community we're in, where 80-90 percent of our business is from the locals. The exception is Las Vegas, which is tourist-driven. We don't want to be 'corporate.' So our managers are given a lot of latitude to exert independence and be the face of that location they're in. Yes, we teach them what we want and how we want them to do it but they basically take it upon themselves."

They don't have trouble attracting labor, either. "We get the best of the best," claims Maen. "It's a cool environment and there's pride of ownership about where they work."

IDG has 35 managers, eight of whom are upper-level GMs, says Cardenas. Promotion and development from within is key, and fosters loyalty. "That's when you can trust someone to run your place in Vegas or New York; to be able to replicate and keep the concept consistent.

We're all about the repeat business and serving the community we're in. Up to 90 percent of our business is from locals.

"You gotta feed your people the carrot, whether it's incentives and benefits or giving them tools like business cards and expenses," says Cartenas.

Incentives certainly help. "I think we're one of the most generous companies out there when it comes to compensation, not only from base salary, plus quarterly bonuses and at the third tier, profit participation," says Cardenas. "I've got a 26-year-old running my $8 million operation at Katana and he's making a good chunk of change—in the six figures."

Cardenas is a big believer in rewarding his high achievers with travel, just as he was rewarded when his mentor Nobu Matsuhisa took him around the world in his earlier days. Cardenas recently took one of his Katana managers to Japan for an immersion in Japanese food and sake and culture. "Well, how can you be a manager of a Japanese restaurant and not go to Japan?" asks Cardenas. "I was so proud of Eiji (Mori). I had given him a sales goal and he killed it."

One has to wonder, how can these guys not have an attitude, given the accolades that have been heaped upon them?

Believe it or not, says Maen, "we're all very down to earth. I like nothing more than to walk into one of our busy restaurants, unnoticed, and just enjoy the activity and energy of the place."

That attitude filters down to the staff, too, Maen says. "If the owners aren't arrogant, there's no way the servers or other employees should be arrogant. I mean, the owners could easily pull up in a Ferrari and be nasty to everyone, but we aren't afraid to pick up trash or straighten up the place or carry someone out if we have to. Our employees see we're all in it together and we just happen to be the owners. Often employees meet with us in our office and ask for advice on opening their own restaurants. We're there to help them grow, and you know what? That breeds loyalty. We've had people with us for the whole eight years.

"I look at this as a business and it just happens to be the restaurant business. I could do the same thing with a hotel, or a retail store or a car wash for that matter. It's putting the right pieces together, managing them properly, being forward-thinking and doing it a bit better than the next person. We're not necessarily doing anything new; we're doing what others do, just a bit better."

AT A GLANCE

INNOVATIVE DINING GROUP

Corporate Headquarters: Los Angeles, CA
Owners: Lee Maen, Philip Cummins, Michael Hide Cardenas, Craig Katz
Employees: Approximately 1,000 across eight locations
Corporate Chef: Josh Thomsen
Number of units: Boa, 3; Sushi Roku, 4; Katana, 1
2005 projected gross revenues: Over $40 million
Future plans: IDG plans to open three to five restaurants per year and is evaluating opportunities in the hotel market.

SUSHI ROKU
Zen-inspired sushi bar and restaurant with stone walls, pale bamboo veneer tables. Cuisine marries straightforward sushi and trendy California-Asian fare complemented by a staggering selection of sakes (they even have a sake sommelier).

A celebrity magnet, Sushi Roku has hosted Drew Barrymore, Cameron Diaz and George Clooney, among others.

Locations: West Hollywood, Santa Monica and Pasadena, CA, and at the Forum Shops at Caesars Palace, Las Vegas
Check average, with alcohol: $45, LA area

In addition to a vast selection of topgrade sushi and sashimi—

BOA
Definitely not your father's steakhouse. BOA is, say its creators, " designed for the modern elite." It's dimly lit interior features soft amber tones, rich leathers and walnut textures, as well as a crushed blue glass display hidden under the floor. The sophisticated menu offers choice cut steaks from around the world, complemented by an assortment of available rubs (blue cheese crust, peppercorn) and sauces (pinot noir, truffle). There's a satisfying selection of poultry and seafood options for those who don't eat red meat.

And a groovy lounge serves the same fare in leather-walled splendor.

Locations: Sunset Blvd. in West Hollywood at The Grafton Hotel; Santa Monica, overlooking the Pacific; and at the Forum Shops at Caesars Palace, Las Vegas.
Check average, with alcohol: $70
Menu bites:

KATANA
Robata-yaki, the Japanese barbecue (think Japanese tapas on skewers) is spotlighted here, featuring beef, poultry and vegetable skewers. Also offers sushi and sashimi favorites such as maguro, sake and toro, plus rolls indigenous to Katana. Two pages of sake listings round out the menu (here, too, a sake sommelier is on site to guide the diner). The intimate 6,000-square foot space echoes the design of ancient Japanese temples and dècor with cantilevered brick and mortar, a 400-year-old redwood bar and table tops, cold rolled steel and custom ambient lighting.

Location: West Hollywood, CA
Check average, with alcohol: $54
Menu bites: