WEBVTT - The Melt’s Employees Help Serve Up 400% AUV Jump 0:00:21.960 --> 0:00:24.800 Welcome to Chopping It Up. I'm your host Michael Hanlon, 0:00:24.880 --> 0:00:28.120 the senior restaurant and food service analyst at Bloomberg Intelligence. 0:00:28.680 --> 0:00:31.320 Today we're joined by Ralph Bauer, CEO of The Melt. 0:00:31.480 --> 0:00:33.360 Thanks for doing this, Ralph. 0:00:32.840 --> 0:00:33.600 Thank you, Michael. 0:00:33.640 --> 0:00:36.680 I really appreciate getting a chance to talk to you. 0:00:37.240 --> 0:00:39.839 Yeah, I've been looking forward to this one for our listeners. 0:00:39.840 --> 0:00:43.000 The two of us first cross pass about a decade 0:00:43.040 --> 0:00:46.440 ago when Ralph was the CEO and president at Popeyes. 0:00:47.159 --> 0:00:50.840 That was some run that you, Cheryl and the team had. 0:00:50.880 --> 0:00:53.720 What really sticks out to you about that experience and 0:00:53.760 --> 0:00:56.240 what were maybe some of the most important takeaways about 0:00:56.520 --> 0:00:58.080 building a successful brand. 0:01:00.240 --> 0:01:02.520 Yeah, so I grew up in New Orleans. I'm not 0:01:02.560 --> 0:01:05.080 sure if you knew that, but so for for a 0:01:05.080 --> 0:01:07.440 guy who grew up in New Orleans, Popeyes is like 0:01:07.480 --> 0:01:11.080 the pinnacle of fast food and so, uh, that was 0:01:11.160 --> 0:01:14.880 really a truly exciting time. And to be able to 0:01:14.920 --> 0:01:19.479 turn around an iconic brand like Popeyes was was really 0:01:19.520 --> 0:01:23.280 pretty exciting. But the other thing that made that time 0:01:23.360 --> 0:01:28.400 really meaningful to me is that we rebuilt that business 0:01:28.480 --> 0:01:32.959 on the premise of focusing on franchisees first, and the 0:01:33.000 --> 0:01:36.240 first half of my career in the restaurant industry was 0:01:36.240 --> 0:01:42.040 spent working with franchisees and so working with a brand 0:01:42.480 --> 0:01:46.679 that truly believed that, you know, our customer was the 0:01:46.720 --> 0:01:50.320 franchise e, and that if you served the franchise ese, 0:01:50.640 --> 0:01:53.160 that would be what builds the business. And I think 0:01:53.160 --> 0:01:57.840 that we I think that we proved that. And you know, 0:01:57.880 --> 0:02:00.240 we went into a brand that didn't have a great 0:02:00.480 --> 0:02:05.520 history of franchise or franchise relationship, and by building that relationship, 0:02:06.000 --> 0:02:08.520 we were really able to build a business. And you know, 0:02:08.600 --> 0:02:11.480 it's a it's just a totally different business today than 0:02:11.520 --> 0:02:15.640 it was back in and you know, two thousand and 0:02:15.720 --> 0:02:18.320 eight when when we started there. 0:02:20.440 --> 0:02:24.840 Yeah, that, uh, that was awesome. Man. I actually had 0:02:24.840 --> 0:02:28.239 a client yesterday asking me about restaurant brands. And I 0:02:28.280 --> 0:02:30.400 don't know if you're following the story, but Patrick Doyle 0:02:31.720 --> 0:02:33.600 is now the chairman of the board and he took 0:02:33.639 --> 0:02:36.560 a stake in the company. And I actually told this 0:02:36.639 --> 0:02:39.799 investor he should read Cheryl's book there to serve if 0:02:39.840 --> 0:02:43.560 he wants a good you know, inside scoop of how 0:02:43.720 --> 0:02:47.120 Patrick's looking at things, because all they've been talking about 0:02:47.160 --> 0:02:50.120 since since he joined on was on all the investor 0:02:50.160 --> 0:02:53.240 calls and on all the earnings calls, is UH store 0:02:53.320 --> 0:02:57.800 level profitability and serving the franchisees. And you know, to 0:02:57.880 --> 0:02:59.680 your point, I think I think you and the team 0:02:59.720 --> 0:03:01.920 really prove that out at Popeye's. 0:03:02.440 --> 0:03:05.480 Yeah, if you're going to be a great franchise brand, 0:03:06.200 --> 0:03:08.760 the way you do that is by serving the franchisees. 0:03:08.760 --> 0:03:11.359 And if your franchisees are happy and making great money, 0:03:11.400 --> 0:03:13.520 they're going to build more restaurants. And that's what builds 0:03:13.520 --> 0:03:17.480 your brand. When we started there, you know, if you 0:03:17.600 --> 0:03:19.600 look back to two thousand and eight, two thousand and nine, 0:03:19.840 --> 0:03:24.440 we were building about you know, twenty or thirty new restaurants. 0:03:23.919 --> 0:03:25.760 A year, and and. 0:03:25.840 --> 0:03:30.640 Most of those weren't very successful. And today, you know, 0:03:30.720 --> 0:03:36.120 they're they're Before I left in uh, you know, twenty 0:03:36.240 --> 0:03:39.160 and fourteen range, we were up to about you know, 0:03:39.200 --> 0:03:40.200 one hundred plus and. 0:03:40.080 --> 0:03:41.360 Now they're even higher than that. 0:03:41.560 --> 0:03:44.160 And and because of the franch if the franchise believe 0:03:44.200 --> 0:03:46.400 in you and believe in the leadership and they trust you, 0:03:46.680 --> 0:03:48.080 they're going to build more restaurants. 0:03:48.120 --> 0:03:50.480 And that's how you build that's how you build. 0:03:50.280 --> 0:03:51.000 A great brand. 0:03:51.080 --> 0:03:55.840 And when franchises make more money, they build more restaurants 0:03:55.920 --> 0:04:00.680 and and that that's what makes everybody successful for sure. 0:04:01.960 --> 0:04:04.080 All right, So where have you worked since Popeyes? And 0:04:04.320 --> 0:04:05.800 what attracted you to the Melt? 0:04:07.640 --> 0:04:12.120 Yeah, So after I left Popeyes, I went to UH 0:04:12.160 --> 0:04:15.160 Payway And I'm not sure if you're familiar with pay Away, 0:04:15.240 --> 0:04:19.520 but Payway is a fast casual brand about two hundred 0:04:19.600 --> 0:04:23.279 units that was started by Rick Federico at PF. 0:04:23.400 --> 0:04:26.960 Chang's and I went in there. 0:04:26.640 --> 0:04:30.080 With the attention of splitting that off into a into 0:04:30.120 --> 0:04:35.479 a standalone brand. Worked with that brand for for a 0:04:35.520 --> 0:04:41.240 couple of years, built there was there was actually no 0:04:41.960 --> 0:04:48.480 dedicated UH employees to the brand when when I got there, 0:04:48.880 --> 0:04:53.440 and so we built a whole standalone unit and UH. 0:04:53.560 --> 0:04:54.520 And then. 0:04:55.720 --> 0:04:59.200 I had family in the in the in the Bay Area. 0:04:59.320 --> 0:05:03.080 My son was year and I got a I got 0:05:03.120 --> 0:05:06.839 a call one day from a bunch of folks at 0:05:06.839 --> 0:05:10.320 the Melt and I was, you know, the Melt was 0:05:10.320 --> 0:05:13.040 a pretty pretty small brand. 0:05:12.680 --> 0:05:13.520 And it was funny. 0:05:13.560 --> 0:05:17.320 I had had a I had a conversation with my 0:05:17.480 --> 0:05:20.280 wife prior and I said, you know, I'm not sure 0:05:20.279 --> 0:05:24.320 about grilled cheese brands. I'm not sure if grilled cheese 0:05:24.360 --> 0:05:28.839 is enough to sustain a restaurant brand. And then sure enough, 0:05:28.880 --> 0:05:30.880 I get a call a couple of weeks later from 0:05:31.480 --> 0:05:32.960 the investors at the Melt. 0:05:33.000 --> 0:05:38.040 And at the time, they had they had. 0:05:37.920 --> 0:05:46.560 Eighteen restaurants spread across three states, Texas, Colorado, and California, 0:05:47.000 --> 0:05:51.919 and they were struggling, and they they asked me to 0:05:51.960 --> 0:05:53.880 come in and take a look and see what I thought. 0:05:55.200 --> 0:06:00.120 And I was really impressed with the. 0:06:01.839 --> 0:06:04.120 Board and the group of investors was a bunch of 0:06:04.200 --> 0:06:10.039 really smart people. Ron Johnson who kind of created the Apple. 0:06:09.800 --> 0:06:16.960 Store and was you know at J. C. Penny and Target, and. 0:06:19.200 --> 0:06:24.560 Michael Marx who was who's a venture a tech venture capital. 0:06:24.240 --> 0:06:27.720 Guy, and I, you know, I talked. 0:06:27.480 --> 0:06:30.280 To these guys and they were just, you know, a 0:06:30.480 --> 0:06:34.480 pretty exciting group. And I decided decided to come out 0:06:34.480 --> 0:06:38.920 to California and sell Girl cheese sandwiches. 0:06:39.960 --> 0:06:44.080 So, so, how many restaurants at the Melt as a 0:06:44.120 --> 0:06:45.520 company owns as a franchise? 0:06:45.640 --> 0:06:45.839 Yeah? 0:06:46.000 --> 0:06:47.960 So, and can you talk about the service model a 0:06:48.360 --> 0:06:48.760 little bit. 0:06:49.000 --> 0:06:52.279 Yeah, So we're we're a fast casual brand. It's it's 0:06:52.400 --> 0:06:55.800 been an adventure really. So when I got here, we 0:06:55.880 --> 0:06:59.760 had eighteen restaurants, as I mentioned in three States. But 0:07:00.360 --> 0:07:04.520 one of the first things I did was closed everything 0:07:04.560 --> 0:07:09.680 outside of California. And when we started, I think that 0:07:09.800 --> 0:07:12.280 we got a little ahead of ourselves. We were founded 0:07:12.280 --> 0:07:16.840 in twenty eleven and with a lot of fanfare. 0:07:16.320 --> 0:07:16.400 And. 0:07:18.080 --> 0:07:20.560 From day one, when we opened our first restaurant, we 0:07:20.560 --> 0:07:22.600 said we were going to have five hundred restaurants in 0:07:22.640 --> 0:07:26.720 five years, and before we really had a brand yet, 0:07:26.880 --> 0:07:30.520 we were already planning the five hundred restaurants, and we 0:07:30.640 --> 0:07:32.560 kind of put the cart before the horse. So when 0:07:32.560 --> 0:07:38.200 I came in in twenty sixteen, what my idea was ist, 0:07:38.680 --> 0:07:42.920 let's focus on California. Let's get California right, Let's build 0:07:42.960 --> 0:07:48.600 a great brand, and then we'll start expanding again. And 0:07:48.640 --> 0:07:53.320 that's what we're doing today. So we got down to 0:07:53.560 --> 0:07:57.360 as low as seven restaurants. Today we have twelve, with 0:07:57.440 --> 0:08:00.680 four more under construction and five more in the pipeline 0:08:00.800 --> 0:08:04.360 for next year. And during the pandemic, we bought a 0:08:04.400 --> 0:08:08.880 second brand, home Room, which is a macaroni and cheese 0:08:08.920 --> 0:08:14.000 brand out of Oakland, and they had two restaurants a 0:08:14.080 --> 0:08:18.200 block apart. One is a. 0:08:17.000 --> 0:08:18.200 Full service. 0:08:19.360 --> 0:08:21.640 Small, full service sit down restaurant and the other one 0:08:21.680 --> 0:08:25.560 is a block away. It does sit down or rather 0:08:25.680 --> 0:08:30.280 does carry out and delivery only. And carry out and 0:08:30.320 --> 0:08:34.200 delivery only we did over four million dollars last year 0:08:34.280 --> 0:08:37.360 and in macaroni and cheese, So it's a good good 0:08:37.400 --> 0:08:43.440 business travels well, it travels well, and we have the 0:08:43.520 --> 0:08:46.160 best mac and cheese you'll ever have in your life. 0:08:46.240 --> 0:08:48.760 So it's a it's a good it's a good brand. 0:08:48.760 --> 0:08:51.880 We just built our third we opened up our third 0:08:51.960 --> 0:08:55.280 home room in Berkeley a couple of months ago, and 0:08:55.360 --> 0:08:58.080 so we're just starting to take a look at that 0:08:58.200 --> 0:09:00.640 brand and its possibilities for expansion. 0:09:02.080 --> 0:09:04.280 Awesome. And so all the new stores this year and 0:09:04.320 --> 0:09:06.080 next are going to be in California as well. 0:09:08.000 --> 0:09:13.640 Next year we will open our first restaurants outside of California, 0:09:13.760 --> 0:09:16.200 which will be in uh which will be in Phoenix. 0:09:16.240 --> 0:09:18.480 So we'll get we'll get one or two open in 0:09:18.520 --> 0:09:19.480 Phoenix next year. 0:09:20.920 --> 0:09:26.880 Nice. And are are most of the new restaurants going 0:09:26.960 --> 0:09:29.560 to be staffed by existing general managers or you're going 0:09:29.600 --> 0:09:31.960 to have to go outside of the system maybe to 0:09:31.960 --> 0:09:32.600 to hire some. 0:09:33.080 --> 0:09:35.840 Yeah, that's a great question. I think that. 0:09:37.240 --> 0:09:39.360 Whenever a brand. 0:09:39.160 --> 0:09:44.520 Goes outside of its its you know, traditional area, you 0:09:44.640 --> 0:09:47.120 got to be very very careful, and I think the 0:09:47.160 --> 0:09:53.400 best thing you can do is to convince folks who 0:09:54.120 --> 0:09:58.320 are in your core group of restaurants to relocate. And 0:09:58.520 --> 0:10:00.560 uh so that's that's our plan and is to get 0:10:00.600 --> 0:10:03.240 folks to relocate. But I think we're also going to 0:10:03.280 --> 0:10:07.760 be hiring people in the you know, in the Phoenix area. 0:10:07.840 --> 0:10:11.040 We actually have one person in our system now who's 0:10:11.120 --> 0:10:15.400 from the Phoenix Scottsdale area that we relocated to San 0:10:15.440 --> 0:10:20.040 Diego and he's he's there now training and our intent 0:10:20.200 --> 0:10:23.960 is once we open Phoenix that he'll, uh he'll move 0:10:24.040 --> 0:10:26.959 back there. But I think, I think that's super important, 0:10:27.240 --> 0:10:32.040 and I think that, uh a lot of brands make 0:10:32.080 --> 0:10:35.240 that mistake, is that when you start to expand outside 0:10:35.280 --> 0:10:37.720 of your your core area, if you try to do 0:10:37.760 --> 0:10:41.000 it with no new folks, a lot of times that 0:10:41.240 --> 0:10:45.760 culture doesn't move with you. And a big part of 0:10:46.240 --> 0:10:51.920 growing any any brand is being able to move that culture. 0:10:52.480 --> 0:10:56.600 One example I like to give is, I remember when 0:10:57.400 --> 0:11:00.800 Chick fil A was was just this little chicken brand 0:11:00.840 --> 0:11:05.439 in the in the southeast, and being the very knowledgeable 0:11:05.480 --> 0:11:07.760 person that I am, I told anybody who would listen, 0:11:07.840 --> 0:11:09.600 I'm not sure Chick fil A is ever going to 0:11:09.640 --> 0:11:11.920 be more than a regional player, because it's gonna be 0:11:12.800 --> 0:11:15.560 it's going to be so hard for them to uh 0:11:16.200 --> 0:11:18.520 they're so culture heavy, it's going to be so hard 0:11:18.559 --> 0:11:23.000 for them to uh create that culture all across the country. 0:11:23.400 --> 0:11:26.800 And kudos to them. Cheryl is on their board now 0:11:26.840 --> 0:11:29.880 as a matter of fact. But kudos to them because 0:11:29.880 --> 0:11:31.880 they showed, they showed it could be done. 0:11:31.920 --> 0:11:34.119 And you know that they have that same. 0:11:34.400 --> 0:11:38.560 It's my pleasure culture in California, as they have in Georgia, 0:11:38.760 --> 0:11:41.240 and that's what's allowed them to be successful every place 0:11:41.280 --> 0:11:41.720 they've gone. 0:11:42.760 --> 0:11:45.640 Yeah, in New Jersey as well. I Uh, once my 0:11:45.640 --> 0:11:47.760 son gets a little older, I'd love I'd love for 0:11:47.840 --> 0:11:49.160 him to work for Chick fil A. 0:11:49.520 --> 0:11:52.920 Yeah, it's a it's a great brand with a great culture. 0:11:53.000 --> 0:11:56.200 I agree with you, you can't you can't go wrong there. 0:11:57.320 --> 0:12:00.960 Yeah, all right, So the melt is had an incredible 0:12:01.040 --> 0:12:05.000 run since twenty twenty. You know, one of the best 0:12:05.280 --> 0:12:08.880 pandemic success stories that I've heard of, maybe you know 0:12:09.000 --> 0:12:11.880 the best out there. Can you talk about your experience 0:12:11.960 --> 0:12:14.400 during the pandemic, you know, I'm sure it wasn't easy 0:12:14.920 --> 0:12:17.959 at first, and maybe talk about the changes that enabled 0:12:17.960 --> 0:12:21.920 the chain to survive and then kind of grow AUVs 0:12:21.960 --> 0:12:23.840 the way it has. 0:12:24.400 --> 0:12:25.760 Yeah, so that's a great question. 0:12:26.000 --> 0:12:31.679 So I remember March fifteenth or so of twenty twenty, 0:12:32.880 --> 0:12:38.040 we celebrated one hundred consecutive weeks of positive comp sales 0:12:38.120 --> 0:12:41.840 and things were looking really good for our brand. On 0:12:42.200 --> 0:12:47.760 March eighteenth, three days later, they announced a shelter in 0:12:47.800 --> 0:12:51.760 place in San Francisco and then later in California. So 0:12:51.840 --> 0:12:55.040 we went from one hundred consecutive weeks of positive comps 0:12:55.040 --> 0:13:01.440 to negative eighty percent pretty much overnight, which goes to 0:13:01.559 --> 0:13:04.920 prove one of my favorite sayings that when when things 0:13:04.960 --> 0:13:06.160 are good, they're never. 0:13:06.000 --> 0:13:07.000 As good as they seem. 0:13:07.640 --> 0:13:12.520 And uh. But again, being very knowledgeable in these kind 0:13:12.520 --> 0:13:15.040 of things, I said to myself, this can't last longer 0:13:15.040 --> 0:13:19.000 than two or three weeks, and so I made some 0:13:20.440 --> 0:13:26.000 really good decisions based on really bad knowledge. So because 0:13:26.040 --> 0:13:27.960 I thought it would only last two or three weeks, 0:13:28.000 --> 0:13:30.720 I wanted to make sure that we didn't lose any 0:13:30.760 --> 0:13:34.840 employees while we were shut for this short period of time. 0:13:35.559 --> 0:13:39.720 And so I uh, I remember I went to work 0:13:39.760 --> 0:13:42.920 and a team member who'd been with us for a 0:13:43.000 --> 0:13:46.160 number of years, who I was very close to was 0:13:46.720 --> 0:13:49.200 really on the verge of tears and was worried about 0:13:49.280 --> 0:13:51.080 losing her job and how she was going to be 0:13:51.080 --> 0:13:53.959 able to feed her family. And I said, I said 0:13:53.960 --> 0:13:58.640 to her, look, you don't have to worry. You know, 0:13:58.760 --> 0:14:02.480 your your paycheck is safe while as long as this 0:14:02.520 --> 0:14:03.520 thing lasts. 0:14:03.840 --> 0:14:06.320 And uh, then you know, I. 0:14:06.360 --> 0:14:09.960 Was very fortunate that I had some investors who backed 0:14:10.000 --> 0:14:10.439 me on this. 0:14:10.640 --> 0:14:12.120 But I told all of my. 0:14:12.160 --> 0:14:15.280 Folks, look, we're gonna pay you whether you come to 0:14:15.320 --> 0:14:17.720 work or not. If you're not comfortable coming to work, 0:14:17.760 --> 0:14:20.840 don't come to work. But uh, you know we're gonna 0:14:20.920 --> 0:14:26.360 we're gonna pay you if you come in or don't 0:14:26.400 --> 0:14:28.760 come in. Now, I will say that most of the 0:14:28.760 --> 0:14:31.120 folks didn't believe me at first, and so they came 0:14:31.160 --> 0:14:35.680 to work anyway. But but we didn't We didn't really 0:14:36.080 --> 0:14:38.720 lose anybody. But the problem was, as I mentioned, our 0:14:38.760 --> 0:14:43.360 sales were there was basically nobody, especially in downtown San Francisco. 0:14:43.440 --> 0:14:48.120 And our office is above one of the restaurants on 0:14:48.240 --> 0:14:50.880 Market Street in the heart of the financial district in 0:14:50.960 --> 0:14:57.120 San Francisco. And and uh, about three or four days 0:14:57.120 --> 0:15:00.400 in to the shelter in place, I remember I looked 0:15:00.760 --> 0:15:05.920 over the balcony and there was almost nobody in the restaurant, 0:15:05.960 --> 0:15:08.920 and the only people in there were first responders, and 0:15:08.960 --> 0:15:12.840 there was some police officers who were at the counter ordering, 0:15:13.160 --> 0:15:15.560 and I just yelled over the railing I said, you know, 0:15:15.680 --> 0:15:18.800 don't charge them for their food, you just give it 0:15:18.840 --> 0:15:22.440 to them for free. Then I started thinking about it, 0:15:22.680 --> 0:15:24.320 and one of the things that I knew is I 0:15:24.360 --> 0:15:27.440 had people in every restaurant and they didn't really have 0:15:27.560 --> 0:15:31.880 anything to do, and they they didn't really feel like, 0:15:32.520 --> 0:15:35.080 you know, they were needed. And I thought, well, why 0:15:35.120 --> 0:15:39.640 don't we give all first responders their meals for free? 0:15:40.480 --> 0:15:45.240 And so within about twenty four hours, I told everybody, hey, look, 0:15:45.240 --> 0:15:47.480 if you have any first responders come in, just give. 0:15:47.360 --> 0:15:49.360 Them their meals for free. 0:15:49.560 --> 0:15:52.080 And the next thing, you know, that went viral. So 0:15:52.200 --> 0:15:55.560 within about a week, I have a couple of restaurants, 0:15:55.920 --> 0:16:01.600 one at Stanford in Palo Alto and one in La Jolla, 0:16:02.280 --> 0:16:10.080 where we had hospitals within walking distance of our restaurants, 0:16:10.600 --> 0:16:13.760 and so within about a week we started having people 0:16:13.960 --> 0:16:17.760 lining up in the morning and we would have lines 0:16:18.120 --> 0:16:22.960 out the door all day, open to close. I remember 0:16:23.040 --> 0:16:29.800 at Stanford we were doing about thirteen thousand or so 0:16:29.960 --> 0:16:33.520 a day, and twelve thousand of it it was free. 0:16:34.440 --> 0:16:38.360 And still I kept on thinking, well, this is only 0:16:38.400 --> 0:16:40.720 going to last a couple of weeks, and we're getting 0:16:40.720 --> 0:16:41.880 all this exposure. 0:16:44.080 --> 0:16:45.280 But as things started to. 0:16:46.760 --> 0:16:49.520 Move on, first of all, I couldn't handle all that business, 0:16:49.600 --> 0:16:53.320 especially at Stanford. It was I worked ended up working 0:16:53.320 --> 0:16:56.320 a Thursday and Friday myself open to close on the 0:16:56.360 --> 0:16:58.760 grill at Stanford because I had heard the crew was 0:16:58.800 --> 0:17:04.160 ready to mute. And at the end of the Friday, 0:17:04.240 --> 0:17:07.640 we actually ran out of food at about ten o'clock 0:17:07.720 --> 0:17:12.480 on Friday, and people were just worn out, and I said, man, 0:17:12.520 --> 0:17:14.400 I just don't know if I can do this anymore. 0:17:14.440 --> 0:17:15.640 And I was really. 0:17:17.760 --> 0:17:20.239 I was really worried because I knew I was going 0:17:20.280 --> 0:17:21.560 to have to cut it off because it was so 0:17:21.680 --> 0:17:27.680 hard on the team. But I couldn't figure out, you know, 0:17:28.080 --> 0:17:29.720 where I was going to go from there and how 0:17:29.760 --> 0:17:35.000 I would explain it to folks, And so I had 0:17:35.000 --> 0:17:36.639 to make a decision. Do I go to a fifty 0:17:36.680 --> 0:17:37.600 percent discount? 0:17:37.640 --> 0:17:38.359 What do I do? 0:17:39.160 --> 0:17:43.080 And so finally I just decided, you know, I'm just 0:17:43.119 --> 0:17:45.520 going to go cold Turkey and end it all together. 0:17:45.960 --> 0:17:52.639 And to my surprise, no backlash whatsoever, and all of 0:17:52.680 --> 0:17:55.320 a sudden we started to get a steady stream of people. 0:17:55.320 --> 0:17:59.199 And another interesting story was La Joya. So Stanford had 0:17:59.200 --> 0:18:02.080 always been our high volume restaurant, and at the time, 0:18:04.200 --> 0:18:08.080 you know, they were, you know, you know, maybe a 0:18:08.119 --> 0:18:11.040 two million dollar restaurant. I was just looking before the call. 0:18:13.400 --> 0:18:16.199 This same week in twenty eighteen, the week that we 0:18:16.320 --> 0:18:20.159 just finished, Stanford did was our highest volume restaurant, and 0:18:20.200 --> 0:18:23.640 they did a little bit under forty thousand, thirty eight thousand. 0:18:23.960 --> 0:18:29.080 Last week they did ninety five. And La Joya was 0:18:29.080 --> 0:18:32.119 the other restaurant. La Joya I had had opened for 0:18:32.160 --> 0:18:34.760 a couple of years and it wasn't a great performer, 0:18:35.560 --> 0:18:38.200 but they also had hospitals close by, and we were 0:18:38.200 --> 0:18:44.200 having people lining up, and you know, our our awareness 0:18:44.320 --> 0:18:46.800 in southern California wasn't as good as it was in 0:18:46.880 --> 0:18:51.119 Northern California where we were founded. So La Joya is 0:18:51.160 --> 0:18:55.040 a fascinating story. For two years, we had done about 0:18:55.080 --> 0:18:58.160 twenty thousand a week, plus or minus one thousand dollars 0:18:58.240 --> 0:19:01.119 every single week for two years, you know, nineteen to 0:19:01.160 --> 0:19:08.000 twenty one. It was pretty mediocre, and then overnight we 0:19:08.040 --> 0:19:13.280 went down to four or five thousand. But by April, 0:19:14.960 --> 0:19:17.960 so you know, Shelter Place was in March. By April 0:19:18.040 --> 0:19:20.600 things were starting to come back, and we went from 0:19:20.640 --> 0:19:23.960 four or five thousand to ten or fifteen thousand, and 0:19:24.040 --> 0:19:25.560 by the end of April we were back to the 0:19:25.600 --> 0:19:30.280 twenty thousand that we were doing pre COVID. In May 0:19:30.320 --> 0:19:35.160 we started doing record weeks and in June we did 0:19:35.480 --> 0:19:42.280 forty thousand, and in July we did fifty thousand and 0:19:42.720 --> 0:19:44.960 fifty thousand. We average fifty thousand a week, and I 0:19:44.960 --> 0:19:48.400 remember my manager saying, well, we want to beat Stanford. 0:19:48.480 --> 0:19:51.080 We want to do we want to do sixty thousand, 0:19:51.840 --> 0:19:55.040 and in August we did sixty thousand a week. In 0:19:55.240 --> 0:20:00.480 September we did seventy thousand a week. And last year 0:20:00.520 --> 0:20:06.199 that restaurant did four point three million, and so there 0:20:06.280 --> 0:20:09.040 was a couple of things at play. I think the 0:20:09.119 --> 0:20:13.320 first thing is is that we did get some We 0:20:13.359 --> 0:20:17.160 did build awareness with this free meals for first responders. 0:20:17.280 --> 0:20:21.959 We won a Jefferson Award for public service in San Francisco. 0:20:23.440 --> 0:20:26.960 You know, it kind of went viral that we were 0:20:27.000 --> 0:20:29.560 doing this, So that was a piece of it. But 0:20:29.640 --> 0:20:34.640 a bigger piece of it is when people came, we 0:20:34.720 --> 0:20:38.960 had really really good food and really really good service. 0:20:39.080 --> 0:20:43.320 And because we didn't lose any team members because we 0:20:43.359 --> 0:20:45.800 paid them whether they came to work or not. We 0:20:45.880 --> 0:20:49.280 actually had two months after the Shelter and Place started, 0:20:49.320 --> 0:20:53.480 So in June of twenty we had more employees than 0:20:53.520 --> 0:20:57.080 we had in March of twenty And so when folks came, 0:20:57.640 --> 0:21:02.720 we have never we have never really struggled to handle 0:21:02.760 --> 0:21:04.920 the business that came in. So when the business came, 0:21:04.960 --> 0:21:08.560 we were ready. The other thing is is that, you know, 0:21:08.600 --> 0:21:12.440 we were founded by tech entrepreneurs. Our founder, John Kaplan, 0:21:12.760 --> 0:21:18.520 who interestingly enough is the Ambassador to Singapore today, was 0:21:18.600 --> 0:21:23.280 the founder of the flip video phone that he sold 0:21:23.320 --> 0:21:27.680 to Cisco and so, and all of our investors were 0:21:27.800 --> 0:21:32.439 tech folks. And so we had a very good technology 0:21:32.560 --> 0:21:34.960 platform that we were able to build on. And when 0:21:35.320 --> 0:21:41.440 third party delivery became so prevalent during during COVID, no 0:21:41.560 --> 0:21:44.480 we went from you know, pre COVID we were eighteen 0:21:44.520 --> 0:21:49.119 to twenty percent delivery and during COVID we got up 0:21:49.119 --> 0:21:54.119 as high as eighty percent eighty percent delivery. But it 0:21:54.200 --> 0:21:58.879 didn't it wasn't it wasn't difficult to ramp up because 0:21:58.880 --> 0:22:00.840 we had the systems and I used to handle it. 0:22:00.920 --> 0:22:04.840 So so two things that were very important. We had 0:22:04.840 --> 0:22:07.760 the tech platforms in place to handle the business when 0:22:07.800 --> 0:22:11.320 it came, and we also had you know, the food 0:22:11.359 --> 0:22:15.760 and the service models where we deliver what we call 0:22:15.800 --> 0:22:17.919 and I love it here experience. And so when people 0:22:17.960 --> 0:22:20.920 came and had that I love it here experience, they 0:22:20.920 --> 0:22:24.199 told their friends and things, and things just snowballed. So 0:22:24.920 --> 0:22:30.240 actually twenty twenty, even with you know, horrible marches and 0:22:30.600 --> 0:22:34.200 March and April that were down. You know, I think 0:22:34.440 --> 0:22:38.120 March was down fifty percent and April was down sixty 0:22:38.200 --> 0:22:41.879 or seventy percent, twenty twenty ended up being a record 0:22:41.960 --> 0:22:45.280 year because of the amount of sales we did in 0:22:45.320 --> 0:22:49.080 the back half of the year. But the interesting thing 0:22:49.240 --> 0:22:54.360 is that our average unit volumes actually doubled during COVID. 0:22:54.480 --> 0:22:57.280 So I mentioned that Stanford was our highest volume restaurant. 0:22:58.800 --> 0:22:59.399 You know, pre. 0:22:59.359 --> 0:23:03.160 COVID, they were doing you know, thirty or forty a. 0:23:03.119 --> 0:23:07.080 Week, and you know, now they. 0:23:07.119 --> 0:23:09.720 Last year they did four point five and this year 0:23:09.760 --> 0:23:13.639 they're on pace to do over five million. Every restaurant 0:23:13.640 --> 0:23:17.000 we have has doubled their volume since the beginning of COVID, 0:23:17.800 --> 0:23:21.000 and you know, it's one thing you have to have. 0:23:24.320 --> 0:23:26.800 One of the not very complicated beliefs that I have 0:23:26.920 --> 0:23:28.879 is if you're going to be a great restaurant company, 0:23:28.920 --> 0:23:32.760 you need to run great restaurants. And you know that 0:23:32.920 --> 0:23:36.159 is the operator in me. But if people come to 0:23:36.200 --> 0:23:39.720 your restaurant and you don't run a great restaurant, it 0:23:40.600 --> 0:23:43.320 doesn't do you any good. Some of my team gets 0:23:43.320 --> 0:23:47.040 frustrated with me sometimes because I don't get excited about 0:23:47.320 --> 0:23:51.840 great sales. What I get excited about is great guest feedback. 0:23:52.359 --> 0:23:56.600 Because great sales are about what you did yesterday. Great 0:23:56.600 --> 0:23:59.520 guest feedback is the best indicator you have of what 0:23:59.800 --> 0:24:04.240 you're going to do tomorrow. And so I'm fanatical about 0:24:04.240 --> 0:24:08.080 guest feedback and tracking guest feedback and following guest feedback. 0:24:08.560 --> 0:24:13.280 And you know, if we have a great sales day 0:24:13.440 --> 0:24:15.320 and I don't feel like we delivered that, I love 0:24:15.320 --> 0:24:16.240 it here experience. 0:24:16.560 --> 0:24:17.359 I'm not happy. 0:24:17.880 --> 0:24:19.800 I really don't care if it was a record day, 0:24:19.800 --> 0:24:23.080 if we didn't deliver, I love it here, and but 0:24:24.240 --> 0:24:27.000 our number one goal is to deliver, and I love 0:24:27.000 --> 0:24:30.040 it here experienced every guest. And that's all about great 0:24:30.080 --> 0:24:33.240 restaurant operations. And I think, I really think in the 0:24:33.280 --> 0:24:38.080