THE NEW MASTERS OF THE UNIVERSE

SUSHI KING RULES

How an ex-banking executive cornered the sushi market

Peter C. Newman April 7 2008
THE NEW MASTERS OF THE UNIVERSE

SUSHI KING RULES

How an ex-banking executive cornered the sushi market

Peter C. Newman April 7 2008

SUSHI KING RULES

THE NEW MASTERS OF THE UNIVERSE

A MACLEAN'S SPECIAL SERIES

How an ex-banking executive cornered the sushi market

PETER C. NEWMAN

FAST FOOD HAS a fast history. Hamburgers, for example, were believed to be invented by a Seymour, Wise., fairground vendor named Charles Nagreen as recently as 1885, when he flattened the meatballs he was selling and stuck them between slices of bread for customers who wanted quick service. Other fast foods are more recent inventions but only one can claim ancient roots: sushi, whose roots trace back 5,000 years to China, when slices of fish were covered with rice and allowed to ferment, which kept the fish edible—while the remains of the rice were discarded as spent preservative.

The dish took centuries to cross over to Japan, where fish was a staple and sushi gained a significant following as street food and later as an example of Japan’s culinary art. With

the addition of rice vinegar, diners began to eat the rice as well. The delicacy gradually spread across the globe, as the itamae-san (master sushi makers) evolved their art.

It comes as a bit of a surprise that Canada’s sushi king, who employs more than 800 workers here and in New York City—the vast majority of whom are sushi makers—is an earnest former banking executive who is rapidly cornering the domestic market for sushi, which he makes in over 30 varieties. Ken Valvur’s private company, Bento Nouveau Group of Cos., has annual sales of around $50 million and could double in size in three years. “Our principal goal is to expand as a sushi company, both in terms of intensity throughout Canada as well as geographically, going into new areas such as the United States,” Valvur says. “We already have some fabulous New York outlets, including the granddaddy of takeout sushi operations in North America, originally called Dai-kichi, the biggest and most famous takeout sushi operation in New York. It was owned by Yaohan, a large Japanese department store and real estate company that went bankrupt.” Valvur bought the

orphaned retail operation. “We also have three absolutely fabulous sites, all on Broadway, one at Bowling Green, close to Wall Street, one at Cortland, close to the World Trade Center site, and one at 39th, close to Times Square and the fashion district.” Valvur was born in 1961 in downtown Toronto of Estonian parents. His initial involvement with the food industry was as a parttime dishwasher, busboy, line chef, and waiter during his high-school years. He went to Europe for the first time when he was 14 to attend a Scout jamboree and later spent another summer backpacking around the continent with a friend. After graduating from the University of Toronto in 1984 with a bachelor of commerce degree, he qualified as a chartered accountant and first joined Price Waterhouse. There, one of his earliest audit jobs was counting 400-oz. gold bricks in the vaults in the Bank of Nova Scotia, deep beneath its head office on King Street West. “Even then,” he recalls, “I wanted to do something international, and banking seemed to me a better way to go than becoming a diplomat, which I also considered. Basically there’s more than counting money involved in banking.” After Price Waterhouse, he attended the American Graduate School of International Management in Arizona, where one compulsory qualification was to learn a foreign language. He picked Japanese. “I met Bill Hannigan there, and we ended up being very close friends. He was a grad from Notre Dame, had gone to Japan for two years, and came back speaking fluent Japanese. He made me realize that it’s actually possible for a westerner to become very adept in Japanese. At the time, I’d gotten some romantic ideas about international banking because I wanted to live abroad as a Canadian, and knew the banks had great networks in overseas cities. So I decided that since New York, London and Tokyo were the financial centres, the only place they didn’t speak English was Tokyo, and for commercial reasons I picked Japanese—this said without ever having eaten sushi.”

He passed a second-level language proficiency test in Japan, the second highest from the top of four levels, for which he had to learn 1,000 written characters. “I can talk about finance and about everyday things, but once you get into flowers and such sorts of areas, I wouldn’t have a chance,” Valvur says. It was mainly for his language skill that he was hired by Scotiabank while still in graduate school. His final semester was spent in Japan, living beside Mount Fuji at the government-sponsored International Institute for Studies and Training. He was 26 when he graduated, and, after training, started full-time with the Bank of Nova Scotia in Tokyo as an account manager of investment banking. The move brought other changes as well. He had been dating his Estonian-Canadian girlfriend, Monika, for five years, so they decided that since he was going to work in Japan, it was a great opportunity for them to be married.

It was in Tokyo that Valvur got his first serious taste of Japanese food. ‘T loved the way we had lunch every day,” he recalls. “The Japanese, by custom, all have lunch at 12 o’clock, so everybody has to catch an elevator downstairs right at noon and they descend on the restaurants in the underground areas. Japanese consumers are very quality-conscious and picky, so somehow the restaurants have to feed this mass of humanity right at 12 o’clock and feed them very well, in a way that will keep them coming back, because competition is horrific. The way they did that was through bento boxes, which are sort of plastic TV dinner containers, and they’d put various relatively small helpings in there, often five or six dishes in a single box.”

When he was transferred to a more senior job in London, Valvur realized that the sushi trend was catching on there and in most other parts of the world. “I always wanted to have

my own business, and so throughout the years I’d had ideas that I’d eliminate over a period of time, but this whole notion of doing bento boxes and sushi was a strong one, and while I was still in Japan, I went around to all the supermarkets, fast-food outlets and department store basements where they’ve got these phenomenal food areas, and took spy footage with my video camera. I don’t think Japanese people could have taken those films, they’d have been whisked away, but as a foreigner I liberally took all sorts of helpful footage.”

His trigger point for leaving London and the bank, and starting up his own firm, came when his home was broken into. “Some guy came into our house in the middle of the night,” he recalls. “We went downstairs, and he jumped

The only place they didn’t speak English was Tokyo, so he learned Japanese— long before he’d eaten sushi

through our French doors and escaped with my wife’s purse, which had our passports and what-have-you. It made her really want to get back home. We had a two-year-old child who hadn’t seen that much of his grandparents and cousins, so that was a bit of a tipping point. But the deal between my wife and myself was, ‘Okay, I will give up this great job in the bank and go to work in Toronto as long as I can have my own business.’ ”

He decided to open his first Canadian outlet in the concourse ofToronto’s Scotia Plazasomething he has often joked about, given that when he left the bank after nine years, his title was vice-president and director, which allowed him to eat in the executive dining room. “I went from the executive dining room

to serving food in the basement,” Valvur laughs. “I realized that I’d never own a bank— also that I probably wasn’t the right sort of person to be promoted to the very highest levels. There are certain skills that I didn’t think I necessarily possessed—and God knows it’s a very slippery slope up there.”

But his new venture needed a name. “My wife and I hadn’t been able to decide on the best,” he recalls, “so we drank a bottle of wine and narrowed the list to a smaller group, and then drank another bottle of wine and finally, by the end of two bottles, picked the name Bento Nouveau. It’s sort of interesting because bento was the core idea—and nouveau means new, so it’s sort of a new lunch box. The name seemed to sound a little more interesting

than calling it the New Bento. We wanted to put in a lot of things that weren’t traditional injapanese-style lunch boxes. Originally, we called one of our dishes Scandinavian Light; it contained poached salmon with dill sauce and three different salads. That one still survives to this day.”

At the time, most Canadians still thought of sushi preparation as only performed in specialty restaurants by acrobatic chefs who twirled knives and forks, and that’s what the sushi experience was all about. But Valvur was 35 and confident it wasn’t a risky decision, since he was still employable if it didn’t work out. “I thought that things were becoming Japan-ified around the world,” he reminisces. “Karaoke machines were being set up everywhere, Japanese animation was being picked up in different places. Japan had been known for exporting cars and TV sets but that was the first wave. The next wave’s all been cultural, and it has included Japanese food. We started the business in 1996 at Scotia Plaza where our food was refrigerated, a combination of sushi, bento boxes and sandwiches, with sushi the strongest part of our inventory,” Valvur says. “And so even though we opened

His trigger point for leaving the bank came after a break-in at home

a few other stores that looked like the first one but had this wider menu, sushi became the key thing, and we started opening up sushi kiosks at Sherway Gardens, the Eaton Centre, and all kinds of different places.” Along with that came a move into supermarkets, which had spotted the Bento Nouveau product. “So we began making sushi in a small catering kitchen,” Valvur says, “and eventually graduated to a larger factory in Scarborough.” Factories would later open in Ottawa, Montreal and Vancouver. “At the same time,” he says, “we realized that people wanted to have sushi made right in front of them before they bought it, so we started to put sushi chefs into supermarkets, and into our own takeout sushi kiosks. Now we have

26 sushi kiosks that are our own outlets across North America. We found that if you were selling x amount of sushi that had been made off-site in a factory, you’d sell five times that amount if there was a sushi chef working in front of the customers. First of all it would be very visible and the whole image of being fresh is reinforced. Three-quarters of all the sushi that we sell is made right on the spot, with chefs working in the stores.”

Most of Valvur’s sushi has a single-day shelf life— and is purchased within the first two or three hours after it has been prepared. The sushi that’s delivered from Valvur’s factories has a longer shelf life, typically by using a higher moisture content in the rice. He is also diversifying by selling hyper-fresh sandwiches— for example, ginger chicken with wasabi.

Valvur has one partner, Glenn Brown, whose sushi company he acquired in 2002. Outsiders participate through a group called Whitecastle Private Equity, founded by Ephraim Diamond, who co-started Cadillac Fairview. “The reason our business is essentially unique, and what makes it an interesting vehicle either from a general business sense or as an investment target, is the fact that we’ve done a couple of things differently from other companies,” Valvur contends. “We have our own employees spread throughout retail chains and cafeterias across Canada and potentially across North America. It’s unique to have your own employees in other people’s premises. What we can do is have a completely different level of customer service, to be able to control our own merchandising, to provide an element of theatre that other food products can’t have if they’re just sitting on a shelf someplace. So that’s a truly innovative thing, and you don’t find many companies that do that.” And you don’t find too many former vicepresidents of major banks out there hustling sushi, either. M