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Brooklyn Dumpling Shop CEO on Fast-Casual Sales · Choppin’ It Up by Bloomberg Intelligence

0:13
Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Hanlon,
0:16
Speaker 1: the senior Restaurant and Food Service analyst at Bloomberg Intelligence.
0:19
Speaker 1: Our research and that of bi's five hundred analysts around
0:22
Speaker 1: the globe can be found exclusively on the Bloomberg terminal.
0:25
Speaker 1: If you enjoy the pod, do me a solid and
0:27
Speaker 1: give us a five star review on Apple or Spotify.
0:31
Speaker 1: Today we're joined by Jeff Galletly, chairman and CEO of
0:34
Speaker 1: Brooklyn Dumpling Shop, an Asian inspired fast casual restaurant chain.
0:38
Speaker 2: Welcome to the pod, Jeff, amazing, Mike, thank you so
0:42
Speaker 2: much for having me. Really appreciate it and excited to
0:44
Speaker 2: dive in here.
0:45
Speaker 1: Cole Man, as part of my research, I visited the
0:50
Speaker 1: Willowbrook Mall location of Brooklyn Dumpling Shop.
0:54
Speaker 2: Awesome, how'd that go?
0:55
Speaker 1: It went great. My son and I loved it. He
0:58
Speaker 1: requested the mac and cheese dumplings, which were fantastic. We
1:01
Speaker 1: also had the Korean barbecue rabbi and chicken tarioki, so
1:07
Speaker 1: they were all great.
1:08
Speaker 2: Man. We had a nice spread. Excellent. Yeah, that's that
1:11
Speaker 2: location doing well for us, particularly in the holidays. Here
1:14
Speaker 2: starts to really pick up, so they're doing a great
1:16
Speaker 2: job over there.
1:16
Speaker 1: Well, I went and picked them up early and there
1:19
Speaker 1: was already people place and orders milling about.
1:22
Speaker 2: It was you know, it wasn't even five o'clock yet. Yeah.
1:26
Speaker 2: I think particularly to the holidays, you know, malls pick
1:28
Speaker 2: up and that one in particular, and we love that
1:32
Speaker 2: location kind of right in the front of the food court,
1:35
Speaker 2: so you literally like everyone in the mall has to
1:37
Speaker 2: walk by it, and it's doing really well for us.
1:39
Speaker 1: Yeah, that's great, All right, good stuff man. So where
1:43
Speaker 1: where did you work prior to Brooklyn dumping Shop and
1:46
Speaker 1: what attracted you to the opportunity.
1:47
Speaker 2: Yeah. Absolutely, I'll go way back because it all ties together.
1:52
Speaker 2: But I started my career at McKenzie and I was
1:55
Speaker 2: doing strategy projects for CpG companies, so a lot of arge, food, beverage, household,
2:01
Speaker 2: personal care companies, predominantly a lot of growth strategy work.
2:05
Speaker 2: And I really loved consumer as a business and I
2:08
Speaker 2: liked strategy work. And I got recruited to join PepsiCo
2:11
Speaker 2: and do corporate strategy and m and a up in headquarters,
2:15
Speaker 2: up and purchase, and so moved into the industry and
2:19
Speaker 2: was now part of a CpG company, did a couple
2:21
Speaker 2: of years of strategy work and then actually moved over
2:23
Speaker 2: and as a brand manager on the marketing side. So
2:27
Speaker 2: all of my career in the beginning was was CpG focused.
2:31
Speaker 2: I then went to business school, got an MBA of Orton,
2:34
Speaker 2: and afterwards completely pivoted became an investor at of Private
2:37
Speaker 2: Actuty Funds, and I really enjoyed private equity. I thought
2:40
Speaker 2: it was really interesting, you know, buying companies, getting involved,
2:44
Speaker 2: rolling up our sleeves, figuring out how we can be helpful.
2:47
Speaker 2: And that's the part I enjoyed the most was spending
2:49
Speaker 2: time with our portfolio company CEOs, really diving in to
2:54
Speaker 2: how do we actually lead this team, lead this group
2:56
Speaker 2: of people, lead this business to a successful outcome. And
2:59
Speaker 2: in that process, says I really felt called that I
3:02
Speaker 2: was really more of an operator. I thought investing was great,
3:06
Speaker 2: but I really liked the operations and the leadership side
3:09
Speaker 2: of business. And so after a few years, decided to
3:13
Speaker 2: leave and I wanted to get back into not only
3:15
Speaker 2: an operating role, but also back into a consumer basing business.
3:20
Speaker 2: And so with that I had a couple of friends
3:22
Speaker 2: who had joined Burger King and then were part of
3:25
Speaker 2: the process of Burger King becoming Restaurant Brands International with
3:29
Speaker 2: the merger of Timportance, and I saw the way that
3:33
Speaker 2: you know, their careers had taken off, the way that
3:35
Speaker 2: the business was run in this three G capital model,
3:39
Speaker 2: and decided that I thought that would be a great
3:42
Speaker 2: fit to go into an operating role and to get
3:46
Speaker 2: back into a consumer basing business. And in this case,
3:49
Speaker 2: this consumer facing business happens to be restaurants and the
3:52
Speaker 2: business of restaurants and the business of franchising, and so
3:56
Speaker 2: decided to get on board. And that was early twenty seventeen,
4:00
Speaker 2: and I had an incredible seven years at RBI doing
4:04
Speaker 2: a variety of leadership positions all over the world, starting
4:08
Speaker 2: with Burger King North America Marketing, where I was ultimately
4:11
Speaker 2: leading what we called marketing intelligence. So this is developing
4:14
Speaker 2: the new products and promotions to ultimately drive sales and
4:18
Speaker 2: restaurant profitability for ten billion dollars in system sales. And
4:24
Speaker 2: in that I really learned how to drive performance. And
4:27
Speaker 2: I also really learned how to engage with franchise ese
4:30
Speaker 2: and how to work in a franchise system and build
4:34
Speaker 2: trust with franchise ease and communicate with franchisese also while
4:39
Speaker 2: driving performance, and then things kind of took off from there.
4:43
Speaker 2: I actually had an interesting move where I went from
4:45
Speaker 2: a marketing leadership role to becoming head of North American
4:48
Speaker 2: operations for Burger k and so a pretty big pivot.
4:51
Speaker 2: We're now in the face of ops for seven thousand
4:54
Speaker 2: restaurants across the US and Canada, and suffice to say,
4:58
Speaker 2: at that point in time, I actually didn't really know
5:00
Speaker 2: a whole lot about running restaurants, but we did some
5:03
Speaker 2: really great work engaging with our franchisees, listening to them,
5:06
Speaker 2: getting their feedback, and ultimately driving the agenda of how
5:09
Speaker 2: do we improve the guest experience at BKA, how do
5:13
Speaker 2: we build the brands and brand love, and ultimately how
5:16
Speaker 2: do we help franchisees run their restaurants better to make
5:20
Speaker 2: more money and to build the bottom line and to
5:22
Speaker 2: improve for wall Ebaza and ultimately their paybacks and returns.
5:26
Speaker 2: And helped grow the business that way, and so really
5:29
Speaker 2: formative experience for me. Learned a ton and it created
5:32
Speaker 2: the opportunity. Actually, one day our CEO came to me
5:34
Speaker 2: and said, Hey, We've got this incredible, fast growing business
5:37
Speaker 2: in Asia, would you consider moving out there, and I'd
5:40
Speaker 2: always wanted to live abroad, and I thought it'd be
5:42
Speaker 2: a really cool opportunity, and so I actually moved out
5:45
Speaker 2: to Singapore and I spent four years there and I
5:47
Speaker 2: had two roles. My first year, I was head of
5:49
Speaker 2: ops for the entire region across brands, working predominantly with
5:52
Speaker 2: Burger King and Popeyes throughout Asia, traveling all over, went
5:56
Speaker 2: to China, Bunch in Australia and Korea and Japan and
6:00
Speaker 2: Indonesia and so forth, and really got a feel for
6:03
Speaker 2: the region and being part of these growth businesses as
6:07
Speaker 2: the brand was really growing fast in those regions. And
6:10
Speaker 2: then probably the most transformational part of my career and
6:14
Speaker 2: tying it together to what I'm doing now, is I
6:17
Speaker 2: had the opportunity after my first year to take on
6:19
Speaker 2: leadership of the Tim Horton's Asia business. And that business
6:24
Speaker 2: when I started in jan twenty twenty, it was seventy
6:28
Speaker 2: restaurants in two markets, basically divided evenly between China and Philippines,
6:33
Speaker 2: and over the course of my three years that business
6:36
Speaker 2: grew to over seven hundred locations in five markets. A
6:41
Speaker 2: lot of that growth led by China and actually today
6:44
Speaker 2: based on deals that we signed back then. The Tim
6:47
Speaker 2: Morton's Asia business is over eleven hundred locations in eight markets,
6:52
Speaker 2: so really incredible growth. And in that role it was
6:56
Speaker 2: really interesting because it was very entrepreneurial. So part of
6:59
Speaker 2: this figure company, but launching the brand in these markets
7:03
Speaker 2: super entrepreneurial, starting from the ground up. How do we
7:06
Speaker 2: enter these markets? Well, how do we build the brand?
7:09
Speaker 2: In some markets? Brand awareness was okay, in some markets
7:12
Speaker 2: it was non existent, so in many respects we were
7:15
Speaker 2: starting from scratch and how do we go build successful
7:17
Speaker 2: businesses in these markets? So it was very entrepreneurial, and
7:20
Speaker 2: after a few years of that that went well, the
7:23
Speaker 2: company asked me to come back and I became GM
7:26
Speaker 2: of the Tim Whartons US business and Tim's US you know,
7:28
Speaker 2: strong business where it plays in the Great Lakes region
7:31
Speaker 2: of State New York, Ohio, Michigan, starting to grow in
7:34
Speaker 2: other places. Coffee is a hot category right now. You've
7:36
Speaker 2: got a bunch of emerging players that are really starting
7:39
Speaker 2: to pick up growth, and certainly Tim's intended to do that.
7:43
Speaker 2: But when I got back to headquarters and back in
7:45
Speaker 2: the US, I really missed that the work I was
7:48
Speaker 2: doing in Asia, which had this incredible entrepreneurial energy, building
7:52
Speaker 2: the brand, launching the brand in these different markets. And
7:55
Speaker 2: as I've thought about my career and of all the
7:57
Speaker 2: things I've done, the idea of going on and taking
8:00
Speaker 2: leadership of a business that was in a much more
8:03
Speaker 2: nascent stage, ideally working with a great group of investors
8:06
Speaker 2: to go build a business basically from the ground up
8:09
Speaker 2: that really intrigued me. And so connecting all the dots here,
8:12
Speaker 2: I got involved with Brooklyn Jumpling Shop through having a
8:17
Speaker 2: relationship with one of our core investors, a guy by
8:19
Speaker 2: the name of Matt Higgins. So Matt runs a fund
8:22
Speaker 2: called r SE Ventures, Ross Sports and Entertainment Ventures. His partner,
8:26
Speaker 2: Steven Ross, the owner of the Dolphins and the founder
8:29
Speaker 2: of the related companies. They've been prolific investors in the space.
8:32
Speaker 2: Maybe you've come across them, you know, brands like Mama Food, Goo,
8:36
Speaker 2: Magnolia Bakery, Milk Bar, Bluestone Lane. And I had actually
8:40
Speaker 2: met Matt in the CEO search for one of his
8:42
Speaker 2: other portfolio companies, and he and I hit it off
8:46
Speaker 2: and ultimately actually offered me the role to be CEO
8:49
Speaker 2: of one of those companies and for a variety of reasons.
8:52
Speaker 2: I didn't think the timing was right. I didn't think
8:54
Speaker 2: that the fit was right, and so I actually declined
8:57
Speaker 2: and I said, you know, Matt, I think this is awesome,
8:59
Speaker 2: but this just isn't the right one for me right now.
9:01
Speaker 2: But through that he and I had kind of built
9:03
Speaker 2: a relationship and stayed in touch, and ultimately this all
9:07
Speaker 2: came together because Matt has been a shark on Shark
9:10
Speaker 2: Tank with Kevin O'Leary, and Kevin and his team actually
9:15
Speaker 2: sourced this Brooklyn Dudley shop deal, not on Shark Tank,
9:18
Speaker 2: but they came across the brand. They started talking to
9:22
Speaker 2: the original founders. One thing led to another and they
9:24
Speaker 2: started talking about taking over the brand, and so Kevin,
9:29
Speaker 2: knowing Matt and knowing Matt's knowledge of the restaurant space,
9:33
Speaker 2: Kevin calls Matt says, hey, I want to invest in
9:35
Speaker 2: this brook and Tompic shop deal. Why don't you take
9:37
Speaker 2: a look at it and come in with me. Matt
9:39
Speaker 2: takes a look, he says, okay, I'll get involved, And ultimately,
9:42
Speaker 2: because I was staying in touch with Matt, that's how
9:44
Speaker 2: this came together where Matt said, Hey, I'm going to
9:47
Speaker 2: invest in this business called Brooklyn Topic Shop with Kevin O'Leary.
9:50
Speaker 2: You know, we need someone to take it over. Why
9:52
Speaker 2: don't you go take a look. And so, at the
9:54
Speaker 2: time I was living in Miami, flew up to New York,
9:57
Speaker 2: went to one of the locations in Manhattan here and
10:02
Speaker 2: got to know the business. And for me, what really
10:04
Speaker 2: stood out about this business and this opportunity was a
10:07
Speaker 2: few things. And I'll tie this all together now, which
10:10
Speaker 2: is one. It fulfilled what I was looking to do,
10:12
Speaker 2: which is take on leadership and an emerging brand, working
10:16
Speaker 2: with some great investors to go do something much more entrepreneurial.
10:21
Speaker 2: So it checked that box. But then I got into
10:23
Speaker 2: the business. The second part that was really interesting to
10:26
Speaker 2: me was already for a very young company and company
10:29
Speaker 2: was just found in twenty twenty one. The business was
10:32
Speaker 2: already omni channel in that it had restaurants, but it
10:36
Speaker 2: also had this CpG business selling frozen dumplings to retailers
10:41
Speaker 2: that had just launched, very nascent. But I liked that
10:44
Speaker 2: elements which if you combine all the things I'd done
10:47
Speaker 2: in my career with restaurants and franchising and with this CpG,
10:51
Speaker 2: that to me was really compelling and then the third
10:54
Speaker 2: thing was I really liked the category. I think today
10:58
Speaker 2: everybody's a foody put ticularly young people. And you talked about,
11:02
Speaker 2: you know, your son. Maybe in times past, you know,
11:04
Speaker 2: dumplings wouldn't have been as interesting our appealing. But now
11:09
Speaker 2: as global cuisine grows, as Asian fusion cuisine grows and
11:14
Speaker 2: becomes more popular, I thought, you know, I saw a
11:17
Speaker 2: market opportunity, which is, you know, particularly in that kind
11:20
Speaker 2: of fast casual space, which you know, however you want
11:24
Speaker 2: to define it for us, you know, we're about a
11:27
Speaker 2: twenty two dollars average check, really focused on premium, higher
11:30
Speaker 2: quality ingredients in fast casual. If you think about all
11:34
Speaker 2: the categories, you know you've got burgers, chicken, salads, Mexican
11:41
Speaker 2: at least at scale, there's no national leading Asian inspired brand.
11:46
Speaker 2: And so I thought, coming on board here, you know,
11:50
Speaker 2: we can go fill that market need. The categories got
11:54
Speaker 2: a lot of tailwinds, a lot of interest from the consumer.
11:57
Speaker 2: Let's go build a great business, and we can go
12:00
Speaker 2: become this Asian inspired best casual leader and doing so
12:04
Speaker 2: in an omni channel way with the restaurants, with CpG,
12:08
Speaker 2: working with this great group of investors, So a bit
12:10
Speaker 2: of a long waited answer, but that's how it all
12:13
Speaker 2: ties together. That's what got me on board at the
12:16
Speaker 2: beginning of last year. Since then, we've grown tremendously. We're
12:20
Speaker 2: really starting to hit our stride in terms of restaurants
12:24
Speaker 2: and our growth, both domestically and up in Canada, where
12:28
Speaker 2: we've got nine locations today in Canada twenty one overall,
12:31
Speaker 2: and in CpG where you can find us in places
12:34
Speaker 2: like Walmart and Costco and Shop Right and on QBC
12:37
Speaker 2: with Kevin and as of next year, we'll be in
12:41
Speaker 2: a lot more doors. With all the growth that we
12:43
Speaker 2: had to have a head. So it's been by far
12:46
Speaker 2: the hardest thing I've ever done, taken a very early
12:49
Speaker 2: stage company and building it into what it is today.
12:52
Speaker 2: But Mike, I couldn't be more excited for where we're
12:54
Speaker 2: at and the plans that we have for this business. Yeah,
12:57
Speaker 2: it sounds like a great fit.
13:00
Speaker 1: I love that Brooklyn Dumping Shop has brought back the automat.
13:04
Speaker 2: Yeah, not everyone knows what an automatic is, so maybe
13:08
Speaker 2: i'll explain you know that say back in the day
13:11
Speaker 2: actually was founded in Philadelphia back in nearly nineteen hundred's
13:15
Speaker 2: you know, a locker system with food in it, and
13:18
Speaker 2: so in most of our locations we do have the
13:20
Speaker 2: automat you know, we're one hundred percent digital ordering, either
13:24
Speaker 2: on a self ordered kiosk or on your phone. If
13:27
Speaker 2: you want to order with an order taker at the till,
13:31
Speaker 2: you can do that. We've actually found there's still a
13:34
Speaker 2: good chump for people that want to do that, but
13:36
Speaker 2: you know, effectively one hundred percent digital ordering. And then
13:39
Speaker 2: you know, your food is delivered in many places through
13:43
Speaker 2: a heated or cool blonder system and so we've had
13:47
Speaker 2: a lot of fun with that.
13:48
Speaker 1: Does that format lower labor costs for you? And how
13:51
Speaker 1: many employees do you need at the peak?
13:52
Speaker 2: Yeah, it's actually as I got into the business more
13:56
Speaker 2: there were you know, I can name a number of
13:58
Speaker 2: other things that were really exciting about why I thought
14:00
Speaker 2: this could be a great business, and in doing so,
14:04
Speaker 2: I thought about the pain points of my franchise ease.
14:06
Speaker 2: When I was at RBI, the two of the biggest
14:09
Speaker 2: pain points are around real estate and finding quality sites
14:15
Speaker 2: and then around labor. And so for us, we're very
14:19
Speaker 2: nimble format. Most of our locations are somewhere between six
14:22
Speaker 2: hundred and one thousand square feet predominantly all in line.
14:26
Speaker 2: Obviously you went to the Willowbrook location, which is a
14:28
Speaker 2: two hundred square foot mall kiosk. So I think we're
14:31
Speaker 2: able to solve that real estate equation really nicely for
14:35
Speaker 2: folks by being nimble and flexible. And then on the
14:37
Speaker 2: labor side, we are a lower labor model, and so
14:41
Speaker 2: our standard is to operate with a manager plus one
14:45
Speaker 2: in down times, and then depending on volume and the location,
14:50
Speaker 2: during peak times, we'll get to a manager of plus
14:53
Speaker 2: three or four. So at any given point in time,
14:57
Speaker 2: you'll rarely ever have more than five folks working in
15:01
Speaker 2: a location. You know, our food is really high quality,
15:04
Speaker 2: it's delicious, it's made fresh. But with the menu work
15:09
Speaker 2: that we've done, with a lot of operations work that
15:12
Speaker 2: we've done, we're able to execute with quality and speed
15:16
Speaker 2: of service in a really effective way with less labor.
15:20
Speaker 2: And so that makes the model really attractive as well.
15:23
Speaker 1: Yeah, for sure, I mean it's a typical, typical, it's
15:26
Speaker 1: a similar labor needs to say a wing stop, which
15:30
Speaker 1: is obviously a hugely attractive system right now for franchisees.
15:36
Speaker 1: Is there any other unit economic data that you're willing
15:39
Speaker 1: to share.
15:40
Speaker 2: Yeah, obviously we are a private company today, but you know,
15:43
Speaker 2: a few of the KPIs that I look at obviously
15:46
Speaker 2: comp sales, and there's of course been a lot of
15:48
Speaker 2: noise about this with everything going on. We're actually positive
15:53
Speaker 2: same store sales for the year. It's obviously up a
15:56
Speaker 2: smaller base. We have seven locations that have been open
15:58
Speaker 2: for more than a year. We're plus thirteen percent comp
16:02
Speaker 2: sales on a six month basis, We're plus fifteen percent
16:05
Speaker 2: on a trailing three month basis, so we're actually picking up.
16:07
Speaker 2: Even last month we were plus eighteen percent same source sales,
16:11
Speaker 2: so we're really starting to hit our stride and growing
16:15
Speaker 2: top line, you know, kind of typical food costs in
16:19
Speaker 2: that thirty percent range, and then most of our units
16:22
Speaker 2: are now kind of break eating, are getting profitable. Some
16:26
Speaker 2: of our best units are kind of in the low
16:27
Speaker 2: twenties or world eve it to top and so we
16:30
Speaker 2: find that to be, of course, really attractive. And if
16:32
Speaker 2: you combine that with a smaller footprint, our payback period
16:37
Speaker 2: is quite attractive as well. And so you know, we're
16:40
Speaker 2: targeting three years. We're a bit shy of that right now,
16:43
Speaker 2: but we think that you know, that's a great place
16:46
Speaker 2: to be and of course you know what we're trying
16:49
Speaker 2: to do here. We are a franchise system. We do
16:51
Speaker 2: have four corporate locations to balance our franchise. You know,
16:54
Speaker 2: we're we're selling dumplings, but of course we're selling paybacks
16:57
Speaker 2: to franchise ease. A potential franchise ease a lot of
17:00
Speaker 2: interest in the space. I think, you know, our ideal
17:02
Speaker 2: franchise e is somebody who is a franchise of another
17:05
Speaker 2: system and they want to grow. They've built out a brand,
17:08
Speaker 2: they've built out a territory in one of these larger
17:11
Speaker 2: legacy systems, but now growth is really hard to come by.
17:15
Speaker 2: They probably can't grow with white space. They probably have
17:18
Speaker 2: to only grow through doing an f to app acquiring
17:21
Speaker 2: another franchise e. With us, you can come in and
17:23
Speaker 2: take a large territory and go build out that territory
17:27
Speaker 2: in a great growth category. You know, we are kind
17:30
Speaker 2: of a small but mighty team. I want us to
17:32
Speaker 2: be a best in class franchise or in terms of
17:34
Speaker 2: the support and care that we provide our franchise ease
17:37
Speaker 2: and so getting that world class dedicated support and go
17:40
Speaker 2: have at it building a large territory leveraging the existing
17:43
Speaker 2: infrastructure that you have, your ability to find great sites,
17:47
Speaker 2: to get them outfitted and equipped and opened, to hire
17:50
Speaker 2: great people, get them trained and have them execute, and so,
17:54
Speaker 2: you know, building a business that's attractive to folks that
17:57
Speaker 2: want to go do that has been our goal, and
17:59
Speaker 2: I feel great about where we're at. A few other
18:01
Speaker 2: KPIs I look at, you know, from a guest rating standpoint,
18:05
Speaker 2: we're moniacal about this. I actually, you know, I read
18:07
Speaker 2: every single review that we have. We categorize them to
18:11
Speaker 2: create action plans. You know. The brand, I think a
18:13
Speaker 2: bit earlier on was going through some growing pains. Actually,
18:16
Speaker 2: when I came on board, our Google rating as a
18:19
Speaker 2: system was three point eight, so not so great. Today
18:22
Speaker 2: we're at four point four as a system. We have
18:25
Speaker 2: several restaurants operating at four point eights, and so that's
18:28
Speaker 2: been a key metric for us. We do a pretty
18:31
Speaker 2: decent third party business, both third party delivery and third
18:34
Speaker 2: party catering, which has become a huge platform. So we're
18:38
Speaker 2: going to build our beatings on those and the way
18:41
Speaker 2: that they interact the algorithm to drive great ratings and ultimately,
18:46
Speaker 2: of course, deliver a great guest experience that folks love,
18:50
Speaker 2: and then we're going to build that loyalty and frequency.
18:53
Speaker 2: So those are some of the key metrics we looked at.
18:55
Speaker 2: And then this year we also took a big hack
18:57
Speaker 2: at speed of service. When we started tracking, we actually
19:00
Speaker 2: were over eight minutes, so pretty slow. We've gotten the
19:05
Speaker 2: system to just about six minutes is what we finished
19:09
Speaker 2: November at we have a few restaurants operating in the
19:12
Speaker 2: four minute rangee the I think is a great place
19:14
Speaker 2: for us. Our target is to get to five so
19:16
Speaker 2: come in, have a great experience and be able to
19:20
Speaker 2: have a great meal relatively quickly has been a big focus,
19:25
Speaker 2: and of course it all goes to what's going to
19:28
Speaker 2: the bottom line and how are we supporting our franchisees
19:32
Speaker 2: in their full law.
19:33
Speaker 1: So yeah, that was some strong improvement in a short
19:35
Speaker 1: period of time. How fast are you growing the store base?
19:40
Speaker 1: Is all of the development going to be done by
19:42
Speaker 1: your franchise partners? And where are you looking to expand?
19:45
Speaker 2: Sure, so just level setting where we are today twenty
19:49
Speaker 2: one open locations. We're twelve in the US, we're nine
19:53
Speaker 2: of them in Canada. So today we got New York,
19:56
Speaker 2: New Jersey, Philadelphia, Miami, Dallas domestically, and then we've got
20:02
Speaker 2: eight up in Alberta, predominantly around Calgary, where our Canadian
20:05
Speaker 2: Master franchise is based. And then we just opened one
20:08
Speaker 2: right in the heart of downtown Vancouver. And so from
20:11
Speaker 2: a growth standpoint, actually domestically this year hit a bit
20:14
Speaker 2: of a pause on growth. You know, we had a
20:17
Speaker 2: few franchisees get their shops open, but I really wanted
20:21
Speaker 2: to focus on ensuring we have the right model and
20:24
Speaker 2: we've got great unit economics that are attractive to really
20:27
Speaker 2: high quality franchisees coming in. And so while we do
20:30
Speaker 2: get a decent amount of in down interest, actually kind
20:33
Speaker 2: of slowed growth for signing new franchisees here domestically, as
20:37
Speaker 2: our business is really taking off on the restaurant side
20:40
Speaker 2: in Canada, and you know, just from an overall growth
20:43
Speaker 2: company growth standpoint, you know, we're up over two x
20:46
Speaker 2: year of a year in terms of revenue and system
20:49
Speaker 2: wide sales. You know, we've had a lot of tremendous growth,
20:52
Speaker 2: and I thought thought it was a good digestion buriod
20:54
Speaker 2: for us to really nail the model and then get
20:56
Speaker 2: back into growth mode on the restaurant side in twenty
21:00
Speaker 2: twenty six. So you know where I see us growing
21:03
Speaker 2: most immediately is actually on the licensing side. So we've got,
21:08
Speaker 2: you know, today licensing deals at places like you could
21:11
Speaker 2: find us at Yankee Stadium or Madison Square Garden Resorts World,
21:16
Speaker 2: New York. We're really attractive to some of these kind
21:18
Speaker 2: of plug and play models like college campuses, airports, theme parks,
21:23
Speaker 2: stadiums and venues like that. So you'll see us popping
21:26
Speaker 2: up more places there. Domestically in the near term. We've
21:30
Speaker 2: continued to have great growth in Canada, and I think
21:33
Speaker 2: now you know, we're looking to support our existing franchisees
21:37
Speaker 2: and their growth, you know, particularly in places like South
21:40
Speaker 2: Florida and Pennsylvania. Our four corporate locations, three are in
21:44
Speaker 2: New York. We actually have taken on our Dallas shop
21:47
Speaker 2: as a corporate location, and so you know, we are
21:50
Speaker 2: and I think we'll get into what our plans are
21:52
Speaker 2: for our capital raise, but of course from a capital
21:55
Speaker 2: allocation standpoint, being thoughtful about you know, where are we
21:58
Speaker 2: deploying dollars and what's the return and we're going to
22:00
Speaker 2: see in those dollars and with where some of our
22:02
Speaker 2: units at today, our growth will predominantly be through franchising
22:06
Speaker 2: and licensing. That said, you know, I could see us
22:10
Speaker 2: building out a market like Dallas a bit more DFW
22:13
Speaker 2: obviously an incredible market, You've got some great performance down there.
22:17
Speaker 2: That may be a market that we choose to do
22:20
Speaker 2: some self development with more corporate locations and really get
22:23
Speaker 2: the ball rolling. We could potentially then refranchise that to
22:27
Speaker 2: a franchisee who wants to come in and hit the
22:29
Speaker 2: ground running with open locations, or you know, we're generating
22:32
Speaker 2: attractive returns, you know, we can go deploy capital and
22:36
Speaker 2: build it out ourselves.
22:37
Speaker 1: Great, and you touched on the same store sales, which
22:40
Speaker 1: you know you've done pretty well this year despite the
22:43
Speaker 1: widely publicized difficulties of some of the companies that we cover,
22:47
Speaker 1: namely you know, Chipotle, you know, and part of the issue,
22:52
Speaker 1: you know, Cobb has talked a lot about weakness with
22:55
Speaker 1: gen Y and gen Z customers. Is that something you're
22:58
Speaker 1: seeing and what are the demo graphics of your typical customer?
23:01
Speaker 2: Yeah? Yeah, great question. And I get asked this a lot.
23:05
Speaker 2: And what's fascinating to me is, you know, we have
23:09
Speaker 2: twenty one locations, right and so at this stage a
23:12
Speaker 2: lot of the demographics are kind of the demographics of
23:15
Speaker 2: the trade areas where those different locations are. But what's
23:18
Speaker 2: fascinating to me is that, well, our target is going
23:22
Speaker 2: to be young people, college students, young professionals, kind of
23:25
Speaker 2: eighteen to thirty. We have anyone and everyone coming into
23:30
Speaker 2: our shops and coming into our brand. And a kind
23:34
Speaker 2: of a fun anecdote I like to give is, you know,
23:37
Speaker 2: we've got restaurant locations and cool neighborhoods, places like the
23:42
Speaker 2: East Village or Deep Bellam in Dallas, and you know,
23:46
Speaker 2: there you're typically getting kind of a younger consumer, you know,
23:49
Speaker 2: mostly college kids, young professionals. But at the same time,
23:53
Speaker 2: you know, anybody can walk through those doors, and of
23:55
Speaker 2: course we'll serve them. And an anecdote I like to
23:57
Speaker 2: give is, you know, we've got our investor, Kevin O'Leary
24:00
Speaker 2: goes on QVC and we've been on air six times now.
24:04
Speaker 2: We've sold millions of dumplings on KBC and it's QBC
24:08
Speaker 2: target demographic is women over the age of sixty is
24:13
Speaker 2: ninety two percent of their their viewer base, and they
24:18
Speaker 2: love our dumplings and they're buying our dumplings and they're
24:20
Speaker 2: you know, buying them in bulk and serving them, you know,
24:23
Speaker 2: when they have people over, our rankings are coming over.
24:25
Speaker 2: So we're hitting kind of all spectrums of you could
24:28
Speaker 2: be like the cool NYU student who pops into our
24:30
Speaker 2: East Village location, or you could be you know, the
24:35
Speaker 2: grandmother in Middle America ordering on QBC and our brand
24:38
Speaker 2: scales across both. But you know, to answer that the
24:43
Speaker 2: first part of your question, we are really maniacal about
24:47
Speaker 2: value for money and value for money obviously there's a
24:50
Speaker 2: lot that gets thrown into that pod. It's not just price,
24:53
Speaker 2: but what is the quality of the food that someone's getting,
24:57
Speaker 2: what's the quality of the experience and the hospitality that
25:00
Speaker 2: they have, you know, what is the portion size? And
25:03
Speaker 2: we've we've done some some work around that to ensure that,
25:07
Speaker 2: you know, we are fast, casual, we are quality. We
25:10
Speaker 2: of course have to make margins, but we want to
25:13
Speaker 2: ensure that we're really delivering a great value for money
25:16
Speaker 2: for the guest and for the consumer. And so that's
25:20
Speaker 2: you know, of course, there's a lot of alchemy that
25:22
Speaker 2: that goes into that, and and looking at our product
25:26
Speaker 2: mix and our price pack architecture and ultimately you know what,
25:30
Speaker 2: we're charging folks for the experience and for our products
25:35
Speaker 2: and and so you know, I think we're we're very
25:37
Speaker 2: fair when it comes to pricing. It's something we're very
25:41
Speaker 2: intentional about in the decisions that we make come pricing,
25:45
Speaker 2: you know, we do. It's something that that I find
25:48
Speaker 2: interesting is there's all this talk about how how solvet
25:52
Speaker 2: the consumer is what's crazy to me is, you know,
25:56
Speaker 2: third party delivery, where we actually do we charge you know,
25:59
Speaker 2: an extra ten percent over our restaurant sales on third
26:02
Speaker 2: party and then once you layer in all the fees
26:05
Speaker 2: and all that, our third party delivery sales are up
26:09
Speaker 2: on a same store sales basis are up fifty percent
26:12
Speaker 2: year over year. Wow. And when we start talking about
26:16
Speaker 2: consumer softness, you know, you look at companies like door Dash,
26:20
Speaker 2: it doesn't seem like they're experiencing a tremendous amount of softness.
26:23
Speaker 2: So people are like, there's still a willingness to pay
26:25
Speaker 2: out there. You know, there's such you know, myriad options
26:29
Speaker 2: in every single market. There's so much competition, there's so
26:31
Speaker 2: many places you can go. Now, Yeah, I think this
26:35
Speaker 2: term slop hole is kind of hilarious. You know, you
26:37
Speaker 2: can slot hole anywhere. Now, what's the value for money
26:40
Speaker 2: that you're offering, what's the quality of the experience that
26:44
Speaker 2: you're providing to that guest? And I think some of
26:47
Speaker 2: these businesses have, you know, as they've grown so much,
26:50
Speaker 2: beginning to face challenges when it comes to consistency and
26:54
Speaker 2: offering that value for money that guests appreciate and are
26:59
Speaker 2: willing to go back at the same rate.
27:01
Speaker 1: Yeah, value has been a hot topic, and to your point,
27:04
Speaker 1: I see feel like I say this every podcast recently,
27:07
Speaker 1: but it's what you get for what you pay, right,
27:09
Speaker 1: So what are your plans to boost sam Star sales
27:12
Speaker 1: going forward? Is a lot of it around consumer awareness
27:15
Speaker 1: and growing the brand that way.
27:17
Speaker 2: Yes, Actually, you know, coming in, we actually heard we're
27:21
Speaker 2: spending quite a bit of money on social media advertising
27:24
Speaker 2: and you know, GEO targeting and working with a really
27:27
Speaker 2: high quality agency. And I ultimately decided I just didn't
27:31
Speaker 2: think that was a great use of funds and felt
27:33
Speaker 2: like for where we are as a Nasson brand, we
27:36
Speaker 2: don't need to act or behave like a national brand. Actually,
27:41
Speaker 2: we should act and behave like a local brand. And
27:45
Speaker 2: so that's where you know, we kind of took things
27:47
Speaker 2: down to the studs. We rebuilt the menu, We did
27:51
Speaker 2: a massive overhaul when it comes to food quality, food preparation.
27:56
Speaker 2: We brought in a branch of culinary support, worked with
27:58
Speaker 2: a great agency call Culinary Edge. I'd actually brought the
28:02
Speaker 2: former head of culinary that I worked with at Burger
28:05
Speaker 2: King on board with us last year, chef Mike Salem,
28:10
Speaker 2: And so really for us, it was like, we're a
28:12
Speaker 2: restaurant business, Let's focus on the food and let's have
28:14
Speaker 2: the highest quality of food that we possibly can. So
28:17
Speaker 2: we started there, uh, and then we built out you know,
28:20
Speaker 2: operations procedures, really tracking KPIs and improving guest experience. So
28:28
Speaker 2: we worked on our food, We've worked on our hospitality model,
28:31
Speaker 2: and then we got involved in our local communities. And
28:33
Speaker 2: so for us LSM, local shop marketing is is paramount.
28:38
Speaker 2: And you know, we obviously we while we were spending
28:41
Speaker 2: a lot of money for us as a smaller brand
28:43
Speaker 2: on social media, wasn't making a den in the universe
28:46
Speaker 2: of you know, what others are spending, and so just
28:49
Speaker 2: didn't think that was a wise allocation of funds and
28:51
Speaker 2: ultimately pulled that back and then focus on local shop marketing.
28:55
Speaker 2: So like, for example, here in New York, you know,
28:57
Speaker 2: we we love it and we can demo our product
29:01
Speaker 2: and we try to get our product in front of
29:03
Speaker 2: as many people as we possibly can, So we do
29:05
Speaker 2: things like New York Wine food Fests or different food
29:08
Speaker 2: festivals around town. You know, we obviously have we have
29:13
Speaker 2: a big visible presence in places like Madison's Red Guard
29:16
Speaker 2: and the Yankee Stadium. But then you know, we're just
29:18
Speaker 2: part of the community. We want to be involved in
29:21
Speaker 2: the different trade areas and neighborhoods that we participate in,
29:24
Speaker 2: and we want to be kind of a more local
29:26
Speaker 2: brand in that sense. But then you know, in an
29:29
Speaker 2: omni channel way at the restaurant level, we are growing
29:32
Speaker 2: significantly on things like third party platforms and really punching
29:36
Speaker 2: above our weight class and the ways that we work
29:38
Speaker 2: with the aggregators to partner with them to go build.
29:43
Speaker 2: We actually work with a great vendor called Spice. I'll
29:47
Speaker 2: give Max over there shout out. They do a great
29:49
Speaker 2: job helping us drive third party sales. We do a
29:52
Speaker 2: lot of like a b testing of different promotions and
29:56
Speaker 2: we picked the winners and we boost those with the
29:59
Speaker 2: aggregators and then for us catering has really become a
30:03
Speaker 2: phenomenal platform for us. We're GREENO. I think some folks
30:08
Speaker 2: are kind of tired of like the same old, same old.
30:10
Speaker 2: So you know, you get a one, two, three thousand
30:12
Speaker 2: dollars catering order and those are pretty pretty transformational, and
30:17
Speaker 2: you know, we we've really enjoyed doing that, and it's
30:20
Speaker 2: a great catering option. We want to make it super
30:23
Speaker 2: super super simple and easy for whoever is ordering the
30:27
Speaker 2: catering to just click a few pints, tell us how
30:30
Speaker 2: many people do you have, tell us when and where
30:32
Speaker 2: you want it. We'll take care of the rest. And
30:35
Speaker 2: so catering has been a really powerful growth driver for
30:38
Speaker 2: us as well. So to summarize it, you know, great food,
30:42
Speaker 2: great experience, being part of our local communities, and then
30:46
Speaker 2: leveraging technology where we can, particularly the ways that we
30:49
Speaker 2: work with the different aggregators, both in terms of delivery
30:51
Speaker 2: and catering.
30:52
Speaker 1: Yeah, I mean local store marketing works. Man, there's a
30:56
Speaker 1: reason why you know, Chick fil A wants their managers
30:59
Speaker 1: to live in the communities where they're opening up right
31:02
Speaker 1: A hundred percent.
31:02
Speaker 2: Yeah, makes a big difference. How's the CpG business doing, Yeah,
31:07
Speaker 2: I've been having a lot of a lot of fun
31:08
Speaker 2: with this. You know, it was the early part of
31:10
Speaker 2: my career, as I mentioned, and you know, I think
31:12
Speaker 2: if I had to do one thing over again in
31:15
Speaker 2: my career, particularly when I was at a place like
31:17
Speaker 2: Pepsi coo Is, I really wish I'd worked on a
31:19
Speaker 2: sales team, you know, for example, like the folks that
31:22
Speaker 2: are down in Ventonville on the Walmart sales team. I
31:25
Speaker 2: think that would be a really valuable experience. And so
31:27
Speaker 2: for me coming in over the past call two years,
31:31
Speaker 2: I've really had to dive into that sales component and
31:34
Speaker 2: that's been great, you know, working with the different buyers,
31:37
Speaker 2: working with a few brokers to ensure that we're getting
31:40
Speaker 2: our product into the right places. And for this year,
31:43
Speaker 2: you know, the really big win that we had was
31:45
Speaker 2: getting into Costco. You know, it was like a very
31:49
Speaker 2: long time of paperwork and preparation getting the right pack
31:53
Speaker 2: size and product, and ultimately we had a really successful
31:57
Speaker 2: launch with Costco and we're excited about our relationship with
32:00
Speaker 2: and going forward. You know, today you can find us
32:02
Speaker 2: in Walmarts throughout the Northeast. We've got a good partnership there.
32:07
Speaker 2: You could find us in every shop right store Stu
32:09
Speaker 2: Leonards is it a banner that we love and working
32:12
Speaker 2: with Stu and the team over there has been great
32:15
Speaker 2: for us. So yeah, we have a great partnership with
32:18
Speaker 2: those retailers and we're really excited about all the growth
32:21
Speaker 2: that we have on the CpG side of the business.
32:24
Speaker 2: We've just signed on to enter a few more retailers.
32:27
Speaker 2: Everything that we've done this far. You know, we do
32:29
Speaker 2: have one broker. We're doing everything else direct right now
32:32
Speaker 2: and seeing how far we can grow with that, and
32:34
Speaker 2: it's incredible the response we're getting. People love our products.
32:38
Speaker 2: Buyers love our products. They really love the authentic story
32:42
Speaker 2: of you know, we are a real restaurant brand. These
32:44
Speaker 2: are the same products we serve in our restaurants, and
32:47
Speaker 2: I think today young people don't have as much affinity
32:50
Speaker 2: for some of the legacy brands, particularly in the frozen aisle,
32:53
Speaker 2: but we come in. We're a cool brand, trying to
32:55
Speaker 2: be great value for money with an incredible product that
32:58
Speaker 2: people love, and we've had a lot of uptick there
33:01
Speaker 2: and you'll see us a lot more places in the
33:03
Speaker 2: very near future. And then aside from CpG, we also
33:08
Speaker 2: have a really high growth food service business, and so
33:12
Speaker 2: food service I think about things like, you know, you
33:14
Speaker 2: can find us in places like Madison Square Garden, the
33:16
Speaker 2: Yankee Stadium, not just in the concession stamp, but in
33:20
Speaker 2: all of the clubs and suites and on the luxury
33:23
Speaker 2: box menu. We're a great, delicious, easy to make, portable
33:26
Speaker 2: handheld food and folks love that. And so we're in
33:31
Speaker 2: addition to the stadiums, you can find us now in
33:34
Speaker 2: a bunch of college campuses, you can find us in
33:36
Speaker 2: a bunch of country clubs, you know, different event venues, hospitals.
33:42
Speaker 2: So we're getting some incredible uptick on the food service
33:45
Speaker 2: side of the business. And something that I really love
33:48
Speaker 2: about this business is that we are omni channel in
33:50
Speaker 2: the sense that we have restaurants the restaurants or the
33:55
Speaker 2: front porch of our business. And we love the restaurants,
34:00
Speaker 2: but we have a great product and brand that can
34:02
Speaker 2: scale in channels like CpG and food service, which most
34:07
Speaker 2: restaurants don't have. Right it's a lot harder to do
34:10
Speaker 2: you know, a burger or a chip dinner or whatever.
34:13
Speaker 2: In CpG or food service. We're able to go do that,
34:17
Speaker 2: and we're really trying to maximize our growth and ultimately
34:21
Speaker 2: it's a really nice business for us, very cool.
34:25
Speaker 1: The company is looking to raise capital. Can you talk
34:28
Speaker 1: to me a little bit about the company's reverse takeover plans?
34:32
Speaker 2: Absolutely ourto. So I mentioned, you know, some of our
34:36
Speaker 2: core investors are Kevin O'Leary and a few partners of
34:42
Speaker 2: his that he has done a number of deals with
34:44
Speaker 2: over the years with tremendous success. And so our real
34:49
Speaker 2: core investment team is Kevin and then gentlemen by the
34:52
Speaker 2: name of Leonard Latschman and Jason Smart, Paul Planging, and
34:55
Speaker 2: then I mentioned Matt Higgins and RS Ventures who have
34:58
Speaker 2: been great partners to us. So Kevin and his team,
35:01
Speaker 2: they're all Canadian and they've had incredible success listing businesses
35:06
Speaker 2: in Canada. And so the process for listing a business
35:10
Speaker 2: in Canada, there's something called RTO or reverse takeover, And
35:13
Speaker 2: all of this is publicly available information. You could actually
35:16
Speaker 2: google Brooken Deplin shop RTO. You'll see some articles about it.
35:19
Speaker 2: There's a shell company up in Canada. It already exists.
35:22
Speaker 2: We are getting through our audit process right now. We've
35:26
Speaker 2: completed twenty twenty three, twenty twenty four. What we're doing
35:29
Speaker 2: now is wrapping our stubs September thirtieth, Financials will file
35:34
Speaker 2: those into a perspectus. We'll provide that perspectives to the
35:37
Speaker 2: Exchange in Canada and we're aiming to be listed at
35:41
Speaker 2: this point by mid February, and so you know, it
35:46
Speaker 2: is you know, for an early stage business like us listing.
35:50
Speaker 2: You know, sometimes folks have some questions around that. I
35:54
Speaker 2: would say it's a much more well worn path in Canada,
35:58
Speaker 2: and I'm very fortunate that have some incredible partners in
36:01
Speaker 2: these guys who are experts in this. They've done it
36:04
Speaker 2: with incredible success a number of times. They know the playbook,
36:08
Speaker 2: and we're excited to get the business listed ultimately. As
36:13
Speaker 2: I think about it, you know, while we do have
36:15
Speaker 2: these interesting financies for investors, of course, we want folks
36:20
Speaker 2: to be along for the full ride, and we have
36:24
Speaker 2: incredibly ambitious plans for what we're doing here where we
36:27
Speaker 2: believe we will take this. At the same time, the
36:30
Speaker 2: listing obviously provides access to liquidity for folks, and that's
36:34
Speaker 2: obviously an attractive mechanism. So you know, you can get
36:38
Speaker 2: on board here and you know what will be trading
36:42
Speaker 2: some time by mide Q one or you know, you
36:45
Speaker 2: can get a part of it. And as I think
36:47
Speaker 2: about and what gets really excited building an incredible business
36:50
Speaker 2: here and land the groundwork to ultimately build a business
36:54
Speaker 2: that could one day uplist to something like Nasdak. And
36:58
Speaker 2: the partners that I have or they have done this
37:01
Speaker 2: in the past. They've had a lot of success with
37:03
Speaker 2: that and they've taken you know, businesses from very low
37:07
Speaker 2: pre money valuations in the private markets, got them listed,
37:11
Speaker 2: ultimately got them uplisted to Nasdak and you know, trading
37:15
Speaker 2: at some really serious market gaps. And so you know
37:17
Speaker 2: that's the intent here. We've got an incredible team and
37:22
Speaker 2: group of folks who've got great success having done that,
37:26
Speaker 2: and we're excited to continue in that process. Now.
37:28
Speaker 1: Very exciting because you're you know, an emerging growth company.
37:32
Speaker 1: Are there are there less restrictive reporting requirements like something
37:37
Speaker 1: similar to the Jobs Act for IPOs in the US.
37:40
Speaker 2: Yeah, I think that's definitely a feature of listing in Canada.
37:44
Speaker 2: Of course, there are requirements and regulations, and you know,
37:48
Speaker 2: we as a company bunned up that said, you know,
37:52
Speaker 2: I think the listing and reporting requirements they are lesser
37:56
Speaker 2: than something like Nasdak today, you know, but you know
37:59
Speaker 2: stringent and you know we're working with some great folks
38:04
Speaker 2: up in Canada to ensure that we're well positions. You know,
38:07
Speaker 2: we meet all the requirements and get listed here. But
38:10
Speaker 2: I think you know that is why it's a bit
38:12
Speaker 2: of a more well known path for business in Canada
38:18
Speaker 2: is because of that.
38:19
Speaker 1: All right, good stuff man, Well it's like I said,
38:22
Speaker 1: exciting times. Good luck and thanks for joining the pod.
38:26
Speaker 2: Mike, Thanks so much for having me, and I really
38:28
Speaker 2: appreciate all that you do for the industry and following
38:31
Speaker 2: your work, and glad to get that great experience of
38:34
Speaker 2: bookers to publish shop and I'll look forward to sentence
38:36
Speaker 2: of touch. Thanks so much for sure.
38:38
Speaker 1: Thanks man, and now that you're going to be public,
38:41
Speaker 1: it'll be easier for me to follow what's going on
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Speaker 1: at Brooklyn Dumpling Shop. I also want to thank the
38:46
Speaker 1: audience for tuning in. If you'd like to find your
38:49
Speaker 1: nearest Brooklyn dumpling shop, you guessed it, You go to
38:51
Speaker 1: Brooklyn Dumplingshop dot com. If you liked our discussion, please
38:55
Speaker 1: share it with your friends and colleagues. Check back soon
38:58
Speaker 1: for an interview with Juwan Joey George, co founder at
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Speaker 1: eight five eight Partners,