Last week, the local food world experienced waves of shock at the fate of Richie Nakano, the chef behind Hapa Ramen. When Nakano was ousted from the restaurant he helped start by its main investor Owen Van Natta, #BoycottHapaRamen trended on Twitter and a storm of bad publicity swirled around the dispute.
In looking back on the dramatic events, Mission District chefs and restaurant owners seemed united in their primary response: Hapa Ramen’s story was an incredibly unfortunate one.
“It’s a bummer,” said Valerie Luu one of the chefs and owners of Rice Paper Scissors. “We’ve watched him grow his business over the last five years, and it sucks to see the rug being pulled out from underneath him.”
However, what the dispute at Hapa Ramen may signify about the wider Mission restaurant scene depends on who you ask, and how far along they are in their career.
For Luu, who started Rice Paper Scissor with partner Katie Kwan as a popular pop-up in 2011 and now rents kitchen space in Brick and Mortar Music Hall, the story of Hapa Ramen makes her nervous. It’s yet another indicator of how challenging it can be to go from pop-up to full-scale restaurant.
“We want to open our own restaurant, but it’s hard to do, underline and bold that word: hard,” said Luu. “Everything is really expensive, spaces are scarce… it almost feels impossible, we hope to make it happen and find the right people, and by people I mean investors.”
For Hapa Ramen, which started as a pop-up and food stand at the Ferry Building in 2010, finding an investor like Van Natta meant that Nakano could open a full-scale restaurant on Mission Street. But having a full restaurant also meant that Nakano sold the bulk of the business to his investor. For $20,000, the restaurant became a reality but Nakano went from owner to employee, as reported in the Chronicle.
“We’re shocked and shaken,” said Luu of Nakano’s trajectory. “It definitely raises some important issues about having investors, it raises issues that we will need to address in the not too distant future.”
While Trish Tracy is set to open her first restaurant later this year, Myriad Gastro Pub on 21st and Mission, she’s been the head chef for the openings of other restaurants and knows how tricky the economics of it can be. For Tracy, finding the right financing is especially important.
“Whether it’s a restaurant or dry cleaner, if you’re the person who has the know-how and passion and it’s your dream, you need to be careful how you finance yourself,” said Tracy.
Myriad’s financing, she said, comes from a group of investors, a successful Kickstarter, her own savings, and loans from the bank. She said she’d be wary of having one powerful investor.
“There’s a lot of ways to skin a cat, same thing with financing a restaurant,” said Tracy. “The upside of having one investor is it’s a lot simpler, less legal paperwork, and just one person to deal with, but you have to wonder how much you’re giving up.”
Like Nakano, Anthony Myint and Karen Leibowitz went from the street food scene to full-scale restaurants. With several restaurants started—Mission Chinese Food, Commonwealth, and Lt. Waffle and a new one called the Perennial on the way later this year—their story serves as one successful road map from curb to kitchen.
“We understand restaurants from the business side, but my heart sides with Richie,” said Myint, who knew Nakano from when he was a guest chef at the couple’s Mission Street Food pop-up.
Without knowing all the details of the situation between Nakano and Van Natta, Myint said he’s hesitant to draw any conclusions about the story of Hapa Ramen. For Myint, whatever the details or meaning, they’re specific to Hapa Ramen and not necessarily a cautionary tale for young chefs everywhere.
“Whatever people agree to at the beginning, which can be really nuanced, whatever they argue for or negotiate for, goes,” said Myint. “It’s important for prospective investors and prospective chefs to negotiate whatever agreement at the very beginning before there’s tons of money being lost.”
Both sides of the issue have stated publicly that the Hapa Ramen was operating at a loss. Nakano has said he was fired because of it, while a joint statement from Van Natta and Hapa Ramen’s director of operation Deborah Blum said that Nakano wouldn’t agree to cost cutting measures suggested by the management and left.
“The economics of running a restaurant were different even a year ago,” said Myint, citing recent changes to the minimum wage and new insurance requirements for businesses with more than 20 employees. “Starting in January, Mission Chinese Food’s insurance went from $8,000 to $10,000 a month. That is big difference if you’re just starting out.”
“The restaurant business is tough, and people will argue about the right place to transfer costs,” said Leibowitz, noting that you’ve got to cut costs somewhere. “But we also understand Richie’s point of view, the way that he makes his food is important to him, so it’s heartbreaking to watch.”
How did Owen Van Natta think that the Hapa Ramen brand was a thing that could be separated from Richie Nakano?
Maybe after more time and more success it could have been. But at this point? There is no Hapa Ramen w/o Richie. I’m sure lots of people could come up with lots of good reasons to fire Richie Nakano, but trying to keep the Hapa Ramen brand is only going to cost Van Natta. He should give it back.
I totally agree, Van Natta should give Richie the Hapa Ramen brand back. No question
Give the name back? After the tantrum that Nakano has been throwing online? He would be lucky if they decided to SELL his brand back. Just judging by his public interactions, the guy sounds like a disaster to work with. I am not surprised he got fired.
Investors take on the risk. For that risk, the investors want ownership. If you don’t want to give up ownership, you must take on more risk by going to a bank and taking out a loan. If the restaurant fails, you owe a bunch of money to the bank. If the restaurant is successful, you make more money. It’s a Yin Yang and everyone has a different tolerance for risk.
I agree. While I too don’t know the details it wouldn’t be the first time someone had great vision for a business of some type only to find out that there are some harsh economic realities related to running the business. Sometimes the visionary isn’t interested in “the business” in as much as creating something they consider special and transcends dollars and cents AND the bottom line.
John is right in that investors generally invest to make money. I suspect in typical SF fashion people will draw an opinion one way or the other without any of us knowing the exact details.