Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Allen,
Speaker 1: a senior restaurant and food service analysts at Bloomberg Intelligence.
Speaker 1: Our research and that a bi's five hundred analysts around
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Speaker 1: we're joined by Nick Kenner, founder and CEO of Just Salad.
Speaker 1: Thanks for joining me, Nick.
Speaker 2: Yeah, thanks for having me. Mike appreciate it.
Speaker 1: So are you a native New Yorker?
Speaker 2: Yes?
Speaker 1: Are you No, I'm Jersey. I'm a Jersey guy man.
Speaker 1: So I saw that your office is actually right down
Speaker 1: the street from our Bloomberg's New York flagship. And I
Speaker 1: saw that you went to Colgate, So I thought, maybe
Speaker 1: you know.
Speaker 2: Having strayed too far from New York City in life,
Speaker 2: so actually one of my bigger personal regrets. But I
Speaker 2: do love it.
Speaker 1: Okay, So you grew up in the city I grew Yeah, I.
Speaker 2: Grew up downtown in Greenwich Village and yeah, went to Colgate, graduated,
Speaker 2: came back, got a job in finance, quit started Just Salad,
Speaker 2: and I've been in New York City ever since.
Speaker 1: A very cool So what inspired you to start just salad?
Speaker 2: Well, the first thing was actually to answer a question directly. Actually,
Speaker 2: in some ways it was seamless web. I was twenty four,
Speaker 2: was my turn to order lunch for the entire trading floor,
Speaker 2: and everyone wanted a salad and I went on to
Speaker 2: and no one was specific about where it was from. Right,
Speaker 2: these were the days where there was no one in
Speaker 2: midtown specializing in salad, and so people were getting salads
Speaker 2: from a suit place called Hale and Hardy from places
Speaker 2: like packs Metro, and of course when everyone got them,
Speaker 2: people would complain about the quality and the options. And
Speaker 2: so that was kind of an epiphany moment where if
Speaker 2: someone I realized, if someone just did salad, but did
Speaker 2: it really well and specialized, there could be a big opportunity,
Speaker 2: not just in New York City, but you know nationally
Speaker 2: as well.
Speaker 1: What did you trade?
Speaker 2: I was moved all over the place. It was kind
Speaker 2: of a I was working at a hedge fund, and
Speaker 2: as people would get fired, they would put me as
Speaker 2: an assistant to going from the consumer retail analysts to
Speaker 2: a person running the syndicate desk. Eventually I ended up
Speaker 2: working for a great guy named Peter Jepson doing you know,
Speaker 2: handling the helping him handle the macroeconomic book.
Speaker 1: Okay, cool, Yeah, I was an equity pop prop trader
Speaker 1: in a previous life. And about the salads, man, we
Speaker 1: used to I worked at Sadodi covering restaurants prior to Bloomberg.
Speaker 1: I guess it was early twenty teens, and we actually
Speaker 1: had a salad spot that we found on Lexington. It
Speaker 1: was like maybe around the high forties, I guess maybe
Speaker 1: forty eighth and lex And they did a great salad
Speaker 1: and we were there almost every day for five dollars
Speaker 1: and fifty cents. They would pack that thing with so
Speaker 1: much protein, you know, and me and my friends were
Speaker 1: there probably four days a week, maybe you know, Fridays
Speaker 1: we would treat ourselves to something a little bit nicer.
Speaker 2: But if Fridays or the weekdays for most salads in general,
Speaker 2: it's it's a pizza and Burger's thrive on Fridays for sure.
Speaker 1: Man. So I'm assuming at some point the menu was
Speaker 1: in fact just salad.
Speaker 2: Yes, yes, when we started it was it was just salad.
Speaker 2: And then yeah, we started with a reusable bowl program.
Speaker 2: Actually we were only selling salads in reusable bulls. Then
Speaker 2: we realized two things. One people wanted more than salad
Speaker 2: from us. They wanted things that were healthy, fast and affordable.
Speaker 2: And not everyone want was going to reuse their bull
Speaker 2: and so people were throwing those out. So about a
Speaker 2: year in we quickly pivoted. We added wraps, and we
Speaker 2: started to have disposable bowls as well to accommodate those
Speaker 2: that we're not going to reuse. And today, I mean,
Speaker 2: now it's the menu. Is it's ironic given the name
Speaker 2: because we're probably more diversified in health than anyone in
Speaker 2: the salad category. We sell smoothies, we sell warm bowls,
Speaker 2: we sell wraps, soup, and we just introduced something called
Speaker 2: marketplates a couple of weeks ago. So we're really anything
Speaker 2: where we feel we can create a great culinary product
Speaker 2: that's fast and healthy and affordable, we're gonna try and do. So.
Speaker 1: How many restaurants are there currently, and what's a split
Speaker 1: between your company owned and franchise units.
Speaker 2: So we're virtually all company owned, and I mean we
Speaker 2: have three that are franchised out of ninety eight, and
Speaker 2: so we're coming up on one hundred locations, and we're
Speaker 2: all over the northeast, so Massachusetts, Pennsylvania, New Jersey, Connecticut,
Speaker 2: New York, Long Island. And then we're also got twenty
Speaker 2: five restaurants in Florida everywhere from Orlando down to South Florida,
Speaker 2: Port Saint Luci in between. And then we're in the
Speaker 2: Chicago area as well.
Speaker 1: All Right, So I saw you raised some money recently,
Speaker 1: So should that should that be an indication? Is that
Speaker 1: an indication that you're going to be primarily focused on
Speaker 1: building company owned units going forward?
Speaker 2: Yes, yeah, that's a good rate. Yeah, we're not franchising
Speaker 2: right now, so you know, the capital is meant to
Speaker 2: just continue to accelerate our growth. So we we open
Speaker 2: ten restaurants roughly in twenty twenty three, we open twenty
Speaker 2: restaurants in twenty twenty four, and we'll hopefully open thirty
Speaker 2: restaurants this year, and we'll continue to ramp up a
Speaker 2: company owned growth.
Speaker 1: Okay, cool. This leads me into a few different questions.
Speaker 1: I guess let's start here. How big are the restaurants
Speaker 1: and how much do they cost to build?
Speaker 2: Yeah, I mean the restaurants, it really depends based on
Speaker 2: are they urban, are they suburban, but you know, call
Speaker 2: it roughly two thousand square feet and net build out
Speaker 2: costs are typically around eight hundred and fifty.
Speaker 1: K Okay, is there any other un economic data you'd
Speaker 1: like to share, cash on cash returns, whatever it might be.
Speaker 2: Yeah, I mean, we we've the business model is in
Speaker 2: a very good place. I say that humbly because you
Speaker 2: know it wasn't always the case, but certain in the
Speaker 2: last few years we've hit a lot of goals that
Speaker 2: we've had. One of them was getting above twenty percent
Speaker 2: store lovely bit on margins, which we're significantly above that.
Speaker 2: Now we're above the two million AUV that we'd always wanted.
Speaker 2: And most importantly, these are all like means to an end.
Speaker 2: The most important, like you said, is cash on cash
Speaker 2: return and you know we're typically around forty to fifty
Speaker 2: percent or more on that. So it's been it's been
Speaker 2: a great business the last couple of years, and want
Speaker 2: to continue to keep that going.
Speaker 1: Yeah, strong. What percentage of your new store gms are
Speaker 1: brought in from other existing just sellid restaurants.
Speaker 2: That's a great question. Virtually all our general managers have
Speaker 2: been line level employees, assistant managers or supervisors at existing locations,
Speaker 2: so we have an unbelievable farm team, we call it.
Speaker 2: And we don't hire on the operations level outside general
Speaker 2: managers almost ever. Sometimes there are unique situations in newer
Speaker 2: markets where someone doesn't want to raise a hand and
Speaker 2: move to but that hasn't been an issue in Florida,
Speaker 2: by the way, But typically it's just existing employees who
Speaker 2: see the opportunity. And you know, speaking of Florida, we
Speaker 2: have a husband and wife that had been with us
Speaker 2: in New York for over ten years and they moved
Speaker 2: down to Florida together to run separate locations. Our regional
Speaker 2: director who heads up Florida. She worked with me at
Speaker 2: our second location in a basement, doing all of the
Speaker 2: deliveries for Midtown together. She ended up actually moving to
Speaker 2: Florida year to ahead of just salad working at a
Speaker 2: Chase Bank, and then when we moved there, she raised
Speaker 2: her hand and now she's our regional director, which has
Speaker 2: been pretty pretty amazing journey for both of us there.
Speaker 2: So yeah, I mean, we really on the operation side,
Speaker 2: we want our employees to see the growth, to see
Speaker 2: the opportunity, and I think it can be somewhat discouraging
Speaker 2: when you're bringing in people from the outside with quote
Speaker 2: unquote great resumes, right Starbucks, Chipotle, whatever it might be,
Speaker 2: and putting them over people that have been busting their
Speaker 2: butt at your company for years. That's something we've really
Speaker 2: tried to avoid.
Speaker 1: Yeah, that's great, and it keeps the culture intact.
Speaker 2: Yeah, and culture is a big part of operations for us.
Speaker 2: We have something called the three c's, so every location,
Speaker 2: every employees trained on it. It starts with the culture,
Speaker 2: creating a culture of positivity, opportunity, and growth, and then
Speaker 2: it leads to connection with the customers. We want to
Speaker 2: connect with every guest that comes through, and we want
Speaker 2: to have consistency, consistency of product and consistently see of hospitality.
Speaker 1: Wh's a core customer.
Speaker 2: There is no core customer for Jess Salad. It is
Speaker 2: a extraordinarily broad customer.
Speaker 1: We have.
Speaker 2: Really we have locations in Midtown, New York, We're in Harlem,
Speaker 2: We're in Williamsburg, Brooklyn. You know we're in these are
Speaker 2: these are radically different demos from each other. Then and
Speaker 2: even in Florida, you know, we'll be in Brickle but
Speaker 2: we'll be in Port Saint Lucy or Pembroke Pines. So
Speaker 2: you know, Pembroke Pines, the average household income is about
Speaker 2: high seventies equal to US household income. Brickles off the charts.
Speaker 2: It worked for really anyone that's middle income, upper income,
Speaker 2: and even lower middle income. I think there's just a
Speaker 2: giant desire in this country to have healthy food that
Speaker 2: tastes great, that's actually affordable, and I think we're delivering
Speaker 2: on that better than anyone col Do you.
Speaker 1: Think that's a bigger opportunity maybe on the coasts than
Speaker 1: it is in Middle America?
Speaker 2: No, I mean, I think we're kind of seeing from
Speaker 2: the average household income in the markets that we exist
Speaker 2: in the Northeast and Florida that there's a huge opportunity
Speaker 2: all over the country. And so you know you're you're
Speaker 2: going to see that in our site selection in the
Speaker 2: coming years as well.
Speaker 1: What's the split between lunch and dinner?
Speaker 2: So suburbs it's about sixty forty in favor of lunch,
Speaker 2: and then although that is that is changing with the
Speaker 2: release of the marketplates, our dinner's actually going up pretty significantly,
Speaker 2: and urban's like anywhere from seventy or eighty percent. Lunch
Speaker 2: just is a lot of a lot of these areas
Speaker 2: empty out at night.
Speaker 1: Okay, I see you're getting into the drive through game
Speaker 1: this year. Are you having any issues finding good locations,
Speaker 1: be it drive through or traditional in how many restaurants
Speaker 1: and would you say about thirty ish or so this year?
Speaker 2: Yeah, So we'll open around thirty restaurants this year, about
Speaker 2: one or two we'll be drive throughs. Drive through real
Speaker 2: estate's impossible to get in the markets we operate, so
Speaker 2: it's certainly not a need to have, but if there
Speaker 2: is a good opportunity, we'll do it. And we're not
Speaker 2: doing pick up lanes like at Chipotle. We're doing actual
Speaker 2: drive through lanes where you can point and shoot and
Speaker 2: get what you want at that time. You don't have
Speaker 2: to download our app or anything like that. And so
Speaker 2: we think that's a huge part of disrupting fast food
Speaker 2: is doing drive through and doing it well. And so
Speaker 2: far we've had a great experience. We open our first
Speaker 2: one in Livingston, New Jersey. The drive through is doing
Speaker 2: really well for us, and they'll be There'll be more
Speaker 2: on the way when there's opportunities.
Speaker 1: All right, So that's it. There's two near me. I
Speaker 1: have not been yet, but there's a Clifton location and
Speaker 1: Livingston location for mail have.
Speaker 2: Come come on check it. I mean, where are you
Speaker 2: in Jersey?
Speaker 1: I live in Verona, New Jersey, right next to Moncley.
Speaker 2: Okay, yeah, that's well, we'll try and get closer to
Speaker 2: you then.
Speaker 1: Yeah, so when I'm out running my errands on Saturday,
Speaker 1: I'll swing by the Livingston drive through. How are you
Speaker 1: looking to drive Seamstar sales growth this year?
Speaker 2: Good question. I mean, we were coming off double digit
Speaker 2: same store sales since twenty eighteen with the exception of
Speaker 2: COVID twenty twenty, and unfortunately, I could say with confidence
Speaker 2: this year very unlikely. It's going to be double digits
Speaker 2: this year. It's certainly a harder consumer environment, and I
Speaker 2: think there's been dramatic tailwinds to just salad and the category,
Speaker 2: and I think it's a little more of a market
Speaker 2: share game this year because they're just you know, doesn't
Speaker 2: seem to be the consumers. Seems like it's tightening a
Speaker 2: little bit. So with that, you know, we're launching our
Speaker 2: Loyalty this summer. That's gonna be a big part of
Speaker 2: Q three, Q four and and the future, and it'll
Speaker 2: be offering instant rewards to our customer and some other
Speaker 2: at this point confidential, but really fun, amazing gifts for
Speaker 2: our customers. And then marketplaces has been a big boon
Speaker 2: that's going to have tailwinds. So we only released that
Speaker 2: about three weeks ago, it's already besides salads, our biggest category,
Speaker 2: and people the feedback has been amazing in a lot
Speaker 2: of ways. I think it's our one of our best
Speaker 2: culinary products we've ever put forth, and I think that
Speaker 2: will create a new occasion for customers who come to
Speaker 2: us for salad but might want something heartier at night
Speaker 2: or on weekends, and I think that should help drive
Speaker 2: sales uh there as well. And then there's the general look.
Speaker 2: We're in the restaurant business. The food's got to continually
Speaker 2: get better and it's hard to define, but when it
Speaker 2: gets better, you get more customers. And so there's constant
Speaker 2: culinary innovation that's happening all the time, including this year.
Speaker 1: Obviously, commodity prices have been swinging around with a lot
Speaker 1: of the tariff news and headlines, and so I guess
Speaker 1: how much inflation are you expecting at right now for
Speaker 1: the year, and how much price do you intend to take?
Speaker 2: Yeah, impossible to say. No one knows where this ends up.
Speaker 2: If it ended up where it is today, not much.
Speaker 2: All our food pretty much comes from America, with the
Speaker 2: exception of Mexican avocados, where Canadian and Mexican agriculture are
Speaker 2: excluded from the terrorists as of now. So on the
Speaker 2: food side, not much. There could be significant packaging costs
Speaker 2: and significant cost to kitchen equipment, and it's too hard
Speaker 2: to know. Ultimately, Look, if it looks like it's truly
Speaker 2: affecting our margins, we will, you know, have to take price.
Speaker 2: But I don't think at this point it's it's it's
Speaker 2: it's too hard to know what that actual effect is.
Speaker 1: What was your plan for price coming into the year.
Speaker 1: All right, good stuff? So when I when I pull
Speaker 1: up to the drive through Saturday, what should I order?
Speaker 2: Well, I gotta know a little bit more about you, Mike,
Speaker 2: So are you do you like chicken? Are you vegan?
Speaker 2: Do you like spicy? So?
Speaker 1: I like spicy, I like chicken. You know I like steak.
Speaker 1: You know, protein's big, I.
Speaker 2: Would say so. The crispy chicken peblano is always a
Speaker 2: crowd pleaser. That's a salad. The spicy chicken sees a
Speaker 2: wrap might be up your alley. And if you're looking
Speaker 2: for something hardier and you don't want a salad, the
Speaker 2: Tazeki market plate pro tip with like a little siracha
Speaker 2: on the yok cucumber is pretty amazing. So those are
Speaker 2: my favorites right now.
Speaker 1: Those all sound fantastic. What's your personal favorite? Number one
Speaker 1: go to order?
Speaker 2: I eat it four times a week, so at this
Speaker 2: point there is I have to mix it up. But
Speaker 2: right now I've been odeing on the marketplates, either the
Speaker 2: Pesto or the Tazeki my all time in terms of
Speaker 2: what I've ordered the most itch just out. The Tokyo
Speaker 2: super Greens is an amazing one. And the Crispy Chicken Peblano,
Speaker 2: I don't do Krispy chickens. I sub that out for
Speaker 2: our braised chicken, which my opinion is the best chicken
Speaker 2: in all of fast casual or fast food is amazing.
Speaker 2: That's that's what gets me excited.
Speaker 1: All right, good stuff, You gave me a few things
Speaker 1: to try. That pesto is right on my alley too, man,
Speaker 1: so I think you're gonna have to try that one.
Speaker 1: This was great, Thanks again for doing it.
Speaker 2: Nick. Was nice to meet you. Yeah, nice to meet
Speaker 2: you and appreciate you having me on.
Speaker 1: Yeah, you got it. Where can listeners go to find
Speaker 1: their nearest Just salad?
Speaker 2: Just go to just salid dot com and click on
Speaker 2: the order now now I'm kidding, it's just salad dot
Speaker 2: com and you can click on locations and it'll show
Speaker 2: show you what's closest.
Speaker 1: All right, great? And uh, which social media channels are
Speaker 1: you big on?
Speaker 2: We have an actress salad At on Instagram and uh,
Speaker 2: you know, we have a LinkedIn profile, but Instagram is
Speaker 2: the best place to find us.
Speaker 1: All right, good stuff. I also want to thank the
Speaker 1: audience for tuning in. If you like the discussion, please
Speaker 1: share it with your friends and colleagues. Check back soon
Speaker 1: for an interview with Vishal Augerwal, the founder and CEO
Speaker 1: of Checkmate