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Speaker 1: Brought to you by Bank of America. Merrill Lynch seeing

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Speaker 1: what others have seen, but uncovering what others may not.

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Speaker 1: Global Research that helps you harness disruption voted top global

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Speaker 1: research from five years running. Merrill Lynch, Pierce, Fenner and

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Speaker 1: Smith Incorporated. South Williamsburg or billy Burg. Is that what

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Speaker 1: I should call it? No one calls it Billy except

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Speaker 1: for those people like me live in Brooklyn Heights, right,

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Speaker 1: and we fantasize about being thirty. Y is younger and

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Speaker 1: hanging out and head Hi, and welcome back to Bloomberg Benchmark,

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Speaker 1: a show about the global economy. It's Thursday, November three.

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Speaker 1: I'm Kate Smith, an editor for Bloomberg News here in

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Speaker 1: New York. I'm joined today in the studio by Dan Moss,

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Speaker 1: Executive editor for Economics. Hey Dan, So today we're going

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Speaker 1: to talk about the price of eating. I read this

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Speaker 1: really interesting research report from Goldman Sachs a couple months

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Speaker 1: ago and it said that the SMP agriculture livestock in

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Speaker 1: decks it's fallen more than from early So I read

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Speaker 1: that and, not being any kind record, thought that that

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Speaker 1: was excellent news. But as he loves to do, Dan

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Speaker 1: told me I was wrong, What are we going to

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Speaker 1: do with you? Well, tell me why I'm wrong, Dan,

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Speaker 1: one of your past nimes. Well, look some throat clearing. First,

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Speaker 1: it is absolutely, unquestionably true that for the societal good

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Speaker 1: quality food ought to be as affordable as possible. So

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Speaker 1: now that you're disclaimers out of the way, However, we

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Speaker 1: live in a macro economic environment where although the global

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Speaker 1: economy including the US, has been growing since two thousand

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Speaker 1: and nine, there is not just a lack of inflation.

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Speaker 1: The big story has been deflation and disinflation. And once

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Speaker 1: the disinflation becomes persistent and your head down to zero,

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Speaker 1: and in the instances of some countries spend some time

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Speaker 1: under neath zero, then there's the risk of some sort

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Speaker 1: of deflationary trap that is not a good thing for

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Speaker 1: the economy or for society. So, like all of these things,

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Speaker 1: it's a question of balance and a question of context. Okay,

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Speaker 1: so where do where does food fit into that? Then? Well,

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Speaker 1: you know, again, one of the reasons why I think

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Speaker 1: people feel that we haven't been growing since two thousand

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Speaker 1: and nine. I mean, you've seen surveys which show people

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Speaker 1: still think we're in recession. We have been growing since

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Speaker 1: two thousand and nine. But people say they're not feeling

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Speaker 1: at principle because they're not getting big wage increases. Why

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Speaker 1: no big wage increases. Well, partly, there's no inflationary pressure, okay,

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Speaker 1: and food is one component in the global price chain,

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Speaker 1: so it's kind of like if food prices are decreasing,

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Speaker 1: it means that those vendors of the food can't raise

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Speaker 1: their wages, which means that you can't raise your just

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Speaker 1: just this big cycle kind of like that. Well, it

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Speaker 1: doesn't mean they can't. I mean, employers can do whatever

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Speaker 1: they want, but they don't have to there's no pressure. Well, again,

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Speaker 1: it's part of the totality here. If you've got an

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Speaker 1: economy where there's little inflationary pressure and little wage pressure.

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Speaker 1: Though there's some signs that is changing. You know, as

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Speaker 1: we hang around five unemployment for a while, if there's

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Speaker 1: no real pressure to do so, then people just aren't

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Speaker 1: going to do so. Okay, So there's just no pressure

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Speaker 1: to do it, and then that's kind of where we

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Speaker 1: are now. Well, I mean again, this is the intersection

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Speaker 1: of where societal good quality, affordable food for everybody is.

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Speaker 1: You know, when you put it into the broader mosaic

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Speaker 1: of this living, breathing economy. Like all things, you can

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Speaker 1: have too much of a good thing. That's really what

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Speaker 1: I'm trying to say. Have I hedged enough? I think so,

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Speaker 1: I think so. So. Basically, what you're saying is cheap

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Speaker 1: food is too much of a good thing. I'm saying,

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Speaker 1: in the overall context of the forces that are shaping

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Speaker 1: the kind of economy we've had since two thousand nine,

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Speaker 1: one of the downsides has been a disinflation rep deflationary trend.

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Speaker 1: Now there is some evidence that that is abating. Okay,

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Speaker 1: not ceased, but abating. That's the context that I'm asking

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Speaker 1: it'll look at all. Right, Well, then I'm going to

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Speaker 1: pull you out of your comfort zone now because we're

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Speaker 1: not going to talk about economic We're not going to

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Speaker 1: talk about the defletion inflation, because I want to talk

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Speaker 1: about just one more thing listeners might be curious about.

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Speaker 1: Listeners might say, but wait a second. The FED looks

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Speaker 1: at core measures of inflation, you know, as do many

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Speaker 1: central banks around the world, and that's supposed to exclude

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Speaker 1: food prices and fuel. Well it does, except food consumed

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Speaker 1: outside the home is actually part of an inflation indicator

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Speaker 1: that the Federal Reserve watches very closely. It's called the

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Speaker 1: core PC PC and core P. See. Well, Dan, you

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Speaker 1: laid us up for them my segue because instead of

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Speaker 1: talking about kind of inflation, deflation, all these things, I

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Speaker 1: wanted to talk about what cheaper food prices actually mean

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Speaker 1: for the business models that have food in them, obviously restaurants.

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Speaker 1: So help us figure out what's going on here. We

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Speaker 1: have in the studio today, Al de meg Leo. For

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Speaker 1: some of our older listeners, you might know him from

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Speaker 1: the restaurant in the Twin Towers Windows of the World.

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Speaker 1: Our younger listeners will know him from Ruby Rosa, home

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Speaker 1: of the most photographed pizza on Earth. Dan, that's actually true.

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Speaker 1: Today he's six months into his latest venture, a new

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Speaker 1: Italian restaurant in South Williamsburg, Berano. Oh, thank you so

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Speaker 1: much for joining us. Thank you for having me a

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Speaker 1: pleasure to be here. Of course, South Williamsburg or billy Burg,

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Speaker 1: is that what I should call it, Dan. No one

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Speaker 1: calls it billy Burg except for those people like me

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Speaker 1: live in Brooklyn Heights, right, and we fantasize about being

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Speaker 1: thirty year is younger and hanging out the nail and head.

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Speaker 1: So just a main your new places hip. Uh. I

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Speaker 1: wouldn't say I'm hip, I'd say, um, I'm a restaurant

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Speaker 1: our trying to hit an area that's about to explode,

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Speaker 1: and there's all signs of it going on in my area.

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Speaker 1: And it's definitely in the next four years you're going

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Speaker 1: to see that it's probably just going to be as

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Speaker 1: big as the North Side. I actually went to visit

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Speaker 1: Dan I'm sorry, not Dan's restaurant, Owls Restaurant on Monday,

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Speaker 1: and the amount of construction in South Williamsburg, the cranes,

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Speaker 1: the construction sites was it was just staggering. I don't

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Speaker 1: know if you've been around there, Dan recently. No, So

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Speaker 1: what makes you and people like you out spot like

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Speaker 1: the next next next thing in terms of opportunities to

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Speaker 1: put a place. Um, basically, what what got me interested

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Speaker 1: in the area is the obviously the building, right, And

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Speaker 1: then we looked a little deeper and since your numbers guy,

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Speaker 1: we basically saw that in the next four years is

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Speaker 1: five thousand apartments coming to the neighborhood. So just add

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Speaker 1: times that by two ten thousand people thousand feet from

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Speaker 1: your door. The math is good. That's incredible. Well, let's

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Speaker 1: let's dive into the restaurant model before we get into

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Speaker 1: the food piece. So out, can you walk us through

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Speaker 1: kind of the business model of having a restaurant. You've

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Speaker 1: clearly done it a few times, Uh, you know, kind

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Speaker 1: of what margins are typical? Just kind of walk us

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Speaker 1: through that. I mean, if you just open up a

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Speaker 1: textbook you start looking at you know you want eight

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Speaker 1: percent rent, that's the golden You don't get that in Manhattan,

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Speaker 1: never if you do, be very lucky. Um, you've got

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Speaker 1: food cost. Everybody's like you gotta be. If you're hitting

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Speaker 1: twenty five, you're drinking champagne. And if you're over thirty,

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Speaker 1: you kind of how do I get it down? Labor

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Speaker 1: cost is another big one, right, So labor cost you

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Speaker 1: want to keep it under thirty five, but you really

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Speaker 1: want it at twenty eight, which is another impossible feat,

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Speaker 1: but you try time time again. Um. But overall, those

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Speaker 1: are the major numbers, the controllables, you know. So right there,

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Speaker 1: I just spat out almost sixty of where you're at.

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Speaker 1: You only gottcent wiggle room now, and and that's when

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Speaker 1: the utilities and everything else comes in. So it's it's

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Speaker 1: definitely a tough game of numbers, um, but you can't

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Speaker 1: deposit percentages. Does this general economic narrative of low inflation,

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Speaker 1: low wage pressure, etcetera. Does that resonate with you, uh,

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Speaker 1: low wage pressure. Actually, it's the inverse for my business

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Speaker 1: right now, because everybody just signed, um, they just signed

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Speaker 1: something to bring minimum wage up to fifteen dollars an

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Speaker 1: hour for the restaurant industry. At the end of this year,

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Speaker 1: we're going from nine fifty to eleven dollars an hour.

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Speaker 1: So it's it's kind of inverse to what I've been seeing,

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Speaker 1: you know, and um, I always believe fair wage, but

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Speaker 1: it's this is a very aggressive wage increase for the

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Speaker 1: restaurant business and something we're not sure how to handle yet,

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Speaker 1: and we're trying to put our arms around it. Yeah.

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Speaker 1: On the food bit, you know, you and I spoke

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Speaker 1: on Monday. Can you tell us about some of the

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Speaker 1: areas that you've seen food pricing, dumpling. We can talk

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Speaker 1: about an index from Goldwin, but like help us like

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Speaker 1: contextualize that, like what on the menu, what items have

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Speaker 1: actually decreased? The major things that have seen decreases dairy,

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Speaker 1: anything in the dairy um, meet, not really but a

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Speaker 1: little bit. Um, I was looking at my my bills.

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Speaker 1: It did decrease, decrease a little bit. But what happened

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Speaker 1: is all the the un unknown cuts started increasing, and

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Speaker 1: the primal cuts were like kind of flatlining. So all

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Speaker 1: like basically all the cuts we know New York strip

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Speaker 1: porta house, they've kind of flatlined. But all the other steaks,

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Speaker 1: like a Chuck steak or a Hangar steak, they started

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Speaker 1: to take a climb. So when you're not looking, that

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Speaker 1: kind of came up in the rears. Why did that happen? Dan,

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Speaker 1: you're looking very confused. I was just gonna ask Al

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Speaker 1: if he studies commodity prices each day. Uh no, but

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Speaker 1: I think it's starting to be a good idea. You

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Speaker 1: don't have a Bloomberg terminal in your office, or if

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Speaker 1: you wanted to take one back to the restaurant, for sure,

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Speaker 1: can always bloom Knowledge to take it. But but really,

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Speaker 1: I mean Dan's question, do you do you look at

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Speaker 1: commodity braces? Um? Not? No, honestly, no, I don't. I

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Speaker 1: mean the amount of time. I'm actually a working partner

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Speaker 1: in my restaurant, so I'm hands knees deep in, you know,

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Speaker 1: getting the job done. So basically what I do is

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Speaker 1: I look at my invoices. I see where my invoices are.

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Speaker 1: Is there spike week over week? Um? Can I use

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Speaker 1: my leverage of knowing my purveyors for such a long

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Speaker 1: time to push them back down? Because it's it's normal

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Speaker 1: to do the creep, but you've got to be controlling

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Speaker 1: business and pushed the creep back down. What's the average

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Speaker 1: life span of a New York City restaurant? I mean,

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Speaker 1: you've got to have your thing. I imagine if you've

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Speaker 1: got to have your age, and if you're not cutting

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Speaker 1: it can get all pretty quickly. So talk a bit

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Speaker 1: about that. Um. Two things on that. Right, So most

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Speaker 1: restaurants in New York City or in the world, in

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Speaker 1: the world say, I think your value is your your lease, Right,

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Speaker 1: everybody talks about lease. I'm very fortunate to have a

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Speaker 1: partner that we own the realty, which is home run.

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Speaker 1: So that just expands your lifespan dynamically ridiculously, if I

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Speaker 1: can jump in, how common is that? Pretty uncommon? Pretty uncommon? Um,

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Speaker 1: because most of the people in real estate wouldn't even

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Speaker 1: want to touch a restaurant. You know, if I like,

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Speaker 1: for an example, if I said, okay, let's do a

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Speaker 1: three million dollar Let's do a three million dollar deal,

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Speaker 1: and I'm going to make about ten percent a year

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Speaker 1: orf a million bucks or a year or a million bucks,

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Speaker 1: most people would laugh walk away and like, I can

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Speaker 1: do that while I'm sleeping. You know that enters my

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Speaker 1: bank account doing nothing. Why should I work for it? Um?

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Speaker 1: But yeah, I mean that's that's a tough one. That's interesting.

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Speaker 1: And then on the food, but you're saying that you

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Speaker 1: can negotiate with your vendors sometime, and what does that

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Speaker 1: look like? UM? Usually like pay early? You know, you

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Speaker 1: do the tricks like that. Be be frugal, be smart,

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Speaker 1: buy what you can, don't buy on impulse like everybody

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Speaker 1: else does. Right, You've got it's it's it's your own

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Speaker 1: bank account, but it's a business bank account. So as

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Speaker 1: a chef or anybody else's restaurants, so you want to

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Speaker 1: be creative, you want to be cutting edge. You want

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Speaker 1: to increase the life span of the restaurant. So you're like,

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Speaker 1: what can I do next? What can I do next?

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Speaker 1: But you have to realize what can you do next

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Speaker 1: that makes money that's affordable, that keeps your lifespan going,

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Speaker 1: because if you're not the next, the next hottest thing,

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Speaker 1: people forget about you. What's the fame of your new

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Speaker 1: self Williamsburg Restaurant. So basically what I did is I

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Speaker 1: did a tribute to my grandmother. She came from Eastcia Barrano, UM,

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Speaker 1: and she basically taught me how to cook. So she

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Speaker 1: was it for me and getting me in the food business.

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Speaker 1: And then she hated me for doing it. But um,

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Speaker 1: but that being said, it's it's Ai, it's Southern Italian.

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Speaker 1: There's a lot of Northern Italian restaurants, so I wanted

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Speaker 1: to be southern. Um. We did a lot of wood

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Speaker 1: fired cooking because she wouldn't know how to turn on

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Speaker 1: a gas knob until she came to America. She used

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Speaker 1: to throw fire in the oven and that's how she

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Speaker 1: cooked ice and the ice in the fridge and that's

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Speaker 1: what kept it cold. And then I just wanted to

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Speaker 1: focus my menu around Campania region, which is where Barano

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Speaker 1: is from. And so we do mozzarello, we make pizza,

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Speaker 1: we do pasta, and then everything comes off the wood

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Speaker 1: fired as much as possible. We're going to take a

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Speaker 1: break and hear from a sponsor. I don't think they're

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Speaker 1: in the food business, but listen anyway. Brought to you

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Speaker 1: by Bank of America Merrill Lynch. Seeing what others have seen,

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Speaker 1: but uncovering what others may not. Global Research that helps

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Speaker 1: You Harness disruption voted top global research from five years running.

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Speaker 1: Merrill Lynch, Pierce, Venner and Smith Incorporated. Welcome back, um Oh.

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Speaker 1: I wanted to ask you a little bit more about

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Speaker 1: how you can incentivize, you know, with these fluctivating food prices,

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Speaker 1: how can you incentivize your chefs to make sure that

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Speaker 1: they're putting specials together and making the kinds of meals

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Speaker 1: that are going to be both good for your customers

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Speaker 1: but then also for the bottom line. So the good

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Speaker 1: thing about that about creativity. Nobody gets in this business

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Speaker 1: unless they want to be creative. You actually have to

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Speaker 1: control it. It's the inverse. So what you want to

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Speaker 1: control is what they're spending and how much labor they're

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Speaker 1: using to make that special Right, they'll they'll make specials

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Speaker 1: all day long, and if they don't sell, they'll just okay,

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Speaker 1: I put it in family meals, do something else. But

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Speaker 1: you you actually have to think, okay, I made this special.

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Speaker 1: Now it didn't really sell. What can I do with

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Speaker 1: it to change it to actually sell? Right? So if

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Speaker 1: I do a rabbit dish, maybe the rabbit dish doesn't sell,

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Speaker 1: but if I convert that rabbit to pasta, it starts

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Speaker 1: to sell. So I believe incentivizing them on food costs

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Speaker 1: and labor costs, so they become your partner. And they

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Speaker 1: don't even know it, right, they're doing it because for themselves,

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Speaker 1: but yet they're doing it for the better of the business.

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Speaker 1: And is that something new that you've done it, Brono.

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Speaker 1: Have you done that at other restaurants as well? Um?

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Speaker 1: I see it done with the main chef usually all

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Speaker 1: the time, the head chef anything, he's always got some

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Speaker 1: kind of program to entice his paycheck as well as

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Speaker 1: entice the restaurant's livelihood. I'm doing it with Susie's, so

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Speaker 1: I'm taking a step further. I'm doing a wine director.

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Speaker 1: So this way, get the wine and sell the wine,

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Speaker 1: make more money. Got it. And then when you're coming

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Speaker 1: up with the menu, so outside of just your specials,

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Speaker 1: your your menu. We spoke about this on Monday. I

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Speaker 1: thought it was fascinating. When you're putting together a menu

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Speaker 1: to kind of balance out some of the food. The

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Speaker 1: margins are smaller with the larger ones. Can you walk

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Speaker 1: us through that. So there's a lot of things at

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Speaker 1: the end. Like I said, you want like food costs

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Speaker 1: the better, right, So when you're starting to build your menu,

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Speaker 1: you want to have some great, fun, high ticket items,

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Speaker 1: but then you need some to help bring down that percentage.

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Speaker 1: And can you jump in and tell us, like what

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Speaker 1: those are? So if I'm looking at a menu, like

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Speaker 1: so few things. So if you're looking at a menu

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Speaker 1: and you're thinking about a steak or a rack of

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Speaker 1: lamb or things like that, those are huge center of

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Speaker 1: the plate items, right, So the percentage of food costs

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Speaker 1: will be up to right now, Okay, now I have

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Speaker 1: that what's going to sell equally or slightly more, that's

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Speaker 1: a better food cost. That's so when they combined it

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Speaker 1: down to thirty salad um, something fried all right, I

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Speaker 1: mean rice ball? Okay, got it interesting? So back to wages.

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Speaker 1: You know the idea that Danny Meyer pioneered and it

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Speaker 1: created a lot of buzz at the time of doing

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Speaker 1: away with tips, uh and adding it to salary. How

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Speaker 1: is that ricocheting if that's even the word through the business,

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Speaker 1: through the industry. I think there's a lot of people

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Speaker 1: jumping on the bandwagging UM. It's still in charge of territory.

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Speaker 1: So as a business owner, it's it's a risk. We

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Speaker 1: we definitely looked at UM, but not at the time

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Speaker 1: we're willing to gamble with UM. But I kind of

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Speaker 1: I do understand it. You want to be in control

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Speaker 1: of what your employees make. If they're good, you reward them,

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Speaker 1: they get a raise. This way, it's all status quo.

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Speaker 1: Come in, they make their seven fifty nine an hour

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Speaker 1: and they're making so you do thousand dollars in sales,

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Speaker 1: they're making two done, you know, And it's kind of

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Speaker 1: like it's a salary. I'd rather be able to control

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Speaker 1: and entice them to work hard, or give them something

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Speaker 1: where I can control it, rather than the guests control it.

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Speaker 1: Do the staff have strong feelings about this either way? Oh,

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Speaker 1: I think they're so against. I don't think they are

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Speaker 1: for getting the salary or getting the bigger wage. They

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Speaker 1: want the tips because then they're in control. Right, So,

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Speaker 1: so this is about reordering the balance of power in

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Speaker 1: an entire industry. It's it's earth shaking for our business

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Speaker 1: to figure it out right now. And it must be

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Speaker 1: tough when you have some restaurants doing it in some

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Speaker 1: restaurants not doing it in certain you know, brackets of

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Speaker 1: the restaurant world. I say this because I remember I

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Speaker 1: was looking at two restaurants, one that had the tip,

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Speaker 1: tip was included, and I remember looking at them and

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Speaker 1: us thinking that one restaurant was it just seemed a

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Speaker 1: little bit more expensive than it ought to be. But

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Speaker 1: that's because all the tip was included, and I just

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Speaker 1: I wasn't, you know, automatically thinking about that. So I

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Speaker 1: imagine I wasn't the only person that was, you know,

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Speaker 1: comparing menus for a meal out with my significant other

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Speaker 1: family and was just like, this place just seems overpriced.

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Speaker 1: I'm not gonna So that has to be I mean,

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Speaker 1: that has to be kind of a little bit of

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Speaker 1: uneven playing fields too. If you want to be a newcomer,

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Speaker 1: you have to you have to be so busy about it.

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Speaker 1: I firmly believe that. I think, you know, people look

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Speaker 1: at it and people like control. Everybody wants to be

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Speaker 1: in control of something, right, and this is the easiest

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Speaker 1: thing for people to be control of as a consumer,

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Speaker 1: You go out, you eat, you judge how well you

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Speaker 1: were treated, you leave the tip. Accordingly, people are starting

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Speaker 1: to think, who are you to tell me what I'm

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Speaker 1: supposed to tip, especially when you see that just gets

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Speaker 1: added on the bottom right. Um. So these are all

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Speaker 1: very hard things to deal with as a restaurateur because

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Speaker 1: it's like what do you do? You know, because if

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Speaker 1: you do something, you can end up lose being losing profit,

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Speaker 1: right Dan, in Australia, I know in Europe gratuity is

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Speaker 1: often included. Is it is included in Australia. Tipping never

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Speaker 1: used to be a thing. It's increasingly become a thing.

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Speaker 1: What do you mean by it wasn't a thing? Well,

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Speaker 1: people didn't really do it. I mean you would only

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Speaker 1: do it if and I'm talking about you know, when

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Speaker 1: I was in my youth, people would only do it

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Speaker 1: if like wow, that's really exceptional. Um, not really a given.

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Speaker 1: In fact, I was just about to ask, you know,

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Speaker 1: having been in the United States now for ten years, uh,

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Speaker 1: you know, I'm always thinking in terms of the tip now.

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Speaker 1: I was in Japan and September and I had to

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Speaker 1: constantly correct myself every time my wife and I went

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Speaker 1: to a restaurants like, oh my god, massive societal faux pa. Here,

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Speaker 1: I almost left a tip and I'm quickly crossing it out.

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Speaker 1: When I was in London earlier this year, it was

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Speaker 1: the same thing. I mean, some restaurants did and some didn't.

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Speaker 1: It was like seventy thirty and you had like actively,

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Speaker 1: like really read the nit the receipt just to make

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Speaker 1: sure I didn't I didn't make the mistake. It was now,

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Speaker 1: was this in the London area or was this somewhere else?

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Speaker 1: This is in London? Yeah, I think it's probably pretty

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Speaker 1: attuned to hear I mean people are looking for tips, seri,

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Speaker 1: anticipating tips, particularly if you're anywhere near a business district. Yeah,

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Speaker 1: but it's given the amount of Transatlantic traffic that goes on,

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Speaker 1: you would think so. But I was actually surprised because

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Speaker 1: I really like food. I should probably have this as

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Speaker 1: a disclaim. I really really like restaurants and food. We

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Speaker 1: went to some really nice restaurants, is what I'm trying

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Speaker 1: to say, and it was like sevent thirt though, And

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Speaker 1: when I'm thinking of the same kinds of restaurant in

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Speaker 1: New York, there's only one restaurant group that does it.

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Speaker 1: It's it definitely was more than in New York. I mean,

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Speaker 1: I don't know why Dan and I are doing in this.

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Speaker 1: He probably know much better than we know. I mean, honestly,

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Speaker 1: one of the things we brought up on Monday was,

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Speaker 1: you know, it's kind of a broken system. It's like

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Speaker 1: the only system, the only business where we pay some

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Speaker 1: in the customer pay some of the other wages. Right,

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Speaker 1: So it's not common. I mean, I've been to Italy,

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Speaker 1: I've been to Thailand. It just doesn't happen. You pay

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Speaker 1: your you pay your employees, you charge what you need

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Speaker 1: to charge. Except I think people are so used to

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Speaker 1: food prices being at a certain point because at the

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Speaker 1: end of the day, you know, like you're saying, it's

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Speaker 1: it's about people going out to eat the food. When

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Speaker 1: you go out to eat the food, it's not just

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Speaker 1: about the food. Like if you go to Walmart and

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Speaker 1: pull something and it is what it is, and you

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Speaker 1: go home and there's no service. Our food includes the

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Speaker 1: service includes the ambiance includes everything. So when you're pricing

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Speaker 1: menus and things like that, I mean, that has to

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Speaker 1: be a custom. But as far as going back to tips,

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Speaker 1: it's it's not normal to to do this. So, but

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Speaker 1: it became the normal two in uh in America to

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Speaker 1: tip people. So who wants to break the mold? First?

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Speaker 1: You know Danny Meyer, obviously, and once he did it,

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Speaker 1: you saw a slew of other people do it. Except

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Speaker 1: now it's like the smaller guys like me, first restaurant

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Speaker 1: coming out, Um, you're scared to make that weave. And

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Speaker 1: you've got iconic things that seem to be emblematic of

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Speaker 1: the way the food industry works in the United States.

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Speaker 1: Like back in the early nineties when I was still

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Speaker 1: living in Sydney, I went to see Reservoir Dogs at

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Speaker 1: the cinema and there is that famous tipping scene at

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Speaker 1: the entrance to that moving. In fact, there was a

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Speaker 1: quiz for anyone who went to the cinema that night.

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Speaker 1: You know what's the name of the gangster Mr x

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Speaker 1: X who doesn't tip? And if you've got it correctly,

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Speaker 1: you would get a free ticket to another movie of

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Speaker 1: your choice. So if Reservoir Dogs were being made today,

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Speaker 1: what would happen exactly? I just think the whole tipping

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Speaker 1: thing in America is going to be tough enough because

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Speaker 1: of the restaurant tours or the restaurants, it's it's the consumer.

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Speaker 1: The consumer does not want to lose control, and it's

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00:23:00,080 --> 00:23:03,200
Speaker 1: that's the tough thing restaurants are struggling. There's I've seen

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00:23:03,200 --> 00:23:05,720
Speaker 1: a few restaurants go with the note tipping and then

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00:23:05,920 --> 00:23:08,520
Speaker 1: revert back because it's like, well that hurt too much, really,

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00:23:09,320 --> 00:23:11,080
Speaker 1: And one thing, I mean, going all the way back

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00:23:11,080 --> 00:23:13,080
Speaker 1: to the Goldwin Report that we started this show on,

431
00:23:13,440 --> 00:23:15,960
Speaker 1: though fascinating, I mean, one of the other fascinating things

432
00:23:16,119 --> 00:23:19,320
Speaker 1: of that report was that as food prices have declined

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00:23:20,400 --> 00:23:23,119
Speaker 1: in the past almost two years, dining out costs have

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00:23:23,160 --> 00:23:27,080
Speaker 1: stayed the exact same or more or less. So clearly, like,

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00:23:27,160 --> 00:23:29,800
Speaker 1: you know, people really value going out, and even though

436
00:23:29,800 --> 00:23:32,159
Speaker 1: they recognize that maybe making the meal at home has

437
00:23:32,200 --> 00:23:35,200
Speaker 1: become significantly cheaper, they still want that service. They still

438
00:23:35,200 --> 00:23:40,959
Speaker 1: want the whole experience. Restaurants and restaurants staff recognize regulars.

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00:23:41,000 --> 00:23:42,840
Speaker 1: I mean, for example, if you know, my wife and

440
00:23:42,880 --> 00:23:44,760
Speaker 1: I are trying to figure out where to go for dinner,

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00:23:44,760 --> 00:23:46,800
Speaker 1: will be like, oh, yeah, that place is good, let's

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00:23:46,800 --> 00:23:50,199
Speaker 1: go there. And we'll go to that place and we're like,

443
00:23:50,280 --> 00:23:52,760
Speaker 1: we remember it was really good here, But did they

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00:23:52,760 --> 00:23:58,240
Speaker 1: ever remember us as customers? They have to, and why

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00:23:58,119 --> 00:24:00,679
Speaker 1: you say they have to, It's it's part of this service. Right.

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00:24:01,000 --> 00:24:04,800
Speaker 1: So for me and as a chef, saying this food

447
00:24:04,840 --> 00:24:09,240
Speaker 1: is secondary to me, right, services primary because think about

448
00:24:09,280 --> 00:24:11,000
Speaker 1: all the times that you just said it. You just

449
00:24:11,119 --> 00:24:15,120
Speaker 1: nailed the nail the boa hit the nail on the head.

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00:24:15,359 --> 00:24:17,760
Speaker 1: That's what you did. Um. But anyway, it's like when

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00:24:17,800 --> 00:24:20,760
Speaker 1: you go out, you remember good service, and if it's

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00:24:20,800 --> 00:24:23,760
Speaker 1: good service and okay food, you'll go back. You want

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00:24:23,760 --> 00:24:25,600
Speaker 1: to be recognized. Not only do you want to be

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00:24:25,640 --> 00:24:27,960
Speaker 1: in control, you want to be recognized. You know, you're

455
00:24:28,040 --> 00:24:29,960
Speaker 1: you're in your life day and day out. You want

456
00:24:29,960 --> 00:24:32,960
Speaker 1: to go someplace and Cheers is the best thing where

457
00:24:33,000 --> 00:24:35,160
Speaker 1: everybody knows your name. Right, you want to go there,

458
00:24:35,600 --> 00:24:38,080
Speaker 1: you know, hey doing what's everything? Your drink that you

459
00:24:38,160 --> 00:24:40,560
Speaker 1: drink all the time hits the table and that's what

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00:24:40,600 --> 00:24:44,479
Speaker 1: people want. And then food, because if you have bad food,

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00:24:44,920 --> 00:24:47,639
Speaker 1: great service, you might go back just because the service

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00:24:47,720 --> 00:24:49,760
Speaker 1: was so good. But if you have great food and

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00:24:49,800 --> 00:24:53,240
Speaker 1: crappy service, you're not going back, or even okay food

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00:24:53,240 --> 00:24:57,760
Speaker 1: and excellent service. Perfect. There's a place around the corner

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00:24:57,800 --> 00:24:59,760
Speaker 1: for me that you know, whenever I go in this

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00:25:00,240 --> 00:25:02,239
Speaker 1: hi and how you do and this and that and

467
00:25:02,400 --> 00:25:04,920
Speaker 1: I go back on. I mean, the food is excellent,

468
00:25:04,960 --> 00:25:07,600
Speaker 1: don't get me wrong, But if you ever wondered, are

469
00:25:07,640 --> 00:25:11,200
Speaker 1: they like this with everyone or do they recognize Kate Smith?

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00:25:11,280 --> 00:25:14,960
Speaker 1: They recognized Kate Smith. Well, what you would say is

471
00:25:15,040 --> 00:25:18,480
Speaker 1: yet they definitely recognize Well. I was actually in there

472
00:25:18,520 --> 00:25:20,399
Speaker 1: recently and it was after I had been there with

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00:25:20,440 --> 00:25:22,400
Speaker 1: my mother and I came in. They were like, oh,

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00:25:22,440 --> 00:25:23,840
Speaker 1: you're just in with your mom the other day. I

475
00:25:23,880 --> 00:25:25,720
Speaker 1: was like, I knew you actually, Reckon. It was the

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00:25:25,760 --> 00:25:28,320
Speaker 1: best thing ever. Well, Al, thank you so much for

477
00:25:28,400 --> 00:25:29,920
Speaker 1: joining us. It was great to hear a little bit

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00:25:29,920 --> 00:25:32,639
Speaker 1: more about kind of the back the back office of

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00:25:32,680 --> 00:25:36,040
Speaker 1: the restaurant business, really really interesting stuff. Benchmark will be

480
00:25:36,040 --> 00:25:38,359
Speaker 1: back again next week and until then, you can find

481
00:25:38,400 --> 00:25:41,040
Speaker 1: us on the Bloomberg terminal, Bloomberg dot com, as well

482
00:25:41,040 --> 00:25:44,600
Speaker 1: as an iTunes, pocket cat, and Stitcher. While you're there,

483
00:25:44,800 --> 00:25:46,639
Speaker 1: take a minute to rate and review the show so

484
00:25:46,720 --> 00:25:49,000
Speaker 1: more listeners can find us and do let us know

485
00:25:49,040 --> 00:25:50,840
Speaker 1: what you thought of the show. You can talk to

486
00:25:50,920 --> 00:25:53,480
Speaker 1: and follow us on Twitter at Daniel Moss d C

487
00:25:54,160 --> 00:25:56,800
Speaker 1: and at by Kate Smith, and you can follow our

488
00:25:56,840 --> 00:25:58,960
Speaker 1: guest as well as well as go to his restaurant,

489
00:25:59,000 --> 00:26:01,960
Speaker 1: but before you do, check Al's restaurant on Instagram. You

490
00:26:02,000 --> 00:26:05,480
Speaker 1: can find them at Barano b k Al. It was

491
00:26:05,520 --> 00:26:07,960
Speaker 1: great to have you pleasure of being a great fun,

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00:26:08,200 --> 00:26:12,960
Speaker 1: great soup, and my recollection is it was Mr Pink

493
00:26:13,040 --> 00:26:16,200
Speaker 1: who did not want it to I never saw the movie.

494
00:26:16,280 --> 00:26:18,000
Speaker 1: I think you're right. It's been a while for me,

495
00:26:18,080 --> 00:26:21,440
Speaker 1: but I think you're right. Okay, Thanks, Thanks, you see

496
00:26:21,440 --> 00:26:29,680
Speaker 1: you next week. Brought to you by Bank of America.

497
00:26:29,800 --> 00:26:32,879
Speaker 1: Merrill Lynch. Seeing what others have seen, but uncovering what

498
00:26:32,920 --> 00:26:36,200
Speaker 1: others may not. Global Research that helps you harness disruption

499
00:26:36,720 --> 00:26:40,560
Speaker 1: voted top global research from five years running. Merrill Lynch, Pierce,

500
00:26:40,640 --> 00:26:42,120
Speaker 1: Fenner and Smith Incorporated,