Gordon Ramsay Story

Gordon Ramsay Flees Kitchen as TV Fame Saves Restaurant Empire
Bloomberg, December 2009
By William Green

On a gray morning in October, Gordon Ramsay bursts into the kitchen of his south London house, pop music blaring from the radio. At the heart of the room stands a 67,000-pound ($109,000) French cooking range that weighs 2.5 tons and had to be lowered by crane into the celebrity chef’s home.

Ramsay, who is 6 feet 2 inches (1.88 meters) tall and weighs 215 pounds (98 kilograms), is wearing jeans, a tight black T-shirt that accentuates his muscles and a Bell & Ross watch -- a Swiss brand marketed to soldiers, bomb-disposal experts and other “men facing extreme situations.”

The 43-year-old Scot pours himself a juice, sits at the kitchen table and looks back on his own extreme situation: a year in which his global restaurant empire almost went bankrupt.

In the fall of 2008, his London-based Gordon Ramsay Holdings Ltd. breached the covenants on a 10.5 million-pound loan and overdraft facility from Royal Bank of Scotland Group Plc. The bank hired KPMG to perform an independent review of the firm, 69 percent of which is owned by Ramsay and 31 percent by his father-in-law, Chris Hutcheson. In late December, Ramsay says, KPMG recommended that the company declare bankruptcy, fire hundreds of people and close all but its best-performing restaurants.

On the Line

“Everything was on the line,” Ramsay says. “December, January, February and March were the most highly pressurized, s---tiest, most awful four months I’ve ever had in business.” Ramsay was in Hollywood for most of the first 12 weeks of 2009 shooting the U.S. version of Hell’s Kitchen, the reality show he fronts for the Fox network. After a day of filming, he’d often be on the phone for hours at night, talking with Hutcheson about how to save their business.

The stress was so intense, he says, that he’d go for runs in Malibu at 4:30 a.m., wearing a black vest loaded with 20 kilograms of weights. “I just ran and ran and ran,” he says. For Ramsay, bankruptcy was unthinkable even if it made financial sense.

“There was no f---ing way that was ever going to happen,” he says. “That was never even an option.”

Ramsay’s fame would have made it the most public of failures.

“He’s one of the great chefs,” says Jean-Luc Naret, Paris-based director of the Michelin Guide series, which awards the stars that are the Oscars of the food world. Restaurant Gordon Ramsay at Royal Hospital Road is London’s only dining spot with three Michelin stars. In all, Ramsay boasts 12 stars, surpassed only by Frenchmen Joel Robuchon (25) and Alain Ducasse (18).

Television Chef

By 2009, Ramsay had about 20 restaurants as far afield as Dubai, New York, Paris, Prague and Tokyo. He also starred in five TV shows that reinforced his image as a master chef who swears and shouts in pursuit of perfection.

In the U.K., he earns more than 2 million pounds annually from Ramsay’s Kitchen Nightmares and The F Word, in which his culinary adventures with celebrities have included creating breast-milk cappuccinos. In 2009, Hutcheson says Ramsay’s talent fees from U.S. shows alone hit $9 million.

Ramsay has also published two autobiographies and lent his name to 23 cookbooks. According to Nielsen BookScan, his books, which have been translated into 18 languages, have generated almost 25 million pounds in U.K. sales alone. Ramsay also endorses pots, pans, glasses and china branded as Gordon Ramsay by Royal Doulton, and he’s Diageo Plc’s U.K. pitchman for Gordon’s Gin. Hutcheson says Ramsay makes about 3 million pounds a year from endorsements.

All of this has placed Ramsay at the vanguard of a generation of celebrity chefs with such myriad business interests that they barely cook.

International and Sexy

“Television made our profession really international and sexy,” says Austrian-born chef Wolfgang Puck, who began appearing on U.S. morning television in the 1980s. Today, Puck, 60, has more than 90 restaurants and says he generates $50 million a year in sales of cookware and appliances.

Ramsay, too, has focused on TV in amassing a fortune that London’s Sunday Times estimated in April 2008 at 50 million pounds.

“He’s perhaps the most media-enhanced chef in history,” says Bill Guilfoyle, a restaurant marketing expert at the Culinary Institute of America in Hyde Park, New York.

Ramsay’s empire expanded just as the global recession deepened. He opened eight restaurants in 2008 and was particularly exposed as diners cut their spending. Brand-name chefs like Ducasse and Robuchon seldom own their restaurants outright; instead, they sign consulting deals under which they provide chefs, create a menu and run the operation. Ramsay’s company owned almost all of its restaurants and was on the hook for everything from rent to salaries.

Bitter Irony

“We weren’t unlucky,” says Hutcheson, 61, chief executive officer of Gordon Ramsay Holdings. “We were clumsy. We’d put too many risks in front of us with too much confidence that nothing would fail.”

For Ramsay, this was especially embarrassing because Kitchen Nightmares showcases him as a savior of other people’s restaurants.

“It’s not great if you’re making a show called Kitchen Nightmares and advising people on how to fix their businesses for you to go bankrupt,” says Pat Llewellyn, producer of the program and Ramsay’s partner in a production company called One Potato Two Potato.

Tough Childhood

Ramsay was, at least, no stranger to hardship. The son of a failed musician who worked as a day laborer, he grew up poor in Glasgow, Scotland and Stratford-upon-Avon, England. In his 2006 autobiography, Humble Pie (Harper), he describes his late father, also named Gordon, as a wife-beating alcoholic and thief, whose favorite punishment was to thrash the back of his son’s legs with a belt. Ramsay’s mother, Helen, raised their four children, baking bread when she couldn’t afford to buy it and cooking them dishes such as ham hock soup or sausages and beans. His father’s view, Ramsay writes, was that “only poofs cook.”

A knee injury wrecked Ramsay’s dreams of a soccer career. So he stumbled into a hotel management course before taking a series of junior cooking jobs.

In 1989, his fascination with haute cuisine was awakened at Harvey’s, a London restaurant run by Marco Pierre White, the first British chef with three Michelin stars. Ramsay then moved to London’s top French restaurant, Le Gavroche, as an apprentice chef. Michel Roux Jr., now its head chef, says Ramsay was late for work in his first week after being arrested for jumping over a London underground turnstile to avoid the fare.

Ruthlessly Hardworking

While Roux says Ramsay was unruly, he made up for it in the kitchen. “He was beautiful to watch,” Roux says. “He’s a very naturally gifted chef. He has the taste, the eye of an artist, the efficiency, and he’s ruthlessly hardworking.”

Ramsay spent three years in France, including a stint with Robuchon, where he mastered the essentials of French cuisine. Then, in 1993, he became head chef at Aubergine in London.

“He was an animal, a monster; he was horrible,” says Angela Hartnett, who worked with him there. Hartnett says Ramsay once threw oysters at her after she’d opened them imperfectly. “He’d always say, ‘Why are you diluting my standards?’”

Nonetheless, Hartnett has worked with Ramsay for 16 years and is currently head chef at Murano, one of his London restaurants. One reason she stayed was the quality of his cuisine, which features lighter sauces using less butter and cream.

“He took classic French cooking and modernized it,” Hartnett says.

Pursuit of Perfection

Friends say Ramsay is hard-wired for perfection.

“If he were in a line of washer uppers in a prison, he’d want to do it the best and fastest,” producer Llewellyn says. Aubergine won two stars in 1997, and Ramsay decided he deserved more than the 25 percent stake its owners had given him. Ramsay quit, triggering a lawsuit for breach of contract that the parties settled out of court.

Ramsay had just married a schoolteacher, Tana Hutcheson, with whom he now has three daughters and a son between the ages of 7 and 11. Tana’s father, Chris, who owned a printing company, risked 1 million pounds in cash and loan guarantees to bankroll the Royal Hospital Road restaurant in 1998.

He and Ramsay have been partners ever since, and their bond goes beyond business. “He’s my son-in-law but, actually, he’s my son,” Hutcheson says.

Boiling Point

The Royal Hospital Road restaurant, with signature dishes like lobster ravioli in a lemon grass and chervil sauce, won its third star in 2001. By then, Ramsay was as famous for his temper as his cooking. A British TV documentary called Boiling Point showed him spitting out food and firing a waiter for serving the wrong appetizer. Ramsay even ejected restaurant reviewer A.A. Gill -- along with his guest, actress Joan Collins -- for criticizing him in print.

“I’ve become more mature,” Ramsay says now. “I wouldn’t say mellow. I still get incredibly frustrated.”

Many employees defend him, saying he’s generous and loyal. “He’s definitely not malicious,” says Josh Emett, head chef at Gordon Ramsay at The London in New York. “He’s passionate.”

Ramsay’s breakthrough came in 2001, when private-equity firm Blackstone Group LP asked him to run the restaurant at Claridge’s, one of four landmark hotels it then owned in London. Since the 1850s, Claridge’s had been patronized by famous guests ranging from Queen Victoria to Cary Grant.

“I thought it would be clever to have a bad boy there, and Gordon was the baddest,” says John Ceriale, Blackstone’s senior adviser for the lodging industry.

Dining Sensation

Ramsay’s arrival attracted a thousand calls a day for dining reservations, Ceriale says, and the restaurant has since made Gordon Ramsay Holdings as much as 2 million pounds a year. In 2002, Ceriale also put Ramsay in charge of all food at the Connaught and installed him at the Savoy Grill, a 120-year-old restaurant in the Savoy Hotel once run by French culinary legend Auguste Escoffier. A year later, Ramsay opened two restaurants in the Blackstone-owned Berkeley hotel.

In 2004, Ramsay’s Kitchen Nightmares debuted in the U.K., making him a household name. Mike Darnell, Fox’s president of alternative entertainment, saw him in a reality series, Hell’s Kitchen, and signed him to make U.S. versions of both shows. According to Hutcheson, Ramsay earns about $250,000 per episode. On Nov. 3, Fox announced that Ramsay will also star in MasterChef, an American version of the British cookery contest.

“He can’t walk the streets of New York without people shouting and screaming,” Darnell says. “He’s like a rock star.”

Critics Complain

The TV work, along with his international restaurant expansion, has triggered accusations that Ramsay is spread too thin. Richard Harden, co-founder of the guidebook Harden’s London Restaurants, says he was the city’s best chef for 10 years.

“Many of his restaurants have lost their way,” Harden says. “If you’ve got so many interests that are so geographically diverse, you can’t give them all proper attention.”

Jay Rayner, restaurant critic for the Observer newspaper, says Ramsay’s food is “out-of-date” as he doesn’t have time to create new dishes. “It’s no longer top-notch,” Rayner says.

While Ramsay bristles at such criticism, saying consistency is more important to him than being avant-garde, he makes no apology for spending less time at the stove. “You tell me a chef anywhere in the world that’s prepared to turn down quarter of a million dollars for an hour’s work on TV, and they’re the biggest lying bastard that ever put on a chef’s jacket,” he says.

Overseas Expansion

By 2006, Ramsay had nine restaurants in London. Ceriale then asked him to create restaurants in Blackstone’s overseas hotels, too. Ramsay opened in New York that year; Prague and Boca Raton, Florida, in 2007; and Hollywood and Paris in 2008. He rented the properties from Blackstone and used his non- restaurant earnings to equip the kitchens -- a strategy he says made sense because it deployed income that would have been taxed at 40 percent in the U.K.

Every one of these overseas ventures has lost money. In New York, where he opened two restaurants in Blackstone’s London NYC hotel, Ramsay says losses reached $4 million a year, with a unionized staff costing 80 percent of revenue.

Hutcheson says he and Ramsay didn’t think locally. For example, they neglected to take into account how little alcohol New Yorkers would order at lunch. Ramsay’s foray into Prague failed in early 2009. He also tripped up in France where he opened at the Trianon Palace Versailles, on the outskirts of Paris. Hutcheson says they lost as much as 200,000 euros ($295,000) a month there in 2008, with wages consuming 90 percent of revenue.

Emotional Approach

Ramsay’s ambitions in France were fueled by ego, Ceriale says, as he dreamed of winning three stars in the home of haute cuisine.

“I totally agree,” Ramsay says. “The French have been brilliant over the last 20 years at coming over to our country and telling us how crap our food is.”

Hutcheson says this emotional approach became a liability once the credit crisis struck. In late 2008, when RBS wanted to assess whether its loan was at risk, he says his accounts department couldn’t provide the relevant financial data. The company was also 7.2 million pounds in arrears on U.K. taxes. At the time, Ramsay and Hutcheson had 1,250 employees, up from 45 in 1998.

“The company just grew too quickly and no one kept on top of it,” Murano’s Hartnett says.

Crisis Moves

To avert bankruptcy, Ramsay and Hutcheson poured nearly 9 million pounds of their personal savings into Gordon Ramsay Holdings in 2009, 69 percent of it from Ramsay. They worked out an extension of tax payments with the British government and cut the staff at their London headquarters to 58 from 86.

Hutcheson says he told Ceriale the company would go bankrupt unless they could renegotiate their contracts with Blackstone.

“Shuttering the restaurants would not have been the best outcome for us or Gordon,” Ceriale says. “They needed to restructure the business, and we were the key to restructuring it.”

After weeks of negotiation, Blackstone agreed to assume ownership of the restaurants in Hollywood and Versailles, paying Ramsay a consulting fee to run them. The restaurant in Prague was closed in February. In November, Blackstone also took control of Ramsay’s restaurant in Boca Raton and his two restaurants in New York, paying him a percentage of revenues to oversee them as a consultant.

“Financially, we weren’t going to come out with much,” Hutcheson says. “But you just want to stop these apparently endless losses.”

Cutting Costs

In Ramsay’s remaining restaurants, everything is now about cost control. In London, his bistro Foxtrot Oscar has closed on Mondays and Tuesdays. Stuart Gillies, his head chef at Boxwood Cafe in The Berkeley, has saved 1,500 pounds a month by no longer ordering flowers, and he now uses cheaper cuts of meat, such as beef shoulder, that he says require more skill to prepare.
Hutcheson says the worst is over and Gordon Ramsay Holdings should generate 7 million pounds to 8 million pounds in earnings before interest, taxes, depreciation and amortization in the fiscal year ending in August. The company is also moving ahead with two new projects in 2010: Petrus, which had two Michelin stars, will relocate in London’s Belgravia neighborhood in January, and the Savoy Grill will reopen after a renovation.

New Life

Still, Ramsay will focus as much as ever on TV. “I want a life out of my kitchen,” he says.

In the future, Hutcheson says restaurants may become even less of a priority for Ramsay.

“I can run the business in Gordon’s name,” he says. “TV is his forte. That’s what he likes doing.”

Ramsay says his restless ambition stems from his childhood. He sometimes forces himself to recall those days as a reminder of how far he wants his life to be from that misery.

“Trust me,” he says. “That’s enough to keep anyone f---ing moving a thousand miles an hour.”

Pokhara: Construction of Regional International Airport Commences

Construction of new airport commences in Pokhara
Nepalnews, 9-Dec-09

Finally, construction works of a regional international airport in Pokhara, a major tourist hub of the country, have commenced.

The preliminary phase of the construction saw the light of the day after Minister of Tourism and Civil Aviation Sarat Singh Bhandari himself steered dozer and excavator to level the land acquired for the purpose of building international airport.

Government had acquired 3,106 ropanis of land in the Chhinedanda area of Pokhara sub-metropolitan some 34 years back to build a new airport. Due to lack of budget, political instability and other land-related hassles, the plan of constructing new airport had long been confined to shelf.

Earlier, efforts to build a new airport in the city under the concept of BOOT (Build-Own-Operate- Transfer) had also faced a debacle.

This time, the plan of construction new airport is being executed with the financial assistance extended by the Chinese government. Processes like preliminary survey and grading are estimated to cost around Rs 1.5 million. According to the minister, out of US $ 200 million extended by China for financing the Upper Trishuli Hydropower, some US $ 88 million will be mobilized for constructing the airport and Lumbini-Pokhara Fact Track.

The government has estimated some Rs 13 billion in order to accomplish the construction of new airport. The full-fledged construction will begin after the preparation of DPR.

The proposition of building a new regional airport in Pokhara was forwarded as an alternative to Tribhuwan International Airport (TIA) based in Kathmandu.

Tourism entrepreneurs of Pokhara are optimistic that the construction of new airport will help to give a whole new boost to the tourism business of the city.

Related News
International Airport Vital for Pokhara (24-Sep-06)

Shake Shack Taking Over the World

The Accidental Empire of Fast Food
NYT, 15-Dec-09
By GLENN COLLINS

CONSIDER, now, the not-so-fast-food rollout. Of the anti-chain chain.

Indeed, to comprehend the prudent and eccentric global-expansion vision of Shake Shack, Danny Meyer’s mini-chain of burger-and-custard stands, it is useful to consider the essence of contemporary American fast food.

“The whole experience is to cram people into a cookie-cutter space, to feed them as many unhealthy calories as possible — then get them to leave,” said Mr. Meyer, the president of the Union Square Hospitality Group and the Yoda of Shake Shack. “That stripping away of human experience? That is where fast food went astray.”

Contrast and compare, then, with the three Shake Shacks in New York City, where patrons are cheerfully welcomed at the counter of a neighborhood-centered, urban-fantasy version of a burger roadhouse. On the menu? Whole-muscle, no-trimmings, fresh-ground, antibiotic-and-hormone-free, source-verified-to-ranch-of-birth, choice-or-higher-grade Black Angus beef.

Furthermore, “people have to wait in line just to place their orders,” Mr. Meyer, 51, said on a recent afternoon. “After that? They have to wait for us to cook their orders. And then? We hope they’ll stay awhile, as they eat. To enhance the communal experience.”

And since Mr. Meyer’s team is on the case, the imminent proliferation of the concept — four Shacks will open in 2010, and a long-range plan calls for even more — will be persistent. Thoughtful. Considered. Crafted. Correct. In short, exactly what might be expected in a venture where the entire burger-management team honed its skills in three-star restaurants.

And it’s all so Danny.

“A hamburger stand is a very democratizing amenity,” he said. “We hope that each new Shake Shack can become both a citizen of, and mirror of, their communities.”

The Shake Shack rollout is precedent-shattering for the Union Square Hospitality Group. “We’ve always resisted expanding anything, ever,” Mr. Meyer said. “We resisted offers in Las Vegas. We resisted reality TV shows. And it took six years with Shake Shack before we decided to go forth and multiply.”

He has put David Swinghamer — his longtime business partner — in charge of the Shacking of America. As Mr. Swinghamer says of the ramp-up: “This is not a formula that anyone else has, or would do.” (Mr. Swinghamer had supervised the Blue Smoke barbecue restaurants, which Mr. Meyer would like to replicate, but others will lead that push.)

If the deliberate pace of expansion hardly seems to suggest a world-domination strategy, nevertheless a global future is in Mr. Meyer’s sights. Next year Shake Shack plans to plant its standard in Kuwait — way beyond its well-worn subway stops.

Mr. Swinghamer said the Shack in Kuwait will be managed by Alshaya, a local company that handles 50 brands in the Middle East, including Starbucks, Dean & DeLuca and Le Pain Quotidien.

In the United States, however, Shacks will not be franchised. Mr. Swinghamer said that “in five years we could have 20, mostly up and down the East Coast.”

Scheduled to open next year is an outpost on the ground floor of a Miami Beach building on Lincoln Road designed by the Pritzker Prize-winning Swiss architecture firm Herzog & de Meuron. (It designed the bird’s nest stadium at the Beijing Olympics.)

Another new Shack will land at Prince and Mulberry Streets, to be opened this spring.

On the Upper East Side, Mr. Swinghamer has leased a ground-floor space next door to the Barnes & Noble on the southeast side of East 86th Street near Lexington Avenue.

It is to open sometime next year, around the time another Shack will make its debut in the theater district at the southwest corner of 44th Street and Eighth Avenue, Mr. Swinghamer said.

Schnipper’s Quality Kitchen, three blocks south at 41st Street and Eighth Avenue — whose menu includes premium burgers — seems sanguine about the impending Shack.

“We serve a much more varied menu,” said Andrew Schnipper, its chief executive, who is also looking for more locations.

Mr. Swinghamer professes not to see competition with Schnipper’s. “All boats rise with the tide,” he said.

Shake Shack has also been trying to transplant its Noo Yawk sensibility to an octagonal outpost on the Boston Common (in a crumbling former men’s room). So far Bostonians have mostly greeted the prospect with snark. Some said that since hometown milkshakes are called frappes, the interloper might more properly be emblazoned with the words Frappe Shack.

Mr. Swinghamer said Boston Common is still on his radar. After all, Mr. Meyer brought a Chicago-style hot dog — celery salt, sport peppers and all — to condescending Manhattanites.

Mr. Meyer’s accidental empire began with a hot dog cart in 2001, part of an art installation in Madison Square Park. “To our astonishment, every day, a line would form,” Mr. Meyer said. The cart expanded into a burger stand, “and none of us had any idea that that could be a success.”

The Shake Shack prototype cost a bit shy of $1 million, even though the prefabricated building, designed by James Wines, “arrived like the falling house” among the Munchkins, Mr. Meyer said. “One day it wasn’t there? And the next day it was there.”

In future, Mr. Swinghamer said, each new Shack will cost over $1 million and will be in what he called “special places in each community.”

Thus, the popular Shack satellite at Columbus Avenue and 77th Street “is across from a museum and has a distinctive glass ‘sidewalk shed’ that is an indoor cafe,” said Randy Garutti, chief operating officer of Shake Shack.

And at Citi Field in Flushing, Queens, home of the New York Mets, Shake Shack is crowned by the beloved skyline silhouette that once topped the demolished Shea Stadium scoreboard.

Mr. Meyer said that keeping a sense of community was one challenge in expanding the Shacks, along with maintaining the original’s quality, hospitality and “glint in its eye.” He referred to the bad puns that he seems to favor, such as the fall “Shacktoberfest,” and the winter “Have Yourself a Merry Little Custard.”

The Union Square Hospitality Group does not discuss revenues, which have been estimated at $70 million by trade publications.

Shake Shacks “are profitable,” Mr. Meyer said. “They don’t need a robust economy to work. They have a highly focused menu. They are replicable. There is no reservation operation. There is no florist. And it’s a fun thing.”

The premium burger market “is a really hot niche,” said Malcolm M. Knapp, who heads a restaurant consulting firm in Manhattan that bears his name.

He said of Shake Shack: “They can make a lot of money. Burgers are not only American comfort food, but they are also American ethnic food.” This is why “Americans go abroad hankering for a burger,” Mr. Knapp said, and why a global premium-burger strategy could be well received.

The popularity of the Shake Shacks has been wildly beyond expectations, partly due to their humble order average of $13, “perfect for this economy,” Mr. Swinghamer said.

Remarkably, with more than $4 million in yearly sales, each of the Manhattan Shacks outdistances both premium and mass-market burger chains. McDonald’s, for example, has an average of $2.29 million in yearly revenues from each of its 13,958 outlets, according to Technomic, a Chicago-based restaurant consultant. The Shacks also outdo a premium-burger legend, the Virginia-based Five Guys Burgers and Fries; its 535 stores each average $1.03 million in sales.

Some customers think the Shack rollout is long overdue. “The quality is there, so if they don’t screw it up, they’ll be O.K.,” said Sandy Hawkins, a 61-year-old inventor from TriBeCa who was consuming his Shackburger under heat lamps on a recent frigid afternoon in Madison Square Park.

So how fast and how far can the Hospitality Group take this? Five Guys began franchising only in 2003, and has now ballooned to 535 stores. “Our focus is not on how many you do,” Mr. Swinghamer said bluntly. “If we can’t do it right? We won’t do it.”

Mr. Meyer commented that “we will grow as broadly as we can, without losing the quality, the hospitality, the community. And the sense of humor.”

Obituary: Dr Saubhagya Shah

Professor Shah no more
Nepalnews, 16-Dec-09

Renowned anthropologist Prof. Dr Saubhagya Shah passed away after a heart attack on Wednesday. He was 45.

Shah was admitted at Alka Hospital in Lalitpur when he complained of a heart attack Tuesday evening.

Shah, who did his Ph.D in Anthropology from Harvard University, was a professor at the TU's sociology department. He was also the programme coordinator of the Conflict, Peace and Development Studies of TU.

Slumping NYC Real Estate

The Non-Hot Hot Spots
NY Magazine, 22-Nov-09
By S.Jhoanna Robledo

Where are sellers hungriest to make a deal?

When the proprietors of the real-estate auction service Bid on the City wanted to find out where their services would come in handy, they turned to Matthew Haines for data. The founder of PropertyShark.com, Haines and his team dug into third-quarter numbers to help pinpoint the five areas of prime Manhattan that have been toughest on sellers, based on three major criteria: how long it takes a typical seller to find a buyer there (Manhattan average: 150 days), median-price drops over the past two years (Manhattan overall: 10 percent), and the number of closed sales relative to the total number of properties on the market (the average is 23 percent, and higher is better). Bid on the City’s Albert Feinstein says he’d expected unglamorous areas like Murray Hill to top the list, but the results were very different. (It may be that dullness equals stability.) As for where the market may be headed based on these numbers? “If I knew [that], I would be so busy acting on that information that I wouldn’t have time to speak to you,” says Haines with a chuckle. Still, it’s fair to say that where there’s a weak market, there’s space for negotiation.

1. Chelsea/Flatiron/ Union Square/ Hudson Yards
Average days on market: 162
Sales-price change from 2007: –36 percent
Closed sales versus inventory: 21 percent
The explanation: Feinstein says he was surprised to find Chelsea and the Flatiron atop the list. But the whole area’s not uniformly problematic. The main trouble’s in “Chelsea Heights,” the area more or less centered on 23rd Street west of Eighth Avenue. According to appraiser Jonathan Miller, in 2008 this area had “one of the highest concentrations of new-development activity. That’s what this is about: the skew in the far west where there’s a lot of projects to be absorbed.” High Line fans, consider making an offer in 2010.


2. Midtown/Midtown South
Average days on market: 149
Sales-price change from 2007: –27 percent
Closed sales versus inventory: 19 percent
The explanation: Many apartments here are pieds-à-terre, and that’s a weak market segment at a time when getting approved to buy a first home is tough enough. On top of that, a lot of new condos in the area were built specifically for that market, compounding the problem. That said, if you have the cash to buy with a minimal loan, opportunities abound.

3. Soho/Tribeca/Little Italy
Average days on market: 184
Sales-price change from 2007: –15 percent
Closed sales versus inventory: 11 percent
The explanation: Lots of low-hanging fruit here, so pluck away. The particular problem, Miller points out, is that much of the housing stock, both new and old, is made up of larger apartments, requiring bigger loans and more cash up front and therefore “very susceptible to the credit contraction.” For buyers who’ll have no trouble obtaining a mortgage, now may be prime time for loft-hunting.

4. Upper East Side/Carnegie Hill
Average days on market: 162
Sales-price change from 2007: –8 percent
Closed sales versus inventory: 18 percent
The explanation: Feinstein hadn’t expected this moneyed area, but the stats speak for themselves. The occasional buzz-heavy megasale seems to be obscuring the fact that the luxury market has been suffering. “There certainly are sales, but the activity has thinned quite a bit,” reports Miller. “Even though the decline in employment [in the city] wasn’t as high as expected, high-wage-earners were really hit.” Watch this space closely during bonus season.

5. Battery Park City/Financial District/South Street Seaport
Average days on market: 162
Sales-price change from 2007: –7 percent
Closed sales versus inventory: 9 percent
The explanation: Haines says he was struck by the low number of closings, especially in Battery Park City, where prices haven’t dropped much and “nothing’s moving. There seems to be a lot of unrealistic sellers.” Within this area, says Miller, the financial district is particularly bad off, because despite all the new building, the neighborhood, even after a decade, has never quite jelled. Given all the chatter about the neighborhood’s vulnerability, Bid On the City’s Raymond Villani says he’d actually expected the financial district to be higher on the list.

Kathmandu Said to Plan Share Sale as Early as October

Kathmandu Said to Plan Share Sale as Early as October
Bloomberg, 22-Sep-09
By Angus Whitley

Kathmandu, the outdoor equipment retailer with shops across New Zealand and Australia, may sell shares in an initial public offering as early as next month, two people familiar with the matter said.

The Christchurch-based company, jointly owned by Goldman Sachs JBWere Pty and Quadrant Private Equity, will probably decide within two weeks whether to proceed with the sale, the people said, declining to be identified because the plans aren’t public. The IPO may raise about A$400 million ($345 million), based on preliminary estimates, one of the people said.

Kathumandu’s sale would follow that of Myer Group Pty, Australia’s largest department store operator, which plans to file for an IPO next week. The two retailers are among at least four private equity-controlled businesses that may go public in coming months to tap a cash surplus among local investors that Bank of America Merrill Lynch estimates at about A$200 billion.

Macquarie Group Ltd., Australia’s largest investment bank, and Goldman Sachs JBWere have been hired as advisers, the people said. Hayley Morris, a spokeswoman for Goldman Sachs JBWere in Sydney, and Chris Hadley, Quadrant’s managing director and a Kathmandu director, didn’t return phone calls seeking comment. Paula Hannaford, a Macquarie spokeswoman, declined to comment.

Kathmandu declined to comment, it said in an e-mailed statement.

Goldman Sachs JBWere and Quadrant led the leveraged buyout of Kathmandu for NZ$275 million ($195 million) in April 2006. In September that year, the firms bought the remaining 49 percent stake from Jan Cameron, who founded the retailer in 1987.

Camping Equipment

Kathmandu has more than 80 stores in Australia, New Zealand and the U.K., according to its Web site. The company’s products include own-branded backpacks, jackets, sleeping bags and camping equipment.

The sale may take place in late October or early November, within about a week of the Myer listing, and Kathmandu’s owners haven’t decided how much of the business to sell, the people said. The company, which also has an office in Melbourne, may opt for a dual listing in Australia and New Zealand, one of the people said.

Australian companies, most of them retailers, may announce more than A$10 billion of initial share sales by June, UBS AG, the biggest arranger of stock offerings in Australia since 2006, said this month. IPOs in the nation raised a combined A$674 million so far this year, according to the stock exchange.

Melbourne-based Myer said this month it plans to lodge an IPO prospectus on Sept. 28. The company, part-owned by Texas- based TPG Inc., may raise at least A$2 billion, according to Tribeca Investment Partners in Sydney, making it Australia’s largest offering since 2007.

Forty-five companies went public in the 12 months ended June 30, according to the operator of Australia’s stock exchange. That was the smallest number since 1993 and marked an 81 percent drop from a year earlier.

NYT Fashion Week Review: Prabal Gurung

The First Few Strides Are Looking Good
New York Times, 12-Sep-09
By CATHY HORYN

Fashion is such a complete world, wrapped in its own myths, that if the industry is in a bad state, nobody really notices. What you notice instead is someone’s shoes.

My, my: where did she get those? The fashionista’s long legs, exiting a cab on the corner of Sixth Avenue and 42nd Street, setting off a wail of honking (why hurry?) were extended by her super-size, strappy heels, probably a Givenchy model. Killer.

That’s the way it was Thursday and Friday, the opening days of the spring 2010 shows: a dozen little back-to-school wardrobe crushes. There were also some good collections.

Prabal Gurung, a relatively new designer — he spent five years at Bill Blass before he set out on his own last winter — makes sophisticated clothes. He is aware of fit. He can set a proper sleeve. He has good connections with fabric mills, which will sell him small amounts. He makes everything count.

“When I started this collection, I thought, ‘What can I do to get people to buy my clothes? ” said Mr. Gurung, a native of Nepal. That’s a worthwhile question today. Why buy a $3,000 trench-coat dress in khaki double-face silk when you can buy the look for a lot less elsewhere?

Mr. Gurung’s answer is to create clothes that aren’t really about a one-dimensional look. That’s fine for an androgynous-looking label like Wayne.

On Thursday in a stripped-down loft in Chelsea, with a D.J. playing, the designer, Wayne Lee, presented a skinny silhouette of draped jersey T-shirt dresses, leggings split at the knees and gauzy minis that looked tied on the body. At some point the cement grays and whites blurred into the background, the low sky over the Hudson. Did the hard-edged clothes look familiar? A little.

Mr. Gurung knows he has to do something particular, with more depth, if he wants to stand out. If his first collection, shown last February, emphasized tailoring, this one displayed his skills at draping. Also, Mr. Gurung has added a few sportswear looks: slim trousers with diagonal seams or ribbon ties at the ankles, sleeveless silk jackets.

The most interesting dresses were a crisscross of fabric, fitted but not tight and more suggestive of pretty packaging than bondage. A cocktail dress in deep royal blue silk had a doughnut swirl of fabric on one shoulder. From a single piece of fabric, he worked a flat bow into the lapel of a cream pantsuit. There was a too-much-ness to everything that made for a nicely twisted sensibility.

Have you ever become completely irritated by a box of chocolate? You know the kind: concept chocolate, artfully arranged in a just-so box, flavors exotic and trying. I’m afraid that was my overall reaction to Jason Wu’s collection on Friday at the St. Regis Hotel.

Mr. Wu has a pretty good eye for color and prints. This season he plays with broken-wave prints (he called them Rorschach prints in his show notes) and some silk or denim tweeds with the small-grid pattern of industrial screens. For some reason I liked the idea of a slim, hooded tracksuit in dark tweed. It’s wearable and, at the same time, just a little out of it. A tweed mini-sheath with whorls of staple-like embroidery was lovely.

But a banality creeps into the picture. Whereas Mr. Gurung manages to take lightly the notion of feminine packaging, Mr. Wu treats it with a prissiness. Waists are defined and ribbon-tied. There are peplums aplenty. You suspect that Mr. Wu, like many designers, has spent a few hours gazing at the play clothes of Claire McCardell. Yet his cuffed shorts look unplayful and certainly not original. Though he tries.

He should try a little less hard is the answer. Not everything in life is a spotless decorator interior or a magazine spread. He should loosen up a bit. And why the uniformly short hemlines, six inches above the knee? That in itself is the sign of a fairly conformist outlook.

The scene at Elie Tahari’s presentation on Thursday felt like an industry cocktail gathering. The GQ guys are here! The models kept whisking past, on a continuous loop. (“Every seven minutes,” Mr. Tahari said.) There were little things to eat. The clothes were perfectly comprehensible: softly draped dresses and sarong skirts, smart-looking linen shorts and a trim jacket, blasts of orange silk, and a tailored denim shirt with a lovely starchiness.

Then it was out onto 42nd Street toward the wailing taxis and Ms. Hot Shoes.

Saleways slapped Rs 114 million in VAT fine

Saleways slapped Rs 114 million in VAT fine
myrepublica, 9-Sep-09
MILAN MANI SHARMA

Inland Revenue Department (IRD) has slapped value added tax (VAT) and penalty of Rs 114 million to Saleways Departmental Store after its investigation proved the store of evading tax in a large scale.

The company had not issued VAT bill and had not paid VAT even after collecting the tax from the customers, a source told myrepublica.com. "The evasion amount actually stood at Rs 57 million. The overall figure touched Rs 114 million due to fine and penalty," he stated.

This has made Saleways the largest ever case of VAT evasion unearthed by the department so far.

The department had initiated investigation against the departmental store after executing a smooth raid on the basis of information provided by an insider two months ago. It had seized its books of accounts, computers and other documents.

The investigation had started with Saleways sales store in Kathmandu. But when the investigating officers dug out its exclusively hidden procurement and sales records, they had extended the investigation to the store´s main outlet in Pokhara as well.

"We managed to conduct the first ever comprehensive study on how the trader manipulated his book of accounts and electronic entries to evade the taxes," said a source.

However, despite repeated calls from the IRD, the promoter of Saleways did not show up at the department to collect the penalty notice and the letter on Tuesday. "We will wait till 2 pm on Wednesday. If he still did not turn up, we will personally deliver the letter to the store at around 3 pm," said the source.

Sudhir Pradhananga of Saleways, meanwhile, said that he has not received any letter or notification from IRD so far. "We will decide on our future action once we get the letter," he stated.

Gayatri Devi

Gayatri Devi, Maharani of Jaipur, died on July 29th, aged 90
The Economist, 20-Aug-09

Though India has not been ruled by princes for many decades, it is not hard to find princesses about the place. Bollywood stars, for example, in sheaths, shades and bling, whose every move and change of wardrobe is recorded in flashy magazines; fashionistas, aping Kareena’s T-shirt or Priyanka’s bobbed hair, who spend their afternoons eating ice cream in Delhi’s malls; and the VIPs, or VVIPs, who force their cars through the traffic with horns blaring, and who refuse the indignity of being searched at airports.

In contrast to these one may sometimes find, at high tea at the Delhi Polo Club or in the lounge of the Taj hotel, the genuine article. Gayatri Devi was among the most famous of these. Her beauty was astonishing, praised by Clark Gable, Cecil Beaton and Vogue, but liner or lipstick had nothing to do with it. She had a maharani’s natural poise and restraint. From her grandmother, she had learned that emeralds looked better with pink saris rather than green. From her mother, she knew not to wear diamond-drop earrings at cocktail parties. A simple strand of pearls, a sari in pastel chiffon and dainty silk slippers were all that was required. The fact that she looked equally good in slacks, posing by one of the 27 tigers she personally eliminated, or perched, smoking, on an elephant, merely underlined the point. She was a princess, and a princess could make Jackie Kennedy appear almost a frump.

Money was never lacking in her life. As the daughter of Prince Narayan of Cooch Behar, in West Bengal, she grew up with dozens of staff and governesses recommended by Queen Mary. Thirty horses, six butlers and four lorryloads of luggage accompanied the family to their holiday cottage. “Broomstick”, as the family called her—other members were “Bubbles” and “Diggers”—was polished up in Lausanne and Knightsbridge, where she rather redundantly took a secretarial course. Her future husband, the Maharajah of Jaipur (“Jai” to her) first appeared at Woodlands, the family home in Kolkata, resplendent in an open-top green Rolls Royce. When she married him in 1940 her presents included a Bentley, a hill-station house and a trousseau that was left for collection at the Ritz in Paris. Their life came to revolve round the polo seasons in which he starred: winter and spring in India, summer in Windsor or Surrey, the thundering chukkas interspersed with plentiful champagne.

Yet there was an oddity about Gayatri Devi. She was a tomboy who liked to keep company with the servants, worrying about their wages, and with the mahouts, learning their songs and stories of elephants. After meeting Jai at the age of 12 she began to wish she could be his groom, fortuitously brushing his beautiful hand as she handed him his polo stick. Distinctions between raja and praja, prince and people, did not bother her, and she could be as cavalier about the yawning social divide between women and men. As Jai’s third wife, she should have been in purdah in a “city” of 400 other lounging and sewing women, watching the world through filigree screens. Instead she kept him company in the palace, riding and big-game hunting, or flying to Delhi in her private plane to shop. And she set up a girls’ school in Jaipur through which, she hoped, other daughters of the nobility might eventually learn to stick up for themselves.

The perfumed prison
Independence in 1947 brought a democratised India and the replacement of the 562 princely states with centralised, socialist government, but her attachment to “my people” did not change. Command, like style, came naturally to her. In both Cooch Behar and Jaipur, arriving becomingly wind-blown at the wheel of her Buick or her Ferrari, she would be greeted with flowers and incense and with deep prostrations in the dust. The villagers trusted her to help them, so she tried. That intimate understanding between ruler and ruled, she often said later, was sadly missing from modern India. It went with the crumbling of modern Jaipur which, under the maharajahs, had been a glorious desert city of wide avenues, palaces, peacocks and pink walls. She always saw it that way.

In 1960, having asked Jai’s permission and summoned the party secretary to the palace, she joined the liberal Swatantra party to oppose Jawaharlal Nehru’s left-wing Congress. She did not like socialism or five-year plans. A run for parliament two years later for the Rajasthan constituency gave her the world’s largest landslide, 192,909 votes. But this was hardly surprising. The people were voting for “Ma”, their princess, an exquisite figure in pearls and pale chiffon enthroned on a palanquin of carpets, who nevertheless called them her sisters and her brothers.

She continued to field their problems to the end of her life, though her political career as such did not long outlast a spell in Delhi’s Tihar prison in 1975, under Indira Gandhi. The charge was currency offences, based on a few Swiss francs found in her bungalow among the jade, rose-quartz, Lalique and Rosenthal. The prime minister seemed mostly to object to her aristocracy. Gayatri Devi softened the blow by pouring French perfume into the open sewer in her cell. As it ran through the building, Asia’s largest prison and one of its worst, other prisoners gathered to inhale the wafting vapours, the true scent of royalty.

User’s Guide: How to Start Your Own Food Truck

User’s Guide: How to Start Your Own Food Truck
NY Magazine, 9-Aug-09
Ben Leventhal

In the two years since New York published an extensive guide called “Cartography,” the city’s enthusiasm for street food has only increased. Trucks and carts, once the purview of recent immigrants, are now alternative gigs for displaced recession victims or starter dream jobs for anyone who ever wanted to own a restaurant but couldn’t make the numbers crunch. Before you fire her up, however, there are a few things you should know about operating a food truck, from getting a license to making sure you don’t get knifed by the halal guy next to whom you just parked (spoiler: You’re going to get knifed by the halal guy).

Startup/Operating Costs: Though trucks are a small business, they still require a significant investment. Costs include the truck, permit acquisition, supplies, security, insurance, and truck storage, among other things. Some of the costs are obvious, and some are not. Truck parking, for example, may not seem like an expense, but the Department of Health requires all trucks to be stored and maintained at a food-truck commissary, where you’ll pay rent for things like access to clean water and refrigeration. The less you need your truck to do, the cheaper it is. Treats Truck, which bakes its goods off-site, was born in 2007 with $80,000 in capital.

According to one business plan we’ve seen (but never came to fruition), a pizza truck seeking $300,000 in start-up capital expected to make money right away. High volume and excellent margins can be a reality for trucks. For this pizza concept the profit margin was estimated to be over 50 percent, as compared to a good restaurant, where the margins aren’t greater than 10 percent, if you're lucky.

Permits: The Rules of the City of New York, the abstruse, hulking set of guidelines that regulate activities ranging from operating a street cart to carrying a handgun, stipulates that two permits are required: a Mobile Food Vendor License for you and a Mobile Food Vending Unit Permit for your truck. The former is a matter of paperwork and a few classes. The latter is not, as the city stopped issuing them ten years ago, according to a representative at the Department of Consumer Affairs, and there has been a cap of 3,100 licenses since 1979 (5,100, if you count fruit and vegetable carts, too; a bill has been introduced to raise the cap to 25,000). The permits are distributed via lotteries. Veterans are eligible for certain exceptions and receive priority status in the permit lotteries, which are held periodically, according to Elliot Marcus, associate commissioner for the Bureau of Food Safety and Community Sanitation. And the rep over at the Department of Consumer Affairs did tell us that you can get an exception from the Parks Department or a hospital to operate on their property.

Indeed, the process is extremely complex and loopholed, and any exception will increase your start-up costs significantly. The Times ran a story on this recently, as did the Village Voice. Also, "some people are operating carts legally and some aren’t," hinted our Consumer Affairs operator.

The upshot: Your only real option for getting a permit is the black market, where you can either buy a permit illegally, mostly in Queens, for between $5,000 and $20,000, or partner with an existing license holder, for cash and a portion of profits, say 10 percent of sales. If you’re interested in pursuing one of these options, head to a food-truck commissary (we’ll get to those in just a moment) or ask your favorite truck operator, who might have heard about an available permit via word of mouth. (Note that the NYPD arrested six people last month on charges of fraud counts related to illegal food-vending permits, so brokers — and permits — are harder to find.)

One important footnote here is that while the brokering of permits is highly illegal, once you’ve secured the permit, the Department of Health does very little at present to police these rogue permits. And, Marcus concedes, there are many loopholes. For example, "There’s absolutely no requirement that a permit holder works the cart. I could have a permit and hire people [to work] seven days a week and monitor what they do," he says. "And that would be completely legal .. In the grand scheme of things, it’s not the biggest health priority for us."

The Truck: This is the relatively easy part, as food trucks are readily available online. Budget $75,000 to $100,000 for the acquisition and retrofitting of the truck. (Kenny Lao bought his Rickshaw Dumpling Truck on the "Commercial Trucks" section of eBay.) To ensure that your rig passes Health Department approval, Sean Baskinski of the Urban Justice Center’s Street Vendor Project recommends Workman Cycles in Ozone Park (800-BUY-CART) for the job. The garage does enough truck work to be well versed and up-to-date with DOH code. (There’s also Steve’s Sheet Metal in Woodside, but ’Steve’ just got arrested for permitting fraud. True.)

Location, Location, Loc … hey, who slashed my tires?: City codes make certain streets and areas off-limits to food vendors, so consult the list supplied by the Street Vendor Project when you’re picking a spot. There is an unspoken law of the street that says seniority plays — and that if you try to park on a corner or stretch that has long been occupied by someone else, you will pay a hefty price. We asked Kenny Lao why he doesn't just set up shop in the meatpacking district, which on a weekend night would seem as high-volume as locations come, and he indicated that the reason was in part the threat of violence from existing vendors.

Still feeling the Churros y Chalupas truck, champ? Most of the big restaurateurs in the city have passed on trucks because of the complications around permits and location. (Indeed, the Street Vendor Project is now actually offering a class on it.) But, don’t let that scare you: good luck. Let us know when you fire up the Twitter.

Related Links
Cartography Revisited: An Updated Map of New York Street Food
The Street Vendor Project
New York’s twenty best food carts ranked, in order
And other essential street-cart questions answered
The 50-Vendor Poll
Wall Street Journal: Food Truck Nation
Wall Street Journal: Top 10 Lunch Trucks Around the Country

Yankee Fast Food Chains Enter Nepal

With Sept comes KFC, Pizza Hut
ekantipur, 23-Apr-09

Come September, the world's two best known fast food chains will come to Kathmandu -KFC, also known as Kentucky Fried Chicken, and Pizza Hut.

Both KFC and Pizza Hut are being brought by R.J. Crops who owns the soft drink company Varun Beverages, the manufacturers of Pepsicola in Nepal. R.J. Crops has the franchise of both for India. Both these food chains will be opened at Annapurna Complex, Durbar Marg. There will be two separate teams to handle daily operation.

KFC is the world's most popular chicken restaurant chain specialising in Original Recipe, based in Louisville, Kentucky, USA. KFC was founded by Colonel Harland Sanders in 1952 and primarily sells chicken in pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, sides and desserts. Sanders sold the entire KFC franchising operation in 1964 for US $2 million. Since then, it has been sold three more times, most recently to PepsiCo. It made it part of its Tricon Global Restaurants division, which has now been renamed Yum! Brands.

The original handwritten recipe is kept locked away at the KFC corporate headquarters in Louisville, Kentucky as a closely-guarded secret. Only two members within the Yum! corporation know the recipe in its entirety.

Pizza Hut is the world's largest pizza restaurant chain and international franchise based in Addison, Texas, USA. Pizza Hut offers different styles of pizza along with side dishes including pasta, buffalo wings, breadsticks, and garlic bread. It has approximately 34,000 restaurants, delivery-carry out units, and kiosks in 100 countries.

Pizza Hut is also one of the flagship brands of Yum! Brands, Inc. Pizza Hut is the world's largest pizza chain with over 12,500 restaurants across 91 countries. In India, Pizza Hut has 137 restaurants across 36 cities.

R.J. Crops is one of PepsiCo India's largest franchisee bottler having operation in India, Nepal and Africa. Of late, this group also has investment in Nepal's housing sector. The Mega housing project - Park View Horizon in Dhapasi is being built by this group.

Another Warren Buffet Book

Buffett: Rock Star of American Capitalism
Knowledge@Wharton, 15-Jul-09

Warren Buffett's rock star status is evident from the fact that each year tens of thousands of fans from all over the world travel to Omaha, Nebraska, to listen to him speak at his company Berkshire Hathaway's shareholder meeting. For many at this event, which Buffett calls the "Woodstock for Capitalists," it is an annual ritual of paying homage to the man who made them money through Berkshire's stock and from his investing and business insights. Little wonder that Alice Schroeder's insightful biography titled, The Snowball: Warren Buffett and the Business of Life, has proved popular among readers. She seeks to explain how Buffett became one of the world's richest men and why he is admired for his business ethics and for uniquely pledging most of his money to philanthropy.

Buffett's annual letters to shareholders (see Warren Buffett's Letters to Berkshire Shareholders on berkshirehathaway.com) are widely read. The letters analyze good and bad businesses, give examples of managers who treat customers and employees fairly while also making good profits, and expose accounting tricks that fool many investors. Some letters have noted that executives should be paid bonuses only if their company's long-term performance is better than that of industry peers; others have warned of looming disasters – such as the red flag he raised about derivatives morphing into "weapons of mass financial destruction." During the subprime mortgage crisis that led to the global financial collapse, one of Buffett's letters pointed out that rich people like him should be made to pay a higher tax rate than wage earners like his secretary.

Buffett's most important act has been to donate much of his wealth to the Gates Foundation, to be spent over 20 years mainly on health care and education. As he states: "The idea of passing wealth from generation to generation so that hundreds of your descendants can command the resources of other people simply because they came from the right womb flies in the face of a meritocratic society." Also, unlike most other philanthropists, Buffett has not set up a foundation nor paid for buildings at hospitals or museums to try to perpetuate his name.

Rational Money Machine

By the late 1970s, according to an earlier biography, Buffett had spent $15.4 million to buy 46% of Berkshire, including 3% for his wife Susan, paying an average $32.45 per share. (See Roger Lowenstein, Buffett: The Making of an American Capitalist.) With Berkshire stock recently around $87,200, Buffett has grown his wealth nearly 3,000-fold in some 30 years. This massive capital accumulation is based on an investment discipline he learned from Benjamin Graham. Buffett's approach to investment involves using seventh grade math and common sense to analyze a company's underlying economics; buying a business not a stock; ignoring the fluctuations of the stock market; and, most importantly, maintaining a margin of safety.

After initially attending business school at Wharton, Buffett got his MBA degree from Columbia University in 1951 so that he could study under Graham. Buffett modified Graham's process of holding a widely diversified portfolio of statistically cheap stocks, and made concentrated investments in a few easy to understand, stable, growing businesses run by good, shareholder-friendly managers. Berkshire's earnings and value have risen due to a mutually reinforcing combination of investing the policy premiums of its insurance and re-insurance operations in buying companies such as See's Candies, Borsheim's fine jewelry and electric utility MidAmerican Energy, and investing their free cash flow, low turnover and hence low taxes on investments like The Washington Post, Coca-Cola, American Express and Procter & Gamble. Of course, the mathematical magic of compounding gains over time have also helped Berkshire Hathaway multiply its wealth.

Buffett's three rules of portfolio management are: 1) Don't lose money; 2) Don't forget rule one and 3) Don't go into debt. His focus, an intellect which is a perpetual learning machine, rationality, confidence and an ambition from childhood to become rich are identified by Schroeder and others as personal traits that drove his success. Moreover, he attracts talented people to work, partner and deal with him due to his honesty, fairness, letting them do their job without interference and crediting them for success.

Buffett freely acknowledges making several errors. The biggest was his purchase of Dexter Shoes for $433 million in 1993, and then compounding the error by paying with 1.6% of Berkshire stock, effectively costing shareholders more than $2.2 billion at the current stock price. Also, following years of losses, Buffett liquidated Berkshire's original textile operations in 1985. While the textile business provided the capital for entry into the insurance business -- "the cornerstone of Berkshire," as Buffett puts it -- the employees who lost their jobs got minimal severance compensation.

Obviously Buffett's successes are far more numerous than his failures. In the stock market, notes Schroeder, his strategy has been strict adherence to Graham's main principle of margin of safety. In frothy bull markets, Buffett is fearful while others are greedy, taking profits on some holdings and piling up the cash generated by Berkshire's businesses. For instance, Berkshire sold its stake in PetroChina for $4 billion in 2007 amid rapidly rising oil prices and the craze for investing in emerging markets, having bought it in 2002 and 2003 for $488 million. Then, during severe stock market or industry declines, he is greedy when others are fearful, buying good businesses at attractive prices. His reputation and large cash holdings also get Berkshire favorable terms, which benefited him in deals with Goldman Sachs and General Electric during last year's stock market panic.

Lucky Man

While the likeable qualities of Buffett have been widely publicized, Schroeder reveals a far more complex person who caught some lucky breaks. In the 1940s, while a teenager, Buffett avoided getting caught while repeatedly stealing things like golf balls and clubs from a Sears store in the Washington, D.C., area. The family lived there while his father, Buffett's close friend and role model, served as an ultra conservative Republican Congressman from Nebraska. Buffett was a street smart teenager, not getting into any trouble while buying coin operated pinball machines and installing them in barber shops in poor neighborhoods, with whose owners he split the money from the machines.

Later, in the mid 1970s, he got lucky again over Securities and Exchange Commission charges about his purchases of Wesco Financial stock, after the failure of a buyout attempt. The failure was engineered by Buffett and partner Charles Munger since they wanted to buy Wesco, which they ended up doing. In 1976, one of their companies paid a $115,000 fine to settle with the SEC, without admitting or denying any wrongdoing. Buffett avoided being named and fined, a potentially "terrible, irreversible damage" on a budding reputation. Two weeks after the settlement, the SEC put Buffett on a panel to study corporate disclosure practices.

The SEC settlement led Buffett and Munger to dissolve their structure of interlocking partial ownerships in numerous businesses, eventually folding them all into Berkshire. While Schroeder writes that Buffett got the idea for the structure from another investor he admired, the question remains whether Buffett was also attempting to minimize paying taxes by copying what the late Jay Pritzker, one of his business idols whose family owns the Hyatt Hotels, was then doing through a maze of holdings.

Right Side of the Edge

Buffett criticizes the high fees charged by investment managers, especially of hedge and private equity funds. Last year, he took a bet with a fund of hedge funds predicting its high fees would result in long-term performance worse than that of the S&P 500 Index. (See: "Buffett's Big Bet," Fortune, June 9, 2008.) Yet, Buffett himself accumulated much of his initial capital from the fees he charged a hedge fund-type partnership, pocketing half the gains over 4%. Buffett's partnership began in 1957 with $105,000 from family and friends and only $100 of his own money. When he closed it in 1969, Buffett's share was $26.5 million of the partnership's $100 million in assets, entirely due to the retention and compounding of his fees on a growing asset base. However unlike the high fee-charging fund managers of today, Buffett also agreed to bear a quarter of the losses, which he did not have to do since his partnership had a 31% compound annual gain over its 12-year life.

In the 1980s, Buffett publicly opposed the greenmail tactics of corporate raiders who threatened to dislodge management but went away if the company bought their stock, enabling them to make a profit. Some of Buffett's investments for his partnership were also made based on the expectation that managements would buy back his stock at a higher price. In fact, in 1965 he would have sold his stock in Berkshire Hathaway, then a Massachusetts-based high cost manufacturer in the declining textiles business, had he not been angry at being offered 12 cents less, $11 3/8 per share instead of the $11 ½ promised by the management. The greenmail operators often pushed company managements to take on huge debt to finance the buy back of only their stake. In contrast, Buffett's activism was aimed at companies which could enhance shareholder returns by using the cash or other assets not reflected in the deeply undervalued share price.

By 1989, Berkshire owned 6% of Coca-Cola stock, then worth about $1.2 billion. Coke was Berkshire's largest holding and Buffett joined Coke's board. In the mid 1990s, after Coke's stock had risen by several multiples, Coca-Cola chief executive Roberto Goizueta was promising mid- to high-teens earnings growth to Wall Street analysts. But as Schroeder writes, by then Goizueta was using financial engineering to "maintain the illusion of the company's rapidly rising earnings flow." Schroeder writes that Buffett knew Coke was buying and selling bottlers in order to time the profits and boost earnings.

This was "neither illegal nor technically deceitful," observes Schroeder, and Buffett remained silent about it on the board. Buffett says Goizueta "was just not a guy you questioned," adding that "as a board member, you can do practically nothing." His son, Howard Buffett, who was on the board at Berkshire as well as Coca-Cola Enterprises, the major Coke bottler, said, "he had no problem challenging Coca-Cola on behalf of CCE." But Howard eventually got off the CCE board, says Schroeder, since "there was just too much potential for conflict between the CCE and Berkshire board." What kind of conflicts? Did Buffett also face any conflicts since he was running Berkshire and was on Coke's board?

Since 1993, Buffett has argued for the expensing of stock options, which many chief executives liberally give as incentives and bonuses to themselves, other managers and employees. Only in 2002, going against the views of most CEOs, Buffett found the time was right to push Coke's board to make it the first major company to expense stock options. Coke's action, which was allowed but not required by accounting rules, was soon followed by the boards of The Washington Post, Microsoft and others. Buffett draws a token $100,000 annual salary from Berkshire and awards himself or other managers no stock options, grants or warrants.

Personal and Family Life

Schroeder confirms that Buffett owns no fancy houses, cars or yachts. He wears cheap clothes, craves hamburgers, French fries and cherry Coke and appears awkward in social situations. Buffet also spends hours playing bridge online, enjoys golf, handball and table tennis and plays the ukulele. Schroeder describes Buffett as a showman who avoids confrontation and hides his true opinions behind coy remarks, if being blunt may hurt his business or other relationships.

In his family life, writes Schroeder, since Buffett was consumed with his work -- "a sort of holy mission" to find more ways to make more money -- he had little extra time for his wife and three kids. "While he was friendly with his kids, he hadn't really gotten to know them" while they were growing up at home in Omaha. On occasion Buffett's secretary blocked even his family's access to him, not on explicit but on implicit orders, a typical Buffett method of operating, notes Schroeder.

In the 1970s, while his youngest child was in high school, Buffett found time to go to black tie parties at embassies in Washington, D.C., and mansions on Fifth Avenue in New York where they mostly served French food. He went to these events accompanying Kay Graham, then publisher of The Washington Post. Schroeder uses Buffett's term, "elephant bumping," to describe these events.

In 1978, after all the children had grown and left home, his wife Susan moved to live permanently in San Francisco. In addition to being a nurturing mother and generous with time and money to friends and strangers in need, Susan boosted Buffett's confidence, enhanced his people skills and expanded his social conscience, Schroeder notes. Susan wanted him to stop being consumed with making more money once he had made his initial millions. His actions that led Susan to leave their home in Omaha are the major regret of Buffett's life, Schroeder writes. Later in 2003, while helping care for Susan, who was being treated for cancer, Buffett, 73, told a group of students at Georgia Tech: "If you get to my age in life and nobody thinks well of you, I don't care how big your bank account is, your life is a disaster." In 2006, Buffett married longtime companion Astrid Menks.

Unlike most other capitalists, Buffett believes that children should not inherit money just because of the lottery of their birth. He says children should be left "enough money so that they feel they could do anything, but not so much that they could do nothing." Implementing his views, in June 2006 Buffett announced the donation of 85% of Berkshire stock, then worth about $40 billion. Five sixths of the shares were to go to the Bill and Melinda Gates Foundation and the rest to foundations run by his three children – including one named "Sherwood," after the forest in the Robin Hood story -- and one named after his late wife Susan. Buffett also plans to give his remaining Berkshire shares to philanthropy.

As with his business projects, in philanthropy Buffett has found willing partners in Bill and Melinda Gates to try and fulfill shared goals of eradicating major diseases like malaria and HIV/AIDS in developing countries, and improving high school education standards in the U.S. Buffett and Bill Gates, friends since 1991, were one and two on the Forbes list of the world's richest people in 2008. Buffett's views on inheritance and on capitalists giving their money back to society, to which he believes they owe their wealth in the first place, influenced Bill and Melinda Gates to set up their foundation. "Buffett's ideal was a world in which winners were free to strive, but narrowed the gap by helping the losers," writes Schroeder. The Gates foundation had around $30 billion before Buffett began adding his billions.

Melting Snowball

According to Schroeder, Buffett has often spoken with other wealthy people about the poor history of most foundations, where managers stray from the vision of deceased donors or, even worse, use the money for their own goals and salaries. So, while Buffett expresses confidence in the Gates Foundation and others he is donating to, his plan forces them to spend his money as they receive it each year over 20 years. It is one of the few philanthropic donations where the money will run out relatively quickly, contrary to the self-interest of foundation bureaucracies to survive as long as they can.

Other self-made American billionaires who are known to have pledged much of their wealth in their lifetimes include George Soros and Charles Feeney. Funding by the Soros Foundation, set up by the highly successful hedge fund manager, is said to have helped undermine the apartheid regime in South Africa and communist rulers in the former Soviet Union and Eastern Europe. (See Soros on Soros.) Feeney, a founder of the duty free shopping business, is said to have played a major role in bringing about peace in Northern Ireland. Since 1982, unknown to even his close friends, Feeney had given away more than $4 billion anonymously, including $600 million to his alma mater, Cornell University, and $1 billion to schools in Ireland. Feeney owns no homes, flies coach and rides subways and cabs. Feeney's foundation, which does not identify him in any way, plans to give away its remaining billions by 2017. (See The Billionaire Who Wasn't, an authorized biography by Conor O'Clery.)

Schroeder was the only Wall Street analyst covering Berkshire whom Buffett spoke to before she began writing this book. She was the first biographer to have full access to him, his family and his extensive archives. She was also aware that "Buffett always avoided or limited his time with anyone he feared might criticize him." Given these facts, Schroeder's work comes across as fair and honest, though it would be a better read if at least 100 of its 976 pages were cut.

As Buffett has often noted, the American economy in the second half of the twentieth century provided the ideal environment – lots of wet snow and a long hill to roll and grow his snowball -- for someone of his skills, temperament and personality to become immensely wealthy. As Buffett's huge snowball quickly melts, it should turn into a gushing stream that fulfills his philanthropic goals.

Karishma (KC) Manandhar Interview

Don't call it my comeback, I'm starting from zero: Karishma
Republica, 1-Jul-09
AVASH KARMACHARYA

She had no plans to become an actor, no ambitions. She always set her mind free and looked forward to all that came her way.

“Accidentally,” says the prominent actress Karishma Manandhar how she came to Nepali silver screen. But once she made the entry, she left behind all other actresses; and after giving superb performances in blockbusters like “Truck Driver”, “Manakamana”, “Allare”, “Ajambari Maya” and “Papi Manchhe”, she knew what she truly wanted to do – to become an actor. In no time, the lady with the seductive eyes, Manandhar awed audiences and became a sought-after face in Nepali films.

After doing over a hundred films, she tried her hands in filmmaking. Manandhar did not want to follow the traditional way of making films in Nepal – “wrap it up within the budget of three million Rupees.” She dared to invest handsomely, expecting to give a new direction to Nepali filmmaking. Ironically, even after investing some eight million Rupees on “Babu Saheb”, the film tanked, driving the heroine to frustration. She wanted to say goodbye to Nepali films, and because she had invested the money together with her husband, producer Binod Manandhar, the commercial loss sparked misunderstandings in her married life, too. She left for America.

Finally, after three years in the States, one of Nepal’s leading heroines has come home. She is, in fact, making her comeback in director Dipak Shrestha’s upcoming film “Ho Yahi Maya Ho” wherein she plays the lead with Rajesh Hamal.

In an interview with Republica yesterday, Karishma explained why she left showbiz, talked about her priorities, and clarified the controversies that hit the papers in her absence, about big screen business in Nepal, and what next in her career.

Excerpts:

Republica: Many thought you would never come back to the industry…

Firstly, I never left the industry. It’s human nature that one’s mind gets diverted for sometime. The rebel inside me took me to the US. Now I’m over that phase. Rumors had it that it was because of the commercial loss of “Babu Saheb” that made you leave the industry and settle abroad.

I can’t deny that. See, when you put your all on something and hope for the best, what happens to you when you don’t get anything in return? My husband and I invested a lot in the film. It was obvious for me to be frustrated.

In that case, do you blame the audience for not understanding your approach?

No, not at all. I must admit I’m to be blamed for all what happened. Maybe I couldn’t understand the market during that time.

You were already an established actor in Nepal before you left for America. Tell us about you stay there. What did you do there and how did Nepalis in the States respond to you?

In America, I was an ordinary human being. At times, I was a makeup person, the next I was a salesperson. It’s just work that matters in the end. I knew many Nepalis in the States who found it surprising to see me doing things. But I was prepared. Of course, I was nobody there. But that wasn’t a bad experience, either.

Most of the heroines that you worked with, like Jal Shah, Kristi Mainali, and Niruta Singh, are no more in this business. Does that make you to feel alone?

Look, what people don’t understand is irrespective of being professionals, we all have our personal lives, and at one point, we have to set our priorities in life. Kristi chose her children instead of her profession, and she’s a wonderful homemaker now. Jal Shah is also busy with her personal matters, and I suppose Niruta is doing the same. At one point, my priorities were different, too.

With new actors in demand now, does that bring you a fear for your comeback?

No. Honestly speaking, I’m looking forward to work with them. I’m keen on working with new directors as they may have better visions on making better films. The entry of new actors isn’t a big deal. However, the time has come to ask why the audiences still want to see Rajesh Hamal, Bhuwan KC and other old actors. This makes it transparent that the newcomers haven’t made much big difference to the industry. What I’ve seen is, the new actors are often in rush to do more films now. There’s no struggle. All that they look for is a break in a film, some five interviews in the local dailies, and their close-ups on a few television channels. But instant popularity isn’t lasting.

By the way, this is not my comeback. I’m starting from zero again.

Niruta Singh once said that it’s for 12 to 13 years that a hero and heroine can do lead roles. After that it’s time to play side roles.

I agree there’s a period for everything but not necessarily always. If it was so, why is Amitabh Bachchan still playing main characters, and why are Hari Bansha Acharya and Madan Krishna Shrestha still so popular? It’s just that filmmakers in Nepal haven’t understood the importance of character roles.

In these many years, what difference did you find in Nepal’s celluloid?

I don’t know many in the industry. Gone are the days when there used to be just a few films released in a year and they were successful. Now there are dozens. The quantity is up but the quality has gone down. But it’s good to see high-definition cameras being introduced though it’s sad we’re still following the 1990s marketing strategies.

Getting a little personal now, it was reported that your relationship with you husband was on the rocks and that was another reason why you didn’t want to come back.

Well…there are many ups and downs in one’s life. Yes, we misunderstood each other. In married life, it’s common to disagree. If you’re talking about physical relationship, yes, we sort of broke up but we always respected each other’s priorities. We’re still together and give each other space.

So what next in you career? Can we be sure that the rebel in you won’t make you quit again?

[Laughs] I can’t say right now. But it won’t be a permanent goodbye to Nepali cinema. Now that audiences want to see me, I’ll be doing more films, music videos and documentaries.

Stimulus Funds for E-Records Augur Big Windfall for Small Health Firms

WJS, 24-Mar-09
By JACOB GOLDSTEIN

Big companies including General Electric Co. will likely profit from the billions of federal stimulus dollars going to doctors who buy and use electronic health records. But little-known niche players could be among the biggest winners.

One such company is eClinicalWorks, a closely held firm in Westborough, Mass. The company, founded a decade ago by computer-programmer Girish Kumar Navani, his cousin and his physician brother-in-law, now has about 750 employees and expects $100 million in revenue this year. In the next few years, the company plans to hire 500 more people, up from 150 before the stimulus bill was approved.

"As of Dec. 31, we had put together a game plan saying, 'This economy looks like it's really getting bad. Why don't we be a little bit prudent?'" Mr. Navani says. "It changed in four weeks to, 'You will hire for growth; forget hiring for need.'"

The $787 billion stimulus package Congress approved in February promises more than $20 billion in outlays for health-information technology, coming mostly between 2011 and 2015, according to an estimate from the Congressional Budget Office. Physicians using electronic records will be eligible for more than $40,000 each in Medicare incentive payments over several years starting in 2011. Hospitals can also qualify for millions of dollars in incentive payments. Doctors and hospitals not going electronic by 2015 will be subject to penalties.

"We never anticipated the kind of dollars we're talking about today -- never in our wildest dreams," says Steven Plochocki, chief executive of Quality Systems Inc., a publicly traded company that sells electronic records under the brand NextGen.

An electronic health record, sometimes called an electronic medical record, replaces a patient's paper file. EHR systems can incorporate safety features such as automatically alerting a doctor if a patient has prescriptions for drugs with dangerous interactions. Proponents believe EHRs can also reduce wasteful spending from unnecessary testing, help doctors spot trends in their practices and enable agencies such as Medicare to pool anonymous medical data to track public-health issues.

Skeptics say that sharing information electronically will require the creation of complex data networks. Worries about patient privacy also persist. And many physicians say the systems can be expensive and difficult to use. The cost often runs to tens of thousands of dollars per doctor in the first year -- and several thousand dollars a year after that.

A federally funded survey published last year found that only 13% of practicing doctors used a basic EHR system, and only 4% used what the authors called a "fully functional" system.

Key details of how the money will be distributed remain undecided. To receive incentive payments, doctors must demonstrate "meaningful use" of a "certified" EHR, but the legislation leaves those terms to be defined by federal officials.

GE has been in the health-equipment business for decades, but it didn't start selling EHR systems to doctors until 2002, when it bought a system from another vendor. The business is already growing at a rate of 15% to 20% a year, says Jim Corrigan of GE Healthcare IT.

But the labor-intensive aspects of adopting and maintaining electronic systems in doctors' offices can give smaller technology companies an opening to compete against big corporations, says Eric Brown, an analyst at Forrester Research Inc.Shares of publicly traded specialists such as Quality Systems, Allscripts-Misys Healthcare Solutions Inc. and Cerner Corp., have outperformed the broader market this year. Earlier this month, eClinicalWorks gained a national distribution channel when Wal-Mart Stores Inc. said it will begin selling eClinicalWorks EHR packages to medical offices through its Sam's Club stores.

The installation of Dell Inc. computers and training by eClinicalWorks staff will cost a physician $25,000 for the first year, with the option of adding additional doctors in the practice for $10,000 each. After the first year, the price will fall to about $5,000 a doctor annually.

Mr. Plochocki of Quality Systems says consolidation among vendors is likely, and he says that his company is considering a few acquisitions this year. Quality Systems has also been beefing up its sales force, he says.

Allscripts is using its business selling billing software to doctors as a jumping off point, selling EHR systems to its existing customers. Glen Tullman, the company's CEO, says a physician customer recently explained why he would rather buy both billing software and an EHR system from a single vendor: "If something goes wrong, I want one throat to choke," the doctor said.

Write to Jacob Goldstein

Soy Sauce King

Sauce of success
The Economist, 8-Apr-09

How Yuzaburo Mogi of Kikkoman helped turn soy sauce into a global product

AT THE International Trade Fair in Chicago in 1959, visitors were delighted by the salty-savoury taste of roast beef marinated in a novel condiment called soy sauce; slices were being given away by young Japanese men. What the nibblers did not know was that the foreigners were not merely demonstration staff but workers at the saucemaker’s new American unit, who wanted to see at first hand how American consumers responded to their product. Among them was Yuzaburo Mogi, a 24-year-old student at Columbia Business School and the scion of one of the founding families behind Kikkoman, a soy-sauce manufacturer which traces its origins to the early 17th century.

By the time he reached the top of the firm in 1995, Mr Mogi was well on his way to transforming it into an international food business and turning an obscure Asian seasoning into a mainstream global product. “We tried to appeal to the non-Japanese, general-market consumer,” says Mr Mogi, who speaks fluent English—a rarity among Japanese bosses. Kikkoman is now the world’s largest maker of naturally brewed soy sauce. Foreign sales of its sauce have grown by nearly 10% a year for 25 years. Its distinctive curvy bottle has become commonplace in restaurants and kitchens the world over, alongside other condiments such as Italian olive oil or French mustard. Interbrand, a brand consultancy, ranks Kikkoman among the most recognisable Japanese names in a list otherwise dominated by carmakers and electronics firms.

Indeed, this family-owned Japanese firm is unusual in several ways. In 1973 it became the first Japanese food company to open a factory in America; Mr Mogi was running the American division by this time. Whereas many Japanese firms eschew mergers and acquisitions, Kikkoman has been active, buying American and Japanese companies in the course of its expansion. (In January Kikkoman adopted a holding-company structure which will make acquisitions easier, among other things.) Mr Mogi speaks with pride about corporate-governance reforms he has instituted, including succession planning. Since 2004 the firm’s presidents have come from outside the founding families. And rather than being centrally run from Tokyo, Kikkoman is known for devolving power to the bosses of its foreign subsidiaries.

Under Mr Mogi’s leadership Kikkoman’s sales have grown to more than $4 billion a year, of which soy sauce accounts for 20%. Most of the firm’s revenue now comes from selling other food products, in Japan and abroad. Kikkoman is the biggest wholesaler of Asian foodstuffs in America, with similar operations in Europe, China and Australia. It sells canned fruit and vegetables in Asia under the Del Monte brand, and one of its subsidiaries is Coca-Cola’s bottling affiliate in Japan. Foreign sales account for 30% of revenue but 55% of operating profit, three-quarters of which comes from North America. By some measures Kikkoman is the Japanese firm most dependent on the American market.

The recession has hit Kikkoman’s profits, but it is relatively well protected. “In a recession, demand shifts from restaurants to household consumption,” Mr Mogi explains, so what his company loses in one market it makes up in the other. Another concern is the value of the yen: the exchange rate against the dollar has gyrated wildly over the past 18 months between ¥90 and ¥125, and is now around ¥100. But Kikkoman buys most of its soyabeans and wheat from America and Canada, so a stronger yen actually reduces its costs. On a cashflow basis the company is unscathed, says Mr Mogi. But the strong yen extracts a toll when the revenue is consolidated in the corporate accounts, he laments. A further frustration for the company is the recent trade quarrel between America and Mexico, a small but growing market for the firm. Last month, after Mexican truckers were banned from America’s roads, Mexico retaliated by slapping tariffs on many imports from America, including a 20% duty on soy sauce, which Kikkoman makes at its factory in Wisconsin.

Kikkoman’s move into America in the 1950s set the template for the company’s foreign expansion. America was the perfect place to venture abroad, says Mr Mogi. It is open to new things and is willing to incorporate novel ingredients into its cuisine. During his time at business school Mr Mogi travelled across America, visiting Asian restaurants. There were very few: in New York he found only eight Japanese eateries. Kikkoman, he realised, had to adapt its sauce to the local cuisine if it was going to succeed. Kikkoman promoted soy sauce in America by hiring chefs to concoct recipes that incorporated the sauce into classic American dishes. The firm then sent the recipes to local newspapers, prompting housewives to cut them out and shop for the ingredients. In the process it started to position soy sauce not as a Japanese product, but as an “all-purpose seasoning”, as a housewife puts it in Kikkoman’s 1950s television advertisements. The same words can still be seen emblazoned on its bottles.

What’s the company’s special sauce?
In 1961 the company picked up many new customers by introducing teriyaki sauce—a mixture of soy sauce and other ingredients devised specifically for the American market as a barbecue glaze. Kikkoman is now devising products for South American and European tastes, such as a soy sauce that can be sprinkled on rice—something that is not done in Japan. In Europe and Australia, where consumers are suspicious of biotechnology, Kikkoman’s sauce is made without genetically modified ingredients. Mr Mogi is also taking Kikkoman into a foreign market rather closer to home: China. It is a more difficult market to enter than America or Europe, because soy sauce is already part of Chinese cuisine and cheap products abound, often chemically synthesised rather than naturally brewed. Mr Mogi hopes to establish Kikkoman’s sauce as a premium product aimed at wealthier buyers. His early recognition of the importance of adapting his firm’s product for foreign markets is Kikkoman’s real special sauce.