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Markets move fast. Get the insights you need in 10 minutes with Barclays Brief, a podcast from Barclays Investment Bank. Each week our experts analyze market themes, helping you anticipate what's next. Listen to Barclays Brief. Wherever you get your podcasts, you can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow, here to tell you about our new on demand news report delivered right to your podcast feed. Bloomberg News now is a short 5 minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed. Yes, there are other products like this from a variety of news organizations, but they usually rerun their radio newscasts throughout the day. That's not what we do. We create customized episodes that can only be heard on Bloomberg News Now. And we don't wait an hour to publish breaking news. When news breaks, we'll have an episode up in your podcast feed within minutes. Minutes. So you're always getting the latest stories and developments. Get the reporting and the context from.
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Bloomberg's 3000 journalists and analysts.
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We're all over the world. Listen to the latest from Bloomberg News now on Apple, Spotify or anywhere you listen.
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Bloomberg Audio Studios Podcasts Radio News. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal.
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A
And I'm Tracy Alloway.
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B
Tracy, we were down in D.C. several weeks ago. We were at that IIF conference and we had a great meal when we were in town.
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A
We did indeed.
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B
It was a really good meal.
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A
Yeah. We went to a place called Butterworths which is getting a lot of buzz. Has been getting a lot of buzz for a while and sort of serves, I don't wanna say farm to table cause that's not really it, but like an emphasis on organic, maybe like rarer cuts of meat. I remember we had bone marrow, which you love. I love bone marrow. The first time I ever ate bone marrow was at an all you can eat buffet in Las Vegas. And it was so. It wasn't even the best bone marrow but like I ended up with a mountain of empty bones on my plate.
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B
I think both of us like, like sort of rich, fatty food.
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A
Well, it's like I always say, it's like sucking the life force out of an animal. It's animal essence.
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B
We had really good fries, which famously. And we'll probably get beef tallow, no seed oils. Very hip these days. I'm pretty sure we had something with foie gras, which I love. I Seem to recall there was some left on the plate. And I was like, does anyone want this? Does it? Can I take this bite? Can I take this bite? I cannot resist foie gras. Anyway, it was a really good meal. I love doing restaurant episodes because. Or talk about the food industry because if you want to understand the economy, both in the sort of short term, like where we are on the cycle with food costs and labor costs and how free spending people are, they're a great snapshot. And any given time, there are just this perfect combination of labor costs, inputs and rent, which is like the whole economy there.
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A
There's also the supply chain issue. Right. And we did that whole episode on Cisco, the dominant food supplier to restaurants in America. I doubt Butterworth uses Cisco for obvious reasons, but, like, where they actually source their ingredients is a really interesting topic.
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B
Right. This is what I say, which is that, like, they're this perfect combination of the snapshot at the moment and then the big structural things of how the economy works across the cycle. So I really like restaurant episodes.
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A
There's also an interesting cultural element in this and like, everything is cultural and political nowadays, including the restaurant business, because Butterworth's has been described as a sort of right wing MAGA hangout. So we should talk about that too.
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C
Yeah.
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B
I'm fascinated by the DC scene because I was like, oh, they're like Democrat bars, Republican bars. I don't. Do they mix?
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A
You got to declare your political allegiance before you walk in.
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B
It's so. And actually there's something really profound here because I feel like this is happening to brands of all types. Right? Yeah. Is this the right coded brand of the left coated brand, et cetera.
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A
But in D.C. people have to choose sides.
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B
You have to choose sides. But anyway, it's funny, you know, because we were there and our producer Kel is like, we should go to Butterworth. So I was like, oh, there's the MAGA restaurant.
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C
Great.
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B
I want to check it out. But when you go in, you know, it's not like there's, you know, you wouldn't know it, let's say somebody aren't.
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A
Wearing red hats and stuff.
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B
But you would never know it at all. You would never. Like at least the night we were there, I didn't see any, like White House notables that I recognized. Although apparently they do hang out there from time to time. But it's not like designed. It looks just like a very nice, normal restaurant. A real good, great dining room.
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A
So there is a bit of a clubhouse element to it. We should talk about the overall design, because it's pretty unique as well.
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B
Well, when I tweeted, I was like, oh, we had a great meal at Butterworth. On Twitter, all these people respond because, you know, apparently. Whatever. Anyway, it made the connection with the chef and owner of the restaurant, Bart Hutchins. We really do have the perfect guest, therefore, to talk about Butterworth. We're going to be speaking with Bart Hutchins. Bart, thank you so much for coming on the Outlaws podcast.
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C
Yeah, thanks for having me, guys.
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B
What's a MAGA restaurant?
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C
Oh, God, where do we start?
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B
Do you think of it if. When you see in the media, it's like, oh, this is like, do you conceive of it the same way that it's written about? What does that mean in your head?
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C
So the history of restaurants more or less doesn't include D.C. like, when we think of the great American restaurants, they happen sort of in L. A or they happen in New York. And so you think about, like, spago in the 80s, I guess, and what people talk about when they talk about Spago is like, this actor was there, that actor was there, whatever. And then when you talk about the great restaurants of New York, you talk about this model ate there, this actor ate there, this bank person ate there, this, like, important person ate there. And so in D.C. the version of that now that sort of politics or pop culture is like, what politicians are eating at these restaurants, and that sort of becomes what you're known for. And so early on, we were on the Hill, and so we developed a following among the new administration that came in, like, two months after we opened. And so now it is a MAGA restaurant because that's, like, an interesting way to talk about the restaurant, because they're there. And so it's this, like, your notability is like, who's in the dining room? And so early on, we had a lot of customers from the administration, from, like, Scott Besson to Mark Rubio, Steve Bannon, whatever it may be. And so as that sort of developed, it became the MAGA restaurant. But, like, if we did what we did at Butterworth's, well, in New York, it would be like the. I don't know. If we did it somewhere near Wall street, it'd be like the Wall street restaurant. So I'm not entirely, like, It'd be like, you know.
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B
Yeah. But just one quick thing. Follow up. When anyone launches an establishment in D.C. do they have to sort of think about this question of sort of which side will be aligned with this restaurant in terms of like the market opportunity?
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C
No, it's relatively new. It was, it was a binary sort of in the 70s, 80s, 90s of like you had political customers or you didn't. Right. So there was a very famous restaurant in downtown D.C. in the 70s called Sanssouci. It was like this French restaurant and all the administrations went there, all these things. And Mick Jagger showed up one day and he wasn't wearing a proper sports coat so they kicked him out. But it was a political place. Like you had to look like you sort of belonged there. And so there was political restaurants or non political restaurants. And it was, it was a lot about proximity and how close you were to these various buildings. But this like declaring everything sort of right or left is very new and odd.
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A
Okay, I want to go back to something you said. I'm kind of surprised that Washington D.C. didn't develop more of a food scene given that, you know, I think about it as a political city for obvious reasons. A lot of politics is about, you know, being seen with the right people and appearing important. And so it's kind of surprising to me that it didn't develop more of these like seen and be seen restaurants.
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C
Yeah, it's strange. When we, we started the place, this was sort of explicitly an aim. Like the, the dining room is designed to not hide anyone. Right. Like you will be seen and be seen. Like there's no, there's no hiding place. That was a big part of the business model because I was looking at Spago and a couple other places in New York from the 80s and thinking through, I think maybe the answer to D.C. is like it was more of a house party thing. And there's always been sort of like the gentleman's clubs and the private clubs and like the Georgetown scene was a. You bring in a chef and do a party at your house. Like there was, it was always like behind closed doors. It's a very like the Smokefield Room thing exists for a reason. Right. Like D.C. is a town that likes to hide itself.
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B
Yeah. It is interesting to think like you read stories about D.C. and all the legendary things would be like some editor at the Washington Post or something like that were famous for their cocktail parties and everyone was there. So it is true. It does feel like the places where people congregated did tend to be these more like private entities. Just one more question though. It is not quite true that it's like, oh, you opened the restaurant before the new administration and they started out. I mean, you're one of your co owners. I think Is like, affiliated with Breitbart UK. I mean, there are.
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A
Mr. Butterworth.
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B
Yeah.
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It's named after him.
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B
There are, there are political roots to the restaurant, right?
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C
Totally. I mean, this, this is part of being in D.C. we have six investors, I think two. The third one I would have to ask because he's like a tech bro, so you never know where they align. But two of them are pretty solidly like classic libs, and a few of them are pretty like MAGA adjacent conservatives. I will say the one you're talking about, Raheem Kassam.
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B
Yeah.
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C
He used to work with Steve Bannon, was the Breitbart editor in London. Has done a lot of work with the administration. One of our investors, when we started, when we opened the place, you sort of invite all your friends and family and that's how you sort of get the business going. And it turns out he was just way better at it than the rest of us. Right. So, like, the first night we were open, there's like 60 reservations, and I'm pretty sure like 45 of them were from Raheem. And so the MAGA thing did sort of generate in that way.
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A
How difficult is it to get investors for a restaurant business in general, but also specifically in dc?
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C
Yeah, it's like, it's a terrible investment. Right. Like, if you're, if you're listening to this for financial advice, don't do it.
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A
Yeah. They say never open a restaurant, and I imagine they also say never invest in a restaurant.
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C
Right. So if you're looking to make money off an investment, never invest in a restaurant. If you're looking to sort of build for yourself a place to be, to always have the good table to invite your friends to have something to talk about at dinner parties, it's one of the best investments. Right. Like, there's nothing more interesting than sort of like, what's going on. And there's nothing more convenient than, like, not having to host at your own house and to be able to say, oh, like, come to my restaurant, sit at my table. That part of it's great. But as a business investment, it's like the worst. Especially post Covid. Like, the Martins are a joke.
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B
Let's talk about the menu. I mean, the whole team came, everyone loved the meal. Like, how do you go about the process of sort of conceptualizing the overall menu? A goal for the menu.
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C
Yeah. So ours specifically is working with farmers. So I have a host of farmers that I've been working with as a chef for, I guess, a decade now. Most of them are the sort of Pennsylvania Amish and Mennonites, these sort of not technologically plugged in folks. And so I get a call from them on Mondays. They go, this is sort of what's coming out of the ground this week. These are which animals are being slaughtered? Which ones do you want? And then those products come in, and the menu is based off of that, which sort of doesn't really allow you to have the same dish on the menu every single day. Which is a classic sort of trope of the restaurant industry. If you're, like, in culinary school or whatever, they'll sort of say, like, consistency is super important. You should have the same dish prepared the same way every time, because if it becomes somebody favorite and they can't come get it next week, they'll be super mad and they'll stop being your customer. But what that does is sort of create a sort of leans into a global supply chain where you, like, you have to have bananas every single day if you have a bananas foster. But, like, bananas are not growing year round unless you're willing to sort of go across the globe. And then you're dealing with shipping and the products not as fresh and all of these sort of problems. So what we do is we work with these farmers, and whatever's coming out of the ground at that time is what we're doing. And so in the summer, when there's a ton of tomatoes, we're getting all the tomatoes in that we can. And what we're not selling and using, we're canning to make tomato sauce in the winter when there's no tomatoes. Like, that's a really sort of good way to work around not having produce in the winter. But other than that, we're sort of obligated to and constrained by what's actually coming out of the ground at that time.
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A
Is it true that you don't serve burgers because you don't want everyone to just go into the restaurant and order a burger all the time?
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C
The burger conundrum is the burger conundrum. The burger conundrum is the. Is the bane of my existence. So I had a restaurant three blocks from Butterworth's years ago called Bucherts. It was a lot like Butterworth's, but smaller. And we did a burger because that was. It's good money at the time. And it quickly became like one of those, like, oh, this is best burger in D.C. really popular burger. And so then you. You do this, like, really interesting dish with pheasant or, you know, whatever, and you Work really hard on it and you're so excited and you can't wait people to try it. And then you sell 30 burgers in a night and then you're done. And so the problem with the burger is not that it's, it's bad economics or that it's a bad dish. I love burgers as much as anyone. The problem is if you do it well, it's the only thing you become capable of selling because it's so self explanatory and it's, it's so desirable. And so if you want to sort of work with all these products, if you want to be able to like sort of sell bone marrow or you want to be able to sell these game birds or you want to be able to sell this weird vegetable, you can't have a burger because it just dominates the entire menu.
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A
This actually reminds me of the podcast industry, right? Because often, like some of our best episodes, I would argue some of our episodes that get the best feedback come in lower in terms of downloads than some that I am not such a fan of.
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B
No, this is really interesting. I had never thought about this. If you have any, I guess, signature item, it has this crowding out effect. The moment you have a great burger and it gets on the bus, it's like, oh, we all show up, oh, gotta order the best burger in D.C. cause we're here. Then what is the point of invest? I had never thought about this phenomenon, the curse of the curse of the burger. But how it's like, okay, what, hey, what about all this other great stuff.
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C
That we have audience capture for ground beef?
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A
Today's markets move fast. Get the insights you need in 10 minutes with the Barclays Brief, a new podcast from Barclays investment bank. Through sharp dialogue and scenario based analysis, our leading experts analyze key market themes each week. So whether you're managing a portfolio or leading a business, the Barclays Brief podcast can help you make smarter decisions today. Stay sharp, Stay briefed. Find Barclays Brief wherever you get your podcasts. I'm Carol Massar.
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A
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C
Close.
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A
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A
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B
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C
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A
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C
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- [15:58]
B
Okay, so you talked to the farmers in Pennsylvania, et cetera. How does it get there? Who are the entities that actually deliver the food and how built out is that? Who are these companies and so forth that actually make this distribution happen?
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C
So I'm a psycho and I try to avoid the quote unquote, larger supply chain at all costs. So the actual way that the produce and most of the meat gets to the restaurant is a literal Amish guy with like a hat and the beard and everything shows up at seven. He's like one of the few people that has the keybox code to the restaurant because he refuses to be in D.C. during the day because there's too much traffic and it's too loud.
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A
He says, fair enough.
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C
So he comes in early, comes to the restaurant, drops it all off. We show up. It's there for a lot of restaurants. It is sort of Cisco and a couple other really large companies that are, that are doing this procurement. And then a huge tractor trailer shows up. And these are sort of commoditized and like they're pretty standard across the industry. But if you want to break out of that, you're dealing with like a guy with a Ford F150 in the trailer.
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A
I know you said you had these farmer relationships from your previous experience as a restaurant owner, but how do you actually go about finding and identifying potential suppliers, especially in the Amish and Mennonite community? Because, you know, I imagine they're not necessarily posting ads online or something like that.
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C
No, they have a landline that they're only allowed to use in the barn for one of them. So in the earlier days now, now that there's sort of an economy for this, because the farm to table thing happened, but in the early days before that Was sort of industry of it in and of itself. The trick was you would go to farmers markets, like, actually the same one that you would go to on a Saturday morning or whatever, and you would talk to the farmer and you would sort of say, like, hey, these carrots are really good. I have a restaurant. I want to buy 80 pounds of them every week. Can I get your contact information or whatever it may be? And then for a lot of those, if you see your favorite farm stall at the market on Saturdays disappear, it's because enough of us are buying their stuff to where they don't have to deal with that anymore.
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A
It's your fault.
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C
It's my fault.
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B
I didn't know that.
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C
Yeah.
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B
So there's farmer's markets in my neighborhood in the East Village. I love going to a farmer's markets. Actually, I never really thought about farmer's market economics before, but how much are farmers markets in general about the revenue that they make there versus, like, building some of these connections such that they have more a place to be seen by potentially commercial clients?
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C
Yeah, you should definitely, next time you're there, ask. But my understanding is that if you're at the farmer's market, you're sort of at the beginning of your cycle as a new company, a new enterprise, or the end. And so, you know, there was a farmer that I bought from from a long time who did pigs up in Illinois, and now I'm working with a closer distributor in Virginia. But the last time I saw him, he was at the farmer's market, and he was like, yeah, yeah, this is the only outlet I have to sell things anymore. Like, we're on the way out. We're like, we're done. We're closing up shop. We're selling the farm. And so that's sort of the cycle is either they're trying to build an audience so that they can do this wholesale process, or they're sort of like, this is their last leg. Because it's not a great economic model. Like being at a farmer's market is. It's like small potatoes for them.
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A
I know you said that the ingredients and the menu construction was influenced by seasonality. So what's in season at any given time? But how much does price actually influence your decisions? So, you know, if a farmer comes in and says, I have. I'm trying to think of an expensive thing, foie gras. I have the best foie gras in the world or something like that, but it's really, really expensive, would you still buy it? Do Your customers care about price?
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C
Oh, boy. They do.
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A
Sorry.
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C
No, no, they do. I've been thinking about this a lot. So I was, you know, it's the end of the year, so I'm doing numbers and all those things you have to do when you have investors. And I was looking at the price of French fries specifically. And we've been noted for the French fries and the beef tallow fries and the best fries in D.C. and whatever. And I think they're on the menu right now for 12 bucks an order. And I was looking at an old menu of mine from restaurant, you know, in 2019, and they were on the same fries. I've been making the same fries forever. They were on the menu for nine bucks an order. And I was like, wow, they've really gone up. 12 bucks is kind of expensive for an order of fries. Like, is there any room for this? And I started sort of digging into the price of goods and the labor involved and realized that, like, if I wanted the same sort of margins on that $9 order fries that I have on my now $12 order fries, they would actually be 25 bucks. So, like, we've just sort of, like, the cost of goods is, like, eviscerated sort of the margins on that. And we found other ways to make it up in different areas of the menu or with private events or whatever, catering, whatever it may be. But chefs are not inclined to at least, like, the chefs that are in the kitchen every day are not inclined to think about the price of goods because they want the best product. Like, they'll sort of stretch their own margins to get the better product. If you're eating at a restaurant where, like, the chef is named on something, you're getting the best product no matter what it costs. Because we're just psychotic and obsessive in that way because we tend to be more artists than, like, economists. Right? So they want the thing to taste as good as they can, specifically because other chefs are going to come in and eat and be like, this is this. Is that doo doo foie gras from Cisco or whatever. And why. Why are you serving that? And it's really embarrassing for you.
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B
Wait, do you have specials at the restaurant?
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C
No, because we change the menu every day. So the special thing is sort of, like, designed to allow you to keep the same menu year round and then, like, do the seasonal thing on the weekends or whatever.
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B
Oh, I see. Well, maybe you could just. This is just a general question. I think, like, everyone who read Kitchen Confidential became really, like, cynical about Specials like, oh, this is just how the chef gets rid of the fish that's about to go bad or whatever. Can you clear up some misconceptions? Or, like, how real is that? I don't know that that book made me. I read it in high school. You know, high schooler loves a book like that. But, like. Or maybe early college. But, like, it makes you very cynical about a lot of decisions. And this comes out and it's like, oh, this is just a plate of tomatoes with vinegar, and they called it something fancy. How real is that phenomenon?
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C
Yeah. So two things. Number one, in his second book, he totally. Anthony, in his second book, Medium Raw, I think it was called. He totally regrets writing that essay. He's like, this has been detrimental to the restaurant industry. I was an idiot. I was really mad. I'm sorry I wrote that. It's not true. So the funny thing about Anthony Bourdain, and this is he wasn't like a good chef. He was like a very normal, run of the mill chef. He was a great writer, a really good media personality. But, like, if he lived in Columbus, like, he would be the chef of an Applebee's. Like, it was a very, like, media in the road.
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A
That's so mean.
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C
A workman. God, that's gonna get clipped. I'm gonna look like a jerk. But, like. And he would say that himself. Like, he wasn't like a grand sort of haute chef or whatever. He was a workman. He was a journeyman. And so that is true at that level. It's totally true. And all of it's still true to this day. Like, if the fish is starting to go bad on Friday and you're at one of those restaurants, they are going to toss it in some vinaigrette and put it on a salad on the brunch menu. That's 100% going to happen. But the bar, since that essay was written in the 90s, or I think it was the 90s, the bar for chefs. And because of the whole foodie revolution of the mid aughts, the lowest level of, like, chef is much higher than it was then. Like, there's not. There's fewer and fewer journeymen, and there's more and more people who are into it because they're, like, obsessive about the products and sort of artistically minded in that regard. So if you're eating at a restaurant that's not a chain, I wouldn't worry too much about that stuff because they, if anything, they're more inclined to throw it out before you would even notice because they're just sort of like, they would be ashamed if they sold a piece of fish that smelled bad.
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B
Yeah.
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A
In defense of Anthony Bourdain's cooking ability, his cookbook is really good, and he has an awesome recipe for lasagna and then a whole, like, schedule for doing Thanksgiving dinner. And I follow those religiously, although I will admit they're, you know, they're basic recipes in some sense. They're not particularly creative, but they're great, and I rely on them anyway. You know, you mentioned the importance of chefs in a restaurant like this. How competitive are restaurants when it comes to getting the best chef?
- [24:02]
C
Extremely. It's like when we were opening Butterworths, I would go stand out back of restaurants that I liked, where the sort of dumpsters were where people might take smoke breaks in hopes that I could talk to the cooks and steal them. So we trade talent and sort of fight over talent in extremely competitive way. So much so that there's, like, serious feuds over it. Across cities, like In New York, D.C. and LA, there are chefs who hate each other because they steal each other's cooks. Particularly if you have, like, a really good, fast dishwasher, and I can have one dishwasher instead of two. I'm going to take your dishwasher. Wow.
- [24:38]
B
Can I ask you. So the night that we were there, after I tweeted we were there, and I think maybe you sent. Maybe it was via dm, and you're like, oh, I'm glad you enjoyed the meal. I think we had sort of an off night or something like that. What does that mean? Like an off night or from the perspective of the chef? Because it certainly seemed like a very busy night, et cetera. Our food was excellent. In your mind, when you say, ah, you know what? We kind of had an off night, what does that mean to you?
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C
It can mean a few things that night. Specifically, it meant it was very busy that night, but the busyness was not spread out. It wasn't like, oh, there's a table at 6:15, then another table at 6:30, then a double table. It was every single table came in at the exact same time. And so what happens then is all your production lines get screwed at the exact same time. So then there's a huge wave of cocktails, and the bartender's rushing through all the cocktails because all the cocktail orders came in at the same time. And then it moves to the kitchen, and the kitchen's rushing through all the orders because they all came in at the same time, instead of sort of like being super purposeful and like, okay, I have 10 minutes to do this one, and then the next one's gonna come in, and then the next one's gonna come in.
- [25:37]
B
It's.
- [25:37]
C
They all come in at the same time, so you're rushing through it. And as a result, like, things get sloppy. And so that night specifically, I watched the rhythm of the restaurant, and everyone came in at this exact same time. And I could see the kitchen getting backed up and tickets were a little slower than I would like them to be. And some of the plates, like, I was like, oh, I wish we had plated that a little bit differently. I wish it was a little neater here. And so when that happens, reservation systems are mostly designed to do that. Some of them are designed to fit as many people in as they can and good for them. But most reservation systems are designed to slow down the number of people who are coming in so that the dishes and the drinks and whatever it may be are done well and done intentionally. And when there's like a huge swath of walk ins on any given night, that's when the sort of like the production capacities of a kitchen or a bar get sort of backlogged and they get sloppy.
- [26:23]
B
Tracy it sort of reminds me a little bit of like our conversations that we talk about electricity and grid, which is the difference between total throughput and peak throughput. Right. And so, you know, you want an even distribution, and the problems come on that one really hot day or whatever. And so spreading the demand out is also a very important consideration in sort of optimal grid design.
- [26:50]
A
Only you would compare the restaurant business to electricity grids, but it makes sense. I agree, since we're on the topic of reservations. One phenomenon of living in a foodie city is that you have restaurants where it's very difficult to get a reservation. And I'm thinking specifically of Carbone. I would love to take my husband to Carbone one day. But my impression of the process to get space there is that it's so difficult. It's basically not worth it. And in fact, in New York, you now have reservation auctions, people selling platforms.
- [27:23]
B
There are these. One, I forget which app it is where you can get a reservation fairly easily if you pre commit to a minimum spend. So it's like you pre commit to like a $300 spend or whatever, $300 worth of garlic. And then, and then, anyway, so first.
- [27:39]
A
Of all, how do I get a reservation at Carbone? What are your tips? And then secondly, what do restaurants think of these, like, very intense competitions for seating in the restaurant?
- [27:49]
C
Yeah. Number one, this is mostly David Jenks fault. So I hope he knows that this is entirely his fault. Momofukukou, was this his sort of Michelin starred restaurant? I think it's closed now, but it was the first one that I knew of at the time that did this. Like, there's no way around the reservation system. Like, you have to log on exactly two weeks before and you have to sort of win the lottery. There's this famous story about how his parents couldn't get a reservation for the first year because he refused to sort of break out of this system. And so used to you would like, know somebody and you would shake hands and you would sort of get a reservation and whatever. And this like, super scarcity model sort of produced this, like this reservation thing to some extent. So how do you get a reservation? A lot of them are now designed to not have any workarounds. Right. So, like, knowing somebody's not going to help you because if you interfere with that scarcity model, you interfere with the entire system. And so your best luck is to sort of be online at the right time when they go live. Some reservations book a month out, some book a whole year out, some book one week out. So understanding exactly where you are in that process and when those dates unlock is sort of where you want to be. Most of these systems are sort of automatically ran by OpenTable or Resi, and so they're pretty standardized. A lot of them are midnight. I think Resi's midnight. And I think Open table is like 2am so understanding that might be helpful. Other than that, there's just like, not a lot of ways around it anymore because of this sort of scarcity model that we have to maintain. That being said, knowing the owner would help. So go meet the Teresi brothers, have them on the podcast and then see if they can get your reservation. That might. That might do it.
- [29:21]
A
There's an idea.
- [29:22]
B
Very ethical.
- [29:22]
C
Yeah.
- [29:23]
A
You mentioned David Chang. I just remembered some friends of mine back when David Chang had his food magazine. Do you remember that it closed down in like 2017. But they used to do dramatic readings on Lucky Peach. We'd sit there and, you know, someone would read it out loud in a really dramatic fashion, and it was hilarious. It was so much fun. I need to do that again.
- [29:44]
B
I think that sounds very fun.
- [29:46]
C
I love Lucky Peach. I still have every issue. I still have it like.
- [29:49]
B
Oh, really?
- [29:50]
C
Yeah, it's like a set.
- [29:51]
A
Those are probably valuable now.
- [29:53]
C
You know, what they might be actually.
- [29:54]
B
Those were the good old days. We need a new lucky beach. I want to talk a little bit more about the labor market. So you talked about the intense competition for chefs, but also, you know, there's the competition for a really high skilled dishwasher. I kind of have like a two part question, which is like right now we're recording this December 17th, like a how does the competition for sort of the sort of more everyday restaurant labor, like, what does it look like? And I'm also curious. Restaurant kitchens, I suspect, are sort of disproportionately draw from the immigrant workforce, perhaps probably in many restaurants, a lot of undocumented immigrants. I'm curious if you see any effect from that. And just to the extent that there is a restaurant ideology or that, you know, and I associate obviously as sort of the crackdown on immigration or the reversal of unrestrained immigration as part of the signature moves of the current political environment. Can you talk a little bit about how this all looks from the perspective of someone who has to staff a restaurant?
- [31:00]
C
Yeah, I mean, there's an arms race to some extent. Right. Which is like, traditionally the restaurant industry has drawn from this undocumented labor market and there's obviously less and less of those each day right now for a multitude of political reasons. And so the good restaurant workers that are left are becoming incredibly scarce. And so there's huge incentives. If somebody, if your dishwasher comes and asks for a raise, you just give it to them because you finding another one, like training, you know, training a new person who's never done it before, whatever it may be, is going to take you months and the cost will just work out to be exactly the same as giving the one you have a raise. And so the market on cooks is, you know, sort of when I started out, the cook and dishwasher sort of level of the staffing, not the management level, but below that, the average was like sort of 2 or $3 above the minimum wage. And now it's like at least it's close to double now. Right. Like, so the DC minimum wage is creeping up to 15. And I think our average cooks and DishWashers are like 26, 27 an hour. And so that market is becoming harder and harder to staff because there was decades of sort of training this undocumented community on how to do these tasks. And now all of that sort of like human capacity, all of that training has been pushed out. And so for the ones who are documented, the ones who stayed, or whatever it may be their prices and their value are skyrocketing because there's just less and less of them. And that that time that was spent training, whether it was at sort of at Applebee's or a restaurant like mine or whatever it may be, those years and years of training are becoming harder and harder to find. You can't just, like, replace that in six months. Like, you can't teach with a dishwasher, maybe with cook. I can't take a guy who works at, you know, Dunkin Donuts or whatever and train him to be like a French line cook in less than a year. It's going to take a long time to get him sort of to where he can do things to order and be useful. And so there's a lot of just training that's gone, and it's been great for the wages of the people who are still here, but it is really competitive right now.
- [33:10]
B
I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week we bring you fascinating conversations with the people who shape markets, investing and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market. Whether you own stocks, bonds, real estate, commodities, crypto. You really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob. Bob Shiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors. Michael Lewis, author of the Big Short and Moneyball. Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify, or wherever you get your podcasts.
- [34:11]
A
One notable thing about Butterworths is it's in a really cool building, a historic building, and the decor is really nice. Joe knows that I'm into interior decorating. So, you know, you've got the antler chandeliers and the sort of plush seats and all of that. How important is the, I guess, the vibe of the restaurant to the overall business?
- [34:33]
C
Massively important, right? Like, I think these days I spend as much time thinking about lighting and volume level and like, spacing out of seats and whether or not you can hear the person you're talking to and that stuff, as I do, about the food.
- [34:45]
A
Wow.
- [34:46]
C
Because there's this sort of arc that started in the foodie thing, sort of started in 2008 with the housing crisis and the real estate bubble. And so all of a sudden, all of these young, ambitious chefs could afford to go open a restaurant and they hired cooks beneath them and they trained those cooks. So we got a sort of a wealth of good cooks and good people that went on to be chefs. And so that foodie thing that we saw in the mid aughts produced a ton of really good food. Like, we were better off because of it. Yeah. But now sort of real estate and those things are back to where they were in that way before that. And so now your competitive advantage isn't just that your food's good, because good food is easier and easier to come by. Like, you can. You can find a good chef in any neighborhood, everywhere now. But you need a competitive advantage because rents are sort of back to where they, you know, were, whatever. They're very incredibly expensive right now. And so you're, oh, we have the best food in town. It doesn't work anymore. Right. So you have to combine the best food with a comfortable place to hang out or with a specific social scene or with a. Whatever it may be.
- [35:48]
B
You mentioned lighting. When you think about lighting, how much is it about the experience of the diners that night versus lighting for Instagramability or TikTok or whatever it is? And how do you think about the fact that part of eating is creating social content and how does that factor into your strategy and thinking about the overall vibe?
- [36:10]
C
So I think a lot about it. And you saw this again with that sort of like the foodie thing. Restaurants were incredibly bright, and this Scandinavian minimalism thing was a trend at the time, but also lent itself to Instagram and like posting and taking pictures.
- [36:23]
A
I hate minimalism.
- [36:24]
C
I really, I can't stand it. But it lent itself to sort of photography and those sort of things incredibly well, because you had these bright, natural light restaurants and you could sort of photograph some. Something top down in a way, and it would look really good on Instagram. And so to say I don't think about it or I don't want to be a part of that is not true. Because what I'm actually trying to do is the exact opposite, which is like our food photographs. Terribly. If you have photos on your phone from that night, they probably look awful, but it's a reaction to that thing, which is like, I want to feel like something sort of before that date or something sort of more classic. They're more timeless than that. The rule of thumb, I worked for this really good restaurateur named Brendan who's down in Florida now. So if you're ever in Destin and you find a good restaurant he probably owns it. But his rule of thumb was if it's too bright to reasonably get away with giving a hand job, then it's too bright in the restaurant.
- [37:15]
A
That's not what I thought you were gonna say. But.
- [37:17]
B
But that is a good rule of thumb. It's good to. Yeah, I'm gonna. I'm start paying attention to that.
- [37:21]
C
But if you tell that to your staff, they never forget. Like, you'll never come into Butterworths. It'll be too bright because they won't forget that one.
- [37:27]
A
Thank you for changing my restaurant experience forever. There's a really good breakfast place in Connecticut that I like to go to. The food's amazing, the service is excellent, but the decor is terrible. It's like gray vinyl flooring and just white walls. And every time I'm in there, I'm like, they should let me redecorate. I would do it for free just to enjoy it a bit more interesting.
- [37:48]
B
You know how much I loathe the degree to which the built environment has been designed for, like, you've heard me, like, rant about Millennial Pink and all of these, all of these design. I like Millennial Pink. I know, but these design elements that are just so clearly designed to be a backdrop for someone's Instagram and the way our whole real life has been reoriented for social photography drives me crazy. And I do appreciate anything that just like this looks like the pre iPhone era. You know what I'm saying?
- [38:18]
A
Absolutely. One thing I wanted to ask is, you know, we talked about the clientele earlier, and, you know, you get some well known people into the restaurant, do you try to, like, directly publicize that or, like, monetize that? If Steve Bannon comes in for the first time, what do you do?
- [38:39]
C
So it's actually the exact opposite. And on some level, I'm grateful that the media at large has done this for us because it's. As a restaurateur, it's like, really embarrassing to do that. And so my big fear is if you have a major client. Nancy Pelosi was like a regular one of my older restaurants. The big fear is if people find out they're there, they'll start coming to interrupt her in the middle of dinner, and then that person's gone. And I've watched it happen with restaurants over and over again, and that can range from, like a famous person to, you know, if you're. If your bar gets known for having, like, pretty women at the bar, like, all of a sudden it's like 70% male. And the pretty women are gone. Like, this is. This is. This is like a reality of this thing, right? Which is like, they're there because nobody's bothering them there, and they get to be normal and sort of human. And so in some ways, it's been incredible thing for us that the sort of media has picked up on this and they're happy to just sort of write about it because it does bring in new customers who are looking for that specific thing. But at the same time, you're always afraid of losing those customers. So for me specifically, I would never ever in a million years be like, hey, Politico, by the way, like, in the spotted Marco Rubio having dinner with his family, because then you'll just never see that customer again. And it's. That's a. That's a terrible thing to do to somebody.
- [39:54]
B
Okay? But it's funny you said Marco. I was literally just going to use Marco in my example of the question I was going to ask. So you're there, the chef, someone says, oh, by the way, Marco Rubio's in the dining room tonight. Do you want to do anything different?
- [40:06]
C
So at that point, it's the same thing with a food critic. At that point, it's too late to do anything different. So much of cooking and so much of preparing food for a restaurant happens before the first diner sits down, right? Like, if you're braising something, you take the four hours it takes to braise that thing, and then the service starts, and you're. You're basically just sort of heating up at that point. So there's not a lot you can do on the food level, but there is the sort of, like, minor details around the edges, which is like, okay, the plate's going to be a little bit cleaner. You're going to let the server know. One of the funniest ones is we had the ambassador from the UK and early on, and I didn't know who he was. And so I said, I was like, hey, what's up, man? All the British people were like, well, you're supposed to say sir, whatever the title. I don't even remember at this point, because I don't care. But, you know, I use the wrong greetings, and there's a whole proper greeting etiquette that I just didn't know. And so you do sort of try to let the servers in the front of house know that sort of thing, because it's just embarrassing for them if you don't.
- [41:02]
A
You mentioned pretty women at the bar. So now I Have to ask. I imagine running a restaurant, you see some interesting things go down and you probably hear a lot of interesting conversations. What's the most dramatic incident or intriguing conversation that you've seen?
- [41:18]
C
This is so funny. So the sort of political era we're in now where that seems to be all anyone talks about is incredibly boring to me. So there's a lot of sort of, like, political arguments or deal making that happens at the restaurants in D.C. whereas, like, pre this era, I had a nightclub restaurant lounge thing in Adams Morgan where, like, semi regularly. This one I'm specifically thinking about. This woman came in with her. She was in a relationship and she was having an affair. And so she came in with her affair partner and was seated next to a guy who was also having an affair, which was her partner. And so they were seated right next to each other.
- [41:59]
B
Wow.
- [42:01]
C
And had to, like, we had to find the bouncers and sort of drag all of those people out because the sort of arguments and the yelling at each other that started was just over the top and ridiculous. I don't know.
- [42:10]
B
I feel like maybe that'd be a good way to discover that. It's like, okay, let's just call it.
- [42:14]
C
A wash here, or else we're both guilty.
- [42:17]
B
Yeah, we're both guilty.
- [42:18]
C
All right.
- [42:19]
B
I actually have, like a million more questions. I'm mindful of the time. I have one last. That's sort of like maybe an important macroeconomic question. So Butterworths hasn't been open that long, but you've been in the business for a long time. And one of the things that we talk about a lot is, you know, in the 2021, 2022 era, one of the phenomenons of that time was for the first time in maybe many people's lives, if they were a small business owner, it may have been the first time that you couldn't just put a sign in the window saying help wanted and expect a lot of people to show up. It was an era of labor scarcity the likes of which we hadn't seen in decades. And maybe people never had to contemplate that possibility before. And the question we've been wrestling with and asking a lot of people is like, what are the sort of scars from that period, the traumas of that period, and how do they carry over? Has your experience of that time of realizing that you could wake up and might literally not be able to perhaps staff a restaurant that day so that you can function? Has it stayed with you to now in such a way that you think strategically different about things like optimal staffing levels or optimal inventory or anything like that. Did it change the way you do business in some sort of lasting way?
- [43:33]
C
Yeah, in a ton of ways. I'm not even sure which one to start with. So, number one, if you came to the restaurant tonight and you went into the kitchen, it's the exact same people that worked with me the day Covid started. And so I've kept them in various ways through multiple restaurants because I watched all my other friends sort of lose cooks and dishwashers and whatever during that time and not be able to get them back. And so a chef designs a dish and maybe even does a bunch of the prep, but at the end of the day, you're still putting in the hands of your staff to do it right when an order comes in. And I saw the wholesale quality of their food plummet because they, all of a sudden they were handing it to people they didn't train. And so through a number of reasons, got really lucky, kept a lot of those people. And I will keep them as long as I possibly can, because to train a new generation after them myself would just. I mean, I'm almost too late in my career to do it. And so that's. That's a big thing. We did see a huge exit of like management level staff during that time. So if you're a really good front of house staffer, if you're a really good waiter, really good manager, really good bartender, turns out you're also a great salesman. So a lot of them went into real estate and in sales and whatever it may be. And so there is, if you're at restaurants now and you're like, why is service so bad? Number one, they're understaffed because labor has become so expensive that they're trying to get more tables out of one server. Number two, the people that they spent training to do those front house jobs exited that entire economy during COVID because we were sort of front lines of this thing happening. We were expected to be open every day, but without any staff or money to do it with. And so a lot of, like, the best sommeliers, the best front house managers, totally exit the market. So those are still hard to find. And we struggle with it all the time. I've got a good front of house manager right now. I'm really lucky. But it took us. He's our third one in one year because they're just really hard to find. The talent pool for that is really empty right now. And then the cost of goods is just Never recovered. And so sort of like, you know, when it started, we were like, oh, you know, supply chains are bad right now because of shipping or whatever it may be, and they'll go back down on, you know, whatever it was. Fryer oil. This is a big part of the beef tallow thing with the fries is I buy the cows from this farmer, so I also get a good price on his tallow because I sort of buy the whole thing. But most fryers in any restaurant in the entire world are filled with canola oils that are. That are sort of globally processed. Right. And so during COVID you saw these things go up in price and you were told they were going to come down. And shipping containers, whatever it may be, they never came down. It cost an unbelievable. It's like 200 bucks a night to fill a fryer or something like that. And so that's when I sort of started the switch to beef towel and all that, because I was like, okay, well, I know this guy. He's 30 miles away or whatever. I'm going to just buy his entire product and keep the supply chain like one to one. So there's. This is all kinds of. Of things that happened during COVID that we're still recovering from, but the big ones are the staffing and cost of.
- [46:20]
A
Goods, obviously, vertical integration. There's one more macro, one more macro question that we got to ask. We talked about the supply side, but what are you seeing on the demand side in terms of customers coming in and ordering? And how connected would you say you are to the broader business cycle? Because I imagine, you know, if you're running a McDonald's franchise, you probably experience the business cycle in a very different way to someone who's running a boutique restaurant.
- [46:49]
C
Yeah. So my understanding, just from other restaurant tours and the news and stuff, is that it's. It's down right now, and that I think reservations are down like 15 from last year is what most people are reporting. We're in a very special circumstance. Obviously, we're new and we're a. Or at the end of the day, a luxury item. And so Hermes prices never dropped once, and Hermes demand never dropped once during COVID Like, this is. This is sort of like the side of the business that we're in and we're lucky to be in, and I hope we can stay in it. So for us, it's a totally different ballgame. My understanding is that reservations are way down. Spending is way down across the board. Yeah.
- [47:23]
B
I'll give you a chance to sort of, like, really Let your right wing side come out. Health code violations and permitting and all that stuff. Of course, those are some of the most uncomfortable scenes. If you watch that show the Bear, how real is it from your perspective? Do you want to rant about the sort of. Do you want to tell us anything about permitting and such in dc?
- [47:44]
C
Yeah. I mean, so number one, the Bear is fascinating. The first season, that Uber Eats episode, I still. So all of us switch to Uber Eats and all of these things during COVID to figure out how to survive. And that ding that it makes when a new order comes in still sends me into, like, a blackout rage. I remember one time during COVID picking up the iPad that the Uber Eats order came in and just throwing it in the deep fryer and being like, screw it, I'm not doing this anymore. And so that episode, I watched it with my wife. We. At one point, I was like, I think we might have to turn this off. Like, I was getting like, too, too upset, too anxious because it was too accurate. It was totally spot on on what that feels like with the health code violations and the. And the permitting and all that stuff. Oh, God, is this where we're gonna have to bleed? I've been. I've been doing so good avoiding that. Yeah, you're having so hard. It's ridiculous. There was a restaurateur that I worked for, and the prep kitchen was in the basement, and it wasn't ventilated. And I was like, how did you get a permit for this? And he was like, well, we put $10,000 in a briefcase and gave it to the guy. And that's how we have this. So if you go down to city hall and you pull the records for the building, this basement doesn't even exist. And this was like less than 12 years ago. And so that obviously doesn't seem like an ideal system, but to do that same thing at the restaurant we have now, took us almost eight months to get the single permit for that. And so there's sometimes where you're like, was it better when we just put some cash in a briefcase? Like, I'm not sure what we're doing here. Because you're paying rent that entire eight months at that point, you know, $10,000 is a lot cheaper than whatever your rent is. X Eight months. And yeah, it's a strange thing. I'm not sure what sort of, like, don't say that. What sort of make work job it is for the city to have these health inspectors that come by and say the same thing every Single time, which is like, hey, by the way, like, they put a thermometer in all your food, which is hypothetically for food safety, but all the half decent restaurants are fine. So, like, what are you doing here? I saw you last month. They were the right temperature last month. Can you leave me alone? But it's really the permitting process because you're in this race against your landlord to open before you start paying them. And getting 17 different permits to, like, have a basement or have a closet or whatever it may be is legitimately stopping new restaurants from opening. So it's pretty miserable. And that's just. That's not left or right wing. That's just like really, like, sort of like a technocrat would be better in this regard.
- [50:03]
A
Right?
- [50:04]
C
Like, it's like, please let me get my permit a little bit faster. Or a mob system. Right. Like, my understanding is, from my friends in Montreal, is that it's still very much a mob system. And so they go, yeah, well, we still put some cash in a briefcase and then boom, we're open in a month. So, you know, let's pick one of those. But this middle ground right now where, like, it's just like, three guys in an office who are completely. God, they're gonna come, like, inspect me this week for saying this. Like, three guys in an office who are all idiots is just. Is miserable.
- [50:30]
A
Yeah, you're definitely gonna get a visit.
- [50:32]
C
Yeah, whatever. Who cares?
- [50:35]
B
Bart Hutchins, that was fantastic. Thank you so much for coming on Odd lots. That was a lot of fun.
- [50:40]
C
It was good talk to you.
- [50:41]
A
Really fun. Thank you so much.
- [50:42]
C
Thanks, guys.
- [50:56]
B
I love restaurant episodes. I mean, I love restaurants, but I love restaurant. I've just always learned so much talking to these guys.
- [51:02]
A
We could do like a spin off series restaurants or something. No, they're incredibly informative in terms of the macroeconomic environment, but also all these little themes that we talk about on odd lots, like the supply chain, like labor hoarding, like, to your point, distribution of resources, such as energy.
- [51:22]
B
No, I never thought about that time because obviously, I presume a restaurant wants all tables filled at any given time. Right. But I had never really thought about the thing. You have to have them staggered so that you do not have all the cocktail orders come out all the same. I never thought about that. And the sort of risk of, like, demand spikes. You have this system designed for some optimal throughput, but the idea of, like, you don't want it all at the same time. Very intuitive. I suppose I just. It hadn't occurred to me before did.
- [51:52]
A
You watch the bear? You must have.
- [51:53]
B
Oh, yeah, yeah.
- [51:54]
A
I had to stop watching because it was so stressful and it was so many people shouting at each other. I just. I couldn't do it after the first season.
- [52:02]
B
It's funny how, like, basically everyone we talk to is like, yep, it's exactly how it is. And it's super difficult that. And have you watched the Pit, by the way?
- [52:12]
A
No, but you keep recommending that it's good.
- [52:14]
B
There's a new season starting soon. But I, you know, I was talking to a friend of mine who works at one of the NYU medical facilities, but he had the same reaction, like, he can't watch that. As a consumer of TV shows, to my mind, that's a very good sign when people say, no, I can't watch this. It's too real. I was like, okay, I'm not getting something overly dramatic.
- [52:33]
A
Yeah, I'm gonna put the Pit on my list.
- [52:35]
B
Yeah, you should.
- [52:35]
A
This is something that stands out whenever we do a restaurant episode, which is there's an intensity about the job. And in many ways, it's a unique industry because the profit margins aren't that big. You're probably doing it for something other than money. You're selecting your ingredients, usually often, because you want to make the best menu item possible. Not necessarily. Again, because it's going to produce the most profit. And you basically dedicate your entire life to this undertaking, right?
- [53:04]
B
Absolutely. It's interesting to think about what is a chef. You think it's like, oh, this is someone who makes good food. Right. But then the idea is like, that the chef then has to think about lighting all these other things that do not strictly fall under what we think of as the making of food. I don't know. There's so many interesting things. I mean, it's so interesting how many trends seem to date back to 2008. And so part of the story there was like, okay, there's a lot of cheap rents. Restaurants can open up. But it's also the truth that media is. Was such at the time, because of the invention of the iPhone and so forth, that, like, foodie culture was like a thing in the media. Right. And all these. All these different crosswinds that happen and at certain key points that made it difficult to disentangle.
- [53:51]
C
I don't know.
- [53:51]
B
That was just a really fun episode. I felt like I learned quite a bit in that one. Oh, and also the burger crowding out was something I'd never known about before.
- [53:59]
A
Yeah, that makes sense. Again, intuitively, I gotta say, though it makes you wonder what comes next. So, like, we've perfected food. A lot of restaurants have perfected the vibes or certainly pay attention to it more than they used to. What comes next, do you think?
- [54:15]
B
I don't know. What do you think? Do you have some thought? Do you have some.
- [54:20]
A
I mean, I'd like it to be service. Yeah, I worry that it's going to be like some customization thing, which I hate. Oh yeah, we shouldn't give customers options. I hate that.
- [54:30]
B
No, I don't like. I don't like. I don't like choice.
- [54:33]
A
Yeah, that's right. That's right. Okay, shall we leave it there?
- [54:35]
B
Let's leave it there.
- [54:36]
A
This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
- [54:41]
B
And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Bart Hutchins, he's at WhiteGuyFieri. Follow our producers Carmen Rodriguez at CarmenArmandasho, Bennett at Dashbot and Cale Brooks at Kalebrooks. And for more Odd Lots content, go to Bloomberg.com OddLots for the daily newsletter and all of our episodes and you can chat about all of these topics 24. 7 in our Discord, Discord, GG, Oddlauts.
- [55:05]
A
And if you enjoy Odd Lots, if you want us to do more restaurant episodes, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening. Bloomberg Daybreak is your best way to get informed first thing in the morning, right in your podcast feed. Hi, I'm Karen Moscow.
- [56:04]
B
And I'm Nathan Hager. Each morning we're up early putting together.
- [56:08]
C
The latest episode of Bloomberg Daybreak US Edition.
- [56:11]
B
It's your daily 15 minute podcast on the latest in global news, politics and international relations.
- [56:18]
A
Listen to the Bloomberg Daybreak US Edition podcast each morning. For the stories that matter with the context you need.
- [56:24]
B
Find us on Apple, Spotify, or anywhere you listen.