Daniel Satinsky: Okay, so we are resuming the interview after an interval, so for those of you watching this on the tape we won’t be dressed the same, but we’re going to pick up where we left off, which was where you were talking about joining the group that formed Uncle Guilly’s steakhouse. And I want you to just talk a little bit more about how that got opened, your operating issues and outcomes, and then slide into Starlight Diner. Hopefully then we’ll get into your financial career, okay?

Bernard Sucher: Sure. So just to reset a little bit of context. There was really no restaurant scene in Moscow in 1992. Rostic's had just started on his path. [Rosinter restaurant group. See interview with Henrik Winther] I believe his first restaurant was a Spanish themed venture in the corner of the Moscow Hotel. The TrenMos Joint Venture between a couple of guys. I believe it was Shelley Zeigler, if I’ve got it right, from Trenton, New Jersey, and some local characters had launched, I believe, in 1992.

Daniel Satinsky: I think they launched earlier than that. I have an interview with them, and so we’re going to be including that in the archives as well.

Bernard Sucher: Oh, good, because those are very colorful stories, and I had a number of really excellent meals at TrenMos in Kropotkinskaya. But when we opened Uncle Guilly’s I believe it was the sixth restaurant with a white tablecloth, you know, come as a businessperson and expect decent food and decent service. I think we were possibly the sixth restaurant in the city outside of the hotels.

And the way we got to Uncle Guilly’s was that I had gone back to a gentleman named Dominique Berhouet, who was a food and beverage manager at the Penta Hotel on Olimpiyskiy Prospekt*. I had met him in 1991 briefly at a brunch that he had staged at the Penta Hotel. I remembered him, and I had this idea of starting a 24/7 restaurant in a city that was beginning to live 24/7, at least for some people. And Dominique told me that he had already developed a relationship with another food and beverage manager, Paul O’Brien at the Radisson Slavyanskaya, and that Paul had a young Russian friend, Oleg Bardeev, and that they together were working on a specific project in the center of the city, and they’d be happy to hear about a diner, but I should meet them and take a look at this new project. That was at 6 Stoleshnikov Pereulok*.

It was a place that was already well-known as Café Stoleshnikov. It was one of the very first Soviet era new style dining experiences, and it was inhabiting a basement that was, I believe, in a 300-year-old building, and it was about as clean as a basement in a 300-year-old building. And what this group needed wasn’t my insight as a restaurateur, they needed money. And so at the end of the day we made a deal, and the deal was that I would put up the cash to build out this underground place to renovate Café Stoleshnikov, we would turn it into a steakhouse. And I invested, if I recall properly, $146,500, mostly in Italian imported kitchen equipment, and a lot of cleaning. And that became Uncle Guilly’s, which began informally to serve meals in April of 1994.

But the other part of the deal was that as soon as the group had gotten on its feet with Uncle Guilly’s we would figure out a way to build Starlight Diner. We didn’t know that’s what it was going to be called at the time, but my idea, with their food experience and our collective growing understanding of how you work in the Moscow restaurant industry, such as it was in 1993 and ’94 — under the banner of Flying Foods — which is what we called it, led us ultimately to opening up, in late 1995, Starlight Diner.

So, on the way I prevailed upon the same group to build a gym. I like working out, and all that great steak at Uncle Guilly’s which we were importing every week through another partner of ours, a partner who came later and became the most important member of the group—he became the CEO of the group, Shawn McKenna. Shawn was a supplier to Uncle Guilly’s, and when Shawn joined us I asked him to help make sure that we built a gym so it would help work off all this fine food that we had.

And that project opened in 1995. It was called the Moscow Beach Club. It was also in the center of town, in the back of Pushkin Square, in the theater building that was called the Lenkom Theater, next to the nightclub Two by Two. It was quite a scene in the Lenkom Theater back in those days. So, we had three projects, conceived very early. One of them, Uncle Guilly’s, up and running, and cash flowing. I think I made my money back in less than eight months.

Daniel Satinsky: You got paid back out of the profits in less than eight months.

Bernard Sucher: Yeah, right. And that was very encouraging. But it helps when you have no competition. As I said, there were but a handful of restaurants that were open in those days in Moscow, and the increasing flow of international visitors to the city, business-minded visitors, as well as an increasing number of local people who had money and were beginning to appreciate a restaurant experience. Again, bigger context, going to restaurants was not a thing, and so restaurants were not places that people generally went to.

Dining out was very exceptional. Most people ate their meals in someone else’s home if they were celebrating something. And so there was even, back in those days, this kind of underlying, unanswerable question, would Russians want to eat in restaurants, were we building these businesses for a limited expatriate and diplomatic community audience or were we going to see, over time, growing numbers of increasingly sophisticated Russian customers, and how long would it take if that in fact was the path that we were on. That happened very, very fast.

Daniel Satinsky: That balance changed.

Bernard Sucher: Yeah. And it was accelerated by the pioneering Russian restaurateurs who were incredibly creative, I would say courageous. One of the early examples that I’m talking about was a Ukrainian restaurant that was built kind of like a human terrarium, where everyone was participating in a mockup of a Ukrainian village. The food was great, and the feeling of sitting in a barnyard —

Daniel Satinsky: What was it called?

Bernard Sucher: My brain is straining for this, but…

Daniel Satinsky: Not Sam Prishel?

Bernard Sucher: No. No-no-no.

Daniel Satinsky: Okay.

Bernard Sucher: It was the first restaurant in a complex of restaurants that were dominated by a single entrepreneur, whose name I also cannot — I’m very unhappy to say I can’t recall right now. But to the extent that, you know, I’ll come back to you with that, and if you want to edit it in, we’ll edit it in. [Shinok]

Daniel Satinsky: Yeah, okay. So, this was in the wild and crazy times in Moscow, and so it was cash businesses, had to deal with local criminal groups, and having to have krysha* or a cover. And so how did you deal with that?

Bernard Sucher: So being a new guy in Moscow, and very self-consciously being the only one in our group who had any money at all to put at risk in an investment project, I was not only concerned about the risk to the principal, I was concerned about the risk to this principal. I didn’t want anyone outside of our group to know that I was the source of financing for this restaurant or for any other project. And I asked my more experienced expatriate colleagues what they knew about the way restaurant businesses were covered — covered by Mafia groups, covered by rogue agents of law enforcement, or what?

But it was perfectly obvious from the get-go that the food industry, which had existed before in the Soviet Union, had its industry Mafia. If we were going to be opening a new restaurant, we were going to be entering somebody else’s territory. And the question was whose territory, what were the rules of the game, and how were we meant to limit our risk and preserve the commercial viability of the business while—it was not small matter to me—maintaining our own ethical standards. And frankly speaking, my colleagues had no idea. They were working in hotel food and beverage concepts with international owners who were international, multinational companies. And to the extent that this grubby bit of business of protection was a reality in those establishments, it was not the responsibility of the F&B manager.

So we went to our young Russian partner, Oleg, and we said Oleg, what do you know about this? Well, he didn’t know anything either. So, I replied, now look, guys, I’m not putting a penny into a project where we haven’t done sufficient due diligence on our obvious risk factors. And not only is this perhapstheobvious risk factor, it’s frankly speaking the one that scares me the most, so we better do some research. And I did very little of it myself. I took it on faith. But after a reasonably short period of time — we were in a hurry to get this restaurant up and running —Oleg came back with his description of the security situation for the restaurant industry.

And as I recall, it boiled down to the following. First there was an incumbent Soviet era Mafia that had established rights over any restaurant properties in central Moscow, the implication being that if you were going to try to do something on their territory, in their vertical, they had the right, recognized by all stakeholders, presumably including the authorities, to collect some kind of fee or tax on your operation, or a known quantity. There was a second group. They were the challengers to the incumbents. That group was going to be very aggressive. They were thought to be even murderous, ruthless, and unpredictable. They were growing fast. They had understandably a fearsome reputation. It turned out that that group became known to the wider world as the Solntsevo Mafia. And then there was a third alternative, which was the local police. They too were trying to expand their sources of revenue and had apparently decided that the restaurant business, despite the competition from the dangerous assaults of the Mafia and whatever the incumbent group was, that that competition was something they could manage and make a buck off.

So with this map in mind, we had to make a choice: do we find some way to deal with one of these groups, which group, what are the terms of trade, or if we are going to say we don’t want to have anything to do with this, then most likely we just don’t bother opening our business. In fact, with that logic, we hit upon something that seemed to us to be a reasonably ethical position, but at the same time be pragmatic. And at this point Shawn McKenna, who had only recently joined us as a leader of Flying Foods, Shawn McKenna suggested that we approach our preferred group with a contract, and the offer being here’s a piece of paper, it says we need protection. And in fact, we really did. I mean, that wasn’t something theoretical.

Daniel Satinsky: Right.

Bernard Sucher: We need protection, and we’ll pay for it. And we’ll pay a fixed, agreed fee in advance, and we will have a legal contract. You provide us security services and we will provide the required money, and we will grow our business, and we’ll have a predictable income, and we will have an opportunity to prove this concept out. The decision was to go with the young and aggressive, potentially notoriously murderous group Solntsevo.

Daniel Satinsky: How do you spell that group? Do you remember?

Bernard Sucher: It’s commonly spelled in English as—it’s a neighborhood. It’s a region of the city of Moscow on the east side. S-O-L-T-S-E-V-O, Soltsevo [Solntsevo].

Daniel Satinsky: Soltsevo, okay.

Bernard Sucher: I think there might be an N in there, S-O-L-N. And I’m looking back, and thinking was I just being prudent, or was I being cowardly. But again, I was the source of the money, and I didn’t want to have anything to do with these negotiations. So it was actually Shawn and Oleg, and it’s possible that Paul O’Brien was part of it as well, but as I recall Shawn and Oleg went to a meeting, a series of meetings, and Shawn’s purpose was to persuade the young man that he was talking to, a guy in his early 20s — and it was always some small group of young men.

His main objective was to persuade these folks that they should accept a contract. And going back to the logic, we could feel that if we secured a contract, a legal instrument, that we will not blatantly be contributing to the problem of corruption in the country. We were instead providing an example whereby with agreed terms in advance entrepreneurs could size the risk, price that risk, and decide whether or not it made sense to put money into a project and try to build a business. And at the same time, with such an instrument, our counterparts on the security side would in effect have a new kind of business, one that would be ahead of the curve of the developing legislation in a country which, at that point, was essentially lawless. So we thought that was a genuine win-win.

One of the big fights was our potential partners wanted not a fixed amount of money every month, they wanted a share of the profits, or even a share of the revenues. This meant they were going to have to look at our books. We did not want to invite any outsiders, under any pretext, to look at our books. We wanted to run our business, and we wanted to have a clear expense in mind in advance. We resolved that matter in our favor, although we did have to give up, if I remember right, a corner booth in our bar in Uncle Guilly’s for every Thursday, Friday and Saturday night. In other words, if they wanted it, then they could have it, and we’d be paying for whatever they would order. That was a very big expense. Sometimes that corner was very busy. But that’s how I got comfortable with the risk of entering that arena, and that’s how we established a precedent that allowed us to grow from one restaurant to a number of restaurants, and not to mention —

Daniel Satinsky: Yeah, so you followed that precedent.

Bernard Sucher: — the Moscow Beach Club. Yes, exactly.

Daniel Satinsky: Yeah, you followed that. Do you know if others in the business followed that model?

Bernard Sucher: Well, a lot of people asked us for advice over time, like how did you do that? What are you doing? How are you handling this? This was one of the most obvious questions. So, if Uncle Guilly’s was the sixth restaurant in the city outside of a hotel that reached some kind of acceptable international standard in a very short period of time with, by the way, no break from the 1998 crisis. Restaurant openings just kept on motoring up.

Daniel Satinsky: Booming, yeah. So did you ever have to call on them for their services, or was the fact that you had a contract —

Bernard Sucher: I recall only one time. Well, actually, it might make sense to go back just a second. Building out the restaurant was not that difficult. It really was you had to clean it and wait for the Italian equipment to clear the border, install it and get going. So in a very short period of time, in other words, from late summer of 1993 to April of 1994, that was the period of time it took us to get the restaurant basically up and running, and we started serving among friends in April of 1994.

But once it became clear to the outside world, just by the activity around the building, the construction teams going in and out, that there was going to be a new something there, pretty regularly there would be a knock on the door. This was a knock on the door leading downstairs into the basement, where the restaurant was. And this was the appearance of people in either organized or opportunistic extortion rackets, protection rackets. And what they were probing for was who is, if anybody, covering this wannabe establishment. And once we had made our agreement, we were given the instruction that if anyone should knock on your door and ask, just give them this phone number.

So, I wasn’t there every day, but again, my memory of what the guys were telling me was that pretty much every day for the first couple of months somebody would be knocking on that door. And we wouldn’t have a conversation with these folks. We would just hand them a little piece of paper with a phone number on it and tell them in fluent Russian or bad Russian, call this number. And those people didn’t come back. And after a couple months nobody bothered knocking on the door.

So, flash forward a couple years later, on a very busy Friday night, not only was—there was no knock on the door, there was just the march of many heavy booted feet coming down the staircase and filling up the very small bar. And this was a group that had decided that they were going to establish their rights on the property. Entirely unannounced, a very unpleasant surprise, very scary for any of the guests who were aware of what was going on. And we had to call that number. So I received a phone call from somebody in the restaurant saying you better get down here, because we’ve got a problem.

And by the time that I made it, basically just about a mile away from my house, what I saw was— the Stoleshnikov was effectively a walking street. There’s a road through it, but it’s a small connection street in the very heart of Moscow opposite the mayor’s office, Mossoviet, and on one end of the street facing Mossoviet was an infamous Georgian restaurant that the Georgian Mafia [had run] going back to Soviet days. At the other end of the street very limited traffic flow around what later was the government Duma—well, was the government Duma at the time.

But both ends of the street were blocked off by Mercedes and BMWs with lots of young men facing off between lines of these cars. Mind you, this is right opposite the official mayor’s office, which is itself guarded. But the legal authorities were not really in any evidence at all. This confrontation between two groups was taking place, and it was even, but for all to see on the entire Stoleshnikov street. And once our guys arrived there was a tense standoff, which lasted about 90 minutes. I didn’t go past that line of men and the double line of cars. But they cleared it up. They cleared it up peacefully. As far as I know there were no adjustments to our contract. Nothing like that ever happened again. So in short, this way of doing business, which is clearly not ideal, and certainly open to argument about whether it’s a right thing to do or not, this worked. It worked for our business.

That sort of thing seems to have worked for most businesses. And this contract that Shawn was able to implement, in one form or another, seems to have become, faster than you would have thought, the legal standard in the capital city of the Russian Federation.

Daniel Satinsky: Right. So fast forward, Starlight Diner. You’ve established Uncle Guilly’s, you’re making money, you’re getting your money back. So is that when your attention turns to Starlight Diner? And where did the diner itself come from, and sort of how did you get that business underway?

Bernard Sucher: So I was out almost every night in Moscow. I love drinking beer. My favorite beer is Irish beer. Rosie O’Grady’s was a fixture in my daily life. I went to Rosie’s at any opportunity to have some bass or drink some Guinness and throw darts and try to keep up with the grapevine news in this extraordinarily dynamic situation. That was my happy place.

Daniel Satinsky: It was your communications hub as well.

Bernard Sucher: Yeah, absolutely. Absolutely. But the food was horrible. I don’t even…I don’t know if they had a kitchen, but whatever…we didn’t want to eat at Rosie O’Grady’s. Wanted to do anything else, but did not want to eat there. And the bar would typically close around 2:00 in the morning. And I wasn’t out every single night, but whenever I did leave, I was hungry. And generally speaking, restaurants were not readily available, and hardly any restaurant was open at a time late at night. There was nothing open late at night.

So I’d gone through this as an expatriate living in Hong Kong, living in Tokyo, living in London. No such thing as 24/7 food in those cities. And I just knew that I…I knew before I moved to Russia that if I moved to another foreign city and I could not get American food 24/7 that I was going to open a restaurant. And that’s where the diner idea came in.

Daniel Satinsky: And it wasn’t just food, it was American food that you were looking for.

Bernard Sucher: Yes, absolutely. Absolutely. I wasn’t exactly homesick, but I love breakfast at odd hours. I need coffee at odd hours. And there’s nothing like a burger for comfort after having half a dozen pints. So the reason I originally went back to Dominique Berhouet was because there was a place around the corner from Rosie O’Grady that I had found. It was an old-style Soviet café. And I thought this would be perfect. Two and a half minutes’ walk from the front door of Rosie’s. They weren’t doing any kind of meaningful business with this old-style Soviet concept. And I had basically a handshake deal with them to open my concept of a diner in their building. But what do I know about running a restaurant? Nothing. So that’s when I went back to Dominique Berhouert. And Dominique Berhouet introduced me to his friend Paul O’Brien. And Paul O’Brien introduced us to his young friend Oleg Bardeev. And that’s how we got to Uncle Guilly’s.

I couldn’t wait to get to the diner. That was still my concept that I just had to have that. As an entrepreneur, but mostly as a wannabe diner personally, as someone who wants to eat. And Shawn McKenna agreed to leave Quality Foods. I believe that’s the name of his company. He was an importer of food from the United States, and he was servicing the major hotels, among other businesses. So that’s how he got to know Dominique and Paul, because his company was shipping them significant quantities of food every week. And Shawn loved this diner idea so much that it proved to be the wedge that leveraged him out of his nice corporate job into our ready or not band of merry men. We had kicked off Uncle Guilly’s, and in fact we had kicked off the Moscow Beach Club, which was, again, a project that I wanted because I needed a gym.

And Shawn took on the role of organizing these businesses, which were not well organized, but he did it with the prize, in his mind, of building out this diner, and most likely a chain of diners that we could string out across Russia. And so I can go back and find the exact dates, but Shawn joined us in, I believe, the spring or summer of 1995 — I’m sorry, the spring or summer of 1994, and had the first diner being crated up in Ormond Beach, where it was manufactured, Ormond Beach, Florida, and being shipped to the port of Helsinki for a long, long road trip to Moscow in late 1995. It basically arrived the week of Thanksgiving 1995.

Daniel Satinsky: Right, so you moved from the idea of just taking over an existing café or building and settled on a real American style diner, the old type, right?

Bernard Sucher: You know, one of the major obstacles at the time was that the elements that you think of as, you know, if I say diner you have some imagery that immediately comes to your mind, and that includes things like Formica, and neon, maybe Naugahyde, never mind a jukebox. You couldn’t make any of that stuff in Russia of 1994. It physically wasn’t manufactured or manufacturable in the country. It was, despite all the trouble, extra expenses of shipping and customs, it was cheaper to build and ship into the country than to try to manufacture it in the country. Later that changed, of course, but at the time, if you wanted a diner, you had to build it somewhere else and truck it in.

Daniel Satinsky: So, you bought it from Florida, shipped it. It was fully built out. I mean, it had your booths, and your jukebox, and your kitchen, and all those things built in?

Bernard Sucher: It had the pictures screwed to the wall.

Daniel Satinsky: Ah, okay.

Bernard Sucher: I mean, it was entirely pre-built, 100% ready to go except for the connections. So, what we did, Oleg Bardeev, in all of this, was essential. Paul didn’t speak Russian. Dominique had fallen out earlier. We caught him mishandling our money, and so he moved out and moved on pretty early on in the history of Flying Foods. Shawn joined. But Shawn didn’t speak Russian either. And I was busy with Troika Dialog 24/7, and my Russian anyway, I wouldn’t have trusted it in those kinds of conversations, as we tried to figure out well, where are you going to put a diner.

Daniel Satinsky: Right. I mean, you had to have rights to the land, and permitting, and sanitation, and all those things, all of that bureaucratic —

Bernard Sucher: This is a vocabulary I still don’t have today. So back in those days Oleg’s role was an interface with the local business community, local government authorities, yeah, it was absolutely essential, and nothing would have happened without it. Oleg had a winning way about him, and people liked him, and after striking a deal with the Lenkom Theater to open the Moscow Beach Club — this was quite controversial in the theater community to have the general director of the theater repurpose parts of his building. We can talk about the property rights in post-Soviet Moscow if you like.

But anyway, the gentleman’s name was Mark Zakharov, and in order to keep his theater group going, he got commercial, he got practical. He had a lot of space, but he had nobody paying to go to see his plays, and he repurposed some of that empty space. He had a nightclub, he had a little café, and then he had the Moscow Beach Club. He had a world standard gym in the back of the Lenkom Theater. And that relationship was something that obviously other theater directors noticed, and one of them said hey, do you have any ideas for me? Is there something I can do with my theater? Which was just around the corner in Mayakovskaya Square [Editor’s note: Triumfalnaya Square, site of Mayakovskaya Metro Station.]. And Mark Zakharov said talk to Oleg Bardeev — these guys seem to know what they’re doing, and I’m pleased with the relationship.

So Oleg met with the director of the theater in Mayakovskaya, and it turned out that Aquarium Park, that is adjacent to the theater, seemed to be, more or less, seemed to be within this gentleman’s remit. And he and Oleg hit on the idea if this was going to be a prefabricated, freestanding building, maybe we could put it in the back of the park in Mayakovskaya. It wasn’t exactly a formal lease, let’s put it that way. And it never was formalized. And the city of Moscow was never very happy that a building appeared in this public park.

Daniel Satinsky: In a public park, right.

Bernard Sucher: But when the diner burned down, I think it was in 2017, it was still an open issue about that lease. It had remained unresolved for over two decades.

Daniel Satinsky: Were you paying rent to someone?

Bernard Sucher: Yes, we were. We were paying rent. I can’t remember exactly who the contracting lessor was, but effectively it was the theater.

Daniel Satinsky: It was the theater, yeah.

Bernard Sucher: And later the city did manage to assert certain rights, and we were paying the city as well.

Daniel Satinsky: And who put the utilities in for you? The theater?

Bernard Sucher: Yeah, I have to do some more homework, but —

Daniel Satinsky: Okay.

Bernard Sucher: At the end of the day, again, my recollection and actual factual history may differ greatly, but at the end of the day, I don’t think any of this would have happened without Oleg being able to form relationships and develop understandings. And people got paid. I believe, on the basis of the accounts, that everything was paid according to a contract, but how this would have looked from a city manager’s point of view I can only guess. And I bet it would have changed literally almost year to year over the life of the original Starlight Diner, because again, we were dealing in an environment where the laws on the books, the regulations on the books, didn’t really fit what people were doing on the street. And over time that improved, changed. There was a huge amount of corruption everywhere. So, whatever worked in 1995, was surely different by 1998, was quite a different thing ten years later, and so on.

Daniel Satinsky: So you brought a piece of American culture, if you will, into Russia, which in those days was in love with American culture, at that period of time.

Bernard Sucher: Yeah. Well, it was something that we understood was a net positive, but it was never a blanket embrace of Americans or American culture. You were always dealing with the anxiety, and I think the reality that everything that was happening was happening because of force majeure on the Russian population. These people were undergoing, in real time, a national trauma, and each one of them personally in their families were going through multiple traumas. But if you were going to do restaurants, if you were going to do a diner, there was an American standard, and there was no other standard for an American diner than what we were doing. And so people were, I think at least intellectually, those who were engaging in some kind of professional way, or more importantly, ultimately customers, appreciated that this was something like an authentic American experience. And if you wanted that for that particular moment in your day then yeah, that was something, you could taste America going to Starlight Diner, that was for damn sure.

The team that actually delivered Starlight, which were people that were recruited, by and large, by Rosinter, Rostic’s operation, JoJo Massimiani, Bob Lorenz and others, they were bringing an authentic American experience, and they took huge pride in that. And the people who worked with us in those early years, and for a very remarkably long time afterwards, they loved being part of that and representing it, and that’s why Starlight Diner had such long legs and was so commercially successful; people loved it.

Daniel Satinsky: Yeah. And was it a success from the beginning, or did you have to build that?

Bernard Sucher: So, by the time Shawn really settled into his role — I mentioned that Dominique Berhouet left under a cloud. My relationship with Paul and Oleg had become very strained, and I was…in the beginning this was really not about making a buck for me. This was about investing my money so I could have a good place to eat, or a good place to work out. And I wanted to…by the time Shawn got ready to do the diner, you know, he had cleaned up a lot of stuff at Uncle Guilly’s and Moscow Beach Club, and by the time he was really ready to advance this concept, he’d worked out “okay, we’re not going to build it on site, we’re going to do a modular setup, we’re going to buy it from a specific place called the Starlight Diner Manufacturing facility in Ormond Beach, we’re going to ship it, this is how this thing’s going to work”, built a business plan, all that, I really was hoping somebody else would do this.

But Shawn said look, you recruited me to this crazy effort, and I said yes because you promised me that you’d pay for the diner, and there’s no way that we’re not doing the diner. So we needed $1.1 million, if I remember right, to do what became Diner 1, the Mayakovsky diner, and a promise is a promise, and I really respected Shawn, believed in him, and so I said okay, I guarantee that you will have the money on time.

And at that moment I was lucky because there was an enthusiasm for this idea that Russia was going to be on a vertical path to being the largest economy in Europe, that these early, modest successes we had had in our businesses were proofs of concept, and that consumer culture in Russia, starting in Moscow, was just going to boom. And so when I said to people we are going to do the diner—and this was in discussing this in the beginning of 1995—and the plan was well advanced, and I guess I was already putting money into it myself, people were like well, “you’re going to let me invest, right? I mean, you’ve got to let me invest!”.

And I looked at where my life was. I was very busy with other projects, and increasingly exhausted with a half a dozen different projects in this crazy environment we were living in. And I said all right, you know, I’m going to syndicate my interest in this. So ultimately I didn’t have any dollar exposure in the diner. Other investors bought all of the…well, they paid for the entire thing.

Daniel Satinsky: Paid for the entire investment.

Bernard Sucher: Yeah. I syndicated it 100%. So, when we opened I don’t believe I had any, I don’t recall having any cash invested in the diner at all. And by that point we had agreed — sorry, that’s not quite true. In retrospect we sold the Moscow Beach Club. I believe that was in late ’96. And we sold Uncle — or I sold out of Uncle Guilly’s. We sold the Beach Club, if I’m not mistaken, 100% at the end of 1996, so very quickly. And I sold out of my share of Uncle Guilly’s at the beginning of 1998, and had no cash invested in the diner.

The diner was, in the first year I believe that unit did $4.3 million in revenue, which made it the highest-grossing diner by far in the world. There’s one in, I believe, Silver Spring, Maryland that did two and a half million dollars at its peak, so we were breaking records. And shortly after opening the first diner we opened a second one on Oktyabrskaya, which was largely funded out of profits from the first diner. I don’t remember raising money for Oktyabrskaya. That cost perhaps $1.3 million, and in its first year it did $4.8 million in revenue. And that was high margin revenue. These were unusually profitable diners. And the reason they were unusually profitable is because they were filled 24 hours a day, seven days a week.

And the reason they were filled was that expatriates observed the traditional three meal hours, breakfast, lunch and dinner, and Russians were doing the same thing, which was a big surprise, but they were doing that two hours later. So if Western breakfast, let’s say, went from 7:00 to 9:00, Russians would begin to show up for breakfast around 9:00 and stay to 11:00. Westerners would be coming in for lunch, and they might finish up by 2:00. Well, Russians would fill the place back up just as all the Westerners were leaving and stay there for lunch till maybe 4:00. Westerners would be coming in for happy hour, and maybe a lot of Russians would be staying as well through the happy hour. We’d be making an incredible amount of money on alcohol. And dinner was also a double.

And we’d get into the post-midnight shift. Well, where were you going to go before going to the nightclub or after coming home from the nightclub? Nightclubs were booming all over Moscow. The coolest place you could go to was the diner. At 4:00 in the morning it was a party on a Wednesday morning. And I knew that because that’s when I would go to breakfast. I’d be waking up super early to go to breakfast and that would be my night life, would be having my pancakes and coffee in a booth surrounded by revelers who were spending sometimes a couple hundred bucks a pop on champagne before the sun went up. That went on for a long time. It was a great business, and it was hysterical, fun.

Daniel Satinsky: Yeah. So, it was a different atmosphere than what we think of as a diner atmosphere in the U.S. This was —

Bernard Sucher: Thank God. [Laughs.]

Daniel Satinsky: Yeah. [Laughs.]

Bernard Sucher: Thank God. No, we couldn’t have foreseen that, of course. And later, as the market developed, people began to chip away at that. We still had a great 24/7 business for any diner in the world, even ten years later, 15 years later. Still they were outrageously profitable diners, at least in the top line, generating revenue. The bottom line didn’t always work out that way, but that’s another story. But understandably, restaurants began to open to cater to the party people at 3:00 in the morning, and they were far more attuned to the needs of Russian 20 somethings with big money who were passing from the coolest nightclub to their apartments. Great coffee houses began to populate Moscow, particularly after the 1998 crisis. And those coffee houses began to serve very decent breakfasts. And so on. And that’s natural. But the foundation for the diners in Oktyabrskaya and Mayakovskaya were still very, very strong.

Daniel Satinsky: Ultimately how many of the diners did you have?

Bernard Sucher: Well, in 1998 we had a third diner. At the port in Miami, I’m pretty certain, we had a third diner built, ready to go, and obviously a place to put it. We had identified land. We had dug a big hole. The basement was where all the storage would go. And set up all the utilities so that the diner would be dropped down the hole and you could literally plug it in, screw in all those connections, and voila, you’re ready to rock and roll. So, in September 1998 we had another diner that was meant to be coming to Moscow.

Obviously in the conditions of this extraordinary crisis, where really it looked like nothing good was going to happen, and it was hard to make any reasonable scenario going forward, our board voted to keep the diner in Florida and accelerate an idea that had been kicking around in our group for a little while then, which was to establish a foothold in the competitive U.S. market. Diners in the United States are obviously dealing with a lot more competition than we had in Russia.

And part of the idea was it was really hard to imagine where we were going to get the staffing for the rapid expansion that we were then planning and staffing particularly for management talent. So there was this wooly idea that if we had a decent U.S. business — maybe it wasn’t really as good as our Russian business — but if we had a decent U.S. business, that that would serve as a recruiting ground for leading edge U.S. market best practices, and that we would be able, over time, to cycle promising talent from Russia into the Florida market, and cycle back people that we thought were very promising and wanted an adventure working in Russia. A wooly idea. But in those conditions of crisis, we started a new business in Florida. So, you asked me how many diners we eventually had.

Daniel Satinsky: Right.

Bernard Sucher: We opened three Miami area diners. I’m speaking with you today from Miami. And those units are still around here. They’re called Moonlight diners now. We lost a fortune on those three diners in Florida. Nothing worked from the start. Never had good management, never had good labor. That was a crucial area that we never solved for. Later 9/11 just devastated Florida’s economy, or the consequences of 9/11 devastated Florida’s economy. We actually ended up being forced to sell those units, in distress, shortly thereafter.

Daniel Satinsky: That’s a bit ironic in that you thought of those as a place to develop management talent and workers that could be recycled to Russia while your Russian staff was perking away, and the U.S. part crashed. It’s just ironic.

Bernard Sucher: Ironic is a generous word for it. From gentleman Dan Satinsky. It was stupid.

Daniel Satinsky: [Laughs.] Okay.

Bernard Sucher: And the truth is our Russian management again and again proved over the years not only how loyal they were — and I don’t mean just personally — but loyal to the concept, in spirit loyal to the concept. And that first generation of people that we recruited in the 1990s by and large stayed with the firm, until our own failures in business in Russia compelled many of them, regretfully, to move on to other work in other places.

So, look, in the conditions that pertained, it’s kind of like combat. You can be good, courageous, lucky in one battle, and then maybe a second one, and people start looking at you. You go into a third battle and they’re looking to you for leadership and to set an example because you’ve done it in the past, and they’re scared out of their minds. Well, every year in Russia in business in the 1990s was a version of revolution, a version of war. And we did great year in and year out. But it never stopped.

And an individual or a team’s ability to keep managing the next crisis, the next series of insane, nobody would believe this kind of event, you can’t expect to do that forever. And we had a great run. But we went from being really, really well adapted to purpose, and successful at riding this outrageous wave, to not being so willing to get into the water, let alone being willing to push ourselves to the next level. And early success, in the case of Starlight, I’m absolutely clear in my mind that early — not just early success, but outstanding, unexpected success — laid the groundwork for future mediocrity.

Daniel Satinsky: Okay, interesting. I know you have limited time, so I’m going to call time on this, and the next time I talk to you we’re going to talk about your career in finance, which is as important in the experiences that you had as in the development of the restaurant business in the expat community that you’ve described so far.