Why does Michelin – the world’s second largest tire seller “burn” millions of dollars to evaluate restaurants?

Recently, the official entry of Michelin Guide into Vietnam with the list of 103 honored restaurants has attracted the attention of the media.

However, the fact that a tire company like Michelin, the second largest in the world, spends millions of dollars, recruiting staff to travel the world to evaluate restaurants, makes many people wonder: what is the purpose and is it profitable? ?

Profit or loss?

The business results report for 2022 shows that the Michelin group has sales of 1.089 billion euros ($1.16 billion) and net profit of $7.942 billion, down 3.9% compared to 2021.

Although Michelin does not officially publish the number of Michelin Guides, but according to research by Transportist expert David Levinson, this guide’s access to a new market will increase its sales in that country by about 3%.

With total sales averaging around $25 billion annually, an increase of just 3% is also an extremely important ratio for Michelin.

By some estimates, the Michelin Guide has sold more than 30 million copies worldwide, or about 250,000 copies a year. For example, in 2007, the Michelin Guide came to Japan and more than 300,000 manuals were sold out in just 5 weeks of its launch.

Globally, Michelin’s report shows that it sold 1.2 million copies in 2007 and if you calculate the retail price of about 20 USD / book on Amazon, this group will make 20.4 million USD in book sales.

However, in order to publish this manual, Michelin also needs to recruit a team of supervisors to visit 62,000 restaurants worldwide, including travel expenses, accommodation… According to some estimates, children this number can be up to 17.8 million USD.

Although the exact number is not clear, a 2011 report by the Financial Times (FT) said that Michelin Guide lost up to $ 24 million a year, meaning that the money from book sales was not enough to cover the cost of evaluation.

Even so, this figure is only 0.1% of tire sales and this loss is like a marketing expense for the company.

For example, Japan in 2007, the release of Michelin Guide, if there is a loss, still brings about a revenue growth of 36.4 million USD from selling tires to the corporation in this market.

Besides, inviting Michelin Guide to access the market to stimulate tourism and cuisine will also cost the government budget.

Eater’s report shows that the Korean tourism industry once had to pay $1.8 million to Michelin to publish the “Seoul Guide”, while Thailand admitted to paying $4.4 million over five years to the airline to This handbook is accessible.

Receiving money is like that, but the benefits that Michelin Guide bring are not clear, other than the increase in sales and brand name of this tire corporation.

According to former Michelin star chef, Mr. Joel Robuchon, receiving 1 star will increase the restaurant’s revenue by 20%, 2 stars is 40% and 3 stars is 100%.

Selling beer with peanuts

Similar to the accompanying sales marketing tactics to stimulate sales, such as selling beer with peanuts, initially, the Michelin Guide restaurant selection was only to serve to increase sales of its tires.

It all started in the Clermont-Ferrard region of France where brothers Andre and Edouard Michelin founded their tire company here in 1889.

Growing up in Clermont-Ferrand, the two Michelin brothers set out to revive their grandfather’s declining company. Their tire innovations, from removable bicycle tires to trains using rubber wheels, have made transportation easier and more economical than ever.

At that time, French agriculture began to transform into the industrial age with a relatively small number of cars, only about 3,000 units.

Therefore, the Michelin brothers devised the release of a handbook called Michelin Guide that scores restaurants, hotels, and eateries across France and then distributes them to customers.

At that time, the two founders just thought that the more people drove around, the more they ate, the more easily the tires were damaged. And so, they will sell more car tires. That’s why when it was first published, the Michelin guide also included instructions on gas stations, tire changes or service garages…

Unexpectedly, the unexpected success of Michelin Guide not only turned the company into the world’s second largest tire manufacturer in terms of revenue, but also made the company an influential food industry that has nothing to do with it. mandarin.

In its first release in 1900, the Michelin Guide sold 35,000 copies.

By 1926, Michelin had produced more comprehensive travel guides with a focus on the culinary industry and the dining experience rather than just a manual “selling beer with peanuts”.

At this point, the Michelin brothers realized that the French were very fond of food and wanted a handbook that included the best restaurant locations.

So the star rating system was also built in 1936 and the number of people using the Michelin Guide skyrocketed thanks to the reliability of the reviews, left anonymously by secret diners.

*Source: Synthesis