Michelin Stars To Dim?

Nothing brings a restaurant extra business like a coveted Michelin star. But news that the Michelin Guides lose more than $24 million a year casts their future into doubt. Even though the Michelin star system might be an anachronism, don’t you secretly wish you’d get a nod from Michelin—and the 30 percent revenue boost said to go with it?

It’s hard to pinpoint exactly when the first signs of trouble became visible in the Michelin Guide empire. The famous red book still commands great sway among patrons and proprietors of fine dining restaurants in many nations, most of them in Europe.

But the Michelin Guide found only spotty success when it attempted to expand into the U.S. You knew something was up when the company announced there would be no Los Angeles or Las Vegas Guides in 2010, as there had been the prior year.

The company did add one new U.S. market, Chicago in 2011, making for a total of three U.S. editions this year including New York City (first published in 2006) and San Francisco (2007).

But Michelin suffered a huge blow when Jean-Luc Naret resigned as director of Guide Michelin last December. The company has yet to name his replacement, although it reports that its staff of 90 inspectors is still busy eating at and rating restaurants on several continents. These inspectors are the Guide’s point of differentiation; other guides and online review sites are in effect crowdsourced, relying on anonymous, self-appointed critics.

Even with all the bad news, you can bet that every holder of a Michelin star or the less-prestigious “bib gourmand” designation (i.e., good food at moderate prices) hopes the Guide keeps going. Say what you want about rave write-ups on Yelp or Open Table or a high ranking from Zagat, Michelin stars remain the gold standard of restaurant ratings.

That’s true even though most U.S. restaurants have little or no interest to crafting their dining experience to meet Michelin standards; the vast majority of U.S. restaurant customers just don’t care about these old-school standards.

Nevertheless, most restaurant industry followers were surprised to read the Financial Times story that details the Michelin Guide’s woes. The article concludes that the Guide, on track to lose $30 million by 2015, will still be published because it adds value and prestige to Michelin’s $30-billion-a-year tire business. It says the Guide hopes to stem losses by creating an online component, one that will perhaps derive revenue from the restaurants it rates.

Michelin isn’t the first print-based publishing company to run into trouble in the digital age. Its restaurant guide product appears safe for now; let’s hope the parent company’s pockets are deep enough to keep it going well into the future.