Editor's Note: Restaurateur Michael Don is interviewed in this Dec. 9, 1999, article. He is still in business with his Mirovaya Karta chain of restaurants mainly in Kyiv, including Lucky Pub, Golden Gate and Sam's Steak House (formerly Uncle Sam's.)
Wavering investors should take note of the Uncle Sam’s story.
When U.S. citizen Michael Don returned to his native Kyiv in 1995, six years after having emigrated from what was then the Soviet Union, he too thought it wasn’t worth pumping money into a business here. But Don changed his mind during a second visit a year later.
Today Don and his two partners – all former Soviet citizens – are juggernauts of the Ukrainian restaurant business, owning four restaurants in Kyiv and another in Yalta.
Don and his partners opened what Don calls their “first baby” – Uncle Sam’s on vul. Zhylyanska – in July 1996.
It immediately became popular with an expatriate crowd starving for more Western-style restaurants. At the time, about the only other restaurants serving quality chow to the ex-pat community were Studio and Arizona Barbeque.
According to Don, Uncle Sam’s was so packed in the first year after it opened that people consistently were lining up outside to get in.
Uncle Sam’s success seemingly started a precedent. In the next two years, dozens more Western-style restaurants opened up, a trend that continues today.
Don and his partners have been a part of that expansion trend.
One year after Uncle Sam’s opened, they started Stop, a fast-food restaurant by Druzhby Narodiv metro station. Stop was the first to introduce Ukrainians to the American fast-food tradition, and was radically different from any restaurant previously opened in Kyiv. Fast and efficient waitresses, Philadelphia sandwiches, bright yellow tables, scrupulous cleanliness and walls lined with unusual road-traffic signs combined to make Stop another instant success for USU. The restaurant remains one of the few in Kyiv to challenge the corporate might of McDonald’s.
But along with the good times, there have been bad times.
In the fall of 1998, the hryvnia lost 30 percent of its value in just over a month. Restaurants stood to bear much of the burden of the financial crisis, as purchasing power dwindled along with the value of hryvna salaries, and profit margins sank sharply in just a few months.
Don and his partners responded to the crisis in typically un-Ukrainian fashion.
While most other restaurants upped prices in response to the hryvnia’s fall, Uncle Sam’s slashed its prices to increase turnover by making the restaurant more accessible to the average Ukrainian.
If before, ex-patriots accounted for 80 percent of Uncle Sam’s custom, now the figure is under 60 percent.
Despite fears of deepening economic crisis, USU risked opening another venture in the teeth of the crisis.
Now, a year later, USU’s Mexican restaurant Tequila House is doing good business.
Don is the first to admit that USU’s success isn’t due to innovation – all their ideas are tried and tested in the United States.
Rather, the embryonic state of the Kyiv restaurant market means customers have to hunt for good restaurants – not the other way round.
‘We didn’t do anything new by American standards. We’ve just brought American management here,’ he said. ‘First of all, it’s professionalism. There is no such thing as a useless detail in our business.’
The food in the Don’s restaurants is as authentic as it can get in Kyiv. Some ingredients and products such as steaks, avocados and other delicacies are imported.
The staff goes through a thorough selection process. Waitresses have to be good-looking, polite, thoughtful and English-speaking.
‘We want a client to feel that we’re always waiting for him here,’ adds Beni Golani, Don’s partner.
American-style management has certainly made an impression on tourists in the hugely popular Crimean resort town of Yalta, where USU in May opened its Cactus restaurant and night club. Cactus is the first western-designed and run venue in Crimea, according to Don.
He said the venue received up to 600 customers a day during the summer. Like at Uncle Sam’s, clients were lining up at the door.
‘We were telling them we had no room left to sit or even to stand,’ he said. ‘And they were telling us they didn’t care.’
Though turnover in the Cactus has dropped off after the close of the summer season, the restaurant made more than enough then to tide it over the lean off-season, Don said.
USU was the first foreign investor to pump cash in an eatery and a night club on the Crimean Black Sea Coast, despite the peninsula’s reputation as the former Soviet Union’s best resort, Golani added. ‘Crimea is virgin territory,’ he said.
In a market where dirty plastic chairs and bad service at low-quality restaurants are the norm, the Cactus is in a class of its own.
Don expects others to follow where USU has led. Crimea’s warm seas and natural beauty have proved less of a draw now that resorts in Greece and Bulgaria, which have improved their standards of service greatly over the past few years, have become accessible to tourists from the FSU.
Nevertheless, Don sees a revival under way in the rundown Crimean resorts.
‘I think Yalta will get back on its feet quickly over the next few years,’ he said.
Don and Golani said they may start a new project in Crimea soon.
Back in Kyiv, USU is still planning to expand. Don and Golani described the Kyiv restaurant market as an ‘unplowed field’ and they promised to introduce Kyiv to yet more new tastes from the rest of the world next year.
At the moment, the partners are preparing a Georgian restaurant – Mimino – for opening later this month. As ever, they are applying exacting standards.
‘Out of 800 people that applied to be waitresses in Mimino, we chose just 25,’ they said.
