Stretching 62,000 square feet in the lobby of the Venetian Resort Hotel Casino, Tao Las Vegas looks like the temple Siddhartha would have built if he'd been a gangsta rapper. The restaurant, which opened in 2005, has high ceilings, a 20-foot-tall Buddha, a pool filled with Japanese carp, lacquered everything, and Quentin Tarantino lighting. It's a restaurant that hires people whose sole job it is to put on a bikini and sit in a bathtub filled with roses—and pays Kim Kardashian to throw its New Year's Eve party.
So it shouldn't be surprising that Tao Las Vegas is also the highest-grossing restaurant in the U.S., by far, according to Restaurants & Institutions magazine. In 2009, the restaurant brought in $59,292,345, more than double what the runners-up each made (New York's now-defunct Tavern on the Green, $27 million; Miami's Joe's Stone Crab, $26 million; New York's Smith & Wollensky, $25 million). All this despite the worst recession in the history of Las Vegas. The economics of the restaurant business are so wretched that while Tao Las Vegas has made it to the top of the magazine's list of the highest-grossing independent restaurants for the past five years, Restaurants & Institutions folded in April.
Tao pulls them in with Vegas-size ambition and subtlety. It also tries to prevent guests from ever leaving. Diners are encouraged to drink in the lounge, eat in the restaurant, and pay $20 or more to get into the nightclub—where they can spend $400 for a bottle of vodka. The next morning, they can drink off their hangover in a $2,000 rented cabana at Tao Beach, next to the hotel pool, where the menu includes massages. Tao Las Vegas' projected 2010 sales include $28 million from the restaurant and lounge, another $28 million from the club, and $10 million from the pool. The company is considering expanding into hotels, cruise ships, and even its own island.
As Tavern on the Green's 2009 bankruptcy has demonstrated, pulling in lots of money doesn't guarantee profitability. Yet because of Tao Las Vegas' size and alcohol sales, Ron Paul, the president of food industry consulting firm Technomic, believes it is the most profitable restaurant in America. Tao Las Vegas, Paul says, is "as big as some Whole Foods (WFMI) stores. Nobody is doing anything near that volume."
While most restaurants aim to make about 30 percent of their revenue from alcohol, Tao Las Vegas takes in about 75 percent. "When we buy vodka, we buy it by the pallet," says Rich Wolf, one of four partners in Tao Group, which owns 12 restaurants and seven clubs in Vegas and New York. "We have a different model. We're throwing a party with a restaurant," he says. Thirteen-dollar Tao-tinis and Tao-hitos might be profitable, but it's hard to sell alcohol over the long haul. "You get a bottle for $10 and sell it for $400," says partner Paul Goldstein. "But how do I get 400 people in a nightclub every single night?"
The answer, it turns out, is more complicated than merely hiring scantily clad women to bathe in a tub with roses—or calling Kim Kardashian's agent. When Tao Las Vegas opened at the Venetian, a hotel built largely to accommodate the huge convention center attached to it, many predicted failure. Remembers Wolf: "They said, 'There's no vibe at the Venetian. It's all conventioneers. It's dead after 10 p.m.' " So the restaurant adjusted by marketing to the conventioneers during the week before letting in the club kids. As a result, both contingents can say they partied at Tao Las Vegas without knowing the other did. The models don't have to see the Midwestern salespeople, and the Midwestern salespeople don't have to fret about being rejected by models.
Tao Las Vegas also markets to the pre-theater crowd for early evenings and to families on Sunday nights. "The ladies that play nickel slots also have to eat," says Goldstein. "They come into Tao at 5:45 and they're out by 7:30. Then we get our normal crowd in. If you're making $20,000 before 8 o'clock, that's a good thing." It's a particularly good thing in a town where new restaurants are constantly vying for the attention of celebrities. "At some point you have to come down to earth and say, 'Hey, we're selling Chinese food!' " says Kim Kurlanchik, another partner. "The A-list only comes for so long. So you better be nice to the grandmas and the babies."
The menu, which pairs generous portions of Chinese food and sushi in a way that isn't particularly Chinese or Japanese, caters to a demographic that can best be described as American. "Asian style makes it very fast. As it's ready, it comes up," says Corporate Executive Chef Ralph Scamardella. "People don't have to wait for their entrées. Especially with the wok stuff. It comes out in five or six minutes. That's by design." Tao Las Vegas serves about 1,400 dinners on a weekend night, with an average check of about $70 per person. Because dinner prep starts at 7 a.m., chefs can make a lot of dishes that just need to be finished off for a minute in the oven before they hit the table.
Even the kitchen is ridiculously large. On Saturdays, the restaurant employs 57 cooks, 8 chefs, 26 servers, and 10 hostesses to make sure things move quickly. At dinner, the executive chef stands behind a microphone to direct the cooks. The dishes, such as the three most popular—Miso Glazed Chilean Sea Bass with Wok Vegetables ($36), Kung Pao Chicken ($28), and Wasabi Crusted Filet Mignon with Tempura of Onion Rings ($38)—are all big and uncomplicated. While the menu does have dishes that lose the restaurant money, such as the $88 Kobe Ribeye, Tao Las Vegas' food costs are, at 25-30 percent of its budget, a little lower than the industry average. Largely because of its giant, chocolate mousse-filled fortune cookie, 30 percent of diners order dessert. That's remarkable for any restaurant, especially one where many patrons are half-naked and about to dance.
One problem the restaurant hasn't yet resolved is that after spending an hour and a half making a guy and his bachelor party feel special, a bouncer in front of the velvet rope might tell them they can't get into the club. "It's probably our biggest single challenge," says Wolf. "We can deliver a great experience at the restaurant, but if they don't get into the club, they don't have a great experience. We bend over backwards, but a group of 20 guys at a bachelor party? That's a tough one." The genius of the business plan, however, is that the restaurant gets them so drunk that they don't remember being turned away.