Fresh off the Press: El Bulli Lost Half a Million Euros

The Economist reported on October 27th that El Bulli restaurant made losses of a whopping half a million euros a year (full report here). For blue chip companies, this might not sound like a huge loss. However obviously for a restaurant with El Bulli’s stature- exclusive, Michelin star, former best restaurant of the world year over year - this is very surprising and, of course, frustrating for its chef/owner, Ferran Adria, a culinary genius. Now I understand why the restaurant closed down earlier this year. It boiled down to lackluster financials.

Numbers don’t lie:
2 million requests for 8000 seats per season- Doesn’t take a genius to realize that they can easily achieve a full house per service
250 euros (~$340) for a 30-course meal

Let’s look at some competitors. All of which are rated with Michelin 3 stars and according to their tasting menu online it costs: 
Alain Ducasse at the Dorchester, London- $180
The Fat Duck, London- $290
French Laundry, Yountville - $270
Per Se, New York - $295
Meadowood, St. Helena - $295

All the competitors serve less than 15 courses. If we assume that everyone gets the standard small size tasting plates, we can easily see that El Bulli’s price seems a bit low. A great deal for diners but unfortunately not good business for the restaurant. Their target market (higher income, older age group, appreciates good food and a once in a lifetime experience) can and will definitely pay more than $340. Not to mention other expenses that come with running a restaurant- COGS, labor, equipment, etc. I wonder if Ferran adopted Steve Job’s strategy of paying himself $1 per annum. Does anyone know? It would be interesting to analyze El Bulli's financial statements in a form of a case study for Finance or Strategy class. 

Onward we go with El Bulli Foundation and the case competition Ferran launched last month. I really wonder what those 5 lucky MBA students will win. Perhaps, the “last supper” at El Bulli?

More about meeting Ferran here and here.

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