Latest / The Inspired Stories Podcast / Dining on Data: How Alistair Levine is Changing the Restaurant Industry's Back Office | Restaurants & Franchises Series

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Dining on Data: How Alistair Levine is Changing the Restaurant Industry's Back Office | Restaurants & Franchises Series · The Inspired Stories Podcast

• 0:04
  Welcome to another edition of Inspired Stories, where leaders
• 0:07
  share their experiences so we can learn from their successes,
• 0:10
  how they've overcome adversity, and explore current challenges
• 0:13
  they're facing. Welcome to another edition of
• 0:17
  the Inspired Stories podcast, where leaders share their
• 0:20
  experiences so we can learn from their successes and be inspired
• 0:24
  by how they've overcome adversity.
• 0:26
  My name is Anthony Codaspodi and today's guest is Alistair
• 0:29
  Levine. Alistair is a restaurant owner
• 0:31
  of the Vine Hospitality Group, A collection of multiple
• 0:35
  restaurants, and we'll hear a little bit about that, but his
• 0:38
  main focus is as a partner with Kitchen Sink, an organization
• 0:42
  that provides outsourced corporate office services
• 0:45
  specifically for other restaurants.
• 0:47
  That includes things like bookkeeping, payroll, HR,
• 0:50
  financial and operational advisory, staffing, recruiting
• 0:53
  and marketing. They are essentially the full
• 0:56
  back office for many leading independent restaurant groups
• 0:59
  across the country. Now before we get into all that
• 1:02
  good stuff, today's episode is brought to you by my company,
• 1:05
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  To find out if your company qualifies, contact us today at
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  Add Back benefitsagency.com. Now back to our guest today, the
• 1:31
  CEO of Kitchen Sink. Alistair, I appreciate you
• 1:34
  making the time to Share your story today.
• 1:37
  Yeah, of course, happy to jump on and excited to to go through
• 1:41
  it with you. All right, just one more
• 1:43
  clarification. I am not the CEO of Kitchen
• 1:45
  Sink, but I am a partner there. Alex is our CEO.
• 1:50
  So don't want it, don't want him getting upset with me, but yeah,
• 1:54
  I'm one of the main shareholders.
• 1:58
  In this thanks for helping me clean that up.
• 1:59
  And what is Alex's last name so we can give proper credit to
• 2:02
  him? Rocky Opie I I will not try to
• 2:07
  spell that off the top of my head.
• 2:09
  Fair enough, Alex. Sorry to step on your toes.
• 2:12
  I'm sure you're doing a wonderful job with Alex through
• 2:14
  there. Maybe at some point we can have
• 2:17
  you on the show as well. So Alistair, let's talk 1st
• 2:22
  about the restaurant group. So Vine restaurant, Vine
• 2:26
  Hospitality group, there's a collection of multiple
• 2:29
  restaurants. Let's talk about each one of
• 2:31
  them. What what's the name?
• 2:32
  Where in the San Francisco area are they located and what's the
• 2:36
  concept? Yeah.
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  So we've got 10 different restaurants across five
• 2:44
  different concepts. And so we've got 4 left banks
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  and then one petite Left Bank, which is a exactly as it sounds,
• 2:55
  a smaller version of a Left Bank.
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  We also then have two LB stakes, meso and camper.
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  And so they are all around San Francisco Bay Area, but none of
• 3:07
  them actually in the city of San Francisco.
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  So we've got 2 up in Marin County, one in one in Tiburon
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  and one in Larkspur. We've got two over in the East
• 3:16
  Bay, one in San Ramon and one in Oakland.
• 3:18
  And then we've got 2 on the Peninsula in Menlo Park.
• 3:23
  And then we've got another 4 down in the South Bay in San
• 3:27
  Jose, one downtown San Jose and three right across the street
• 3:32
  from the Winchester Mystery House in in in San Jose and kind
• 3:38
  of Valley Fair area, if you will.
• 3:41
  So yeah. So how did all that come to be?
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  I mean, that's, that's quite a few different restaurants
• 3:46
  against, you know, along different concept lines.
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  How? How did this all kind of evolve?
• 3:53
  Yeah. So you know, my dad started the
• 3:55
  business in 1994, we started the first restaurant.
• 4:01
  So we just celebrated this in July, our 30th year of business
• 4:05
  at the first restaurant, which is a milestone not that many
• 4:08
  restaurant operators get too. So we're pretty, pretty pleased
• 4:12
  around that front. Prior to that he was the CFO of
• 4:15
  Vilfernail and Gordon Biersch, which are two like large Gordon
• 4:18
  Biersch not really doesn't that doesn't don't think have that
• 4:21
  many locations left. But for a while they were very
• 4:24
  successful. They were on a pretty holy
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  stage, brew pub kind of craft beer, early stage piece.
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  And then he obviously wanted to do his own thing.
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  So he started the group and unfortunately he passed away
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  about seven years ago and I inherited the business.
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  And so at that point we had five restaurants.
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  So we've in the last seven years basically doubled the size of
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  the group in terms of restaurants and top line sales
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  and number of employees, which it's good and bad.
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  I, I generally, I have the opinion that anytime you double
• 4:58
  anything, everything breaks. And so that can be fun.
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  So we're dealing with some of that right now, which is, is
• 5:06
  always a good time. But yeah, effectively that's
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  kind of how we got into it. And, and so, you know, it's been
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  something I've grown up with, right?
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  Because it took three or four years to raise money for the
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  first restaurant. And so he started raising money
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  when I was about 5 years old for the first restaurant and opened
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  the first restaurant when I was 7.
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  And so, you know, it's been a really long run of it being just
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  sort of like this other member of the family almost in some
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  ways, not exactly, but sort of right.
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  So yeah, that's that's kind of how it came to be.
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  Are there other family members involved?
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  Yeah, I mean, my mom sits on the board of the restaurant group as
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  well. And my, my brother, he works for
• 5:59
  actually a supplier on the kitchen sink side.
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  That's another software vendor that we work with, but is also
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  kind of a board observer and has a background on the culinary
• 6:08
  side. So he he weighs in there where
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  where he feels confident on that side.
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  So it's still very much a, a family held business despite,
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  you know, sort of at the scale and scope rat with, you know,
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  600 plus employees and you know, doing in excess of $50 million
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  in revenue. It's a it's, it's kind of a
• 6:29
  major animal in some ways. That's a pretty good sized
• 6:32
  group. Which one of the concepts if if
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  you can say is your favorite and what's your your favorite menu
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  item? Yeah, so it, I mean, that's
• 6:42
  always it. It's funny.
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  That's like always the question everybody asks.
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  And you know, I think, I think like anything else, it's like
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  asking somebody like, what's your favorite child is?
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  And like, I think probably by by day, that might vary for most
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  parents. I don't have kids myself, but
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  you know, I think it's like, you know, one kid ran in and is
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  like, oh man, we're taking that kid to the ER and you're like,
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  maybe this kid isn't my favorite today.
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  And then, you know, the next day they have a they do something
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  really cute or adorable or really heart warming and you're
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  like, Oh no, this it's my favorite today.
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  So I think it's very much that way.
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  You know, I think we're really excited.
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  So we just opened Rolati last year, which is a Italian
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  American. We've been super excited both in
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  terms of like the operational performance of the restaurant,
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  but also looking at how guests are engaging and getting excited
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  about that experience. So you know, that's certainly
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  one that that I've super and enjoyed.
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  There's a, we do a mortadella pizza there that I really,
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  really like and, and the Hot honey 1 is pretty good there.
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  And then I really like in terms of like every day because as
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  much as I love Italian American food, like I can't really eat
• 7:50
  chicken parm everyday like or I mean, I could, but it just
• 7:54
  probably wouldn't be good for me and I'm not sure I'd feel great
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  after doing so. So I really like Mesa, which is
• 8:00
  our Mediterranean concept a little more like light fresh,
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  you know, fetous salad, some grilled prawns.
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  We make our own two different types of our own sort of pita in
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  house, one that's fried and one that's baked.
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  And the fried 1 sounds kind of intense and what not, but it's
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  actually like really like light and fluffy, not not greasy at
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  all. So I, I would probably say on a
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  day-to-day basis, Mesa would be my choice.
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  But you know, for a little more special occasion, anything or,
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  or that more indulgent meal Relati.
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  And you know, I think I grew up in one of the, the in Left Bank
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  in Larkspur, you know, going all the time.
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  And so there's, there's always that sort of nostalgic opinion
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  about that where it's like, you know, I remember going there at,
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  you know, 10 or 11 or 12 with a group of friends and sitting at
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  my own table. And you know, all of those,
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  those those sort of like fundamental building block
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  moments, let's say. I'm looking at your website here
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  and for those people who are listening want to check it out,
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  it's Vine hospitality.com. And each of the different
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  concepts is linked off to their their own website where you can
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  check out what the interior looks like.
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  And all the ones that I've checked out so far look really
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  cool. You can see the menus, you get
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  an idea of what the food is like.
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  I'm curious, Alistair, like how fun it is that you have multiple
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  concepts here and you kind of get to play around with
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  different menu items, different decors.
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  But I would imagine that also introduces its own challenges,
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  right? Like it would probably be easier
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  if all of these restaurants were the same concept, like roughly
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  the same footprint, the same interior design.
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  Talk to me about that. Yeah, I mean, it's, it's, it's
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  absolutely a trade off, right? And I think, you know, one, one
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  of the great quotes about the restaurant industry that that I
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  heard a couple years ago that I just absolutely love is
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  restaurants are simple and simple as hard.
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  And I think that's probably true not just for restaurants, it's
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  true across a lot of businesses, but restaurants in particular
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  are very much a nickel industry. So it's a lot of, hey, I'm going
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  to make this little incremental change here and that's going to
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  drop one more nickel and then one more nickel and one more
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  nickel. And so it's a, it's so much of
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  that incremental improvement, improvement every single day
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  that, that if you don't where that becomes hard when you have
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  multiple brands is what, what is my ethos of French food or
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  what's my ethos of Italian food? And when you need somebody like
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  living, owning and and breathing, what is this brand
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  about? How do we get the experience
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  better for guests every single day That that can be just come
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  distracting because, you know, not surprisingly, there's a
• 10:44
  little shiny bird syndrome that occurs where it's like, oh, hey,
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  this is the hot new cool, fun concept we've never done before.
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  And we get to go try a bunch of new places And you get to, you
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  know, eat at a bunch of things and have fun like
• 10:58
  conceptualizing a menu. And all of those things are
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  really fun. And new decor, new new
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  vernacular about, OK, well, what kind of what do we want this to
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  look like? Because it's, it can be
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  exhausting and challenging to just everyday be trying to be 1%
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  better, 1% better, 1% better. That's not for everybody.
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  And so that that piece can be challenging.
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  But you know, as a, as a restaurant group, you're always
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  kind of looking like, how am I, how am I either giving the same
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  quality food at a cheaper price for my guests so that there's
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  more value for them? Or how am I giving them
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  something that's innovative that they may may not have had or may
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  not have had in this way that I can command a price premium for
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  so that I ultimately can be a successful, profitable business?
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  So, you know, I think that's where that's where it's like
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  awesome to have multiple things because if you get bored, but if
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  you get burnt out on one piece, you can kind of jump to the
• 11:55
  other. But it's also that very much
• 11:57
  that double edged sword. So, yeah, I mean you, you look
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  at a lot and from a valuation perspective, you look at a lot
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  of restaurant groups, most of those that have sold for large
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  valuations are single concept scales because it's an easier
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  for an investor, an outside person to understand, OK, I'm
• 12:18
  going to buy this. Here's what the brand ethos is,
• 12:20
  here's how we go forward with it, etcetera, etcetera.
• 12:23
  And so there's some risk there and there's some challenges
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  there. And we're actually in the middle
• 12:28
  of looking at a reorg right now to more heavily align around the
• 12:34
  brands and create sort of those individual brand champions for,
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  you know, as we sort of think through that.
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  And that's I would say for the larger restaurant groups, let's
• 12:46
  call them 1010 to 15 unit, fully mid market, starting on their
• 12:50
  way to enterprise in terms of like the overall industry
• 12:53
  dynamics, They're all sort of thinking about centralized
• 12:56
  management. And how do you how do you
• 12:58
  empower the sort of individual brand champions to help you
• 13:03
  build that brand and become a partner in that brand and really
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  give them an ability to like live and love in that brand,
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  right. And so I think that's where
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  that's a little different, but but I think that's helps to
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  negate that sort of double edged piece where it's like, if all
• 13:19
  you do, if you're in charge of, say the French brasseries and
• 13:23
  all you do is think French brasseries 24/7 365, then you
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  know, it's you negate some of that concern where it's like,
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  oh, I'm switching lanes constantly and trying to figure
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  out, wait, was I talking about this thing?
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  Or was I like, you know, like it's easy to get things muddled
• 13:42
  at that point. So.
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  So is there a desire to grow any of these concepts outside of the
• 13:48
  Bay Area? Yeah, absolutely.
• 13:52
  I mean, we've, we've looked at a couple locations in in LA in the
• 13:55
  past. We haven't found one that we're
• 13:57
  like, oh man, we love this. California is a challenging
• 14:01
  regulatory market. So we've certainly thought about
• 14:04
  looking further afield from California.
• 14:08
  You know, often times what happens is you kind of go Bay
• 14:10
  Area either to Hawaii or you go up to Tahoe or Reno.
• 14:15
  And if you're in Socal, you're often times LA to to Vegas and
• 14:19
  then Scottsdale. Phoenix is sort of the lot
• 14:21
  logical just from a pure basic logistics of hey, where can you
• 14:26
  get to in about an hour or an hour and a half plane ride?
• 14:31
  Cuz as soon as you're sort of bicoastal, it's like if
• 14:33
  something goes horribly wrong, you are a minimum of 6 hour
• 14:37
  plane ride away and that plane isn't likely not leaving for a
• 14:40
  few hours. Like you're probably not there
• 14:42
  the same day, right? And so the IT requires a
• 14:46
  completely different thing in terms of like from a management
• 14:51
  structures, process systems. And I just, we're not there yet,
• 14:54
  but clearly like goal is to get there as we continue to to build
• 14:58
  and grow the restaurant. Well, kudos to you for
• 15:01
  understanding that the infrastructure isn't quite in
• 15:02
  place to support that yet, but that's certainly on on the road
• 15:05
  map. Any thoughts about franchising
• 15:08
  any of these concepts at some point?
• 15:11
  Not really, no. I mean, I think we, we, we're
• 15:15
  much, we're far more bullish. You know, we're in, we're in
• 15:19
  sort of the fine casual or whatever kind of segment you
• 15:22
  want to think about. So I wouldn't say we're like a
• 15:24
  full scale like fine, like full on fine dining in terms of like
• 15:28
  we're not getting a Michelin star.
• 15:30
  That's kind of not what we're we're looking to do.
• 15:34
  But you know, we're obviously also not, you know, Applebee's
• 15:37
  or Chili's at that segment. You typically don't see
• 15:40
  franchise concepts at the the scale that or the the quality
• 15:44
  level that you guys are. Not, not a lot.
• 15:46
  I mean you can kind of eat, it's like Ruth's Chris Capital
• 15:49
  Grille. It's a lot of stakey concepts at
• 15:52
  that point. There's not, you know,
• 15:55
  Cheesecake Factory, but they don't franchise.
• 15:57
  So most of the like large scale operators that are in the space
• 16:02
  that are in our segment often times are not franchising
• 16:07
  because we have a lot more on sort of the QSR, you know,
• 16:11
  Chipotle, Starbucks, whatever, what you know, whoever you want
• 16:14
  to kind of think of in that kind of, you know, Chick-fil-A
• 16:16
  McDonald's of course, would be like classic examples.
• 16:19
  So anywhere in that fast food to sort of like QSR is far more
• 16:24
  common just because the the sort of volume of those restaurants
• 16:27
  is a little bit lower the build out costs.
• 16:30
  It's more, you know, when we're building out an 8 to 10,000
• 16:35
  square foot restaurant, the build cost is pretty expensive.
• 16:37
  And so it's a capital intensive piece and you know, franchises
• 16:41
  work really well where it's kind of this lovely business in a box
• 16:45
  for often times first time business owners or other sort of
• 16:50
  a people who are, you know, wanting to get into a different
• 16:54
  segment or market that they aren't currently in etcetera.
• 16:58
  And they kind of, I wouldn't say it's like with training wheels,
• 17:01
  but like it's somewhere around that, right?
• 17:03
  It's like, hey, like we've got the designs for you.
• 17:05
  We've got like great. You get a lot.
• 17:08
  Of support. Yeah, it should be like there's
• 17:10
  a, there's a lot of, there's a, as I say, business in a box.
• 17:13
  There's a lot of, there's a lot of like, hey, like let's let's
• 17:16
  build this like an IKEA set. You still have to obviously
• 17:20
  operate it and execute on it. And there's still obviously a
• 17:23
  ton of variability there for you.
• 17:25
  But I find that concepts that are a little more capable being
• 17:29
  put in that box are far more successful.
• 17:31
  And so it's just not a path we've actually looked at very
• 17:33
  much. And I think, you know, for us,
• 17:36
  we're we're pretty excited about continuing to build the brands
• 17:41
  we have and you know, certainly look to scale those brands and
• 17:45
  you know, potentially create an exit down the road within some
• 17:47
  of the brands or part of, you know, like that.
• 17:51
  That's the nice thing about being brand centric is that hey,
• 17:54
  somebody loves Meso say and they want to buy 14 of the 14 that we
• 17:58
  get to at some point like great, let's do that transaction and we
• 18:02
  can, you know, choose to continue to sort of build and
• 18:05
  incubate other brands within the portfolio.
• 18:08
  So you grew up in the restaurant industry and I'm going to guess
• 18:11
  that from those experiences, that's where the inspiration for
• 18:14
  Kitchen Sink came from, what I'll call back Office in a box
• 18:18
  for restaurants. Yeah, yeah.
• 18:20
  I mean, I think really so where it started was in 96 when we
• 18:24
  opened the second restaurant. My dad was kind of wearing every
• 18:28
  hat, and that quickly became unsustainable with two, two
• 18:32
  places. With one, it was kind of
• 18:33
  sustainable. With two, it became
• 18:34
  unsustainable. So he started a company called
• 18:36
  Vine Solutions, and then we merged Vine Solutions in 2021
• 18:41
  with Kitchen Sink, and we'd gotten to a point where we were
• 18:44
  looking at sort of technology. What was next?
• 18:49
  How do we make this process significantly more efficient,
• 18:52
  both from a the experience of the operators and the owners of
• 18:56
  the businesses we were serving, as well as how do we make the
• 18:59
  fulfillment portion more efficient internally?
• 19:02
  We were doing a lot of manual process, a lot of systems that
• 19:05
  maybe didn't talk to each other. And, and, you know, I think this
• 19:08
  is, this is sort of true for the entire restaurant industry, not
• 19:11
  just our category. You know, coming into the
• 19:13
  pandemic, many things were done in the same way as they were
• 19:17
  done in the 80s or the 70s. And so it was a lot of legacy
• 19:21
  process and, and that's totally fine because again, like, you
• 19:24
  know, it's in many ways it's pretty manual business.
• 19:29
  But we saw a huge opportunity by putting the two companies
• 19:32
  together to really deliver more on the technology front and, and
• 19:37
  deliver better insights, more actionable insights and, and
• 19:40
  just a better experience for the operators where we saw there
• 19:44
  were huge gaps in the marketplace, both from my own
• 19:46
  experience operating my own restaurants and then, you know,
• 19:50
  what we were seeing across our larger customer base at the
• 19:52
  time. And so that's very much the sort
• 19:55
  of how we ended up with kitchen sink and kind of where we are
• 19:59
  today is, you know, very much on that focus of like, how do we
• 20:02
  make this process easier? Because your average restaurant
• 20:05
  owner is very much like an artist of, is it a good way to
• 20:09
  think about them? And as I as I highlight to most
• 20:11
  people like, there's not a lot of like wildly 6 businessly
• 20:15
  successful artists like you could probably name.
• 20:19
  It's like Wayland Dale Chihuly, like there's probably.
• 20:26
  Part of the brain that needs to light up to be created in those
• 20:29
  ways is typically different than the part of the brain that lines
• 20:32
  up to be efficient and set of processes and, you know, hire
• 20:36
  and manage people. Yeah, they're two different
• 20:38
  skill. Sets, yeah, 100%.
• 20:41
  And the same is true for if you look at architects or interior
• 20:44
  designers or any of the creative professions, most of the
• 20:47
  creative people and, and bless, like bless them that it's great.
• 20:51
  We need people who are wildly creative, who are coming up with
• 20:53
  awesome ideas in my industry like creating great new food
• 20:57
  items or awesome menu items that are innovative and interesting.
• 21:02
  Often times those people, though, are not great at
• 21:05
  operating businesses and not great at especially on the like
• 21:09
  the numbers side of the business.
• 21:11
  But ultimately need that information in order to stay in
• 21:15
  business and be successful. And so, you know, I think that's
• 21:18
  very much sort of the genesis of where like we live is like, you
• 21:21
  know, our tag line is we turn great restaurants into great
• 21:24
  businesses. And, you know, it's all about
• 21:26
  how do we take somebody who has often times like exceptional
• 21:31
  food, great guest experience, great guest satisfaction, but
• 21:35
  is, you know, kind of lighting money on fire because they're
• 21:39
  just not paying attention to it. So how do we, how do we create a
• 21:42
  little awareness, not diminish those factors, but but really
• 21:47
  help them help their business thrive?
• 21:51
  And, and I, you know, I think that's, that's pretty critical.
• 21:53
  So. So I'm looking at the kitchen,
• 21:56
  kitchen sink website and for folks who are listening, it's
• 21:59
  kitchen and then sink is spelled SYN candits.usnot.com but dot
• 22:05
  US. So kitchen sink dot US.
• 22:08
  And yeah, above the fold here. It's expert bookkeeping, payroll
• 22:12
  and HR for restaurant groups. But there's a lot more here, you
• 22:17
  know, I mean, HR has got multiple levels to it.
• 22:20
  So there's recruiting. You also offer marketing
• 22:23
  services. So this has grown into quite a a
• 22:26
  breadth of of options available for these restaurant clients.
• 22:32
  Yeah, we, we also do insurance. We're looking, we're looking at
• 22:36
  a couple other verticals as well right now.
• 22:38
  And, and a lot of it's just naturally sort of evolved right
• 22:41
  as, as you know, we started doing bookkeeping.
• 22:45
  And then when you're doing bookkeeping, often times the
• 22:47
  person they have potentially internally doing the bookkeeping
• 22:49
  is also the person doing their payroll.
• 22:50
  And they're like, well, if you're going to replace that
• 22:53
  person, then how am I going to do payroll?
• 22:57
  So what are you going to do for me on the payroll side?
• 22:59
  It's like, do I got to go find another company?
• 23:01
  And it's like, OK, we'll do payroll for you.
• 23:03
  And then when you're once you're doing payroll, especially a huge
• 23:06
  amount of our clients are in California and New York, you're
• 23:09
  sort of basically doing HR by the time you're doing payroll in
• 23:11
  those two states because of the amount of like regulatory
• 23:16
  minefields that you kind of have to wade through.
• 23:18
  So now you're like logically doing HR.
• 23:20
  And then, you know, when you're giving somebody all this
• 23:22
  information, it's like, what do you do with it?
• 23:24
  So operational and financial consulting and advisory come out
• 23:27
  of that. The marketing actually came out
• 23:30
  of that as well, where what we saw is we had some clients who
• 23:33
  are struggling to drive sales and they're like, well, cool,
• 23:36
  you guys are experts. You see all these restaurants,
• 23:38
  what do I do? And we're like, well, we don't
• 23:40
  actually do marketing. And that's kind of what you
• 23:43
  need. You need some more demand
• 23:44
  generation, right? Like they're like, well, but my
• 23:46
  cost of goods and my labor numbers are awful.
• 23:48
  And you're like, yeah, that's because you're, you're not
• 23:50
  selling enough product every day and you're at your minimum
• 23:53
  levels. And like, that's, that's the
• 23:55
  solve, right? And so we try to always at the
• 23:58
  core level be like, here's the information, do with it what you
• 24:01
  will. But if you want us to sort of, I
• 24:06
  sort of refer to it as bumpering for you, like you want us to be
• 24:09
  the guardrails on the road, we can also do that where you're
• 24:13
  like, hey, you're going to go drive down the road.
• 24:16
  We don't want you driving off the road, but we do want to
• 24:19
  empower you and your team to like, learn and get better.
• 24:22
  And we're happy to help explain processes and systems and do
• 24:27
  education and mentoring of the management team.
• 24:29
  How do you read AP and L? How do you read operations
• 24:32
  reports such that they're actually usable and actionable?
• 24:35
  Because again, all the stuff we do is awesome, but if you don't
• 24:39
  use any of it, it's all kind of a waste of time.
• 24:42
  And you know, so for us, it's also garbage in, garbage out.
• 24:46
  So that's where, if we, you know, what we see a lot of times
• 24:49
  is clients come to us, their existing financials are rough
• 24:53
  because they, they're trying to like muddle through them.
• 24:55
  They're not an expert on them. And then they're making, you
• 24:58
  know, good decisions off bad data and they're kind of
• 25:01
  struggling on that front. So that that's kind of very much
• 25:04
  like the way we, we, we look at, at solving the problem.
• 25:07
  And so often times, you know, insurance became a kind of a no
• 25:10
  brainer where we had all these clients who are like, we're
• 25:13
  seeing how much they're paying on insurance.
• 25:14
  We're seeing like, oh man, your renewal notice pops up half the
• 25:18
  time you don't have time to shop it or think about it.
• 25:21
  And then all of a sudden you're like, cool, well, I'll just sign
• 25:23
  up again because you got to have insurance.
• 25:25
  And you know, we've, we've, we've found, you know, 30 to
• 25:30
  100K savings annualized for clients like fairly routinely.
• 25:34
  And they're like, this is awesome.
• 25:35
  Like because who wants to pay more for insurance?
• 25:38
  Nobody really. And you know, it's just simply
• 25:42
  like, hey, like we've got the time to shop it.
• 25:44
  We've got all the information you need.
• 25:45
  We, you know, because we're doing your payroll, we can look
• 25:47
  at workers comp stuff, we can look at the workers comp
• 25:51
  reporting, right? So it just becomes like these
• 25:53
  logical sort of bolt ONS. And you know, for us, it's like
• 25:56
  if you'd like them, they're here, they're available, we're
• 25:59
  happy to support. And if you don't, no problem.
• 26:02
  They're, they're not, it's, it's not a, it's not an all or
• 26:04
  nothing approach with us. So Alistair, when you guys think
• 26:07
  about adding one of these new bolt on services, whether it's
• 26:11
  marketing or it's insurance, are you going out and acquiring, you
• 26:15
  know, a small group to bring that skill set in house?
• 26:18
  Are you referring those those deals out to other players?
• 26:23
  Are you just kind of hiring somebody who's sort of an expert
• 26:25
  in that area to kind of head it up?
• 26:29
  All of the above. We we have done every single
• 26:31
  different one of those. It really, it depends on the
• 26:33
  category, right? So, you know, we stood up a
• 26:36
  sister company for on the marketing side, it's called
• 26:39
  Super Hungry because we kind of, you know, we had the joke
• 26:42
  internally. Well, nobody wants to buy
• 26:44
  marketing from their accounting firm because accounting firms
• 26:46
  aren't exactly known for being like the most sexy dynamic
• 26:49
  things. I was like, OK, well, we need a
• 26:50
  separate flag post here for this.
• 26:53
  And we work with clients that aren't kitchen sink clients that
• 26:57
  super hungry as well. Because, you know, there are
• 26:59
  other people who want marketing that maybe don't want, you know,
• 27:02
  already have a good solution and they're happy with the rest of
• 27:05
  their back office, right? It's again, not, not all or
• 27:07
  nothing. And then on the insurance side,
• 27:09
  sort of similar thing. So you know what we have, you
• 27:13
  know, we, we, we've done some, some mergers and acquisitions as
• 27:17
  well. We, we've bought a couple firms
• 27:19
  and you know, obviously the current iteration of kitchen
• 27:23
  sink was a merger between the firm I owned and the firm that
• 27:25
  Alex owned. And it's kind of what we, how we
• 27:27
  ended up to where we, we did. And, you know, so we, we're
• 27:31
  always looking at opportunities, right?
• 27:32
  I, I would say like for us, it's everything is on the table in
• 27:36
  terms of like, hey, we need to go solve this problem.
• 27:39
  What are the options? We could go hire somebody, we
• 27:41
  could go buy a company that does it.
• 27:44
  We can partner with a company that does it.
• 27:46
  Like do we want to own this? Do we feel like this is
• 27:48
  accredited to the business or is this something that like we
• 27:51
  actually never want to get into doing, but we still need to find
• 27:54
  a solution for. And so that's kind of where we
• 27:57
  think through on a like corporate business development
• 28:00
  standpoint, like what how do we think about solving this
• 28:04
  problem? How much do we want to own it?
• 28:06
  What are those resources take etcetera.
• 28:09
  And so for us, we're always looking at like, you know,
• 28:12
  purchasing is a big category we're talking about internally,
• 28:15
  we're talking about legal internally, we're looking at tax
• 28:21
  because all of those things are like kind of directly, you know,
• 28:24
  it is another one that I think there's a huge opportunity for
• 28:28
  IT and kind of tech system management.
• 28:32
  So, you know, we're, we're looking at kind of all of those
• 28:35
  various options and being like, do you buy it?
• 28:38
  Do you partner it or do you build it right?
• 28:40
  And that, and that's really kind of the way we look at it.
• 28:42
  And, and you know, if you're building it, that could be
• 28:45
  hiring an expert and having them come in and build a team and
• 28:48
  department around it, which is basically what we did on the
• 28:50
  recruiting side. So we, you know, we launched
• 28:52
  recruiting in 2021 because we had so many clients that were
• 28:56
  just like, I can't find people help.
• 28:59
  I, my man, I, my manager, I have one manager, they're working 80
• 29:03
  hours a week. They don't have time to screen
• 29:05
  resumes. Can you guys help with that?
• 29:07
  Like, and that's kind of where it came out of.
• 29:09
  And so we, you know, we hired a recruiting person and director
• 29:12
  of recruiting and they built out a team and, you know, we went
• 29:15
  through multiple iterations of pricing and OK, what does this
• 29:17
  look like? And how did, how does the
• 29:19
  offering evolve and, and whatnot?
• 29:20
  Because that one felt like, hey, like this seems this seems like
• 29:25
  the best path forward for this particular thing versus, you
• 29:28
  know, we, we acquired a company called Hone earlier this year
• 29:32
  that that was on the tech side. And we're like, OK, this is a
• 29:34
  way it's way, but they've been, they've spent three years
• 29:37
  working on this problem. Like that has real value for us
• 29:40
  to as a shortcut. So we kind of just look at all
• 29:43
  those things in a process based approach and you know, what's
• 29:49
  what's the price, what, what, what are we hoping to get out of
• 29:51
  it? How do you justify it right.
• 29:53
  So. So Kitchen Sink at its core is
• 29:56
  targeted specifically to restaurant groups, right?
• 30:00
  But since you guys have acquired some other businesses that I'm
• 30:04
  assuming had clients, you know, before you acquired them, some
• 30:07
  of those standalone services are outside of the restaurant niche,
• 30:12
  Is that right? No, it's, it's all within
• 30:15
  restaurants. So we're, we're still all within
• 30:17
  restaurants because it's a massive market.
• 30:20
  There's more than a million restaurants in the United
• 30:22
  States. You know, you know, 60% of those
• 30:26
  are, are chain franchise, franchise or 40% of them are,
• 30:31
  are, are independent. We're still talking about a
• 30:33
  total addressable market in the US of 400,000 locations.
• 30:37
  We're at 450 locations. We have a little bit of room to
• 30:41
  run, let's say of, you know, if, if we, if we would be ecstatic
• 30:46
  to get to between 1 and 5% of the total addressable market,
• 30:51
  like we would be work like a multi billion dollar company at
• 30:55
  that point. So like, you know, I think
• 30:58
  that's that's where when you like look at the math, you're
• 31:00
  like, Oh yeah, like we can, we can kind of stay put.
• 31:02
  Now we do have some restaurant adjacent businesses.
• 31:05
  We have clients that have wholesale bakeries.
• 31:07
  We have catering firms, a couple that have like small Inns.
• 31:14
  So, you know, we're we absolutely do those types of
• 31:17
  things where I would say it's like more under the broader tent
• 31:22
  of hospitality. But often times it's like it
• 31:26
  there are adjacent businesses where it's like, hey, wholesale
• 31:30
  bakery. Yeah, makes total sense.
• 31:32
  We totally understand that. You know, we have a bunch of our
• 31:35
  clients are buying from the same wholesale bakery, right?
• 31:38
  Like it just, it just makes life easy on that.
• 31:40
  Well, I think, you know, from a client perspective, somebody,
• 31:43
  you know, coming to you and, you know, shopping for these kinds
• 31:45
  of services, however many of the, you know, almost dozen
• 31:49
  services that you guys offer is, you know, if they're in that
• 31:53
  restaurant space, what a treasure trove of experience
• 31:57
  they're getting with you guys, right?
• 31:59
  I mean, you grew up in the restaurant industry.
• 32:01
  All of your clients are in the restaurant or, you know, closely
• 32:05
  related the field. You guys know what the numbers
• 32:08
  are supposed to look like, right?
• 32:09
  You know what the data should be.
• 32:11
  You know, the levers to pull, you know, the common mistakes.
• 32:15
  It's not like, you know, some accounting firm that's like,
• 32:18
  yeah, I got a restaurant client, but I've also got dentists and,
• 32:22
  you know, landscapers. And, you know, like, there's a
• 32:26
  lot of value in having so much institutional knowledge that's
• 32:30
  baked within the restaurant industry.
• 32:34
  Yeah, absolutely. And I and I think, you know,
• 32:36
  there's some, there's some uniqueness to the restaurant
• 32:38
  industry. I think the industry itself
• 32:40
  often times is like, oh man, we're so unique.
• 32:42
  And I think everybody convinces, every industry convinces
• 32:45
  themselves that they're like so wildly unique.
• 32:47
  And you know, I think most things are 8020 where it's like
• 32:50
  80% is kind of just business and 20% is like, what is that unique
• 32:54
  to your sort of industry? And I'm sure there's a little
• 32:56
  bit of a sliding scale on that. But yeah, no, I mean, like
• 32:59
  that's really why we're we're so deeply focused on this.
• 33:02
  It's they, it's, it's not an industry that has had terribly
• 33:05
  great financial services provided to it historically
• 33:10
  because you know, so many of the operators lack acumen in the
• 33:15
  category that it makes it a harder to serve category.
• 33:19
  But as we've already discussed, it's a massive market.
• 33:22
  There is a massive amount of of demand and desire and, and just
• 33:27
  core need within the marketplace.
• 33:29
  Like, you know, even with clients that I talk to who don't
• 33:32
  end up going with us, most of them are still like, Nope, I
• 33:36
  don't have this category figured out.
• 33:38
  Like maybe, maybe they're going to do something other than me.
• 33:40
  That's totally fine. But there's still very few very,
• 33:43
  very, very, very off very like rarely do I talk to somebody
• 33:48
  who's like, oh, no, I've nailed this, totally got it figured out
• 33:51
  right. And, and it's just, it's just
• 33:53
  not super common. And so, you know, I think as a
• 33:56
  result of that, it, it, it's, it's nice when you, it's like,
• 34:00
  hey, like whether you use me or not, like, and certainly, of
• 34:03
  course, I hope, you know, as many people use me as possible.
• 34:06
  But whether you use me or some other service or you do it in
• 34:09
  house or however you solve the problem, the fact that so many
• 34:13
  people aren't solving the problem successfully, just, you
• 34:16
  know, continues to, to, to fire, fire us up and motivate us to,
• 34:20
  to know that there's just a massive need in the space.
• 34:22
  And because it's been somewhat neglected over the years, I
• 34:26
  think that that makes it more, there's more challenges there,
• 34:32
  But I think that's also where the opportunity is, right.
• 34:35
  I will say it's not the, it's not easy.
• 34:37
  It's, it's certainly super hard. There's a huge amount of
• 34:39
  variability. But you know, that's, that's
• 34:43
  also why there there's not 50 competitors in the space doing
• 34:47
  exactly what we do and the way we do it.
• 34:49
  So you know like anything else what does growth?
• 34:52
  Look like you're, I think you said you're serving 450
• 34:55
  locations right now. Yeah, we're growing at about 30%
• 34:59
  annualized rate. But but so that so that's on the
• 35:03
  organic side. And then we did you know we've
• 35:05
  done it. We did an acquisition this year,
• 35:06
  we did an acquisition two years ago and an acquisition in 21.
• 35:12
  So those obviously then we sort of exclude those in the 30%
• 35:16
  they, which obviously means we're doing more growth than
• 35:18
  that. But we kind of look at that as
• 35:22
  in in a separate bucket because it's like, hey, we're going to
• 35:26
  just buy this firm, we're going to bring them in.
• 35:28
  And and you know, that strategy sort of continues to evolve for
• 35:32
  us in the way we like think about those transactions and how
• 35:35
  to structure them and what that kind of piece looks like.
• 35:38
  Because, you know, I think what we found is a lot of people have
• 35:41
  really personal relationships with their bookkeeper because
• 35:45
  their bookkeeper kind of like, I know what's in how much money is
• 35:49
  in your bank account. I know if you're paying your
• 35:51
  employees appropriately like it's a, it's a pretty revealing
• 35:55
  you. Feel very exposed.
• 35:59
  Right. So there's a, there's a, there's
• 36:02
  a fair amount of sort of builds up trust there that that isn't
• 36:07
  as easy to transfer in some of the acquisitions as, as I think
• 36:10
  we would have thought originally and and can lead to, to some
• 36:15
  fallout. So you know, I think for us like
• 36:17
  how you, how you structure and, and do those deals is certainly
• 36:21
  evolving and continue to evolve. Though we continue to want to do
• 36:24
  more of those deals because we still think it's a great way to
• 36:30
  to pick up, you know, good chunks of business all, all at
• 36:33
  one go because because the go to market is an expensive go to
• 36:36
  market within our category. Go to market for the restaurant
• 36:40
  or go to market for you with your new clients.
• 36:44
  For us to for us to land clients, it's it's because it's
• 36:47
  a lot of you know, one location, 2 location, 3 location and see
• 36:51
  your a lot of touch points decent.
• 36:54
  It's a long sales cycle, Yeah. You've got a lot of
• 36:56
  conversations you have to have to make them comfortable.
• 36:58
  Yeah, yeah, exactly. And then you're, you know,
• 37:01
  implementation takes a month and a half, right, And so to two
• 37:05
  months. And because it's just a lot of
• 37:07
  data going back and forth and we want to make sure we get it
• 37:09
  right. And so there's just a lot there.
• 37:11
  And so the you know, if you can pick up a few 100 clients in one
• 37:15
  whack, often times it can be super helpful.
• 37:19
  And so how are you and these new prospects finding each other?
• 37:23
  You guys doing some kind of promotions advertising and
• 37:25
  growing at 30% per year when you exclude the acquisitions is
• 37:29
  impressive. Yeah.
• 37:31
  So we, we, we stood up a sales team in January of this year.
• 37:35
  That was the first time other before that I was, I was
• 37:37
  actually managing the sales process and basically everybody
• 37:41
  prior to that I pretty much personally sold onto the
• 37:45
  platform a lot of word of mouth. It's a very tight knit industry.
• 37:50
  So everybody talks to each other and like everybody kind of knows
• 37:55
  each other. And so, you know, a lot of word
• 37:57
  of mouth, a lot of referrals historically.
• 38:01
  And you know, we were sort of working to to scale that, that
• 38:05
  go to market motion, which is hence the sales team.
• 38:07
  So we've got six people on that team now and they kind of really
• 38:12
  got going in January. And I'd say over the last few
• 38:16
  months they've really started to kind of hit their stride.
• 38:20
  We're doing some marketing, some paid advertising, you know,
• 38:23
  Facebook, Instagram type type type posting and, you know,
• 38:30
  really starting to build out sort of content that's, that's
• 38:35
  educational content. Because we, we see that there's
• 38:38
  just, you know, we have so much innate knowledge in house in
• 38:43
  terms of we've got a director of HR and we've got a person who
• 38:46
  just does benefits all day. And we've got a payroll manager
• 38:50
  and, you know, we've got all these people who are really good
• 38:53
  at their jobs and know what a lot of information that the
• 38:57
  average operator doesn't know. And so, you know, we see a big
• 39:00
  opportunity to continue to kind of build our thought leadership
• 39:03
  in the space and to use that as kind of a marketing funnel, if
• 39:10
  you will, for hey, like, oh, cool, like what are 10 tips I
• 39:14
  should focus on? And everybody loves the
• 39:16
  listicles, but not, not my personal favorite, but they get
• 39:20
  a lot of clicks and that's kind of drives a bunch of traffic.
• 39:23
  But you know, hey, what are 5 things you should know that this
• 39:25
  quarter for, you know, labor law compliance in California or
• 39:29
  whatever those types of things. We're, we're just starting to
• 39:32
  kind of ramp up now. And so who's your ideal client,
• 39:35
  whether it's revenue, locations, employee size, how do you know
• 39:39
  somebody's kind of a good clip for you?
• 39:42
  Yeah. I mean, So what we really like
• 39:44
  to sort of three to 15 unit operators.
• 39:47
  We work with people bigger than that and smaller than that, but
• 39:49
  that's kind of really our three to 15 unit independent operator.
• 39:53
  Most of the people in that sort of space are, it's no longer
• 39:58
  sort of a hobby business, right. If you're a one unit operator,
• 40:01
  it could be well, whatever this is like it's a fun, cool toy to
• 40:04
  have and whatever. Or maybe it's a business, but
• 40:08
  it's really just like. It's you and your wife who work
• 40:11
  there or whatever the whatever the answer may be, right?
• 40:14
  Like often times the one unit operators especially like if
• 40:18
  they're small, lower turn out like lower volume sales volume,
• 40:23
  they're just kind of like, hey, we're just going to do this.
• 40:25
  And it's, it's either lifestyle business or whatever it looks
• 40:29
  like, right? When somebody by the time
• 40:31
  somebody's getting the three units, they've really decided
• 40:33
  that this is a professional business that they are going to
• 40:36
  build and grow and scale and operate much more can do a
• 40:38
  business. They may not be doing so today,
• 40:41
  but they kind of are going to get their hand forced.
• 40:43
  Just in terms of things like, you know, one of the key
• 40:47
  examples I use is like people don't sue other people for the
• 40:50
  most part on the labor law side. They tend to sue like businesses
• 40:54
  because you know, if I'm working with you 12 hours a day in a hot
• 40:58
  kitchen and I'm the owner of the business, you're going to have
• 41:00
  a, you're going to be like, wow, this dude's in the trenches with
• 41:02
  me 12 hours a day. Like you got to do some really
• 41:05
  terrible things to like end up getting sued.
• 41:07
  At that point, there's like, there's just a certain level of
• 41:10
  like respect and like, no, this guy's right here, right by my
• 41:13
  side. Like we're both just you're
• 41:15
  doing what we can, right, But as soon as you remove yourself from
• 41:19
  that situation and you now have like, say a manager in in in
• 41:23
  between, it's like, well, screw this guy.
• 41:25
  Like what's the owner doing? He's probably just sitting at
• 41:27
  home doing nothing. Of course not true, But like
• 41:30
  that's, you know, it's very quickly.
• 41:32
  It's like that's the perception and then it's like, cool, well,
• 41:35
  I'm I'm not getting paid overtime in the way I should or
• 41:38
  whatever the thing may be you quickly.
• 41:41
  So that's usually that, that sort of three to five unit range
• 41:44
  is where you start seeing a little more like labor law
• 41:46
  litigation and compliance, especially California and New
• 41:49
  York. So you have that and you now
• 41:52
  often times are going to have like a director of operations
• 41:56
  who's between you and maybe even general managers at the store
• 42:00
  level. You're starting to build some
• 42:01
  layers of management. You need above store level
• 42:03
  reporting. You might change the structure
• 42:06
  of your business. Like all of a sudden now you're
• 42:08
  going to start hitting a lot of these like scaling challenges of
• 42:11
  like, hey, how do I do labor law compliance at scale?
• 42:14
  How do I manage employees working across multiple
• 42:17
  locations with common ownership where there's huge labor law
• 42:20
  compliance things around that in California?
• 42:22
  Like there's all these things, hey, I'm more than 50 employees.
• 42:26
  I now have Affordable Care Act reporting requirements.
• 42:29
  Oh, how do I, how do I do that right?
• 42:30
  You say you just start hitting all of these like kind of
• 42:33
  milestones. And in many cases, we're able to
• 42:36
  help clients proactively avoid slamming into the proverbial
• 42:40
  brick wall of those milestones because it's like, hey, to your
• 42:43
  point earlier, it's like we've been here, we've done this, we
• 42:47
  get to see it. You know, we see more
• 42:49
  restaurants than any of these operators get to see themselves.
• 42:53
  And as such, it's like, hey, we think you've got this problem
• 42:56
  coming. Let's help you proactively, like
• 42:59
  not slam into the wall, like let's turn around the wall or
• 43:01
  let's put our brakes on or whatever, whatever, you know,
• 43:04
  example you want to use on that front.
• 43:06
  So for us, like, that's really why we, we, we like working with
• 43:10
  that sort of scale and, and scope because they want to
• 43:14
  learn, they want to get better. They've decided this is a real
• 43:16
  business. They want to make it as
• 43:18
  profitable and successful as possible.
• 43:21
  And often times they need a lot of help in terms of formalizing
• 43:24
  and professionalizing the business in terms of how do you
• 43:27
  do financial reporting, What KPIs do you look at?
• 43:30
  Like there's, there's so much stuff there that it can be just
• 43:33
  wildly overwhelming. And that's not to beat a dead
• 43:37
  horse, but that that really seems like it's the value of
• 43:39
  working with a group like yours. You've worked with hundreds of
• 43:41
  locations at different sizes and help them grow to additional
• 43:47
  sizes. And so you know what's coming
• 43:49
  around the corner, you know, the next thing that they're likely
• 43:52
  to run into that they have no idea because they haven't been
• 43:54
  there yet. I'm, I'm curious, Alistair, what
• 43:57
  are maybe some of the most common mistakes that you see
• 44:01
  these small restaurant owners making?
• 44:05
  Yeah. I mean, look, I think at the
• 44:06
  core it's just like, are you looking at books?
• 44:08
  Do you have good books and are you looking at them like.
• 44:11
  I know that sounds like again, like we go back to restaurants
• 44:14
  are simple, simple as hard like the amount of people who like
• 44:19
  don't know what their cost of goods sold is or what their food
• 44:22
  cost is or their labor cost is or understand the basics of like
• 44:28
  how financials are put together. And thus what you know, we've
• 44:34
  talked earlier about, hey, like all of this is sort of worthless
• 44:37
  if you can't put it into action. But what do I need to look like
• 44:41
  at on my PNL or my OPS reporting that I can then directly drive
• 44:46
  an operational change around? And what should the cycle and
• 44:49
  cadence be of that? How do I read these reports?
• 44:52
  How do I understand what that looks like?
• 44:54
  Like to me that, that that core foundational level just is
• 44:58
  potentially one of the single biggest hurdles we see
• 45:02
  consistently because it's not just at the ownership level,
• 45:07
  it's at the manager level. And you know, you have a
• 45:09
  workforce that has incredibly high turnover in the restaurant
• 45:12
  space. So you, you're constantly
• 45:13
  churning through bodies like most restaurants are running in
• 45:17
  the excess of 100% turnover rate annualized like that, that makes
• 45:23
  that problem much harder, right? Because you're like, cool, this,
• 45:25
  this person's here today, three months from now, they're gone.
• 45:28
  So like, you know, it's, it's so how do you, how do you put a
• 45:31
  process and structure around that so that the team can
• 45:33
  clearly understand here's what a good job looks like?
• 45:36
  Here's what a bad job looks like.
• 45:37
  Here's kind of where we are today because I, I don't believe
• 45:39
  anyone. I mean, there's probably some
• 45:41
  people, but the vast majority of people don't show up to work
• 45:44
  being like, I'm going to be terrible at my job today.
• 45:47
  That's not how people go to work.
• 45:48
  Often times they don't know what success looks like.
• 45:51
  They they don't know where they're at in terms of.
• 45:53
  Success. What to do next?
• 45:53
  But. Most people, genuinely, yeah,
• 45:56
  they don't, but they want to show up and they want to do a
• 45:58
  good job, right? And so if we can give them some
• 46:01
  structure and framework, you know, that makes that process
• 46:05
  significantly more successful and more possible.
• 46:09
  And I think the other piece, the other biggest one I would say
• 46:11
  is, is HR HR and sort of payroll compliance, like regulations
• 46:17
  change all the time. They're incredibly challenging
• 46:20
  to keep up with. They're weird.
• 46:24
  They change randomly. Like it's, it's, it is, it is
• 46:28
  hard to stay on top of everything.
• 46:30
  I mean, across my 10 restaurants, for example, I
• 46:32
  think we have four or five different minimum wages and
• 46:35
  we're all in the Bay Area, right?
• 46:37
  So you like, you just think about like that where you're
• 46:40
  like, wow, now I've set this, this person's now getting paid
• 46:43
  $0.20 less an hour than they should be.
• 46:45
  And you know, we've done an incredible job not having that
• 46:48
  be an issue. But like you could see how very
• 46:52
  quickly, if you're a small business owner, you've grown
• 46:55
  quickly, You've got a very successful concept people are
• 46:57
  excited about. You're opening a couple
• 46:59
  locations you may not realize that you know, might be 10
• 47:02
  minutes up the road. You're at a completely different
• 47:05
  minimum wage. There's different requirements
• 47:07
  around leaves and. And you can take all of this
• 47:11
  headache and hassle off your client's plate.
• 47:13
  They don't have to worry about it.
• 47:14
  They don't have to think about it.
• 47:17
  Yeah. I mean, I wouldn't you know,
• 47:19
  we've got, it's a partnership. So we've, you know, we're going
• 47:21
  to, we're going to be educating them.
• 47:22
  We still need them to be. They can't check out.
• 47:24
  You're there to help them and coach them.
• 47:26
  Got it. Exactly.
• 47:28
  And to just be like, Hey, this is this is a problem.
• 47:31
  You might want to address this quickly.
• 47:33
  We're not it's your business, but we you're going to end up in
• 47:37
  litigation if you do not solve this problem.
• 47:40
  Some people are like, you know what, that's fine.
• 47:42
  I'll, I'll roll the dice and I'm like, that's insane.
• 47:45
  Please sign this waiver and release for us.
• 47:48
  And then they do. And you know, we all go on a
• 47:51
  better our merry days. But you know, most people, even
• 47:55
  ownership wants to treat their like nobody.
• 47:58
  Most, most of the people we work with don't want to treat their
• 48:00
  employees badly. They want their employees to be
• 48:02
  successful and to show up and do a good job.
• 48:04
  So they they win, right. And so that's, you know, there's
• 48:07
  another area there around goal alignment.
• 48:10
  Hey, what does ownership want? What are the hourly employees
• 48:13
  want all the way through? How do you ensure that there's
• 48:16
  clear goal alignment so that you know, if the employees are doing
• 48:20
  an exceptional job and the owner's making a ton of money?
• 48:24
  I personally believe that the employees should benefit in that
• 48:28
  like they're the ones doing the the day-to-day work.
• 48:31
  There should be a clear like, hey, here's here's, if you do
• 48:35
  this, you get this, here's how we win together, right?
• 48:38
  And I think that doesn't always, again, it's not always the case
• 48:41
  because often times it's like, hey, I'm a chef and I worked 12
• 48:45
  hours a day and now all of a sudden I've got this concept and
• 48:48
  it's taking off and all of a sudden I'm going from like one
• 48:51
  unit to three units to 5 units and I don't none of that was
• 48:56
  true for me at one unit. I didn't have to worry about any
• 48:58
  of that because I was the one there for 12 hours a day.
• 49:01
  Now, like I'm at four stores 4 hours a day, like, you know, or
• 49:07
  whatever that the three hours a day or whatever it might look
• 49:09
  like, like, hey, like now I'm like, each employee only sees me
• 49:12
  for three hours. They're like, this dude doesn't
• 49:14
  work that hard, right? So, you know, it's, it's, it's,
• 49:17
  it's as I say, This is why for us, that sweet spot is that 3 to
• 49:21
  15? Is there just so much to be
• 49:22
  done? And, and when done correctly,
• 49:26
  massive value creation for ownership for the, for the
• 49:29
  individual, you know, shareholders, if they're
• 49:31
  shareholders, then for the individual employees just make,
• 49:34
  you know, things much clearer, easier handbooks, you know,
• 49:39
  benefits, like all of the stuff that you end up getting into it
• 49:42
  just, but it just becomes that kind of compounding thing.
• 49:45
  So I want to talk about employees for a minute because I
• 49:47
  think you would have a good perspective on this, Alistair,
• 49:50
  given, you know, the size of both of your companies and the
• 49:53
  fact that you're helping your clients with this as well.
• 49:56
  Because you know, the, the labor market has been especially tight
• 49:59
  since COVID and probably, you know, no tour for any industry
• 50:03
  than the the restaurant industry.
• 50:05
  I'm curious what things you've tried and found success in to
• 50:10
  both recruit and then once you've got somebody good to
• 50:13
  retain them. Yeah.
• 50:17
  I mean, I think 2 separate things.
• 50:18
  So, so we'll talk about recruitment first.
• 50:20
  Yeah, certainly really challenging. 2021, I would say
• 50:24
  was incredibly challenging. I think actually labor market's
• 50:28
  kind of easing at this point. Certainly we're, we're finding
• 50:31
  it's easing more availability of good talent.
• 50:37
  I, you know, I, I, I don't don't know fully what to attribute
• 50:41
  that to, but certainly we're, we're having less challenges on
• 50:46
  that front where for a while would be like, yeah, I just hope
• 50:49
  anybody shows up. Do they have football school?
• 50:51
  They were hired Now it's like, hey, like, no, let's actually
• 50:54
  get somebody who's good. The nice thing about that is
• 50:58
  what I think part of the problem that occurred in 21 and into
• 51:02
  early 22 is when you're hiring anyone, often times they're not
• 51:06
  a good cultural fit. They're not a good fit for the
• 51:08
  team. You're kind of just like, I need
• 51:10
  a body, please plug them in. And it can actually create this
• 51:13
  like negative ripple effect of like, oh, this person's toxic or
• 51:17
  they're challenging or, and like it just, or you burnt, you know,
• 51:23
  I think a lot of restaurants burnt a lot of people out
• 51:25
  because they couldn't get enough people to work.
• 51:30
  And then you have, you're like, cool, you want to work overtime,
• 51:33
  you want to work double time. They're like, yeah, like people
• 51:35
  will be like, sure, of course I'll do that.
• 51:36
  And then but it's like you're burning a resources.
• 51:39
  I sort of think of it like a candle, right?
• 51:41
  You can burn it, but at some point you burn it out, right?
• 51:44
  And so I think those two things sort of compounded with each
• 51:48
  other to, to create such a challenging circumstance on the
• 51:51
  recruitment fund. It's not that complicated.
• 51:54
  Again, it's a lot of simple stuff here.
• 51:58
  Do your existing employees like you like are you, are you, are
• 52:02
  you doing, are, are you training and developing them?
• 52:06
  Like is it a good place to go to work?
• 52:09
  Do they feel valued? Everybody works in these like
• 52:13
  siloed industries for the most part, right?
• 52:15
  So like whatever industry that you're working in, you probably
• 52:19
  know a ton of other people also working in that same industry.
• 52:22
  If you guys all hang out at a bar or go out for dinner, you're
• 52:27
  likely all going to trade some form of war stories from whether
• 52:31
  it's about clients or or whoever you're serving or or Co workers
• 52:36
  or ownership. Those are pretty much the three
• 52:39
  things that people like to talk about.
• 52:41
  If you're terrible and you're a terrible boss and you have
• 52:44
  terrible bosses, most of your applicants you want are going to
• 52:49
  know that well in advance of them applying with you, unless
• 52:52
  they're like brand new to the area and don't know anything.
• 52:55
  So like to me, the two kind of go hand in hand.
• 52:58
  I also think fundamentally restaurants historically looked
• 53:01
  at their employees as replaceable assets because it
• 53:04
  was like, no, if you're gone today, I'll hire somebody else
• 53:07
  tomorrow. That's fundamentally changed.
• 53:09
  There's a huge number of reasons for that.
• 53:11
  Demographic changes, lowering birth weight, blah, blah, blah,
• 53:14
  blah. There's just less people
• 53:15
  actually fundamentally entering workforce and there's less
• 53:18
  people who want to work in restaurants amongst a ton of
• 53:21
  other professions. We probably don't have it quite
• 53:23
  as bad as every electrician, plumber.
• 53:27
  All of the tradespeople I talked to are like, Oh my God, good
• 53:29
  luck finding like an an apprentice.
• 53:32
  And I know I've heard stories of like electricians showing up on
• 53:35
  other people's job sites and literally being like, I'll give
• 53:38
  you $1000 today if you come work for me and like, what are you
• 53:41
  getting paid? I'll pay you $10 more an hour.
• 53:44
  So like, like wild stuff. So, and I, I think this is true
• 53:49
  across, there's definitely some, some segments in the labor
• 53:51
  market, but restaurants is one of them that certainly there's
• 53:53
  this some applicable for. And so as a result of like less
• 53:57
  available talent, you got to develop your talent, retain your
• 54:00
  talent. To your point, like how do you
• 54:02
  do that? Well, again, pretty simple
• 54:05
  stuff. Do they feel valued at work?
• 54:08
  Are you acknowledging what they do?
• 54:10
  Have you made it fun to come to work?
• 54:12
  How do you incentivize good behavior?
• 54:14
  How do you clearly and identify here's what a great job looks
• 54:17
  like? How do we get you on the path to
• 54:20
  where you want to get to, right? And I think historically
• 54:22
  restaurants have struggled to create the idea of working in
• 54:26
  restaurants as a career. It's challenging, it's high
• 54:28
  stress, long hours. You're often times working when
• 54:31
  everybody else is not working holidays, nights, weekends,
• 54:34
  etcetera. Not for everybody, right?
• 54:37
  But I think also even for the people that it is for, so many
• 54:43
  of them haven't sort of been put on a career path.
• 54:45
  So how are you getting mentored? How are you getting trained?
• 54:47
  How are you cross training? Like how do you learn more and,
• 54:50
  and get get, you know, so that there's the actual growth there
• 54:54
  for you. Now, some of that is much easier
• 54:56
  when you're at my scale than when you're at like one or two
• 54:59
  units. If you're one or two units, you
• 55:01
  have maybe you know, a manager or two managers per location,
• 55:05
  3-4 depending on the size of the operation.
• 55:08
  You've got a very limited pool of, well, if you're the GM of 1
• 55:14
  store, you could go be the GM of another store, but there's not
• 55:18
  really you're not, there's nothing kind of beyond that
• 55:20
  until that ownership group either opens another store and
• 55:24
  then you could maybe there's an opportunity for you to be a
• 55:26
  director of operations or whatever that is, right?
• 55:28
  But there's limited growth opportunities.
• 55:30
  So for us, part of our reason for growing is so that we can
• 55:35
  give our existing people that we want to retain more
• 55:39
  opportunities to grow and get promoted internally.
• 55:43
  So we try not to hire anyone externally to run rest, to be
• 55:47
  AGM of a restaurant. So you don't get to be a general
• 55:50
  manager unless you've worked for us internally.
• 55:53
  So we will hire people who are previously general managers, put
• 55:55
  them in, become an assistant general managers with a clear
• 55:59
  path to getting them to be general managers.
• 56:00
  But because we really like want our culture, our sort of ethos,
• 56:07
  like we don't just like hire people in from the outside
• 56:10
  because we we just have found that unsuccessful, but also
• 56:13
  because we've now got a track record of building and promoting
• 56:17
  and developing internally. And we certainly could be better
• 56:20
  at this. I don't think we're perfect at
• 56:21
  it. I don't think any company ever
• 56:23
  is perfect at this. But like always working on it,
• 56:26
  right? Again, as a result, we have a
• 56:30
  lot more employees. You've stayed with us for a long
• 56:32
  period of time, right? And again, like, you know, like
• 56:36
  I don't have any employees who were with us from day one at
• 56:39
  this point because they've all retired like, because for a 30
• 56:44
  year old restaurant, like they worked for we, I think our
• 56:47
  longest serving employees 26 or 27 years at this point.
• 56:53
  So, but I think like, you know, but again, if you have those
• 56:56
  stories and you have those employees who stay that long
• 56:59
  when you're asking employees like, hey, can you?
• 57:01
  That word of mouth means everything.
• 57:02
  Referral for us. Well, of course, right?
• 57:05
  It's like, hey, it's way easier to like, hey, you hired this AGM
• 57:10
  that everybody likes. Often times AGM is going to
• 57:13
  bring their favorite bartender, their favorite server, a couple
• 57:16
  busboys, a line cook from their previous job.
• 57:20
  Because if they're a good AGM, all those people really liked
• 57:23
  working for that manager. I mean, there's some saying
• 57:26
  about like, you know, your boss's, you know, like you can
• 57:29
  love the company you work for and hate your boss and you'll
• 57:31
  leave the company or whatever, right?
• 57:33
  Because like it's, it's, they have so much kind of impact on
• 57:36
  your day-to-day existence. And it's hard like, you know,
• 57:39
  for us, we're constantly working to evaluate and look, we, we
• 57:43
  have our fair share of managers that for whatever reason don't
• 57:46
  work out. Are, you know, challenging.
• 57:49
  We get that feedback. We take that feedback really
• 57:50
  seriously. But I think the two kind of feed
• 57:53
  each other is kind of fundamentally my belief is most
• 57:57
  of this also isn't that that hard.
• 57:58
  If you're you know, how are you asking the employees?
• 58:02
  What benefits are you providing? Like our number one benefit
• 58:04
  people love is just an emergency bilingual helpline.
• 58:09
  It's our single cheapest benefit we would provide.
• 58:11
  And they can kind of call and for like emergency mental health
• 58:14
  support or they can get referrals to like a doctor or an
• 58:20
  attorney or like it's it's just sort of a catch all thing.
• 58:23
  It's literally the cheapest benefit we provide.
• 58:26
  And when we've been surveyed employees in the past, it is
• 58:29
  their favorite benefit. And so it's funny oftentimes
• 58:34
  where those types of things come out where it's like, do I think
• 58:37
  most restaurants would think about mental health in that way?
• 58:40
  Probably not. But it's a very high stress,
• 58:43
  challenging job. And to have it be bilingual, you
• 58:47
  know, a huge amount of our staff native Spanish speakers, right?
• 58:50
  So again, I think it's about meeting people where they are.
• 58:53
  So long rambling answer but it something I'm super passionate.
• 58:57
  I can tell. Yeah, lots of good stuff in
• 58:58
  there. Alistair, I just have one more
• 59:00
  question for you, But before I ask it, I want to do 2 things.
• 59:03
  If you're listening today and you like today's content, please
• 59:06
  hit the subscribe, like or share button on your favorite podcast
• 59:09
  app. Think about who else would enjoy
• 59:10
  today's interview. Alistair, I want to also tell
• 59:13
  people how to get in touch with you.
• 59:14
  What's the best way to make that happen?
• 59:17
  Yeah, you can. You can reach out at Kitchen
• 59:20
  Sink dot US. So it's just my first name at
• 59:24
  kitchen sink dot US is probably the best way to get a hold of
• 59:30
  me. Or you can follow me on LinkedIn
• 59:32
  or ping me on LinkedIn. I post, you know, two to three
• 59:35
  times a week, usually ranting and raving about random things
• 59:40
  in the restaurant sort of hospitality space.
• 59:44
  So if you're in the space or you're curious about the space,
• 59:46
  you know, would always love feedback or, or thoughts or
• 59:50
  suggestions on that front. Those are probably 2 best places
• 59:53
  to kind of get a hold of me for the most part.
• 59:56
  OK? And Al so yeah, Alistair is
• 59:57
  spelled Alistair Levine is Levine.
• 1:00:03
  So you can put together his e-mail address or you can find
• 1:00:06
  him on LinkedIn to follow the the different things he rants
• 1:00:09
  about. And then the last question I
• 1:00:12
  have for you, Alistair, is I want you to think whether it's
• 1:00:14
  on the personal professional side about a particular
• 1:00:17
  challenge that you went through in life, something you overcame,
• 1:00:22
  and then the lessons that you learn coming out the other side.
• 1:00:27
  Yeah. I mean, I think for me, you
• 1:00:28
  know, COVID was obviously about as challenging as it could come
• 1:00:32
  for our industry, right. We went from, hey, normal
• 1:00:36
  business operations to nothing within the span of 10 days.
• 1:00:42
  And it was unclear, especially in the Bay Area, it we really
• 1:00:46
  didn't come back to normal operations until 2021.
• 1:00:50
  So you went pretty close to a year in a heavily disrupted
• 1:00:56
  operation thing. And so we tried to kind of stuff
• 1:00:59
  we launched a virtual brand called Mac and Cheese shop that
• 1:01:03
  will be our CEO of the restaurant group was, you know,
• 1:01:06
  instrumental in, in, in sort of standing up.
• 1:01:08
  We, we, we, we just sort of were flinging things at the walls and
• 1:01:14
  on the kitchen sink side. We were basically even one step
• 1:01:17
  more reviewed move from that where we were reliant on our
• 1:01:22
  restaurant partners that we support making good decisions
• 1:01:26
  for their businesses so that we can continue to get paid by
• 1:01:29
  those businesses and service them.
• 1:01:31
  While every other week there was a new PPP or ertc or other
• 1:01:36
  financial implication thing. Now obviously plenty of free
• 1:01:40
  money floating around, which was nice, but but it was certainly,
• 1:01:44
  it was certainly very, very dynamic.
• 1:01:46
  The good thing for me and, and you know, one of my favorite
• 1:01:50
  sort of sayings is don't let a good crisis go to waste.
• 1:01:54
  Because what I find, so we were in the middle when, when COVID
• 1:01:56
  hit, we were in the middle of a massive AP system migration.
• 1:02:02
  So we are moving from 1 AP system provider to another.
• 1:02:06
  And we ended up basically completing the entire migration
• 1:02:10
  in three months. That would normally have taken
• 1:02:11
  us 18 months because the volume people weren't buying
• 1:02:16
  restaurants weren't buying a lot of products.
• 1:02:17
  I'll just tell you in, in March and April of 2020 in Northern
• 1:02:21
  California and, and, and the other areas that we service.
• 1:02:26
  And so as a result, like the volume was way down.
• 1:02:29
  So that made it easier to move. People were also kind of at home
• 1:02:33
  and whatever minimal chaos we were adding to their life was
• 1:02:38
  nothing and was an irrelevant rounding error compared to the
• 1:02:42
  chaos that was already occurring in their life.
• 1:02:45
  We were sort of an afterthought on that front.
• 1:02:47
  Hey, you guys are making some changes.
• 1:02:48
  OK, Whatever. We're all making changes.
• 1:02:50
  I'm changing everything. Everything's changed every three
• 1:02:53
  weeks. Like I like, I don't care.
• 1:02:55
  Go ahead. Right.
• 1:02:56
  And was it the smoothest thing? Could we have done things
• 1:02:59
  differently? Absolutely.
• 1:03:00
  But you know, for me, you can spend a lot of time kind of
• 1:03:06
  wallowing in headwinds or you can get on with figuring out how
• 1:03:10
  to sort of where's the opportunity in this space,
• 1:03:13
  right? I mean, are you look at, you
• 1:03:15
  look at any of the last major recessions, tons of start-ups
• 1:03:18
  came out of them because people got laid off and we're like,
• 1:03:21
  well, I'm going to go chase my dream Airbnb, Uber, you can go
• 1:03:26
  through. There's a whole long list.
• 1:03:27
  If you haven't pulled it up, I'd, I'd suggest Googling this
• 1:03:31
  at some point. But yeah, I think, you know, for
• 1:03:35
  me, it was incredibly challenging.
• 1:03:38
  You know, was working a ton, was basically trying to save, you
• 1:03:43
  know, both businesses was unsure at times whether they were
• 1:03:46
  savable, which was, you know, as stressful as it comes,
• 1:03:51
  especially, you know, when you inherit businesses, there's an
• 1:03:54
  element of like, oh, that's you kind of got given this thing.
• 1:03:57
  But also at the same time, there's this like expectation on
• 1:04:00
  legacy and you know, it's like you didn't.
• 1:04:03
  Want to be the one where this all unraveled?
• 1:04:05
  Yeah. Yeah, No, you don't.
• 1:04:07
  You don't. You don't want to be the one
• 1:04:09
  who's like, well, you, this is the guy who made this fail.
• 1:04:12
  What was otherwise successful right there.
• 1:04:14
  There. There is a different level of
• 1:04:15
  pressure there, good, bad. It's, you know, kind of kind of
• 1:04:19
  indifferent, but you know, I think so for us that that would
• 1:04:22
  certainly mean for me like that, that level of headwinds.
• 1:04:26
  I don't think we'll see again. But I also think the truth is it
• 1:04:31
  made. It's made and is making the
• 1:04:33
  industry a significant better place.
• 1:04:36
  And but and did the same for my companies because we had to
• 1:04:40
  learn. We couldn't just do things the
• 1:04:43
  way they've always been done, which is always, you know,
• 1:04:45
  everybody quotes that adage like, oh, it's so dangerous.
• 1:04:48
  And I agree, But often times like change is hard.
• 1:04:52
  People don't like change. They're not inherently ready for
• 1:04:55
  change. And so force change can be
• 1:04:57
  really and especially massive, unprovoked, unrelenting force
• 1:05:01
  change can be incredibly challenging.
• 1:05:03
  And it certainly was for for our industry.
• 1:05:05
  And I I still don't think we, we've seen sort of the end of
• 1:05:08
  the shake out on that front. You know, you see all these
• 1:05:12
  bankruptcies this year and Red Lobster and all these other
• 1:05:15
  large restaurant groups. I still think all that's COVID
• 1:05:19
  hangover. They just we're able to have
• 1:05:22
  enough debt, but then that debt burden with interest rates
• 1:05:26
  adjustments become challenging etcetera.
• 1:05:28
  So you know, I think we're still shaking all of that out.
• 1:05:31
  But certainly for me that was that was about as challenging as
• 1:05:36
  it gets. But I also like you, you learned
• 1:05:38
  more in a accelerated period of time and we were able to make
• 1:05:43
  major changes that we kind of wouldn't have.
• 1:05:45
  We reduced our menu sizes at our restaurants.
• 1:05:47
  We are now more simple menus, right?
• 1:05:50
  So which are more profitable and easier for the staff to execute
• 1:05:53
  on And like, but you know, prior guests would have kind of been
• 1:05:56
  like, I don't know about this, or at least that was our
• 1:05:59
  perception. And then, you know, it's like
• 1:06:01
  guests are just now like, well, you're still open.
• 1:06:03
  This is awesome. Yay, right?
• 1:06:05
  Like. It's a new bar.
• 1:06:07
  You know, yeah. And This is why I say don't let
• 1:06:10
  a good crisis go to waste. And also, I think if you sit and
• 1:06:13
  moan and mope and, and Eeyore it, you're giving up your power.
• 1:06:20
  Like you have the choice of like how you're going to address and
• 1:06:23
  it ain't going to always go your way.
• 1:06:25
  You're going to fail. Some businesses are going to
• 1:06:27
  fail. Like it's not always you're not
• 1:06:29
  always going to come out, you know, ahead.
• 1:06:33
  Other than that, you're going to have a lot of knowledge that you
• 1:06:35
  wouldn't have previously had. But I just, I would never want
• 1:06:38
  to give up the power I have about like if, if it's if it's
• 1:06:41
  if it's things that I can do to control and change.
• 1:06:44
  And as long as I continue to think about them in that way, I
• 1:06:47
  haven't sort of given away my power.
• 1:06:49
  So it's like, well, this is happening to me.
• 1:06:52
  Nothing I can do. You're like, cool, well then
• 1:06:54
  there's nothing you can do and you may as well just go home
• 1:06:58
  like so. I love that.
• 1:06:59
  I love a couple of things there. I love the don't let a good
• 1:07:02
  crisis go to waste. You guys found ways to take
• 1:07:06
  advantage of the situation, to leverage it in positive ways, to
• 1:07:10
  tighten your belts, to make, you know, simpler menus, which
• 1:07:13
  certainly helps to control your costs.
• 1:07:15
  And I really love that you turned Eeyore into a verb.
• 1:07:19
  I've never heard that done before.
• 1:07:21
  But Alistair, I want to be the first one to thank you for
• 1:07:24
  sharing both your time and your story today.
• 1:07:26
  I really appreciate it. 1st thank you for having me.
• 1:07:30
  Folks, that's a wrap on another episode of the Inspired Stories
• 1:07:32
  podcast. Thanks for learning with us
• 1:07:34
  today.