Season of the Switch. Part Three

[robert brown]

On page 20 of the 2002 Guide Michelin for France, the following appears under the heading of “Prices”:

Prices quoted are for autumn 2001 and are given in euro (EUR).

They apply to high season and are subject to alteration if goods and service costs are revised. The rates include tax and service and no extra charge should appear on your bill, with the possible exception of visitors’ tax

(Upper case mine).HOTELS AND RESTAURANTS IN BOLD TYPE HAVE SUPPLIED DETAILS OF ALL THEIR RATES AND HAVE ASSUMED RESPONSIBILITY FOR MAINTAINING THEM FOR ALL TRAVELLERS IN POSSESSION OF THIS GUIDE.

I read this in no other way than if one dines anywhere in France (and it is nearly impossible to find a restaurant in the Guide whose name is not in bold type) with their Michelin Guide in hand, a restaurant cannot charge you more for their special lunch menu or any dinner menu that is alluded to in terms of price in the Guide. Does it not mean that if I had ordered the 300 euro menu at Arpege and showed the maitre d’hotel my copy of the Michelin, that he would have been obliged to lop 86 euros off my bill? Does anyone see this Michelin policy as being anything different? Indeed, has anyone used his or her Michelin in this way anywhere in Europe to gain a formerly lower price, be it in a hotel or restaurant?

[Bux]

My guess, assuming your reading of this is correct, is that best you could ask for is that there be a 214 euro menu and that it be offered to you. If there are menus at 100 euros, 214 euros and 300 euros, I don't think you could demand the 300 euro menu for 214 euros because the 300 euro menu isn't listed. In any event, I question the value of entering into any fine restaurant with an adversarial attitude. If you managed to get Arpege, or any other restaurant, to serve a 300 euro menu for 214 euros, my guess is it might be a less enjoyable version. Who knows? Maybe they'll think you're a Michelin inspector and treat you even better. Caveat emptor and let us know how you fare.

On the other hand, there are alternative interpretations of the MIchelin statements. Note that they allow leeway based on a change in costs. Another way to see this is to understand that Michelin disavows any legal responsibility in regard to prices. You can argue with the restaurant or sue them, but you can't hold Michelin as a party involved in fixing the price. Your recourse would only be to note your disappointment with the restaurant and hope Michelin takes note and removes a star for what should be seen as a fault in service. For Michelin to rmove Arpege from it's listings over a price increase, mihght well hurt Michelin's reputation more than Arpege's.

[robert brown]

Bux, I would love someone at Michelin to tell us the purpose of the pricing statement. Is it to cover themselves, but from what? No other guidebook has such a statement. What is the user suppose to do if he sees a jump in prices? Does the statement about passing on the costs of increased goods and services apply to the establishments in bold letters? My wife's daughter who is an attorney thinks it is purposely not a rigorous statement so that the establishments will be willing to be listed without possible harm, but that the user feels the guide has his or her interests at heart. The part I put in upper-case letters, however, sure sounds to me that anyone carrying the guide is the beneficiary of a price freeze. Regardless, some of the price changes I saw since the guide was published were a lot more than a seven or eight month increase in goods and services.

[Margaret Pilgrim]

This phraseology is not entirely unfamiliar to me, although I can't offhand remember where or cite an example. I have always read it to mean, as Bux also suggested, that the institution guarantees that they will provide you a meal (or a room or an apartment or a service) at this sometimes negotiated price. It need not be, nor seldom is, the top meal or room, etc., that they offer on a menu or price list at higher tariff. I have noticed that multi-star inns frequently offer a demi-pension that is a tremendous bargain when you combine their room and menu prices, but the fine print clarifies that "the chef will compose a special menu for demi-pension".

Another example, when I am booking lodging and have secured a "best price" I am always careful to ask about what kinds of rooms are available at a higher price, where the room I have been offered falls within the range of rooms and what kinds of upgrades I might have at a higher rate, having learned that less expensive is not always the best nor even an acceptable buy. The same is true with more careful reading of a multi-menued dining room.

Parenthetically, Robert, we did not notice any price-creep to speak of when we were in France in late March-April. Our hotel was within pennies of its previous rate as were our favorite restaurants. Is it possibile that this phenomenon is taking place it the most expensive levels where many visiters might be less price conscious or aware of the creep? Also, I wonder percentage-wise how many 3-star diners are frequent repeat customers? How many are one time visiters? How many would put off a long-scheduled dinner because of a couple of hundred dollars?

[robert brown]

Margaret, I included La Regelade and A Sousceyrac in my post to illustrate that "good, honest" restaurants are good and honest. I don't think I spelled it out, but that's why they were in there. It is pretty clear that the Ritzy places are the greediest. I also believe that if a chef-restaurateur plays around with prices, people should be concerned since it most likely means he or she (mostly "he's") is messing around with other parts of the restaurant.

I believe that the price statement applies more readily to meals than to hotel rooms. It is not customary to hondle over the price of a meal or to ask for a free dish or better menu.

[John Whiting]

... we did not notice any price-creep to speak of when we were in France in late March-April. Our hotel was within pennies of its previous rate as were our favorite restaurants.

That was our experience in six hotels in the Dordogne in April/May. Prices were exactly or almost exactly as listed in the Alistair Sawday guide.

[Bouland]

Does it not mean that if I had ordered the 300 euro menu at Arpege and showed the maitre d’hotel my copy of the Michelin, that he would have been obliged to lop 86 euros off my bill?

No, restaurants complete a questionaire sent to them by Michelin in the Fall. Even though a restuarant may have 3 or 4 menus plus à la carte selections, they generally list their least expensive menu plus a couple of signature dishes. They also list the common range of prices for a full meal without wine. For example, a restaurant may have three menus, one for 30€, one for 40€, and one for 50€. Only the 30€ menu may be listed in the Guide. If you order the 50€ meal they are not going to give it to you for 30€.

Prices ... are subject to alteration if goods and service costs are revised.

And this happens. Between October 31st of one year and when you dine at the restaurant 9 months later, the restaurant may have changed their menu enough to require a price change.

[Bux]

Bux, I would love someone at Michelin to tell us the purpose of the pricing statement. Is it to cover themselves, but from what? No other guidebook has such a statement. What is the user suppose to do if he sees a jump in prices? Does the statement about passing on the costs of increased goods and services apply to the establishments in bold letters? My wife's daughter who is an attorney thinks it is purposely not a rigorous statement so that the establishments will be willing to be listed without possible harm, but that the user feels the guide has his or her interests at heart.

The more I examine this issue, the more I suspect that the purpose is to tell the client that Michelin has their interests at heart, but that they (Michelin) cannot be held responsible for changes made by the individual establishments listed in the guide. These hotels have assumed responsibility for maintaining prices. Sounds like a disclaimer to me. I'm not a lawyer, but I've read disclaimers and this smells like one.

Are the hotels willing to risk the wrath of Michelin? I don't know if there would be rath. Nevertheless, I wouldn't be surprised if anything there could be used in a French court to hold the restaurant responsible for what Michelin says they are. Anyway, neither Michelin nor the restaurants seem to have made a contract with the consumer, so it's just between Michelin and the restaurants. If enough people complain, it will be interesting to see what Michelin does about future listings. They could refuse to list the offending restaurant or take away a star. Will they?

In any event, I don't think you can prohibit the addition of a more expensive menu as long as ones for the listed price are available.

[cabrales]

In my assessment, diners who care about possible price differences from the those quoted in Michelin should inquire prior to making a reservation. When the Michelin guide indicates that prices are from Autumn 2001, and one utilizes the guide after its publication in early 2002, there are clearly possibilities for change. Even if the pricing information were accurate as of the time the guide is released, prices can change during ensuing parts of the year.

[robert brown]

It seems to me that the operative word in the statement is "maintaining". What about that?

I singled out Arpege because they have one printed menu for 300 euros that has to be a recent replacement of the 214 euro menu that no longer exists. (For the record, there is also a 300 euro Chef's Special Menu, but it is obvious that if you ask the chef to prepare you something special or off the cuff, the Michelin statement does not apply.) Bouland is certainly right in the case of a restaurant offering three or four menus at varying prices. However, many restaurants offer two menus, and the prices of each appear to be listed in the guide in the form of two figures separated by a slash. Bux looks like he agrees with my "in-house" lawyer. What I do not fathom, however, is why have Michelin trys to distinguish itself with such a wishy-washy statement. I would like to see Michelin's Delphic Oracle, Derek Brown, chime in on this one. Does anythink we have a class-action suit against thousands of restaurants? And don't forget that this price statement is in every Red Guide regardless of the country.

[Bux]

I just noticed the subtitle for this thread. Of course this is all about the chefs not seeing their books in the red, but as well in the black as possible. I don't know how many of us regularly charge strangers a price below market value for our time or products. It's one of the sad facts of life that fine dining as evidenced by three star restaurants in France, is priced out of the reach of not only the majority of people, but of a good number of connoiseurs as well--at least on a regular basis. On a scale of injustice, I wonder how that relates to the ability to live in luxurious dwellings and to access the finest of medical care. Speaking of injustice, it's obvious we all don't have the same access to the same level of legal counsel. Supply and demand will set the prices, and as long as chefs can raise their prices, they will. The economy may have more of an effect on restaurant pricing than any particular indignation. A personal choice to stay away will only have an effect if there's no one to take your place at the table. This seems a bad time for restaurants to increase their prices in general, but in general restaurant in the middle upper range are more affected by economic downturn than those at the very top--or at least they were when they had a carriage trade. Now that they rely on a kid stockbroker's Christmas bonus, it may be another story. The Frenchman may take to the streets if he finds the price of bread or the metro unjust, but he has little sympathy for diners at three star restaurants.

On a different tack, Bouland posts that restaurants fill in their own information. Can we think of reasons why a three star restaurant would purposely inflate or deflate their prices when filling out the questionaire? My guess is that their tables, if full, are not filled by those making price comparisons in the first place. I would think the last thing the restaurant needs is a diner who's figured his meal to the last cent and not likely to spend on wine. Thus I don't see the discrepancy as deceitful in terms that it was preplanned. Maybe I have too much sympathy for those who are chefs or who own and run restaurants, but pricing here is subject to supply and demand as is the rest of what most of us buy.

[Fat Guy]

Robert (Brown): What you're saying is that a substantial number of European restaurateurs are currently engaging collectively in a short-sighted bait-and-switch operation, correct?

[robert brown]

Bux, if I didn't see empty tables and a large shortfall of Americans at Arpege, the Chanteclair and Hostellerie Jerome, I would not have taken time to compose these posts and do the simple research (but time-consuming research nonetheless) involved. People apparently are not replacing those who are not going to the better restaurants. It has ramifications not just for your thrice-annual gastronomic excursions to France, but for all that trickles down in both economic levels of dining and dining in the entire Western world. As for the Michelin price policy, the main factor (not that I mean to pat myself on the back) is that no one in my experience ever noticed it in order to attempt to analyze it, as well as try to divine its practical implications. It is an intriguing document worthy of analysis and interpretation.

[Steve Plotnicki]

Don't you think that part of the problem with the prices is that it is becoming harder and harder for a 3 star restaurant to wow us? We have such good access to ingredients on a worldwide basis that what we want when we are sitting in a place like Arpege is something unique and unusual. That goes to Robert's point in another post about fixed menus and reduced choices and the chef being a performer. When sitting at Arpege and being served a Sea Scallop, a few carrot slices and a third vegetable with a dollop of the best Brittany salted butter in the world, would it be any good if you could get the same quality ingredients in NYC? As a result in order to keep the wow factor going the cost of ingredients and the labor to prepare them perfectly must be extremely expensive.

I think another aspect to this is that with the stock market boom, even with the recent crash, luxury items are going through a repricing. For example, real estate prices are soaring. And the price of top bottles of wine are up by a large percentage. I sat at Christie's a few months back and watched a case of 1982 Cheval Blanc go for over $10,000 with the vig. It was selling in the $5550-$7000 range about a year ago. I think that what this issues comes down to, is that if a place like Daniel is going to do less covers a night, than they are going to try and appeal to the top end of their customer base. Sell a more refined experience to fewer people for more money. I think their decision to do away with lunch is a step in that direction. What will happen as a result is the same that will happen to '82 Cheval. The super wealthy will still be able to drink it every night. And the less wealthy will drink it less often than they were able to over the last 5 years. And the cost of eating in Arpege will be prohibative in a way that we haven't seen in a decade. Hopefully that will make for better restaurants in the middle but I'm never optomistic when it comes to food customs.

[Bux]

Robert, if people are not filling the tables at restaurants that were impossible to book last year, I suspect we will see another revision in pricing--and I hope it's down, although Steve P.'s suggestion that the chefs will seek out fewer of the super rich at even higher prices may have some substance.

I think the been there, done that, is a major factor in travel and food destinations nowadays. When you travel to be wowed, repeated visits to the same restaurant are less likely to have that effect. In fact, after being wowed for a while, the wow effect is minimized and wow ain't what it used to be.

[Jonathan Day]

The Financial Times economist Peter Martin wrote an important article on 4th July, called "A homely challenge to branding." Under the new FT subscription system you cannot link to this piece, even though it is online.

So here is a brief summary:

- House prices are indeed rising: in the past year Spain is up by 18%, Ireland 8%, Britain in the year to May almost 18%. Smaller but significant increases in the US.

- Martin thinks that "house purchases are part of a broader trend in which people are increasingly purchasing 'experiences' rather than goods per se."

- Many of the experiences they seek are 'positional', i.e. conferring status. Your possession of a chocolate bar does not affect my enjoyment of my own bar. But with positional goods (example, lakefront property) your buying a house alongside mine harms my enjoyment. The knowledge that many other people have the same new car (or wristwatch, or access to a fancy restaurant) may make this less desirable to me.

- Martin believes that there may be a broad scale shift toward positional goods, where supply of status is not easily created by innovation (or, for that matter, from product quality).

There are all sorts of implications here for consumer goods manufacturers.

If Martin is right -- and he usually is -- then this shift toward positional goods may explain (1) the rise of 'new dining'; (2) a broad trend toward higher prices; (3) a similar trend toward fewer tables and harder-to-get reservations. Conran, for example, is no longer building "gastrodomes" but smaller restaurants.

There's money to be made here, but it sounds like bad news for diners.

[Steve Plotnicki]

Bux et al - There's another major issue in haute cuisine restaurants that needs raising. The wine lists have been completely picked over and the cellars have been replaced with new purchases that have been made at current market prices. Going to Guy Savoy and paying $1500 for a first growth from a top year, or $500 from a mediocre year has changed the dining experience. That's why I sense that pricing will go up not down. They need to find clientele who are going to buy wine in that price range and as such are going to have to make the experience more exclusive in feel.

As for the been there done that, I think that all the major gastronomes would head to Spain if the reports weren't just that the meals were technically astounding. "Absolutely delicious" is what everyone is waiting to hear and then they will all jump on the plane. In addition, the Spanish restaurants do not seem to be part of hotels and are stand alone concerns and that means you have to stay somewhere else. And the Costa Brava doesn't really have its equivelents of the palaces on the Cote d'Azur.

My wife and I were going to plan a few days on the Amalfi Coast in September before we go to Paris for a long weekend. So I pulled that article the Times ran on five seafood restaurants on the coast last summer and while I'm sure they are good, steamed gamberoni in an arugula sauce didn't move me to jump on the plane. So trying to find new places to go that serve "wow" food ain't easy.

[Steve Plotnicki]

JD - Is Martin saying that people are looking to redefine their place in society by allocating funds for capital purchases that make societal distinctions obvious? In otherwords, create hierarchys within elite groups of people? If that's the case, what segment of the population gets to play this game? And what happens to the other segment. McDonald's type of marketing of mass marketed products?

One more question about this if it's not too late. Does this mean that people will keep a larger percentage of their net worth in these types of items and not in things like the market? How do you get the money to play this game if you divert capital out of the stock market into these types of purchases?

[robert brown]

Steve, I am sorry I missed seeing your post until now.

For some reason I saw Steve P's. I guess I didn't scroll up enough.

Actually I was baiting you to see what you would write!!!!! I was only half-serious about the class action; but perhaps you want to take it on for the members of the class. Seriously, though, what do you think about the Michelin statement,etc.? Two more things: I have a vague recollection that years ago Michelin used to say that establishments in the Guide promised to hold their prices steady until the next year's Guide. I also remember that there were many more establishments that did not give their prices: These were listed in non-bold type. (Does anyone have a collecti0n of old Michelins out there that he or she could consult about this?) Second, is Michelin being misleading by raising expectations on the part of the reader when it publishes its price statement? What do you think? Or anyone else?

[Jonathan Day]

JD - Is Martin saying that people are looking to redefine their place in society by allocating funds for capital purchases that make societal distinctions obvious? In otherwords, create hierarchys within elite groups of people? If that's the case, what segment of the population gets to play this game? And what happens to the other segment. McDonald's type of marketing of mass marketed products?

One more question about this if it's not too late. Does this mean that people will keep a larger percentage of their net worth in these types of items and not in things like the market? How do you get the money to play this game if you divert capital out of the stock market into these types of purchases?

Steve, the Martin article is not long and doesn't address all of these questions directly. On what happens to the McDonald's type of marketing, he says that the trend predicts trouble. Mass marketing and branding depends on "manufactured" status rather than the positional status that customers get by purchasing scarce goods:

"To the extent that manufactured status enhancements are lsing their power to satisfy consumers, modern branding techniques may be running out of road. This will throw suppliers back on more traditional product and service enhancements and may help to explain some of the recent weakness in brand-related advertising expenditures."

But it gets worse, because if consumers are really seeking experiences, they may be measuring their value in ways different ways to the traditional ones like product and service quality, ways over which companies have less control. "The challenge to consumer goods companies is a substantial one. Two of the main motors of generatiung demand growth -- product improvements and brand-related status enhancements -- both seem less powerful than before."

The implication is that this affects multiple socioeconomic segments, not just the super-rich but also the typical McDonald's customer.

Martin doesn't speak about equities. I would think the implications would be

(1) problems for traditional consumer goods companies e.g. Unilever;

(2) some shift out of equities and into real estate, art, rare coins, etc. However given that the vast majority of equity shares are held not by invididuals but by mutual funds, pension trustees and the like it is hard to know how strong this effect will be;

(3) a general fall in productivity, since corporate innovation gets diverted from product improvements toward status enhancements.

There is a longer academic article on the trend Martin speaks of, but I have not yet read it: Cooper, Garcia-Penalose and Funk, "Status effects and negative utility growth," Economic Journal, July 2001.

[anil]

Robert (Brown): What you're saying is that a substantial number of European restaurateurs are currently engaging collectively in a short-sighted bait-and-switch operation, correct?

Not quite a bait-n-switch, however, in the first few weeks of Jan '02, many establishments (not just restaurants ) did a rounding up of prices from NGL/GDM/ASL/FFR to EUR, and thereby raised prices from 12% to 21%. So, for example - things that cost 50NGL were suddenly 25EUR overnight. Now, 50NGL is not equal to 25EUR.

[robert brown]

Anil, I am curious to know how you found this out, or was it all over the media and I mised it. That kind of increase is quite staggering without some kind of intervention.

[Jonathan Day]

Apparently service staff have suffered from the switch to the Euro. The old 10 franc piece was often used as "pourboire" e.g. when retrieving a car from the car park or rewarding some small service. The piece that corresponds to it in size, 1 Euro, was only 6.55957 francs. I have heard a number of complaints from delivery people, car park attendants and the like that they are being cheated. As related in an earlier post, I had a car park attendant at Tétou contemptuously hand back a 1 Euro piece I had given him.

[Bux]

As for the been there done that, I think that all the major gastronomes would head to Spain if the reports weren't just that the meals were technically astounding. "Absolutely delicious" is what everyone is waiting to hear and then they will all jump on the plane. In addition, the Spanish restaurants do not seem to be part of hotels and are stand alone concerns and that means you have to stay somewhere else. And the Costa Brava doesn't really have its equivelents of the palaces on the Cote d'Azur.

At least one minor gastronome has done just that. We've been spending about half our time in Spain and each trip brings new surprises in terms of interesting and delicious food. It has called for some palate adjustment--French food is different from Spanish as it is from Italian--and palate adjustment is the antidote for "for the been there done that" syndrome.

"Absolutely delicious" is the very subjective end of a reaction to a meal. Arzak, from an earlier generation of Spanish chef, served us an absolutely delicious meal years ago in San Sebastian and Santamaria in his El Raco de Can Fabes will do that today about an hour north of Barcelona. He'll do it in a style that it Catalan, but in a way that will leave an experienced connoisseur of French food believing that Catalan cuisine belongs within the world of Burgundian, Alsatian, Provencal, Norman and Perigordine cooking. Santamaria is adding guest rooms to his property, but we drove there for lunch from Barcelona and others report that it's an easy enough train ride. Nevetheless, you are correct in noting the absence of Relais Gourmands with rooms. Almost all of our memorable meals in northern Spain have been at stand alone restaurants. In many cases these restaurants have been in the suburbs of major cities or in some location without adjacent hotels of appeal. We neither search out nor gravitate to the most luxurious hotels. For those that expect the level of comfort attendant in Relais & Châteaux properties, Spain is a different proposition. There is not the same tradition of catering to the traveling gourmet. I suspect that will change.

To address the absolutely delicious again, I'd say it was as evident in the starred restaurants noted for their creativity as it is in Arpege and Gagnaire and we found it far more evident in the unstarred restaurants. Unfortunately some luck along with a little research will be required. We've hit some exceptional places if all you want is delicious. The research is not just a matter of getting recommendations, but of learning where your tastes match local ones. While few foods will please me as much as well done deep fried items, I found my attraction to things a al Romana in Catalunya brought dishes that were heavily breaded and not pleasing. Rice dishes were invariable delicious at a basic level and the seafood was often exquisitely cooked--perhaps to a degree rarer than in France, which pleases my palate. Nevertheless, when I score, I'm not yet convinced I know enough to claim it's more than luck. That's a risk I'm willing to take as it's paid off well.

[lizziee]

Robert,

In every Michelin Guide there is a card that you can send to Michelin with your comments and evaluation. It asks for the name and address of the establishment and then asks you to rate from very good, good, average, poor on the following: value for money, welcome, setting and atmosphere, food, comfort, upkeep, service, peace and quiet and accuracy of prices as quoted in the guide. Their adddress is Michelin- Editions des Voyages - 46, avenue de Breteuil - F-75324 Paris Cedex 07. Alternatively you can send comments via their website at www.ViaMichelin.fr or e-mail them at leguiderouge-france@fr.michelin.com

I think you should definitely send them your reactions to the Euro increase phenomenon.