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5:45
KOKONAS on Instagram @nkokonas on Twitter @nickkokonas.
5:50
Nick is the co-owner and co-founder of the Alinea group of restaurants, which includes Alinea, Next, The Aviary, Roister, Saint Clair Supper Club, and The Aviary NYC.
5:59
Alinea has been named the best restaurant in America and best restaurant in the world by organizations and lists as diverse as the James Beard Foundation, World's 50 Best, TripAdvisor, Yelp, Gourmet Magazine, and Elite Traveler, and the list goes on.
6:14
His restaurants have won nearly every accolade afforded to them.
6:18
Recently, Alinea had to shut its doors due to COVID-19 right alongside restaurants everywhere, all over the world.
6:23
So, you can imagine my surprise when, just a few days ago, Nick told me that Alinea had a record-setting day, in fact, its highest revenue day ever within the last 2 weeks.
6:33
That's part of the catalyst for recording this episode, and we dig into the strategies and tactics that made it possible.
6:41
And even if you have no interest in restaurants, there's a lot that you can gain from this episode as it relates to frameworks, thought structures, contingency planning, all of that.
6:52
And if you are in the hospitality industry, the restaurant biz, I recognize that Alinea is a somewhat unusual case, but still, there are things to be learned from how Nick and his team have responded to this and adapted and innovated in other places. So, I suggest listening.
7:10
Nick, as bit of background, has been a subversive entrepreneur and angel investor since 1996.
7:17
He spent a decade as a derivatives trader, has co-written three books, and believes in radical transparency in markets and business.
7:24
As an outsider to the restaurant industry, Nick's approach to the business of restaurants is markedly innovative, and he has been featured in Business Week, Fast Company, The New York Times, Forbes, and Crain's Chicago Business, among many other publications.
7:37
He's given talks on innovation, entrepreneurship, and experience design across the country.
7:41
He's also the founder and CEO of Tock Inc.
7:44
That's TOCK, a reservations and CRM system for restaurants with more than 10 million diners and clients in more than 30 countries.
7:50
Tock has also recently launched a to-go platform, which has helped restaurants pivot to fulfill pick-up and delivery orders.
7:57
You can find more on that at explore. tock. com.
8:02
And without further ado, please enjoy a very wide-ranging and tactical conversation with Nick Kokonas.
8:12
Nick, welcome back to the show. Thanks, Tim. Great to be back.
8:16
And this is an episode that I've been looking forward to.
8:20
We've been chatting over the last handful of weeks, and you've had a few dozen people request that you go back on my podcast.
8:28
I've had a few people request the same.
8:31
And there a lot has happened in the last uh year and a half, but certainly in the last month and a half.
8:41
And before we get into the current state of affairs and how in some ways, many ways, you've zigged instead of zagged and approached things differently, let's zoom out to a concept that we discussed in your first appearance quite a bit.
8:58
And maybe you could just define it for us.
9:01
And that is asymmetric bets or asymmetric opportunities.
9:06
Could you define what that is and then perhaps just describe what kind of follow-up questions you've been getting and how you would speak to those?
9:16
Yeah, well, I mean, we covered a lot of ground.
9:18
I think that first podcast was 3 hours or something like that.
9:20
And um you know, the overarching theme was about decision-making, not outcomes, right?
9:30
So we try to measure I try to measure my self and my business life and personal life on on making the decisions, not whether or not they sort of paid off or not.
9:46
And in business especially, you're investing um what you're looking for is an opportunity where if you make the wager or you make the investment that you know, you you get paid off 8x, but you can only lose 1x or 2x.
10:07
Um it's just that simple, you know, it it's and that doesn't mean like also that the odds are actually 8x.
10:14
It's like a 50/50 odds chance that pays off more than 50/50, right? Mhm.
10:22
Um or there are unknowable odds, and this is probably more often the case.
10:30
But if something does happen, it's really consequential as opposed to if it doesn't happen, it doesn't really matter.
10:40
Um so without getting, you know, technical or mathematical about it if you take an action and X happens and it doesn't really affect you at all, but if Y happens, it's either really really great or really really bad, that's the asymmetry that we're looking for.
10:59
And you want to you want to take the the action which either hedges you in case that that outcome is really terrible or um you invest in it if the outcome's really great.
11:13
And then knowing that you did that is is the right path.
11:17
Like you don't the outcome is what it is.
11:20
Like you can't really control it most of the time.
11:24
And so consequently, you just go, "Yep, I made the right decision.
11:29
I'm going to live with that."
11:30
And uh I was just going to say, and I don't want to pull you off your train of thought, but could you give a perhaps an example, not not necessarily the current example which we will get into, but are there any examples that you could use just to illustrate this for folks who are listening? Yeah, of course.
11:47
Um you know, occasionally uh in I'll use an investing example.
11:54
Occasionally, you see a situation where uh a company is very, very solid, um has a great balance sheet, is doing business, you know, steadily, and and you know, they're not going to go out of business anytime soon.
12:12
But, they have an opportunity that if it if it happens, um if it works, it could it, you know, it it's going to go skyrocketing.
12:21
The example I can think of is actually similar to our current crisis.
12:26
Um and that is in 2008, I remember watching uh the CEO of Ford on TV and all the other guys were talking about the bailout and the TARP money and all that, and they were they looked really nervous.
12:40
And he got up there and was like, "Yeah, we're not going to take the TARP money. We don't need it."
12:44
And Ford was trading at like, I want to say it was like a dollar eighty a share or something at the time.
12:48
It had been dragged down.
12:51
And you could just see that they felt that their business was solid, their business overseas was fine, their business in China was growing, and they had planted the seeds for that.
13:04
And it felt to me like Ford wasn't going to go down to a dollar, but it could easily go to five. That's it.
13:11
It's not like, you know, it's not like overly complicated.
13:13
Um and knowing what I did about the the overall sector at the time because I was studying it, that was kind of all I needed to go to say, "Hey, this is a really asymmetric situation."
13:27
I I think what's interesting after our last talk where we got into it in more depth, um a lot of people on Twitter some started threads saying, "Hey, a lot of these people that are on on podcasts and people who think about these sorts of things that I like, Naval or whoever it may be, talk about asymmetric risk or Taleb.
13:47
And and let's make a list of everything that's asymmetric."
13:50
And people were like, "Reading a book is asymmetric or spending time with your family is asymmetric."
13:55
And that's not the point.
13:58
That it was like, "Yeah, those are great investments of your time and they're linear, you know?
14:06
Um what we're looking for is something that is multiplicative, um that uh is logarithmic.
14:14
And um I certainly think reading books is awesome and and spending time with your family is awesome, um but it's not asymmetric." Mhm.
14:24
And let's let's let's jump into asymmetric risk cuz there's asymmetric risk or opportunity to the upside, right?
14:33
Where maybe you can invest very cheaply, I'm just making this up, in a drug development company and it's going to be worth nothing, but your your downside is capped and very minimal, but if it does in fact clear the regulatory hurdles and ABC, it's going to be a 20 or 100X, right? Something like that.
14:52
There there are those examples.
14:52
Then there are downside risks and you are a participant and you wear many hats, but certainly one of those hats is in the food and beverage or restaurant world.
15:06
And many people would argue that no sector has been so swiftly decapitated as the the arena of restaurants.
15:18
And I'd just be curious to know if we travel back in time, when did you start to assess this risk?
15:30
So it is April now and I think we're six or seven weeks into a quarantine mostly national.
15:36
I'm a I'm the CEO and founder of Tock, which is a reservation system and we operate in 28 countries and one of those countries where we have about 20, 30 restaurants.
15:46
Small presence is Hong Kong.
15:49
And when the virus hit China and then Hong Kong started shutting its borders, we could rapidly see the reservations going from you know, 95% capacity at most of the restaurants there to zero. Like actual zero.
16:06
Like they were open-ish, but no one was going.
16:15
That certainly woke me up to the possibility that zero was was plausible.
16:22
Now, it's a funny story is that about three years ago we were assessing our clearing risk.
16:28
So Tock not only does ordinary reservations, but we sell tickets to events for restaurants or special tables like chef's tables or pre-fix menus.
16:40
And we sell about 30 to 40 million dollars a month of those for restaurants around the world.
16:44
And one of the things that we have to assess is the risk of of how we pay those restaurants out.
16:49
You can imagine that if you have a concert or something like that and you sell the tickets to the concert um and like you know, it's the Fire Island scenario, right?
16:58
So you sell all of the tickets to the concert and then everyone pays their money. Okay, got it.
17:04
Just to be clear, that's the F Y R E not the Yeah, yeah, yeah, yeah. F I R E. yeah, yes. Yes, that's correct.
17:09
Yeah, the Fire Festival, right?
17:11
Yes, F Y R E not not the not the other one.
17:14
Um and uh And so you you you pay out the money to uh, the concert promoter ahead of time.
17:23
And then if the concert doesn't take place or that guy just goes to Jamaica with the money, um, we're left holding the bag in the case of the restaurants.
17:30
So, we were trying to assess that that risk.
17:32
And it's a bit like running a clearing firm.
17:37
And What is a clearing firm? Just for clarity.
17:39
A clearing firm is is uh, is the middle position in a uh, commodities market.
17:44
So, there are a buyer to every seller and a seller to every buyer.
17:48
So, if I make a transaction with you for a futures contract, we don't actually make it directly, um, even though you're the buyer and I'm the seller.
17:57
I actually sell it to the clearing firm and you buy it from the clearing firm. it.
18:01
So, it's kind of like a title company in a home transaction. Right.
18:05
So, I remember our CFO, Steve Brnecki, really bright guy, very conservative, saying to me, you know, "We shouldn't pay out XYZ restaurants this far in advance because there's a risk that they can default and all that."
18:19
And I said, uh, and I have this in an email, I said, "It's not like every restaurant in America can close all at once."
18:27
Uh, and that was 3 years ago.
18:27
Um, I was wrong about that.
18:30
Uh, you know, I I I never imagined a scenario that that this could happen.
18:35
And then in February, I I could imagine it.
18:39
Um, I could imagine it given what what's happened.
18:43
Um, I still thought the probability of it happening was very low.
18:47
It wasn't like I was, you know, prescient in the sense of like, "Yes, for sure this is going to be a pandemic that sweeps America."
18:53
Um, and even if it had been, you I probably wouldn't have thought that it would result in the kind of lockdowns that it has.
19:04
Um, so, but I did think, "If it happens, we are completely screwed, right?
19:10
So, there's an asymmetric risk to the downside where you go like, "Look, there's a There's a 90% chance this doesn't happen at this point."
19:19
Or maybe even a 95% chance.
19:21
But, if it does happen, we have a load of problems.
19:24
We have a load of problems for our restaurants, for our employees, for Tock, um and they're existential in nature.
19:34
They are the kind of problems where you go, "I have blow-up risk.
19:40
I can wake up tomorrow and have no businesses."
19:44
And Tock could be on on on the hook for, you know, 5 to 10 million dollars, which would blow Tock out.
19:51
So, I became very aggressively paranoid um with people in my circle and saying, "Hey, look what's going on in Hong Kong could happen here." This is end of February.
20:07
And Just Just Just so I understand, and in your circle you mean within the company, employees, managers, colleagues within the company? That's correct, yeah. Yeah.
20:16
And uh you know, I I I called in our general counsel and said, um Emily Groden, uh really bright young woman, and I just said, "I need to understand everything about uh unemployment.
20:33
I need to understand everything about furloughing people.
20:34
I need to understand all the benefits."
20:36
I talked to our HR people, like, "How much can we pay people and they can still still get benefits?"
20:40
And I remember them looking at me going like, "Are Why are you asking these questions?"
20:45
Like, you know, "Are you Are you about to like sell the company?"
20:49
Like, they weren't thinking negatively.
20:51
They were thinking like, "Something must be up."
20:53
But, it was probably a good thing, right?
20:55
And then I called in Steve and I was like, "We need to come up with with methods of tracking um the inflow and outflow of of payments to to our companies by the hour not by the day. Like things like that.
21:14
And in terms of the restaurants, you know, I I had pulled in Grant Achatz and and our uh you know, our management team and and just said I I think there's a reasonable chance we don't have any restaurants in a couple weeks.
21:31
And for those who don't know, since it's not in your bio, uh can you give two or three lines on on Grant? Yeah, sure, absolutely.
21:38
Um Grant Achatz is is my business partner.
21:40
He's also one of the best chefs in the world.
21:44
Um renowned for uh modernist cuisine we like to call it.
21:48
Um some people call it molecular gastronomy.
21:51
We built Alinea together in uh 2005.
21:54
Uh and uh he's won, you know, best chef US and uh he's been on all the the TV shows.
22:03
And if you want to learn more about him, the best way to do that is uh Chef's Table, uh the Netflix series season 2 episode 1.
22:09
Um really really talented, dedicated, amazing person who also survived stage 4 cancer um 10 years ago. Grant is is incredible.
22:18
So, I second that recommendation.
22:20
Last name spelling A C H A T Z.
22:22
Also uh both you and Grant appear quite heavily in the 4-Hour Chef for those people who might already have that.
22:32
Okay, so you called in Grant.
22:36
And I just said I I think there's a reasonable chance that we don't have any restaurants in a couple weeks.
22:42
He could tell I was very serious.
22:42
Um Alex Heiser, business development manager, could tell I was very serious.
22:49
So, they weren't looking at me saying like, you know, you're crazy.
22:54
But they also were looking at me like you know, I I think you've kind of lost it a little bit or maybe you're overstressed these days.
23:04
And I I just kept saying to them like, "Look, I I hope I'm wrong.
23:09
Uh but if I'm right, we need to do a lot of things very, very quickly and very well.
23:16
And if we don't, we're going to be in a world of hurt.
23:20
Um I think that because I was a trader um on the floor, which doesn't exist anymore, you know, um the thing about a trading floor is that the markets work the same as they do now, um lot slower.
23:35
And you could watch people though and their positions.
23:38
So, the difference, you know, in the '90s and early 2000s is that when someone was losing a tremendous amount of money and was stressed out, you could watch them.
23:51
And people had different reactions.
23:51
Like one reaction was to blame everyone else around them.
23:55
It wasn't their fault, you know, the world conspires against them.
24:00
Uh and they would lash out and get violent or something like that.
24:02
Some people would what we called turtle, like they'd put their shell up and tuck their head in and and just kind of like sit there and watch the world fall down around them.
24:13
And it wasn't a pleasant thing by any stretch, but it was the kind of thing that you saw fairly often.
24:19
And so, what we always tried to train our people to do was "Hey, you know, the the market's much bigger than you.
24:26
The world's much bigger than you and it is what it is.
24:28
Like it you have to see it as as you see it.
24:33
Assess it and then doing nothing is a choice.
24:39
Doing nothing is is holding tight to your current position.
24:41
It's like buying your position again.
24:45
And so, if you're better off selling your position and getting out, you have to do that very quickly.
24:51
And one of the things that any any trading book will tell you is that you're supposed to let your winners ride and your losers you're supposed to lock in.
24:59
But most people do the opposite of course in every aspect of their life because when you lock in a loser you have you have ended that that outcome in a negative fashion.
25:10
You've reinforced it like you you've lost the game. The game is over.
25:17
And by by lock in what do you mean?
25:20
Well, I mean in the in the case of trading like if you buy a stock at $100 a share and it goes to 80.
25:27
If you hold it, you go like well, there's a chance it could go to 110, right?
25:32
If you sell it at 80, you've locked in a $20 loss. It's done.
25:33
Like the game is over of that particular trade.
25:39
And so I think a lot of people tend to do the opposite of what you should do which is when you buy the stock at 100, it goes to 110, they sell it and they lock it in because why?
25:48
Hey, I made a good decision and I won and that one's over.
25:54
Um it's the converse and it's exact opposite intuitively of what of what you should be it's intuitively exactly the right thing that your brain's telling you to do.
26:05
It's saying, you know, lock in the the feel good, get the get the serotonin release or whatever.
26:12
And and ignore the the bad Like like let's just let it ride because like it'll probably turn around, you know, or it's cheaper.
26:21
Like I loved it at 100, I got to love it at 80, right?
26:25
And you can ride that all the way down to zero and it's no different with our restaurants when when we were looking at the possibility, let's just say that that we didn't do the lockdowns in America, but demand went down 40%.
26:42
Demand goes down 40% in a restaurant, you're probably losing money every week and you're going to have to make really hard decisions about staffing, about hours, um about food purchasing, all those things.
26:56
And so, that day, and it was I can tell you it was March 4th, um we I basically said, "We need to get like contingency plans together.
27:08
Like, nothing happens, no problem. Um business as usual.
27:14
If uh it's regional and people can't travel and our demand is down 20 or 30%, what's our plan for that?
27:21
What's our staffing plan?
27:23
What's our What's our purchasing plan?
27:27
Um what's What's our our PR plan, for lack of a better term?
27:30
Like, what is our messaging to the world?
27:34
What should our menu items be?
27:36
Um what feels appropriate?
27:39
Um how do we message that to our teammates and our staff who may not understand the situation?
27:45
And then, of course, you know, what happens if we're mandated to shut? What do we do?"
27:51
And by making all those decisions at a time where it wasn't yet a panic, when events started to unfold, you you're kind of like, you know, dust off plan D.
28:07
And then you just execute because the decision-making is much easier to make when you're not when you're not in the throes of battle, so to speak.
28:15
So, if we if we then look at the play-by-play, so you call all your teammates, your staff together.
28:21
What What message do you sort of deliver to the You You've spoken with management.
28:30
You've spoken with Grant.
28:33
Or presumably you've spoken with management, but what what What is the message that you sort of deliver when things start to go either before they go sideways or when they start to go sideways?
28:42
Yeah, so just before, you know, it things were really going sideways and you could see that in Seattle specifically you could see that there is both an outbreak and the restaurant business was starting to go down the tubes.
28:57
And on March 8th I tweeted that the hospitality industry in the United States is about to be decimated. It's 4% of GDP.
29:09
And then hotels and airlines are are are coming right after.
29:12
And that's you know March March 8th.
29:14
That same day I brought in I think we have about 25 managers between front of house and back of house at our five restaurants.
29:25
And we brought them all in to a meeting and I just said um this is coming and we need to institute new rules as to how everybody works.
29:36
And so we instituted mandatory temperature checks um hourly hand washing both of which are logged.
29:47
Um normally if there's like a 1:00 p. m.
29:49
or noon call time for front of house to do side work people kind of can come anytime between you know 12:00 and 12:30 or whatever.
29:58
I was saying if someone's not there within five minutes of call time exactly 12:00 to get their temperature checked they can't come in the building.
30:05
If they've traveled from Europe or Asia in the last two weeks they have to quarantine for 10 days.
30:12
And all that sounds fairly normal now.
30:13
Um at the time what I was relying on are two things.
30:18
One I was looking at what they were doing in China to to combat this at businesses.
30:25
Um it wasn't hard to find information on that.
30:27
And then I also talked to a doctor um here in Chicago about you know is it safe for employees to go in with this?
30:35
Like what precautionary measures can we take for their safety and if the safety of our of our customers.
30:41
And mind you this is when we were still open.
30:42
Like, we were not closed at that point.
30:43
And I I do know that there was a bit of cynicism on this because they were kind of going like, "Oh, Nick's the owner guy, and he's not here during service, and there's no way we can stop our service in the middle of of of, you know, a busy night serving 300 people to have all 55 people on the staff wash their hands every hour.
31:06
It's just not going to happen."
31:10
And I can see that look on a few of their eyes.
31:11
Like, man, he's out of touch and doesn't get it.
31:17
And as soon as I saw that, I shut it down hard.
31:22
I basically just said like, "There will be no jobs in 4 weeks, and we need to get way ahead of this curve, and anybody who doesn't take this seriously is just out the door.
31:33
No HR calls, no anything.
31:33
We are in We are in a wartime footing."
31:40
And the smiles kind of went off their face as I went down the line, and I just said, "We are going to work as hard as we possibly can for all of our mutual benefit and for our community's benefit, and we're going to feed people, and
31:58
we're going to feed each other, and we're going to get each other jobs, and we're going to pay you, and I'm not going to take any money, and Grant's not going to take a salary, and all of the management team, the ownership team is not going to take a salary. That's how seriously we take it."
32:10
That's how seriously we take it."
32:12
And by the end of that meeting, all of those procedures were in place the next day.
32:18
Um there were one or two people who did not want to do it, and they were asked to leave.
32:24
And this is pre-tsunami, right?
32:27
I mean, you're sort of seeing based on the canary in the coal mine of Seattle and Washington that the tide kind of flowing out, so to speak, right?
32:37
Like, okay, this is not this is not normal.
32:41
Yeah, and we we were still doing business, you know, we were still open.
32:45
Um and I thought that there was a chance that, you know, again, I thought it was like, well, we're at like 60% now or 70% that this is going to come to Chicago, but even if it doesn't come to Chicago, even if it just stays on the West Coast, it still affects us tremendously, right?
33:01
So, you know, day by day, I think it became very evident that we were going to be mandated to close.
33:11
And that's when I went from restaurant mode like of like, okay, well, the restaurants we we kind of know what we're going to do.
33:19
We've got these plans to the talk mode of holy cow, if every restaurant in America shuts, Talk has no business.
33:32
Like, we're a 4-year-old, 5-year-old startup with 100 employees.
33:37
Um may I pause you for 1 second? Yeah, of course.
33:40
So, you have the startup with 100 employees, but you also have all these restaurants.
33:43
So, you said you had the plans in place.
33:45
What were the plans for those restaurants?
33:48
I mean, if Well, Yeah, for the plan for the restaurant was if if the governor's office mandated that they close, we would um Well, first of all, let me back up.
34:00
We we run the restaurants very differently than a lot of folks.
34:03
We eliminated tipping 10 years ago in order to accomplish a lot of the things that I think the industry needs.
34:09
Um we try to treat all of our employees as the professionals that they are.
34:16
So, what I mean by that is that a lot of people think of a waiter or waitress as embodying this this role in society of servitude.
34:24
Um and certainly we're in service of our customers, but in trying to give them great hospitality.
34:32
But for for many of our employees, you know, most I would say, this is their chosen profession.
34:39
They are highly skilled at what they do.
34:42
Um we create a unique environment and experience for our guests, and that's why we're we're so successful.
34:47
And and the more successful we are as a team, the more successful these folks are as professionals.
34:53
Um we have servers that make, you know, well into 150 plus thousand dollars a year.
35:00
But we don't do it with tips.
35:00
Um and so we also provide a 401k um with 4% matching benefits.
35:09
We also have um healthcare benefits um that people vest into after just, you know, a month or two of work.
35:14
We have family medical leave act, um you know, paid paid parental leave.
35:19
All these things that I I think uh and we'll probably get to it in a little bit, but all these things I think that that people are aware of now because the industry you know, was forced to close and and, you know, you're talking about 11 million workers in the United States that are in the hospitality business.
35:37
Um And that aren't going to be displaced by robots anytime soon, you know.
35:44
We ran that very very differently.
35:44
And so the considerations that I had was okay, if if we're not doing any business and we have no revenue coming in, what is the best way over the short term, month or two, to ensure that these folks have healthcare, ensure that they're taken care of.
36:05
What does a furlough look like?
36:05
What does unemployment insurance look like?
36:09
What kind of capital reserves do we have that we can pay stipends to them?
36:14
What other work could we give them that could produce revenue that isn't our core business, you know?
36:21
Um and so all of those things were considered.
36:23
And when the shelter-in-place order came, I was watching uh on on my computer and uh I heard the governor, Governor Pritzker, say that he's ordering all the restaurants closed.
36:39
And I closed that window and I immediately called our HR and our general counsel.
36:45
And I said, "I'm going to draft a letter furloughing all 300 people, but what we're going to do is we're going to pay the benefits out at the level at which we can keep them on that they can get unemployment insurance, but can also retain their health care.
37:00
We are going to pay a $300,000 stipend to all the employees.
37:05
So, $1,000 for every employee on their paycheck as a bonus to tide them over.
37:09
So, last paycheck comes this Friday.
37:12
They Everybody gets extra $1,000.
37:16
Um and then what we're going to do is we need to understand the rules on how to hire everybody back and what the timing of that looks like.
37:25
Um and certainly at that point, um we didn't know what that how successful we would be in in the plans I'll tell you about in a second.
37:36
Um and I wrote that letter to the employees and I I have to tell you like it was it was super emotional.
37:44
Um I was at home and uh it it was really tough because in some ways I felt like I knew the plan and I knew what we might be able to accomplish.
37:54
But I also thought that there was a really high chance that we'd fail at it.
38:01
And also there was, you know, it's a sense of helplessness.
38:04
Like there's not much you can do.
38:05
So, I knew I think I what I said to my wife was I knew I was making the right decision both ethically and strategically.
38:17
And yet it still felt terrible.
38:20
So so that was really hard.
38:20
And then I sent that off.
38:24
And I probably wallowed for like an hour.
38:26
And then I went, "Okay, we need to start feeding people.
38:28
We're in the business of selling food and selling emotional connections with that food and and cultural connections.
38:39
And we're going to start doing that."
38:41
And so, um you know, we had already decided that we were going to try to do carryout, which is the farthest thing from what we do normally.
38:51
And Yeah, just to paint a picture for people. Yeah.
38:55
So, Alinea is like MoMA meets immersive theater meets uh hear a pin drop quiet kitchen with art pieces being brought out to you.
39:14
It is as far from takeout as you could possibly imagine, right? Or carryout.
39:20
Yeah, it's it's as far from carryout as you can imagine.
39:22
And um you know, I I said to Grant, I'm like, "We got to do $30 comfort food.
39:33
And we need to do it at volume."
39:35
Now, as a as a contrast, what would you say the average sort of ticket per per person or per table price is normally?
39:43
Yeah, it's it's uh you know, with with wine food service, about $350 a person. Mhm. Okay. Should we do that?
39:50
You're you're going to 1/10 of that price point.
39:52
like, let's we can talk a little bit of numbers.
39:53
Like, we do 128 people a night at Alinea.
39:56
And we have a staff for 64 seats.
40:00
We have a staff of about 85 people that make that happen.
40:03
They get there at 4:00 in the morning, 5:00 in the morning for the morning prep team.
40:07
And they're there till 2:00 in the morning.
40:10
Um so, the cost, as you might imagine, of running all of that labor for 20 hours a day.
40:14
And then the night cleaning person, there's the door doesn't lock 365 days a year.
40:19
It is a 24/7 operation to keep that going.
40:23
Um and we do about $20 million in revenue a year.
40:25
It's a It's a very successful business.
40:27
Um and we built that up from our first year doing about 4 and 1/2 million in sales.
40:34
Um it's really, really hard work to make It's like running a theater, like you said.
40:41
It's It's like every night is showtime.
40:43
If the fishmonger doesn't show up with the fish that morning, the people are still showing up at at 6:00 p. m.
40:51
And there's just no excuse not to have excellence because uh everybody's coming there expecting a transformative experience.
41:03
And if we fall even a little bit off of a really high mark, they consider that horrific because it's their special occasion.
41:09
You know, it's the one time they're going to go to Alinea and see that.
41:12
It's like going to see the Stones, and if the Stones suck, you're like, "Ah, God, I waited 30 years to see the Rolling Stones and they were no good."
41:20
No, they bring it every night.
41:22
It's hard work, you know?
41:22
I mean, they're like 80 years old and they're still doing a great job.
41:27
So, we have that attitude of make it happen. Just do it. Like, figure it out.
41:33
And just just as a side note, because I think it'll I think it's kind of entertaining.
41:37
Uh so, good food, like good-tasting food, again, we're going to we're going to segue back to comfort food and just what a transition that is.
41:47
Uh and you and I have not spoken about this in depth because I wanted to save it for this conversation in terms of making that hop in the specifics, but there good-tasting food is table stakes, right, at Alinea.
42:06
Could you What is the I think it's embroidered, is it not? It's on a wall. What is the expression?
42:14
Flavor is for Well, yeah.
42:16
Grant Yeah, I don't even want Should I say that?
42:21
I think at one point actually when you were doing Four Hour Chef, you got a kick out of this.
42:27
Grant had a a uh a napkin that someone embroidered that said flavor is for Um and I I think I mean it's not it's not exactly PC, but I I think it's like yeah, that's given.
42:40
Like making food taste good at that level, um it better damn well taste good.
42:47
Um and honestly that for for people at that level, that's not the hard part.
42:55
That'd be like telling Picasso like you know, hey, you know, can you do a portrait of my daughter and make it look like her?
43:03
And the answer of course is of course he can.
43:04
Like, you know, that's like he was doing that when he was 12 and it was unbelievable. He was a prodigy.
43:12
Um what are you going to do when you're 60?
43:15
Um to do something new, different, interesting, better?
43:19
How are we going to to through food and through your experience and and sitting down there create an emotional experience for you with food and service as the medium.
43:28
And that sounds like that sounds like pretentious Like I get that.
43:32
Like I get that that sounds like potentially like the worst art house project in the world.
43:36
Which which means it's even harder to pull off. You know what I mean?
43:41
So, what we always tell people in any interview you'll ever hear with me, you'll hear when people say, "Well, what's the point of Alinea?"
43:49
And I say fun and delicious.
43:51
And everyone's like, "Yeah, but what about the science?"
43:53
Or what about the art house?
43:55
Or what about the pin drop in the kitchen? And I'm like, "Nope. Fun and delicious."
43:59
Like if you're not having fun at Alinea, if you don't get the joke, um if you think that we are making fun of you, we fail miserably.
44:05
But if you go there and you're laughing with us and you are surprised and excited, we all win.
44:15
It's it's meant to be that.
44:18
And by the way, we fail all the time at it, but we try really hard to keep it approachable.
44:22
So, let's let's flash forward then because now all of these things that make Alinea Alinea, many of them are gone, right?
44:29
I mean, it's just the the the palette of colors has been reduced to carry out or Yeah, I mean, we didn't know what we were We didn't know what we were going to do and I think everybody on our team, that the closing team, as we were trying to figure this out, kept going back to things we knew.
44:52
And we were on a chain text message um because there's so much going on.
44:58
Um and one of our our employees kind of was modeling in talk like, well, we can do 125 meals a night and we can do it between a 6:00 pickup and a 9:00 pickup and and we'll have this many employees and this many dishwashers and all that.
45:17
And I remember I replied, "There are no chefs.
45:19
There are no dishwashers. There are no cooks.
45:25
There are no owners and there is no restaurant.
45:28
Get it through your heads.
45:28
Like, none of what we had last week exists.
45:33
We're doing something completely different.
45:35
We have to do it inexpensively because no one's going to want to spend $200 on a pickup meal. It's also tone-deaf.
45:41
We're in the middle of a freaking pandemic, right?
45:42
Um it's going to have to cost like 30, 35 bucks.
45:47
It's going to have to be comfort food because it's still kind of winter here.
45:51
It needs to be highly delicious.
45:51
It needs to be transportable and it needs to beat the out of ordinary like delivery food, pickup food.
45:58
And then we need to do it at a scale that the revenue makes sense.
46:03
If we're doing a hundred of them at 35 bucks a night, that's $3,500.
46:10
With the scale of our employee level and our lease and the kind of ingredients we buy, $3,500 a night is fine if you if you have a small sandwich shop. It's probably great.
46:21
You probably have two or three employees.
46:22
We have nearly a hundred at that restaurant.
46:24
Um our annual payroll there is, you know, six and a half seven million dollars.
46:31
So, you're guys you you're not getting the scale of the problem, you know?
46:33
And I remember I called Grant and and he was like, "Well, we could do like a beef Wellington cuz that's always delicious and we could do them individual size."
46:44
And we buy at the Currently, we buy beef from a ranch in Colorado called 7X Ranch, which makes a great product.
46:50
And uh you know, the Wellingtons would have to be 50 or 60 bucks each.
46:58
And I was just like, "It's got to be 35 bucks.
47:00
Like, you have to come up with something that's 35 bucks."
47:01
And he said, "Well, I could do a short rib um beef Wellington because short rib is way less expensive than tenderloin and it'll still be really delicious.
47:08
The sauce will be the same."
47:12
Um and all of a sudden, you know, 3 days later, we turned on Tock, which we built this other thing which I can tell you about in a minute, Tock to Go.
47:23
And um we put up 500 for sale for the weekend on Friday, Saturday, Sunday.
47:29
And they sold out in like 5 minutes.
47:32
And we also offered wine to go with that and we sold like a couple hundred bottles of wine.
47:39
And suddenly, we're like, "Oh, like, hey, we brought in like $20,000 of revenue a night.
47:44
We can hire back like 30 people."
47:47
And by the way, we need to cuz we got to produce 500 beef Wellingtons.
47:51
The first day was was tricky because the pickup we'd never done a pickup before, but we kind of went like, "Well, what's the smoothest way to do a contactless pickup?"
48:00
Um so, we built two-way text messaging into talk, and people just pulled up, and we had an iPad out front, and people had masks on and gloves, and they popped their trunk, and we put the food in the trunk, and off they go, and lo and behold, by 7:30 the first night, we had served all 500, and people were posting on Twitter saying, "Wow, this is a really joyful thing in the midst of all this craziness."
48:24
And what always happens with with us in a good way and with Grant, God bless him, like, you know, guy's a freaking fighter.
48:32
On Sunday, he was like, "You know, I think we could do 750 tomorrow." Like, 500 easy.
48:39
And by the following weekend, we were doing 1,250 a night, and we had re-employed about half our staff in a week.
48:49
And then we kind of looked midweek, and we went, "Okay, what do we do it next?
48:53
Now we know how to do this.
48:53
Like, hey, we got 500 under our belt.
48:57
I think it's safe to to get Next and Roister, our other two of our other restaurants going.
49:01
And by the way, we have a cocktail bar.
49:02
Let's start doing cocktail prepaid cocktail packages, um cocktail kits out of Aviary, and then offer them up with these meals."
49:12
So, we started engaging Nick jump in for a second? Yeah, please.
49:14
So, a question that I'm sure some listeners are wondering is how do you produce that number of meals safely without packing employees together? Yeah, absolutely.
49:26
Um that's certainly part of the trick.
49:28
First thing you have to understand is that on a normal night at Alinea with the 128 people, you're looking at about 2,200 to 2,500 plates going out of the kitchen.
49:39
Um we have a big open kitchen.
49:41
It doesn't look like a traditional French kitchen.
49:44
It looks more like a um like a lab or something like that.
49:49
And uh so, what we did is we took all the dining room space and we we spaced all of that out.
49:58
Prep kitchen next door um that we use all the time during the day.
50:03
And the the important thing to remember is that the intricacy of what we do at Alinea normally with those 2,000 plates that goes out is highly complex.
50:14
You've got 15, 16 different dishes each with 15 or 16 different components um very precise.
50:20
By doing 500 to 1,000 beef Wellingtons that are all identical to one another along with the sides and the rubbish on mashed potatoes and all of that it's actually much simpler than what we do normally.
50:32
Um and so what we did was we did the temperature check, the mandatory hand washing, the masks, the gloves, but we spread it out throughout the entire restaurant.
50:40
Um so that the space where diners normally are wasn't being used.
50:46
So we used that as staging for all of the boxing of the food and whatnot, right?
50:51
Um so we were able to do it in a way that um was safe.
50:56
And it's really important to remember too and this is something I think a lot of people early on um didn't think about.
51:01
In In Chicago, we have 82 major grocery stores for 5 million people.
51:08
Um if one of those nodes goes down, like if you think about a computer network, if you have a network of 16 computers and one of those nodes goes down, you notice, right?
51:19
But if you have one with 64,000 nodes and one of them goes down, you don't really notice, you know, that's that's the internet in a nutshell, right?
51:26
That's that's that's computing in a nutshell.
51:31
Um early on there were some folks in the industry that were calling for restaurants to not be allowed to do carryout at all. And is it 100% safe?
51:39
Well, it seems to be the case and there's broad consensus on this that um food is safe and packaging is probably safe, like 99% safe.
51:53
Now, the mail is still being delivered and we're all getting Amazon packages.
51:58
Um so what we were left with is really the safety not of our customers, which seemed to be very very safe, but the safety of our employees.
52:07
And so that's what we took very very seriously.
52:09
And and first I should also add anybody who didn't want to come into work didn't have to, right?
52:15
Anyone who felt unsafe or was in giving care to elderly parents and it was a bad risk reward. No one had to work.
52:22
Their their their reemployment is in no way contingent on whether they decide to work during this time.
52:29
What we found though is that most people wanted to work.
52:33
Um and in addition to being reemployed, we put everyone at $15 an hour.
52:40
We did not know, you know, so if you were a dishwasher, you made 15 bucks an hour.
52:44
If you were the head chef of Alinea, the sous chef, a manager who was making $150,000 a year before, you were getting $15 an hour.
52:53
And we did that to make everyone equal.
52:57
And then we said if we make money doing this, we're going to take the profits of that money and we're going to distribute it amongst all the employees and a recapitalization fund for the restaurant.
53:07
And Could you just tell like Everyone felt like part of it, yeah.
53:12
I'm I'm the I'm the I'm that guy who interrupts, so I apologize, but the because I know people are going to wonder recapitalization, could you just explain that real quickly?
53:21
We don't have to spend too much time on it, but what does that mean? Yeah, no.
53:24
I I mean basically we're going to need runway to keep everyone employed after we reopen.
53:32
Uh one of the things that people don't realize, I think, in the industry and in in public in general, although it's it's certainly dawning on everybody, is that okay Congress passed the CARES Act and that's certainly a huge help to small businesses across the board.
53:49
Um they did so very very quickly and consequently the the uh there's a June 30th deadline as of the time we're we're recording this and it may be changed.
53:59
But basically you can you can apply for the payroll protection program, rehire everybody, but you got to spend all that money if you want it to be forgivable by June 30th.
54:07
But restaurants won't be reopened for ordinary business by June 30th.
54:15
And even if they were how many people are going to show up and feel safe, right?
54:21
So it's one thing to hire everybody back, but then what happens on July 1 when your your demand is down 70%?
54:29
And all of a sudden you have ordinary expenses and ordinary payroll again and your lease that you signed in 2016.
54:38
So what we wanted to do was try to make enough money now that we could have you know, a capital pool where we could weather the storm.
54:49
Not now, but over the 6 months after we're allowed to reopen.
54:55
Um and it remains to be seen of course whether or not this works.
55:00
But what I didn't want to do was was wait to see what happened.
55:03
Like every step along the way I kept saying great, I'm glad Congress is doing this.
55:11
I'm working with the Independent Restaurant Coalition, but I also want to keep working.
55:14
Like you know, I don't want to rely solely on you know, Congress or the some guidance in the SBA whether or not they change this June 30th date or not.
55:24
Like I can't really control that even though they should change it and I want them to and we've we've pushed them to because it'd be good for the industry as a whole and for the economy as a whole, I can't personally as an individual, rely on that.
55:39
And so, we we've been working really, really hard to scale up all of our operations so that we actually make money during this time.
55:46
And then we're going to pay out that money to the staff so that they they can, you know, take care of themselves and all that.
55:51
But then we also said, like, "Look, we want to guarantee your employment even when it doesn't make sense come September." That's the goal.
55:59
Let me ask you another question or just dig into one aspect of this that that may be a dead end or it may be interesting to people.
56:06
You're just mentioning a few minutes ago about repurposing the dining space, in other words, the spaces outside of the kitchen, but still within the restaurant for this takeout. Right?
56:18
For the meals that you were delivering for, say, $35 a pop.
56:24
pop. Was part of your ability to execute that the use of induction stove tops that could be moved around and put all over the place because that's something I remember noticing very, very obviously when I walked into the sort of the main and I
56:39
know you have multiple spots, but within Alinea, so the sort of main alien autopsy sterile cooking environment, were the induction stove tops, these I mean, if if you imagine for people who have no idea what this is, like a like a very a very thin uh boxed board game. I mean,
56:54
I mean, something roughly that size that you can plug in anywhere and boil a huge pot of water within a matter of minutes using My understanding is some some type of of sort of I get well, magnetic induction, I suppose.
57:11
But did you use those in the dining space or were was that primarily a prep and kind of packaging area?
57:18
Yeah, that It's a good thought, but we didn't really need to.
57:22
We were able to uh to do everything we need to do between our prep kitchen and our main kitchen.
57:29
Again, like, keep in mind, like, it's a lot of food.
57:31
Um if you look at Grant's Instagram, you'll see some pictures where, you know, there's you know, the packaging for 500 of them across all of the the the pass, and you know, they're plating it up, you know, um for packaging.
57:45
But in terms of the cooking, we didn't need to do that.
57:48
It was more in terms of the packaging and staging for pick up and whatnot that went out into the dining rooms.
57:55
Um again, it's a ton of food, but it's less than we normally do.
57:59
Did uh I I'm not in the restaurant world, but I imagine that and correct me if I'm wrong, but that that on top of low or no I shouldn't say demand, but rather ability to service customers in the usual way, that there are some supply chain disruptions.
58:19
Did you guys not run into any supply chain issues?
58:23
You know, we're starting to now.
58:23
Um but early on, all the food that you might imagine that would normally be be distributed to thousands of restaurants, almost everybody was buying nothing.
58:37
So early on, we actually found that that we had some distributors who would call us up and say, "Hey, I've got 800 lb of XYZ that's about to go bad in 4 days. Do you want it?" It's amazing.
58:53
So we were Yeah, so you know, we I remember like um probably like day five or six, we you know, we didn't want to be selling wine out of our cellar because it would again be a little tone deaf trying to sell, you know, like, "Hey, it's a pandemic.
59:09
Buy a $250 bottle of wine, right?"
59:13
Um so we were going out into the market and buying wine from distributors, and when we would reach, you know, the distributor, and they would email us back, they'd be like, "What do you mean you want to buy wine?
59:29
And we're like, yeah, we we need to buy like, you know, 50 cases for the next couple days.
59:33
And they would go like, what are you what are you doing, you know?
59:37
And and so so again, like I mean, you know, sounds bad, but from a trading perspective, when you're the only buyer, it's like the in scene in Trading Places with Eddie Murphy going like, you know, he's got all the frozen concentrated orange juice, right?
59:52
Um if you don't know the movie reference, it's worth watching. Old old movie. There was time now.
59:59
Um but uh you know, it's like we would just go like, well, you know, they're asking $22 a bottle, offer them 12. And we'll buy it all.
1:00:09
And and still doing that, you know, it's like we put in a wine order this morning.
1:00:13
Um most restaurants are not are not buying wine right now.
1:00:16
They're they're their wine cellars.
1:00:20
Um again, about the asymmetry of things, like you want to be a buyer when everyone in the world says that there's it's totally not worth buying.
1:00:29
As long as the thing you're buying has some intrinsic value.
1:00:33
Um and and vice versa, you know?
1:00:36
Yes, let me let me hop in because I I want to try to put myself in the in the shoes of of some listeners who are going to say, my god, like these guys have huge cash surpluses, they're generating incredible revenue.
1:00:48
Of course, they can weather the storm.
1:00:50
Now, if if we just take that as a as a as a position, right?
1:00:54
Which I think I'll seems reasonable for people for for for people to take, right?
1:01:01
Uh what I'd love to talk about is uh or to hear you talk about, really, is number one, what types of restaurants you think will make it?
1:01:10
And that could be intrinsically because they have certain characteristics or because they adapt in certain ways.
1:01:15
And then what are some of the things you wish restaurants would do more of and less of, right?
1:01:23
For instance, a lot of restaurants you are using gift certificates.
1:01:25
I don't know how you feel about that, but I'd be interested in hearing.
1:01:28
The to the first point, like who's going to survive, you and I were chatting last week or maybe it was time time space has collapsed, so it's hard for me to say.
1:01:38
Maybe it was a few days ago.
1:01:39
And I It was a few days ago.
1:01:42
And a friend of mine was playing, as he called it, meet Santa Claus. Thank you, Matt.
1:01:47
And delivering Franklin's barbecue to his friends in Austin, which is an incredible gift.
1:01:53
Franklin's barbecue, for those of you don't know, is this iconic barbecue spot where normally you would have to wait hours and hours and hours.
1:02:03
There is a line that will take you 3 to 4 hours if you are lucky enough to get to the door before it sells out completely.
1:02:10
It is incredibly popular, right?
1:02:12
And I remember you were like, "Yeah, Franklin's will be fine."
1:02:13
Which I would tend to agree with, right?
1:02:14
It's kind of like if people are looking at distressed debt and real estate.
1:02:17
It's like, "Yeah, like Pebble Beach probably would be fine.
1:02:21
Maybe like the B-tier C-tier, like who knows, right?"
1:02:24
And I'm not Pebble Beach is just a hypothetical, but it's a name brand in that respect, which I'm sure has some value in terms of resiliency, but who do you think's going to going to make it through?
1:02:36
And what are the characteristics of the things that they might do?
1:02:42
Yeah, so one of the things that what it was interesting in a in a difficult way when this all happened was that as much as I was scared and and to be clear, I was very scared as to what would happen, um just as much as everyone else's.
1:02:59
Like, you know, yeah, we have pretty good capital reserves and whatnot, but we chose to do that, you know?
1:03:05
Uh during the good years, last couple years, we always held money back.
1:03:07
Um we didn't pay it all out to our investors or ourselves.
1:03:12
And we did that because when things were going really well, you know, we expanded over 15 years to five restaurants.
1:03:22
Um I watched other groups during that time expanded 20, 25, 30 restaurants and thought to myself, there's no way that that they can be managing all that well, I don't think, unless they're doing something in in which case I need to learn from them, you know.
1:03:36
Um but we were always very conservative in keeping those capital accounts and whatnot, but more than anything else we're scrappy.
1:03:46
Like people don't realize people think I wrote a check and built Alinea and then like retreated to some island somewhere.
1:03:53
Like since the day we opened Alinea, which is 15 years ago, coming up May 4th, I have been engaged every single day with with that restaurant, with Grant, with our team, as has Grant, um personally, as have Steve Bernacki and other key people that we have. Um it is not glamorous. And then we're scrappy.
1:04:16
Like we'll we'll just get in there and do ourselves.
1:04:18
Um I'll tell you what kind of restaurant will survive.
1:04:21
Um Eric Rivera used to work for us and he has a place called Addo, A D D O, in um in Seattle and he is very vocal on Twitter right now.
1:04:35
Um in in a in not always a a a totally positive way.
1:04:38
Um because he sees a lot of big companies and big hospitality people saying, you know, that the industry is going to get bailed out this and that.
1:04:50
And Eric's just like, it, I'm selling burgers.
1:04:52
And next week we're going to do a steakhouse.
1:04:54
And then by the way, um if you want to pay it forward, we'll sell a thousand bowls of soup every week for you know, uh people who are in need.
1:05:03
And uh anybody can buy one of those.
1:05:06
And he has created in the last three or four weeks, Probably 20 different concepts of carry out delivery.
1:05:17
Um he's doing his own delivery fleet already. He's figured that out.
1:05:18
Um and he was a development cook for us and moved What is a development What is a development cook?
1:05:30
Yeah, he just basically like he started off in our kitchens and then he didn't really didn't really love or thrive in the environment of I'll just grind out old linear kitchen every day.
1:05:43
And so what he did was he we when we did research on something or we would try to figure out new products or new ideas or new dishes or whatnot or you just needed someone to go like get me 42 different kinds of grass-fed beef and we're going to figure out which one we're going to serve it next for our steakhouse.
1:05:58
He would do all that sort of stuff.
1:06:00
So he was a research chef basically.
1:06:04
And you look at what he's managed to do and what he says on Twitter is like look, I've got eight employees.
1:06:10
I don't have a ton of money.
1:06:13
Um and I know for a fact there's no chance that I won't be open in two years because I just wake up every day and do whatever it takes to make my payroll and make enough money to keep my place open.
1:06:29
What was What was his name again? One more time. Eric Rivera. Eric Rivera.
1:06:34
And you know, it's like he's really vocal on Twitter and I think he's pissing a lot of people off and he's gotten into it with me.
1:06:42
Eric Rivera Cooks is his handle on Twitter.
1:06:44
That's what I was trying to find.
1:06:45
The restaurant is at Addo Seattle.
1:06:49
He even gets into it with me at times because you know, early on like in this like I I feel like I need to I have enough of a platform in the industry where I have to be a little bit careful on on balancing um my criticism with my encouragement, you know?
1:07:10
And, uh, so I think he was kind of like, you know, "Hey Kokonas, why are you you know, why aren't you supporting this or that?"
1:07:18
And yet I I watch what he's doing as opposed to some other folks who who turtled.
1:07:27
To get back to our earlier conversation, where they just kind of went like, "Well, it's a hopeless situation.
1:07:31
There's nothing I can do.
1:07:31
So, um, there's a bit of this this misery porn going around with all not just the hospitality industry, but with with everything, every industry, every business, um, saying, you know, "Woe is me, we'll never make it." kind of thing.
1:07:51
And this is a terrible situation.
1:07:54
But I have a huge belief in human ingenuity in the ability of people, um, to be resilient.
1:08:02
And the things people make are never as structurally sound as the people themselves.
1:08:10
Like, this is not a unique situation as much as we'd like to think it is.
1:08:14
Pandemics have been going on for throughout human history.
1:08:16
It's just that none of us walking around has lived through one before.
1:08:21
Um, and so if you study history and if you if you read accounts, which I did right at the beginning, of 1918 pandemic and what happened in 1920 through 1928. It was the roaring '20s.
1:08:34
People partied their brains off afterwards.
1:08:38
And but right now, if you pick up a newspaper and you read all you read about and all that anyone wants to hear about is how hopeless and awful the situation and how broken society is.
1:08:49
And we have massive problems.
1:08:52
But we could look at that and say, "Wow, this is really put a lens up to the things we need to fix. Let's get fixing."
1:09:00
And so the kinds of places that will will do that, you know, the Franklin's Barbecue story is perfect.
1:09:04
Like that guy didn't He wasn't like he grew up like barbecuing.
1:09:08
He figured the out, made a brand for himself.
1:09:11
There's no chance that Franklin's Barbecue doesn't exist in 2 years.
1:09:15
Um and then also the other thing that will happen is just like when you have a forest fire and then the forest re-blooms.
1:09:24
You know that there's some 25-year-old chef out there and she's been itching to do her own restaurant, but she couldn't afford the leases and she couldn't find the backers and all of that.
1:09:37
And a year from now there's going to be some empty restaurant that's with a perfect kitchen that she's going to be able to get at half price.
1:09:45
And all of a sudden she's going to kick our ass.
1:09:47
Like the new Alinea is going to come a year and a half from now to kick our butt. And that's a good thing.
1:09:55
Like that's the stuff that that we need to start focusing on, I think.
1:09:59
So So if we're if we're looking at I mean I think the I agree with you that I think the the hope is important to kindle and highlight whenever possible because it is so easy and I've certainly struggled in the last few weeks.
1:10:14
I'm not trying to compare myself to anyone who's who's out of work, but everyone is fighting battles we know nothing about.
1:10:22
A lot of people in my life also, family members who are in the service industries have been laid off and it's it's a tough time and it is very easy to succumb to despair, particularly if you are only ingesting news that highlights hopelessness, if that makes any sense.
1:10:44
If we look at the If we look at the tactical So I totally agree with you.
1:10:48
I mean the opportunity is just going to be incredible for the you know, that 25-year-old woman or any up-and-comer or person who's simply been waiting in the wings looking for opportunities.
1:10:57
I mean, within the next year or two there are going to be a lot of opportunities.
1:11:00
If you're looking at tactics right now, what are some of the things that you think are not a good idea?
1:11:12
What are bad ideas that people in the restaurant world are pursuing and what are some of the good ideas?
1:11:19
So, you mentioned that the gift certificate thing and I I know that like week one, people love their their neighborhood restaurants and I'm glad they do and I do as well.
1:11:32
By the way, I I'm a frequent diner and I've got all my favorites.
1:11:34
And so, people wanted to know what they could do and there was this whole movement um about gift certificates and someone in New York set up a site that they called restaurant bonds, which showed that they don't really understand what a bond is.
1:11:51
They were just basically a Groupon um and it was not only a gift certificate, but it was a gift certificate that was at a 25% discount.
1:12:00
Um all the GoFundMe started, Yelp did a terrible thing with GoFundMe to like create, you know, 100,000 automatically generated GoFundMe pages for restaurants including my own, which I I I shut down and they killed the program.
1:12:17
Um you know, it makes people feel good to give to support other people and I certainly don't want to ever discourage that.
1:12:30
A gift certificate is a liability on your balance sheet and if you take say $25,000 from people for a GoFundMe or gift certificate, first of all, in the scale of your payroll and, you know, if a restaurant has 40, 50 employees, you can just do the math on on the back of your hand, you know, like you know, they're making just call it $15 an hour, 10 hours a day, like multiplied by 50.
1:13:00
You're going to cover like a day of payroll with a with a gift certificate drive or a or or a GoFundMe. Maybe 2 days, maybe 3.
1:13:05
You know, if you're hugely successful, maybe every employee gets a few hundred dollars.
1:13:12
And of course, you could say like Nick, well, you're being really cynical.
1:13:14
Like that's a few hundred dollars they didn't have.
1:13:18
But what I'm saying is that you're much better off channeling that to other organizations that can leverage it more more impactfully, you know, World Central Kitchen, for example, the work Jose Andres is doing.
1:13:33
Um if you want to help your local restaurant, buy food from them.
1:13:35
Because if you buy the gift certificate and then you go use it in 4 months, they spent that money 4 months ago.
1:13:43
Um you know, one of the big problems that a lot of restaurants had is that they were paying for food that they bought 4 weeks ago with next week's revenue.
1:13:55
Um and the gift certificate just exacerbates that problem.
1:13:57
It just It's like mortgaging their future.
1:14:01
Um what's interesting is that when I criticized the gift certificates, a lot of restaurants didn't understand how the finances on that work.
1:14:08
They didn't understand how that shows up in their in their balance sheet and were very much thinking that I was trying to hurt them. I was not.
1:14:19
I was actually trying to trying to help.
1:14:22
Um so it's again, it's very tricky how in in the midst of a a crisis, you you try to you try to be positive and educate the public and and even your fellow business owners.
1:14:36
Um similarly, there's there's a really high end push to sue insurance companies.
1:14:40
Um for business interruption insurance.
1:14:45
And you know, that's a 5-year process.
1:14:50
That's not going to save your restaurant next week.
1:14:53
Um and that's not going to help your employees next week.
1:14:54
So, all these things are are thoughts that people had really, really fast.
1:15:01
Um and again, I think that's why it went to the planning ahead.
1:15:05
Um if you're acting as a reaction to a really bad situation, it's very easy to make bad decisions quickly.
1:15:13
Um if you've considered the various possibilities that can occur and what you will do at that time, it's it's like being an athlete that goes, "Okay, well, if we get to this part, this is the play we run." And you just do it.
1:15:29
It's not a hard decision and then you you act it out.
1:15:34
That's Those are the folks that are that are going to make it in every in every business through this sort of thing.
1:15:38
And um and also, that's of course the problem with our government, too.
1:15:45
Um we had some of these these playbooks in place and we were spending money on them every year and then people said, "Well, why are we spending money on something that never happens, right?
1:15:56
Maybe we should just save that money or spend it on something else or or give people tax cuts with it."
1:16:03
Um that's the sort of failure of of leadership that is happening nationally, internationally, um but also locally and on a small basis with many businesses.
1:16:14
And uh I don't know how you change that globally.
1:16:17
I really don't, but Well, I think I think we can start with the people listening and how they implement things.
1:16:25
And so, I had a clarifying question, but I also want to maybe underscore one thing, which is many people listening will say, "Well, that's great if you had the foresight to plan and determine contingency A, B, C, and D before all of this hit, but a lot of people didn't do that.
1:16:45
And I would just say, and I'd I'd love to hear you add to this after I ask a clarifying question, that it's it's not too late because there's still so much uncertainty in the next 2 weeks, 4 weeks, 2 months, fill in the blank.
1:16:59
You can still ask yourself, "What if this happens versus that?"
1:17:02
And think about what you will do in those situations in advance, right?
1:17:07
That's that's still very much a possibility for a lot of people.
1:17:12
But the quick clarifying question I had might seem superficial, but you mentioned that a lot of restaurants are paying for the food they bought 4 weeks ago with the revenue from the following from next week, let's just say, right?
1:17:29
So, I I imagine that something like net 30 terms Uh do does that mean that you guys do not pay your vendors using terms like that or just that you have such a cash reserve, you have such a margin of safety in that that buffer that you don't have to depend on next week's income to pay for what you bought 4 weeks ago?
1:17:53
Uh the answer is actually both.
1:17:53
Um about 5 or 6 years ago, we realized that if we called the vendors of our more expensive items, um meat, fish, wine, that sort of thing, and we said, "Hey, we'll make you our exclusive vendor for the next 3 months, and we'll probably spend about $220,000 during that time.
1:18:17
What sort of discount will you give us if we prepay for that?"
1:18:18
Almost like a futures contract, right?
1:18:20
So, instead of getting net 90 or net 60, which is what every restaurant tries to get, we actually negotiated a discount um by prepaying that, and then, you know, sort of trueing up afterwards.
1:18:33
So, for our big-ticket items, we try to stay a couple months ahead on payments in order to get more favorable terms and better product.
1:18:43
Um and that's something that when I when I talked to even big restaurant groups about that, there are certainly some that do that. It's very rare.
1:18:52
Um you know, you're looking at some big hotels that do that whatnot, but not that many.
1:18:57
Um and then the other part is exactly what you said, which is you know, for the for the vendors that just are smaller, they won't do that or we just sign the standard terms.
1:19:10
We have a capital account that we keep, which is, you know, accounts receivable, accounts payable.
1:19:15
In our accounts payable, that we're always going to be able to cover that.
1:19:18
We're never going like, well, if business goes down 30% next week, we're not going to be able to pay for 4 weeks ago.
1:19:24
Now, of course, everyone can say like, well, that's because you're a busy restaurant or whatever, but when we first started, that was, you know, my dad used to run his own business.
1:19:32
He was only high school educated and he was like, "Every time I tried to complicate things when I was in college and I'd talk to him about his business, he would be like, 'It's three shoe boxes, Nick.
1:19:44
It's the money in, the money out, and then the third box is what paid for your college.
1:19:50
It's the money that's left over.'
1:19:50
As he was like, so so you hear if you worked with me, you would hear me say that a lot.
1:19:57
Like, I will get some very complicated models sometime.
1:20:02
And if there isn't a three shoe box tab on that spreadsheet, like money in, money out, money left over, I don't even want to look at it.
1:20:10
Um and it's not that hard, you know?
1:20:10
And I it it it it if if you can't figure out if if that third shoe box isn't going to have anything in it, you need to reassess what what you're doing and and and iterate.
1:20:26
Um and boy, so much of of things would be less complicated.
1:20:31
So, we always get down to the three shoe box method and we always make sure that there's something left over in that third shoe box and and if there isn't, um we we change.
1:20:39
We we change our what we're offering, what we're selling, and all that.
1:20:45
And after 15 years of doing that, um the hardest part is to keep that attitude uh when things are going well.
1:20:56
Um you know, we ripped apart Alinea after a record year in 2016, raised it to the ground, and rebuilt it because we had maxed out of that footprint.
1:21:06
It wasn't going to improve at all.
1:21:09
And right now, like you said, it's not too late.
1:21:11
Like I want to pick up on that.
1:21:12
It is very much not too late.
1:21:12
We are at the beginning of the beginning of some unknown, terrible, weird thing that's happening.
1:21:21
Um your listeners may, a year from now, listen to this and go, "Grant Nick was so full of He's out of business." It could happen.
1:21:31
Like, you know, it's like like my what I live in fear of right now is hey, in September when when all of the government like, you know, look, we can't keep printing trillions of dollars.
1:21:47
We can't bail out every single business in America permanently.
1:21:51
I mean, it seems like we can cuz we just did.
1:21:53
But if we keep doing that, you run into things like hyperinflation and you know, at some point we're going to probably issue a 50-year bond at 1% and the Chinese government will probably buy that bond.
1:22:05
Um but at some point that the the ability of the rest of the world to to to want to consume our debt will will slow down.
1:22:15
Um and so consequently, all of us are going to be left to our own devices sooner rather than later, you know?
1:22:22
So, September or so, I reopen my restaurants and we've got people wearing gloves and we're practicing social distancing and our occupancy is 50% of what it used to be and demand is down 70 or 80% and my revenue has gone and plummeted by 75%.
1:22:44
That's what I spent yesterday modeling out.
1:22:45
And at some point you just go like, "Yeah, it's not really worth being open, you know?"
1:22:51
Um so at that point I go like, "Well, what would we need to do to make it worth being open?
1:22:58
What would we do to be able to save 95% of the jobs and still make money as a son of business and rebuild it over the next two or three years?"
1:23:09
Um and and I don't have those answers yet, but we're kind of going like, "Well, what do we do experience-wise?
1:23:18
What will people want emotionally then?
1:23:20
Well, they'll certainly want safety in the short term.
1:23:24
They'll want a release of some sort.
1:23:24
Um I I think humor will be important then.
1:23:30
Um but what is that in terms of a dining experience?
1:23:33
I haven't the faintest idea, right?
1:23:35
So, these are the conversations we're having now and I was talking to Grant about it yesterday and trying to come up with ideas for instead of looking at the distancing as a limitation or the occupancy as a limitation, what kind of weird idea can we have to make that an asset instead of a liability?
1:23:57
So, I I have no idea what we're going to do.
1:23:59
I don't know if it'll work or not.
1:24:01
Um but that's the part that's going to be really hard.
1:24:06
It's actually not right now.
1:24:08
Like right now the limitations are so great that all we can do is carry out.
1:24:11
Like they extended the the stay-at-home order through May um in Illinois yesterday and I just went, "Oh, okay.
1:24:19
Well, for the next four weeks we kind of know what we're doing.
1:24:24
After that, it's a wide-open slate and very scary. Um to be honest.
1:24:29
People listening who want to improve, and I want to come back to talk because you we didn't really uh pick up, and that's that's my fault, but pick up on the Here's a business that also entirely depends on restaurants, and uh it it's not like you're only servicing Alinea, so you can make up for it, right?
1:24:51
I mean, we're we're going to come back to that, but for people listening, whether they are in restaurants or otherwise, are there any particular books or resources that you have found helpful or would recommend for improving your thinking and strategic planning?
1:25:14
They don't have to touch on it directly.
1:25:16
It could be for instance, you like do that I think has a lot of great leadership lessons.
1:25:21
It's not a book about leadership, but nonetheless, is is does anything come to mind?
1:25:25
Just for people who are saying, "God damn, I wish I studied more economics, which I did not, but you might have.
1:25:31
I wish I studied derivatives. I wish I studied this.
1:25:32
I wish I studied that, but I haven't.
1:25:35
How can I hone my thinking?"
1:25:39
Do you have any suggestions?
1:25:41
They're the same ones from the last podcast we did.
1:25:43
Um I think there's a list on there, and I I I it's it's funny, you know, um Nassim Taleb on on Twitter can be very pedantic and kind of a jerk sometimes.
1:25:55
Um but Fooled by Randomness, not not The Black Swan as much.
1:25:58
This isn't actually a black black swan event, I don't think.
1:26:03
Um uh Fooled by Randomness is over and over again a book that I come back to um and have suggested to people to read during this um or to reread because um both that and Skin in the Game are are fascinating.
1:26:25
And what's been interesting in this is that, you know, he he has the generalized uh Rubin principle, which is is kind of funny, which is basically like all the airline CEOs have no skin in the game, right?
1:26:39
So many of the leaders of our of our big companies um are custodians of those big companies, and they get paid more if the stock price goes up.
1:26:51
And so if they take their capital reserves, if they take that third shoe box and they spend it to get the stock price going up, and they don't hold, you know, billions of dollars in reserve um they only do that knowing that they're going to get bailed out if hits the fan, like '08, like '01, like '89, like now.
1:27:14
Um and so Taleb is this is stuff he's been writing about for 20 years.
1:27:17
Um and I have to say that like, you know, what people don't realize is that um the airlines, you know, I tweeted something like they're too few to fail.
1:27:29
Like they've they've all merged together, there's not that many of them, and we we certainly will need air travel in the future.
1:27:37
Um and so consequently, everyone's like, "Well, yep, got to have to bail out the airlines."
1:27:41
But but you really don't.
1:27:43
Like those planes aren't going anywhere.
1:27:45
Um and someone will buy those assets, and the airlines will still run, and the employees will still have their jobs.
1:27:51
Um so I I keep coming back to a lot of his his thinking on that.
1:27:57
Um because the people that I know that are looking for the bailouts in any industry, including hospitality, including software, both of which I'm in are the ones who themselves generally don't own the things.
1:28:13
They may look like they do and they may you may think that they've got their skin in the game, but they don't.
1:28:22
They have licensing deals. Which is very different.
1:28:25
Um the people who've built their own businesses from scratch and have bootstrapped them and whatnot, I think you'll find that a lot of those folks are like my dad uh and my dad was a product of the Great Depression.
1:28:38
My dad didn't carry a credit card his whole life.
1:28:41
He was like, "If you can't pay for it, you can't afford it, you know?"
1:28:44
And that's been beaten into me.
1:28:47
Um and that like I I I tweeted, you know, after this all happened like, "We ran talk in a very capital efficient manner while some of our competitors grew at at at a pace we're growing 300% a year, which isn't shabby, right?"
1:29:02
Um it's it's VC eyebrow-raising worthy, right?
1:29:07
That said, some of our competitors grew faster by giving their product away, by burning through 60, 70 million dollars, and then selling the company for a couple hundred million.
1:29:17
Those are all the companies now that are laying off 50% of their employees.
1:29:21
Um and so running a fiscally cautious and intelligent company, whether that be your restaurant or your software company or your airline or whatnot, um you know, like biggest example of that's Apple.
1:29:34
How many companies does Apple buy a year?
1:29:37
How much money do they have in the bank? 100 billion plus.
1:29:41
And there's been times where people are like, "Oh, Apple should buy Uber." Uh not Uber, uh Tesla.
1:29:44
Or Apple should buy this or Apple should buy that.
1:29:46
Apple's product development cycle is slow as hell.
1:29:50
They wait and see what works in the market, and then they just make a better version of it.
1:29:55
Um and you know, is is anybody worried about Apple right now? I'm not. Right?
1:30:01
So, and yet like there are companies like like my favorite, like Yelp. What did Yelp do?
1:30:09
Well, they laid off 50% of their workforce right away.
1:30:13
That Taleb goes through all of that in great detail 20 years ago.
1:30:18
And um has been right on the money with a lot of his prescriptive writings.
1:30:24
What are what are some companies that could be in his hospitality or they certainly could be outside that you admire a lot right now or in general? Ah, that's tricky.
1:30:35
Um certainly they're they're they're out there.
1:30:39
Um I think some of the remote learning uh I follow a guy named Austen Allred on Twitter who uh has a a online programming school.
1:30:54
And the model of that, I started following him about a year ago.
1:30:57
And I think it's called the Lambda School.
1:31:00
And the the model of that, which is so great, is simply like you don't pay for the school until after you get out and we get you a career.
1:31:07
So, if we do our job right, we'll take some money you know, for I don't even know what the deal is, five five years after you graduate or whatever.
1:31:17
And then if during that time you become unemployed again, you stop paying us, right?
1:31:21
Um what's fascinating now is that these universities the great part of an elite university, and I think you and I have both been fortunate to to go to two of them.
1:31:34
A lot of what we learned, I bet, took place outside the classroom amongst our peer group.
1:31:38
What's interesting is that I have a 21-year-old son and he is at a wonderful liberal arts college and he hasn't been feeling that he was getting that same experience that that I got.
1:31:53
And I I honestly thought it was a failure of of him, like, you know, or maybe if I was going to be in a generous mood, I'd blame the school or something, right?
1:32:04
But I think what happened is that he associates a lot of his relationships to be online and virtual, you know?
1:32:09
And so he stayed in touch.
1:32:12
Like when we when I went off to college, I I I couldn't be in touch every day with my high school friends, or I couldn't be in touch with people that I met on the other end of the world who had similar interests to me. Um he he does.
1:32:23
And I think if you look at what Austin's doing with the school is that he's taken the best most important parts of the school and realized that some of the the community aspects can be done virtually.
1:32:37
Now, I I still have I'm not totally sold on that. I'm 52 years old though.
1:32:43
I bet my kid agrees with that 100%.
1:32:43
Like I I think that I think that he just thinks, you know, he's like telling me, you know, get over it, old man.
1:32:52
So, you know, you look at companies like Zoom, which is really hot now.
1:32:54
We started using Zoom a year and a half ago.
1:32:59
If you had told me 5 years ago that like that would be a company that would grow like that when hey, you know what?
1:33:05
Like Skype video has existed for years. Google Hangouts is free.
1:33:11
There's all these free options, right?
1:33:13
Why would you build a video conferencing company?
1:33:17
Well, it's because all those video conferencing things suck.
1:33:20
All the ones I mentioned aren't that great.
1:33:22
They're free, but they're not they're not differentiated.
1:33:24
Um when we started Talk, we started Talk competing against OpenTable, which was completely ubiquitous.
1:33:32
And I've had hundreds of people tell me both in our industry and investors and whatnot, you are completely out of your mind starting a company competing against someone who has a monopoly.
1:33:45
And uh so I the companies that I like to look at are the ones that go into a very established industry and just go, "Hey, it's ripe to be blown up and done better, you know? Yeah. Yeah.
1:33:59
I've got another I've got another of that.
1:34:00
I feel like another people gave that a lot of people gave that line to uh Google uh with respect to Yahoo. Yeah.
1:34:08
100% And you know, I mean, like Google seems impenetrable now, right?
1:34:14
Um Facebook seems kind of impenetrable, but yet, like TikTok still came along, you know?
1:34:20
Not something I use, but still still there's there's always um room for for a positive change.
1:34:30
And uh you know, it's an interesting question.
1:34:33
I I normally I probably go on and on about that question, but I'm so in my own weird space these days because everything's happening.
1:34:41
I mean, I've we've probably done for Tock and the restaurant group, I bet we've done what?
1:34:46
2 years of work in 8 weeks.
1:34:50
Like normally what we accomplished in 8 weeks in 2 years, we did in 8 weeks.
1:34:54
Well, you had to completely I I I mean, I don't know if completely is the right modifier.
1:34:58
Just a quick aside, uh Austin Allred you mentioned at Austin a u s t e n and and and it is Lambda School.
1:35:05
Lambda School is super interesting.
1:35:07
Uh you had to kind of redesign the business, if I'm not mistaken, or at least do a hell of a lot of coding and product upgrading because as you mentioned, OpenTable or kind of analog to OpenTable, but better, a reservations and CRM system for restaurants.
1:35:20
And you How long did it take you to create the to-go platform? 6 days. Yeah.
1:35:30
And and and and you know, it was We're a 100-person company and we service about 3,000 hospitality clients between wineries and uh restaurants in 28 countries.
1:35:41
As I mentioned, we were growing about 300% a year, and at as this year started, we um had come off a year where we grew um by 300% almost across every metric.
1:35:51
Revenue, um we added 40 employees to get to just under 100.
1:35:54
Um and uh we we really were getting traction for bigger groups and more casual restaurants and whatnot.
1:36:04
And then this happened and just at the same time where I was saying that I could see that my restaurants were going to go to zero, I had this this company um with 100 employees that were making really innovative software for the hospitality industry.
1:36:23
And it was going to go com- our revenue was going to go completely to zero, you know?
1:36:27
Um and w- you know, we have a high high payroll because we have really highly skilled individuals.
1:36:37
Um and so Canlis restaurant in Seattle, which was a couple weeks ahead, {quote} {unquote}, you know, of the problem, they were like trying to modify the way that we handle tables, which is unique to Tock, um to make it into carryout meals.
1:36:55
And Brian called up um Jeff Kaplan, who's the COO and a really great guy at Tock, and and I could really couldn't run the company without him.
1:37:05
And Jeff called me and said, "You know, we're going to go to zero."
1:37:08
And I'm like, "Yeah, yeah, I I I I know."
1:37:10
And he's like, "I I think we should just do this carryout thing."
1:37:14
He's like, "You're doing it for Alinea.
1:37:16
You're already talking about it.
1:37:18
Canlis has already started doing it."
1:37:21
Um and the third-party delivery apps charge 20 to 30%.
1:37:24
Like, that's we don't need to do that.
1:37:27
These people aren't going to be sending food out the back door.
1:37:30
This is going to be the only option in America.
1:37:33
So, we got a group together of about 12 to 15 design engineering people and we got on on a video call and we just said, "We got to do this in a week."
1:37:43
And everyone kind of like you could see the discomfort because this is the pro- kind of project that normally we would take 6 months to build.
1:37:52
And we're very particular about the UX.
1:37:54
We're very particular about testing.
1:37:55
Yeah, you're talking about payment processing, all these things.
1:37:59
And Robin and Nill, who's our head of engineering, who is just an extraordinary um guy.
1:38:04
He was a machine learning guy at Google and whatnot.
1:38:08
He got off the call and he called me on the phone and he just said, "We can do this." I got it.
1:38:16
There's a couple people who were like, "That's not really possible."
1:38:17
And they said, "W- You know, we're not going to be able to test it.
1:38:20
Like, it would take weeks to test."
1:38:22
And like, "Yeah, we're not going to test it.
1:38:23
We're just going to throw it out into the world."
1:38:26
And 60 days later, Canlis was using it.
1:38:30
And we had five restaurants by day seven.
1:38:33
We're adding 50 a day now.
1:38:33
So, we went from processing over a million dollars a day uh in gross merchandising value for events and prepaid reservations and then, you know, 50's to 60 70,000 reservations that were free besides that to zero and now we're at a million two a day um in four weeks.
1:38:56
Uh and we've completely changed the way that the restaurants um can manage the inventory on the dashboard, the back end side of Tock, in a way that we're getting emails every day from restaurants saying, "Not only is this a lifeline to to the other side of this crisis, but we are employing people.
1:39:18
Um we like, there have been several restaurants, including Alinea, by the way, which has had its record revenue day during this time.
1:39:24
And so, what we were what we managed to do and what our team managed to do is is have the urgency of a startup circa 2002. Yep.
1:39:40
Um and we now are working 7 days a week.
1:39:47
We we hired another person yesterday.
1:39:50
Our first hire since this all began.
1:39:52
To be in our account management team to help onboard restaurants because we're adding we're literally working someone is working 24 hours a day for talk right now just onboarding restaurants and then teaching them how to do this.
1:40:06
And then this is the kind of thing also that expands talk was always about dynamic and variable pricing for a time slotted business.
1:40:13
Now what that means is that your dentist should cost less on Tuesday than Saturday, right?
1:40:16
Dentists have time slots.
1:40:19
Suddenly furniture stores have time slots.
1:40:21
Grocery stores have time slots.
1:40:24
There are going to be reasons to gate in a time slotted way a whole bunch of different kinds of businesses.
1:40:32
So now we are talking to all sorts of businesses that have nothing to do with the restaurant industry about time management for reservations.
1:40:44
And because we built those data structures in that way 5 years ago and we thought about those time slots almost as derivatives that's now um flexible enough that we can apply it to say a furniture store which we just signed yesterday.
1:41:01
So um again very interesting outcome unintended of a terrible situation.
1:41:08
But I have to say that our team uh man I we've never felt more productive more connected.
1:41:22
We haven't been in an office in 6 weeks.
1:41:24
I personally don't like remote work.
1:41:24
I like to be in an office but we have been more productive in the last 6 7 weeks than we have in the last year and a half.
1:41:33
An extraordinary pace um, really high quality, too. That's incredible.
1:41:41
And, uh, you have a lot of skin in the game just to bring that for his back.
1:41:46
Yeah, I you know, I I I would like to emphasize that I've lost 10 lb. I'm stressed out. I'm 1,400 emails behind.
1:41:53
You're always on the email zero thing, right?
1:41:55
Like, I'm not managing all of this well. It's chaotic. It's not fun.
1:42:03
Um, I'm drinking more wine than I should in the evening. Um, but, you know what?
1:42:07
Like, uh, you know, it's like a sense of purpose is what we all want.
1:42:12
And, uh, I think it's very easy to have a sense of purpose right now.
1:42:18
Well, Nick, this is, uh, this has been yet another wide-ranging and fascinating conversation.
1:42:26
I appreciate you coming back on.
1:42:28
People can find TOC at exploretoc. com. Is that right? Yes.
1:42:35
And Please, please do support your local restaurants, um, through there.
1:42:38
And they can find you on Twitter.
1:42:38
That's probably Is that where you're most, uh, active?
1:42:42
@nickkokonas on Twitter is is Twitter and Instagram and @nickkokonas at Instagram. Excellent.
1:42:49
And I will include links to everything we discussed in the show notes for everyone. tim.
1:42:53
blog/podcast or just go to tim.
1:42:56
blog and search Nick or Alinea or Kokonas.
1:43:01
Uh, and you can find everything that has been covered.
1:43:04
Is there anything else that you would like to say or comment on before we wrap up, Nick? Not at all. Thank you so much.
1:43:10
Um, you know, I'm sure that much of what I've said here is going to be wrong, and that's fine, too.
1:43:18
Um, and send me some Franklin Barbecue next time you have a a meat, uh, a meat fairy, a meat angel coming by cuz I would love some of that right now.
1:43:27
Oh, that is my plan for lunch today is leftovers. Can't wait.
1:43:28
This is, uh, thanks again, Nick.
1:43:31
Always, always a good time.
1:43:33
And to everybody listening, till next time. Thanks for tuning in.
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