Henrik Winther
Rosinter, Tigrus Restaurant Holding, Rostic’s, Patio Pizza, Planet Sushi, American Bar & Grill
Henrik Winther
Rosinter, Tigrus Restaurant Holding, Rostic’s, Patio Pizza, Planet Sushi, American Bar & Grill
About
About
A pioneer in the industry, Henrik has 45+ years of international experience in CIS, France and the USA and the Middle East, and has opened over 450 restaurants globally throughout his career. He has created 15 franchise brands, and brought on board over 40 franchisees, who opened over 250 restaurants under him.
Henrik has been working in Russia for the last 33 years. He made a major contribution to raising the service standards in Russia since the early ‘90s. The key principles to this are ethical, fair and professional business practices. These principles extend both to employees, guests and to partners. Today Tigrus is recognized as a leading restaurant operator in Russia.
Tigrus Restaurant Holding was founded in 2005. It has a presence in the Middle East, Eastern Europe and Central Asia and operates more 60 restaurants globally including brands Osteria Mario and Shvili.
Henrik has been working in Russia for the last 33 years. He made a major contribution to raising the service standards in Russia since the early ‘90s. The key principles to this are ethical, fair and professional business practices. These principles extend both to employees, guests and to partners. Today Tigrus is recognized as a leading restaurant operator in Russia.
Tigrus Restaurant Holding was founded in 2005. It has a presence in the Middle East, Eastern Europe and Central Asia and operates more 60 restaurants globally including brands Osteria Mario and Shvili.
Note: The written version of this interview has been supplemented by the interviewee
Daniel Satinsky: All right. Well, first of all, thank you for taking the time to speak with me. As you know, I'm in the process of gathering interviews with foreigners who have been important in business in Russia, particularly from the '90s. That is going to be the raw material, if you will, for the book I want to write about that period. I never lived in Russia, but I traveled there frequently, say 100 or 120 times, mostly during that period. I used to come and stay for three weeks at a time, five times a year with different joint ventures and so on starting in 1990. So I'm pretty familiar with the restaurant business there from the consumer point of view.
I think part of this book is... First of all, it's much more ambitious than can possibly be covered in a single book because of the richness and complexity of the period. For that reason, I primarily focused on Americans, but I also spoke with Johan Vanderplaetse who I've known for a number of years from Schneider Electric. So I can't keep it within these narrow bounds and still get at some of the important changes that took place.
And particularly looking at industries or sectors that didn't exist in the Soviet times. So finance, real estate, some aspects of telecom and retail. Restaurants of course did exist, but the restaurant industry is quite different. I'm really looking forward to hearing more about your experience or what brought you there. And I know, just looking at your LinkedIn profile, that you have a strong philosophy about how you've approached the restaurant business there. I could tell you more about myself if you want, and my favorite or non-favorite restaurants, but...
Henrik Winther: I'm sure we'll get into that.
Daniel Satinsky: Okay. Very good.
Henrik Winther: Go down memory lane together on which restaurants were in in the different periods.
Daniel Satinsky: Right. So what brought you to Russia?
Henrik Winther: Well, just in couple of words. I was born United States in Dallas, Texas, but my parents are Danish, and when I was a young child, moved back to Denmark. I grew up in Denmark till age 13, when they moved to southern France, to open up a restaurant in a hotel in southern France. So that was the start of my restaurant career, when I was 13 years old and living in a hotel and restaurant.
So, from there on, obviously, besides working every free moment of my time when not going to school, I continued into fine dining restaurants on [the Cote d’Azur, and near Paris], a season or two seasons. And then I went back to United States where I worked for a number of restaurant companies and Marriott. Went back to France to take over the business where I was actually in 1990, when I saw a little ad for some restaurant director for Moscow. It was in the International Herald Tribune. And you know, those ads were like one and a half line length. So anyway, it was enough to catch my attention. I was in southern France, and so I was just curious. So I called them up and one thing led to another. They wanted me to come, but so much time-
Daniel Satinsky: Let me interrupt you. You had previously never had any particular interest in Russia or Moscow?
Henrik Winther: No. Let's say culturally not. It had [for a long time been portrayed as] an evil empire and perceived as such and maybe even treated as such. So, it was just really never on the map.
In the hotel restaurant industry, always in the International [Herald Tribune], they advertise for people to go to Africa, they go to Asia, they go to Latin America, and all over the world, but there's never been any ads for anybody in the Soviet Union. So it was like when I saw that little one and a half line ad, it just, "I got to know what's behind that." And it was just driven out of curiosity that I wanted to find out what that was about.
I wasn't looking for a job. I was running my own hotel and restaurant in southern France. I was in heaven. But they didn't want to talk to me unless I sent them a resume. So I grabbed an old resume and put it in the fax machine and asked some questions. And they said something about a restaurant in Moscow and so forth, talked it through a little. They were just also starting to look for people.
Daniel Satinsky: Who placed the ad? Was it Russians or foreigners?
Henrik Winther: Yes, it was Rostislav Ordovsky who was the founder of Rosinter in those days. They did Kodak and Pioneer and Aiwa in those early '90s. Restaurants was what I came over to open up. He's a Venezuelan of Russian origin, and he came over in 1988, '89, started up Kodak distribution in the Soviet Union. He had this problem with the Kodak business. He wanted to sell it for rubles, but he gets the rubles and he can't use the rubles because he cannot buy dollars to pay the supplier.
But there was a law that came out that you can open up hard currency restaurants, as a matter of fact, only hard currency restaurants. The idea came to him to open up a hard currency restaurant. Byproducts were rubles which is generated from the Kodak business. So, dollars from the restaurant goes to Kodak, and the rubles goes to buy products for the restaurant.
Daniel Satinsky: Wow. So it was an elaborate currency circulation.
Henrik Winther: Absolutely. It was kind of to solve a hole in the law in finance. It was a logical way to do it, ingenious way.
Daniel Satinsky: Let me just give you a quick personal note, because the first joint venture I worked for was in the same period of time. And we were importing rare earth oxides, which are a high-tech material from the Atomic Energy Ministry, selling them for dollars, using the dollars to buy video and audiocassettes in Hong Kong, shipping them to Vladivostok, selling them in the Far East for rubles, and buying more rare earth oxides.
Henrik Winther: That's it, yes.
Daniel Satinsky: Same problem solved in a different way, right?
Henrik Winther: Yes, yes.
Daniel Satinsky: And he was interested in the restaurant primarily for that purpose, but was it also because he saw an opportunity in restaurants?
Henrik Winther: Primarily it was a currency issue. Now he had a friend in Spain that he brought over to help him open up the very first restaurant which is Rincon Espanol in Hotel Moscow on Manezhnaya Square. You must have been there, I'm sure, in those early days. It was one of the few places that was opening. So anyway, at that point he brought me over because he needed more currency conversion, so he needed more restaurants. He is not a restaurateur, he's an entrepreneur. And that's when I joined him. And with him, and so I opened up over 400 restaurants over the next 17 years with him throughout Russia and throughout the CIS, primarily in Russia with him.
Daniel Satinsky: It started from currency conversions, and then once the ruble becomes convertible, then it becomes a real business line for you.
Henrik Winther: Well, it actually quickly grew into its own business because in 1993 we opened up the American Bar and Grill, and Santa Fe, and Patio Pizza in Volhonka, Rostic’s and Combi’s-
Daniel Satinsky: So, you opened Patio Pizza?
Henrik Winther: Yes.
Daniel Satinsky: I thought that it was an Israeli company for some reason.
Henrik Winther: No, Venezuelan. Venezuelan company with this.
Daniel Satinsky: Well, when I was traveling there, some of the people I worked for would not eat Russian food, so we ate at Patio Pizza all the time. They told me that it was an Israeli company.
Henrik Winther: No.
Daniel Satinsky: So just correct my own understanding of what happened.
Henrik Winther: Yeah. It was not Israeli, it was Venezuelan. That partner that I joined in 1991 to open up the restaurant. Rostislav Ordovsky-Tanaevsky Blanco is his name. By 1993, we opened up all these American Bar and Grill in Mayakovskaya, the Santa Fe, and Combi’s, also a sandwich place. And Rostic’s, the fried chicken, the KFC kind of look-alike, also opened up in 1993. So by end of 1993, we had probably about 25 restaurants or so.
Daniel Satinsky: In Moscow.
Henrik Winther: All in Moscow, yeah.
Daniel Satinsky: Did you come up with the concept for these restaurants?
Henrik Winther: Well, concept is always a team effort. It is impossible for a single person to come up with a concept or at least a good concept, so it's teamwork. I'm not the creative genius in terms of creative thinking. I'm the organizer. I'm the one that makes the trains run according to schedule and fully loaded and know where they're going. That's my part more than the creative part. But that focus on systems and implementation and organization was what allowed us to expand the business so quickly. By the time we got to 100 restaurants, it was in probably 1996, so it was going quite fast. We had to make sure that the wheels didn't fall off the wagon.
Daniel Satinsky: And were you pulling more expats in or were you training Russians to use your methods?
Henrik Winther: Both, absolutely in parallel. Just there was no reservoir of knowledge or knowledgeable people that could run a professional restaurant, Western-style. They were just not there. So, it had to be from foreign expertise, and we brought in a lot of Americans, Europeans, and so forth. But they are deeply handicapped by not speaking Russian, so it's always kind of a difficult trade-off. Up until 1990... Well, I think we fired about 75 foreigners in 1998. We let them all go. I left a handful, and the other 80 foreigners all had to go. So initially... In 1998, most of the restaurants was managed by Russians at that point in time. A lot of the big ones were run by foreigners. But nevertheless, it was in the early days, there was only foreign specialists brought.
Daniel Satinsky: Do you speak Russian, by the way?
Henrik Winther: I do.
Daniel Satinsky: So, you've learned.
Henrik Winther: Yes. Now I've lived here for 30 years. I never learned it in an academic environment, but it was just work environment that dictated that. I learned it. And then I got married to a Russian so that's even better excuse to perfect it.
Daniel Satinsky: Perfect it, right.
Henrik Winther: So yeah, those days were crazy in every sense of the word. They were chaotic, quite lawlessness. Because it was lawless, the only law that existed was the law of highest leverage or force. So that was driving death and killings very often as the final way to solve business disputes, because court systems almost have stopped, government was lost in their own clouds, and there was just so much lawlessness. And the only way to solve disputes was, well, you talk it over, you don't agree, you take it to the next level, the next level, and then you have the shoot-out.
And that was exactly what happening every day, every day, every day around us. It was pretty bloody, and I lost a number of friends and a number of acquaintances, a number of colleagues, a number of just foreigner friends that were here, which I'm sure you're familiar with the names also, since you were here, researching.
Daniel Satinsky: You were in the eye of the storm because you were cash businesses, right?
Henrik Winther: Yes, yes. As opposed to just import and distribution, restaurant is a people business. It takes huge amount of people to deliver a steak. In a shoe store you just need one clerk at the cash register. So given that it was such a people-intensive business, I came in close dealing with Soviet culture and Soviet mindset [that was highly educated and cultured but with a Soviet perspective and world view and experiences, so it was challenging to get exposed and adapt new business methods and styles.]
It was the first [western style] restaurant that people saw, right? Before, a restaurant was a Soviet restaurant. So now what is a restaurant that's not Soviet? They just could not fathom what that should be. So you had to start at the very basic level about training and teaching and involving. And it's not only technical skills, but it's the emotional part of being in the service industry. We know that Soviet, they are ]not known as smiley,] right? I mean, the saying “it's only [crazies that always smile...”, reveals a lot.]
So, to have staff that are energetic, smiling, talkative, relaxed, and all that was very difficult, but nevertheless objective so you had to just go at it systematically, because that was-
Daniel Satinsky: Did you have training classes in the restaurant? Or it was a part of work experience?
Henrik Winther: We created a school, internal, educational… It wasn't a university; it was an internal development programs for all positions. And it was like we needed just to fill new positions in a new restaurant. We needed maybe 500-[800] managers per year, managers, [chefs] and directors. So you needed a big throughput. And then, obviously you have turnover of staff because people love to hire our people because they're the only people that actually learned something about the hospitality industry. So our people that we trained, educated, and brought into our thinking system, they were high value targets for anybody else that needed to open up a restaurant in Moscow because the only alternative was to take in another foreigner at a foreigner salary. And we know where that goes.
Daniel Satinsky: So, you really were the beginnings of this industry?
Henrik Winther: It was the very start when you had to really... the waiters, the staff, the managers, they just did not get what a restaurant was supposed to be. And you could try to explain it to them. You can try to demonstrate it to them, but for them it was just abstract words that didn't take on an imaginary state that they could strive for. So very difficult.
Daniel Satinsky: What was the hardest thing you had to overcome in that training? What was the sort of most deeply ingrained problem?
Henrik Winther: Well, the most ingrained is this lack of smiling and enthusiasm. And so it's something that took a lot of my efforts early on and specifically that. So it must have been in 1994 or something like that. I had been wanting to, for people to wear name tags, it's normal: Andrei, Peter, Paul, Svetlana. "Hi, I am a waiter." Come on, let's be friendly. Let's lighten up. It was impossible. People quit, refused, walk off work, didn't want it. They were scared that people would know their name. They were fearful of that distance that they have between the guests and them, that distance, by god, might be less. And that was very threatening to them. So we're talking about some deep seeded cultural obstacles, barriers due to the isolation of the country for the last previous 70 years. And I mean, it was on everybody's mind. People are laughing in the restaurants, why nobody's smiling. Come on, or the cashiers at the grocery store, I mean, they're all just sour lemons.
In a grocery store, you do go there for the groceries, you don't go there for the smile. But when you do go to a restaurant, you actually do go there, not only to eat. You go there because you feel good while you're eating. So it's such a critical part to it. So part of our unique competitive advantage that we gained through the 90’s where we were the only restaurant company that was driving [quality] standards, consistent standards. It didn't mean that we were perfect all the time. No way, by far. But given the standard level of the foreign restaurants in Moscow that were very still amateurish and ad hoc and low budget and all that stuff. Rosinter just came in and just did things right. So that became our competitive advantage. And now that's all changed. But in those days, it was pretty big part of our business model and therefore all the focus on training and human development.
Daniel Satinsky: Did the owner push back on you about spending so much money and staff time on training?
Henrik Winther: We fought about, just about everything. We didn't see eye to eye on much. He is an entrepreneur. I'm a restaurateur. I know what it takes to make a restaurant tick. But it was very stressful to be confrontational with my partner and my boss.
But I knew what had to be done and, "This is what I'm here for," and I so I drove my agenda and ignored everybody else. And you can say, okay, it didn't make me a lot of friends, but it did make the company that Rosinter or Rostislav opened up, the most successful [of his ventures.]
Daniel Satinsky: And how long did you stay with him?
Henrik Winther: 17 years.
Daniel Satinsky: 17 years. Wow. Well, before I go there, I'm going to go back again to the beginnings in a different way. I remember reading about McDonald's and how long they took to develop their supply chain, to be able to get a product at their standards and their specifications. And so you must have had a lot of that same difficulty opening restaurant to get your supply chain. And how did you deal with that?
Henrik Winther: Well, again, going back in 1991, 1992, ‘93, in those early years when we're launching up to 25 restaurants by the end of 1993, I think, you couldn't buy anything really in a regular supermarket. Well, in the supermarket you could. So the only sources we had, we bought... We bought a warehouse, a big one, fitted it out and created a distribution center. Well, import business really, because we bought everything, all the wine, the alcohol, the food, the pasta, the meat, everything in Europe, shipped it in.
I shouldn't say "everything." We did buy... What do you call it? Vegetables and fruits, a lot of the key products, they were imported. And then even the fruit and vegetables that were bought locally, there was no suppliers of fruit and vegetables in the local market. And you couldn't just call up, "Can you bring me seven cases of tomatoes, please?" There's no phone number for that. So, we set up this distribution system, or facility to just service our restaurants. That grew into a whole different business. That was then later sold off to Emborg, and then today is still in business on a different name, Danish still company. So that was just a distribution, the facility. But then we also had to have lots of cars. We had lots of foreigners. We had lots of... Everybody had to have a car and distribution to the restaurants, that was also needed. Lots of trucks. So where do you get those cars serviced? Well, again, there was nobody you could really call to do that quality wise.
So, we had to set up an automotive repair service facility. Huge hanker and trucks, in and out, repair. Roads were [low quality], so broke down all the time. So there was a lot to do there. Then bakery, where do you buy bread for the restaurants? You don't find bread, there's nobody to call. So you go out there and you make your own bread. So what do you do? You set up, you buy a facility and then you set up a big bakery and production facility, and then you need to distribute all this bread to all the restaurants. Again, more trucks and more drivers and so forth. You get the point. It was not a matter of open up restaurants. That was the easy part. It was opening up a distribution facility, was import, tamozhnya…
Daniel Satinsky: Customs.
Henrik Winther: Customs, yes. And all that stuff. And distribution.
Daniel Satinsky: So, you had your own “tamozhnya”* point there in your facility, right?
Henrik Winther: No, not in the facilities. It had to go through [ground or] airport facility. So everything was complicated. The whole point is that it was not a... The matter, the task was to open up restaurants, but it pulled along a whole pool of other service businesses that you normally would just make a phone call for, including, well, we talked about the training, the training school. It became a major project that we were able to pump out these hundreds and hundreds of trained managers. So it was a very big exciting project. And I was feeling, I'm changing the Soviet Union. I'm changing the country from the Soviet Union into a new world, I'm thinking. So in that sense, it was very satisfying. There was a certain acknowledgement that that was happening, but it was still, because you were in the midst of it, it was maybe a little bit hard to understand the historical perspective on what you are doing and what the impact is. But as the years went into the mid-90s and later 90s, that whole in perspective became more and more clear and surely today, it's funny.
Daniel Satinsky: Well, a couple more questions about this. So you have a warehouse facility, but you have to source sort of large amounts of vegetables and fruits. And if you're not importing them, did you develop relations with collective farms? Did you have to specify to them what exactly you want so they had to meet standards? Did you have to reach that deep into it?
Henrik Winther: Yes, absolutely. And back in those days, “Belaya Dacha” was just launching their greenhouses with foreign technology. I think they started in '90. There was some kind of foreign co-sponsored project. And so there, they started growing some vegetables, but for vegetables you could go just to the market. And we bought a lot in the local markets in those days and through there also, from whoever brought it to the market. So depending on what it was. And nevertheless, it was very exciting because you were doing something that you knew nobody had done before. You were a pioneer. Every step you took, you knew that nobody stepped there before. And my family, my parents, they traveled a lot and doing adventures, stupid things, fun, stupid, but rationally, not very rational, doing crazy stuff.
The primary reason for me coming to Russia in those days was adventure. It was stepping into the darkened world, and it was bound to be interesting. And well, it drove me from the very first when I saw the ad. But that's just a reflection of how I deal with adventure. I seek it out. It's always there they are. I still do. So that was the primary reason, was excitement and doing something really unique. And it's a craziest ways that uniqueness unfolds in a profession. We talked about staff issues, but it's also, for example, why in every restaurant in Russia today is a Caesar salad on the menu. Now, it's a pretty popular salad worldwide, but it's not on every menu in every restaurant in the country.
But it actually has a funny story because in that very first restaurant that I opened up, it was a restaurant, it was a fine dining. And our best-selling specialty salad was salad Caesar. That was done table side so the waiter, he would bring out the egg, the capers, the mustard. He would all fix the sauce, put in the cheese, and mix it, and then toss the salad, lay it up, serve it, and serve it. So that was a fine dining activity.
Daniel Satinsky: What was the name of that restaurant again?
Henrik Winther: It was called Le Chalet.
Daniel Satinsky: Le Chalet.
Henrik Winther: It was on Korobeinikov lane in “Chaika” complex, on the other side of the river from the exhibition, International Exhibition Center now.
So it was really a fantastic Caesar salad because I had done it in the United States for years before that. It was just fantastic. And every waiter was required to know how to make it. And we also talked about turnover. When somebody were about to open up a restaurant, the first day they would go to find their new employees would be in my restaurant because they, at least, developed, some training, know where the table is, selection process and so forth. So yes, prime candidate. So I had turnover of these people quite often. So, they come to this restaurant and this restaurant, no matter what they're doing: "So what are we going to have on the menu?" And always some of them say, "Salad Caesar, we know how to make." And that means that in the 90’s, every restaurant had Caesar salad because it was a little pool of expertise that was just seeded at the very, very launch of this hospitality business. And it just took off and infiltrated. It's an obvious example, but actually there's a lot of other things we did. Corporate policies that yet today dictate how the industry works.
For example, and this is one of my, I would consider, my mistakes probably what I regret a lot, maybe not the most, but one of the things that I could have, should have thought of differently. It's about tips. Soviet Union, no tip policy. That whole concept didn't exist. So we had a discussion on it. I wanted to drive a tip policy, more westernized, but I was not really able to implement it and communicate it and so forth with regret. I could have. The answers were there. I was so busy with so many other issues, it just never got around to it. And that caused surely the 90s and well into the 2000’s that this tipping policy in restaurants was non-existent. So somebody will tip a lot, if they're foreigners, they tip about 20% and Russians, maybe they tip nothing or they tip a little bit or they tip a lot. But there was no rhyme or reason in anything.
So it's one of the precise areas where I understand that I could have played a much more constructive role in precisely... Because I was the standard creator for all those business processes or just habits.
Daniel Satinsky: It's interesting you've mentioned that about tips. Even into the 2000’s, the Russians who came here seemed to be a bit confused about this whole tipping thing, just didn't quite understand.
Henrik Winther: And there was continual discomfort from the guests and from the staff. So I mean, it's a two-sided triangle that doesn't work well together. Anyway, now it's somewhat more becoming standardized or-
Daniel Satinsky: Well, give me another positive example. I mean, beyond the Caesar salad, another thing that, which by the way is very interesting. I spent a lot of time in Yaroslavl, for instance. Caesars, and now that you say this, I know that every restaurant had the Caesar salad. I'm not sure that the Georgian restaurants had it. In fact, probably they didn't. But the Caucasian restaurants had their own distinct cuisine. But every Russian restaurant had it. It's interesting. Any other that stands out for you that was industry defining?
Henrik Winther: One of the issues that I drive home very strongly, consistently for the last 30 years is about customer service. It was so obvious in the 90s that it was so critically needed, that something had to change. But [customer service] took of very slowly outside of Rosinter, [until late 90’s.] It was a single horse race. I was the only one hitting ahead, year after year, year after year, year after year on it. But it was never a broadly accepted business practice. And I guess maybe people didn't have to, or they weren't maybe big enough. Most of the restaurant change in those days, it was just a couple of small restaurants, rarely. So they didn't have, no infrastructure expertise probably to do it.
But what I see today is that focus on customer, customer service, and guest contact, just in the last couple of years, has found some fuel. And I see that in that sense, Russian restaurant hospitality business has now in many ways leapfrogged Europe and United States in service awareness. The U.S. has very much just fallen to the lowest common denominator. No frills, just not very exciting. Europe, it is never been exciting outside of Italy.
Daniel Satinsky: All right. Well, first of all, thank you for taking the time to speak with me. As you know, I'm in the process of gathering interviews with foreigners who have been important in business in Russia, particularly from the '90s. That is going to be the raw material, if you will, for the book I want to write about that period. I never lived in Russia, but I traveled there frequently, say 100 or 120 times, mostly during that period. I used to come and stay for three weeks at a time, five times a year with different joint ventures and so on starting in 1990. So I'm pretty familiar with the restaurant business there from the consumer point of view.
I think part of this book is... First of all, it's much more ambitious than can possibly be covered in a single book because of the richness and complexity of the period. For that reason, I primarily focused on Americans, but I also spoke with Johan Vanderplaetse who I've known for a number of years from Schneider Electric. So I can't keep it within these narrow bounds and still get at some of the important changes that took place.
And particularly looking at industries or sectors that didn't exist in the Soviet times. So finance, real estate, some aspects of telecom and retail. Restaurants of course did exist, but the restaurant industry is quite different. I'm really looking forward to hearing more about your experience or what brought you there. And I know, just looking at your LinkedIn profile, that you have a strong philosophy about how you've approached the restaurant business there. I could tell you more about myself if you want, and my favorite or non-favorite restaurants, but...
Henrik Winther: I'm sure we'll get into that.
Daniel Satinsky: Okay. Very good.
Henrik Winther: Go down memory lane together on which restaurants were in in the different periods.
Daniel Satinsky: Right. So what brought you to Russia?
Henrik Winther: Well, just in couple of words. I was born United States in Dallas, Texas, but my parents are Danish, and when I was a young child, moved back to Denmark. I grew up in Denmark till age 13, when they moved to southern France, to open up a restaurant in a hotel in southern France. So that was the start of my restaurant career, when I was 13 years old and living in a hotel and restaurant.
So, from there on, obviously, besides working every free moment of my time when not going to school, I continued into fine dining restaurants on [the Cote d’Azur, and near Paris], a season or two seasons. And then I went back to United States where I worked for a number of restaurant companies and Marriott. Went back to France to take over the business where I was actually in 1990, when I saw a little ad for some restaurant director for Moscow. It was in the International Herald Tribune. And you know, those ads were like one and a half line length. So anyway, it was enough to catch my attention. I was in southern France, and so I was just curious. So I called them up and one thing led to another. They wanted me to come, but so much time-
Daniel Satinsky: Let me interrupt you. You had previously never had any particular interest in Russia or Moscow?
Henrik Winther: No. Let's say culturally not. It had [for a long time been portrayed as] an evil empire and perceived as such and maybe even treated as such. So, it was just really never on the map.
In the hotel restaurant industry, always in the International [Herald Tribune], they advertise for people to go to Africa, they go to Asia, they go to Latin America, and all over the world, but there's never been any ads for anybody in the Soviet Union. So it was like when I saw that little one and a half line ad, it just, "I got to know what's behind that." And it was just driven out of curiosity that I wanted to find out what that was about.
I wasn't looking for a job. I was running my own hotel and restaurant in southern France. I was in heaven. But they didn't want to talk to me unless I sent them a resume. So I grabbed an old resume and put it in the fax machine and asked some questions. And they said something about a restaurant in Moscow and so forth, talked it through a little. They were just also starting to look for people.
Daniel Satinsky: Who placed the ad? Was it Russians or foreigners?
Henrik Winther: Yes, it was Rostislav Ordovsky who was the founder of Rosinter in those days. They did Kodak and Pioneer and Aiwa in those early '90s. Restaurants was what I came over to open up. He's a Venezuelan of Russian origin, and he came over in 1988, '89, started up Kodak distribution in the Soviet Union. He had this problem with the Kodak business. He wanted to sell it for rubles, but he gets the rubles and he can't use the rubles because he cannot buy dollars to pay the supplier.
But there was a law that came out that you can open up hard currency restaurants, as a matter of fact, only hard currency restaurants. The idea came to him to open up a hard currency restaurant. Byproducts were rubles which is generated from the Kodak business. So, dollars from the restaurant goes to Kodak, and the rubles goes to buy products for the restaurant.
Daniel Satinsky: Wow. So it was an elaborate currency circulation.
Henrik Winther: Absolutely. It was kind of to solve a hole in the law in finance. It was a logical way to do it, ingenious way.
Daniel Satinsky: Let me just give you a quick personal note, because the first joint venture I worked for was in the same period of time. And we were importing rare earth oxides, which are a high-tech material from the Atomic Energy Ministry, selling them for dollars, using the dollars to buy video and audiocassettes in Hong Kong, shipping them to Vladivostok, selling them in the Far East for rubles, and buying more rare earth oxides.
Henrik Winther: That's it, yes.
Daniel Satinsky: Same problem solved in a different way, right?
Henrik Winther: Yes, yes.
Daniel Satinsky: And he was interested in the restaurant primarily for that purpose, but was it also because he saw an opportunity in restaurants?
Henrik Winther: Primarily it was a currency issue. Now he had a friend in Spain that he brought over to help him open up the very first restaurant which is Rincon Espanol in Hotel Moscow on Manezhnaya Square. You must have been there, I'm sure, in those early days. It was one of the few places that was opening. So anyway, at that point he brought me over because he needed more currency conversion, so he needed more restaurants. He is not a restaurateur, he's an entrepreneur. And that's when I joined him. And with him, and so I opened up over 400 restaurants over the next 17 years with him throughout Russia and throughout the CIS, primarily in Russia with him.
Daniel Satinsky: It started from currency conversions, and then once the ruble becomes convertible, then it becomes a real business line for you.
Henrik Winther: Well, it actually quickly grew into its own business because in 1993 we opened up the American Bar and Grill, and Santa Fe, and Patio Pizza in Volhonka, Rostic’s and Combi’s-
Daniel Satinsky: So, you opened Patio Pizza?
Henrik Winther: Yes.
Daniel Satinsky: I thought that it was an Israeli company for some reason.
Henrik Winther: No, Venezuelan. Venezuelan company with this.
Daniel Satinsky: Well, when I was traveling there, some of the people I worked for would not eat Russian food, so we ate at Patio Pizza all the time. They told me that it was an Israeli company.
Henrik Winther: No.
Daniel Satinsky: So just correct my own understanding of what happened.
Henrik Winther: Yeah. It was not Israeli, it was Venezuelan. That partner that I joined in 1991 to open up the restaurant. Rostislav Ordovsky-Tanaevsky Blanco is his name. By 1993, we opened up all these American Bar and Grill in Mayakovskaya, the Santa Fe, and Combi’s, also a sandwich place. And Rostic’s, the fried chicken, the KFC kind of look-alike, also opened up in 1993. So by end of 1993, we had probably about 25 restaurants or so.
Daniel Satinsky: In Moscow.
Henrik Winther: All in Moscow, yeah.
Daniel Satinsky: Did you come up with the concept for these restaurants?
Henrik Winther: Well, concept is always a team effort. It is impossible for a single person to come up with a concept or at least a good concept, so it's teamwork. I'm not the creative genius in terms of creative thinking. I'm the organizer. I'm the one that makes the trains run according to schedule and fully loaded and know where they're going. That's my part more than the creative part. But that focus on systems and implementation and organization was what allowed us to expand the business so quickly. By the time we got to 100 restaurants, it was in probably 1996, so it was going quite fast. We had to make sure that the wheels didn't fall off the wagon.
Daniel Satinsky: And were you pulling more expats in or were you training Russians to use your methods?
Henrik Winther: Both, absolutely in parallel. Just there was no reservoir of knowledge or knowledgeable people that could run a professional restaurant, Western-style. They were just not there. So, it had to be from foreign expertise, and we brought in a lot of Americans, Europeans, and so forth. But they are deeply handicapped by not speaking Russian, so it's always kind of a difficult trade-off. Up until 1990... Well, I think we fired about 75 foreigners in 1998. We let them all go. I left a handful, and the other 80 foreigners all had to go. So initially... In 1998, most of the restaurants was managed by Russians at that point in time. A lot of the big ones were run by foreigners. But nevertheless, it was in the early days, there was only foreign specialists brought.
Daniel Satinsky: Do you speak Russian, by the way?
Henrik Winther: I do.
Daniel Satinsky: So, you've learned.
Henrik Winther: Yes. Now I've lived here for 30 years. I never learned it in an academic environment, but it was just work environment that dictated that. I learned it. And then I got married to a Russian so that's even better excuse to perfect it.
Daniel Satinsky: Perfect it, right.
Henrik Winther: So yeah, those days were crazy in every sense of the word. They were chaotic, quite lawlessness. Because it was lawless, the only law that existed was the law of highest leverage or force. So that was driving death and killings very often as the final way to solve business disputes, because court systems almost have stopped, government was lost in their own clouds, and there was just so much lawlessness. And the only way to solve disputes was, well, you talk it over, you don't agree, you take it to the next level, the next level, and then you have the shoot-out.
And that was exactly what happening every day, every day, every day around us. It was pretty bloody, and I lost a number of friends and a number of acquaintances, a number of colleagues, a number of just foreigner friends that were here, which I'm sure you're familiar with the names also, since you were here, researching.
Daniel Satinsky: You were in the eye of the storm because you were cash businesses, right?
Henrik Winther: Yes, yes. As opposed to just import and distribution, restaurant is a people business. It takes huge amount of people to deliver a steak. In a shoe store you just need one clerk at the cash register. So given that it was such a people-intensive business, I came in close dealing with Soviet culture and Soviet mindset [that was highly educated and cultured but with a Soviet perspective and world view and experiences, so it was challenging to get exposed and adapt new business methods and styles.]
It was the first [western style] restaurant that people saw, right? Before, a restaurant was a Soviet restaurant. So now what is a restaurant that's not Soviet? They just could not fathom what that should be. So you had to start at the very basic level about training and teaching and involving. And it's not only technical skills, but it's the emotional part of being in the service industry. We know that Soviet, they are ]not known as smiley,] right? I mean, the saying “it's only [crazies that always smile...”, reveals a lot.]
So, to have staff that are energetic, smiling, talkative, relaxed, and all that was very difficult, but nevertheless objective so you had to just go at it systematically, because that was-
Daniel Satinsky: Did you have training classes in the restaurant? Or it was a part of work experience?
Henrik Winther: We created a school, internal, educational… It wasn't a university; it was an internal development programs for all positions. And it was like we needed just to fill new positions in a new restaurant. We needed maybe 500-[800] managers per year, managers, [chefs] and directors. So you needed a big throughput. And then, obviously you have turnover of staff because people love to hire our people because they're the only people that actually learned something about the hospitality industry. So our people that we trained, educated, and brought into our thinking system, they were high value targets for anybody else that needed to open up a restaurant in Moscow because the only alternative was to take in another foreigner at a foreigner salary. And we know where that goes.
Daniel Satinsky: So, you really were the beginnings of this industry?
Henrik Winther: It was the very start when you had to really... the waiters, the staff, the managers, they just did not get what a restaurant was supposed to be. And you could try to explain it to them. You can try to demonstrate it to them, but for them it was just abstract words that didn't take on an imaginary state that they could strive for. So very difficult.
Daniel Satinsky: What was the hardest thing you had to overcome in that training? What was the sort of most deeply ingrained problem?
Henrik Winther: Well, the most ingrained is this lack of smiling and enthusiasm. And so it's something that took a lot of my efforts early on and specifically that. So it must have been in 1994 or something like that. I had been wanting to, for people to wear name tags, it's normal: Andrei, Peter, Paul, Svetlana. "Hi, I am a waiter." Come on, let's be friendly. Let's lighten up. It was impossible. People quit, refused, walk off work, didn't want it. They were scared that people would know their name. They were fearful of that distance that they have between the guests and them, that distance, by god, might be less. And that was very threatening to them. So we're talking about some deep seeded cultural obstacles, barriers due to the isolation of the country for the last previous 70 years. And I mean, it was on everybody's mind. People are laughing in the restaurants, why nobody's smiling. Come on, or the cashiers at the grocery store, I mean, they're all just sour lemons.
In a grocery store, you do go there for the groceries, you don't go there for the smile. But when you do go to a restaurant, you actually do go there, not only to eat. You go there because you feel good while you're eating. So it's such a critical part to it. So part of our unique competitive advantage that we gained through the 90’s where we were the only restaurant company that was driving [quality] standards, consistent standards. It didn't mean that we were perfect all the time. No way, by far. But given the standard level of the foreign restaurants in Moscow that were very still amateurish and ad hoc and low budget and all that stuff. Rosinter just came in and just did things right. So that became our competitive advantage. And now that's all changed. But in those days, it was pretty big part of our business model and therefore all the focus on training and human development.
Daniel Satinsky: Did the owner push back on you about spending so much money and staff time on training?
Henrik Winther: We fought about, just about everything. We didn't see eye to eye on much. He is an entrepreneur. I'm a restaurateur. I know what it takes to make a restaurant tick. But it was very stressful to be confrontational with my partner and my boss.
But I knew what had to be done and, "This is what I'm here for," and I so I drove my agenda and ignored everybody else. And you can say, okay, it didn't make me a lot of friends, but it did make the company that Rosinter or Rostislav opened up, the most successful [of his ventures.]
Daniel Satinsky: And how long did you stay with him?
Henrik Winther: 17 years.
Daniel Satinsky: 17 years. Wow. Well, before I go there, I'm going to go back again to the beginnings in a different way. I remember reading about McDonald's and how long they took to develop their supply chain, to be able to get a product at their standards and their specifications. And so you must have had a lot of that same difficulty opening restaurant to get your supply chain. And how did you deal with that?
Henrik Winther: Well, again, going back in 1991, 1992, ‘93, in those early years when we're launching up to 25 restaurants by the end of 1993, I think, you couldn't buy anything really in a regular supermarket. Well, in the supermarket you could. So the only sources we had, we bought... We bought a warehouse, a big one, fitted it out and created a distribution center. Well, import business really, because we bought everything, all the wine, the alcohol, the food, the pasta, the meat, everything in Europe, shipped it in.
I shouldn't say "everything." We did buy... What do you call it? Vegetables and fruits, a lot of the key products, they were imported. And then even the fruit and vegetables that were bought locally, there was no suppliers of fruit and vegetables in the local market. And you couldn't just call up, "Can you bring me seven cases of tomatoes, please?" There's no phone number for that. So, we set up this distribution system, or facility to just service our restaurants. That grew into a whole different business. That was then later sold off to Emborg, and then today is still in business on a different name, Danish still company. So that was just a distribution, the facility. But then we also had to have lots of cars. We had lots of foreigners. We had lots of... Everybody had to have a car and distribution to the restaurants, that was also needed. Lots of trucks. So where do you get those cars serviced? Well, again, there was nobody you could really call to do that quality wise.
So, we had to set up an automotive repair service facility. Huge hanker and trucks, in and out, repair. Roads were [low quality], so broke down all the time. So there was a lot to do there. Then bakery, where do you buy bread for the restaurants? You don't find bread, there's nobody to call. So you go out there and you make your own bread. So what do you do? You set up, you buy a facility and then you set up a big bakery and production facility, and then you need to distribute all this bread to all the restaurants. Again, more trucks and more drivers and so forth. You get the point. It was not a matter of open up restaurants. That was the easy part. It was opening up a distribution facility, was import, tamozhnya…
Daniel Satinsky: Customs.
Henrik Winther: Customs, yes. And all that stuff. And distribution.
Daniel Satinsky: So, you had your own “tamozhnya”* point there in your facility, right?
Henrik Winther: No, not in the facilities. It had to go through [ground or] airport facility. So everything was complicated. The whole point is that it was not a... The matter, the task was to open up restaurants, but it pulled along a whole pool of other service businesses that you normally would just make a phone call for, including, well, we talked about the training, the training school. It became a major project that we were able to pump out these hundreds and hundreds of trained managers. So it was a very big exciting project. And I was feeling, I'm changing the Soviet Union. I'm changing the country from the Soviet Union into a new world, I'm thinking. So in that sense, it was very satisfying. There was a certain acknowledgement that that was happening, but it was still, because you were in the midst of it, it was maybe a little bit hard to understand the historical perspective on what you are doing and what the impact is. But as the years went into the mid-90s and later 90s, that whole in perspective became more and more clear and surely today, it's funny.
Daniel Satinsky: Well, a couple more questions about this. So you have a warehouse facility, but you have to source sort of large amounts of vegetables and fruits. And if you're not importing them, did you develop relations with collective farms? Did you have to specify to them what exactly you want so they had to meet standards? Did you have to reach that deep into it?
Henrik Winther: Yes, absolutely. And back in those days, “Belaya Dacha” was just launching their greenhouses with foreign technology. I think they started in '90. There was some kind of foreign co-sponsored project. And so there, they started growing some vegetables, but for vegetables you could go just to the market. And we bought a lot in the local markets in those days and through there also, from whoever brought it to the market. So depending on what it was. And nevertheless, it was very exciting because you were doing something that you knew nobody had done before. You were a pioneer. Every step you took, you knew that nobody stepped there before. And my family, my parents, they traveled a lot and doing adventures, stupid things, fun, stupid, but rationally, not very rational, doing crazy stuff.
The primary reason for me coming to Russia in those days was adventure. It was stepping into the darkened world, and it was bound to be interesting. And well, it drove me from the very first when I saw the ad. But that's just a reflection of how I deal with adventure. I seek it out. It's always there they are. I still do. So that was the primary reason, was excitement and doing something really unique. And it's a craziest ways that uniqueness unfolds in a profession. We talked about staff issues, but it's also, for example, why in every restaurant in Russia today is a Caesar salad on the menu. Now, it's a pretty popular salad worldwide, but it's not on every menu in every restaurant in the country.
But it actually has a funny story because in that very first restaurant that I opened up, it was a restaurant, it was a fine dining. And our best-selling specialty salad was salad Caesar. That was done table side so the waiter, he would bring out the egg, the capers, the mustard. He would all fix the sauce, put in the cheese, and mix it, and then toss the salad, lay it up, serve it, and serve it. So that was a fine dining activity.
Daniel Satinsky: What was the name of that restaurant again?
Henrik Winther: It was called Le Chalet.
Daniel Satinsky: Le Chalet.
Henrik Winther: It was on Korobeinikov lane in “Chaika” complex, on the other side of the river from the exhibition, International Exhibition Center now.
So it was really a fantastic Caesar salad because I had done it in the United States for years before that. It was just fantastic. And every waiter was required to know how to make it. And we also talked about turnover. When somebody were about to open up a restaurant, the first day they would go to find their new employees would be in my restaurant because they, at least, developed, some training, know where the table is, selection process and so forth. So yes, prime candidate. So I had turnover of these people quite often. So, they come to this restaurant and this restaurant, no matter what they're doing: "So what are we going to have on the menu?" And always some of them say, "Salad Caesar, we know how to make." And that means that in the 90’s, every restaurant had Caesar salad because it was a little pool of expertise that was just seeded at the very, very launch of this hospitality business. And it just took off and infiltrated. It's an obvious example, but actually there's a lot of other things we did. Corporate policies that yet today dictate how the industry works.
For example, and this is one of my, I would consider, my mistakes probably what I regret a lot, maybe not the most, but one of the things that I could have, should have thought of differently. It's about tips. Soviet Union, no tip policy. That whole concept didn't exist. So we had a discussion on it. I wanted to drive a tip policy, more westernized, but I was not really able to implement it and communicate it and so forth with regret. I could have. The answers were there. I was so busy with so many other issues, it just never got around to it. And that caused surely the 90s and well into the 2000’s that this tipping policy in restaurants was non-existent. So somebody will tip a lot, if they're foreigners, they tip about 20% and Russians, maybe they tip nothing or they tip a little bit or they tip a lot. But there was no rhyme or reason in anything.
So it's one of the precise areas where I understand that I could have played a much more constructive role in precisely... Because I was the standard creator for all those business processes or just habits.
Daniel Satinsky: It's interesting you've mentioned that about tips. Even into the 2000’s, the Russians who came here seemed to be a bit confused about this whole tipping thing, just didn't quite understand.
Henrik Winther: And there was continual discomfort from the guests and from the staff. So I mean, it's a two-sided triangle that doesn't work well together. Anyway, now it's somewhat more becoming standardized or-
Daniel Satinsky: Well, give me another positive example. I mean, beyond the Caesar salad, another thing that, which by the way is very interesting. I spent a lot of time in Yaroslavl, for instance. Caesars, and now that you say this, I know that every restaurant had the Caesar salad. I'm not sure that the Georgian restaurants had it. In fact, probably they didn't. But the Caucasian restaurants had their own distinct cuisine. But every Russian restaurant had it. It's interesting. Any other that stands out for you that was industry defining?
Henrik Winther: One of the issues that I drive home very strongly, consistently for the last 30 years is about customer service. It was so obvious in the 90s that it was so critically needed, that something had to change. But [customer service] took of very slowly outside of Rosinter, [until late 90’s.] It was a single horse race. I was the only one hitting ahead, year after year, year after year, year after year on it. But it was never a broadly accepted business practice. And I guess maybe people didn't have to, or they weren't maybe big enough. Most of the restaurant change in those days, it was just a couple of small restaurants, rarely. So they didn't have, no infrastructure expertise probably to do it.
But what I see today is that focus on customer, customer service, and guest contact, just in the last couple of years, has found some fuel. And I see that in that sense, Russian restaurant hospitality business has now in many ways leapfrogged Europe and United States in service awareness. The U.S. has very much just fallen to the lowest common denominator. No frills, just not very exciting. Europe, it is never been exciting outside of Italy.
Daniel Satinsky: You didn't consider Southern France exciting?
Henrik Winther: [Well, I love France but no.] French people are not known as exciting in their openness, friendliness, talkiness, the overtness, and contactness, that's not French surely.
Daniel Satinsky: You were saying, but things have changed so much in Russia. It leapfrogged over this in the sense what? That now, people are engaging?
Henrik Winther: The dynamism and the evolution that's taking place right now in the hospitality businesses that are not closing down. COVID has been bad for business, but it's not been bad for the good businesses. It's been bad for the [poorly run] businesses. It's true. I mean, actually it cleansed out a lot of [weak players]. The crises cleaned up the low performing segment. So a lot of people have closed. But the good restaurants have been thriving in the last couple of years. Trendiness and with style, with taste, with personality, with uniqueness, all that stuff wasn't there before. And now, I foresee that because of all the closings that taken place, then in all those locations, there will be a rebirth. But a rebirth of not in the old, but a rebirth of the already existing trends in the hospitality business that's already very strong. So, this is just more places where they can go out there... When you have rotation, then you have new people, new thoughts, new attempts, new money. So I think that will drive, probably, hospitality.
Daniel Satinsky: In terms of the customer base, you started with hard currency restaurants, which were mostly-
Henrik Winther: 90% of the guests were foreigners.
Daniel Satinsky: Okay. 90% foreigners, 10% wealthy Russians who wanted to show something.
Henrik Winther: Yeah. Now, I should say there were Russians, but they were not paying the bill. They may have been guests of the foreign table. So in that sense, it may have been more than 10%. But it was rare that, in the early days, that Russians had the hard currency to pay. But that changed into by... Well, going back to 1993, when we opened up these Patio Pizza, American Bar and Grill, Santa Fe, any other restaurant, there's a year of explosive growth.
Daniel Satinsky: So, you were beginning to serve more of the Russian public at that point?
Henrik Winther: Yes. It became much more Russian by then. Obviously, also, the foreign population grew from 1991 to 1993, so there's much more foreigners there. In 1991, we had 66% market share of foreign type restaurants in Soviet Union with two restaurants. There were three [western style] restaurants. So I had 66% market share of the Soviet Union, population of 350 million of the Soviet Union. So it was very funny.
Daniel Satinsky: Powerhouse. Well, I remember with Rostic's that my Russian friends... When I came to visit, I stayed with my Russian friends, I didn't stay with hotels in Moscow. And I remember him recommending to me Rostic’s and I remember that he was proposing it to me as a Russian alternative to going to the foreign-style fast foods. That was his impression.
Henrik Winther: His impression. That's funny.
Daniel Satinsky: Was it your intention to bring these restaurants closer to the Russian population? Obviously, it must have been but.
Henrik Winther: Yes. Surely going into the fast food segment with fried chicken, it was a big play for the broad customer base. Because from day one, it was always a ruble business. Even though, the other restaurants, they were currency still. The fast food was selling for rubles.
Daniel Satinsky: Which is why he considered it a Russian restaurant.
Henrik Winther: Probably so. Yes. That's right.
Daniel Satinsky: Just on the supply chain. You opened a fried chicken chain. So you need lots and lots of chicken and you had to source that domestically. You couldn't import all the-
Henrik Winther: We sourced both domestically and internationally because there was not enough chicken locally. So we imported chickens. We supplemented with local chicken and we were striving to always increase the local supply, but there was no supply. It was all small stuff, or bad quality, or they just didn't want to sell us what they had, they had other clients. So we had to work a lot with frozen chicken. But going back to infrastructure, we had to build a huge facility for warehousing, storing, and freezing chicken, and defrosting chicken, and processing chicken, and cutting chicken, and wrapping chicken, and marinating chicken, and sending the chicken to the restaurants. So yeah, running the restaurant was the easy part.
Daniel Satinsky: That was the easy part. The backend was the tough part. So back to the unsavory part just for a minute. I don't want to emphasize that in the book. I don't want to tell stories about shakedowns and the crazy mafia days, but it was a reality in the restaurant business. And so, did you have official “krysha”* or?
Henrik Winther: Yes, we did. We were vulnerable from when I came, even before that. But I came in 1991, until '93 when we solved the issue, and I'll tell you how we solved it. But those early days were really edgy. I was in several situations when people walked into the restaurant and asked to speak with the man in charge. And me being the man in charge, sat by the table and didn't understand anything and my translator refused to sit at the table. So that didn't work very well, because they didn't speak English and that whole... So anyway, I sent them upstairs and we had a local representative that was helping us with those kind of uninvited advances. But then, in 1993 when there was a big shootout in the White House…
Daniel Satinsky: I remember that. I flew into the Sheremetyevo that day. Watched it on TV.
Henrik Winther: Welcome to adventure. One of the guys that was inside the White House, was the deputy minister of anti-terrorism affairs for Russia in those days. After that shootout, he was obviously kicked out. I don’t remember exactly how we got ahold of him, but he came on as our chief of security and his background had been with security services forever. So, he managed to keep and fend off criminal elements with the help of official MVD* that we brought in when things got hairy, which was quite regularly.
Yeah, it was in that way: violent, corrupt, chaotic, lawless, you name it. It just fits the bill. It's what made it super exciting to be here. But I remember many, many times I was thinking in the early 90’s, "How do people survive?" I know it's hard to kill a person. It is. But the country was starving, there was no food. Not in the stores. So what did people live off? And many people have gotten fired or just the company ceased to exist-
Daniel Satinsky: Or weren't getting paid, right?
Henrik Winther: Yes, working and not getting paid for months or years, as a matter of fact. Backlogging on salaries. So just thinking how calm this place is, not just collapsing, and people just buy up in the streets. Well, I guess things weren't that bad. But somehow, how they didn't deteriorate even further, I don't understand the answers to that, because I was always wondering by how things worked. But then, it started... Everything moved away from money and into barter. And everybody was standing down by the metro and selling whether they had, silverware or a cup or glass or a cup or a table or a lamp. They would stand by a long, long, long, long, long, long line. One babushka after another, hoping that somebody needed a Soviet lamp so that she can buy a loaf of bread and survive another day. It was terrible. Terribly sad.
Daniel Satinsky: It strikes me, because I remember all that very well. And particularly, around the subway stations and up and down the stairs going in the... There are people standing there holding something or having something spread out. I'm not very proud of this, but I remember that we took that for granted, in a way, ignored it. And looked at, "This change is going on and there are opportunities here." We looked at the opportunities and we ignored, to a certain extent, ignored.
Henrik Winther: I don't know if we ignored it. We felt just helpless. I mean, the government has collapsed and the government was helpless. Who comes and saves everybody when everything has collapsed? So my sense was frustration of the fact that everything was so dysfunctional and sad. But you are right. Obviously, we were here because of the opportunities, the excitement, and so forth. So we, obviously, saw it through the prism of opportunity. But it was not because we didn't care, I think, most of us. It was just that, "For Christ's sake, where do you start?"
Daniel Satinsky: It was bigger than any of us and much bigger.
Henrik Winther: Yeah. Much, much bigger.
Daniel Satinsky: When did you begin to notice any Russian competitors to you in the restaurant business? When did that start to turn? I mean, I think if we tracked political events and oil prices, we probably could figure out when these things begin to change, but I don't know if you have any impression about that.
Henrik Winther: Restaurants are the type of business, that doesn't require a huge amount of capital to start up. A normal, rich person would probably be able to finance a restaurant. It's still a lot of money. But it's not $10 million or $100 million that you need to open up some other business, right? So it's an entrepreneurial business. So therefore, this entrepreneurial thing was active from '93, basically. Just starting something. By '96, Yolki-Palki opened up, I think.
Daniel Satinsky: Oh, '96. I remember Yolki-Palki very well.
Henrik Winther: That was the first Russian fast food. Well, no. Not fast food, casual concept that went big. If talking about the first competition, Russian competition, I would say got from them. But we were significantly bigger by that and so forth. But nevertheless, we felt, for the first time, that, "Hey, there's somebody that can also do some stuff. We're not alone."
Daniel Satinsky: Is that a good or a bad feeling, by the way?
Henrik Winther: Well, you always feel that somebody is nipping at your cake. Though you know that it's not your cake and it's inevitable. So it was okay. It was okay. I mean, surely, no hard feelings or anything like that. If you had the forest to yourself and now you have somebody else in it, you think that you're first. But before, there was nobody there so it's not yours. After '98 crisis devaluation default, that was the relaunch of the restaurant business. Because again, in that '98, a lot of places closed down, went out, and the rejuvenation took place. It didn't happen fast.
Daniel Satinsky: So, 1998 crushed a lot of the small restaurants?
Henrik Winther: Yeah. Small and big, I would say. But it became six months of pure hell. Pure hell and fight for survival. We stopped all import of stuff. So we had to go all local, meat and vegetables and something that had been very... Well, not feasible to do that before then. But now, it's just trillion dollars is out of the question. So, it's either you sell nothing, or you find something to sell in the local market. So, you had to restructure the whole business and fire everybody else. Fire all the foreigners.
Daniel Satinsky: Because you couldn't afford them?
Henrik Winther: Yeah. And thousands and thousands of Russians for that matter. So, it wasn't only foreigners.
Daniel Satinsky: Did you have to change your menu because you had to adapt to this?
Henrik Winther: Totally redesigned, redo new dishes, new prices, new everything, and just create something that is sellable with products that you have.
Daniel Satinsky: How many restaurants did you have at that point?
Henrik Winther: Probably about 100 and 120, maybe something like that. But at that point in time, that was '98, that was the end of crisises for a good while until 2009. So we actually had ten years of uninterrupted economic development. Those were the boom years without the defaults. That boom and default, it was in the '90s. But here, just boom without the defaults.
Daniel Satinsky: Did your changes that 1998 brought in terms of your menu, your supply chain, and everything, did they continue through those boom years, or did you go back to imports?
Henrik Winther: We evolved back into some import after that. Even several years later, a number of the products we had now have been able to find local suppliers for here and local suppliers had been created locally, including because of the crisis. It helps local production. But nevertheless, that was an evolution back over the years to import quality meat, for example. Fish is always imported. Always imported if it's good fish basically, 90%.
Daniel Satinsky: Did you join the sushi craze, by the way? Did you join that sushi craze?
Henrik Winther: Absolutely. From 1998, we opened up the second sushi restaurant in Moscow. Casual dining. No, it's not quite true because there was one in Hotel Rossiya. Anyway, that was one of the very first affordable sushi restaurant, casual dining and sushi. We called it “Planet Sushi.” So yes, it started in '98. And I think within five years, we probably had 40 Planet Sushi's. It never grew to be as big as El Patio, just because it started later.
Daniel Satinsky: But also, it impacted every other restaurant. I believe that Coffee Mania had sushi on the menu, so it was everywhere.
Henrik Winther: It was everywhere. And it started out great. It was delicious. It was exclusive. It was new. It was trendy. And then, when it started to be sold everywhere, that means that whether it was in a kiosk, or in the metro, or in the supermarket, everybody was selling sushi. It got worse and worse and you were just disgusted with just looking and thinking about putting that stuff in your mouth. So that, basically, made the sushi business collapse. It basically collapsed. And now, it's coming... You have some sushi. You can get sushi and so forth. But it's more fine dining sushi. It's not changed. You still have Yakitori and Tanuki.
Daniel Satinsky: Planet Sushi is gone?
Henrik Winther: Almost. They still have a couple of restaurants left, I think. But yeah.
Daniel Satinsky: So doing those boom years, all these changes took place. But somehow, I get the sense that you also left Rosinter, at some point, in that period?
Henrik Winther: Yeah. Last two years, I became president of Rostic's-KFC, because it was set up to be a business to be sold to KFC Yum! Group. So I led that for two and a half years. And then, decided I better focus on myself and open up my own restaurants. And my wife had already opened up several restaurants on a franchise system from Rosinter. I left the casual dining business and just focused now as president of Rostic's-KFC project. So, by the time I left Rosinter, my wife had opened up [9] franchise restaurants. So just joined her.
I mean, there's no difference, continue to open up restaurants. So that's what I started doing. But when I left Rosinter, they didn't replace me with anybody strong and experienced. So now, the business [going through a difficult time.]
Daniel Satinsky: That actually must be hard to watch, to build that and-
Henrik Winther: It is, because it's my heart, my soul, the best years of my life, my experiences. It means so much to me, those years and what I did and achieved and did fantastic, beautiful things to be proud of. And then I look at it right now, I don't even want to be associated with having ever worked there, because people don't know why now [it has lost it’s advantage.] So, in my profile, you won't read it, specifically, or at least in recent ones. It just makes me very sad. It's another business that didn't survive. All the businesses that were launched in the nineties or even the early 2000’s, how many are still around?
Yes, you have the big globals that are doing Danfoss or oil and gas and so forth. But what restaurants actually, not restaurants, businesses that were launched in those days, do you still see [them] around? I'm right now hard-pressed to mention any.
Daniel Satinsky: The restaurant that I know, “Pushkin”, still there?
Henrik Winther: Yes. Still there. And will be there for about a hundred years.
Daniel Satinsky: I ate there with a Russian friend of mine who started a software outsourcing business. And I visited him a couple years ago, and he took me there. And I hadn't been there in a while, but they look like they're still stable.
Henrik Winther: It's popular. It's suffered greatly during the COVID because it's very much a tourist and foreign business. Tourist location must-visit, kind of for foreigners coming in. And with COVID, it's been really difficult.
Daniel Satinsky: I distracted you from the point you were making about the numbers of businesses that have failed. And what do you attribute that to? Is it that changing conditions and they couldn't adapt? Or what is it?
Henrik Winther: It's every time you get hit... In Russia, you [can] make a lot of money really quickly, and then you lose it because of another default or economic crisis or whatever. So it's all vaporizes. You do it again, you build up a number of years, and poof, it goes again. Not only your business, all the businesses get hit, right? The survivors or not survivors, become a question: how indebted are you? Are you debt-free, or are you leveraged? In Russia, you cannot develop a long-term business with heavy leverage. It just doesn't work. There's too much up and down. You cannot work your business plan for those scenarios, or you just need to be [debt free.] That's also possible, right?
But we're talking about the basic entrepreneur that started the business doesn't have tons of cash to withstand those crises. And there've been so many, so many and so consistently that it is just knocked people out. I'm now living in Moscow. [Most of] my friends are gone. Now, I have a go away party here next week, and my friends that were, well, in, a hundred... Acquaintances in thousands. That's it. Long gone. I'm one of the last ones here. Well, there are some left. So, there's all these [entrepreneurial] people that just have given up or lost everything they had here or whatever they ended up with here after so many years of effort and dogged fighting in the craziness here. They ended up with immaterial and devaluated assets. They need to somehow earn some money before they retire." So that's why they all left. And it's sad. And in that sense, I'm maybe more dogged, more stubborn, and I have found my groove here. I really know the restaurant business very, very well. And I know it better in Russia than I would if I went to United States. I would be now in a different aquarium, find my way there. Here, I feel I have all the leverage, I have the understanding, I have the financing, I have the brand. Hey, it's all for us just to do something with it. So I'm still here for [my lovely family.]
Daniel Satinsky: Yeah, that's true.
Henrik Winther: If it takes you too long, your next crisis will take you out before you get it.
Daniel Satinsky: So has this Sanctions Crisis impacted you?
Henrik Winther: Well, there's today new sanctions announced, so I can't speak to those specifically, the impact they will have. But impact of sanctions, they were bad when they started doing self-sanction with products in 2014 and 2009. But Russia has now adapted. I don't feel they even are impacted by sanctions. The way we feel sanctions is that the exchange rate worsens. So again, devaluation, so you work the same, it means less in dollar terms. But I don't see Russia being vulnerable to sanctions. Now, I'm sure that some sanctions can be found that could hurt. But so far, and Russia has driven very specifically, the economic policy for the last 10 years has been driven toward self-sufficiency, independence from financial markets, huge reserves so that nobody can use [leverage]. It was a point that a vulnerability that was, the government were not willing to even consider compromising [on a homegrown economy.] That has made the Russian economy resilient. I mean, resilient in sanctions terms, basically, because the dependencies are much less than anywhere before. And I get the feeling after all these different sanctions that have been leveraged over the last several years, they have less and less impact, surely, that I can measure or feel. Maybe some people are impacted, but in society, I don't sense it.
Daniel Satinsky: Sort of thinking about your statement a few minutes ago about the expats leaving, this is sort of an aspect of the integration of Russia into the world. I don't mean it to sound condescending, but the integration that took place beginning in the nineties was in partly symbolized by the number of foreigners who were also engaged in the Russian economy and the extent that there's only a few left. And I've talked to probably 10 or 15 people who are still doing business there. Out of, I've now interviewed probably close to 50, so ultimately, I'll interview probably 70 for the book, but that's not important. It's an indicator of a change in the era that we've lived in. And the globalization part of it, though, in some ways, I think still remains, and going back to another thing you said earlier, which is the trendiness, the inventiveness, the change of the customer service climate in the service industry. It seems that Russia has absorbed a lot from that integration. I sometimes thought of this as an organ transplant. There was an organ transplant that went into this body that ultimately rejected it. There's some, I don't mean rejection, but as if they don't need foreigners anymore.
Henrik Winther: It's more driven by the foreigners that's feeling that there's nothing left for us here to do, [the economy has been Russified with new local talent.] That is my distinct take on what's taking place today with the only ones that are here still are the ones that are Russified, Russian family, or diplomatic, or have a business going. There are still business people here, obviously. There's still American Chamber of Commerce. It's still big. So it's not like I'm the only one [expat] left in Moscow. No.
It feels that way, just because in the early days, we were surrounded, we were doing business in English, just because everybody spoke English [in the business world.] And that was the only common language. Today it's a Russian business now, Russian environment, and it makes it much more difficult for foreigners to just come in and be smart and throw the weight around and do some deals. It doesn't work that way. In the nineties, you could do that. But today, you need to have some meat on the bones, serious proposals that make sense and are in need and realistic and whatever, which, again, wasn't necessarily required for the nineties. So today, you need to be better. You need to be much better [in order] to compete in Russia. The environment has changed a lot in that sense, [it’s now a mature market.] And there are more small companies and big companies, there are, I don't say a majority of them, but there's a growing pool of Russian entrepreneurs and small and medium businesses that try to do things the right way.
Daniel Satinsky: Well, yes, but even a place like Yaroslavl, which I visited to study Russian in 1991, when there was the restaurant, only restaurant, we could go to, the Medved', we had to leave at seven because that's when the soldiers came in. And there would be problems if we were there. And there was no Xerox machine. I have seen immense and amazing changes in that provincial city. And I'm sure that that's mirrored around the country. I think we're probably getting to the end of this in a way. This has been enormously interesting and helpful to me in ways you probably can't even imagine, but it really has. And I really appreciate this. And as I said to you previously, if I'm going to use anything from this in the book, I'll get your okay. You're still in business there, I don't want to cause any problems for you by attributing something to you that you go, "No, no, that's not going to help me." So, I definitely will do that. And if you think of something you wanted to say and didn't or whatever, please supplement this. And I wish you success with your new businesses. Obviously, you don't have to create your whole supply chain and system of warehouses in order to open your restaurants. So, it's a different time.
Henrik Winther: It's a different time. Different problem. It's funny how it is hard to say it's easier or harder. It's just different problems you are having.
Daniel Satinsky: So what concepts are you pursuing, just out curiosity.
Henrik Winther: Right now, we have two main concepts. One is Osteria Mario, it's our Italian brand, and Shvili, which is our Georgian Bistro. Those are the two strategic brands. [In 2021] we had 21 Osteria Mario open today, and we have six Shvili open. And we are in the process of opening up 17 more restaurants this year. So, this year will be a big growth year. Because one of my learnings living in Russia, there is no better time to invest in your restaurant business than in the deepest of a crisis. As soon as the COVID crisis was starting on the horizon, [we] immediately started the development strategies that now is the time to act, move quickly and go out there and find the best locations when the rents are the very best, and you nail them in for 10 years, and you have a business model for 10 years. If you wait till business is doing great and everybody's doing good, rents are twice as much, and you struggle to put your business model together with the new rent. I've been through that so many times that I just knew instinctively that this is time to act. And for the last year, the whole team has been just focused on opening up 20 restaurants in 2021. We'll see if it happens. But so far, it looks possible at least.
Daniel Satinsky: Well, certainly when it becomes possible for me to travel again, I'll look for your restaurants when I come to Moscow.
Henrik Winther: [Well, I love France but no.] French people are not known as exciting in their openness, friendliness, talkiness, the overtness, and contactness, that's not French surely.
Daniel Satinsky: You were saying, but things have changed so much in Russia. It leapfrogged over this in the sense what? That now, people are engaging?
Henrik Winther: The dynamism and the evolution that's taking place right now in the hospitality businesses that are not closing down. COVID has been bad for business, but it's not been bad for the good businesses. It's been bad for the [poorly run] businesses. It's true. I mean, actually it cleansed out a lot of [weak players]. The crises cleaned up the low performing segment. So a lot of people have closed. But the good restaurants have been thriving in the last couple of years. Trendiness and with style, with taste, with personality, with uniqueness, all that stuff wasn't there before. And now, I foresee that because of all the closings that taken place, then in all those locations, there will be a rebirth. But a rebirth of not in the old, but a rebirth of the already existing trends in the hospitality business that's already very strong. So, this is just more places where they can go out there... When you have rotation, then you have new people, new thoughts, new attempts, new money. So I think that will drive, probably, hospitality.
Daniel Satinsky: In terms of the customer base, you started with hard currency restaurants, which were mostly-
Henrik Winther: 90% of the guests were foreigners.
Daniel Satinsky: Okay. 90% foreigners, 10% wealthy Russians who wanted to show something.
Henrik Winther: Yeah. Now, I should say there were Russians, but they were not paying the bill. They may have been guests of the foreign table. So in that sense, it may have been more than 10%. But it was rare that, in the early days, that Russians had the hard currency to pay. But that changed into by... Well, going back to 1993, when we opened up these Patio Pizza, American Bar and Grill, Santa Fe, any other restaurant, there's a year of explosive growth.
Daniel Satinsky: So, you were beginning to serve more of the Russian public at that point?
Henrik Winther: Yes. It became much more Russian by then. Obviously, also, the foreign population grew from 1991 to 1993, so there's much more foreigners there. In 1991, we had 66% market share of foreign type restaurants in Soviet Union with two restaurants. There were three [western style] restaurants. So I had 66% market share of the Soviet Union, population of 350 million of the Soviet Union. So it was very funny.
Daniel Satinsky: Powerhouse. Well, I remember with Rostic's that my Russian friends... When I came to visit, I stayed with my Russian friends, I didn't stay with hotels in Moscow. And I remember him recommending to me Rostic’s and I remember that he was proposing it to me as a Russian alternative to going to the foreign-style fast foods. That was his impression.
Henrik Winther: His impression. That's funny.
Daniel Satinsky: Was it your intention to bring these restaurants closer to the Russian population? Obviously, it must have been but.
Henrik Winther: Yes. Surely going into the fast food segment with fried chicken, it was a big play for the broad customer base. Because from day one, it was always a ruble business. Even though, the other restaurants, they were currency still. The fast food was selling for rubles.
Daniel Satinsky: Which is why he considered it a Russian restaurant.
Henrik Winther: Probably so. Yes. That's right.
Daniel Satinsky: Just on the supply chain. You opened a fried chicken chain. So you need lots and lots of chicken and you had to source that domestically. You couldn't import all the-
Henrik Winther: We sourced both domestically and internationally because there was not enough chicken locally. So we imported chickens. We supplemented with local chicken and we were striving to always increase the local supply, but there was no supply. It was all small stuff, or bad quality, or they just didn't want to sell us what they had, they had other clients. So we had to work a lot with frozen chicken. But going back to infrastructure, we had to build a huge facility for warehousing, storing, and freezing chicken, and defrosting chicken, and processing chicken, and cutting chicken, and wrapping chicken, and marinating chicken, and sending the chicken to the restaurants. So yeah, running the restaurant was the easy part.
Daniel Satinsky: That was the easy part. The backend was the tough part. So back to the unsavory part just for a minute. I don't want to emphasize that in the book. I don't want to tell stories about shakedowns and the crazy mafia days, but it was a reality in the restaurant business. And so, did you have official “krysha”* or?
Henrik Winther: Yes, we did. We were vulnerable from when I came, even before that. But I came in 1991, until '93 when we solved the issue, and I'll tell you how we solved it. But those early days were really edgy. I was in several situations when people walked into the restaurant and asked to speak with the man in charge. And me being the man in charge, sat by the table and didn't understand anything and my translator refused to sit at the table. So that didn't work very well, because they didn't speak English and that whole... So anyway, I sent them upstairs and we had a local representative that was helping us with those kind of uninvited advances. But then, in 1993 when there was a big shootout in the White House…
Daniel Satinsky: I remember that. I flew into the Sheremetyevo that day. Watched it on TV.
Henrik Winther: Welcome to adventure. One of the guys that was inside the White House, was the deputy minister of anti-terrorism affairs for Russia in those days. After that shootout, he was obviously kicked out. I don’t remember exactly how we got ahold of him, but he came on as our chief of security and his background had been with security services forever. So, he managed to keep and fend off criminal elements with the help of official MVD* that we brought in when things got hairy, which was quite regularly.
Yeah, it was in that way: violent, corrupt, chaotic, lawless, you name it. It just fits the bill. It's what made it super exciting to be here. But I remember many, many times I was thinking in the early 90’s, "How do people survive?" I know it's hard to kill a person. It is. But the country was starving, there was no food. Not in the stores. So what did people live off? And many people have gotten fired or just the company ceased to exist-
Daniel Satinsky: Or weren't getting paid, right?
Henrik Winther: Yes, working and not getting paid for months or years, as a matter of fact. Backlogging on salaries. So just thinking how calm this place is, not just collapsing, and people just buy up in the streets. Well, I guess things weren't that bad. But somehow, how they didn't deteriorate even further, I don't understand the answers to that, because I was always wondering by how things worked. But then, it started... Everything moved away from money and into barter. And everybody was standing down by the metro and selling whether they had, silverware or a cup or glass or a cup or a table or a lamp. They would stand by a long, long, long, long, long, long line. One babushka after another, hoping that somebody needed a Soviet lamp so that she can buy a loaf of bread and survive another day. It was terrible. Terribly sad.
Daniel Satinsky: It strikes me, because I remember all that very well. And particularly, around the subway stations and up and down the stairs going in the... There are people standing there holding something or having something spread out. I'm not very proud of this, but I remember that we took that for granted, in a way, ignored it. And looked at, "This change is going on and there are opportunities here." We looked at the opportunities and we ignored, to a certain extent, ignored.
Henrik Winther: I don't know if we ignored it. We felt just helpless. I mean, the government has collapsed and the government was helpless. Who comes and saves everybody when everything has collapsed? So my sense was frustration of the fact that everything was so dysfunctional and sad. But you are right. Obviously, we were here because of the opportunities, the excitement, and so forth. So we, obviously, saw it through the prism of opportunity. But it was not because we didn't care, I think, most of us. It was just that, "For Christ's sake, where do you start?"
Daniel Satinsky: It was bigger than any of us and much bigger.
Henrik Winther: Yeah. Much, much bigger.
Daniel Satinsky: When did you begin to notice any Russian competitors to you in the restaurant business? When did that start to turn? I mean, I think if we tracked political events and oil prices, we probably could figure out when these things begin to change, but I don't know if you have any impression about that.
Henrik Winther: Restaurants are the type of business, that doesn't require a huge amount of capital to start up. A normal, rich person would probably be able to finance a restaurant. It's still a lot of money. But it's not $10 million or $100 million that you need to open up some other business, right? So it's an entrepreneurial business. So therefore, this entrepreneurial thing was active from '93, basically. Just starting something. By '96, Yolki-Palki opened up, I think.
Daniel Satinsky: Oh, '96. I remember Yolki-Palki very well.
Henrik Winther: That was the first Russian fast food. Well, no. Not fast food, casual concept that went big. If talking about the first competition, Russian competition, I would say got from them. But we were significantly bigger by that and so forth. But nevertheless, we felt, for the first time, that, "Hey, there's somebody that can also do some stuff. We're not alone."
Daniel Satinsky: Is that a good or a bad feeling, by the way?
Henrik Winther: Well, you always feel that somebody is nipping at your cake. Though you know that it's not your cake and it's inevitable. So it was okay. It was okay. I mean, surely, no hard feelings or anything like that. If you had the forest to yourself and now you have somebody else in it, you think that you're first. But before, there was nobody there so it's not yours. After '98 crisis devaluation default, that was the relaunch of the restaurant business. Because again, in that '98, a lot of places closed down, went out, and the rejuvenation took place. It didn't happen fast.
Daniel Satinsky: So, 1998 crushed a lot of the small restaurants?
Henrik Winther: Yeah. Small and big, I would say. But it became six months of pure hell. Pure hell and fight for survival. We stopped all import of stuff. So we had to go all local, meat and vegetables and something that had been very... Well, not feasible to do that before then. But now, it's just trillion dollars is out of the question. So, it's either you sell nothing, or you find something to sell in the local market. So, you had to restructure the whole business and fire everybody else. Fire all the foreigners.
Daniel Satinsky: Because you couldn't afford them?
Henrik Winther: Yeah. And thousands and thousands of Russians for that matter. So, it wasn't only foreigners.
Daniel Satinsky: Did you have to change your menu because you had to adapt to this?
Henrik Winther: Totally redesigned, redo new dishes, new prices, new everything, and just create something that is sellable with products that you have.
Daniel Satinsky: How many restaurants did you have at that point?
Henrik Winther: Probably about 100 and 120, maybe something like that. But at that point in time, that was '98, that was the end of crisises for a good while until 2009. So we actually had ten years of uninterrupted economic development. Those were the boom years without the defaults. That boom and default, it was in the '90s. But here, just boom without the defaults.
Daniel Satinsky: Did your changes that 1998 brought in terms of your menu, your supply chain, and everything, did they continue through those boom years, or did you go back to imports?
Henrik Winther: We evolved back into some import after that. Even several years later, a number of the products we had now have been able to find local suppliers for here and local suppliers had been created locally, including because of the crisis. It helps local production. But nevertheless, that was an evolution back over the years to import quality meat, for example. Fish is always imported. Always imported if it's good fish basically, 90%.
Daniel Satinsky: Did you join the sushi craze, by the way? Did you join that sushi craze?
Henrik Winther: Absolutely. From 1998, we opened up the second sushi restaurant in Moscow. Casual dining. No, it's not quite true because there was one in Hotel Rossiya. Anyway, that was one of the very first affordable sushi restaurant, casual dining and sushi. We called it “Planet Sushi.” So yes, it started in '98. And I think within five years, we probably had 40 Planet Sushi's. It never grew to be as big as El Patio, just because it started later.
Daniel Satinsky: But also, it impacted every other restaurant. I believe that Coffee Mania had sushi on the menu, so it was everywhere.
Henrik Winther: It was everywhere. And it started out great. It was delicious. It was exclusive. It was new. It was trendy. And then, when it started to be sold everywhere, that means that whether it was in a kiosk, or in the metro, or in the supermarket, everybody was selling sushi. It got worse and worse and you were just disgusted with just looking and thinking about putting that stuff in your mouth. So that, basically, made the sushi business collapse. It basically collapsed. And now, it's coming... You have some sushi. You can get sushi and so forth. But it's more fine dining sushi. It's not changed. You still have Yakitori and Tanuki.
Daniel Satinsky: Planet Sushi is gone?
Henrik Winther: Almost. They still have a couple of restaurants left, I think. But yeah.
Daniel Satinsky: So doing those boom years, all these changes took place. But somehow, I get the sense that you also left Rosinter, at some point, in that period?
Henrik Winther: Yeah. Last two years, I became president of Rostic's-KFC, because it was set up to be a business to be sold to KFC Yum! Group. So I led that for two and a half years. And then, decided I better focus on myself and open up my own restaurants. And my wife had already opened up several restaurants on a franchise system from Rosinter. I left the casual dining business and just focused now as president of Rostic's-KFC project. So, by the time I left Rosinter, my wife had opened up [9] franchise restaurants. So just joined her.
I mean, there's no difference, continue to open up restaurants. So that's what I started doing. But when I left Rosinter, they didn't replace me with anybody strong and experienced. So now, the business [going through a difficult time.]
Daniel Satinsky: That actually must be hard to watch, to build that and-
Henrik Winther: It is, because it's my heart, my soul, the best years of my life, my experiences. It means so much to me, those years and what I did and achieved and did fantastic, beautiful things to be proud of. And then I look at it right now, I don't even want to be associated with having ever worked there, because people don't know why now [it has lost it’s advantage.] So, in my profile, you won't read it, specifically, or at least in recent ones. It just makes me very sad. It's another business that didn't survive. All the businesses that were launched in the nineties or even the early 2000’s, how many are still around?
Yes, you have the big globals that are doing Danfoss or oil and gas and so forth. But what restaurants actually, not restaurants, businesses that were launched in those days, do you still see [them] around? I'm right now hard-pressed to mention any.
Daniel Satinsky: The restaurant that I know, “Pushkin”, still there?
Henrik Winther: Yes. Still there. And will be there for about a hundred years.
Daniel Satinsky: I ate there with a Russian friend of mine who started a software outsourcing business. And I visited him a couple years ago, and he took me there. And I hadn't been there in a while, but they look like they're still stable.
Henrik Winther: It's popular. It's suffered greatly during the COVID because it's very much a tourist and foreign business. Tourist location must-visit, kind of for foreigners coming in. And with COVID, it's been really difficult.
Daniel Satinsky: I distracted you from the point you were making about the numbers of businesses that have failed. And what do you attribute that to? Is it that changing conditions and they couldn't adapt? Or what is it?
Henrik Winther: It's every time you get hit... In Russia, you [can] make a lot of money really quickly, and then you lose it because of another default or economic crisis or whatever. So it's all vaporizes. You do it again, you build up a number of years, and poof, it goes again. Not only your business, all the businesses get hit, right? The survivors or not survivors, become a question: how indebted are you? Are you debt-free, or are you leveraged? In Russia, you cannot develop a long-term business with heavy leverage. It just doesn't work. There's too much up and down. You cannot work your business plan for those scenarios, or you just need to be [debt free.] That's also possible, right?
But we're talking about the basic entrepreneur that started the business doesn't have tons of cash to withstand those crises. And there've been so many, so many and so consistently that it is just knocked people out. I'm now living in Moscow. [Most of] my friends are gone. Now, I have a go away party here next week, and my friends that were, well, in, a hundred... Acquaintances in thousands. That's it. Long gone. I'm one of the last ones here. Well, there are some left. So, there's all these [entrepreneurial] people that just have given up or lost everything they had here or whatever they ended up with here after so many years of effort and dogged fighting in the craziness here. They ended up with immaterial and devaluated assets. They need to somehow earn some money before they retire." So that's why they all left. And it's sad. And in that sense, I'm maybe more dogged, more stubborn, and I have found my groove here. I really know the restaurant business very, very well. And I know it better in Russia than I would if I went to United States. I would be now in a different aquarium, find my way there. Here, I feel I have all the leverage, I have the understanding, I have the financing, I have the brand. Hey, it's all for us just to do something with it. So I'm still here for [my lovely family.]
Daniel Satinsky: Yeah, that's true.
Henrik Winther: If it takes you too long, your next crisis will take you out before you get it.
Daniel Satinsky: So has this Sanctions Crisis impacted you?
Henrik Winther: Well, there's today new sanctions announced, so I can't speak to those specifically, the impact they will have. But impact of sanctions, they were bad when they started doing self-sanction with products in 2014 and 2009. But Russia has now adapted. I don't feel they even are impacted by sanctions. The way we feel sanctions is that the exchange rate worsens. So again, devaluation, so you work the same, it means less in dollar terms. But I don't see Russia being vulnerable to sanctions. Now, I'm sure that some sanctions can be found that could hurt. But so far, and Russia has driven very specifically, the economic policy for the last 10 years has been driven toward self-sufficiency, independence from financial markets, huge reserves so that nobody can use [leverage]. It was a point that a vulnerability that was, the government were not willing to even consider compromising [on a homegrown economy.] That has made the Russian economy resilient. I mean, resilient in sanctions terms, basically, because the dependencies are much less than anywhere before. And I get the feeling after all these different sanctions that have been leveraged over the last several years, they have less and less impact, surely, that I can measure or feel. Maybe some people are impacted, but in society, I don't sense it.
Daniel Satinsky: Sort of thinking about your statement a few minutes ago about the expats leaving, this is sort of an aspect of the integration of Russia into the world. I don't mean it to sound condescending, but the integration that took place beginning in the nineties was in partly symbolized by the number of foreigners who were also engaged in the Russian economy and the extent that there's only a few left. And I've talked to probably 10 or 15 people who are still doing business there. Out of, I've now interviewed probably close to 50, so ultimately, I'll interview probably 70 for the book, but that's not important. It's an indicator of a change in the era that we've lived in. And the globalization part of it, though, in some ways, I think still remains, and going back to another thing you said earlier, which is the trendiness, the inventiveness, the change of the customer service climate in the service industry. It seems that Russia has absorbed a lot from that integration. I sometimes thought of this as an organ transplant. There was an organ transplant that went into this body that ultimately rejected it. There's some, I don't mean rejection, but as if they don't need foreigners anymore.
Henrik Winther: It's more driven by the foreigners that's feeling that there's nothing left for us here to do, [the economy has been Russified with new local talent.] That is my distinct take on what's taking place today with the only ones that are here still are the ones that are Russified, Russian family, or diplomatic, or have a business going. There are still business people here, obviously. There's still American Chamber of Commerce. It's still big. So it's not like I'm the only one [expat] left in Moscow. No.
It feels that way, just because in the early days, we were surrounded, we were doing business in English, just because everybody spoke English [in the business world.] And that was the only common language. Today it's a Russian business now, Russian environment, and it makes it much more difficult for foreigners to just come in and be smart and throw the weight around and do some deals. It doesn't work that way. In the nineties, you could do that. But today, you need to have some meat on the bones, serious proposals that make sense and are in need and realistic and whatever, which, again, wasn't necessarily required for the nineties. So today, you need to be better. You need to be much better [in order] to compete in Russia. The environment has changed a lot in that sense, [it’s now a mature market.] And there are more small companies and big companies, there are, I don't say a majority of them, but there's a growing pool of Russian entrepreneurs and small and medium businesses that try to do things the right way.
Daniel Satinsky: Well, yes, but even a place like Yaroslavl, which I visited to study Russian in 1991, when there was the restaurant, only restaurant, we could go to, the Medved', we had to leave at seven because that's when the soldiers came in. And there would be problems if we were there. And there was no Xerox machine. I have seen immense and amazing changes in that provincial city. And I'm sure that that's mirrored around the country. I think we're probably getting to the end of this in a way. This has been enormously interesting and helpful to me in ways you probably can't even imagine, but it really has. And I really appreciate this. And as I said to you previously, if I'm going to use anything from this in the book, I'll get your okay. You're still in business there, I don't want to cause any problems for you by attributing something to you that you go, "No, no, that's not going to help me." So, I definitely will do that. And if you think of something you wanted to say and didn't or whatever, please supplement this. And I wish you success with your new businesses. Obviously, you don't have to create your whole supply chain and system of warehouses in order to open your restaurants. So, it's a different time.
Henrik Winther: It's a different time. Different problem. It's funny how it is hard to say it's easier or harder. It's just different problems you are having.
Daniel Satinsky: So what concepts are you pursuing, just out curiosity.
Henrik Winther: Right now, we have two main concepts. One is Osteria Mario, it's our Italian brand, and Shvili, which is our Georgian Bistro. Those are the two strategic brands. [In 2021] we had 21 Osteria Mario open today, and we have six Shvili open. And we are in the process of opening up 17 more restaurants this year. So, this year will be a big growth year. Because one of my learnings living in Russia, there is no better time to invest in your restaurant business than in the deepest of a crisis. As soon as the COVID crisis was starting on the horizon, [we] immediately started the development strategies that now is the time to act, move quickly and go out there and find the best locations when the rents are the very best, and you nail them in for 10 years, and you have a business model for 10 years. If you wait till business is doing great and everybody's doing good, rents are twice as much, and you struggle to put your business model together with the new rent. I've been through that so many times that I just knew instinctively that this is time to act. And for the last year, the whole team has been just focused on opening up 20 restaurants in 2021. We'll see if it happens. But so far, it looks possible at least.
Daniel Satinsky: Well, certainly when it becomes possible for me to travel again, I'll look for your restaurants when I come to Moscow.
Customs in Russian
Ministry of Internal Affairs
The roof; mafia protection
