INSEAD: Tell us briefly about the restaurant's menu, the range of Japanese dishes and sake (Japanese rice wine) that you feature?

Ayako Watanabe: Our Executive Head Chef Hiroyuki Saotome, (former joint head chef of the Michelin starred Nobu London) oversees our menus' development, whilst our new Head Chef Yoshitaka Onozaki, excels in his area of specialty, 'Shojin Kaiseki', which is strictly vegetarian haute cuisine. Yasutaka trained himself in one of the most reputed Shojin specialist restaurants 'Hachinoki' in Kamakura near Tokyo. We are the first Japanese restaurant in the UK to introduce an authentic 'Shojin Kaseki' course, and the results have been excellent. We were amongst the 'serious vegetarian specialists' in 'London's Top 10 Restaurants for Vegetarian and Vegan Meals' by Time Out Magazine, and were also favourably reviewed by Harper's Bazaar Going Out Guide and The Food & Travel Magazine this year. We have three kinds of menus:

• Chef's omakase tasting menu (3-7 courses) and a la carte for the restaurant's main dining room. The main dining room menu, which changes monthly, features the chef's signature dishes and seasonal delicacies. Each course can be accompanied by a suggested glass of wine and sake to experience the intriguing marriage with Japanese cuisine. Starting with white wine, chilled and light-bodied ginjo sake, then full-bodied junmai followed by red wine, then kan (warmed sake), before plum wine with dessert. We came up with this formula with our Japanese sommelier and are very proud of its unique proposition.
  
• Bar bite and cocktail menu. The bar offers a more casual dining experience with a variety of cocktails using sake (rice wine), shochu (Japanese equivalent to vodka) and Japanese liquers (such as yuzu citrus, green tea and kyoho grape). Food served in the bar is mainly tapas style kobachi and platters, with recommendations of what drink to choose with each dish.
  
• Takeaway menu for the deli. The deli menu reflects the same quality and dedication of our kitchen. It is popular for both a quick lunch and for those looking for party catering. We have also catered at large external events for prestigious organisations, such as the British Museum, the Conran Shop, and the Fine Art Auction Group.

INSEAD: Which part of the business is the most profitable, the restaurant, boutique or bar?

AW: The restaurant represents over 80% of our sales. However, the bar has the highest profit margin by percentage.

INSEAD: Do you need to import many ingredients from Japan?

AW: We try to source local produce as much as we can. For example, our organic soy sauce is brewed in Wales by Shoda, the European subsidiary of the premium soy sauce brewer in Japan (the owner is the second-degree cousin of Japanese Empress Michiko). We are proud of the fact that we are the only retail outlet in the UK who makes their 'made-in-Japan' premium soy sauce available. Our fish come from the British Iles or Europe, and Japanese mushrooms such as shitake and shimeji are farmed in Kent. However, certain fresh products with the quality that we require are simply not available outside of Japan. Therefore we buy them directly from Japan replenishing our stocks a few times a week. Overall, our food sourcing is much more localised than that of our peers in the United States.

INSEAD: How did you raise the initial funding to start the business?

AW: When I first came up with the idea of opening a Japanese restaurant in London at the end of 2003, I was planning to take over an existing restaurant, with a fairly small budget. However, as the concept was quite unique, we finally decided on a property which was just a shell that we could design and develop from scratch. This obviously required a significantly larger budget!

I needed to raise at least £750,000, which I managed partly through private investors in the UK and Japan from my professional and personal networks.

I also received a loan from the 'Small Firm Loan Guarantee Scheme', sponsored by the UK Department of Trade & Industry, which I was extremely lucky to get. Start-up restaurants very rarely receive this guarantee-free loan, as the industry is known to be very high risk, with five out of six new ventures in the UK disappearing within one year. However, the bank's director and head of the entertainment sector read my business plan and said 'this is the best business plan I have ever seen.' The bank of course followed their standard credit assessment procedures, but I think that they went the extra mile for us!

We also won offers for guarantee-free lease finance from two companies, and some venture capital firms offered a considerable sum of money, however, their extremely high interest rates and protection clauses were too scary, so we didn't accept.

INSEAD: How did you choose the premises?

AW: I was looking for a 'pocket village of London', meaning where people live, work, and go out. Smithfield is one of these areas. No matter what hour of the day or night it is, there are always people around. The restaurant is located in front of the central meat wholesale market which opens at 2:30am, directly opposite one of the biggest night clubs in Europe which opens all night, and surrounded by bars and restaurants including Michelin starred French and celebrity chefs' hang-outs. By the time the clubbers head for home, the city commuters flood in, so there is a non-stop buzz around the clock, whatever day or month of the year.

When we first opened, the area was still up-coming, meaning that we didn't have to spend a fortune on the rent, and we could expect the commercial value to rise. Since opening a new Tesco Metro (a smaller branch of Tesco, one of the biggest supermarket chains in the UK) and Karaoke Box (250 cover private karaoke rooms and bar) have opened on the same block. Despite the credit crunch, I believe that being in this area will be an excellent investment.

INSEAD: Can you tell us about the first few months of launching your business? Did everything go to plan?

AW: The first few months were completely crazy. Restaurant critics discovered us more quickly than we had anticipated, so we were suddenly bombarded with phone calls for bookings. It was a pity that we had to turn down so many as the kitchen didn't have enough capacity. In addition, one of our chefs developed an extreme case of meningitis, and another had a very bad flu, just when we received one of the most famous UK restaurant critics (Fay Maschler of the Evening Standard) who published 'Stalagmites, Sushi and a Serious Shortage of Chefs' in the headline of her two page article. Well, what could we do? At least it helped us in recruiting!

INSEAD: How many people do you employ today?

AW: Including part-time staff we have 30 employees.

INSEAD: Where did you recruit your chefs from?

AW: Most of our chefs are Japanese. About half of them came directly from Japan and we hired the others locally.

INSEAD: How much do you invest in marketing?

AW: We don't advertise at all. We primarily rely on good PR and word of mouth. It normally costs quite a few thousand pounds a month for a PR specialist in food and drink. But as I had carried out the initial stage myself, by the time we started using a PR agency, we already had good press coverage, such as full colour page reviews in key magazines. So we were in a strong position to negotiate favourable fees.

INSEAD: Are you planning to open restaurants in other European countries?

AW: Yes, definitely. Once we are more established in the UK, we will expand to continental Europe. Although, we will need local partners, as regulations are very different from country to country and there are language barriers.

INSEAD: Have you experienced a fall in business due to the financial crisis?

AW: Unfortunately yes. I imagine that most of the up-market restaurants in London, particularly those in the city, have suffered. Our dinner service hasn't been affected that much, but lunch is much quieter at the beginning of the week.

As Christmas is around the corner, and we have corporate party reservations, I hope that this year's total revenues will allow us to prepare sufficiently for next year, which we anticipate to be tough. Fortunately the UK Government just announced the reduction of VAT (value added tax) from 17.5% to 15%, with which we will use savings to run a monthly prize draw worth over £1,000. Some people have told me that this is a bold move as food costs are rocketing due to the appreciation of the Japanese Yen against the British Pound. Some of our competitors have implemented huge price increases on their menus, but I think it is more important to share the pain and gain with our customers, and help each other when the economic weather is crunchy.

INSEAD: Do you consider social responsibility and environmental issues in how you run your business?

AW: Yes, we do. Apart from the normal food miles (using local products as much as possible) and garbage recycling, we have a paperless toilet! Or more commonly known as 'Washlet' (manufactured by TOTO) which, according to the press, was the first public paperless toilet to be installed in the UK.

As anyone who has been to Japan would know, a toilet with washing, heating and drying facilities is already standard, and most Japanese homes are also equipped with one. Some high-end models featuring fully automated functions (lid opens automatically, plays music on MP3, offers shampooing for the user's extra cleanliness, flashes and washes itself automatically after each use, etc.) could cost nearly 10,000 euros. Our toilet is the only make with an after-sale warranty in the UK, and we've been voluntarily acting as a live showroom for our toilet supplier who kindly sponsored us.

The original idea was to incorporate Japanese technology gimmicks in our interior design, so that we offer a contemporary but authentic ambiance which would click with the local non-Japanese clientele. When I came up with the idea, our architects and interior designers were sceptical as to whether the paperless loo would be welcomed by UK consumers, but all agreed that it would be a good talking point. The result was an enormous response from both the customers and the press in the UK and Europe. Many daily papers such as The Guardian and The Daily Mail published full-page photographs of our toilet, while The Time Out Magazine awarded us as one of the best toilets in UK!

INSEAD: How has having an MBA from INSEAD helped you professionally?

AW: I took the MBA programme at INSEAD because I wanted to launch my own venture in promoting Japanese culinary culture overseas. Having an MBA helped me enormously from day one, and I am extremely grateful for the tremendous support that I received from the school, as well as Accenture, where I spent six years working as a management consultant after INSEAD.

In addition to the necessary skills of running a business and managing investor relations, INSEAD taught me how to be confident and work professionally. During the first two periods of the MBA programme I struggled enormously, as my friends may remember. Living outside of Japan for the first time, using my textbook English in practice was tough. In addition to the extra hours spent on preparing for the classes, I took an intensive English course during the summer break, and gradually things started to make sense.

One important part of my year at INSEAD was being surrounded by extremely thoughtful and helpful friends. Without their kind hands I wouldn't have survived for very long. I can say the same thing for my Accenture colleagues, with whom I worked and socialised. These people are an important asset in my life and I owe them a lot. It's a pity that I'm still working such long hours, with little time to see my alumni friends, but that's life as an entrepreneur. I am actually hoping that my INSEAD friends will read this interview and discover what I am up to and where to find me!

INSEAD: Are you in touch with the alumni network?

AW: Yes, I am. One of my investors is an alumnus, and I also meet regularly with alumni from my class. In March 2000, I organised an event for the National Alumni Association in the UK, an 'Introduction to Kaiseki' evening which was held at one of the most exclusive Japanese restaurants in London. It was very successful with tickets sold out almost immediately! The late Irena Owen, secretary of the NAA UK, who asked me to organise this event, suggested that we hold another Japanese theme event at our restaurant. Unfortunately, Irena passed away and the plan didn't materialise. The NAA UK organised a tribute event last summer to remember her warm and dedicated support and friendship which many of us still cherish.

INSEAD: What advise would you give to alumni who want to start their own business?

AW: Do your homework right, commit yourself to work 24/7 until things become easier, which may take much longer than you anticipate. And most importantly, make sure you are passionately loving what you do, otherwise, don't do it.