While a Michelin star is a prestigious accolade, new research reveals that it also significantly increases the risk of restaurant closures. This paradox challenges the notion that top culinary awards always bring financial stability.
The paradox of Michelin stars
In Germany, a record-breaking 340 restaurants now boast Michelin stars, with ten achieving the coveted three-star status, including “Es:senz” near Chiemsee. This high honor celebrates exceptional quality and personal style, as highlighted by the Michelin Guide. However, a recent study published in the Strategic Management Journal suggests that the very accolade meant to signify excellence might also spell trouble for these elite establishments.
The research, conducted by Daniel Sands from University College London, focused on New York’s restaurant scene, where 276 restaurants, potential Michelin-star candidates, were analyzed. Astonishingly, nearly half of the restaurants that received a star—42 out of 92—closed their doors by 2019. In contrast, fewer than one in five restaurants without a star faced closure, and those that did lasted longer on average than their starred counterparts.
Why Michelin stars can be a burden
While a Michelin star undoubtedly boosts visibility—leading to a 35% increase in Google searches for New York’s starred restaurants—this demand doesn’t necessarily translate to long-term financial health. The expectations tied to a star bring about increased costs: landlords may raise rents, suppliers might charge more, and staff, emboldened by the restaurant’s elevated status, could demand higher wages. Additionally, staff turnover in starred restaurants is higher, as employees find more opportunities elsewhere due to the prestige.
Customer expectations also rise, particularly as tourists flock to Michelin-starred destinations. To meet these heightened demands, restaurants often have to make further investments. Unfortunately, even potentially higher prices may not offset these increasing pressures, leading to a precarious financial situation. This dilemma isn’t limited to the culinary world—businesses across various industries that gain a premium image could face similar challenges. The closure of “SEO Küchenhandwerk,” a two-star restaurant on Lake Constance shortly after its second star, underscores the risks. Despite the honor, it shut down just weeks later, with the Michelin Guide now marking it as “unfortunately closed.”
