How I Built This with Guy Raz - STARR Restaurants: Stephen Starr. How a Non-Foodie Built Thriving Restaurants on Gut Instinct

Episode Date: June 22, 2026

Stephen Starr didn’t plan to get into the restaurant business.He set out to be a radio DJ. Then a nightclub owner. Then a music promoter.Along the way, he booked a young Jerry Seinfeld for $75, promoted shows for U2 and Madonna, and spent years pretending to be more successful than he really was.Then, in his late 30s, Stephen walked into a glitzy martini bar in New York.He was so taken with it, he decided to start his own version in Philadelphia.Today, Starr Restaurant Group generates nearly half a billion dollars in annual revenue and includes some of the most successful independent restaurants in America: Pastis, Buddakan, Le Diplomate, Parc, Makoto, and dozens more.The surprising part?Stephen did not start out as a foodie.Instead, he became obsessed with the theatre of dining: design, upholstery, lighting, music. A “wow!” feeling when you walk in the door.In this conversation with Guy, Stephen talks about the hard lessons he learned in the comedy and music business, and the unexpected path he took to redefining dining.What You'll Learn:The unglamorous economics of rock concerts and restaurantsHow rejection, romantic heartbreak, and failure can become powerful motivatorsWhy he believes he's spent his career "throwing the party" without attending itHow building the right team of designers can make a restaurant feel magicalWhy Stephen says today's entrepreneurs have a much harder path than his generation didThe model Stephen says new restaurateurs should follow todayTimestamps:00:06:03 — A lonely childhood: Making up skits in his room00:09:49 — Losing his mother at age 1900:11:17 — Starting a comedy club: Deli by day. Stand up at night00:20:49 — Going broke and reneging on a bank loan00:28:26 — Music promotion: Feeling like a fraud while promoting U2, Madonna00:36:52 — A New York martini bar inspires Stephen to start his own00:42:20 — The bold design behind a line-out-the-door restaurant01:03:31 — Opening Buddakan in New York: “I can’t do anything better. This is Sgt. Pepper”01:09:08 — Starting a restaurant today: “I would say don’t do it … but if you do, keep it smaller”This episode was produced by Alex Cheng with music composed by Ramtin Arablouei. It was edited by Neva Grant with research by Sam Paulson. Our audio engineers were Patrick Murray and Robert Rodriguez.Follow How I Built This:Instagram → @howibuiltthisX → @HowIBuiltThisFacebook → How I Built ThisFollow Guy Raz:Instagram → @guy.razYoutube → guy_razX → @guyrazSubstack → guyraz.substack.comWebsite → guyraz.comSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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I saw something that you talked about in this business and it would just stress me out so much, which is somebody might go to your restaurant five times love it and then the six time something might happen. that is big enough that they'll never go back and they're really mad. Yeah. You know, the more you say what you just said, the more I realize what a stupid business this is to be in. One of our landlords, Seymour Rubin, said to me, goes, why would you want to be in a business

where one guy, a dishwasher, could just stop the whole operation? Yeah. One guy could decide, that's it, I'm leaving. And the whole restaurant falls apart that night. Welcome to How I Built This, a show about innovator, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Stephen Starr built one of the most beloved and lucrative restaurant groups in the country, one hit at a time. Compared to almost any other small business,

owning a restaurant makes almost no sense. The startup costs are high. You have to take out a long-term lease. Your inventory is perishable. Finding staff is a nightmare. The you're The hours are crushing, the customers can be demanding and annoying, and if you execute well, at the end of the month, your net margins are around 5%, 10 if you're lucky. If you really want to make money in the restaurant business, you're better off trying to buy a Taco Bell franchise where margins are closer to 20%. Or you can do what today's guest Stephen Starr has done. Build really awesome restaurants that serve lots of guests, do it consistently, and work. replicate the model multiple times. Right now, Stephen Starr owns nine of the 100 highest-grossing

independent restaurants in the United States. These include places like pastis and Boudiccan in New York, Led Diplomat in Washington, D.C., and Makoto in Miami. In each one of Starr's 40 restaurants, you'll find a unique, dazzling design in addition to great food. And together, these restaurants pull in nearly half a billion dollars a year in revenue. Now, you may have heard the statistic that around half of all restaurants in the U.S. don't make it past year five. Even Stephen Starr has had to shut a few restaurants down over the years. But his incredible track record at building restaurants

that even 10 or 15 years in are still hard to get a reservation at has a lot to do with so many things that most of us don't even notice. The lighting, the temperature inside, the music in the background, the way you're greeted when you walk in. These are things Stephen's been obsessed with ever since he opened his first restaurant, the Continental, back in 1995. And here's the other thing.

He's not a foodie. He doesn't really know much about cooking at all. In fact, before he even got into restaurants, he had a whole first chapter as a comedy and music promoter. And as you'll hear, for a guy who's launched such forward-facing, crowd-pleasing businesses, he kind of prefers to stay in the background, which makes sense when you consider his childhood. Stephen Starr grew up in the mid-1950s and 60s in New Jersey, just outside of Philadelphia.

He says he didn't have many friends when he was young, so he had to create his own entertainment. You know, I was surrounded by televisions because my father was a television repair guy. So the whole house had TVs everywhere. I watched every TV show in the world. and very much fell in love with the Dick Van Dyke show back then. And I wanted to also be a comedy writer. You know, what I watched on TV was the shows, but you know what I was more obsessed with?

The credits. Like I knew the producers. I knew the writer. I remembered, hey, Sheldon Leonard, he did that other show too. And, you know, I had a real to real tape recorder. And I created my own little environment in this room. I know I was obsessed with music. mainly the Beatles and Elvis Presley,

so I'd have my little fantasy imagination periods where I would do Beatles versus Elvis, and I'd do that for three hours. I play one song versus another song, and I'd rate them. So basically, loved TV. I used to do my own skits and radio shows, and then I became sort of intrigued

by being an announcer on the radio. So, like, radio was a thing that you were really, and you actually got a life. since I read, like when you were a teenager, like, to be on the radio? Yes. I went to the federal courthouse in Philadelphia. I took my test, and I passed. And what I used to do, I used to go in and sneak into a college radio station.

And in one part of the station at night, the young college kid who seemed like an old guy to me, was on the air. And I would kind of sneak in and go into the production studio. and then I learned how to do production by myself, just by trial and error, and I'd take the albums from the radio station, and I would do my own audition tapes. One day, however, the guy that was on the air caught me, and I thought, oh, boy, I'm in big trouble. And he said, listen, you can't let just sneak into a radio station. Like, it's not cool. You can get arrested or whatever. He says, but listen, I'll help you. And then I came in, like, twice a week, and he taught me how to edit, splice tape, and all that.

And I just made all my little audition tapes. I pretty much mimic the FM DJs at the time, you know, by talking like this. This is Stephen Starr at WMMR. Right. And then I wanted to be a concert promoter. And I promoted my first big concert in my high school, which was a band called Motha Hoopal. Oh, yeah. Which has had a hit record called All the Young Dudes.

All the Young Dudes, right. Right, written by David Bowie. I got that bug of wanting to be a concert promoter. I loved it. Became friends with the band. Brought the band to my house. My mom cooked them dinner. So the entertainment bug was now really in me.

I'm just wondering, as an 18-year-old, 17-year-old high school kid, how did you become a concert promoter? I mean, who's going to, like, how did that work? I don't understand. I'm just imagining today an 18-year-old saying, hey, I want to bring Mott the Hoopold. That's not just, you can't just snap your fingers now. I'm a concert promoter.

I wanted to break out of the normal lifestyle that I was in in New Jersey. It was boring. It didn't satisfy me. I wanted to do big things. I became the student council president of the school. And somehow they allowed us to have a concert once a year. Ah. So we had the opportunity to book Moby Grape, Alice Cooper, who wasn't big yet,

were Mata Hoopal, and we chose Mata Hoopal. Stephen, when you're, I know that you went to Temple to study communications, but I also know that you lost your mom at a pretty young age. You were just 19. Yes. Which I can't imagine how, I mean, what that would have been like to be a kid and for that to happen. I mean, it was awful. I was 19. I had younger sisters, three younger sisters.

six, seven, 13, something like that. That was horrible. And it definitely did something to me that made me want to work really hard and maybe try and forget. But even prior to that, when I went to college, my goal was to be, I wanted to be rich. Because we didn't have, we had a middle class family, but we didn't have much. And I wanted to take care of everybody. And I remember sending my typing a letter to my mother telling you. her that don't worry. By the time I'm 21 mom, I will be a millionaire.

Okay. And there's conflicting, I've heard conflicting things that you did graduate or that you left before you graduated. First, let's just clarify that. Did you finish or did you leave early? I left early. I left the third year because my sisters were young and I couldn't, I had to be there and help them. So I had no choice at that point. But I guess from what I gather in 1977, right? So you are roughly 21 years old. You open a diner and a comedy club in Philadelphia called Grandma Minis. Tell me the story of how that came about.

Because you were, what was the idea for that? I just wanted to do something that could make some money for myself. And not that I thought it was beneath me, but it just wasn't in my DNA to work. in a restaurant or be a waiter. So I went to this deli, and the deli was called Grandma Minis. And I befriended the owner. And I said, you know what, at night here? What are you doing?

He goes, nothing. We closed. I said, I have an idea. What if you did comedy? Because I had been going to New York to see comedy shows at Catch a Rising Star in New York City. And he said, sure, I mean, I'm open to it. So I started going back to Catcher Rising Star, and I'd watched the show. And the comedian would get off the stage and you go over to the bar and I'd say, hi, my name's Stephen Starr.

I think I'm going to open a comedy club in Philadelphia. Would you be interested? And they all go, yes, of course, and I get their phone numbers. And then we finally had our first show. And I start booking comedy there. All right, so just to one back, so Grandma Minis was an existing diner. It existed. It was a deli.

It was a deli. We put a stage up, like after it was closed, there was enough room in there. How big was it? They probably only hold around 80, 90 people. That's it. And you just got to know the owner or you, and he said, yeah, you can use this place at night and we'll just split the ticket sales or something. Like, how did that work? No, basically, no.

No, you said, you keep the door and I'll keep the bar and food. Got it. And how did you, like, again, you're such a young guy. You know, sometimes you hear about, you know, young people in their 18, 19, 20, who are doing these things that you often hear people in their 40s doing. And then you find out that, well, maybe they looked older. They were taller. They were bigger. They had a presence that kind of enabled them to kind of get away with it.

Did you have any of those things? No, I wasn't looking older. I wasn't like special in that way. You know what I think it is? This is why I heard you're a good interviewer. You're like Barbara Walters. I don't know about that. I mean, my kids have asked me that question.

My wife, my wife, I have a couple wives, have asked me that question. have asked me that question. I do believe I must have had charisma. People liked me. You know, I remember one guy in the very beginning when I first opened my first real nightclub. He was the guy who owned that building, and he was a tough guy.

And he told me, he says, you know what, you're very disarming. That was the word he used for me. He goes, you're very disarming. I just think I was, I had a thing. Yeah. Oh, there's another piece. There's another piece here.

I also worked on the boardwalk in Atlantic City, which is a big piece of who I am and how I became who I am. You worked on the boardwalk when? When I was 16, 15, 16, 17. Boardwalk in Atlantic City as a salesman in a store that sold everything. It sold watches, rings, stereos. And I learned so much from working on the boardwalk in Atlantic City. I learned about human nature.

I learned how to talk to people. I learned how to sell. You know, we were paid on commission, and we got paid based upon how much profit we made on each item that we sold. In the beginning, we felt terrible. We didn't know how to do that. We, you know, a ring that was worth 20 bucks.

We were being encouraged to try and sell for 200 bucks, and we thought that was wrong. But eventually, just like, you know, a Navy SEAL or a Marine, we got to be trained killers. And we learned how to sell and how to, convince people. So I think the ability to feel confident. My confidence was being

a salesperson on the boardwalk in Atlantic City. Yeah. Okay. So you have this burgeoning comedy club at Grandma Minis, and you start to bring comics, and how does it do? It became very popular, and then the gentleman

owned the place, and then all of a sudden one day he goes, you know what, this doesn't make any sense for me. I could, you're keeping the door, I could do it. I want you to leave. I'm doing this myself. Oh, he said he was going to, he said, why am I, why are you making all the money for booking these gigs? I'm going to just book the comics myself.

And he threw me out. I was devastated. And I then said, you know, kind of like Rocky. I said, you know what? I'm going to, I'm going to, can I curse on this thing? Yeah, yeah, sure. Yeah. I was going to say, you know, fuck him. I'm going to come back and I'll fucking put you out of business. Okay.

Because I was the one that knew these comics, you know, people I had befriended. So I started, I started looking for place to open another club. I found a bankrupt building that was a restaurant, somehow convinced the bank. I had no money to sell it to me. Where was it? At Second and Bainbridge streets in Philadelphia. Price was $150,000. Okay.

And how are you going to buy that with zero collateral and zero assets? I didn't even know a collateral. I saw the sign on the building, somehow got the appointment with Continental Bank at the time, met with the man, and told him my idea. What was your idea? What was the pitch you gave him? Pitch was to open a comedy club like I had opened for someone else. And how, why would a banker even take you seriously as a 22-year-old with no collateral and no cash? I have no idea except that I think it was a time that wasn't. I think people still believed in people.

Like bankers still would go on an instinct or a feeling. So it was probably sort of a dead building. Maybe he couldn't lease it or rent it or sell it for a long time. And this kid came in that sort of disarmed him, to use that word. So he let me $40,000. And then there was someone else. I forgot who it was. I either borrowed or whatever, 10.

And for 50 or 60 grand, I piecemeal this thing to other. Yeah, it's so interesting because I've heard we've had stories like this on the show in the past, like where people got a property or a lease in the 70s or early 80s. And it's so clear the contrast between that time and today. You know, the red tape today, the regulations, the corporate owned banks. Like, it's just a completely different. It could never happen again. I could never do what I did back then. Yeah. I mean, it's just a different. Sorry. So you, and What did you call this club, by the way? So there was Catcher Rising Star in New York, which was really the godfather of all comedy clubs.

And I called it Stars, S-T-A-R-S. And presumably you could get some of the comics from New York to come to Philly because it's only an hour and a half, two hours by train. Oh, yeah. I mean, I had already known them and lined them up. So tell me some of the people you brought in. So I believe the first show was Richard Belser, who went on. to be on law and order, right? Yeah.

As the cop. Pat Benatar. Pat Benetar, the singer? Yeah, but she was known as Patty Benatar back then. She was a comic? No, no, no. She wasn't a comedian. Because the shows consisted of a comedian,

a musical act ending with a headlining comedian. Okay. And Patty Benatar back then was, she sang all cabaret songs. It wasn't like rock and roll then. So that was one of our first shows. I booked Jerry Seinfeld played there. He was the host of amateur night.

I paid him $75. Bob Sagitt started in our club. Wow. So I tried to run it seriously, but I had no idea what I was doing. Classic story is the opening night. It sold out. Put all the cover charges, which I forgot what they were then, $5, $8. We put them on the check as opposed to taking the cash at the window.

Put the cover charge on the check and the people drank and they ate on the check. around 65% of the audience walked out on the check that opening night. So they didn't pay. And I had no money. I remember crying that night. What did I do? Because I didn't have the money to pay the comedians. And how did you do the food side of it?

I mean, again, like, that's a different business. How did you even know what to do? I didn't know. I hired a chef. He was a young guy. I don't know how good he was, but we figured it out. This is why, like even today with all the restaurants I own, I see what we do to open a restaurant. The tens of thousands of dollars we spend on training and this and that and audio visual and crazy stuff that we do.

And I look back at how I did this and I say to myself, what the fuck? I didn't, we never did any of this now. All this training. It was just, you just say, come into the door. You have a young chef, but he would say, hey, we need a deep fryer. We need a grill. We need a prep space. and you would say, well, just do what you need to do, just make it happen.

I mean, I learned as I was going along, and we kept the food late. I mean, we did burgers and fries and whatever we did. So it wasn't very complicated. I remember at one point, this is a sad story. You know how when you opened a new business, the old days, you put the first dollar, like you hang it on the wall? Yeah, right. You know, that first buck. Yep.

So at one point, it got so bad we couldn't pay our bills. I had to take the money down off the wall to use it to pay for something that was like COD. Yeah, I mean, I imagine that a comedy club, even with a two drink minimum, you've got staff, you've got to pay back the loan. I mean, and from what I've read about it, stars, it just as awesome as it sounds like it was,

I wish I was there. I wish I was there right now. But as a business, it doesn't sound like it was sustainable. It was not. It was hemorrhaging money. Yeah, it wasn't sustainable. I wasn't making any money. Maybe I was able to eke a couple hundred bucks a week for myself. But I was always getting behind the eight ball. And then eventually that comedy club evolved and morphed into a club that did mainly music. So you just kind of switched it over the same venue, the same exact place? And you still called it stars? Call it stars and did some mind-blowing shows, man. I mean, great jazz artists. Nina Simone, Buddy Rich.

and the four tops and temptations. And then the punk thing started. So then we started doing the Ramones, the clash, and all kinds of punk bands. Just very, very memorable shows, and it's such an intimate environment. How many people could you fit in? Not much, like 120, 120 people. Okay, so you switch over to music, and how did that do as a business? It did okay, and it really was the thing that was the catalyst for me to become a real concert.

promoter. And that motivated me to look for something bigger, which I did. And Stars eventually went, you know, went away. Okay. So this was the transition to a new venue, I think, called Ripley Music Hall, right? Yeah. And from what I read, it's a 500-seat venue, so it's a bigger place. Also in Center City in Philadelphia? Yeah, a few blocks away was on South Street. Okay. Going back just quickly to Stars, you got a loan from a bank in 77 to open it up. Did you were able to pay that back? I don't think so. No. I didn't pay it back. It was too stupid to realize I just walked away from it.

Because, I mean, the building was $150,000. I should have tried to sell it, but I didn't. I just walked away. And nothing happened. There was nobody, I didn't get sued. Right. The bank just repossessed it and then they probably figured out, okay. God, again, amazing, different time, right?

Because today, that could have ruined you for a while, right? Like, it just, it's. No, no, but it's true. When people ask me, hey, What's your advice? I feel so bad because the way things are constructed now, there's very little room for entrepreneurship. Yeah.

Unless you have a lot of money or your family has money. I mean, just to have an idea and have virtually no money, it's hard, man. It's hard. It's not the same country. Yeah. Okay. So you go move to music. So now music really becomes your thing.

Ripley Music Hall. Mm-hmm. And this is the early 80s. You're bringing in, I've read you, too, and Bruce Springsteen and Cindy Lopper and Miles Davis, and I mean, James Brown, Ray Charles. Just incredible artists to a 500-seat club. Yeah. I had this thing in my head that really carried on to the restaurant business that I never wanted to do the same thing every day or all the time. So every night, it was my goal was to have something different.

So one night you'd have Ray Charles, and the next night you'd have, you know, eurythmics. It was like my own Ed Sullivan show. And just to kind of go back on the business side, how were you able to finance the Ripley Music Hall? Like how – I'm assuming you didn't buy that building. Maybe you leased it, but how were you able to do that? I did that one initially kind of on my own, similar to stars. But eventually I got an investor who was participated in transitioning to – concerts because when you did concerts, you needed real money for deposits and stuff like that.

And Stephen, here's what I'm wondering about. I mean, running a music venue, it's hard, right? And you were not a guy out of business school or, you know, you were really kind of learning as you were going along. But it sounds like, again, just figuring out how to make this sustainable was tough for you at that time. Like, you didn't, it was not easy to make a profit doing this. No. Actually, you weren't making a profit. No, very little. And if I had gone to business school, I never would have done it.

Because none of it made sense. You know, a little of this is you're almost an imposter. You'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 brands 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 a relationship. So I'm in San Francisco, so I think of Bill Graham, the legendary promoter here, right? Who lived here. And, I mean, what gave you an advantage, do you think? I 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 could get chicks and, you know, do drugs. That's what I was getting at. Like, 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. My mom had died. And 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, like, 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 this 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. Yeah, for sure. All right. So from what I gather, the Ripley Music Hall 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 ban in excess or REM. We need you to book them for $3,000. You'll probably lose money, but stick with us because if you do us as 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. Right. 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 and Philly, like a huge act like that, right? You know, there's a minimum guarantee for her and maybe a share of the profits and then there's all the ticket sales and you've got to 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. And 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 ticket master, 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? Hmm. No, for me, it was different. Because I was David and and there was a Goliath in town who was, you know, had been there longer and more entrenched. I 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 peasant. and just petulant and difficult, and they're generally very common, 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 their people around them can be worse. It 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.

They're booking agents. Those were the real assholes back then, obnoxious. Because, you know, there was a food chain. The concert promoter 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? Do you, or are you just kind of even keeled all the time? No, not even keel. I lose my temper. The restaurant business is what brings out the temper in

people. Yeah. 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. And, you know, 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, it was 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 that. my competitor. And I was young, so I love that challenge. And by sheer force of my will, I was able to turn people's minds around. I was able to take, I was to be a nobody in this music business and convince the biggest agents in the world to take me seriously. And that to me was, I won. You know, it's interesting, because you mentioned that as a kid, you would be in your room with a real to real 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 out-smuse 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. No, 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, right?

I've been throwing a 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 make sure everyone's glasses filled, and I'm just making sure that somebody has somebody to talk to.

But I actually am not in the party. I totally, And I actually like that role a lot more. I used to be sad about it because I remember going to, I own nightclubs. I went to shows. And I'd be like in the back, my arms folded and watching everybody, just watching them. And I thought I was pathetic. You're not having fun.

You're not part of the event. But eventually, like you just said, I kind of like 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. and 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. 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 had no idea. I pretended. I was still in the music business because I kept the office. I 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

rolladuct and then it became 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. 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. And I just was totally blown away by this place. It was so cool. But 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 never drank martinis and there was a DJ there and I said to this DJ so what is this he goes it's a it's a martini bar and uh I went back again a couple times and it was packed

line to get in and then I said this is something I got to try and something like this in Philly. When 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. Hey, 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 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. He 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. He goes, he wasn't busy. and he leased it to me. And it had this, I don't want to jump ahead, too much. I 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. I 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.

So 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. How, what, like drywall? What was Home Depot? So the diner was the diner. We took the existing booths and re-uolstered them in green, olive, right, green with red piping. There's the pimento.

Yeah. So existing booths re-opulstered. The bar top, which was for mica, we encased it in concrete, kept the bar stools and it re-apulsed him in red and green. And then Owen Kamahira, 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, we had a drink rack, glass rack above the bar, and all the martini glasses, he filled them in Lusite. So 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? Opened in 95. had this

a lot of incredible buildup. I put these like full page ads and 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. And 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.

So hit that ticket machine, boom. You start seeing the tickets flying out. Don, 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 tapis 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. Wow. 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. It 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. And then sex in the city and the drinking cosmos and that whole. 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 we, I asked you about the food there, are you a food person or like, and I say that as somebody who is, I love food. I'm.

I'm going to be a modest here. I'm a very good home cook. People listening to show know I talk about it. I have dinners at my house all the time. I love to cook. I've worked in kitchens. It'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 was a 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?

Yes. But there's another part of this story. I hate doing this to you because I'm skipping something. In between me, 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 good interior designer from New York. The place was packed. You couldn't get in. And it went out of business in nine months. Why is that? I couldn't figure out how to run it.

It was like Yogi, Yogi Berra, who said, nobody goes there anywhere because it's too crowded it was just so crowded we couldn't get the food out i mean i remember one time uh the local police department came over to 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 all the there's 40 buns but no burgers inside the bun no 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 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. And 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. Yeah. And thank God I would have shot myself. Right. 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. Like, 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 parochies or maybe, and that didn't quite, I guess it didn't quite work out.

I hate using the word Soviet 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-back, 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. Yeah. And we had a statue of Lenin in the bar, and we had Russian food, Beef Stroganoff, Parogi's, caviar. But it was in a weird neighborhood in Philly, had no parking, and it didn't work out.

Meantime, the 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, San Francisco. 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 Buda Khan, also in Philadelphia, which describe it for people. I've been there, but describe for people who don't know what this restaurant is. Buddha Khan, the original Budkan 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 like 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 a California called Shinwa on Maine. then another gentleman opened a place called China Grill in New York and 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, call these people. So I ended up designing 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 was, I mean, 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, he wouldn'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. Again, when Owen and I walked. out of that restaurant, 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 BudaCon? No. No. And for Continental was all mine. The Buda Khan, 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 a $1.9 million. Today, kitchens cost $1 million, just the kitchen. Just the kitchen and the restaurant, okay? Yeah. So, all right, the interior, it was going to be like that was going to be part of the experience, right? It 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 a woman anybody, who is going to design a restaurant like this. You wouldn't say, this was a concert promoter and 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. I, you know, I wasn't the director.

I was the executive producer. In the movie business, so I was, you know, Samuel Goldman. 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 also knew what you liked.

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, to focus on the big picture, and then hire the right people, but 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, you know, teak wood instead of the light blonde wood, whatever. Is that fair? Yeah, but I, again, if you would 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. 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 Leonard DiCaprio about, what's his name, Howard Hughes? Howard Hughes, yeah. It scared me because it felt like me, because he, Howard Hughes kept going, no, more. Let's do it again. Shoot that scene again. I don't care. Let's bring in the, you.

And it was frightening because I said, oh, shit, I do stuff like this, but on a much smaller level with these restaurants. You 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. Mm-hmm. 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're out looking for new bands. 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. He 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 things. 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 and made me better.

Yeah. All right. So you are, you now have Buda Khan as 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. It's not the focus of the world. And yet this restaurant, you were getting like major celebrities coming to Philadelphia to eat at Boudicom. Like I read that at a certain point, the weight 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. Yeah. 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? Mm-hmm.

From the get-go, from Continental on? Yeah. You 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 it'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, yeah, 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. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

Hey, welcome back to How I Built This. I'm Guy Raz. So it's the late 1990s, and Stephen has another hit with Buda Khan in Philadelphia, and he's realizing just a lot of, how great that city is as a launch pad 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.

And there was nothing here. It was all old school restaurants. They were boring. So you open Continental people freak out. You open Buda Khan. They never saw anything like it. Yeah. All right. So you start to open a succession of restaurants. I think between 98 and 2001, After Buda Khan, you open Tangerine, Blue Angel, Pod, Alma to Cuba in succession. And in terms of, like, is the formula for a successful restaurant kind of, I don't want to downplay it, but is it basically like get butts in the chair, keep costs low and keep tables turning over? Like, is it as simple as that? I mean, no, that's not the formula. That's the goal.

But the formula 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, like that. You 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%. I'm not lucky, but it's like, it's doing pretty good. Like that 10% is kind of standard, right?

Yes. We were doing way more than that in the beginning. And that's because, 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, thousand dollars was able to make a 20 or 25 percent profit today not possible today with between the rent labor cost this cost that cost that regulation this thing that thing that thing whatever thing you're lucky like you said to make 10 percent 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 yeah we all it was only me, myself and one other, the venture capital guy who had his client, who was just me and them in the beginning for the first 10, 12 restaurants and 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, You admit it you hate that part of it.

So on a day-to-day basis, where you just like jumping from one place to the next and checking in on them? Like, 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. I 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, indeed, you opened two restaurants in New York, Buda Khan 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. Yeah. And I wanted to do it.

I wanted to do it. I was, 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 get nominated and I never would win because, you know, I was, 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 make it, big apple. So we did it. We did it for Buda Khan and Morimoto.

Buda Khan, I got scared with Budakon because Budakon 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. and I went to Plan B and went to Christian Leagra, which was 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. Buda Khan in New York. It's just breathtaking. You 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 bring that concept to life. Like that's what you actually love doing. Absolutely. What gets me out of bed other than having to go pee now as they 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 over it. No, no. You want to move on? Move on. It's sad. That's my sad time when it opens. That'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. You 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, 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 six 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. You'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 matri-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 is 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? Yeah. 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 strong. 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. Yeah. 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 upro, yeah. And then customers, right? Like in San Francisco, many restaurants add a fee for mandatory health care 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. By the way, when we open new restaurants, I'm not financing them myself anymore. We go in, 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, 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. Okay. I want to, I mean, we can't mention all your restaurants. There's 40 plus restaurants. And you've got Michelin stars now in some of these restaurants. And you've won a James Beard Award for a restaurateur. I mean, again, Michelin Star is not something that I probably was even on your radar, right? No.

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. Like, 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, um, How much money do we have in the bank? It's a few million dollars? Five, seven. I said, okay, cool, we're cool. They said, but what about the accounts payable?

15 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 they 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, five thousand. Five thousand? Yeah.

I mean, well, the servers, managers, you know, couldn't pay them anymore. And we had to lay off most of the office, but it couldn't lay off all of the office because you couldn't lay off the controller he 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 used to do these gift certificate things every holiday, always sold star gift certificates. So I said, you know what, 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? It'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. Yeah. All right. I want to ask about opening a restaurant today because you still open restaurants, right? Right? And you still have ambitions to open more, I imagine. Are you probably 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? You 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, I just open small restaurants and 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. Well, 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 you keep going up. Because, I mean, it's going to be impossible for restaurants to really keep to stay in business. And, 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 ShakeShack. Like what Danny Meyer did with ShakeShack. Yeah. It's the sort of warrior in me. I'd love to compete with ShakeShack 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. The 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? Well, that's a 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's 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. So, 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. It's a, you know, 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, you know, your skills and how much you think had to do with being lucky, being the right place, the right time? Percentage wise, I don't know. A lot of hard work, right? I couldn't 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 a 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 play clubs. It's a different time now. I couldn't do it.

So a lot of it's luck. A lot of it. That Stephen Starr, founder of Star restaurants. By the way, if you've seen sex in the city the movie, you might remember the rehearsal dinner scene. It was actually filmed at BudaCon 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 gairoz.com or on Substack. This episode was produced by Alex Chung with music composed by Rumtina Arablui. It was edited by Neva Grant with research by Sam Paulson. 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.