Next gens' recipe for success

There is not a family enterprise in the world that does not struggle with how to change with the times while preserving the family legacy, write Drew Mendoza, managing principal, the Family Business Consulting Group, and Carol Ryan, vice president, the Family Business Consulting Group.

Recently the third generation leaders of two iconic restaurants, La Tour D'Argent and Taillevent, addressed this challenge.

La Tour D'Argent and Taillevent are Michelin-starred, world-class restaurants. Both are now led by third generation family members. Both respect the tradition of fine French cuisine and both have been challenged by the recession. Most importantly, their daily challenges are exposed publicly as working examples of the high wire act that next generation leaders of family firms face globally. For restaurateurs, there is the recession, the dip in tourism, the ordeal of travelling and of course the expense of an extravagant and perfectly executed French meal.

Practically every operating company's next generation leader will face this same pivotal strategic question: "what do we keep and what do we change?" They are rarely given a second chance to get it right. Both restaurants are Parisian icons, closely watched by customers and media alike. They have had to consider innovation as well as the impact innovation and change could have on an enterprise that is steeped in traditional French cuisine, a significant part of the Parisian and French culture.

What is required? Without question, prudent reinvestment and clarity on one's intention to succeed and avoid the pain and the pitfalls suffered by family businesses that are non-responsive to the times and the need for action. It is difficult to balance tradition, keeping the loyal customer, while not forgetting the needs of the new customer.

At Taillevent, Valérie Vrinat d'Indy is quite consciously following a strategy based on the sound hospitality management theory: "if it isn't broke, don't fix it." She has retained the restaurant's key non-family maître d'hôtel of 30 years, because he meticulously provides oversight of each day's performance. The traditional customer demands exacting consistency of service and experience. However, she is doing a bit of adjusting by offering wine classes and planning a special menu for Father's Day. As she so succinctly puts it, "it's about evolution, not revolution."

Nearby at La Tour D'Argent, André Terrail saw a need for change in the restaurant space and equipment as they sought to attract the next generation of diners.

Thanks to the foresight of his father and grandfather, André was able to slay multiple birds with a single arrow. In collaboration with the restaurant's sommelier, he raised €1.5 million by tapping into only 4% of their wine inventory providing much needed capital and space. To attract the younger generation he has loosened the "dress code" and added an informative website. He has added small touches to the menu. And in his own words he understands "it's dangerous to be trendy".

These next generation leaders are successfully responding to one of the paradoxes often found in family businesses. For them the real question is not, "do we preserve tradition or do we change with the times?" But rather, "how do we respect and preserve our tradition while still responding to the changing in environment?"

What did the third generation restaurateurs share with respect to strategy? They kept the most important "strategic advantage", the food. While embracing their future with a loosened tie, a father and son brunch, and a website!

Being a family business leader is challenging at the best of times. What we have learned from family businesses confronted with massive global economic change is that the family business that responds quickly to change, whose family business leaders possess the desire to develop and implement clear strategies, who rely on sound business practices- such as reinvestment, competing on differentiating qualities, and a focus on for preserving tradition while embracing change, are the ones that will carry the day.