← Making It with Jon Davids
Making It with Jon Davids
171 - The REAL Story Behind the World’s Best-Selling Bagel | Adam Goldberg, Founder of Popup Bagels
00:44:21
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- [00:00]
John Davids
What's up, guys? JD Here. And on today's show, I am talking to Adam Goldberg, founder of Pop Up Bagels. And if that sounds familiar, it's because I gave you the whole breakdown of Pop Up Bagels back on episode 169 of this podcast. And today the founder is here to set me straight, to tell his version of the story, which is kind of similar to my version, but his version is better, of course, because he is the founder. And he's also going to tell me what I got right, what I got wrong, what I missed. It's a great conversation. You guys are really going to like it. If you're a fan of this podcast, make sure to leave a rating review wherever you're listening. Apple, Spotify, YouTube. That's how I know to keep making this stuff and get my best content to your inbox@johndavids.com now let's get to the show. So, Adam, back in 2020, you're doing flood mitigation, and now you are running probably the fastest growing bagel shop in Manhattan. How does that happen?
- [00:59]
Adam Goldberg
A lot of hard work and a lot of luck and some great chemistry and in the recipes we put together. But it's definitely not a path that most people would take in life. Right. Like, you know, I started on Wall street, then I was in the insurance business, then I was in the flood mitigation business. Now I run bagel shops.
- [01:17]
John Davids
Are you, and sorry, so you started on Wall Street. So are you like, by training, are you a numbers guy? Are you an analyst? Are you a finance guy?
- [01:24]
Adam Goldberg
No, by, by training, I'm always really a marketing and kind of entertainer type person. In any business I'm in. I always believe, you know, there's no reason to sell something. Let's give people a reason to buy something rather than sell it to them. So, you know, whether it was flood mitigation, where these buildings needed help, I created a product or I brought in a product from Norway that buildings needed and I showed them how to use it to help them. Same with our bagels. People want fresh, hot bagels, delicious product that's not going to be like lead in their stomach. And as I started making these four years ago, I realized like, oh, wait a second, like, this is a product people want. All I have to do is show it to them and they'll want it and they'll desire it. So that's kind of, that's kind of how we got here today. Was, you know, if anything, aside from, you know, a really incredible recipe, that kind of changed the structure of a bagel, so to speak. But more than anything, it was getting it in the hands of enough people so that they realized, yes, this is what we want.
- [02:27]
John Davids
So I want to get into that. The story that I told, and millions of people saw it, and it is sort of a movie script version of the story. But basically the bullet points are, it's Covid, everyone's making sourdough, you decide to make bagels, and boom, these things blow up. So is that generally true, or was there a lot more planning and architecture that went into it?
- [02:49]
Adam Goldberg
It's generally true. When I was a kid, there would be these, like, choose your own adventure books where, like, you could turn one page and you would go this route and you turn another page and you'd go that route. And I would say that in the four and a half years of doing this, I've probably had to choose, like, 50 different adventures along the way. We just kind of always chose the path to global domination of bagels. And that's kind of our goal from the beginning, is let's make this product so good that everyone in the world wants it. And not because, hey, we want to make all this money, but because, hey, I really enjoy seeing a smile on people's faces when they eat our product. Someone walked into our store the other day in our Boston franchise and looked at the franchisee and goes, wow, you must be so happy every day seeing how many smiles you put on people's faces. And that's why we're here today. You know, it wasn't like some grand scheme to build a 100 million, $500 million business. It was a grand scheme of, oh, my God, like, I've been locked in my house for four months, and now I can make this product that people are smiling about and making happy families come together and share, you know, warm dough together at the kitchen table. That's. That's the beauty behind what we built and what we're doing. So, no, I didn't set out to build this. I just wanted to continuously make as many people try and enjoy our product as we could, and then designed our production facility and all of our logistics so that we could do that. Four years ago, it was me at 3:00 in the morning with a bunch of high school kids in a kitchen, you know, messing with flour and yeast and water and sugar and, you know, all of that, you know, at 3:00am every Friday, Saturday and Sunday morning. You know, fortunately, I looked at that and said, okay, this is not a way to live the next 40 years of your life. How do we take a step back and design this so that it can be made the day before or the night before or somewhere else?
- [04:49]
John Davids
Where did that first recipe come from, though? So, like, you don't like the. Again, the mythology is you had never made bagels before. So did you go onto YouTube? Where did you get the recipe?
- [04:58]
Adam Goldberg
So the first recipe came from scouring the Internet with my cousin, Jeff Lewis. And we. He had worked at a bagel shop 30 years, 40 years ago, and he kind of had some ideas of, like, how bagels are made. But we really wanted to figure out, like, what are the ratios? You know, what are people doing? So I told Martha Stewart this. Like, one of the three recipes that we kind of used as a guideline was hers. Like, we looked at and we're like, okay, this is how Martha would make a bagel. So we're like, let's put that over here. And then it's like, well, how would the New York Times make a bagel? And I don't remember if it was the New York Times or not, but we, like, put that there. And then we went for some obscure website, and that's what they would do. And this person talks about yeast, and this person talks about sourdough, and this person is adding malt. And someone else is using brown sugar, someone's using white sugar. And at the time, I was kind of a food hoarder. I had, like, all the commercial food companies, I think Baldor was the first to do it, dropping off pallets of food at my house because they were offering it. So I had, like, almost 1,000 pounds of flour in my house when we started this for all different things.
- [06:07]
John Davids
So you are a foodie by. By, like, you like tinkering in the kitchen.
- [06:11]
Adam Goldberg
I like tinkering in the kitchen. I never liked baking because it's a science, you know, grilling a steak. You could grill a steak 50 different ways. You can only bake something one way, right? Like, if you don't have the temperature right and the proofing right, it falls flat. A steak will never fall flat on you. You might overcook it, but there's a hundred ways to do it. Baking is one scientific method.
- [06:35]
John Davids
So you. You start with your cousin Jeff in the kitchen, and you said you got a bunch of high school students to be baking with you out of these.
- [06:42]
Adam Goldberg
Like, well, that was. That was a couple months later. So my cousin Jeff and I baked. We had like a. Like a Covid cook in your vacation, you know, where everyone Tests and you all lock yourselves in the house for a week. Because, like, we've all tested and, you know, we're all safe. All of it, you know, wound up being BS anyway. But so we're all locked in our house, and for three days in a row, we just made bagels. And every day they were like, delicious. But you know, as someone who's never made bagels before, and when you start making bagels, you're talking about seeds and you're talking about boiling and you're steaming and, and all of this stuff going on. My kitchen was a disaster after three days of bagel making. And my wife was kind of like, listen, why don't you guys just like, go buy bagels today? Like, no more sourdough, no more pasta, no more pizza, no more bagels. Go to a bagel shop. Let's just bring it in. Day off from cooking. So we went to a couple local bagel shops and, you know, brought back some bagels and cream cheese and everything, and no one would eat it. Like, the margin of change of bagel product over the last 30 years has probably been slight on an annual basis. But when you look at like what a bagel looked like 30 years ago versus today, it's drastic. And the bagels better or worse? They're much worse across the board. There's dough filler, there's conditioner, there's chemicals. There's all of these things where it's like, why am I putting that in my body? The quality of the flour is not necessarily great. So when we went to these other bagel shops and we brought the product home, you know, we realized like, the bagels we had been making weren't like nostalgic to us from four months ago because we hadn't been to a bagel shop in four months. They were nostalgic to us from like 30 years ago, like a fresh quality product. And what you get today is not the same. And that's what really motivated me to continue baking these bagels. My wife is a photographer and she was doing a sunrise collection, taking photos of mostly women and on their front porches at sunrise every morning during COVID there was like a two month project and she published a book about it. And that meant that she was getting up at like 4:30 in the morning. Then I was up at 4:30 in the morning. So I'm like, all right, if we're all up, you go do your photographs. I'll bake some bagels, and when you come home, we'll eat them and I'll text some friends and I'll say, the bagel window is open. And they knew that that meant to come by the house and pick up a four pack or six pack of fresh bagels out of my back window.
- [09:07]
John Davids
And you're, you're not selling them at this point. It's just giveaways.
- [09:09]
Adam Goldberg
Not selling them, not selling.
- [09:11]
John Davids
Okay, so when, when does the jump happen where you actually get a little tick in your mind that's like, I want to bagel business.
- [09:18]
Adam Goldberg
Yeah. So my birthday, which is November 1st of 2000, I actually decided to have a fundraiser because there were so many random tertiary friends who were texting me, angry that they had not tried my bagels yet. So I said, okay, for 20 bucks, I'll sell a six pack of bagels to anyone that shows up to my house on my birthday. And we, we sold, we raised over $1,000 for a local kids charity. Wow. And a few days later, I was written up as potentially the best bagel in Connecticut is in this guy's backyard. And then the real, you know, messages started. And, you know, my Instagram account at the time, I think, you know, jokingly was called like dead to the bread. It was like a play on somebody else's account that was like bread to the dead. I forget why, but I changed it to pop up bagels. I launched a website, popupbagels.com. and my friend Rachel and Bill said, hey, listen, you're like the most popular thing going on right now around here, you know, and around here meant like among our like 50 friends, like, you should sell your bagels at our restaurant in town. So I did that. And I only started this whole model of like pre ordering bagels. Cause I didn't want to wake up at 4 o'clock in the morning and go make bagels if people weren't going to show up and buy them. Right? Like, right. And it's still to this day, like you open a store and you don't know who the thousand people are that are walking in the door. Like, you don't even know they. You don't know anything about them. So we created this website and it just happened to like click right away. Like, we sold like 40 dozen bagels the first day. We did it for like 25 a dozen. And we sold no cream cheese. I didn't know anything about how to make cream cheese or butter or anything like that.
- [10:57]
John Davids
I want to get to the cream cheese in a second. But, but so this is like right away what I can see is you're constantly looking at the norms and breaking them. The idea of waking up at 4 in the morning, uhuh. Not doing that. The idea of just guessing that people are going to show up and buy these bagels, forget about that. You're breaking the norms of the restaurant industry that people have lived with, but frankly they hate. And even the. Right down to the recipe of the bagel. So let's fast forward here because I'm loving the kind of origin story. When does Danny Meyer get involved and how does that happen?
- [11:27]
Adam Goldberg
So Danny Meyer gets involved probably. I think it was September or October of that. Of the year that I started selling. And what happened was. And, and I'll just put this in there because how the cream cheese came about is important to the story. When I was done borrowing my friend's kitchen because they didn't really want flour all over their restaurant anymore and seeds everywhere, I had to find a place to cook. And there was a local plant based hub kitchen in town that actually wasn't doing anything on the weekends. So I made a deal with him. He wanted me to pay rent and again, I didn't know who was going to show up. So my deal was, I'll sell the bagels, you sell the cream cheese. And while we're using your space, If I sell $25 worth of bagels, I'll make people have to buy two cream cheeses for $12. And that's your revenue. So for $37 they get a dozen bagels and two cream cheeses. I make a little bit of money on the bagels, you make money on the cream cheese. And he was like, wow, like how many do you think will sell? And I was like, oh, you know, 50 customers every Saturday. And like two months later it was like 500 customers every weekend. And he was selling $6,000 worth of cream cheese, which actually equated to me paying about $20,000 a month in rent because he was getting all the cream cheese money.
- [12:41]
John Davids
You're talking about Danny Meyer here that you made this deal with?
- [12:44]
Adam Goldberg
No, that's not Danny Meyer.
- [12:45]
John Davids
Oh, that wasn't Danny.
- [12:46]
Adam Goldberg
Okay, got it. All right, so that, that's. So as we started growing and building, Darren Revelle, who is one of our investors now, he was having breakfast with Danny Meyer at Daily Provisions. And Danny was explaining to him that Daily Provisions only sells the best of what's available. And there is no compromise there because Darren said, how come you don't sell a bagel? He said, we haven't found a bagel that's better than anything out there. So Darren said, I will bet you and I'm not going to say what the bet was that you try pop up bagels and you will know that they're better than anything out there. So Danny agreed to the bet. I reached out to him and I drove up to his house in upstate Connecticut and actually cooked bagels with him in his kitchen and his wife and daughter who were all lovely and we, you know, talked about my bagels and what my, my theory is and everything. And later that day, he posted on Instagram something that he said about Shake Shack years before meeting me. And that was about his burgers. And it was, I, I was truly honored that he said it about our bagels. And that was that sometimes you taste something better than you ever expected it could be. And that's what he said about our bagels. In summary, I'm not getting the words exactly, but that was definitely a major social media boost for us, awareness boost. And it kind of put us on the map.
- [14:03]
John Davids
And, and just, just for timing here, how far into the journey is that? Are we talking like a year in at this point or.
- [14:08]
Adam Goldberg
That's one year. That's one year.
- [14:10]
John Davids
Okay, so. So you're like stumbling and fumbling into these game changing opportunities that just keep going. And at that point were you already. So you're already written up by your local paper, you've got some social media following. I've heard that social media was a big piece of the rise of this. Had that already happened pre Danny or was that kind of the boost right there?
- [14:31]
Adam Goldberg
Danny was, I think the first big boost. I think by like New Year's of 2020, 2021, we had like, I think we were, we were at a friend's house and we were like clocking like 700 followers and I was like, oh my God, at a thousand I'll be famous. That was like, you know, I'm not really a social. At a thousand followers, I'm famous. And then a couple months later, Danny Meyer probably boosted it like by another thousand.
- [14:58]
John Davids
Right.
- [14:59]
Adam Goldberg
To give you an idea, we opened our New York City store in April of 2023 rate with 15,000 followers on Instagram. So from December of 2020 to April of 23, so two and a half years later, that's how long it took us to get 15,000 followers on Instagram.
- [15:18]
John Davids
Yeah, people, people do not realize how long it takes. They see people with big accounts and I'm one of these people. I've got a hundred thousand plus on Instagram and I was at you know, 10,000 for four years. And so then, you know, you definitely need a spark to get there. Was that New York City location your first first or had you have one prior?
- [15:37]
Adam Goldberg
So, you know, I'll give you the, the history. I raised a friends and family round of money in, in late 2021. And the purpose of that was to build out a commissary so that we could revise our method from showing up at 3am to actually creating the dough using proper mixers and proper technique and proper walk in refrigeration and all of that. So we opened a store or our commissary in Reading, Connecticut in January of 2021. And at that point we were operating still from borrowing this kitchen space on the weekends in Westport to this store in Reading, Connecticut as our commissary. That was late 2021, so early 2022 is when that happened. And then it. Over that time, it took us a year to get our next store open, which was in New York.
- [16:28]
John Davids
When you actually open your store, I'm assuming there's a lot of learning, like a big learning curve. Did you have to change your processes and everything?
- [16:35]
Adam Goldberg
There's a ton of learning. Yeah. I mean, there's, there's. There. We. We did not change our recipe. We did change our process. And again, we created a process that would give us the best product we could have. We hired a DOE coach or I hired a DOE coach who came and basically worked and lived. You know, it's like live with the Navy seal. For me, it was live with a DOE coach. And, you know, I got him a hotel in town and. And he flew in from somewhere in the country and spent almost a month with us. Just every day, it was nonstop making product, boiling product, testing product, like adding or just subtracting just the right amount of yeast so that we got the exact product we wanted for our stores.
- [17:16]
John Davids
And if you fast forward that process, because the product quality is something people talk about a lot. How much of a science, like, how easy is it for someone to screw up your recipe today when making it at your restaurant? Or do you have it down to such a science?
- [17:29]
Adam Goldberg
Yeah, I mean, any. Anyone can screw anything up. You know, dough is a finicky thing. And yeast, we've got it down to a science. You know, this still is a handmade product. This still is an artisanal product. We don't use preservatives. We don't use things that make things worse for you. So there will be some variability from what you get in Fairfield versus New York or Boston. Some of that can either be just, was it cooked a minute longer or boiled 20 seconds less. And that's, you know, we're proud of the fact that our product is not 100% identical every time you eat it, but from a consistency basis, we think it's pretty much there.
- [18:09]
John Davids
Okay, so when do you start to raise money? You guys have raised a bunch of capital. Like why? And when did you do that?
- [18:16]
Adam Goldberg
So again, late 2021, I raised, you know, a little bit of money from friends and family just to help pay for the commissary build out. I didn't really want to personally be on the line for building a restaurant I never knew anything about. And you know, going back then, it was like, oh, I can build a restaurant for $82,000, right? And like nobody's ever done that. And somehow I built this restaurant out for like $82,000.
- [18:39]
John Davids
It was like, what does restaurant normally cost to build out?
- [18:42]
Adam Goldberg
I mean, easy, half a million. You know, most, most places are a lot more. I just, I found a place that already had a hood in place and they already had a walk in and everyone was like, electricians are 30 grand. And I was like, I'll find one for three. You know, and obviously that was not realistic. None of it was. I learned that I need someone with restaurant operation experience to operate a restaurant. Like it was not going to be me. I built an amazing team around me over the past few years. But again, so we did some capital raising in late 21 and then in late 20, 2022 is when I got our next like real did a couple million dollar capital raise from some big players in the food space. A lot of Hollywood, a lot of athletes. And that's where we really were raising to say, okay, we're going to open this first store in New York and we're going to do it right.
- [19:30]
John Davids
Okay, and just pause there. How where do the Hollywood athletes. Is that just personal connections or is it because you're blowing up in LA now?
- [19:37]
Adam Goldberg
No, we, we weren't blowing up in la. You know, Darren Revelle, you know, who originally introduced me to Danny Meyer, he really wanted to get involved and he has a fund that is invested in Tastemaker capital. They also invested in Athletic Brewing, which is the non alcoholic beer company which I happen to be invested in with them. And he had said, look, you know, I think you have a business here. And Sam Hendel is another great investment guy out there who also had said to me, you really have a business here. We got to you know, raise some real money and go for this. And Darren said, there's a guy I want to introduce you to. His name is Josh. It's from a big private equity firm in California. I want you to meet him. Meet us for breakfast. And he said, we're going to the Regency Hotel. And I said, okay, the Lowe's Regency on 60th and park and or 62nd, wherever it is. And I show up with a dozen pop up bagels that I baked in my reading facility that morning. And Josh looks at me, he goes, well, how am I going to, you know, how am I eating your bagel? We're in someone else's restaurant. I said, don't worry about it. Order the bagel and lox. Because I've been there before, I know the order. It's like a $40 item. And they literally bring you a whole s. A bagel and a plate of locks and a slide of cream cheese and some capers, and that's what they put in front of you. But they don't make the sandwich. They just leave the bagel next to the locks, next to it. So he brings. He comes that out. I reach and literally reach into my pocket and I go, here, eat this bagel instead. And he looks at it and he's like, wow, that's a good looking bagel. Like, okay. And he slices it open and he puts the locks and the thing on. He takes one bite. He goes, I'm in. He goes, I'm in. I love this. He goes, but if I'm gonna do this, he goes, I want you to talk to John Davis. And I go, who's John Davis? He goes, john Davis is one of the great early stage restaurant investors. He goes, and I want you to have him in the deal. If he's in the deal, I'm in. We'll get everyone in and we'll make this a huge thing.
- [21:31]
John Davids
There's an early stage investor named John Davis.
- [21:34]
Adam Goldberg
Yeah. So John Davis.
- [21:35]
John Davids
People are gonna be super confused. This is not me, John Davids. This is John Davis.
- [21:39]
Adam Goldberg
Different John Davis. Oh, yeah. Good call by so John Davis, Hollywood producer. He was the original investor in Wetzel's Pretzels, Blaze Pizza and Dave's Hot chicken.
- [21:49]
John Davids
Yeah. Love him.
- [21:50]
Adam Goldberg
And I sent John my bagels in the mail. You know, I have no idea what's going on here. I was just talking to some, you know, Hollywood producer and, you know, we have no affiliation to Hollywood, really. And he gets the bagels. And I'm like, john, what'd you think He Goes, they were bagels. I go, what do you mean? I go, no one's ever had that reaction. He goes, well, you sent me bagels. He goes, they're three days old by the time I ate them. What do you expect? So I said, well, John, like, you gotta try them fresh. He goes, all right, next time I'm in town, I'll try them fresh. And I was like, you know, John, I'm actually cooking at my friend Jack's house next Thursday in the Palisades. If you're going to be around, you should come by for bagels. He's like, I'll be here. He goes, I'm not sure I can make it there. He goes, but text me when you're at Jack's house. So I hang up with John. I call my friend Jack. I said, jack, I'm coming to your house next Thursday, and I'm making bagels. He goes, what are you talking about? I said, just. I said, put together the best group of people you can find. I'm coming and making bagels. I gotta invite this guy John Davis over. He's some Hollywood guy. I just. I need a place to bake. And he's like, fine. So I get to Jack's house, I buy a ticket. I fly to la. I get to Jack's house that Thursday morning, and I brought, like, flour with me. I mean, I'm going through TSA with, like, flour and sugar and salt and everything. Seeds. I mean, it's totally crazy. And Jack and I are sitting there, and I'm like, who do you got coming over today? And Jack is bedded in Hollywood, and he's like, oh, my friend Judd Apatow. And, you know, this guy of this studio and this guy of that studio. So we're sitting there, and it's me, Jack, Judd, and, like, four other huge Hollywood people. And I'm texting John, like, are you going to come over? Are you going to come over? And he's like, no. He goes, but you can come see me in Bel Air. So I look around the table, and they're all like, adam, trust me. John's great. Put some bagels in a bag, Take an Uber, get to Bel Air. Thanks for cooking for us today. We'll see you next time. So I get in the car, I go meet with John. I bring him the fresh bagels that I just made in Jack's house. He takes one bite, and he goes, I'm in.
- [23:52]
John Davids
Quick break. So I can tell you about Toyota. And no, this is not a car commercial. This is a commercial for Influicity. That's the marketing agency I created in my apartment almost a decade ago. And man, have we outgrown my apartment. You can see how we help Toyota introduce their vehicles to a brand new generation of drivers. Check out the case study@influicity.com that's inf l u I c I t y influicity.com okay, this is like, this is serious hustle, man. So people, people listening to this have to understand it. It is not the movie script. Up into the right version. Like, you're flying across the country, you're sending bagels, you're baking bagels on the road. Okay, so you raise money at what point? And just to kind of cap this off, how much have you raised to date?
- [24:39]
Adam Goldberg
Somewhere around $11 million to date over several rounds.
- [24:43]
John Davids
And is this, I mean, I love the story of people take one bite of the bagel and they give you their money. Like, that's cool. But is there a special secret sauce to the business of this or is it just, hey, they're really tasty bagels. I have to imagine the pop up model, the margins, the product mix. Like, there's more to it, right?
- [25:00]
Adam Goldberg
There's a vibe for starters, right? You got to start with a great product and then you got to start with like, what are, what are we about? Like, what's our mission? And from a business perspective, what are we building? So we've built the ability to create the same great tasting, great quality bagel, whether we're cooking it in New York or Florida or California or I'll be in the Rockies this weekend and I'm going to bring some dough out with me and we're going to roll bagels out there and it's going to be the exact same product. So a lot of people make a great product, right? Whether it's a great croissant or a great steak. But the question is, is it scalable? Can you open 100 of these stores and keep the same product? And from day one of saying, hey, we're going to make this a national business, we made sure that as we grew, we kept it scalable and we kept the quality very high. So that's what people are investing in. They're not just investing in, hey, Adam's a really fun guy. We're going to go have fun with him and be a part of his business. Like, that's some of it. Like, people enjoyed our ride and they're excited to be a part of this. But more than anything, it's hey, we've got a great product that is scalable and can grow and can be in the hands of everyone. Look at, like, the great burger chains out there, right? They can make the same great burger no matter where they are. That's one of the things that makes them great. It's not the exact four pieces of lettuce or one pickle on each burger. Like, there's always going to be variations, but it's still a great product and it's a great vibe.
- [26:36]
John Davids
Where did the ritual? So you have, like, rip and dip. You have, you know, like, there's sort of rituals here. And I'll say, like, the. On the marketing side, too. I can see people holding up the schmears almost like it's a froyo, and it's like a kind of a foodie badge of honor. How did that all happen?
- [26:52]
Adam Goldberg
So that all happened in our original Westport location, which didn't really have an inside. People would drive up, and our bagel bouncer would, like, walk out to the car and say, hi, like, what's your name? I'll get your bagels for you. And they would give their name, and we'd go in, and their name would be on a bag. We'd hand it to them, and they would get. There are two schmears. We noticed, you know, you're getting a hot bag of bagels handed to you. We noticed that people were actually ripping open their smear cup, dropping it in the cup holder, and, like, reaching over, grabbing the bagels, dipping it in, and eating it before they left the parking lot. So, like, you could imagine this wildly efficient system of people drive up, we give you your name, you hand it to you, drive off, Hand it to you, you drive off. And we had, you know, at some point, 2, 300 cars showing up on a Saturday, and they would drive off, but all of a sudden, you would look and like, 50ft away in the parking lot, those cars are all stopped, and they're all just, like, eating bagels by themselves before they go home, you know? And the joke was, like, we didn't sell dozens. We only sold 10. Because people would get home and be like, oh, honey, there, you know, there's two bagels missing from our dozen here. And so that was where the original grip, rip and dip started. What happened in New York was when we opened our store In April of 2012, 23 in New York, I was originally going to open it as our similar model in Connecticut, which was, you can only buy bagels by the dozen with two schmears for $40 or whatever the number was at the time. And I kind of had, like, a panic attack two weeks prior that, oh, my God, we're opening, like, right in the heart of, like, where people are single, where people live with maybe one roommate. What are they going to do with these dozen bagels? They're going to hate me. And I figured there would be this, like, market. And there is, by the way, a huge market for people that want a dozen bagels or three dozen bagels, or catering. I mean, we have a massive catering business in New York right now that continues to grow on a weekly basis. I said, but what about all of our neighbors? Like, what are they going to do? Like, you know, in the suburbs, like, two families would share a dozen bagels, and it was the cutest thing. They would send me photos that they're the end of their cul de sac. And the, you know, the neighbors all chip in and get a dozen, and they go and they each have a bagel. And it's how they see each other on the weekend. And we love that. It's community, it's family, it's building. But for the person who lives alone in New York, like, they don't want a dozen bagels. So kind of, like, panicked in the few weeks before, I was like, oh, we need the grip, rip and dip bag. And that's a bag with just enough bagels in it so that they could rip them open, dip them in the park. Because, remember, we don't have seating in our stores, and not everyone wants to go home and eat. So, like, how do they eat in the park? And we didn't want to start with bread knives. And again, part of our model is, you know, if I have to cut for you, if I have to slice for you, if I have to smear for you, if I have to scoop for you or toast. All of that just adds to the labor model. To the labor model. To the labor model. It also adds to the waste, and it also adds to the, hey, like, we can't afford to open stores here because the rent is too high, right? So that's where the grip, rip and dip came from. We opened it successfully. We kind of work backwards as to, you know, what could someone afford if they were to go out right now and get a meal by themselves or get a meal with another person. We figured out, like, in New York, the average person going out and getting a meal by themselves is probably spending, like, 10 or $11. And if they were going out with another person between them it was 20, 25. So we kind of fit somewhere in that 12, $, 13 range and said this is a pretty good number. Like, if there's, if there's two people that want to eat together, they can have three bagels together. And if it's one person, you know, maybe they splurge for that $12.
- [30:26]
John Davids
So it's. It's three. Three bagels and a schmear for 12 bucks, right?
- [30:30]
Adam Goldberg
I think it's 13. 13 or 14 right now. Yeah.
- [30:33]
John Davids
Okay.
- [30:33]
Adam Goldberg
We just. After two years, we finally had to raise it a dollar. The prices have been a little crazy.
- [30:38]
John Davids
Yeah, for sure. So, and then the idea of, of the holding it up like it's a froyo, which, which is like a very iconic thing on Instagram. Was that totally natural or did you encourage people to do that?
- [30:51]
Adam Goldberg
That was pretty natural. A lot of our Instagram and a lot of that growth has been really organic growth. We have a lot of fun with, with our community, and our community has a lot of fun with us. And, you know, when we see people doing things that kind of move it, we kind of jump on the bandwagon and, and do it with them. When we do events, we have what are called half moons. So you've been to, you know, a thousand cocktail parties. Like, nobody wants to eat a bagel sandwich at a cocktail party. Right? Like, nobody wants to sit there and be like, you know, so we started this, like, half moon where we cut the bagel in half and give it to you in a cup with a 1 1/2 ounce of schmear at the bottom of it. You can kind of just. Yeah, it's actually kind of civilized, for sure.
- [31:33]
John Davids
So the franchising model, at some point you, I'm guessing the first couple locations probably you owned, and then you start franchising. Is that kind of how it, how it grew?
- [31:42]
Adam Goldberg
Yeah. So we own, we own all of our Connecticut and New York City locations. And at some point, you know, you have an option. It's, you know, do we want to take a slow road and open a few stores a year? You got to raise a lot of. I mean, opening stores is not inexpensive. You know, you need at least a half a million dollars per store just to get it built out. And then you need running capital and everything.
- [32:04]
John Davids
Is that still what, what it's costing you? Because the first one you said you did for 83,000, I'm guessing.
- [32:08]
Adam Goldberg
Yeah, well, that was, that was kind of the humorous. Like, I could do anything for $83,000. We figured it out but it obviously wasn't a real store and we wound up putting real money into it later. But no, you know, it's at least a half a million dollars to build a store. And we want to be in Atlanta, Chicago, Austin, Dallas, Louisiana. Do we want to have that capital outlay? That's one thing to consider. And the other thing to consider is do we know those markets or would we rather partner with franchisees in these markets that know the traffic patterns, know the people have done the research and, you know, we found that franchising is, is really an amazing way to reach more people. And if you tap in with, with great operators, things can be amazing. Our, our Boston store, which just opened a month ago, is our first franchisee location. And our partners there have been amazing to work with and it's, you know, just one step closer to proving that, you know, what we're doing is not something that we have to just do on our own and that we can bring all of these franchise partners in.
- [33:08]
John Davids
What are your goals now in terms of numbers? How big do you think you can get? How fast?
- [33:13]
Adam Goldberg
Caveat on how big. How fast will always fall back to. We'll never go beyond what we think we can sustain perfect product quality. We always have that in the back of our mind. But I think we have 10 stores right now. I would say we'll probably have 25 to 30 stores total between us and franchisees by the end of this year and looking like 60 to 80 by the end of next year.
- [33:35]
John Davids
Wow. And is there a business out there? I mean, there's, there's, you know, so many restaurant franchises. But is there a model out there that you say we can be like them in five to 10 years? No.
- [33:46]
Adam Goldberg
I mean, again, there's a lot of paths that have been taken the choose your own adventures here. I'm sure there's five or six a year that are going to come up where I don't know where we'll be two or three years from now. My hope is that we are at core true to our root. And that is just an epically fresh, great tasting, great recipe bagel experience. It's really hard to say. I mean, there's so many great brands out there, but we really try not to compare ourselves to others. We really just want to focus on what we're doing.
- [34:15]
John Davids
So it sounds like there's a ton of stuff that you did to make this happen. And I always like to kind of reverse engineer and say, okay, what are the two or three things that really made a difference versus you know, the 20 things that you did, but you also could have just skipped those steps if you wanted to. What are two or three things that really made this happen for you?
- [34:32]
Adam Goldberg
Not selling sandwiches four months into it.
- [34:36]
John Davids
That an idea you were going to go with?
- [34:38]
Adam Goldberg
Yeah. I mean, I had a lease and everything. I was ready to open a sandwich shop by the train station. Like, and I kid you not, we showed up there with an oven, and we're ready to do it. And the oven didn't come with a plug. And I called the supplier and I said, you sent it? They said, no, this is supposed to be hardwired. And I said, no, it was supposed to have a plug. Send it back. And that night I realized this is a mistake, and that was sent to us wrong for a reason. And we walked away from the whole deal.
- [35:07]
John Davids
Wow. So you. You could have just opened a sandwich shop and this.
- [35:11]
Adam Goldberg
None of this would have happened. And I never wanted to. At my core, I don't. You know, I just. You're looking. When everything is running at 100 miles an hour, you're looking at like, like, you know, like I said, there's so many. You could do this, you could do this, you could do that. You can talk to this person, that person, you know, that was one of them. I will say one of the, like when you go back to, like, True hustle. We have been in the Hamptons every summer since 2021. The reason we went to the Hamptons in 2021 was to meet the people who were going to help us expand nationally and globally. And it really worked. I mean, it was like, I would get in my car on Friday morning at 3am Go pick up the dough. We would drive to the Hamptons, because if you don't beat the trade parade out there, you sit in traffic for two hours on a Friday morning. So, like, you had to get to the kitchen by 5am we had pre sold 80 to 100 dozen bagels working out of our friend's Greek restaurant and water mill. And people would show up from like 7 to 11am they'd get their bagels, I'd meet them. We'd have like a cool vibe outside with music playing, and everyone be like, oh, that's so cool. You get to go to the Hamptons every Friday. And I'd be like, yeah, and I'm on the 12:30 ferry back, you know, on Friday. So it was like, it was pure. Everything we did was pure hustle. And again, you got to start with a great product. But, you know, when you're growing a business like this, There is no. The word no doesn't exist. Hey, so and so wants to try your bagels. Can you get them to them? The answer is yes. All right. I didn't tell you where they are. It doesn't matter. I'll get them. Whatever we need to do, we'll get them. We were just down in New Orleans, my marketing team and I cooking for the super bowl events, and someone would say, hey, can you get so and so these bagels? Absolutely. Where can we get them? Just. Just say when. And at one point, like, four of us are just, you know, either running somewhere or in an Uber somewhere or on a bike somewhere. I think I took a pedicab somewhere because I couldn't get an Uber. Like, it doesn't matter. The more people, especially when you have a great product, the more people that can try it, and the more people that can get their hands on it, the more people that talk about it. That's how you create something that has that massive outreach, which allows us, in turn to open in other markets. I mean, we showed up at Tulane University three days ago. We've never done anything in New Orleans, and we had over 500 people online before we even showed up. It was wild. The cops were there just to make sure nothing got out of control.
- [37:38]
John Davids
You're. You're willing to do things that other people aren't willing to do. I mean, like, like you said right back from that first investor or one of the first. John Davis. You know, I. You mailed these to me. Maybe I'll have them when I'm in NYC next and you're on a plane to the Palisades. Bacon bagels, Ubering them over. Like, you do what needs to be done.
- [37:57]
Adam Goldberg
And by the way, you know, the funny follow on to that was John called me two weeks later because we had discussed he wanted to find, like, a good Hollywood, you know, partner to bring in. And that person was Paul Rudd. And two weeks later, Paul Rudd and John call me, and they're like, hey, Adam, this is Paul. Like, I want to try your bagels. He's like, can you send them to me? And I'm like, no, I don't want to send them to you. You need to make them fresh. He goes, well, I'm in the Catskills all weekend, or wherever he was. And I go, that's so funny. I'm going to be there, too. And it was the exact same, honey, pack the car. We're going wherever it was. And it was the same thing. And you know, in anything, the answer is always yes, as long as it's not doing anything that's going to harm you or hurt other people. Like, yes, we will get it there. And. Oh, I happen to be there anyway.
- [38:45]
John Davids
Okay, listen, I love this story. I want to kind of go to, to wrap up here on some of the comments because I put this out, millions of people saw it, and I got a lot of pushback and there's a lot of haters out there also because people want to pick on the guy that's doing super well. So a couple things. So I put together some math, and you can tell me if I'm completely off or if I'm close or you can make no comment at all. But I basically said the average order value is probably about $42. I got that off your website for a dozen bagels and three smears, I think it was.
- [39:16]
Adam Goldberg
Yep.
- [39:17]
John Davids
I said, I'm going to estimate you serve about 400 customers a day per location. That turns out to about $6 million a year if you do the math per location or 60 million across 10 locations. And then I said, I think you guys are sitting at about an 18% profit margin. And then I put a value, Basically I said 5x valuation or 5x multiple 54 million valuation. Am I anywhere in the ballpark?
- [39:41]
Adam Goldberg
Nowhere near it.
- [39:42]
John Davids
Nowhere near it.
- [39:43]
Adam Goldberg
You're off on everything.
- [39:45]
John Davids
I'm off by everything. But I was going to say, am I?
- [39:50]
Adam Goldberg
We have, we have, we have a great valuation. You know, if I were to peg a valuation on our business, it's probably over your valuation. But we have brand value as opposed to just store revenue. Bagels are a cyclical business, so we're definitely not doing those kind of numbers that you're talking about. If we were, we would be opening the stores ourselves. You know, six. Six million dollars worth of bagels out of a store would be outrageous. It's possibly doable, but we're not doing that. Those numbers. But we are running really, really efficient businesses. And, you know, Friday, Saturday, Sundays are busier than Monday, Tuesday, Wednesday, Thursday. So you can kind of, you can kind of take what you want out of that. You know, when you, when you start with private equity involved and, and, you know, a lot of big names investing and, and we have great backing and we have real, true leadership here. We have set presidents and CEOs and CFOs that are just best of class who are leading this business. With me. We're going to, we're going to have a great valuation on the Business because of the product, because of the stores, but also because of our growth. We're not valued for, like, hey, this guy's got a five chain pizzeria. Let's, you know, value it based on that.
- [40:57]
John Davids
No, you. You, I'm sure, have a venture. More of a venture type valuation. I think 5x is also crazy. And I put that on there as my as. As a number, but I'm sure you're. You're probably worth a lot more than that.
- [41:10]
Adam Goldberg
Yeah, just. Just so, you know, like, in. In the franchise space, you know, franchise concepts typically are valued at anywhere from 20 to 40 times cash flow.
- [41:18]
John Davids
Okay. So I was way off with the five. And I will say, even as I was doing this, McDonald's makes, I think, three or three and a half million a year per location. So if you were to make 6 million, I would say that would be wild. But, hey, it's a fun number to throw out there.
- [41:34]
Adam Goldberg
Yeah. And by the way, appreciated it, by the way. I was excited. I'm like, wow, this guy knows more than I do.
- [41:41]
John Davids
The best thing you can do as a founder. This is everyone listening. Best thing you do as a founder is when someone throws out an insane number or valuation or whatever. Just don't comment. It'll be out there in the ether. It's fine. So some other comments. Someone said that there's another bagel chain called Goldberg's that you secretly own. Any truth to that?
- [41:59]
Adam Goldberg
No. In fact, the reason why we're using the tagline not famous, but known was because when I tried to launch the business, I was going to be Goldberg's Bagels, but we realized there's Goldberg's in the Hamptons. And then I was going to be famous Goldbergs, but we realized there's also famous Goldbergs in New Jersey. So my wife said, hey, remember we were in that nightclub in 2016 in Reykjavik, and the guy next to us said he wasn't famous, but he was known. And we were like, oh, my God, that's what will be will be. Not famous, but known. Goldberg's Bagels. But we just kind of cut it off and use that as our tagline. I do not own Goldberg's. I'm not related to them.
- [42:35]
John Davids
I love that someone else asked about the. Someone said that they get super excited about the text messages and they can't wait for them. Do you guys send out texts? And are people really engaged with those?
- [42:46]
Adam Goldberg
Yeah, Howard Stern actually called us out. We Baba Buoy gets a bagel alert from us once a week. We send out a text message that says what our flavors are for that week. So it's like this week featuring caramelized onion cream cheese, hot honey butter, whatever it might be. And that's the quote, bagel alert. So we've been doing that for four years. It still goes out every week.
- [43:10]
John Davids
Wow. Oguzan, I'm sure I got that name wrong. Is asking if you have any plans to open up in Japan.
- [43:15]
Adam Goldberg
Funny they should ask that. We are going to be in Tokyo this October cooking with our friends at Wagu Mafia.
- [43:24]
John Davids
All right, Oguzan, go to Tokyo and grab some bagels. Adam, this is awesome. This story was just like, it came to me and I thought, this is just. It sounds too good to be true. But when you actually tell the story, I know that there's a lot more grind and hustle that goes into it. So I appreciate you sharing it today.
- [43:40]
Adam Goldberg
This was really great. And anytime, you know, the only thing I'll say is, there's always haters. And the one thing I've learned from any entrepreneur out there that listens to this is, you know, haters are actually fuel to just keep going because it means you're doing something right.
- [43:54]
John Davids
It means you're doing something right, and it means that you figured out something that they wish they had figured out first.
- [44:00]
Adam Goldberg
Amazing. John. This was super fun.
- [44:02]
John Davids
Awesome, man. Thanks so much. Thanks for listening. Hope you enjoyed this episode. If you did leave a rating or review on Apple or Spotify, wherever you listen to podcasts, it helps other people find the show, and it lets us know that we're doing something right. We'll talk to you guys next time.