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- [00:00]
John Davids
What's up guys? JD Here. And on today's show, I'm talking to Jeff Gallatly, CEO at Brooklyn Dumpling Shop. This is a super fast growing restaurant chain. They're also selling in grocery stores, they're selling at Yankee Stadium. We're going to get into the weeds on how to build and how to manage a very fast growing business. So if you want to get into the tactics and hear how it's all done, hear how the dumplings are made. That's coming up in just a sec. If you're new here, my name's John Davids, but you can call me J.D. if you're a fan of the show, make sure to let me know. Leave a rating and a review on Apple, Spotify, wherever you're listening. That's how I know that you're liking the show. And I read them all, believe me. Of course you can get my best stuff to your inbox. Head over to JohnDavids.com, get on that newsletter. And now let's get to the show. So Jeff, I was looking through your resume and I see management consulting, PepsiCo, private equity, you're an executive at Restaurant Brands International and then you go into the dumpling space as an entrepreneur. So I'm wondering either something went really right or terribly wrong, which one was it? And tell me how you got here.
- [01:14]
Jeff Gallatly
Great, great question, John. And I'd like to believe that things are going right and as they should. I started my career in consulting and all of my projects were for consumer businesses, mostly large food, beverage, household personal care companies, broadly what's called cpg, consumer packaged goods. So I actually really fell in love with consumer as an industry and strategy work in particular. And then here comes the recession and I actually got recruited to join PepsiCo doing corporate strategy and M and A decided to leave consulting and go do into the industry that I'd gotten so passionate about. And there, you know, my joke is like, you know, consulting 30,000ft. I then got to about 10,000ft. Corporate strategy, developing the long term growth plans for how we're going to continue to grow the business. I spent most of my time on the beverage side at PepsiCo thinking about, you know, how do we grow these different categories, looking at a lot of acquisition opportunities, where the growth is going to come from and how do we ultimately continue to grow in the future and make investment decisions and so really enjoyed that experience. But then I got to like zero feet on the ground, boots on the ground as a brand manager and I think particularly an organization like PepsiCo, you know, sales and marketing is really the heart of the business and particularly on the marketing side, a great history of developing folks, marketing talent. And so I was able to make that move from consulting to strategy to marketing and had a great experience. And so I think in that regards, the early part of my career, I'd actually already touched on a variety of different things, but all kind within this consumer landscape. Fast forward. I went to business school, got an MBA at Wharton, and afterwards made a pivot to becoming an investor at a private equity fund. And that fund, great as it was, we actually didn't do consumer. And it was like one of the hurdles I had to mentally get over to decide if I was going to join this fund or not. They'd been around since the 80s, great group of people, tremendous success. But a lot of the companies were more like industrials based manufacturing, distribution, industrial services type companies going through some form of turnaround, what we call like a story deal. So I get on there and investing's great, doing these deals, leading diligence, getting into knowing companies. And something that was very clear to me was I always found myself gravitating towards the CEOs and executives of these companies. Not through so much through the investor lens, but more so having the heart of an operator and wanting to actually go run a business and then perhaps at some point cycling back and you know, becoming an investor, but having actually been in the seat of, of leading a business. So I known some folks who went over to what was originally Burger King and then upon the merger with Tim Hortons, became Restaurant Brands International. The controlling shareholders, 3G Capital, they had a very different way of running businesses. They kind of hired smart, hungry people, threw them out there. And if it worked, it worked great. And if it didn't work, you know, you probably go, go do something else. And so that attracted me because it also got me back into a consumer focused business this time. That through the angle of restaurants, right. So different from consumer products now with restaurants. But it had all the characteristics I was looking for to come in and begin to accelerate now much more as an operator than being in the investing world. And so that brought me to restaurants.
- [04:34]
John Davids
Mm, I'm hungry. You guys hungry? I could go over some fried chicken right now from Jollibee. And no, this is not a commercial for Jollibee. This is a commercial for Influicity. That's my marketing agency. And Jollibee is one of our amazing clients. You can see how we help drive more foot traffic to their restaurants across america@influicity.com Check out the case study. And hey, while you're there, check out all the other case studies from the amazing clients we work with. Influencer marketing, podcasts, social media content, AI and so much more. And if you want to work with us, just hit the let's talk button over at the top of the website. That's influicity.com and I'll see you there. Okay, pause there for a second because there's a ton there that I want to dig into right off the bat. You mentioned a few minutes ago that you started at 30,000ft, then you went to 10,000ft and then you went to 1,000ft. And I don't think people appreciate this. I've done a lot of research into what management consultants do and I think there's this stereotype that they kind of just push papers around and send out big hefty invoices. When you're a management consultant and you say you're looking at, you know, 30,000 foot view, what are the things that you learn in that role that are so critical? Because I know there's, you know, there's management consultants out there that can look at a business and figure things out that nobody else would be able to even see. So what are some of the things you mean when you say 30,000ft?
- [05:59]
Jeff Gallatly
Absolutely, yeah. I mean there I worked with some truly brilliant people that understand business and it's not so much an execution role of like, okay, now I'm going to go be the person that go does xyz. It's more so being able to take that, you know, in this case, 30,000 foot step back and assess the landscape and not necessarily making moves for tomorrow or next week or next month or next quarter. But, you know, here's our business today we have an imperative to go grow. How are we going to go do that? What decisions are we going to make that are going to help us go do that over a longer period of time? And with that, having expertise in particular functions and or in the industry itself, understanding the landscape, who the key players are, and then getting really into data and analytics and understanding where is growth coming from, what are consumers wanting, where do we believe this is going to go and how do we ultimately help these clients get there, you know that that is, there is a skill to that and in some respects there's a need to that. Right. And companies can have that internally. But also you have some really smart, talented people who are a bit more objective on the outside, able to help guide and make recommendations. I do sense, I think that there's a value to that. I certainly appreciate some of the criticism of the consulting industry. At the same time, I think there's some great folks that do an amazing job helping steer companies and company leadership into making really healthy, thoughtful, enduring, long term decisions. And that there's a lot of value.
- [07:37]
John Davids
Doing it at a 30,000 foot level and looking, like you said, past the next month or quarter and even the next year is something that's actually really hard for an operator to do, whether you're in a large company or a small company because you're really focused on, hey, I, how do we keep the train moving right now? And the other thing is that you said people can do it internally, which is true. The problem is that when you're internal, you've already drank the Kool Aid to a certain extent. Like you're, you, you buy into the mission, you buy into the culture, you have to in order to do your job. But if you're a consultant being brought in, you don't have any attachment. I, I don't, I don't care. It doesn't matter to me if you're around tomorrow. I, I want to make sure you are because you're my client. But you can look at it much more objectively and then going down to the kind of 10,000 foot, 1,000 foot. So what are the, what are the differences in the skills there? Because I'm, I'm sure there, there are people listening right now who are maybe more left brained or right brain or more creative or more tactical. What are the skills that you learn when you're getting kind of lower feet on the ground?
- [08:38]
Jeff Gallatly
At some point there becomes a transition from being able to sit back and, you know, build a model and make some beautiful PowerPoint slides to being the person who actually has to go do those things. And that is, there's a difference there. And that's where I think, you know, for me it was like on the marketing side, it's like, okay, I'm now a brand manager. We now have to grow sales like right now for this brand. And we have to do things that are gonna drive performance immediately, like right now. And so at that point, you're no longer able to just kind of sit back and like let things unfold. It's now being responsible for driving that performance. And there, I believe there is a pretty big difference and also a difference in mindset and responsibility. And so at this point, you're now, the performance is there or it's not and it can be very objective and you have to have the plans and the tools and the resources to go drive that performance. And that to me is really where you start becoming an operator.
- [09:45]
John Davids
So that takes you to rbi. And so now you're at, you're working on the Tim Hortons brand. And what happened there, what started in.
- [09:54]
Jeff Gallatly
Miami, working on the Burger King business ultimately was effectively leading marketing strategy for Burger King North America. My team would develop all the new products and promotions that we had launched to drive sales and restaurant profitability. And, and so there it was very much having our finger on the pulse of what's going on in the industry, who's growing, who's not, how do we think about, how do we create a sustained pipeline to ultimately continue growing our sales? Which, you know, the. For a franchisor, that top line sales number really matters because your revenue is then a function of those sales as a royalty. But of course, what matters most is franchisee profitability and ensuring that the franchisees are making money, that they're continuing to operate their shops, open new locations, and that's such an important part of it. So there I got back into kind of, broadly speaking, consumer. I'm in this marketing role, but also I begin learning the business of franchise and what does it mean to be a franchise or have franchisees, how do we support them and ensure that they're going to be successful? And I had kind of an interesting experience where one day, you know, we're just getting out of a meeting. The president of Burger King at the time asked me to stick around after the meeting. At this point, I'd been at the company like a year and a half. I'd already had three jobs there. And he said, Jeff, perspective, immediately when you walk out this room, you're now the head of North American operations.
- [11:18]
John Davids
Okay.
- [11:19]
Jeff Gallatly
And so if you think about, you know, I'm this kind of like consulting, strategy, marketing, finance, private equity person who's now back in a marketing role and ultimately is now just become the face of operations for 7,000 restaurants across the US and Canada. And I think my answer or my response was like, are you sure? Like, you know, I don't really know anything about that. And he was like, yeah, don't worry, you'll do great. You'll figure it out, you know, so we walk out of the meeting, he like makes an announcement to the floor. And at that point, what's interesting is that all the products and things that my team had been creating on the marketing side, I was now on the receiving end of Having to, how do we go help 7,000 restaurants, go execute these things and, you know, ensure the restaurant profitability, a great guest experience, and how do we continuously improve? And so that was kind of a big step in my career and also, I think, a big test. And for me, what I realized immediately, and I'd heard a quote from one of my private equity partners that stuck with me. You know, he would tell the portfolio company CEO, you know, you'll forget more about your company in the sleep. In your sleep tonight than I'm going to learn in the next year, no matter what I do. And so that stuck with me. So I then had an operations council where it was like 18 of, you know, seasoned veteran franchisees who are in their restaurants every day. They care about it. We were in a meeting, two weeks later, I stand up in front of the room, they're like, who the heck is this guy? And I kind of use that line where I was like, guys, and it was all men. But you're going to forget more about how to run a Burger King in your sleep tonight that I'm going to remember in the next few years, no matter what I do. And so how do we take the collective knowledge of this room and ultimately go extrapolate that across our entire system and drive improvement and ensure that you have a voice and that we're listening and that we're going and affecting change and making constructive, positive improvements to the business together. And then, you know, from there I went and I spent a lot of time in restaurants. I did training programs. You know, I got different batches for being able to operate the fryer and the broiler and the cashier, and you truly learn how to respect what it takes. And, you know, sometimes sitting in, like, the corporate office somewhere, you really gotta get out there into the restaurants and understand, you know, what is the life like for the person that's ultimately going to go execute these things, you know, times, however many locations and at scale, and a great deal of empathy develops there.
- [13:47]
John Davids
I love that. And it's a great leadership lesson because it takes a lot of humility. But the trick to being, or one of the traits to being a great leader is empathy, understanding, boots on the ground. And that line kind of sums it up, which is, you're going to forget more in your sleep than I'm going to ever know, because the people on the ground who are doing the job, who are spending 8, 10 hours a day doing it, you're not going to be able to tell them how to do that thing. Better, but maybe there's a coaching or advisory role that you can offer that is more useful. It's not as tactical though. I'm curious about. So I've heard lots of stories about the 3G capital culture, the company that owns RBI and I'm sure it's kind of seeped into the RBI culture also. It kind of sounds like even that role change that happened to you, the fact that you went from one position to another in a meeting, when you leave this room, you have a new gigantic role. Is that what the culture's like? It's fast paced, it's giving people opportunities to grow.
- [14:45]
Jeff Gallatly
That was really a key selling point for me to join rbi. And I think speaking from my own experience in my own career would be illustrative of that. I was there for seven years. I had seven jobs in seven years, including I had one job for three years which after that head of North American operations role, our CEO came to me and asked me if I would move to Asia. They wanted leaders from headquarters to go help build the business in Asia, fastest growing division. And so I actually went and I spent four years out in Singapore. And this is where there's a bit of Canadianness now into my career where the bulk of which I spent three years leading the Tim Hortons Asia business. And for a lot of people they're going to be like, I didn't know Tim Hortons had an Asia business. And actually for a long time that was true. Tim Hortons obviously is iconic Canadian brand. They had never really had much success growing outside of Canada and you know, the contiguous kind of Great Lakes region in the U.S. really nice business in, in the Middle east. But there hadn't really been much outside of that. So I took that on. It was 70 locations in two markets when I started in Jan. 2020. By the time I left, we were over 700 locations in five markets. And based on the deals that we had worked on then, today that business is over a thousand locations in eight markets. And so actually a really nice, healthy, growing business for Tim Hortons in Asia. And so to answer your question on, you know, 3G and I think it was and is, and now, you know, at this point I'm obviously removed from it. But a model where, you know, you come in, you work hard, you produce results and great things can happen. And I'm very thankful and grateful for the experience I had there because also it allowed me to touch so many parts of this industry, whether it's, you know, multiple different functions within marketing, within operations and then Leading businesses and understanding all the components that go into it. And for me, I think that was actually tremendous training to ultimately go become CEO of a standalone high growth business where so many of these things I got exposure to in the roles that I had. And so for that I'm incredibly thankful. And that's something that, you know, certainly my time there allowed me to go do. That I think is pretty distinguished versus a lot of other places where I could have been. So in that regard, yes, the ability to come in and it comes down to results. And you know, everyone's got a scorecard and your scorecard is public and everyone can see it at all times and you kind of know how you're doing or how you're not doing.
- [17:14]
John Davids
Radical transparency.
- [17:16]
Jeff Gallatly
For me, I thought it was great, right? And so now it's, you know, leading a business, taking all the best elements of that culture and that ethos and that way of doing things and how do I apply that or not apply it, depending on what it is in building this business and who we're creating this company to be. But surely I think there's a lot of great things that I took from it.
- [17:39]
John Davids
So when did you get the entrepreneurial bug and why? Dumplings?
- [17:43]
Jeff Gallatly
So I had spent four years in Singapore and the company one day called me and basically was like, hey, you've done an awesome job over there. It's time to come back to the US and what was hard is that I'd spent four years over there. The first year was pre Covid was traveling nonstop, going to China, Australia, all these places almost weekly. Then two rather difficult Covid years where we were still able to grow the business, but travel and everything had been limited. And then one year post Covid where things kind of opened back up. And in that whole time, though, I really loved the entrepreneurial energy of being able to run that business, being able to launch in these new markets, working with master franchisees and their teams to build their companies. And so there was a very entrepreneurial element to it. So after four years, come back and I'm general manager of Tim Hortons usa, which actually is probably a larger business than a lot of people suspect. 650 restaurants.
- [18:41]
John Davids
650. What is Tim Hortons overall?
- [18:43]
Jeff Gallatly
Well, I believe Today there's over 6,000 restaurants globally, about 4,000 of which are in Canada and now, you know, an increasing number in Asia. Very strong business in Middle East. Mexico has a strong business and, you know, continuing to grow and populate, you know, all over the world. And so I'm back in headquarters. And I'm just like, man, I really loved that work. And I felt like I never actually saw myself being like a corporate person. I grew up in a family business that was in a way very entrepreneurial. You know, I went on, did my own path kind of on this, my own career journey. It's funny, the day I left PepsiCo, I told myself, you know, this is a great place. You could have an awesome career here. Probably not for me. I probably want something a little smaller, a little more nimble. I went and did the PE thing. I was then convinced that RBI was a very, while a big company was very different. And I think that largely was true. But for me, I'd always had this kind of family business, entrepreneurial energy inside me that really got unleashed when I was in this Tim Hortons Asia role. And then when I came back to headquarters, I just really, the urge was there. I felt like I'd accomplished a lot at rbi and my desire was to go and sync up with some great group of investors, get into an earlier stage business and ultimately go help grow that. And that's what ultimately brought me to Brooklyn Dumpling Shop. I had in. It was actually, it was in the CEO search for one of his other portfolio companies, a guy by the name of Matt Higgins. Matt. Matt runs a fund called RSC Ventures. It's Ross Sports Entertainment. His partner's Stephen Ross, founder of Related Companies and owner of the Miami Dolphins. They've been prolific investors in the food space with a number of great brands. In the CEO search, they actually offered me the role to be CEO of this other company for a variety of reasons. That one wasn't a great fit at that point in time. But I really enjoyed meeting Matt in this process, having a bunch of calls with him, getting to know one another. Matt wrote a book that was actually very influential to me. And I was living in Miami and I was listening to the Audible and I think I listened to it like three or four times over the span of like a couple weeks trying to decide what I was going to do. The book is called Burn the Boats.
- [20:52]
John Davids
It's a good one.
- [20:54]
Jeff Gallatly
It's really fantastic. And so that was influential to me to think about this analogy of like, how do I burn the boats in my own life of I know what I want to do, I want to go lead a growth business, I want to go team up with some investors, go do it. And what I need to do is kind of successfully get myself out of my, my, my corporate life and all that that entails. But Ultimately having kind of the. I'm going to use the word courage, but the courage, the gumption to go actually go do it. So I passed on that role with Matt, but attempting to stay in touch with him, he actually was like a little mad at me in the beginning and he kind of ghosted me for a little bit. I kept reaching out to him. I'm like, I want to stay in touch. We'll figure this out. And so the way it came together with Brooklyn Dumpling Shop is Matt has been a shark on Shark tank with Kevin O'Leary. Actually Kevin, his team, and the team at O'Leary Ventures, his fund. They sourced the Brooklyn Dumpling Shop deal. Not on Shark Tank, outside of Shark Tank. But Kevin and his team are getting involved with Brooklyn Delta Shop. Kevin pulls in Matt. I'm still in touch with Matt. And that's where it came together, where Matt was like, hey, I'm investing with Kevin O'Leary in this business, Broken Dumpling Shop. Go take a look. Let me know what you think.
- [22:04]
John Davids
So how long had the business been around for at that point when Kevin O'Leary got involved, very early.
- [22:10]
Jeff Gallatly
So this business, our first location opened in May 2021. The story of Brooklyn Dumping Shop is there's a business in New York called Brooklyn Chop House. They have two very high volume locations. Brooklyn Chop House, they're doing like an Asian fusion steakhouse. And. And they put these interesting, innovative dumplings on the menu and it like took on a life of its own. And people loved these dumplings. And the founders of Broken Shophouse said, hey, why don't we spin this out as its own concept and let's see how that goes. So that was in May 2021 when the investment came in. The initial investment from Kevin and Matt was at the end of 2023. So call it Q3, Q4, 2023. And that's when I got involved and ultimately what brought me in. And so I officially joined just over a year ago in January 2024. And why dumplings? For me, it was. It fit this mold of what I wanted to go do, which is go lead a growth business working with some great investors. Two is I love the brand and the product category. I have a whole thesis that around particularly young people, global cuisine, fusion cuisine has tremendous tailwinds as a category. If you look at the restaurant landscape, particularly the fast casual landscape, we can see all the success of players like Chipotle, Sweetgreen, Cava in the Asian inspired space. There's not right now kind of a leading scaled player in fast casual that I believe we can become. Plus this business combines elements of my career where we actually have the restaurant business, but we also have a consumer product business and we sell our products in Walmart and Shoprite and on qvc. And so there's kind of multifaceted which combines all the elements of my career. And so all those things allowed me to say, hey, I think this is a great opportunity and I'm going to leave kind of big corporate life. I'm going to go onto this entrepreneurial journey of, you know, this business which at the time was only really, you know, less than three years old. And we're going to go build it. And that's when I got involved just over a year ago.
- [24:17]
John Davids
So I want to ask, there's got to be such a transition story between going from these behemoth businesses to this, you know, single or triple location company. What is the business look like today? So you mentioned that you're selling in Walmart and at the grocery store shelf. Is it a restaurant? How do you define it today as a business?
- [24:37]
Jeff Gallatly
Yeah, we're a dumpling company that we're trying to get our products to consumers wherever they want to enjoy them. And so Today we have 14 open locations, we have 13 more that are under construction that'll open in the next five months. So actually we've already doubled once since I got involved. Over the next five months we'll double again when it comes to our unit count. And we also are selling in places like Walmart, Shoprite, qvc, which is actually a massive business, huge with trends kind of success. Kevin O'Leary has a great relationship with them. We just sold 1.5 million dumplings back in in on March 5th as part of their today's special value. So a really significant scaled business. And we now actually just last week we announced our partnership with the New York Yankees. We're going to be all throughout Yankee Stadium both in terms of having concession stands, but also throughout all the suites, throughout all the clubs in seat menus. With the Yankees actually becoming kind of close partners of ours and giving us all promotional support. Next week we're going to announce another massive partnership with another iconic New York venue. What we'll do a big release on next week. And so that also unlocks for us a food service business. And I think about whether it's colleges, universities, hospitals, office complexes, event venues, wedding halls, you know, if you think about all this in stadium stuff that we're doing, it's really kind of catering and events in addition to the concession stand, that's going to be a great opportunity for us as well. So our business while young and small, today we are multifaceted. We have our restaurants with our restaurants, we have franchisees. I want us to be a great franchisee support organization doing all that we can to support the success of our franchisees. Out of those 14 shops, three are corporate, the balance are franchised. The majority of our growth will come from franchising. So ensuring that we're doing all the right things to support our franchisees and partnering with retailers to continue to grow our penetration and awareness. And then doing things like food service business alongside some of these bigger licensing opportunities is how we're going to grow and scale. And so from, you know, May 2021, single location to where we are today and where we're going to be by the end of this year and the trajectory that we believe this business can be on, it's pretty transformational.
- [27:01]
John Davids
It sounds like you're, like you're growing on all cylinders here. What's the logic behind. You've got franchising, food service, grocery, CPG business, catering, concession, as you mentioned, and each one of these are $100 million plus opportunities, billion dollar opportunities. What's the logic of chasing them all at once versus saying, hey, we're just going to be the best franchise business we can be?
- [27:26]
Jeff Gallatly
Yeah. In some respects it's not so much chasing because we're getting pulled. And then for my job is to determine where does it make sense to get pulled, where does it make sense to push and how do I allocate capital, how do I allocate resources and probably the most finite resource of time and can we go pursue these things with excellence and make them great businesses? Fortunately, a bit. Because of my background, I'm able to be a bit nimble across some of these different businesses at the same time. I don't think it's like an either or, it can be a both. And for example, growing as a franchisor while a wonderful business, a capital efficient way to grow, ultimately ensuring that we're supporting our franchisees and giving them everything they need to be successful, it takes a bit of time to get that scaled right. If you think about we're only collecting a royalty from those shops and so, you know, at what point in time do you achieve a scaled business? If you're opening 30, 40, 50, 100 locations per year, you're taking something like 5 or 6% of sales of those locations. That business takes a while to scale cpg. It's actually A much larger top line business for us. Same with food service. If I can lump those together, where we're able to scale much more rapidly. And with that scale comes the benefits of it. Economies of scale, driving down costs, driving down unit economics for the cost of our core products. And then ultimately through that, how can I benefit the franchisees by having a more scaled efficient manufacturing operation that's now driving down their costs even further and supporting their unit economics. And I believe they're synergistic in that the shops, they're like the front porch of our business. They're physical, you can physically go to them, they're tangible and they're, they're, they're highly visible. And even if we had a thousand locations, you know, our penetration is still going to be incredibly small. So something like consumer products and food service allows us to have that much greater penetration in a way that in, in no way is conflicting or competing with the shops, but rather is continuing to grow the brands, grow our top line, ultimately our profitability and creating, you know, a great synergistic company that, that has some of these multiple dimensions. As we're out talking to investors, some folks do appreciate more of a compartmentalization. It's easier to ascertain this business if it's just a restaurant company or if it's just a CPG company. Now there's actually a number of examples where companies are getting into both earlier and actually a lot of Matt's other companies have had success with this, whether it's Magnolia Bakery or Mamafuku. And you can look at any other number of brands where I believe that there's an authenticity story that that grocery consumer also wants. They want to know that this is a real restaurant and it happens to have these really high quality products that I can buy in the convenience of my own frozen aisle as well as being able to go out and have our products be in some of these other venues where it's absolutely delicious, it puts a smile on people's faces and it's a great handheld vehicle to bring some incredible flavors in a way that fits really well in some of these different venues. And I can do it at a really good cost structure where the dumplings are being produced and we're pushing out in high volume and able to make money on that. And so I don't think any of these things compete against one another. If anything, there are synergies, recognizing there are different go to market strategies and you need to have kind of different teams or businesses set up for that.
- [31:05]
John Davids
If you're spending more than $50,000 a year on marketing. I've got something for you. It's a playbook I wrote called how to Build a Social Media Selling Machine. You can grab it now for free@johndavis.com playbook. This is the nine step formula we use for our clients at Influicity to turn their social media channels into reliable revenue engines. Grab it right now@johndavids.com Playbook. You've also done it all yourself. So you do have in depth experience doing it at every stage here. It's not like you're sort of guessing how to do a franchise business or how to do a CPG business. I think your expertise and your access to capital obviously give you an unfair advantage, which is the whole point. That's why you were brought in to do this. What is the challenge? So at this point, you're kind of at. You said you have, I think you said you have about 15 franchise restaurants open and then another 15. I'm getting some of those wrong because some are corporate owned. What are the challenges that you have at this point? Obviously, very fast growing. You're capitalized, you have all these great relationships. What's the biggest struggle right now you have?
- [32:13]
Jeff Gallatly
The struggle is the opportunity not to use a cliche, which is that we're creating a new lane. And, you know, probably 99.999% of people woke up today and didn't know that they wanted or could have a Mac and cheese dumpling or a Korean barbecue dumpling. And so it's going out and continuing to raise the profile of our brand, driving awareness and trial and loyalty and frequency. And sometimes, again, you know, we gotta push. Sometimes we're getting pulled. But building a brand, and in some cases building this category of fusion products is the opportunity, but it's also the challenge in that there's not exactly a roadmap kind of laid out. I want to be a student of the industry. I want to listen to podcasts of how all these other founders and CEOs have done things. I want to observe all these great success stories out there and then figure out how we can take that into our business and make great, thoughtful, enduring decisions. And to go tied to where we had started the conversation, you know, there's that strategic element of, like, okay, in an ideal world, where would we grow? But then there's also, like, what's right in front of us. And if there are pathways to profitable growth right there, I'm starting to, you know, reorient, say, okay, food Service. This is like a really interesting business. We can scale rapidly, we can make money. So it's not so much a pivot per se, it's just saying, all right, when I came in, this wasn't a thing. Now it's a thing, and it should be because it's a way to profitable growth at scale and ensuring that it's not to the detriment of other parts of our business, particularly our franchisees who have put their capital on the line. And our job is to serve them and ensure that they're successful, but to make it synergistic so that ultimately they can be more profitable and have a successful business. And that creates the greater whole of what we're doing as being kind of a multidimensional company and having amazing products that it's our job to get those products to consumers where they want to enjoy them as well and as profitably as we can.
- [34:24]
John Davids
Yeah. The challenge that you outlined, which I think is actually a really smart one, is the fact that you have to educate consumers. I mean, obviously they know that they want food and they know they want lunch or dinner, but they don't necessarily have dumpling in their set of options at the top of their head. It's funny, we were talking before the cameras or before the mics heated up, we were talking about pop up bagels. And Adam, who was on the podcast a little while ago, people know they want bagels and so there are some changes, you know, with the dips and the, you know, the rip and dip. So there is some ritual changes there. But people know they want to eat bagels. You have to kind of educate people that they want to eat dumplings. And I'm sure when they take that first bite, they love it. But it's. How do you get that first bite?
- [35:06]
Jeff Gallatly
Yeah, and that's exactly it. It's. People often ask me, who's our competitor? I don't think we have a natural competitor. That's another brand, per se. We are competing for occasions. I'm competing for that after school school snack for, you know, the family, you know, the kids are getting home from school. You know, instead of a hot pocket or, or a bagel bite or a pizza roll, it's a broken dumpling shop chicken parm dumpling. That's an occasion, right. For, you know, a late night meal option on third party delivery. You're on doordash, you're scrolling. You know, you might get wings, you might get something else or you might get our products. Right. Young professionals, you know, in here in New York who want something new and interesting to add to their lunch rotation. That's my competitor is how do I get us into that conversation, that consideration set for somebody to your point, John, that they don't necessarily know that they wanted dumplings. If you look at our shop menus, we lead with dumplings. That's our hero products. We also have chef curated bowls. We have some delicious sides, we have boba. So you can create a complete meal and it can include dumplings or not include dumplings, obviously for CPG or just dumplings. But it's competing in that snacks and apps kind of occasion. And some of our products are more classic in that sense of what you know, most folks would associate with a dumpling. Some of them are a little bit like, we'll call it new school fusion of chicken parm or bacon cheeseburger. And the goal is for that person who didn't necessarily know that they like dumplings or want dumplings, we're making dumplings more accessible for them and doing so in a way that can be at scale, you know, throughout North America and beyond. And so I think that really creates the opportunity. We, we have trademarked Everything's better than a Dumpling. You know, we, we believe that that's what we're out there to, to go promote. And at the end of the day, it's just creating that kind of buy purchase occasion where we get into that consideration set when we dumplings may otherwise have not have been there. And that is both the challenge and the opportunity.
- [37:20]
John Davids
And I think on that note, what we were talking about before, which is you're going after the grocery store shelves, the concession at Yankee Stadium, that actually helps a lot in creating the awareness so that when someone is thinking about having that snack after school, hey, you know, I just, I was at the Yankees game, or I was, I was at the grocery store and that. And it becomes a billboard for the brand as much as it is a place to buy it.
- [37:43]
Jeff Gallatly
Yeah, it's something that I was a huge kind of aha moment for me a bit earlier on here was we were doing a demo at a local grocery store. And you know, you can sit in our restaurants and you can see people do this, but at the grocery store it was, you know, kind of interrupting somebody in the aisle, them having no idea who we are or what we are sampling our product, watching their eyes light up, seeing the smiles on their face. And it got me thinking about this idea of sampling at scale. And those demos are actually pretty expensive. Right. When you're Demoing at individual grocery stores. So something we then started doing is going to things like we did like pop ups at like, you know, different breweries in Brooklyn or different places. And a big breakthrough for us was at the New York wine and food Festival. We served thousands of dumplings over three days. People voted us best bite at the food festival. And that was a huge breakthrough. But it was also okay. Here we are sampling thousands of products over the course of a couple days. You know, we got notoriety from it. That was awesome. And now it's like, okay, this is sampling at scale in a cost effective way. Just last month we were down at South Beach Wine and food Festival. We went through 15,000 dumplings in two and a half days. A way to see the market down in Miami ahead of our first shop opening there next month. And so those kinds of things really got my wheels turning of to your point, okay, now Yankee stadium, you know, 40,000 plus fans, 81 times or more per year. And now we're sampling at scale. Right? And that's where getting into some of these other venues is going to be fantastic for us. And just getting our product out there, you know, into as many people's mouths as we can and having that reaction, that positive affirmation of the smile on the face and that they love these products. That's our goal now, to continue getting out there as much as we can and getting our products to people as easily as we can for them.
- [39:42]
John Davids
It kind of reminds me of the Chobani story. When the Chobani Yogurt brand launched 2006 or 2008 or so, it was a lot of on the ground sampling in the grocery stores, local markets, and, you know, and they were doing things like local Facebook groups, which was pretty new at the time because they really wanted to get the groundswell. You have to get this neighborhood in, you know, Queens or in Brooklyn to be tasting this yogurt, which is a new, different, different mouth feel. We're not used to this. And it's very similar with dumplings. Sampling, in fact, is probably the most important thing you can do because you just got to taste it once and then you either love it or, you know, or you don't. But if you love it, you're now, you know, it's better than, you know, seeing a hearing a radio ad or seeing a commercial.
- [40:25]
Jeff Gallatly
Yeah. And that's. You're exactly right. And something we talk a lot about as a team is that boots on the ground kind of hand to hand combat local marketing. That's how brands are built and you can get funding and you can go hire an agency and you could try to go blast a bunch of social media ads. And we kind of did this and it was a lot for us, but in the grand scheme of the universe, we weren't like even like, you know, making a dentist. It's that local, tactical, you know, getting our product to people. And what I tell the team now is, I mean, even like, let's say it's a little slow outside of one of our shops, for whatever reason, we're going out there with trays of half dumplings and we're sampling the people on the street. At our East Village location last week there was like a pop up anime shop that opened and there was this huge line down the block. So my team to their credit, just took the initiative to say, hey, there's a huge line of people outside, let's go give them samples. And so things like that, where it's making sure that you, you're not too quickly becoming, you know, like a national brand. But we're very much still a local brand. And this is something that we, we really talk a lot about with our franchisees. You know, whether it's in New York or Philadelphia or Dallas or Canada or all the places we're growing, it's very much still a local business. And getting involved in local community, being part of the local community, sampling in the local community matters a whole lot. I think oftentimes like we wish that we, you know, everybody just wants to go viral and have that like big social media post that goes viral and that can happen. And we've had different instances of that. But in that, day in and day out, it's engaging the local community, engaging local consumers where they're at and getting our products to them. And we talk about, you know, we're building the brand one guest at a time and then you gain the word of mouth and all that. It's not a magic wand overnight, but, you know, doing it consistently. We're like maniacal about all of our reviews. We have a system where I actually, every single review at every single one of our restaurants, I get instantaneously and I read them all instantaneously. We then categorize them. We have the follow ups and feedback based on, you know, what's coming in. We've actually made some pretty significant overhauls to our menu and some of the culinary support that we brought in. Listening to consumers and ultimately figuring out how we can go be as effective as possible going out, building this brand, building this category and doing so, you know, one person at a time.
- [42:54]
John Davids
What's been the biggest shock to the system for you? Going from PepsiCo, private equity, RBI. Now you're in this little, I shouldn't say little because you are growing very, very quickly, but little compared to Tim Hortons. What's, what's it been like for you?
- [43:08]
Jeff Gallatly
Yeah, I, it's interesting to me at rbi we actually, you know, we kind of operate in more lean teams. In hindsight it's like that was like the land of plenty relative to here. Here. What we've done is retain some of the folks that were part of the brands before I came in. And they are, you know, really, I view them as like the entrepreneurial heart and soul of this business and we want to maintain the best of that while also supplementing that with some really talented folks across some of the different functions. We are a very small, lean team, but we now combine some incredible talent from other well known places and schools and all that with that entrepreneurial spirit and energy and ownership mindset. And that's what I love and what gets me out of bed every day is the team and how can I help lead the team, build the team, grow the team and these individuals in their own careers while ultimately of course benefiting the business and the ecosystem we've created here and the types of folks we brought involved who are able to flex and they could go be successful in, you know, a larger corporate environment. But are choosing to be here part of this journey and building this company. That's where I think a lot of the magic happens. And we're fortunate in that we have a broader ecosystem of folks beyond just this team who are very supportive and constructive to us. Yeah, at the end of the day, it comes down to ruthless prioritization. There are so many bright shiny objects out there that would be nice to go chase. But it's knowing what matters and then how do we have the right energy against what matters. Systems, routines, processes, tools, resources to go execute. And so it, I think at times what's interesting is it sounds like there's like a lot going on here. Oh, you got this and that and food service and CPG and restaurants. But in the day to day the job is actually quite focused and the folks that we have on the team, their roles are quite focused. A lot of it is in that franchisee support cross functionally and how to ensure they're successful. And then it's tapping into a larger, broader ecosystem of experts and folks who might not be on our team but are part of kind of the broader family to go help grow some of these other, other businesses. And so my job is to ensure that focus. Folks know what matters. We're executing against that because we don't have infinite resources the way you would in a larger company. And so that's just, I think one of the most critical parts of the job is keeping that focus, making it very clear what the standards are and what the goals are and how we're going to fight against that. But there is like a constant iteration of like, you know, X, Y and Z happened and that might throw us off or it might not. And that's where we have to be in constant close communication to know, you know, what's everyone spending their time on? Is that the right thing? And how do we go continue to execute against the things that are going to ultimately help us build an enduring, successful business?
- [46:14]
John Davids
I would think there's a lot of, there's probably a lot of little things that are quite different because the resources at a big company you almost take for granted. You don't even realize that they're there and then you need them. And it's like, oh, we got this right. So there's probably a lot of examples of that. But then also, as you said, you're listening and reading every review that comes in and you're nimble enough to make the changes because there aren't that many locations and your boots on the ground when it comes to the menu and stuff. But probably a big thing, I'd imagine is the fact that a lot of these products are really in R and D phase. I mean, maybe there's a menu item that you thought was going to work and it didn't. Versus, you know, @ Tim Hortons, you know that this cup of coffee sells because we've sold 1 billion cups of it. You know, when it comes to a newer business, you're really having to change things on the fly.
- [47:01]
Jeff Gallatly
I'd imagine very much so. And while we are small and young, I do want to bring some of those disciplines from other places here. So, for example, doing some version of a market test, this is really what we use our corporate locations for, which is we pilot something and then we make a determination based on the incremental sales that it drove, based on the operational complexity of what it is. We make a call on whether we believe it's worth it to roll it out more broadly versus just like willy nilly kicking things out there. And so I want to maintain some semblance of that kind of bigger company capability at the same time, something that I learned particularly from my time in Asia, particular particularly working so much on our China business is failing fast. And there might be something that like, okay, we can get this out there, we can see if it works. And like, the reality is, no matter how much rigor you bring to something, you're not going to have 100 success rate. Right. Certain things might not take off for whatever reason. Our job is to de risk it. And if it's going to take time, effort, energy, money, resources, we want to make sure that we're being thoughtful about what we're spending our time on and is it going to be a waste of time or not? At the same time, just because something failed doesn't mean it was bad. Right? If our intent was good, if we had rigorous thinking, analytics, intention behind it, and then we launched something, we can move on from it rather quickly. Right? And I think that's part of being a nimble business. We don't want to do that all the time. Right. And suck up all of our resources going out and testing a bunch of things that aren't going to work. Of course, it's not the goal. At the same time, I think we, we need to leverage the fact that we are small, can be nimble, and we can move pretty quickly on things to our advantage. So long as, you know, we're doing it for all the right reasons and it's ultimately going to support the success of our restaurant, bottom line, or, you know, the profitability of the business as a whole and certainly the profitability of our franchisees and partners.
- [48:57]
John Davids
Where do you think the business will be 12 months from now?
- [49:01]
Jeff Gallatly
So our targets for the finish this year with 32 locations, which is very much in line of sight based on the pipeline that we have today and where in the construction process our locations are a big thing for us is going to be launching some of these different stadium and concession initiatives really well, then benefiting from all the visibility from that and getting that much more push versus pull. And then there are a few select retailers that we're very far along with that were finalizing the launch plans for, and we want to make sure that those are as successful as possible. And so that's, from the business standpoint, ensuring that, you know, we not only have these open locations, but that they're run well, delivering a great guest experience and ultimately profitable for our franchisees, that we're in the right places when it comes to CPG and we're disciplined on what that looks like for our P and L. Same with food service and then ultimately ensuring that we have a great, healthy, long term pipeline that is going to allow us to grow that much more exponentially over the next few years. And so that was a lot of the work coming in over the past year. We've actually grown a lot at the same time in many respects. We did a lot of the kind of core foundational work this past year while we were still growing. So it's the classic analogy of changing the wheels on the bus while it's moving 80 down the highway. We actually did that rather successfully. We did a bunch of menu work, product work, culinary work, we did a bunch of operations work. We're now in the process of making a change to our tech stack and ensuring that we have great products that people love and we're getting into them as efficiently and profitably as possible. If we're doing all those things, then some of those kind of, you know, those are the inputs, the outputs of how many locations we'll have, how many retail doors will be in. I think a lot of those things will take care of themselves. But suffice to say, we've got some really ambitious plans to create a very meaningful business here and we're well on our way.
- [50:56]
John Davids
I'm gonna go grab some dumplings for lunch right now. I really appreciate you sharing the story and I'm excited to see this is a brand that has so much potential. Cause I know that it's on trend. I could see this on shelves everywhere. So excited to see how it goes. Jeff, love it.
- [51:10]
Jeff Gallatly
John, thank you so much. Amazing questions and appreciate all that you do.
- [51:13]
John Davids
Thanks for listening. Hope you enjoyed this episode. If you did leave a rating or review on, 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.