In her case on the Spanish wonder restaurant el Bulli, IESE professor Julia Prats explores how elBulli’s founders and refounders propelled a sleepy scuba diver’s bar to the world’s top restaurant, using plain market positioning concepts and not so common genius.

elBulli’s Magic Recipe

IESE Business School (Barcelona)

Professor Julia Prats and Javier Quintanilla

ECCH reference 0-608-017

Picture a hilly, rocky, almost barren stretch of peninsula, yet only 140 kilometres north of vibrant Barcelona and a mere 50 kilometres south of France. We are on the Costa Brava, yet worlds away from the touristic-industrial landscapes that British vacationers flock to.

Maybe this is where Spain should establish its innovation incubator. After all it is this peninsula – called Cap de Creus – that has first seen the inspiration for Salvador Dali, one of surrealism’s leading lights, and now elBulli, the restaurant that has shaken up the rules of three-star cuisine and introduced the lucky few to the taste of molecular cuisine.

elBulli is no normal business, and its gestation is also an example of unorthodox development, over a span of twenty-eight years. elBulli started in 1961 as a snack bar for scuba divers, created by a German couple who fell in love with the remote, wild area. The Schillings had a love for the area, but foremost they had a love for food. And so, over a span of almost three decades, they developed elBulli from fried fish shack to three-star nec plus ultra rendez-vous for foodies from world over. (See box on elBulli history).

Unusual business practices
elBulli is also an unusual story in the realm of restaurants. Where else have you heard of a restaurant that is closed for half the year? Where the only meal served is dinner, even though driving home from remote Rosas after a six-hour dinner ceremony is a challenge? Where the reservation list for the full season could close the day after its opening?

As an art, elBulli depends on the talent of its cooks, namely Ferran Adria and his younger brother Albert. As a business, the restaurant is but the tip of an iceberg. The ___ square meter establishment in Rosas is only part of a larger – should we say sprawling? – empire that includes other activities (see chart). Like quite a few other three-star enterprises, el Bulli relies on other spin-off activities to generate the bulk of profits (see chart of el Bulli restaurant financials; note that el Bulli management does not provide consolidated financials for the non-restaurant activities).

The business side has been lead since 1988 by Juli Soler, who joined elBulli with no prior restaurant experience. As a micro-entrepreneur, he had owned a record store in Barcelona specializing in jazz and rock. This says much about the Schilling’s ability to intuitively find good people.

Soler has been adept at spotting and negotiating brand extensions. These include publishing activities (namely cook books), cooking classes, licensing deals with food product manufacturers (for example coffee with Lavazza or chocolate with Chocovic), and even an attempt at extending into hotels, with the Hacienda Benazuza in Sevilla.

Hunger driven by creativity
In the restaurant business, time is a cruel enemy. For each current shining star in the firmament of Michelin triple stars, how many establishments lie moribund by the wayside? Think Maxim’s or La Tour d’Argent in Paris.

Why this evanescence? Perhaps because great cuisine, like great fashion or great art, is produced by inspired minds, and a chef is put to the daily grind by having to produce the same quality day in and day out.

elBulli is fighting this uphill battle against the cruel arrows of fate by using innovation as its driving force. One important reason why the restaurant only serves about 8,000 meals, perhaps only one quarter of its capacity in its existing space, is because slack time is needed by the chefs to cook up their next creations.

Ferran Adria and his restaurant staff of about fifty seem like true biochemists when it comes to this culinary research. Their tests require the latest in food technology (equipment that normally would be reserved for food for outer space or high altitude bivouacs), sophisticated chemical compounds that a corner brasserie or tapas bar has never heard of, and a rigorous scientific method which includes the listing of all experiments in full detail in the ‘catalogue raisonne’ that logs every trial.

Expect class participation
For the author of this case study, professor Julia Prats (see profile) of Barcelona’s IESE business school (ranked 12th worldwide by the Financial Times), the lessons to learn from elBulli are numerous: “For me, the case is mostly about innovation. Innovation in ideas, in processes and in team management. I have used the case in several classes and I am always surprised at how active class participation is.” So our advice to professors who choose this case is to schedule more time for class participation… and expect heated debate on this controversial enterprise.

Why did Julia Prats choose elBulli? “Well, let me first dispell any notion that we did this as the only way to get a table there,” she laughs. “My research on professional services includes traditional areas such as law and consulting, but also more unorthodox sectors such as the arts. What is most intriguing with elBulli is how my students react. Younger MBAs will be very open and acceptign of the elBulli idea, whereas older executive MBAs will be skeptical and accuse the restaurant of snobbery. For me, elBulli is like a $20,000 haute couture gown. The designer creates it for inspiration and not for everyday wear.”

Published in August 2009.

 

From 10 pesetas to 185 euros in 28 years

Like a slow-cooked ragout, elBulli developed from seaside snack bar for scuba divers to three-star paradise on its own terms, and with its three lives

The German couple Hans and Marketta Schilling could just as easily have landed in a calanque near Marseilles, or maybe a baia in the Cinque Terre of Italy, but no, their hearts beat faster in 1961 at Cala Montjol in northern Spain. So fate would have that to be the site of elBulli, a feeding shack named after the couple’s French bulldogs.

First life as snack bar
For the first couple of years, the business was only a mini-golf. It was only in 1963 that the beach bar was inaugurated, serving to a clientele of scuba divers. Yet Hans Schilling was fascinated with gastronomy, and after eight years of research, he decided to give the beach bar a major facelift in 1975 by hiring Jean-Louis Neichel, a French cook who provided elBulli with its first Michelin star one year later.

 

Morphing into French haute cuisine
It was in 1982 that Ferran Adria, elBulli’s current chef and co-owner, first encountered what became his passion and laboratory. Adria had entered the cathedral of cuisine via a small backdoor – first washing dishes on Ibiza island and then cooking for a captain general of the Spanish military. After joining elBulli full-time in 1984, Adria quickly climbed the ranks, with the help of then-chef Christian Lutaud and the mentoring of Hans Schilling, always keen on eating out at other fine eateries to catch trends in haute cuisine.

Phase three – molecular innovation
The transformation of elBulli from its mid-1980s identity as a cuisine nouvelle restaurant into its current status as an outlier in what some call the ‘molecular cuisine’ realm has a few causes. Certainly one factor was Adria’s 1987 ‘epiphany’ when a Cote d’Azur restaurateur explained that “Creativity means not copying”. Although the numerous experiences of eating in other starred restaurants could help in stimulating ideas, it would not boost electron elBulli into the next ring of outer energy. Another factor was Adria’s increasing exposure to artists, and to the concept of creation itself.

As Ferran Adria explains of his intervention at the avant-garde Kassel Documenta art event: “(…) I could make cooking into a more creative place where I could be provocative, ironic and even humorous. Each dish was photographed and archived. They do that for Picasso – why not for me?”

 

Professor Profile

Name: Julia Prats, Head of Department Entrepreneurship
University: IESE Business School (Barcelona)

What area of research are you currently working on?
Most of my research focuses on growth within companies. One line of my research is on growth challenges that companies face, namely those ‘near death’ experiences which some companies experience… and some actually do. Another line of research is on organic growth vs. acquisitions. A third area is the study of how companies build resources and capabilities for sustainable growth. How do companies find robust business models? Much of my research focuses on service companies, namely what I call companies of professionals – for example doctors, lawyers, consultants, and chefs.

 A case study that you think is important. Why?
Since I teach entrepreneurship classes, one of my reference cases, albeit old, is Harvard’s “R & R” case (Howard Stevenson and Jose-Carlos Jarillo Mossi, ECCH reference 9-386-019). Although I wish there was a more updated version, this case provides fantastic insight into entrepreneurial decision-making. It also shows how opportunities can be created, and gives insight into promoters’ behavior.

 A management book you think highly of (written by someone else). Why?
I would quote two books, both dealing with entrepreneurship. The first is “The Entrepreneurial Mindset”, by Rita McGrath and Ian MacMillan (HBSP, 2000), and the other being “Entrepreneuring. Towards 2010” by Pedro Nueno (Ediciones Deusto, 2005). Neither are airport books, but they provide good conceptual frameworks and can prove useful for managers in general.

 What is one of your well-liked teaching moments (case, discussion topic, …)?
A few months ago, I was teaching an executive MBA program and had launched into a discourse on entrepreneurial vision. After about 45 minutes one of the participants raises his hand and comments that this is all fine and good, but he feels that as an employee in a largish company, it has little relevance to his daily grind.

Four weeks later I receive an email from him. His boss is wondering what IESE had done to him. After barely a week back in the office, he was developing all sorts of ideas for innovations, both in products and processes. Knowing that teaching can have that impact is a good feeling.

 What was your most interesting consulting assignment? Why?
It was for a multinational telecoms firm, on a project to develop intrapreneurship within this huge corporation. The project involved both members of the executive board and line managers, and one of the key factors was that we needed to train these managers on how to inculcate the entrepreneurial spirit at all levels of the firm.

 If tomorrow you could occupy an executive function in any company, what function and company? Why?
Well, with no regard for modesty, the position would have to be general manager without hesitation. I want to see the whole picture and have full responsibility. Not for a big company or a multinational. I am starting to believe that certain sizes are too big and too unwieldy. And of course, probably in an area of professional services.

Interview date: July 2009