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Hopdoddy Recipe for Good Burgers, Happy Workers · Choppin’ It Up by Bloomberg Intelligence

• 0:22
  Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Hanlon,
• 0:25
  Speaker 1: the senior restaurant and food service analysts at Bloomberg Intelligence.
• 0:28
  Speaker 1: Our research and that of bi's five hundred analysts around
• 0:31
  Speaker 1: the globe can be found exclusively on the Bloomberg terminal. Today,
• 0:35
  Speaker 1: we're joined by Jeff Chandler, a CEO of High Bar
• 0:37
  Speaker 1: Hospitality Group, the parent company of Hop Dotty Burger Bar.
• 0:41
  Speaker 1: How you doing, Jeff, I'm doing great.
• 0:43
  Speaker 2: Thanks Michael for having me.
• 0:45
  Speaker 1: Sure thing all right? So on LinkedIn, I saw you're
• 0:47
  Speaker 1: a University of Washington grad. I recently watched Boys in
• 0:50
  Speaker 1: the Boat, a movie about the Washington crew team. Have
• 0:54
  Speaker 1: you seen it?
• 0:55
  Speaker 2: I have? Yeah, I have, and it was really good
• 0:58
  Speaker 2: to see people where the purple in the gold and
• 1:00
  Speaker 2: to sing a bow down to Washington and brought back
• 1:03
  Speaker 2: a lot of good memories of the filming in and
• 1:06
  Speaker 2: around Seattle. I thought was interesting around the university and
• 1:10
  Speaker 2: certain clips were very cool. Yeah.
• 1:13
  Speaker 1: I really enjoyed it. It's on Amazon Prime if anybody
• 1:16
  Speaker 1: hasn't seen it. It was great. So uh so, did
• 1:20
  Speaker 1: you play a sport at Washington kid?
• 1:22
  Speaker 2: I believe it or not, I played. I played football.
• 1:25
  Speaker 2: I was an offensive center about two hundred and eighty
• 1:28
  Speaker 2: five pounds ago. I've lost I've lost a lot of weight.
• 1:32
  Speaker 2: But I played back in the Don James era. And
• 1:35
  Speaker 2: you know, for those who don't follow college football, Don
• 1:38
  Speaker 2: James really was the We called him the dog father,
• 1:42
  Speaker 2: uh and he was the coach's coach. He was the
• 1:45
  Speaker 2: players coach. He was big time into organizational control and
• 1:49
  Speaker 2: discipline and and uh and and bringing men to be
• 1:55
  Speaker 2: better men and not necessarily fielding a great football team,
• 1:58
  Speaker 2: although he did that. But I learned so much from
• 2:01
  Speaker 2: him on organizational discipline, structure process that you know, if
• 2:07
  Speaker 2: I'm honest, I probably learned more down on the football
• 2:10
  Speaker 2: field under you know, Don James and his coaching staff
• 2:13
  Speaker 2: than I did up in the business school about things
• 2:16
  Speaker 2: that I use every day, building teams, driving performance, setting
• 2:19
  Speaker 2: high benchmarks, how you push through adversity, how you handle
• 2:23
  Speaker 2: challenges like all of that I learned from him. So
• 2:26
  Speaker 2: I give him a lot of credit, dude.
• 2:28
  Speaker 1: That's awesome. Football is the ultimate team sport. And I
• 2:31
  Speaker 1: had a similar experience. I played at Georgetown, and I
• 2:34
  Speaker 1: learned so much from my coaches, Coach Benson and Scarlata,
• 2:38
  Speaker 1: stuff that I use every day man, whether it's about
• 2:41
  Speaker 1: being on time, accountability, you name it.
• 2:46
  Speaker 2: He had a phenomenal knack. I think he had the
• 2:49
  Speaker 2: walk from his office to our team room timed first
• 2:53
  Speaker 2: day of practice every year. What do we get. We
• 2:55
  Speaker 2: got a time X Okay, old school, this is back
• 2:57
  Speaker 2: in the eighties. We got a time X digital walk.
• 3:00
  Speaker 2: And he would walk us through the very first meeting
• 3:02
  Speaker 2: of the year. He'd walk us through how to reset
• 3:05
  Speaker 2: our times and he would count down three, two, one,
• 3:09
  Speaker 2: set it, and he said, gentlemen, you have no excuse
• 3:12
  Speaker 2: to be late to any meeting that we have. And
• 3:15
  Speaker 2: he would start his meetings really interesting. He would start
• 3:17
  Speaker 2: his meetings at seven fifty eight am, not eight am,
• 3:23
  Speaker 2: not eight thirty, but seven fifty eight. And I look
• 3:26
  Speaker 2: back on that, That's how I schedule my meetings today,
• 3:29
  Speaker 2: because it's mindful, it's purposeful, it's you know, it's seven
• 3:33
  Speaker 2: fifty eight, it's not eight o'clock. And he would walk
• 3:36
  Speaker 2: in and start speaking at the podium and literally it
• 3:39
  Speaker 2: would be seven fifty eight.
• 3:41
  Speaker 1: The guy was amazing, very cool man. All right, so
• 3:44
  Speaker 1: now you've you're the leader on the field. You've been
• 3:47
  Speaker 1: leading hop Dottie for quite a while now they must
• 3:50
  Speaker 1: be treating you pretty well over there they are.
• 3:53
  Speaker 2: It's, you know, we have I think, in my opinion,
• 3:56
  Speaker 2: we've got a world class private equity partner with L Catterton.
• 4:00
  Speaker 2: The way they approached their businesses, their ceo CEOs, their teams,
• 4:04
  Speaker 2: I think his first class. And they've been a great
• 4:07
  Speaker 2: support throughout this whole entire journey. And you know, look,
• 4:11
  Speaker 2: it's been a choppy ride. Uh. You know, we've been
• 4:14
  Speaker 2: I've been here for eight years. We had the pandemic
• 4:17
  Speaker 2: right in the middle of it. We've had you know people,
• 4:21
  Speaker 2: you know, the Great Resignation era, we had the COVID,
• 4:24
  Speaker 2: we had the inflation era. So there's there's been a
• 4:27
  Speaker 2: lot of interesting ups and downs, for sure.
• 4:29
  Speaker 1: No doubt about that. Hop Dotty is an interesting name.
• 4:33
  Speaker 1: How did how was it? How did it get that name?
• 4:35
  Speaker 2: Yeah? I can't take credit for it, nor would I
• 4:37
  Speaker 2: would I want to necessarily. It's it was the brain
• 4:41
  Speaker 2: child kind of of the merger of burgers and beer,
• 4:45
  Speaker 2: and the founders thought, you know, hop obviously is the
• 4:48
  Speaker 2: flower that gives beer as aromatic flavor and bitterness. And
• 4:52
  Speaker 2: Dottie actually is a nickname for cattle in Scotland. So
• 4:56
  Speaker 2: the black ag is candle. They call them little dotties.
• 4:59
  Speaker 2: And and so this whole merger and blend between this
• 5:02
  Speaker 2: union between burger and beer. And you know, it's interesting.
• 5:06
  Speaker 2: People call us hot daddy, you know, we get we
• 5:09
  Speaker 2: get a lot of people that confuse us with bad daddies.
• 5:13
  Speaker 2: And but it's unique and when it sticks, it sticks.
• 5:16
  Speaker 2: And it's something that I think is memorable and unique
• 5:19
  Speaker 2: and once you know it, you know it, and it's
• 5:21
  Speaker 2: it's ended up working out real well for us.
• 5:25
  Speaker 1: Yeah, it's cool. And I know my dad would one
• 5:26
  Speaker 1: hundred percent agree that burgers and beer go together, you know,
• 5:30
  Speaker 1: like peanut butter and jelly they do, all right, So
• 5:34
  Speaker 1: how many units? Where are you primarily located? And how
• 5:38
  Speaker 1: fast do you open in new ones?
• 5:39
  Speaker 2: Yeah, so we're we're forty eight restaurants today. We're in
• 5:42
  Speaker 2: eight states. We're in California, Colorado, Arizona, big concentration in Texas, Tennessee, Louisiana, Georgia,
• 5:52
  Speaker 2: and Florida. And you know, Texas is our home. That's
• 5:56
  Speaker 2: that's where we started. And you know, there's so much
• 5:58
  Speaker 2: white space in tech is to grow the economy in
• 6:02
  Speaker 2: Texas is strong you know, the demographics, psychographics, the consumer
• 6:07
  Speaker 2: behaviors and traits in Texas are strong. It's a heavy
• 6:10
  Speaker 2: dying out as you know, and drinking out state. And
• 6:14
  Speaker 2: so you know, our growth is going to continue Texas
• 6:17
  Speaker 2: Strong and we call it Texas Strong plus plus. We're
• 6:21
  Speaker 2: going to be entrepreneurial and opportunists in Arizona, in Tennessee,
• 6:27
  Speaker 2: in Florida, in Georgia, you know, anywhere in our existing markets.
• 6:32
  Speaker 2: And I think for the next five years we've mapped out,
• 6:36
  Speaker 2: we can stay in these eight states and continue to
• 6:39
  Speaker 2: grow real rapidly. I don't see any addition of a
• 6:42
  Speaker 2: new market. I mean, never say never, but there's enough
• 6:45
  Speaker 2: white space right now for infill that that's going to
• 6:49
  Speaker 2: keep us busy. So, you know, we started out at
• 6:52
  Speaker 2: five restaurants eight years ago and you know, again we've
• 6:57
  Speaker 2: we've we've had quite a bit of organic growth. We
• 7:00
  Speaker 2: had a we had a merger of grub Burger Bar
• 7:02
  Speaker 2: coming out of the pandemic, which helped, you know, further
• 7:04
  Speaker 2: accelerate that that growth. And now we're looking to build
• 7:08
  Speaker 2: a robust pipeline. Cool.
• 7:09
  Speaker 1: So when so, do you have a strong social media presence?
• 7:15
  Speaker 1: You know, and how was that expansion into you know,
• 7:18
  Speaker 1: into other states outside of Texas.
• 7:21
  Speaker 2: Yeah. Look, it may not have been a textbook, you know,
• 7:24
  Speaker 2: example of how you grow and develop the brand. You know,
• 7:29
  Speaker 2: like most privately held brands, Uh, you sometimes make decisions
• 7:34
  Speaker 2: on other factors. And so quite frankly hop Dot he
• 7:38
  Speaker 2: grew you know, Austin, Austin, Dallas, and then it went
• 7:43
  Speaker 2: to Scottsdale and then Newport Beach, California. And the reason
• 7:48
  Speaker 2: for Newport Beach and Scottsdale, Arizona is, you know, we
• 7:51
  Speaker 2: had two founders that you know, one founder had a
• 7:53
  Speaker 2: home in Scottsdale, one founder had a home in Newport Beach,
• 7:56
  Speaker 2: and you know, they seem to know the markets well.
• 7:59
  Speaker 2: And so it wasn't necessarily a pragmatic approach, but it
• 8:03
  Speaker 2: worked and it kind of scattered us around. We're working
• 8:07
  Speaker 2: today just in building and concentric circles out and strengthening
• 8:11
  Speaker 2: the awareness of the brand and the recognition of the brand.
• 8:16
  Speaker 2: And so I think that will continue. And again, we're
• 8:19
  Speaker 2: in enough states and enough markets where we've got plenty
• 8:22
  Speaker 2: of green space, you know, just to infill the current growth.
• 8:26
  Speaker 2: And you know, with our current structure, gosh, we're you
• 8:30
  Speaker 2: know we're shooting for eighty five restaurants total in five years.
• 8:33
  Speaker 2: And we've got the capital to do that, we've got
• 8:35
  Speaker 2: the people to do that. Now, it's just a matter
• 8:38
  Speaker 2: of finding the right real estate good stuff.
• 8:40
  Speaker 1: So how big are are the restaurants and how much
• 8:43
  Speaker 1: do they cost you to build?
• 8:45
  Speaker 2: Yeah, you know, that's a that's an evolving question. Right
• 8:49
  Speaker 2: we started out and we were at thirty six hundred,
• 8:52
  Speaker 2: thirty seven hundred square foot concept. All day long, we
• 8:56
  Speaker 2: roll in the the you know, kind of the popularization
• 9:00
  Speaker 2: off premise, and you know, what we look like is
• 9:03
  Speaker 2: just maximizing our throughput capacity. And now with off premis,
• 9:08
  Speaker 2: we can shrink the size of our units. We our
• 9:10
  Speaker 2: smallest unit today is twenty seven hundred square feet. We
• 9:13
  Speaker 2: think we can get down into you know, twenty four
• 9:17
  Speaker 2: fifty kind of as a smallest footprint and take advantage
• 9:20
  Speaker 2: and maximize that. And again, as we scale down these restaurants,
• 9:24
  Speaker 2: the cost goes down. But I'll tell you, like on
• 9:26
  Speaker 2: a tip, prototypical thirty five hundred square foot building, you know,
• 9:29
  Speaker 2: we're spending about a million six so a pretty sizable investment.
• 9:34
  Speaker 2: We think if we can get down into the you know,
• 9:37
  Speaker 2: twenty six twenty seven hundred square foot range. We can
• 9:40
  Speaker 2: knock that down to a million four perhaps, And you know,
• 9:46
  Speaker 2: and we we've changed, really changed and evolved our footprint
• 9:50
  Speaker 2: to again take advantage of off premiss take advantage of
• 9:53
  Speaker 2: mobile order pickup. When we have a drive through window.
• 9:56
  Speaker 2: You know, we're never going to be a fast food play,
• 9:59
  Speaker 2: so we're never going to be in order at the
• 10:01
  Speaker 2: window and receive your food. We might be more of
• 10:03
  Speaker 2: a park through type operation because of the handcrafted nature
• 10:07
  Speaker 2: of our products. But you know, I think if we
• 10:10
  Speaker 2: can get them down sub one five, we'd be doing
• 10:13
  Speaker 2: really well.
• 10:14
  Speaker 1: Cool. Is there any other unit economic data?
• 10:19
  Speaker 2: Yeah, you know, our au vs are roughly three million bucks.
• 10:25
  Speaker 2: You know, I am proud to say that over the years,
• 10:28
  Speaker 2: A big initiative of ours was to become more scalable
• 10:32
  Speaker 2: and more efficient as we scaled, and all under the
• 10:36
  Speaker 2: master umbrella of you know, don't f it up, keep
• 10:40
  Speaker 2: the soul and the brand funky and organic, and our
• 10:44
  Speaker 2: brand parameters have always been around quality, uniqueness, and variety,
• 10:48
  Speaker 2: and last time I check, you're not going to get
• 10:50
  Speaker 2: there by you know, shrinking portion sizes and dumbing the
• 10:53
  Speaker 2: menu down and doing all of I think the harmful
• 10:56
  Speaker 2: things that a lot of operators get lulled into doing
• 10:59
  Speaker 2: is look to maximize their efficiencies. We've been really fortunate,
• 11:04
  Speaker 2: Michael and enable to do both to maximize the guest
• 11:12
  Speaker 2: experience and to do that in a way that's most efficient.
• 11:15
  Speaker 2: And I give you a couple of examples. Number one
• 11:17
  Speaker 2: is it's just our beef program. We used to grind
• 11:22
  Speaker 2: all whole muscle proteins in house. We had eight different
• 11:25
  Speaker 2: proteins from ahi tuna to bison to different types of
• 11:30
  Speaker 2: chuck and brisket and turkey and you name it. And
• 11:35
  Speaker 2: we had butcher shops in our restaurants and the brand
• 11:38
  Speaker 2: was really built around this made from scratch, made by
• 11:41
  Speaker 2: hand mantra. And as we started to dive into the brand,
• 11:44
  Speaker 2: we realized, yeah, that's kind of cool, but what people
• 11:48
  Speaker 2: really want is just a craveable, badass, great burger. That's
• 11:52
  Speaker 2: really all they want. And so we started to test
• 11:56
  Speaker 2: and COVID really helped gave us some covered but we
• 11:59
  Speaker 2: ended up spending more per pound in our proteins. But
• 12:04
  Speaker 2: by doing that, we were getting a higher quality, more
• 12:06
  Speaker 2: consistent protein, and yes, we were bringing it in fresh
• 12:11
  Speaker 2: in a cryoback package loosely packed, and we found it
• 12:16
  Speaker 2: at the end of the day. A there was a
• 12:17
  Speaker 2: ton of waste in what we were doing. Our total
• 12:20
  Speaker 2: cost on beef went down three hundred bases points overall,
• 12:24
  Speaker 2: even though we were paying fifty seven cents more pound
• 12:27
  Speaker 2: for the product. And it was a better burger, it
• 12:30
  Speaker 2: was cravable, it was made consistently instead of paying a
• 12:33
  Speaker 2: twenty dollars an hour butcher, you know, to throw a
• 12:35
  Speaker 2: bunch of meat and the hopper and a little bit
• 12:37
  Speaker 2: of fat, and we had an eighty twenty blend and
• 12:39
  Speaker 2: this much chuck and this much brisket. We just we
• 12:43
  Speaker 2: had a great consistent product. So that's an example of
• 12:45
  Speaker 2: improving the quality while we improve the efficiency of what
• 12:49
  Speaker 2: we did. And I'm proud to say that today as
• 12:52
  Speaker 2: a company, you know, we're approaching a twenty two percent
• 12:55
  Speaker 2: store level margin type business. So you know, we've and
• 13:01
  Speaker 2: that really helped us because during this time of inflation,
• 13:05
  Speaker 2: guess what, we didn't have to take much price. In fact,
• 13:08
  Speaker 2: we hardly took any price, and I think we we
• 13:11
  Speaker 2: had margins to play with, and you know, it was
• 13:14
  Speaker 2: real important for us that we kept strong price value.
• 13:17
  Speaker 2: We kept that quality in front of people, and we
• 13:20
  Speaker 2: didn't want to rise raise prices to a point where
• 13:23
  Speaker 2: I think most people did today and they're saying, oh crap,
• 13:26
  Speaker 2: what do we do. We've raised these prices, we got
• 13:28
  Speaker 2: to start discounting to get more sales. And it's a
• 13:32
  Speaker 2: it's a death spiral. So I think we've been fortunate.
• 13:34
  Speaker 2: We we you know, we've missed that bullet by taking
• 13:38
  Speaker 2: that approach.
• 13:38
  Speaker 1: Yeah, you have a you have an absolute, absolutely phenomenal product.
• 13:43
  Speaker 1: I'm a fan, and I'm a fan of the chain's
• 13:46
  Speaker 1: use of regenerative beef. When did you know? I feel
• 13:50
  Speaker 1: like that really plays into the Texas consumer right versus
• 13:55
  Speaker 1: maybe some of the other sustainability initiatives you could have
• 13:58
  Speaker 1: taken on. When When did hop Dot make that switch?
• 14:01
  Speaker 1: And how is it? How has it been received by
• 14:03
  Speaker 1: our customers?
• 14:04
  Speaker 2: Yeah, you know, gosh, we made that decision about a
• 14:07
  Speaker 2: year ago. Michael, I watched the Ground. I watched the
• 14:11
  Speaker 2: movie Kiss the Ground, Okay, and one of our beef suppliers,
• 14:16
  Speaker 2: a regenerative beef supplier, sent me it and I was
• 14:19
  Speaker 2: actually watched it on YouTube. And for those who haven't
• 14:22
  Speaker 2: seen Kissed the Ground or the sequel common Ground. I
• 14:26
  Speaker 2: highly recommend it because it's an eye opener and and
• 14:30
  Speaker 2: part of our mantra, part of our company culture is
• 14:32
  Speaker 2: always doing right, doing right by our guests, doing right
• 14:35
  Speaker 2: by our business, doing right by our team members, doing
• 14:37
  Speaker 2: right by the planet. And we're going to take a
• 14:41
  Speaker 2: common sense approach. And when I watched Kiss the Ground
• 14:43
  Speaker 2: and I learned about regenerative farming and ranching, It's like, well, absolutely,
• 14:48
  Speaker 2: you know, why wouldn't we build a healthier ecosystem. Why
• 14:53
  Speaker 2: wouldn't we you know, promote and build a program around
• 14:57
  Speaker 2: more nutrient dense beef for instance, or chicken in a
• 15:02
  Speaker 2: way that is helping the earth, and it's fighting climate change,
• 15:06
  Speaker 2: and it's you know, lowering our dependency on water usage
• 15:10
  Speaker 2: and pesticides and herbicides and you know, creating dust and
• 15:15
  Speaker 2: soil erosion, And why wouldn't we do all that? And
• 15:19
  Speaker 2: and so you know, there was an investment to be
• 15:21
  Speaker 2: made for sure. I mean, we're you know, if we
• 15:24
  Speaker 2: just flipped the switch tomorrow. Currently, you know, we don't
• 15:28
  Speaker 2: think we can find enough supply. We go through roughly
• 15:31
  Speaker 2: fifty five hundred head of cattle a year and it
• 15:35
  Speaker 2: would be hard to find a soul supplier that could
• 15:38
  Speaker 2: handle that in the regenerative space. But it's it's it's transitioning.
• 15:43
  Speaker 2: More and more ranchers are transitioning and a rapid clip,
• 15:46
  Speaker 2: and you know, I'm hoping within the next couple of
• 15:48
  Speaker 2: years we could go one hundred percent regenerative. So you know,
• 15:53
  Speaker 2: we are mostly regenerative. We buy up all the stuff
• 15:56
  Speaker 2: we can find that's high quality, and we're we're out
• 16:00
  Speaker 2: there telling the story to anyone who will listen about
• 16:03
  Speaker 2: all of the great benefits from turning to regeneritive farming
• 16:07
  Speaker 2: and ranching.
• 16:10
  Speaker 1: Yeah, it's great. The page on your website dedicated to
• 16:13
  Speaker 1: conservation for the rest of us and the Force of
• 16:16
  Speaker 1: Nature brand video are both great. I suggest, thank you
• 16:19
  Speaker 1: listeners check those out too. And I'm a customer of
• 16:22
  Speaker 1: Force of Nature. Their products are great.
• 16:24
  Speaker 2: They are they are good, great company, great people, and
• 16:27
  Speaker 2: they truly believe in what they're doing, which which is inspiring.
• 16:31
  Speaker 1: Yeah, it's good stuff. And so I haven't been to
• 16:35
  Speaker 1: Hop Dottie in a minute. Unfortunately. When did you put
• 16:38
  Speaker 1: chicken on the menu and what percentage of the mix
• 16:41
  Speaker 1: does it make up?
• 16:42
  Speaker 2: Yeah, so from day one we have had a ground
• 16:45
  Speaker 2: chicken burger. From day one, we've had a ground turkey burger.
• 16:48
  Speaker 2: From down one or day one, we've had a ground
• 16:50
  Speaker 2: a heat shashimi great tuna burger. Uh, and from day
• 16:54
  Speaker 2: one we've had a bison burger. So those have all
• 16:57
  Speaker 2: been in the mix. We switched to a whole muscle
• 17:00
  Speaker 2: fried chicken breast option gosh, probably pre COVID, maybe twenty nineteen.
• 17:08
  Speaker 2: It was with the proliferation of all the hot chicken
• 17:11
  Speaker 2: and we came up with our own version of a
• 17:16
  Speaker 2: really kick ass Nashville hot chicken sandwich, and that led
• 17:19
  Speaker 2: into tenders and being able to do toss tenders and
• 17:23
  Speaker 2: tenders in a different way. So it's a big part
• 17:26
  Speaker 2: of our sale. I would say out of whole kind
• 17:28
  Speaker 2: of entree mix, it's about ten percent, So I think
• 17:32
  Speaker 2: that's a pretty healthy mix. And that's not including the
• 17:35
  Speaker 2: ground chicken burger that we currently serve, that's just whole
• 17:38
  Speaker 2: muscle chicken.
• 17:40
  Speaker 1: Yeah, and it's been such a hot category. It continues
• 17:43
  Speaker 1: that we continue to see innovation around chicken and the
• 17:46
  Speaker 1: quick service and fast casual names that we cover. Are
• 17:49
  Speaker 1: you seeing it grow as a percentage of mix or
• 17:52
  Speaker 1: is it about ten percent? You seem like where it's
• 17:54
  Speaker 1: going to settle in.
• 17:56
  Speaker 2: No, it's slowly growing, and I think our tender mix
• 17:58
  Speaker 2: is growing, you know, A we feel really comfortable. We
• 18:02
  Speaker 2: work with Redbird Chicken out of Colorado. Give those guys
• 18:05
  Speaker 2: a shameless plug. They are world class, fantastic, regenitive chickens.
• 18:11
  Speaker 2: You can tell and taste the difference for sure. So
• 18:14
  Speaker 2: I think as we sell more and more of it,
• 18:18
  Speaker 2: nothing beats a quality fresh made chicken tender, made from
• 18:21
  Speaker 2: scratch right. We bred it in house. And we do
• 18:24
  Speaker 2: a variety of tossed tenders. So we have a bunch
• 18:28
  Speaker 2: of signature toppings and sauces that we've created for our
• 18:32
  Speaker 2: famous fries, our permbers on truffle fries, well we do
• 18:35
  Speaker 2: those with our toss tenders as well, and that is
• 18:37
  Speaker 2: growing as a big category in itself, just the tenders.
• 18:42
  Speaker 2: So no, I see that continuing to grow. But we
• 18:46
  Speaker 2: just you know, at Hop Dotty, we have a lot
• 18:48
  Speaker 2: of great beef and turkey and other options, and so
• 18:50
  Speaker 2: people kind of are predisposed to come in knowing they
• 18:53
  Speaker 2: want a beef burger or they're going to eat you know,
• 18:56
  Speaker 2: healthier with a bison burger or a tuner burger. But
• 19:00
  Speaker 2: it allows us to access a different niche of our
• 19:03
  Speaker 2: potential guest space that I really believe driving our frequency
• 19:08
  Speaker 2: frequency of business cool.
• 19:10
  Speaker 1: And so I have a question. So I noticed if
• 19:12
  Speaker 1: I see like pastured chickens and whole foods, they tend
• 19:14
  Speaker 1: to be smaller, right, I don't know if it's like
• 19:16
  Speaker 1: lack of hormones and stuff like that. So is it
• 19:19
  Speaker 1: is it difficult finding tenders the size that you would like?
• 19:23
  Speaker 2: That are you know, yes and no? And it comes
• 19:26
  Speaker 2: and goes in waves. You know, if we said, hey,
• 19:30
  Speaker 2: this is our spect and we're only going to take
• 19:32
  Speaker 2: this spec then I think it's a challenge. We sell
• 19:36
  Speaker 2: it by the weight, so it might be you know,
• 19:38
  Speaker 2: four big tenders, or it could be six smaller tenders,
• 19:42
  Speaker 2: and it constantly evolves. And one of the reasons why
• 19:44
  Speaker 2: we feel that's important because we want to put the
• 19:46
  Speaker 2: best quality on the plate rather than a perfect shape
• 19:50
  Speaker 2: and size. To your point, you know, with some of
• 19:53
  Speaker 2: those products, to your point, time to harvest could be longer,
• 19:58
  Speaker 2: and that drives the cost up, right for because they
• 20:01
  Speaker 2: want time to maturity. And but you know, they're not
• 20:04
  Speaker 2: pumping them full of steroids and growth hormones and everything
• 20:08
  Speaker 2: else that's bulking up this chicken. They're not you know,
• 20:10
  Speaker 2: injecting it with saline and different types of solutions. And
• 20:14
  Speaker 2: so I think if we're flexible on size and inflexible
• 20:18
  Speaker 2: on quality, that's a good path for us to take.
• 20:23
  Speaker 1: Yeah, smart, how big is your bar business?
• 20:27
  Speaker 2: You know, our bar business is healthy. It's roughly fifteen
• 20:29
  Speaker 2: percent of our business. We've seen it EBB and flow
• 20:33
  Speaker 2: and it's rebounding right now. With the addition, if you know,
• 20:36
  Speaker 2: we're we're really at the end of the day at
• 20:37
  Speaker 2: Margarite and craft beer bar. But we do you know,
• 20:41
  Speaker 2: open up to what people want to drink, and and
• 20:45
  Speaker 2: that means maybe sometimes domestic beers, you know, not alcoholic
• 20:49
  Speaker 2: beers are on a rise right now. They're on a
• 20:51
  Speaker 2: tear out and another shameless plug for Athletic Brewing Company,
• 20:55
  Speaker 2: if you haven't had their beer, it's it's fantastic, it's
• 20:58
  Speaker 2: na And so we're seeing a rise in nabev, which
• 21:03
  Speaker 2: we think is good for us. It's a premium offering
• 21:05
  Speaker 2: and product that you know, enhances our experience. The fact
• 21:08
  Speaker 2: that it doesn't have liquor in it. Who cares? People
• 21:11
  Speaker 2: are ordering it? And I see that that niche continuing
• 21:15
  Speaker 2: to grow, for sure.
• 21:17
  Speaker 1: I've heard great things about Athletic my brother in law.
• 21:20
  Speaker 1: I haven't had them yet, but my brother in law
• 21:23
  Speaker 1: recommended them to me. He absolutely loves those.
• 21:26
  Speaker 2: Try the Hazy I p A. I'm a big I
• 21:27
  Speaker 2: p A fan. Hazy I p A competes with some
• 21:30
  Speaker 2: of my favorite I p.
• 21:31
  Speaker 1: As, great Hazy IPO That Hazy I p as are
• 21:36
  Speaker 1: right in my wheelhouse, so I'll definitely check that out.
• 21:40
  Speaker 1: All right. So I found it interesting that your loyalty
• 21:42
  Speaker 1: program has three levels. They're called the Headline, A Regular,
• 21:46
  Speaker 1: and Ultimate dotty Fan. Can you talk a little bit
• 21:49
  Speaker 1: about that, because it's not something that I see too often.
• 21:53
  Speaker 2: Yeah, you know, we wanted to create a loyalty program
• 21:56
  Speaker 2: to build loyals, to build frequency, and it's just like
• 21:59
  Speaker 2: everybody else, but we wanted to do it not necessarily
• 22:02
  Speaker 2: with pragmatic. Hey you hit this level and you get
• 22:06
  Speaker 2: this for free. You know, we wanted to come up
• 22:09
  Speaker 2: with a different way. Really, and I don't like this term,
• 22:12
  Speaker 2: but it's it's descriptive. It's the surprise and delight, right.
• 22:16
  Speaker 2: We want to be able to give people recognition at
• 22:18
  Speaker 2: different points in time throughout their journey with us. It's
• 22:22
  Speaker 2: the whole notion of show me you know me, show
• 22:25
  Speaker 2: me you care, and show me you're committed to doing
• 22:28
  Speaker 2: something cool that's going to drive me back into hop
• 22:30
  Speaker 2: dot you again. And so we kind of take that
• 22:33
  Speaker 2: parameter and we try to think, well, what can we
• 22:35
  Speaker 2: do periodically to become front of mind to increase their
• 22:41
  Speaker 2: frequency of their use ocasion. And so, you know, we're
• 22:44
  Speaker 2: fortunate in that we do a pretty creative Burger of
• 22:46
  Speaker 2: the Month program, and you know, we give our more
• 22:50
  Speaker 2: frequent loyals the opportunity to have those burgers before the
• 22:53
  Speaker 2: public we invite them in. Usually there it depends on
• 22:57
  Speaker 2: your level. You can have complementary Burger of the month
• 23:00
  Speaker 2: every month till you're coming in to trying our new
• 23:01
  Speaker 2: Burger of the month. And we've really seen that program
• 23:06
  Speaker 2: help propel our frequency rate. I mean, our average frequency
• 23:10
  Speaker 2: rate for a loyal used to be something like, you know,
• 23:13
  Speaker 2: ten point four times per year, and we've almost doubled
• 23:17
  Speaker 2: that with the advent of this program. So we do
• 23:21
  Speaker 2: see it working. You know, it's not going to be
• 23:25
  Speaker 2: the type of program that you know everybody's going to
• 23:27
  Speaker 2: be on, but if you're a hop Dotty fan, you
• 23:30
  Speaker 2: find a way to attach yourself to it, and you know,
• 23:33
  Speaker 2: and I'm surprised. Look, I'm I probably eat in our
• 23:36
  Speaker 2: restaurants four times a week. That's what I do. I
• 23:40
  Speaker 2: have a classic with cheese, I have a palm truffle fried,
• 23:42
  Speaker 2: and I usually get one of our specials. And anyway,
• 23:46
  Speaker 2: I was shocked to learn that there are over one
• 23:49
  Speaker 2: hundred people that eat at Hop Dotty more frequently than
• 23:52
  Speaker 2: I do. And I thought that was just fascinating. Like
• 23:55
  Speaker 2: I would have thought I would have been the clear leader.
• 23:58
  Speaker 2: So I love that. And I think it's the fact
• 24:01
  Speaker 2: that you know, with our menu and the way that
• 24:04
  Speaker 2: we kind of work our menu in with our loyalty, it's,
• 24:08
  Speaker 2: you know, we're listening to our loyalty club folks and
• 24:11
  Speaker 2: we're understanding what it is that they want that would
• 24:14
  Speaker 2: make them come in faster tenders. I think actually came
• 24:16
  Speaker 2: out of that whole conversation with our loyals, and so
• 24:21
  Speaker 2: it gives us menu insight in things that we can
• 24:24
  Speaker 2: put on the menu that can increase their frequency and
• 24:27
  Speaker 2: their usication and tenders is a good example of that.
• 24:30
  Speaker 2: Brussels Sprouts is another opportunity. People said gosh, I would
• 24:34
  Speaker 2: love something other than French fries, and then they would say, oh,
• 24:39
  Speaker 2: we want something more healthy, and we're like, well, Brussels
• 24:42
  Speaker 2: sprouts might be perceived more healthy. They're still fried and
• 24:46
  Speaker 2: their leaves, but it's amazing how fast our Brussels sprouts
• 24:50
  Speaker 2: have taken off. And again it was insights learned through
• 24:52
  Speaker 2: our program.
• 24:53
  Speaker 1: So great the five to one to two program for gms.
• 24:58
  Speaker 1: Can you talk a little bit about it and talk
• 24:59
  Speaker 1: about out if it's helped GM turnover and if you're willing,
• 25:05
  Speaker 1: if you could share some GM and hourly turnover data,
• 25:08
  Speaker 1: that'd be great.
• 25:09
  Speaker 2: Absolutely. Look, we went to solve a problem, and that
• 25:12
  Speaker 2: is a GM and manager turnover and burn out in
• 25:17
  Speaker 2: our industry. It's been it's been horrible ever since I
• 25:20
  Speaker 2: started in the business in nineteen ninety. I mean, it's
• 25:24
  Speaker 2: it's it's endemic. And so we went to say, well,
• 25:27
  Speaker 2: what's at the heart of that, and we really felt
• 25:30
  Speaker 2: and the conclusion we came up with is, you know,
• 25:33
  Speaker 2: people working long hours, covering shifts in a dynamic, fluctuating business,
• 25:38
  Speaker 2: working with the public, working in a highly fickle industry
• 25:42
  Speaker 2: where you're producing a product and serving it out the
• 25:44
  Speaker 2: back door as fast as you can, and people need
• 25:47
  Speaker 2: a break. And so we came up with this notion
• 25:50
  Speaker 2: of gosh, how could we, you know, figure out like
• 25:53
  Speaker 2: this mid life sabbatical or a mid career sabbatical, and
• 25:57
  Speaker 2: you know, could that give people recharge their energy, their
• 26:00
  Speaker 2: emotional health, their physical health. And then we thought about,
• 26:03
  Speaker 2: well what about their financial health? People? Most people can't
• 26:05
  Speaker 2: take a month, you know, And and so we came
• 26:08
  Speaker 2: up with this notion of the five one two, which
• 26:10
  Speaker 2: is essentially for a general manager, if you're in that
• 26:13
  Speaker 2: role for five years, we're going to give you one
• 26:16
  Speaker 2: year a pay and twenty eight days off or or
• 26:20
  Speaker 2: a month off in a sabbatical and five one two
• 26:23
  Speaker 2: because it's there at CODE and Austin to make it catchy,
• 26:26
  Speaker 2: but it really was the opportunity for our gms again
• 26:31
  Speaker 2: this you know, show me, you know me, show me
• 26:33
  Speaker 2: you care, and show you you're committed to me in
• 26:35
  Speaker 2: some way, shape or form. And and it did that.
• 26:38
  Speaker 2: And I will tell you that we have I think
• 26:41
  Speaker 2: we pay it. We had our ninth payout in that
• 26:43
  Speaker 2: recently and we celebrate these. So myself and our VP
• 26:47
  Speaker 2: of OPS we go to the market, we bring all
• 26:49
  Speaker 2: the gms in there with the market partner and we
• 26:52
  Speaker 2: have a big celebratory dinner. We give them the big
• 26:54
  Speaker 2: check so to speak, you know, and and we have
• 26:58
  Speaker 2: people break down and like get emotional, you know, because
• 27:02
  Speaker 2: the restaurant managers, when's the last time they had more
• 27:04
  Speaker 2: than a week vacation And here they get a month
• 27:07
  Speaker 2: and we make them take a month. Okay, we make
• 27:10
  Speaker 2: them take a month all at once. And they still
• 27:12
  Speaker 2: have their three weeks of vacation or their one, two
• 27:14
  Speaker 2: or three depending on their tenure. They still have that.
• 27:17
  Speaker 2: But they get to go to places and we've had
• 27:20
  Speaker 2: managers go to Alaska, We've had them go to Jerusalem,
• 27:23
  Speaker 2: to Africa, to cross the country RV trips, to like
• 27:28
  Speaker 2: just inspiring things. And they all come back with this
• 27:31
  Speaker 2: newfound energy and passion that they get from their own
• 27:36
  Speaker 2: personal lives. And then there's this endearing part. They're like, man,
• 27:40
  Speaker 2: you do care about me, Like this was amazing. You
• 27:43
  Speaker 2: know my family, I've never been able to take my
• 27:45
  Speaker 2: kids to Disneyland and you were able to do that
• 27:48
  Speaker 2: and it's so cool. And look the reality of it is,
• 27:51
  Speaker 2: it's it's expensive. It's not a cheap program. And I
• 27:55
  Speaker 2: would challenge people listening. If you're in a similar sized
• 27:58
  Speaker 2: company and you're penciling out, well, I just can't afford it.
• 28:02
  Speaker 2: I would, I would. I would challenge you to go
• 28:04
  Speaker 2: back and look at your financial statements and look at
• 28:06
  Speaker 2: the productivity that you receive from your more tenured managers.
• 28:13
  Speaker 2: My contention is is your business is more profitable, it's
• 28:16
  Speaker 2: more healthy, more stable. You have less call outs and
• 28:18
  Speaker 2: turnover in the hourly field because you have stability of leadership.
• 28:23
  Speaker 2: And so that's ultimately what we came to the conclusion
• 28:26
  Speaker 2: of is let's try it, and I will say that
• 28:29
  Speaker 2: it's worked. Like we launched this thing six years ago,
• 28:33
  Speaker 2: we've had no GM turnover other than one person that
• 28:36
  Speaker 2: we initiated a turnover thing for. And then it tells
• 28:40
  Speaker 2: our assistant managers, Hey, I want to be a general manager.
• 28:43
  Speaker 2: You know what do I need to do? And so
• 28:45
  Speaker 2: that's then where the growth comes into play, because we've
• 28:47
  Speaker 2: got to show people that, yeah, we can get you
• 28:48
  Speaker 2: at your own restaurant. Right, it's going to take you
• 28:50
  Speaker 2: eighteen to twenty four months. Here's the training development program,
• 28:54
  Speaker 2: but you can go get it. And then they get
• 28:56
  Speaker 2: to that level. So you know, I would say, at
• 28:58
  Speaker 2: the management level, our trailing twelve turnover is twenty one percent.
• 29:04
  Speaker 1: Great, and i'd imagine you can excuse me.
• 29:07
  Speaker 2: Yeah, no, it's it's pretty good. And I will say
• 29:10
  Speaker 2: that again, take a look at your high performing restaurants.
• 29:13
  Speaker 2: Usually your high performing restaurants have a thing in common,
• 29:15
  Speaker 2: and not only are they more profitable, but guess what,
• 29:17
  Speaker 2: they usually have better retention at the hourly level. And
• 29:20
  Speaker 2: that's what we've seen as well. So you know, our
• 29:23
  Speaker 2: hourly we we have restaurants that run in the sixty
• 29:27
  Speaker 2: percent range for hourly turnover. I think our company average
• 29:32
  Speaker 2: is ninety two percent hourly turnover across all restaurants, so
• 29:36
  Speaker 2: we're better than one hundred percent. And like, we're not
• 29:40
  Speaker 2: satisfied with that. We're going to push forward and try
• 29:42
  Speaker 2: to get better and do right. But I think it's working.
• 29:48
  Speaker 1: Yeah, you're blowing away the industry. So you know, kudos
• 29:51
  Speaker 1: to you and the team.
• 29:51
  Speaker 2: Man.
• 29:51
  Speaker 1: That's great. So i'd imagine it'll let you, you know,
• 29:55
  Speaker 1: promote from within for all your new restaurants.
• 29:57
  Speaker 2: Right, we're very proud of that fact. We have. Out
• 30:01
  Speaker 2: of our forty eight restaurants, we have twenty two. We
• 30:04
  Speaker 2: call them TM to gms that started with us in
• 30:07
  Speaker 2: an hourly capacity and now are running their own restaurants
• 30:10
  Speaker 2: and we're proud of that. And we really want to
• 30:12
  Speaker 2: build a moat around our own internals as we grow.
• 30:17
  Speaker 2: And I think if we do it right, you know,
• 30:19
  Speaker 2: people that understand the culture, they buy off on the culture,
• 30:22
  Speaker 2: they thrive in the culture. We can teach someone to
• 30:24
  Speaker 2: be a manager, you know. And we've really worked hard
• 30:27
  Speaker 2: in the last nine years to design more pragmatic operational procedures,
• 30:33
  Speaker 2: better training programs, really simplifying the admin and the more
• 30:38
  Speaker 2: complicated book keeping parts. And it's about people. It's it's
• 30:42
  Speaker 2: you know, having conversations with people and telling them the
• 30:45
  Speaker 2: why and being out on the floor to assist. And
• 30:47
  Speaker 2: you know, we kind of take a blue collar, roll
• 30:49
  Speaker 2: the sleeves management approach, like we're just out there working
• 30:52
  Speaker 2: as a management team. And so if we do it right,
• 30:55
  Speaker 2: we can have more teams to gms.
• 30:58
  Speaker 1: It's cool, man, Well listen, you you're you're doing right
• 31:01
  Speaker 1: for your employees, You're doing right for the environment. It's
• 31:03
  Speaker 1: a great product and a great experience. So you know,
• 31:07
  Speaker 1: I expect big things out of you guys. Can I
• 31:10
  Speaker 1: look forward to continuing to follow this story.
• 31:13
  Speaker 2: Man, well, thank you very much. I appreciate you having
• 31:17
  Speaker 2: me on. I'm excited for our growth and I'm excited
• 31:21
  Speaker 2: to see what's around the next corner. You know, we
• 31:23
  Speaker 2: live in a dynamic environment, right uh, And I think people,
• 31:27
  Speaker 2: you know, their their resiliency, their ability to solve problems,
• 31:31
  Speaker 2: Like I just think we're spending more time around that
• 31:34
  Speaker 2: than we ever have, and I'm excited to see what
• 31:36
  Speaker 2: the next group all is. Let's go.
• 31:39
  Speaker 1: Yeah, it keeps us all on our toes, that's for sure.
• 31:42
  Speaker 1: So thanks again for doing this, and thanks to thanks
• 31:44
  Speaker 1: to the audience for tuning in. If you liked the episode,
• 31:47
  Speaker 1: think about subscribing and leaving us a review.