How Chotto Matte turned the pandemic to its advantage
In 2008, at the tender age of 35, Kurt Zdesar attempted to retire from the restaurant business having recently cashed out of his dim sum restaurant concept Ping Pong. It didn't go so well.
"I bought a farm in Hertfordshire. A year or so later I was on a tractor out in the middle of a field. I looked around and thought 'what am I doing with my life?'"
The Australian-born entrepreneur's creative juices soon started flowing but it took him nearly five years to launch Chotto Matte which, appropriately enough, means ‘wait a moment’ in Japanese.
“2008 was a weird time. Despite the financial crash rents were going through the roof,” he says. “Restaurants were considered a safe bet, so lots of international businesses started investing in London. The market proved extremely tough to break into.”
But break into it he did, opening Chotto Matte on the corner of Soho’s Frith Street and Bateman Street in 2013. A decade or so on – the group celebrates its 10th birthday in September - Zdesar has grown his premium casual Nikkei restaurant brand to two UK sites (a third is set to open in Manchester next year) alongside international locations in Miami, Toronto and most recently Qatar.
Straddling premium casual and luxury
Old Fashioned cocktail in hand and wearing an expensive-looking leather jacket, it’s difficult to picture the high-energy Zdesar in a rural setting as we work our way through the menu at his recently overhauled Soho flagship.
Spread over three floors, it’s a beast of a site that stands out in an area that’s not big on large restaurants. The venue had a capacity of 140 when Zdesar took it on, but by the time he had stripped it back and reconfigured it there was room for 300. "The rent was high, but we were able to double the capacity, which made it much more viable," he says. "It’s paid for itself a few times over now.”
With a menu that’s big on luxury ingredients including black cod, tuna belly and wagyu, Chotto Matte straddles the premium casual and luxury segment. Spend per head is around £95 net of service and VAT with the menu structured in such a way that diners can have a decent meal with drinks for £70 but can also spend upwards of £250 a head. "But it's a come as you are and fun brand," he insists. "We're not trying to be exclusive.”
Making moves in Manchester
Glitzy and energetic, Chotto Matte seems like a good fit for Manchester’s going out out crowd. But the 20,000sq ft site – which will open summer 2024 atop the 191-bedroom ‘five-star’ hotel that is the centrepiece of Gary Neville’s £200m St Michael’s development – will launch into a crowded market for premium casual Asian restaurants in the city, going head-to-head with brands including Ivy Asia, Tattu, Sexy Fish and Gordon Ramsay’s Lucky Cat.
Manchester’s restaurant scene might be having a bit of a moment, but are there really going to be enough customers to go round for these huge, vibe-y venues? "It is a concern," Zdesar admits. "But what gives me confidence is that we are all rooftop. It’s going to be incredible in the summer.”
Crossing the pond
Chotto Matte's first international site launched in Miami in 2018. It proved to be a savvy move with Zedesar arriving ahead of a number of his competitors – not least Sexy Fish – and becoming well-established in the Florida city even before its pandemic-linked boom (minimal restrictions resulted in a huge influx of visitors from states that took a more cautious view on Covid). He views the site as a toehold in the lucrative North American market, which has proved a tough nut to crack for many.
“Las Vegas and New York are the dream but it’s hard to get into the former without already having sites in the US and the latter is a notoriously difficult market. Hakkasan failed there. Hawksmoor is really the only group to have made it in the Big Apple. But the rewards are potentially massive. They’re two of the highest grossing restaurant cities in the world, many operators do over $50m a year.”
A site in Toronto launched a year or so after Miami and performed strongly but Chotto Matte’s international push was inevitably derailed by the pandemic with a number of sites falling through. But Zedesar appears to have turned the turmoil of the pandemic to his advantage, lining up locations in San Francisco, Los Angeles, Nashville and Philadelphia.
“We got some good deals. Landlords needed leverage with the banks and were therefore desperate to sign tenants,” he says. The first of this new tranche of US sites will be San Francisco, set to launch in August, with the remaining three slated for next year.
Heading east
All Chotto Matte’s UK and North America sites are company-owned but the group is expanding in the Middle East by way of a franchise model. This is down in part to a lack of funds and the need for a local partner on the ground in the region but also because the group lost a fair bit of cash on a project in Dubai that never ended up coming to fruition a few years back. “To be frank, you don’t have the legal protections over there that you have in the UK and across the Atlantic,” he says.
Chotto Matte’s debut Middle Eastern site launched in Doha at the tail-end of last year in time for the World Cup. Fully booked throughout the competition, the restaurant looked set to make a killing but many of its guests could not get to it due to the Qatari capital’s hopelessly gridlocked roads. “It was a bit of a dud. We received literally hundreds of cancellations per day,” he says. “On top of that, very few people came to Doha in the aftermath of the World Cup. It’s been a bit of a learning curve, but things are picking up now. Doha has the highest average spend in the group.”
A somewhat inauspicious start in the Middle East has not diminished the group’s appetite for further expansion in the region with Zdesar set to launch in the Saudi capital Riyadh towards the end of the year and in the process of making deals in other key Middle Eastern locations. More long term, he is also making moves to secure space at two major upcoming Middle Eastern projects: Saudi Arabi’s mind-bogglingly ambitious Neom AKA The Line and Casino giant Wynn’s ‘gambling island’ in Ras Al Khaimah.
A meteoric rise
Zdesar's rise through the restaurant business has been meteoric to say the least. Born in Australia, he arrived in the UK as a teenager in the early 80s and soon started working in fast food restaurants including McDonald's and KFC. Becoming a branch manager for the latter at just 18, he transitioned to hotel F&B and - just a few years later - found himself overseeing the launch of the first London Nobu, a landmark restaurant in the capital if ever there was one.
"I was only 24. I started out as an assistant GM, but the GM left before we opened so I was thrown in at the deep end. But I did well. I was a very structured back then. I knew how to put systems in place. The restaurant had a big impact. You can get sushi in petrol stations now but at the time very few people had tried it. Nobu helped bring Japanese cuisine to a much wider market."
While still at Nobu, Zdesar became involved with another iconic Asian restaurant format, helping Alan Yau with the launch of Hakkasan in 2001. "We met through Nobu and became friends. He wanted to move away from fast casual (at the time, Yau was best known for Wagamama) and raise the profile of Chinese cuisine. I helped him assemble a team - I put my brother in as manager for the first few months - and get the systems in place."
Now a key part of Nobu Matsuhisa's operation, Zdesar helped launch Nobu restaurants in locations including Paris and Milan but eventually started to become disillusioned. While the pay was excellent, equity wasn't forthcoming leading Zdesar - who now had children to consider - to question whether the role was viable long term.
"It was a tough decision to leave such a wonderful job, especially as the relationship Nobu and I had was like father and son. I don't think I've had it so good since."
Playing Ping Pong
Partly inspired by the success of dim sum at Hakkasan, Zdesar struck out on his own with Ping Pong in 2004 with much of the backing coming from high net worth contacts he'd made at Nobu. Offering affordable dim sum and cocktails in a high energy environment, Ping Pong got off to a flying start opening eight London restaurants within a two-year period (it remains one of the fastest ever UK rollouts). But things weren't so rosy behind the scenes.
"Ping Pong was a big success but it was two years of hell," says Zdesar. Presented with what they thought was a goldmine, his business partners pushed for growth above all else, which soon started to damage the brand. "I could not handle my creative vision being changed, so I left. I still think it's a strong brand conceptually." The years have not been too kind to Ping Pong. It hit double figures in London and opened a clutch of international sites but now operates just five sites in the capital.
After a brief spell as a consultant which included overseeing the launch of Mews of Mayfair, Zdesar made his ill-fated attempt at retirement.
"I started out in restaurants very early on so I thought I should probably retire early too. But I hated it. I get bored so quickly,” says Zdesar, who launched a number of other restaurant projects off the back of Chotto Matte’s success including Mayfair poke concept Black Roe and Marylebone organic Italian bakery and restaurant Fucina but all have now closed (the former just ahead of the pandemic with the latter converted to a Chotto Matte during Covid). He was also one of a number of investors in now closed Soho burger and ramen restaurant Ichibuns.
“I wanted to focus on my core brand. Restaurants are like kids. One is one. But have two or more and it's a zoo. That's what it's like with multiple brands. I found it very hard to drive the creative for three brands at the same time.”
Sleepless nights
Even with a single brand to worry about Zdesar is struggling to keep all his plates spinning. “I love restaurants, but the pace is intense. When I stopped working for other people, I thought I’d be able to pick and choose when I worked but the truth is you never stop working.”
There are some sleepless nights, too. “When you’re an employee running a business, you care but there are some financial things that aren’t really your concern. It’s different when everything you own is on the line.”
Top of his list of worries is food price inflation and utility bills with the combined outlay for electric and gas at his flagship now £45,000 a month despite attempts to reduce energy consumption by switching over to halogen bulbs and using the air conditioning less often.
“It’s like having another rent to pay. We were on a fixed contract for electric until late last year, but we’ve now gone up from 15p to 40p per kilowatt.”
Gas, meanwhile, has gone up tenfold, forcing him to consider putting induction in.
Another major source of stress is the US’s fiendishly complex building permit system. The majority of Zdesar's projects across the pond have been badly delayed by seemingly endless red tape (he’s not the only one - Sexy Fish’s Miami restaurant is rumoured to have gone over budget by over $10m dollars due to permit-related delays).
“San Francisco has been the worst. It was supposed to take between three and five months. A year and a half later we don’t have our permits and are now paying rent on a site that’s not trading.”
In the US, everything has to be planned down to the last screw before construction can begin. Plans go to lots of different departments which all make changes. “The problem is that these departments don’t talk to each other, and the changes one department makes can disrupt something that has already been signed off by another department. It’s a crazy system.”
On top of the delays, the weak pound and the strong dollar has made expanding in the US very expensive for the group. “Material costs are through the roof. We've got more on the line now than we initially thought we would. But no risk, no reward. America can be tough, but if you can get the place open it is worth it in the long run.”
Raising cash
Chotto Matte's company-owned expansion is currently being driven by landlord contributions (AKA TIs) which are in most cases then matched by Zdesar and his unnamed silent partner. But this funding model is starting to hold the group back, with Zdesar having recently been forced to pass on a cash intensive project in the US due to a lack of readily available funds.
"We don't borrow from banks or have outside investors. At some point we’re going to have to raise some cash, which is something I’ve never done before.”
Zdesar looks set to concentrate on Chotto Matte for the time being then, but it’s unlikely to end up being his swansong. He admits to having one or two projects that he would one day like to do, including opening a gastronomic Mexican restaurant in London.
"There’s a lot of stuff from Mexico City that has yet to be seen over here. I would love to be the one to bring all that to London, but the truth is I don’t have time at the moment."
