WEBVTT - Savory’s Smith on Consumer Squeeze, Value Meals 0:00:22.840 --> 0:00:23.960 Welcome to Chopping It Up. 0:00:24.200 --> 0:00:26.400 I'm your host, Mike Halon, the senior Restaurant and food 0:00:26.400 --> 0:00:30.200 Service analyst at Bloomberg Intelligence. Our research and that of 0:00:30.240 --> 0:00:32.920 bi's five hundred analysts around the globe can be found 0:00:32.960 --> 0:00:37.120 exclusively on the Bloomberg terminal. Today, we're joined by Andrew Smith. 0:00:37.280 --> 0:00:40.400 Andrew is the managing partner and co founder of Savory Fund, 0:00:40.400 --> 0:00:43.720 the private equity investor in the restaurant space. Thanks for 0:00:43.800 --> 0:00:44.440 joining the pod. 0:00:45.000 --> 0:00:49.960 So excited to be here finally. Listen to all your 0:00:50.000 --> 0:00:52.199 other ones though, Mike, and they're really really good. So 0:00:52.360 --> 0:00:54.560 I'm actually just excited to chill out with you this morning. 0:00:54.720 --> 0:00:58.400 So dude, same same, Yeah. Yeah, I've been looking forward 0:00:58.440 --> 0:01:00.400 to doing this since I met you at the uh 0:01:00.640 --> 0:01:02.840 the Black Box. Yeah, the Box Panels. 0:01:02.920 --> 0:01:04.760 That was a cool event too. They did a great job. 0:01:05.560 --> 0:01:06.800 Yeah, they always do. Man. 0:01:07.240 --> 0:01:09.720 And one of the tidbits I got from when we 0:01:09.720 --> 0:01:11.800 were on that panel, I think you made a mention 0:01:11.959 --> 0:01:14.800 to the fact that you you you're you know, you're 0:01:14.840 --> 0:01:15.880 a race car driver. 0:01:16.480 --> 0:01:18.759 So have you been out on the track recently or well. 0:01:19.480 --> 0:01:22.120 Not recently, but man, every single day I wake up. 0:01:22.160 --> 0:01:24.360 I actually I collect a little bit too. And so 0:01:24.440 --> 0:01:26.320 whenever I passed any of my cars that I collect 0:01:26.360 --> 0:01:27.520 and I was like, gosh, dang it, I got to 0:01:27.520 --> 0:01:29.360 get back out on the track. But yeah, I I 0:01:29.480 --> 0:01:32.399 raised Porsche and Audi for four and a half years 0:01:32.440 --> 0:01:34.280 and some of the funnest times. It was like one 0:01:34.319 --> 0:01:36.120 of those checkboxes in my life and I did it. 0:01:36.200 --> 0:01:36.840 So yeah, it was fun. 0:01:36.920 --> 0:01:37.520 It's very cool. 0:01:37.600 --> 0:01:39.839 So what what's your all time favorite car to race 0:01:39.959 --> 0:01:42.199 and is there one that you're like dying to drive 0:01:42.319 --> 0:01:43.280 but you haven't yet. 0:01:44.480 --> 0:01:47.000 I think my all time favorite card to race has 0:01:47.040 --> 0:01:50.480 been the GT four Kman Porsche. But my the one 0:01:50.480 --> 0:01:53.800 that I want to I want to race is uh yeah, 0:01:53.840 --> 0:01:56.560 the Ferrari Challenge Car, so the two ninety six Challenge car. 0:01:56.640 --> 0:01:59.880 But I drive those, but I don't race them. And man, 0:02:00.160 --> 0:02:01.800 racing them would be very expensive. 0:02:04.120 --> 0:02:06.120 I'm sure insurance would be pretty expensive. 0:02:06.600 --> 0:02:08.520 They don't even ensure of Mike, you hit the wall, 0:02:08.560 --> 0:02:10.160 you're paying for it, so there's no expense. 0:02:11.440 --> 0:02:16.120 So a very high replacement cost, very high replacement go. Yeah, awesome, 0:02:16.200 --> 0:02:16.720 very cold. 0:02:17.960 --> 0:02:21.040 All right, what's what inspires you to start the Savory 0:02:21.080 --> 0:02:24.520 Fund and what's unique about the way it operates? 0:02:25.639 --> 0:02:28.040 Yeah, Mike, my career started actually in tech, if you 0:02:28.040 --> 0:02:30.400 can believe it. Nineteen ninety eight I started my first company. 0:02:30.639 --> 0:02:32.320 And I think it's funny when I say this to 0:02:32.360 --> 0:02:34.960 people because it really does age me. I mean, I 0:02:34.960 --> 0:02:36.400 know you can see me. But I do have a 0:02:36.400 --> 0:02:38.799 few grades now, Mike. I think I've earned those. They're 0:02:38.840 --> 0:02:42.240 hard earned. But I started my first company nineteen ninety eight. 0:02:42.320 --> 0:02:45.440 It was streaming media. Can you believe that? Like you 0:02:45.480 --> 0:02:47.200 think about that in our lifetime, like it hasn't the 0:02:47.200 --> 0:02:50.480 streaming media and like video on our phones and TV, 0:02:50.680 --> 0:02:53.720 it hasn't always existed. And the answer is no, it 0:02:53.760 --> 0:02:57.560 didn't always exist, and the Internet was fairly new with 0:02:57.600 --> 0:02:59.639 stream media in nineteen ninety six, seven and eight, I 0:02:59.680 --> 0:03:02.079 started streaming media company. So that's where I started my 0:03:02.120 --> 0:03:04.920 impetus and my entrepreneurial career was. Then I built and 0:03:04.919 --> 0:03:07.239 sold out to a public company, and then I started 0:03:07.240 --> 0:03:11.119 another company that was in financial software and then construction software. 0:03:11.400 --> 0:03:13.320 When I was doing my last company, which was a 0:03:13.360 --> 0:03:17.959 construction software company that was private equity backed, my wife 0:03:18.080 --> 0:03:20.320 of at the time, how many years is that was? 0:03:20.360 --> 0:03:22.720 Ten years we were married, We had two toddler boys, 0:03:22.720 --> 0:03:24.960 and she says, hey, I want to do something different 0:03:25.000 --> 0:03:26.480 than just be a stay home mom. I'd like to 0:03:26.520 --> 0:03:29.200 do a business or whatever. And I said, well, great, 0:03:29.200 --> 0:03:30.600 what would you like to do. You've been such a 0:03:30.639 --> 0:03:32.840 great support to me. And she's like, I'd like to 0:03:32.840 --> 0:03:34.760 open a restaurant. I'm like, oh, my hell, that has 0:03:34.800 --> 0:03:37.720 the stupidest idea, Like why would you ever do that? 0:03:37.840 --> 0:03:39.880 And I had all these fallacies in my head about 0:03:39.920 --> 0:03:42.760 the industry, which most people do that don't really know 0:03:42.800 --> 0:03:45.280 the ETHNB industry, And what came out of my mouth, 0:03:45.360 --> 0:03:47.920 Mike was I think it's a great idea, and I 0:03:47.920 --> 0:03:50.120 would love to support you, and I think we should 0:03:50.120 --> 0:03:52.760 definitely do that. And for that reason, I'm married for 0:03:52.760 --> 0:03:56.360 twenty five years now, Mike. But yeah, I supported her. 0:03:56.400 --> 0:03:59.760 And she opened up her first restaurant in two thousand 0:03:59.800 --> 0:04:01.960 and eight, and believe it or not, it was like 0:04:02.000 --> 0:04:04.920 the worst time in the world for tech and the 0:04:06.080 --> 0:04:09.480 stock market and banks and construction, and so my life 0:04:09.520 --> 0:04:13.280 was on fire. And she opened up her first restaurant 0:04:13.400 --> 0:04:17.120 and to my surprise, it was absolutely slammed. It was 0:04:17.160 --> 0:04:19.600 so busy, and I'm like, how's that fair? Like why 0:04:19.680 --> 0:04:21.679 is my life on fire now? And she's like crushing 0:04:21.720 --> 0:04:24.000 it and The one thing that I was so impressed 0:04:24.000 --> 0:04:26.120 with was after a few months of her being in business, 0:04:26.160 --> 0:04:29.080 I remember looking at her p and l her finances 0:04:29.080 --> 0:04:31.359 and I'm like, holy crap, what is that? And she says, Andrew, 0:04:31.360 --> 0:04:35.000 that's called profit because I had never seen that before 0:04:35.080 --> 0:04:37.400 my whole career. Mike is a tech CEO and founder. 0:04:37.400 --> 0:04:41.320 And so, to shorten up the story, the following year, 0:04:41.360 --> 0:04:43.440 I sold my tech business. We actually stabilized it and 0:04:43.480 --> 0:04:45.360 we sold it, and I called her up and said, Heed, 0:04:45.480 --> 0:04:47.240 I'd love to join you and see what this is 0:04:47.279 --> 0:04:51.240 all about. So we really started our business career sixteen 0:04:51.320 --> 0:04:54.680 years ago was just kind of try something together, do 0:04:54.760 --> 0:04:57.880 something together. And boy, our whole career Mike has been 0:04:57.920 --> 0:04:59.800 a series of moonshots. We kind of said, well, let's 0:05:00.160 --> 0:05:02.360 do five of these, and let's do ten. It was 0:05:02.400 --> 0:05:04.880 a bakery and cafe concept at the time. We ended 0:05:04.960 --> 0:05:06.640 up doing fifty of them. So that was kind of 0:05:06.680 --> 0:05:08.839 like one of those moonshot stories where it's like, wow, 0:05:08.839 --> 0:05:10.919 we just built one hundred million dollar business just because 0:05:11.279 --> 0:05:14.280 it was serendipitous, and we really started building this an 0:05:14.279 --> 0:05:16.919 amazing team behind us. We got into Little Caesars program 0:05:16.920 --> 0:05:19.640 and they had eighty seven Little Caesars, and then we 0:05:19.680 --> 0:05:21.560 started having brands come to us and say, hey, what 0:05:21.560 --> 0:05:23.440 you're doing with these other brands, could you do for us? 0:05:24.320 --> 0:05:26.800 And we had this incredible ops team, we were operators, 0:05:26.800 --> 0:05:29.200 and so we said, yeah, I think we could probably 0:05:29.200 --> 0:05:30.839 do it with other brands too, and so we started 0:05:30.880 --> 0:05:34.920 making investments in twenty and seventeen. In twenty eighteen, and 0:05:35.320 --> 0:05:38.840 that was really the pivot of our previous company to 0:05:38.880 --> 0:05:42.080 the Savory Fund, where we decided to take really our 0:05:42.200 --> 0:05:46.320 operational background, our team, our playbook of growth and apply 0:05:46.400 --> 0:05:49.920 it to emerging brands. And instead of doing it with 0:05:50.040 --> 0:05:51.880 just the bank of Andrew and Shauna, we decided to 0:05:51.920 --> 0:05:54.120 do with others that we know and trust. And so 0:05:54.160 --> 0:05:57.360 we raised a Savory Fund one in twenty eighteen, or 0:05:57.480 --> 0:06:01.000 Savy Fund two, which was a absequent one hundred million 0:06:01.000 --> 0:06:02.680 dollar funds will both back to back on hundred million 0:06:02.720 --> 0:06:05.440 dollar funds in twenty twenty one, and then we just 0:06:05.520 --> 0:06:07.360 launched fun three for two hundred million dollars to beta 0:06:07.400 --> 0:06:07.760 this year. 0:06:08.680 --> 0:06:09.200 Very cool. 0:06:09.720 --> 0:06:11.279 Why don't you talk to me a little bit about 0:06:11.760 --> 0:06:14.600 your process of identifying potential investments. 0:06:16.120 --> 0:06:18.560 Yeah, the process is actually pretty easy. People think that's 0:06:18.600 --> 0:06:20.800 really really hard. But Mike, you and I are were 0:06:20.800 --> 0:06:23.960 patrons of restaurants, right, and it's really easy when you 0:06:24.000 --> 0:06:26.960 go in to a restaurant, right when you walk in 0:06:27.040 --> 0:06:30.320 to go, wait a second, there's something really good here. 0:06:30.440 --> 0:06:33.159 And then you go through the process or you order, 0:06:33.240 --> 0:06:36.560 or you sit down and you're served, and when you leave, 0:06:37.040 --> 0:06:40.680 you think, well, they have everything there, the sites, the sounds, 0:06:40.720 --> 0:06:43.560 the smells, that everything was hit, like all my senses 0:06:43.560 --> 0:06:46.760 were hit and they did it amazingly. Those are the 0:06:46.760 --> 0:06:49.240 brands we all remember, and those are the brands that 0:06:49.279 --> 0:06:53.200 we typically are talking to. And it's interesting that most 0:06:53.200 --> 0:06:57.799 people would probably step over them because they're not multi 0:06:57.880 --> 0:07:02.760 regional players yet. But if you look under the underbelly 0:07:02.760 --> 0:07:05.360 of that business, most of the businesses we look at 0:07:05.480 --> 0:07:09.600 they've been around for ten years, fifteen years, and they 0:07:09.600 --> 0:07:13.880 have six to fifteen units, and there are these unbelievably 0:07:13.920 --> 0:07:17.480 successful brands, but most are just not looking at them. 0:07:17.560 --> 0:07:19.720 And so for us, we think, well, why have they 0:07:19.760 --> 0:07:23.480 not continued to grow? And we realize it's because it's 0:07:23.520 --> 0:07:26.920 just a different skill. There's a skilled gap for me 0:07:27.040 --> 0:07:29.600 to start something, and there's a skill gap mostly for 0:07:29.720 --> 0:07:32.080 founders to take things from call it ten units to 0:07:32.120 --> 0:07:34.920 one hundred units or ten units to fifty units, and 0:07:34.920 --> 0:07:36.840 it's really the skill that we have as a team. 0:07:36.960 --> 0:07:39.720 So when we identify brands, we look for the ones 0:07:39.760 --> 0:07:46.600 that are typically stepped over but are absolutely evolving that 0:07:47.040 --> 0:07:51.200 flavor segment or the segment of emerging brands within that area, 0:07:51.840 --> 0:07:54.560 and we approach them directly. So, Mike, if you had 0:07:54.560 --> 0:07:56.080 a restaurant, we would call you up and say, listen, 0:07:56.080 --> 0:07:58.680 we think the world of your brand and the concept, 0:07:58.760 --> 0:08:01.240 and we'd love to meet. I'd say ten out of 0:08:01.320 --> 0:08:03.440 ten times we get the founder to respond and meet 0:08:03.480 --> 0:08:05.760 with us. So it's been very, very fun to meet 0:08:05.800 --> 0:08:08.640 with the founders across America. We diligent sixteen hundred brands. 0:08:08.640 --> 0:08:11.280 Can you believe that it's been a few Yeah, so yeah, 0:08:11.280 --> 0:08:12.440 we just look for the ones that are kind of 0:08:12.440 --> 0:08:14.320 stepped over, but the ones that are really doing something 0:08:14.440 --> 0:08:16.320 very unique and kind of show their head above the 0:08:16.320 --> 0:08:17.000 rest of the crowd. 0:08:17.520 --> 0:08:19.880 That's cool, and that's is that kind of the target 0:08:20.160 --> 0:08:23.040 for brands around ten units, is that that's typically what 0:08:23.080 --> 0:08:23.360 you're looking. 0:08:23.440 --> 0:08:24.680 Yeah, I would say we go down to as low 0:08:24.680 --> 0:08:27.760 as five and you know, I think five to ten units, 0:08:28.040 --> 0:08:31.320 you start to get data that you can actually underwrite 0:08:31.520 --> 0:08:35.440 and look at and say they have they done enough 0:08:35.480 --> 0:08:40.880 to scrub off the startup phase, the fad phase, the 0:08:41.640 --> 0:08:43.640 well it's just is this just cool right now, but 0:08:43.679 --> 0:08:44.920 it's not going to be very cool three or four 0:08:45.000 --> 0:08:46.640 years from now. I think it gives them time to 0:08:46.720 --> 0:08:50.720 evolve through some cycles. Yeah, and typically during cycles you 0:08:50.760 --> 0:08:52.400 see the most out of a brand, out of the 0:08:52.440 --> 0:08:55.520 leadership team, out of a founder, right, So we like 0:08:55.600 --> 0:08:56.880 to get to the point where we kind of see 0:08:56.920 --> 0:09:00.360 them go through a couple of evolutions or cycles. So yeah, 0:09:00.400 --> 0:09:03.319 we like five to ten units kind of the call 0:09:03.360 --> 0:09:04.920 it five to fifteen years. 0:09:06.080 --> 0:09:10.840 All right, Cole, is there something more to like, you know, 0:09:10.840 --> 0:09:13.800 figuring out what trends are hot and discerning a fad 0:09:13.920 --> 0:09:17.240 versus you know, outside of just maybe staying power for 0:09:17.320 --> 0:09:18.800 that particular brand. 0:09:19.679 --> 0:09:21.880 Yeah, there is. I mean obviously there's some data. There's 0:09:21.880 --> 0:09:23.400 a lot of great data. And if you look at 0:09:23.760 --> 0:09:25.840 even the group that you and I were talking about 0:09:25.840 --> 0:09:28.880 earlier with black Box, I mean there's great data out 0:09:28.880 --> 0:09:31.000 there that we followed to see where consumer trends are 0:09:31.000 --> 0:09:33.280 spending their money. So yeah, we know that there's some 0:09:33.320 --> 0:09:35.960 flavor segments out there right now, especially that we're very 0:09:36.160 --> 0:09:39.880 interested in that they're hot, that they're being disrupted. If 0:09:39.920 --> 0:09:43.360 you think about, you know, the Asian category, for instance, 0:09:43.440 --> 0:09:45.719 Mike as an example, you know, we all grew up 0:09:45.880 --> 0:09:47.520 going to eat at the little hole in the wall 0:09:47.559 --> 0:09:50.640 shop that's really, really, really good Asian food, you know, 0:09:50.679 --> 0:09:53.720 a Chinese cuisine or a you know, a Thai cuisine. 0:09:54.120 --> 0:09:57.160 But they're starting to go out because the second generation, 0:09:57.240 --> 0:09:58.960 we home G two and G three, they just don't 0:09:58.960 --> 0:10:00.360 want to take over. They want to go something else 0:10:00.400 --> 0:10:02.800 with their lives, and so they're really faced with either 0:10:02.880 --> 0:10:04.160 trying to sell it to someone that will take it 0:10:04.240 --> 0:10:06.400 or just shut them up. So we've watched that data 0:10:06.440 --> 0:10:08.839 the last several years, and if you look at the 0:10:08.920 --> 0:10:11.520 King of the Pin, I mean it really is Andrew 0:10:11.520 --> 0:10:14.160 over at Panda Express. I mean, he's crushed it. It's 0:10:14.160 --> 0:10:16.040 something that we all have to just stand there and 0:10:16.080 --> 0:10:18.559 revere him for what he's done. But there's a lot 0:10:18.559 --> 0:10:21.520 of disruption in that category with the single shops, and 0:10:21.559 --> 0:10:24.120 so we think that something like that is very interesting 0:10:24.160 --> 0:10:26.360 to us. So we've looked at a lot of Asian 0:10:26.400 --> 0:10:29.520 concepts recently and it's incredible to see that you're and 0:10:29.559 --> 0:10:32.440 my dollars. If there's a good shop around us, we're 0:10:32.480 --> 0:10:34.760 spending money there often. I mean, it's on the pin 0:10:34.800 --> 0:10:37.280 wheel of options. And so that's kind of an idea 0:10:37.280 --> 0:10:39.440 of where we start focusing because we feel like that 0:10:39.520 --> 0:10:41.800 trend will be interesting for the next several decades. 0:10:41.840 --> 0:10:44.040 Yeah, and I feel like if it really fits in 0:10:44.080 --> 0:10:47.640 with the growth of delivery because it travels so well, right. 0:10:47.440 --> 0:10:49.600 For sure, it does travel well. I mean, who doesn't 0:10:49.679 --> 0:10:53.760 like a cold noodle, even totally warm? 0:10:53.880 --> 0:10:57.640 So yeah, it's very cool. I had a Sheish State 0:10:57.840 --> 0:10:59.520 on the pod recently, you know, Ashish. 0:11:00.800 --> 0:11:03.280 Of course I know that she's he's my banker's great. 0:11:03.400 --> 0:11:04.240 He's great for he. 0:11:04.200 --> 0:11:08.400 Worked with me on buy and he also helps me 0:11:08.440 --> 0:11:10.760 with on the cell side, so he's great. Harrington Park's great. 0:11:10.840 --> 0:11:11.880 Yeah, he's awesome. 0:11:12.000 --> 0:11:14.559 So yeah, he was on the pod and he mentioned 0:11:14.559 --> 0:11:19.520 there's significantly more demand for the franchise ors versus company 0:11:19.559 --> 0:11:22.360 owned chains right now and that we've kind of had 0:11:22.400 --> 0:11:27.360 that shift. You know, I'm sure it depends on the brand, 0:11:27.520 --> 0:11:30.480 But when do you think a change should start looking 0:11:30.520 --> 0:11:33.760 at franchising? Is it at ten units, twenty five units, 0:11:33.800 --> 0:11:37.760 fifty units? When when should that you know, new muscle 0:11:37.840 --> 0:11:41.520 be worked on. Yeah, I think that he knows what 0:11:41.559 --> 0:11:42.080 he's talking about. 0:11:42.080 --> 0:11:45.000 I think that there's been a shift to franchise or 0:11:45.120 --> 0:11:47.480 models where people want to buy the franchise or because 0:11:47.520 --> 0:11:50.120 they can, they can push the expense and the cost 0:11:50.200 --> 0:11:52.520 and the risk of growing and developing those brands off 0:11:52.520 --> 0:11:55.320 to the franchisees. And the reason why they're doing that 0:11:55.400 --> 0:11:58.160 is because it's expensive right now. Everything's expensive to build. 0:11:58.200 --> 0:12:01.439 Real estate's expensive. Interest rates are high, so it's expensive 0:12:01.440 --> 0:12:04.040 to service that debt. So you really push that risk 0:12:04.040 --> 0:12:07.200 adjusted return off to the to the you know, the 0:12:07.320 --> 0:12:09.319 franchise e, and then for years, the franchise or you 0:12:09.320 --> 0:12:11.280 can kind of sit back and relax and take royalty. 0:12:11.320 --> 0:12:14.320 The problem is with that, though, is the cash on 0:12:14.440 --> 0:12:17.360 cash on some of these brands is so high. Why 0:12:17.400 --> 0:12:19.560 would you Why would you push that off to the 0:12:19.559 --> 0:12:22.520 franchise Z If you, as a corporate owner have such 0:12:22.559 --> 0:12:25.560 good returns and you have good build costs, you have 0:12:26.360 --> 0:12:29.240 no problem staffing your stores, you have the hype, you're 0:12:29.280 --> 0:12:32.440 in the right flavor segment. I actually believe that there's 0:12:32.480 --> 0:12:37.079 buyers for all types of brands in all different I 0:12:37.160 --> 0:12:41.000 would say chapters of their growth, and they don't always 0:12:41.000 --> 0:12:43.959 all have to be franchise or franchise y relationships. I 0:12:44.400 --> 0:12:46.960 also think that a lot of the amazing brands, and 0:12:47.000 --> 0:12:48.680 we've seen this too, Mike, there's been a lot of 0:12:48.720 --> 0:12:52.680 amazing brands where they have really screwed up their business 0:12:52.760 --> 0:12:54.800 because they went franchising too soon and they didn't really 0:12:54.840 --> 0:12:57.680 have a very good under belly or undercaracter foundation, whatever 0:12:57.679 --> 0:13:00.520 you want to call it, to their main business, the hub. 0:13:01.200 --> 0:13:03.680 And so for me, I always feel like, no matter 0:13:03.679 --> 0:13:06.480 if you go franchise or not, Like, we franchised a 0:13:06.520 --> 0:13:09.160 brand that we've been involved with for many years and 0:13:09.240 --> 0:13:12.760 we still own a significant majority of Swig drinks, and 0:13:12.880 --> 0:13:17.240 Swig you know, went out, we built fifty five sixty 0:13:17.440 --> 0:13:21.800 corporate stores, had this unbelievable cash flowing business. We were 0:13:21.800 --> 0:13:25.040 in the game, we were operators, and then we flipped 0:13:25.040 --> 0:13:27.160 the switch to say, well, let's start franchising to kind 0:13:27.200 --> 0:13:29.120 of protect our turf and still be the leader in 0:13:29.160 --> 0:13:32.720 dirty Sodas because it's the original concept creator of dirty Sodas. 0:13:33.360 --> 0:13:36.040 And we sold five hundred and fifty franchises and we're 0:13:36.080 --> 0:13:38.440 still adding twenty five units in corporate a year to 0:13:38.440 --> 0:13:40.080 be in the game with the franchise ese. But the 0:13:40.080 --> 0:13:42.280 franchisees that we got were like, well, since you know 0:13:43.000 --> 0:13:45.040 what it takes to be a you know, a store operator, 0:13:45.280 --> 0:13:47.800 an owner and operator of this business, we believe you more. 0:13:47.840 --> 0:13:49.520 We trust you, We're going to be in this together. 0:13:50.120 --> 0:13:52.080 And the other thing is we don't depend on them 0:13:52.160 --> 0:13:55.080 for franchise fees and royalty fees. I think that there's 0:13:55.120 --> 0:13:58.040 a disconnect between you and me, Mike. If you're the 0:13:58.040 --> 0:14:00.320 franchise O or I'm the franchise e, you have no thing, 0:14:00.960 --> 0:14:03.520 but I'm paying you every single month, and you're so 0:14:03.640 --> 0:14:05.800 dependent on it. You don't really care about my success. 0:14:06.160 --> 0:14:08.160 You just need my franchise fees and my royalty. Yes, 0:14:08.760 --> 0:14:11.480 So that for us, we just we don't think it's 0:14:11.520 --> 0:14:14.559 wrong to franchise. We have franchise businesses. It's just when 0:14:14.600 --> 0:14:17.920 do you franchise? Is really the position that we take. 0:14:18.200 --> 0:14:20.480 Yeah, it's interesting, you know, we think it's very important 0:14:20.520 --> 0:14:22.360 to have skin in the game for a franchise or 0:14:22.480 --> 0:14:27.480 for sure, and the most successful growth franchise or as 0:14:27.520 --> 0:14:30.520 we've seen Popeyes, is one that really comes to mind, 0:14:30.600 --> 0:14:34.200 or ones that care about their franchisees and have a 0:14:34.200 --> 0:14:36.920 good enough relationship that the franchises will share the P 0:14:37.040 --> 0:14:40.400 and L data and the franchisors will actually you know, 0:14:40.720 --> 0:14:42.160 help them make more money. 0:14:42.480 --> 0:14:45.360 Right, do something about it, right, Like I think that 0:14:45.400 --> 0:14:49.920 people that are enfranchising sometimes fail to understand you're not 0:14:50.000 --> 0:14:52.840 selling them something. They're not paying you for something, and 0:14:52.920 --> 0:14:56.000 for how great you are. There is a partnership. So 0:14:56.120 --> 0:14:59.760 it's just like getting an LLC document and signing it 0:14:59.800 --> 0:15:02.120 to get other. In my mind, you're both in bed together. 0:15:02.320 --> 0:15:05.000 Now you're partners. You're married for a period of at 0:15:05.080 --> 0:15:07.880 least ten years. On these franchise agreements. How would you 0:15:07.920 --> 0:15:10.200 treat your partner and how would you treat your spouse? Sir? 0:15:10.280 --> 0:15:12.800 How you want to treat your franchisees the same way. 0:15:12.800 --> 0:15:14.720 You want to be in partnership with them. And if 0:15:14.720 --> 0:15:16.880 they're not successful, you're not going to be successful. So 0:15:17.480 --> 0:15:19.720 we you know, within the Savory platform we have we 0:15:19.760 --> 0:15:22.840 have twelve brands, and within those brands, we have two 0:15:22.840 --> 0:15:24.600 of them franchising and others that are right on the 0:15:24.720 --> 0:15:28.640 verge of potentially franchising. But across the board, Savory will 0:15:28.680 --> 0:15:31.240 always have skin in the game. We will always have 0:15:31.720 --> 0:15:35.720 a foundational corporate body of stores to pay for team, 0:15:36.200 --> 0:15:38.600 to pay for innovation, to pay for technology, to pay 0:15:38.640 --> 0:15:43.120 for support, and not have the dependency on franchisees to 0:15:43.160 --> 0:15:45.520 do that for me. I want to do that for them. 0:15:45.760 --> 0:15:47.120 I don't want them to do it for me. 0:15:48.080 --> 0:15:48.520 Awesome. 0:15:49.200 --> 0:15:53.680 Any thoughts on cosmics, you know, cosmics interesting? 0:15:53.720 --> 0:15:55.760 Listen. I'm from Chicago and so I was born and 0:15:55.760 --> 0:15:58.360 bred in the Golden arch, you know days, And I 0:15:58.400 --> 0:16:00.840 think that the thing about mcdonn well that none of 0:16:00.920 --> 0:16:05.760 us can ever say anything about is how I think 0:16:05.800 --> 0:16:08.880 transformational their brand really is. I mean, they've gone through 0:16:08.880 --> 0:16:12.280 so many evolutions as that brand, and you know, they 0:16:12.320 --> 0:16:14.520 have some smart people over there. The thing I like 0:16:14.560 --> 0:16:16.880 about it is they've kept thinkings simple at McDonald's. Of 0:16:16.920 --> 0:16:19.240 course they add things in and out, but you know, 0:16:19.280 --> 0:16:20.960 I still eat the same freaking meal if I go 0:16:21.040 --> 0:16:23.680 to McDonald's as I did when I was a kid. Right, So, 0:16:23.800 --> 0:16:25.920 when I saw them spin out and do cosmics, I 0:16:25.960 --> 0:16:28.120 in my mind, I thought, man, that seems in my 0:16:28.240 --> 0:16:31.480 mind like a little bit of an offshoot. And it's 0:16:31.520 --> 0:16:34.840 also they're grasping for straws. In my mind, I think 0:16:34.880 --> 0:16:36.560 you should just stick with what you are as golden 0:16:36.640 --> 0:16:39.960 arches and introduce some things on your menu there. I 0:16:39.960 --> 0:16:42.960 think Cosmics is something that's interesting because it's also paving 0:16:43.000 --> 0:16:46.120 the road for new innovation within the segment of Hey, 0:16:46.120 --> 0:16:47.360 I just want to quick treat and I want to 0:16:47.360 --> 0:16:48.720 go grab something real quick, and I don't want to 0:16:48.720 --> 0:16:50.720 have a full menu. But I think Cosmics has got 0:16:50.720 --> 0:16:52.360 too big of a menu. I think that they should go, 0:16:52.760 --> 0:16:54.640 you know, more simple. It's hard to stay simple, Mike, 0:16:54.680 --> 0:16:57.280 and he says that several times in this industry, simple 0:16:57.400 --> 0:16:59.320 is hard. I mean, look at in and out how 0:16:59.360 --> 0:17:01.720 simple they've been all these years, and they crushed it. 0:17:01.720 --> 0:17:03.800 It's been hard for them to stick with X. They've 0:17:03.800 --> 0:17:05.480 been putting, you know, put pressure has been put on 0:17:05.520 --> 0:17:08.159 them to add things over the years, and they just haven't. 0:17:08.280 --> 0:17:10.720 And so I think simple is hard, and I think 0:17:10.720 --> 0:17:13.240 Cosmics not too simple. But I'll tell you this right now. 0:17:13.280 --> 0:17:15.080 It's impressive that they're going for it, and I actually 0:17:15.080 --> 0:17:16.560 think it'll be a success. But they have a long 0:17:16.600 --> 0:17:17.879 way to go to figure out what that's going to 0:17:17.920 --> 0:17:20.080 be and what it will look like across the country 0:17:20.080 --> 0:17:20.960 if they decide to do that. 0:17:21.400 --> 0:17:24.680 Yeah, for sure. I have a question about site selection. 0:17:24.960 --> 0:17:26.600 Is it difficult. 0:17:26.240 --> 0:17:28.760 For some of these hot emerging brands. 0:17:28.840 --> 0:17:32.399 You know, I'm sure there's there's a pretty significant competition 0:17:32.520 --> 0:17:33.160 for sites. 0:17:33.640 --> 0:17:35.840 I know what there is in the fast casual side, right. 0:17:35.960 --> 0:17:37.440 Yeah. Let me tell you why it's hard, though. I 0:17:37.480 --> 0:17:39.400 think it's probably a little different than what other people think. 0:17:39.520 --> 0:17:42.720 That that is, first and foremost, I've built I don't know, 0:17:42.840 --> 0:17:45.159 hundreds of millions of dollars of real estate from ground up. 0:17:45.359 --> 0:17:47.640 So I've bought land, built the buildings, put my concepts 0:17:47.680 --> 0:17:51.840 in them. I've also ground least take the land, I'll 0:17:51.840 --> 0:17:53.399 put all the improvements and put a building on it. 0:17:53.440 --> 0:17:55.280 I don't own it, but now the landlord does. I've 0:17:55.400 --> 0:17:59.360 also just done regular TI build out. I will say that, 0:17:59.680 --> 0:18:01.480 you know, since I've been in the industry the sixteen 0:18:01.520 --> 0:18:03.360 years that I have been, I came into it kind 0:18:03.359 --> 0:18:05.159 of during a recession, you know, in two thousand and eight, 0:18:05.200 --> 0:18:07.440 two thousand and nine, I've gone through kind of the 0:18:07.840 --> 0:18:10.960 pole years. We kind of hit the epidemic or pandemic, 0:18:11.600 --> 0:18:13.840 which slowed everything down. And then now we've kind of 0:18:13.840 --> 0:18:16.920 been in this new evolution of the industry of well, 0:18:16.920 --> 0:18:19.199 what's next. And I think that people don't really know 0:18:19.240 --> 0:18:21.359 what's next. And when I say that, as far as 0:18:21.400 --> 0:18:23.679 on the real estate, there's a lot of new product 0:18:23.680 --> 0:18:26.080 coming where people are going, which is the sprawl areas, 0:18:26.119 --> 0:18:29.720 the suburbs, where there's new people coming in in droves 0:18:29.720 --> 0:18:32.240 because they're living certain geographies and they're going to new 0:18:32.240 --> 0:18:36.240 geographies like Dallas and Houston and others that are just exploding, 0:18:36.680 --> 0:18:38.280