← Restaurant Unstoppable with Eric Cacciatore
Restaurant Unstoppable with Eric Cacciatore
1264: David T. Denney and Chelsea Masters, Partners and Denney Law Firm
01:31:56
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- [00:00]
Eric
A couple things before we get started today. First, thank you so much for showing up week after week making my vision for restaurants unstoppable come true. Your downloads are allowing me to do this show the way I've always wanted to do it. Boots on the ground, word of mouth, leaders, referring leaders, giving the industry an uncensored, no BS platform to share their perspectives and truth. That's on you. Thank you so much. And we're just getting started. So if you're enjoying what we're doing here and you want to help us do it even better, please subscribe to this podcast on your platform of choice. And if you do that, I promise to do everything in my power to continue to improve the show. I'll deliver the restaurant tours you want to hear from and we'll continue to make everything you love about this show better. Thank you. Welcome to restaurant unstoppable. For 10 years and over 1,000 episodes, I've been traveling the country chasing word of mouth leads and having in person only long form discussions with the industry's finest owners and operators. Our mission is to inspire, empower and transform the restaurant industry by bridging the gap between this generation's leaders and the next. Listen to today's guest and so many others and get one step closer to becoming unstoppable. This episode is made possible by US Foods. Running a successful restaurant takes more than just great food. With US Foods, you can expect more high quality products, advanced tools and flexible deliveries to grow your business. Their industry leading moxy platform also does more than just place your US Foods order. It uses AI to help you take control, save time and increase profitability. Visit usfoods.com expect more to learn how to become a US Foods customer one more time, that is usfoods.com expect more this episode is brought to you by Restaurant Technologies, the leader in automated cooking oil management. Their total oil management solution is an end to end closed loop automated system that delivers, monitors, filters, collects and recycles your cooking oil, eliminating one of the dirtiest jobs in the kitchen. Restaurant technologies services over 45,000 customers nationwide. Automate your oil and elevate your kitchen by visiting RTI Inc.com or call 888-79-5314 to get started with excitement. Allow me to introduce to you today's guests. Texas based attorneys and partners at Denny Law Firm, David T. Denny and Chelsea masters. Are you two feeling unstoppable today?
- [02:44]
David T. Denny
100 yes.
- [02:45]
Eric
Stoked to have you here. So this is actually the the third or fourth time now that I've connected with you as a guest on the show. The first two times were like, I think it was 130 something and like 500 and something. I'm like, hesitant to, like, even, like, let my listeners know exactly what episode number it is because I feel like the show has come a long way since then. This is gonna be episode 12.
- [03:04]
David T. Denny
Oh, my gosh.
- [03:05]
Chelsea Masters
Wow.
- [03:06]
Eric
I think 60 something.
- [03:07]
David T. Denny
I feel like I've come a long way since then.
- [03:09]
Eric
We'll link to the episode numbers in the show notes if you guys want to check out what David has to know. And this is my first time connecting with you, Chelsea. So welcome on the show. Today, we're just. We're shooting from the hip. I've always been impressed by what David has to share and. And as I continue to grow and evolve as the host of Restaurant Unstoppable, While I do love diving into the come up stories, the entrepreneurial journeys of these restaurateurs and trying to understand their business, as I elevate, as I climb and get bigger and go up this ladder of educating myself, my curiosity is, like, extending beyond the four walls of restaurants. And I think that there's, like, so much to learn about just the ecosystem of restaurants and what's going on outside of our four walls. And you two have a very unique perspective. So I have zero idea what we're going to discuss today. We're just going to start talking and I hope to learn something from you. But before we dive into it, let's get that motivational inspirational ball rolling with a success quote or mantra. What do you have for us?
- [04:07]
Chelsea Masters
Don't restart. Or do you have one?
- [04:09]
David T. Denny
Go ahead.
- [04:09]
Chelsea Masters
Do you have one, though?
- [04:10]
David T. Denny
Absolutely. My. My inspirational quote is, when wrestling for possession of a sword, the guy with the handle always wins.
- [04:19]
Chelsea Masters
Ooh.
- [04:20]
Eric
Why is that your choice? And why does that resonate with you?
- [04:23]
David T. Denny
Because you have to know where you are in that equation.
- [04:25]
Eric
Yeah.
- [04:26]
David T. Denny
You want to be holding the handle. Yeah.
- [04:28]
Eric
And I think that's a perfect quote for today because of this idea of, like, in your restaurant, like, you need to have a handle on your four walls and the economics of your business. But, like, what ecosystem are you in? What handle do you have on the reality of the world we live in? And what decisions are you making today to be ready for tomorrow? I would say most restaurateurs are heading to, like, what is that, like, Guinness, like, image of, like, the pelican? Or, like, there's a. Or. Or is it. Is it a Guinness thing with the head in the ground? Like, it's like a bird. You know what I'm trying to say?
- [05:00]
Chelsea Masters
Guinness is the heart.
- [05:01]
Eric
I don't know what I'm saying. But the idea. We have our head in the ground, like we're. We're just in this. Like we're siloed. We don't know what's going on in a big picture. Chelsea, what'd you have?
- [05:11]
Chelsea Masters
So I had a quote in notes that I 100% had to Google to get the context of. Did not realize it was a lot. Eleanor Roosevelt. So yay. True hospitality consists of giving the best of yourself to your guests. That's really interesting to me because my notes only had part of that quote in there. But that it fits. It fits.
- [05:33]
Eric
True hospitality is giving the best of yourself to your guests. Dive into that.
- [05:38]
Chelsea Masters
So, you know, something that we talk about a lot as we have been looking to grow the firm is. It's not just about, you know, necessarily representing the people in the food, beverage, and hospitality industries, but it's representing people who at their core, are hospitable and exude hospitality. And that's what we, as a firm have been seeking to do and would prefer to do do versus just, you know, take any Joe Schmo off the street.
- [06:15]
David T. Denny
Yeah. Yeah.
- [06:16]
Eric
Do you have thoughts on that, David?
- [06:18]
David T. Denny
Yeah. You have to do hospitality well. Right. You could be a neurology group. You could be a commercial landscaper. But a lot of people are transactional. A lot of people are service oriented. Very few people in the broader spectrum of business are doing hospitality. Yeah. You know, and I think setting the table and unreasonable hospitality have helped to broaden that message. But I still run into people all the time that have never heard of either one of those books and just don't understand the concept. They just see everything in a transactional way.
- [06:53]
Eric
Yeah. And it's kind of. You know what it's. When you really look at the history of the hospitality industry and what this industry was born out of, we have gotten so far away from what hospitality is. It's become much more, just to your point, like, just transactional. It's about scale. It's about how big can we get. It's about how much profit can we make and how can we be first to market and how can we get something that quote unquote, has legs and private sell to private equity? Not that to say that any of those things are evil.
- [07:22]
David T. Denny
Sure.
- [07:22]
Eric
But, like, the game is changing.
- [07:24]
David T. Denny
But remember, the root of the word hospitality is love of strangers. And that's where we get hospice and hospital. Yep. And if you don't have that, then don't get into this industry.
- [07:38]
Eric
Yeah. And I was, I'm so happy that you gave the, like that, that route. I was gonna. Just about to share the definition of hospitality. It's the friendly and generous reception and entertainment of guests and visitors and strangers. I think that's actually not the. There's another one that I've read and that wasn't the one I was looking for. But if you look at like the cinnamon synonyms of hospitality, it's warmth, generosity, caring, neighborliness. It's, it's all these things that we do out of our nature as tribal animals to care for others. Right. And there's evolutionary benefits, benefits. I think it's a part of our DNA as a species and we kind of just take it for granted. We don't really fully understand why we are this way, but it's a part of who we are.
- [08:16]
Chelsea Masters
Right.
- [08:17]
Eric
It's powerful stuff. So, okay, help me. Before we just go into like whatever direction we choose to go in today, help me understand your firm a little bit better. Like who, who is your target market client? Like who do you guys exist to help?
- [08:29]
David T. Denny
So most of the time, 95% of our clients are in the hospitality space. And that means restaurants, bars, wineries, breweries, caterers, chuck wagons, food trucks, brew pubs, things like that. And, and we only work in the independent space, so we don't represent any of the big chain brands.
- [08:57]
Eric
What's too big for you?
- [08:59]
Chelsea Masters
Brinker?
- [09:00]
Eric
Yeah, that's really big. But like, like, say like, like is there like what's the biggest client you have without like naming?
- [09:06]
David T. Denny
So I mean regional. So people that have grown into regional chains that are in the two or three dozen unit space are not too big? I would say it's not necessarily if they're too big for us, it's when do they need an inside general counsel? Like how much can we do for them? Okay. We tend to act as outside general counsel for smaller companies and then when they do get large enough to have an in house counsel, we can still provide a lot of value to those people, but they're doing the heavy lifting in the legal world for those people. And so that, that tends to be the line of demarcation for, for what's too big is if they have in house counsel.
- [09:48]
Eric
Got it.
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David T. Denny
They don't need us as much.
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Eric
So you're advocate for the independent operator?
- [09:52]
David T. Denny
Absolutely. Yeah.
- [09:54]
Eric
And so I would like to say that I like to think that this podcast is an advocate for the independent operator. I'm not closed off to speaking to a 100 unit operator. Because I think there's a lot I can learn. That 100 unit operator was once a, you know, 10 unit, 5 unit operator. Right. Like, how did you get here and what can we learn from you? I think there's a lot we can kind of trickle down into the independent world from those big players. But my, when I say inspire, empower, transform the industry, I think of a transformation leaning more into hospitality, more into what the root of this industry is about, and seeing fewer 100 plus unit operators and more 10 to 20 units unit operators. How do we spread it out?
- [10:32]
David T. Denny
Well, the hundred unit operators are corporate. You just have to be.
- [10:38]
Eric
Right.
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David T. Denny
You have a ton of infrastructure. You're probably owned by private equity or are already past private equity into corporateness.
- [10:46]
Eric
Right.
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David T. Denny
And so where we really find that. So we almost always are working with the concept creator and whether that person came through our door and said, you know, mama cooks chicken good, let's open a chicken restaurant and didn't list, say, you shouldn't do that and have grown into, there's a lot of food truck to brick and mortar, there's one unit to three unit, there's three units to 10 units. That is some of the most fun stuff that we get to do because the person who started it is still in charge. And everybody wants to hit that magical unknown EBITDA multiple so that they can find an exit, but it just doesn't happen that frequently.
- [11:28]
Eric
Right.
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David T. Denny
And so in order to get there, they have to evolve, evolve their concept, evolve their work style. I mean, it's really hard to go from running one unit to being in three units at different times. Right. Because that involves delegation, it involves evolution of your systems, it involves evolution of your staff. And so we have seen literally hundreds and hundreds of restaurant companies sort of make these transitions. We've had this 30,000 foot view over the whole thing. And so I feel like it allows us to advise them really well based on the mistakes that other people have made. Yeah.
- [12:08]
Eric
Any thoughts on that, Chelsea?
- [12:11]
Chelsea Masters
No, that pretty much sums it up. The only thing I might add in terms of ideal client, the other sort of way of looking at it is, yeah, we 100% want those independent operators, but on occasion we also seek to help the folks that don't necessarily know that they need to be helped.
- [12:44]
Eric
You don't know what you don't know,
- [12:45]
Chelsea Masters
you don't know what you don't know. Yeah, and that's another here recently in particular, a subset that has come through the door of folks that thought they had everything going the way they needed it to be going. And then it's usually not us that has given them the rude awakenings. Usually. Usually their CPA or the irs, but they've gotten the rude awakening of, oh, dear, we. We actually don't know as much as we think we. We knew. And so now we need to have a very different conversation. But all. All of that to say still working for the most part, with the people who started the company is exactly who we look. Look to work with. Who I like to work with in particular.
- [13:32]
David T. Denny
Yeah.
- [13:33]
Eric
And really, what, Like, I'm trying to. To build this network of people like you to help. I never set out on this podcast to be the guy, you know, like, I wasn't me who was going to have all the answers, and I was going to solve all of your problems. I always just wanted to be the student, to understand, to learn what these people that are successful have figured out that my parents struggled with when they had lines out the door in industry. You know, like accolades and press and people like traveling all over the Northeast that eat at their breakfast restaurant but they couldn't pay the mortgage. Like, what didn't they figure out? And, and, you know, I want to create a little network of people like you who exist to help bridge the gap to get from one unit to 10 units where you can actually have something and create opportunity for other people and have a retirement, you know, and, like, how do we get this information out? But to your point, I think that there is a lot of ignorance in the industry, and it's not because these, the people that are in this industry aren't incredibly talented and smart. It's just like drinking from a fire hose. There's so much you have to be good at today to get to that point where you're scaling and creating opportunity for other people. Like, you can't just be a good cook, you know, like, it's more complicated today than it has ever been. It's more competitive than it's ever been. The market's more saturated than it's ever been, and there's so many things going on at this, this high level of, you know, this, this, this, this layer above the actual grind of the money that surrounds the industry that is influencing the direction of the industry that I'm just really starting to, I think, begin to understand. When I say that last part, what goes through your mind?
- [15:13]
Chelsea Masters
I was going to say I thought you were going to take it in the direction of, you know, in the modern era, dealing with sort of the regulatory and taxation framework. And the fact that when I say taxation, I'm not just talking about government taxation. I'm also talking about, you know, things like swipe fees, and I'm talking about the things that restaurants that already have thin margins are having to pay out the door before they've even put a single dollar in their pocket. That was the immediate thought that came to my mind. Did you have. You look like you had a thought there for a second.
- [15:57]
David T. Denny
No, it's. I mean, the money that surrounds the industry is that there's such a discrepancy between what. What the guest sees in terms of the publicly traded restaurant company. Right. Because they essentially have infinite marketing dollars. And so what the independent has to struggle with is how do I develop a concept? How do I create this culture? How do I make this culture experiential?
- [16:23]
Eric
How do I make it profitable?
- [16:25]
David T. Denny
And then how do I turn that into profit when I can't afford a Super bowl commercial? Right. And I can't afford ads on a podcast or I can't afford half the things.
- [16:35]
Eric
But not just that, but also today, it's become like the whole world we live in, Hashtag become, pay to play. Like where I think the. The equivalent would be Influencers. Yeah, right. Where I can't afford to have this influencer who is just some really attractive person that lots of people want to sleep with and don't really know anything about good food. Coming into my restaurant, eating my food, and all of a sudden, like, I don't know, I was throwing out some random example, but it's like there's this imbalance of, like, none of these entities would exist if not for the restaurant industry. And I don't think I'm out of line by saying I don't believe the restaurant owner today is the beneficiary of owning a restaurant. There's like this collective restaurant industry that we have created. Restaurant owners. I shouldn't say we. I don't own a restaurant, but I've grown up in restaurants, and there's so many, I guess, parasites adjacent that say, like, we need you, like. Or we become dependent on these parasites. I shouldn't use that word. It's very negative. But like, we. Like, we almost. They have. A lot of these entities have captured the attention and the habits of consumers, and consumers are more loyal to third parties than they are to actual restaurants is one of the things I've noticed. And that's hard for restaurant owners. This episode is made possible by US foods. It takes more than Great food to run a kitchen these days with US Foods more means consistently high quality products, industry leading tools, inflexible deliveries that let you grow your business on your schedule. Whatever your goals, US Foods helps you turn them into reality. As a US Foods customer, you'll gain access to their industry leading moxi platform which doesn't just make it easy to place your US Foods order, but it uses AI powered technology to help you take more control of your business and increase profitability. You can also explore the latest issues of Food Fanatics magazine from US Foods. In each issue you'll find real world success stories, bold culinary inspiration and practical profit boosting ideas you can put to work immediately. Visit usfoods.com expectmore to learn how to become a US Foods customer again. That's usfoods.com expect more so as I'm ranting right now like do you think I'm out of line? Do you think that I'm like, well
- [18:56]
David T. Denny
that's just a barrier to entry. Yeah, right. The, the old, sort of, the old saying that this is the restaurant, the restaurant industry is the riskiest industry of all industries is not true as long as you focus on the people who are starting with a network of people who know what they're doing and are well capitalized. And well capitalized can mean a lot of different things. But mainly you have to start with money in the bank. You have to be able to pay pre opening salaries to people that know what they're doing. And you have to be able to start with sort of a three to six month cash registerable the money. Right. Or you do become, you're more likely to become one of those statistics, I'd
- [19:36]
Eric
say 12 to 24 month if possible.
- [19:37]
David T. Denny
Well, yeah, it's just really, really hard to get that and sit on it because if you're borrowing it from a bank, you're sitting on it and paying interest.
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Eric
Right.
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David T. Denny
If you're raising it from equity investors, you had to raise a bunch of extra cash that they're not getting distributed back to them. So you potentially give up more equity in your company to hold on to a contingency reserve. What we like to see is start with, if you can start with six months, great. And then don't distribute a lot of profits and create that contingency reserve and build it up. Right.
- [20:10]
Eric
And I think that scenario is if you already, if you have a winning like recipe for success, you know, even if you are doing something right, like I think you'd have to be doing something right to have that success. Six month Runway work. Right? Sure, sure.
- [20:24]
David T. Denny
But yeah, if you're not a, if you're a first timer.
- [20:26]
Eric
Right.
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David T. Denny
It's a, it's a pretty tall ask.
- [20:28]
Eric
Right, right.
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David T. Denny
You know, so there's a lot of
- [20:30]
Eric
these barriers in the way. I mean in terms of I think go continue to go down this line. The things that you see with the clients you work that get people in the most trouble. Before we get into like the higher overarching stuff.
- [20:43]
David T. Denny
Well, sign in a lease without, without knowing what it means. Yeah, I mean it is, it is. And I've said this for almost 20 years and over 20 years and it's still true is it is the most important contract that you're going to sign, more important than your investors agreement, More important than any contract with an architect or a general contractor or a general manager or anything else. The contract that you have with your landlord is the most important because is the most likely to get you thrown out.
- [21:12]
Eric
Yeah, that was actually one of the things I was hoping would be touch on today. One thing I would like to understand is the, the game of developers, like what their objective are like. It feels like there's so much new development happening right now across the country and I don't really fully understand the end game of these developers. Do you have more of insight into what that game looks like?
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David T. Denny
Well, we, we spent a two decades or a decade and a half with it with zero cost money. And so people were able to get free leverage and just build stuff. And so basically from 2009 until you know, 2020, when you say zero cost
- [21:51]
Eric
money, you're talking about like next to zero percent interest.
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David T. Denny
Yeah, yeah. And. And so it's, it's almost free and so there's a lot less risk. And so the development explosion that we're still sort of seeing has. It has resulted in the emptying of downtowns, people that were remote work. The whole culture changed during COVID Not everybody's coming back to work. So the downtown ecosystems have changed a lot. Which has thrown off a ton of the FMB that has supported that.
- [22:24]
Eric
I wonder sometimes if that's a bad thing. I think it's a bad thing for cities.
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David T. Denny
It is a bad thing for cities, but it's pushing, it's pushing the concepts out into other markets.
- [22:34]
Chelsea Masters
Exactly, yeah. Because my biggest. Before I say anything disclaimer, I do not do real estate. I just have opinions. So my uneducated opinion, something that I have seen that I have found to be very frustrating and part of the pushing everyone out of downtown, part of the sad thing about pushing everyone out of downtown is to your point on developers is groups that are coming in to an area that don't understand what makes the area special and valuable and pricing the people that make that area special and valuable out.
- [23:17]
Eric
Right. Well, it's interesting. We live in, like, literally everything about the world we live in today is unprecedented. Like, we are living in times where we've. That are never before in the history of humanity have we seen times like this. I think one of those things that we're kind of just. That's like off our radar is, is the fact that we live in cities. Like, cities are a new invention. If you're alive today, all, you know, as long as you've been, if you've existed, is that giant mega cities are a thing. But there were really a thing a few hundred years ago. Like, they're a new thing. And it was post what like the. The second industrial age, when, you know, there are cities all over, like the east coast and stuff, and these, like, old, like, cities that kind of got vacated when everybody had to move to. Like when the industrial age kind of came to an end and it became the information age. We all had to go to New York, Boston, Los Angeles, San Diego, Miami, like all the big cities, kind of absorbed. It was like for the. I think 1920 was the first time ever or that decade where that we went from more people living in cities than people living in the country.
- [24:19]
David T. Denny
Yeah.
- [24:20]
Eric
And it was so, like, most people today aren't. Weren't alive before 1920. Right. So all we know as a society today is massive cities. But I think that that in itself is not a good way to exist. No offense. We're sitting in Dallas right now. Sure. Like, I know my. I should know my audience, but I think that the fact that movie that this money is moving out of cities and spreading out across the country isn't necessarily a bad thing.
- [24:44]
Chelsea Masters
No. And that's not to say that that's not a bad thing. The issue is going to be, though, back to your point on developers, is that this issue that I've observed as an outsider sort of looking in because again, don't do real estate. But the thing that I've noticed, I feel like is spreading in a way that is. What did you call it? Speculative.
- [25:14]
David T. Denny
It's all speculative.
- [25:15]
Chelsea Masters
Well, of course, of course. But in a way that, you know, going into some of the smaller towns that we want to see grow, like Waxahachie, Jacksboro areas, you know, outside of some of the larger cities where we want to see this kind of independent growth. The fear is that, you know, once the developers get wind of it, the same developers who are coming into the large downtown areas and potentially changing the culture by pricing the culture out, are going to do this in the same town.
- [25:52]
Eric
So this is why I think it's so important that we have these conversations now so that we can teach the people in these small towns the way the games played so that we prevent that game from happening across America. Because right now I see one. Like, we've listed a lot of the things that make it so hard for this, this industry to make it. But one of the big things that I see that I think is scary is that there are these massive development projects going up, not in the big cities, but across the, you know, the Great Plains. Like, like all these momentum markets where there's money coming from outside developing, but it's the same developers in, in cahoots or in collaboration, in partnership with the same private equity firms that are just putting their restaurants across America. And there's no way for independent operators to break into these developments because the relationships are already established. They want, these developers want low risk tenants. They want. And they. To your point earlier, David, like, these companies also have all the marketing budget to make sure that everyone sees that these new restaurants that aren't from this area, wherever that area might be, are coming in and taking the opportunity in these new developments.
- [27:07]
David T. Denny
Sure. Well, think about every shopping center you've ever seen, right? I mean, grocery store, laundromat, Chinese restaurant, pizza place, pad site that's either a bank, a mattress store, or a chain restaurant restaurant. Right, right. So how do you break into that? I mean, and, and you know, there's a whole other podcast about what are those mattress stores doing?
- [27:27]
Eric
Wait, you know, but why are they
- [27:30]
David T. Denny
taking such good real estate?
- [27:31]
Eric
I just had the folks from Lanes on the show Lane's Chicken. Yeah, Lane's Chicken Fingers. Love those guys that they're doing really great stuff. They just went from 24 to 40 locations. They want to do another doubling in size in the next year.
- [27:42]
David T. Denny
Oh my gosh.
- [27:42]
Eric
And like, I love their ambition and I think they're fantastic people. And I wonder, like, when are you guys going to hit this firewall of whatever that, that special thing that you currently have? Like, when does that get diluted? You know, like, that's on my mind. But the thing that I really love about them and their story is that they, before acquiring Lane's Original, like that, that brand that started in College Station in 1994, they purchased that brand and now they're franchising that brand. But before that they were in the game of real estate. They worked, they had their own development company called Main and Main. And they were in the game of finding real estate for Starbucks in Chili's. And like that's what they came, became really good at. And they were thinking to themselves, like we're really good at finding real estate. What if we had a concept that we could also like combined these two things and then like it's a really brilliant business model and that they're in their uniquely position to execute on it. But like that's just kind of opening my eyes to like there's this, this game of who, who's determining the success is that development level. Like that, like those relationships.
- [28:50]
David T. Denny
Yeah, well, one of the things I think that new or independent or sort of, let's just say less sophisticated independent operators come to this game and they'll, they'll go and talk to a landlord and the landlord will tell them, oh well, you know, you don't need a real estate broker. And so just deal directly with me. And sometimes the operator doesn't even know that they don't pay for the real estate broker. The real estate broker gets paid out of the budget for the broker that's already on the landlord. So they don't have an advocate or the landlord's broker will represent both. Who's not an advocate for the tenant. Right, right.
- [29:27]
Chelsea Masters
Has no obligation to do what's in the best.
- [29:29]
David T. Denny
Take a double commission.
- [29:30]
Chelsea Masters
Yep.
- [29:31]
David T. Denny
And so I am a huge, I'm a huge proponent of having my, our clients use restaurant brokers who actually know about the restaurant. I mean use, use real estate brokers that know about the restaurant industry because they can add value.
- [29:45]
Eric
It's specialists.
- [29:46]
David T. Denny
And, and then it's my job to make sure the broker keeps adding value beyond just executing a letter of intent that has some business terms in it and then handing us the lease. I want to make sure that broker is involved in every step of the negotiation is, you know, running paper back and forth to make sure that, that the parties can have this conversation because the broker is the one that's negotiating the business terms. And if you just use somebody that you bought your house from, they're not going to add any value to that. Right.
- [30:17]
Eric
You need a specialist, just like you need a specialist lawyer, just like you need a specialist real estate person, specialist accountant. You know, the restaurant industry is very unique. You can't go to any generic broker
- [30:27]
David T. Denny
or so somebody who's either an office broker, industrial broker, a typical real retail broker isn't going to know about grease traps, scrubbers, Venahoods chases.
- [30:38]
Eric
Was this a laundromat at one time?
- [30:40]
David T. Denny
Yeah. How do you run your exhaust up an elevator shaft in a, in an office building that's 30 stories.
- [30:46]
Eric
Right.
- [30:46]
David T. Denny
It's going to cost you a half a million dollars. Well, nobody told you that till it was too late.
- [30:49]
Eric
Right.
- [30:50]
David T. Denny
Or until you sunk 10,000 bucks in the, in the, in the pre game process. Like that's not a super good investment. So there are a lot of people that can add value. And over two decades of being in this hospitality law space, which is super small, we just have a great network of people. And that's what you were talking about is how do you expand, how do you let people know. And so half the value that we bring to the equation for a client is we know people that can do stuff. Yeah.
- [31:19]
Chelsea Masters
I mean we were talking about capital earlier and I mean we were talking about capital from the financial side. But I was going to also say, you know, there's also knowledge capital. It's incredibly important. Human capital to value and. Human capital. Absolutely to value when you're looking to get into this industry because, because that's. You don't know what you don't know and. But there are people out there who can hold your hand to help lead you down a, a path before you get into signing a lease. Signing your life away with a lease that almost certainly will have a personal guarantee.
- [31:58]
Eric
Yeah.
- [31:59]
Chelsea Masters
So God forbid something goes wrong.
- [32:01]
Eric
Well, we will link to that episode that I did with David like eight years ago when you were last on the show, like full feature episode where you give us advice on how to negotiate a lease.
- [32:11]
David T. Denny
Super.
- [32:11]
Eric
It's super good stuff.
- [32:12]
David T. Denny
Well, but the whole, the whole capital side of it is one of the reasons that I am such an advocate for restaurant associations. Because especially when somebody comes to us and we have a number of people who are doing work for right now that have never been in the restaurant business before. And so one of the things that I advise them to do is, is while you're in development or while you're in, under construction or God forbid, once you're open, it's almost too late. But join the restaurant association while you're planning so that you can just put yourself in proximity to people who have been doing this for decades, not so you can meet the best ice company, which may or may not be an awesome benefit for you, but so that you can have a real conversation with people who, you know, know exactly what it's like to. To build a restaurant or 2 or
- [33:02]
Chelsea Masters
10 or whatever importantly in your area. Take advantage of your local knowledge capital.
- [33:06]
Eric
Yeah.
- [33:07]
David T. Denny
And that it's just.
- [33:08]
Eric
And every city, every state's different with the laws, so you really need. It's unique. You can't get generic advice that's universal.
- [33:16]
Chelsea Masters
Absolutely.
- [33:16]
Eric
Across the country. Because every state's different.
- [33:19]
David T. Denny
Yeah. I mean, that's why. I mean, podcasts are great, but once you have to meet somebody who's boots on the ground in your area for that to. I mean, that's like. If somebody in New York wanted me to tell them about New York law, I couldn't do it.
- [33:31]
Eric
I don't like going to New York anymore. Offense to New York. But like, I'm like, it's like such a unique market and it's really only the. Like, how many people live in New York? Like 4 million people live in New York or something.
- [33:41]
David T. Denny
Depends on how many boroughs you're talking about.
- [33:43]
Eric
But I think all the.
- [33:44]
David T. Denny
Over 8 million people over a meal.
- [33:46]
Eric
Yeah. And like, of that. How many of them own restaurants? Probably feels like half, but it's just such a unique market that it's not universal. Like the. The advice that I would get from somebody, I think, and how to build a restaurant that has done it in Manhattan. It's. It's like. It's such a unique marketplace.
- [34:01]
David T. Denny
Yeah.
- [34:02]
Eric
I mean, I'm sure there's some transferable lessons, some really expensive.
- [34:06]
David T. Denny
We don't have unions. We don't have the same labor laws. We don't have the same. I mean, there's so much different.
- [34:11]
Chelsea Masters
We don't have. Permitting is totally different.
- [34:13]
Eric
Yeah.
- [34:13]
David T. Denny
Raising money is different. You know, so there are so much that are different and that's one reason why people are flocking to Texas to do business.
- [34:21]
Eric
Yeah. It's a. It's a good state to own a business for sure. So when you were making that tie between capital and restaurant state associations, what. So is the tie that, like you. With what capital you have, you can leverage the right rest resources.
- [34:39]
David T. Denny
Sure.
- [34:39]
Eric
Is that. Was that the connection?
- [34:41]
David T. Denny
Yeah. I mean, the discount on insurance isn't necessarily why you're joining. I mean, maybe it's an ancillary benefit. Maybe you really, really want a discount on insurance, but it's really so that you can get into a room with people who have been doing this and they probably forgot more about the restaurant industry than you ever will know when you're first getting started and just get in proximity to them and and it's because they're all in hospital hospitality, they will help you.
- [35:06]
Eric
Right.
- [35:06]
David T. Denny
That's what's awesome about it. Like there are not. There's so many hamburger restaurants, there are so many taco shops. Right. You're not really competing with each other. You might be competing for labor, you might be competing for that 1.5 tacos per week that people eat on average. But once you're outside of the same trade area, it almost doesn't matter.
- [35:27]
Eric
Right.
- [35:27]
David T. Denny
And people that know in the industry know, the better the industry does as a whole, the better they all do.
- [35:34]
Eric
Right. And all ships rise at the time.
- [35:36]
David T. Denny
All ships rise with the tide.
- [35:37]
Chelsea Masters
Well, and also this podcast is living proof, you know, hospitality industry is full of talkers.
- [35:42]
Eric
Yeah.
- [35:42]
Chelsea Masters
And you just got to start, start up the right conversation in order to get, get access to that knowledge base.
- [35:48]
Eric
Huge emotional intelligence in this industry. Great conversations, I can attest. And people are getting more and more open. I think you pointed out Charles, what's his Last name from Brazery 19. Charles Clark.
- [36:02]
David T. Denny
I was gonna say.
- [36:03]
Eric
Yeah, yeah, yeah. And you were saying like you listened to that episode and you were so surprised at how willing he was to share those information.
- [36:08]
David T. Denny
Yeah, that was great.
- [36:09]
Eric
Yeah. Like, like specifically the numbers. And I was scared for a long time to, to like lead off at before a two hour conversation ensues. How much money do you make? What percentage that is profit you like? And I was. But I know through my conversations that that's where people get in trouble. They don't have benchmarks. We're not sharing this information. And if people knew the realities of the money before getting involved, would they get involved? Can we talk people out of it? You know, like, if I can talk people out of it, I think I'm doing a great job. I love the industry, don't get me wrong. But it's not for everyone.
- [36:43]
David T. Denny
Yeah. Same with lawyering.
- [36:44]
Chelsea Masters
I'm about to say that that's exactly the number of times we have had serious sit down conversations in the same vein between. That sound almost identical. But the difference, the only difference is please don't start a restaurant versus please don't go to law school.
- [36:57]
Eric
Yeah. It's hard work. So one thing I am kind of curious about or a conversation I wouldn't mind getting into. A younger version of me would have been very against national and state level associations because of some of the things I've seen at that in those groups.
- [37:20]
David T. Denny
I mean, I can see that.
- [37:22]
Eric
What, what do you think that I'm
- [37:23]
David T. Denny
suggesting so they can't the associations themselves cannot advocate for everyone. At the same time. It's. It's impossible. You can't. So. Because the, because the industry as a whole is so diverse. Right, Right. Some of it is breakfast places, some of it is like diners that don't sell booze, some of it is people that sell booze, some of it is
- [37:43]
Eric
bars, some of it is like USR fine dining.
- [37:46]
David T. Denny
Exactly.
- [37:46]
Eric
There's so many spectrums.
- [37:48]
David T. Denny
And so if you're defending against a piece of legislation that you think is going to hurt the industry more or less as a whole, it isn't necessarily going to help everyone. And you may have to carve out certain segments of the industry. Industry that get more defended in that instance. But over time, that playing field tends to be level. And so the, the best thing about, especially the Texas Restaurant association, which. And again, this isn't the statement on their behalf. I'm a board member, but I'm not speaking for them because A, I wouldn't know what to say and B, I'm not allowed to do that. But it's so advocacy heavy. And they've had so many wins that that basically the slogan. And it's a universal slogan. Right. If you're not at the table, you're on the menu. Yeah. And so what I try to do is get people that are in the hospitality space to get to the table. And the best way to get there is through the association.
- [38:46]
Eric
Right. And the, the reality of these associations too is follow the money. Right. Where does the money come in? That's where their attention is going to go. Because at the end of the day, that's there. They are in business too, and they have to keep their members happy. Where the money is coming from is who they're going to go to work for. So for a long time, I think, you know, if I'm speaking at least to the national level, a lot of the money was coming from the national chains and that's. And the association was going to defend national interest, which would keep things like, you know, like all the regulatory things that they were going to lobby for was in the interest of big business. Right. But that's also where the money was coming from because the independents weren't getting involved. So they're gonna, they have to go to where the money is because they have to stay alive. Like they have to survive. And their resources are coming from big national chains. The other variable is. So like, from my understanding, associations were built on three pillars, basically. Marketplace to help you connect with the market, marketing to Help create awareness about your restaurant and then legislation, advocacy. Right. And those are the three pillars. But once the Internet came around, you didn't really need the marketplace anymore because you could find all the resources. Right. Marketing, I think probably slid off a little bit too. Like a lot of the more traditional marketing that state level associations did for you weren't as effective as they once were. It shifted more towards direct mail marketing, email marketing, social media marketing. So that kind of, they kind of lost that leg as well. But the last thing that still to this day there's a lot of importance is the, the advocacy in the legislation, still very huge. So they've, for that reason alone, you should get involved.
- [40:31]
David T. Denny
They've replaced a couple of the, the past legs of that stool with education. And, and, and then also there's another segment that's not education, it's not advocacy, and it's basically culture building and community building. And so, for example, in Texas, we had a very big push to help make child care more available to restaurant workers in the last legislative session that ended at the end of 2025. Because if you cannot have somebody watch your kid during the day, you can't go to work.
- [41:09]
Eric
Right.
- [41:09]
David T. Denny
Right. Bottom line, like.
- [41:10]
Eric
Right. Or if you're sick, if you don't have health care.
- [41:13]
David T. Denny
Yeah.
- [41:13]
Eric
Right.
- [41:14]
David T. Denny
And so that has become a big piece of it. And so I think that, but, but I think in the, in terms of marketing, not, not enough restaurateurs understand the benefits because some of the associations just aren't great about getting their own message out. Right. You know, and so if you think that they're, you know, a shill for the chains and that the only legislation that they're going to advocate for is going to be benefiting chain brands that, you know, have thousands and thousands of employees and sort of need tax breaks or needs this or need that, you're not going to participate.
- [41:50]
Eric
Right.
- [41:50]
David T. Denny
When you realize that the majority, at least in Texas, the majority of our members are independents.
- [41:55]
Eric
Yeah. Well, the majority of restaurants are independent.
- [41:57]
David T. Denny
Absolutely.
- [41:58]
Eric
Which is what I really want people to understand is that if you get involved, if you communicate, we are the second largest industry in this nation behind the government. We used to be the third. We just surpassed health care.
- [42:11]
David T. Denny
Yes.
- [42:12]
Eric
We have transformative power. Not only are we the second largest industry, the people who just work in the industry and the amount of, I think it's based off of GDB or gdp.
- [42:21]
David T. Denny
Right.
- [42:23]
Eric
But we influence, influence so many people from the people like young people who are a part of the community. Like we just literally are like, we're literally embedded in the communities across the country. We have so much influence. So I think we have to start advocating for ourselves and educating the consumer well.
- [42:40]
David T. Denny
And that's the, that's what we, that's what we give.
- [42:43]
Eric
Right.
- [42:43]
David T. Denny
We give the community a place to, to do life. And so now just over 50% of every food dollar is spent in restaurants as opposed to in grocery stores. So we're not doing it around the kitchen table as much as we used to. We're doing it in restaurant spaces. And so that's what makes the experiential part of restaurant ownership and operatorship so important. Because if you go into a restaurant during a lunch rush and you see a GM or somebody sitting at the bar with a laptop and making a schedule, that culture is broken. You know, and we've all seen it. Yeah, we have all seen it. And if you can develop a culture and an experience mindset that literally begins in the pre hiring process, if you can start conveying your restaurant's culture, your brand's culture, as you're onboarding people, they're going to have a lot more buy in from your staff. And that's going to translate into guest engagement 100%.
- [43:41]
Eric
Chelsea, do you have thoughts?
- [43:44]
Chelsea Masters
Not on that particular point. I was going to say. But you, you kind of hit the nail on the head already, so. But I was going to make the point of, in terms of the, everything that the restaurant industry touches and how. To your point, on how big this industry is, you talk about if the restaurant industry needs it, what should be happening is that people should be listening and following it. And what I mean when I say that is restaurants touch not only. It's not just the interaction between the customer and the business itself, it's also the interaction between the business and employees. So labor, labor laws, labor practices. It's also interactions between. I touched on this a little bit earlier. The restaurant business itself and taxing authorities. It's also, there's so many things that the restaurant industry is large enough that it should be dictating that. To your point, I, I wish that more of the smaller independents would get together and get involved in order to ensure that that voice is being heard.
- [45:13]
Eric
Right. Yeah. And you shared a lot of touch points. But beyond that, it's also farms, vendors.
- [45:21]
Chelsea Masters
Absolutely.
- [45:22]
Eric
Producers, manufacturers.
- [45:23]
Chelsea Masters
Yes.
- [45:24]
Eric
Like linen companies. Like there's. How many companies wouldn't exist if they didn't have the restaurant industry to serve? You know, like. And I don't know if that's factored into this. When they weigh this, the scale, the size of the industry. Is it taking into account all the technology companies, does the POS company get
- [45:44]
David T. Denny
absorbed into that, have economic impact? Yeah, data. You know, basically restaurants generate, you know, $1.94 or something. For every dollar that comes in, then they put a dollar. Say that one more time. I can't remember the exact statistic, but I think the number is, because I heard it last week that for every dollar that comes in, restaurants put 1.$94 back into the economy. So it's almost a hundred percent gain.
- [46:11]
Eric
So for every dollar the restaurant industry earns, they put 1.9 dollars back into the economy.
- [46:17]
David T. Denny
Correct. How does that even by, by factor of buying product, paying wages, the wages that they pay go back into the. Yeah, rent. I mean rent goes into the big boxes of gold coins that the landlords have.
- [46:32]
Eric
Right.
- [46:33]
David T. Denny
And but when you pay, when you pay wages, when you buy product, when you pay rent, when you has the amplified impact because it's going back into the economy and it's growing. Right, right.
- [46:48]
Eric
And usually a local economy.
- [46:49]
David T. Denny
Correct, Right.
- [46:50]
Eric
Hopefully a local economy.
- [46:51]
Chelsea Masters
Right.
- [46:52]
Eric
I mean there's so many different things we could talk about. I am curious, on average, what does it cost to get involved in the local state level association? What is a membership?
- [47:04]
David T. Denny
So when you're operating, at least here, it's a percentage of revenue.
- [47:12]
Eric
So it's not the same cost for every size restaurant.
- [47:15]
David T. Denny
Correct. But what I really recommend that people do is that they join before they open because they don't have any revenue. And so not only can you start taking advantage of the benefits and usually that's a fixed fee of a few hundred bucks. And when, so when you start that process, you, you join as a member and then you get access to all the advocacy. I mean you're getting the advocacy anyway, but you're not participating in it.
- [47:43]
Eric
Right. So the point being for a couple
- [47:45]
David T. Denny
hundred dollars, I think it's probably closer to like six or seven.
- [47:48]
Eric
Okay.
- [47:49]
David T. Denny
But I mean you're going to spend a million dollars on a restaurant, right?
- [47:54]
Eric
Exactly. What, six or $700 when you access the network into the advocacy, like to your point. And then. And what can you save through not making the mistakes?
- [48:05]
David T. Denny
So, so, so it's an intangible number in terms of what you can learn from other people.
- [48:10]
Eric
Right.
- [48:11]
David T. Denny
That's an unquantifiable.
- [48:12]
Eric
Right.
- [48:13]
David T. Denny
Highly positive number. And then there's also, you know, am I going to get 10% off at BMI? Okay. Am I going to get discounted alcohol certification for my Employees, like there are other things that, other benefits that you can get, but it's the, the knowledge base and sort of the new, the access to this, I'd say, friend group. Right, right. But there's also, you know, like, NRA has white papers out right now that says the, the, the tax law changes in 2025 that are going to affect your tax return right now that you're working on right now. If you don't understand these five, these five different changes to the restaurant space that happened in 2025, you're going to miss out.
- [48:58]
Eric
Well, here's the most important reason why I think not to say that those reasons you just listed aren't valuable, but the more independents that get involved, the more you can sway the interests of the association.
- [49:11]
Chelsea Masters
And that's what I was going to say is, you know, once you get into it and you realize that things aren't going the way that you think they ought to, you now have access to the group of people who can actually do something about that. You're not out there as the lone wolf.
- [49:25]
Eric
There are more independent operators than there are corporate operators.
- [49:30]
Chelsea Masters
Right.
- [49:30]
Eric
So we have the numbers in our side, on our side, as long as we all pull in the same direction.
- [49:36]
David T. Denny
When the, when the state advocate, when the state association puts together a state advocacy day and you go to your state capitol and you meet with, with your state congressmen, legislatures, whatever they really want to hear from Independence.
- [49:49]
Eric
Right.
- [49:50]
David T. Denny
Because those are the people whose restaurants they eat in.
- [49:53]
Eric
Right?
- [49:53]
Chelsea Masters
Right.
- [49:53]
Eric
The, the more naive, ignorant, younger version of myself would have just been like, state and national associations are the devil. And I don't trust them as far as I can throw them. But after trying to stay curious and to learn, it's. Well, no, well, like, because that's where they survive is off. Their interest is in helping giant corporations because that's where they make their money. And I think that we got here out of a state of survival. They were just trying to survive, and that's where they had to go to survive. But we let it happen by not getting involved.
- [50:24]
David T. Denny
Well, I've given, I mean, it's not like I get paid by the association to be. I mean, I have to a, have to pay to be a member of it. And as a, as a board member and a participant in, in a restaurant association for 20 years, I mean, I've given so much time and effort and money to, not only to PACs and advocacy efforts, and there's the huge education portion for high school students and, you know, culinary curricula. That help. Help build our workforce. Because workforce development is, again, another pillar of that stool. Yep. I wouldn't have wasted all that time and money over the last two decades if I hadn't thought that it was beneficial to my clients.
- [51:06]
Chelsea Masters
Exactly.
- [51:07]
David T. Denny
Because I could have done a lot other stuff with that time and money.
- [51:13]
Eric
We were talking about the world of developers earlier today. And in terms, from a legal standpoint, from legal advice, do you have any advice in terms of solving that issue of how do we get more proactive with local development? How do we get involved so that when there is opportunity in our community, the opportunity that money is staying in our community, like, where do we even start there? This is the stuff that I'm fully ignorant.
- [51:43]
David T. Denny
So, so the. It's, it starts. It's starting to feel like all the developers go to this big meeting, you know, which they actually have.
- [51:54]
Chelsea Masters
You know, we're not accusing.
- [51:55]
David T. Denny
It's not just an Illuminati. Right. But they do go to a big meeting and then they talk about all this stuff and they. And that's kind of where they figure out. Because when people all over the country are seeing the same lease provisions roll out in the same year, like, and they're bad for the tenant, they all came from the same meeting. Right. So they all go to ICSC International, like, shopping center conference, whatever, conference. Anyway, so that's why we have this associations. Right. So people can have their own damn meeting. But what people think it's completely insurmountable to consider buying real estate for their restaurant. Okay. That it's a, it's, it's a hurdle, there's a barrier to entry there. But if you're going to be trying to get an SBA loan to open a restaurant in somebody else's shopping center, the, the bank is going to be a lot less likely to loan to you because you don't have any collateral. Right. You have fully depreciated tables and chairs and knives and forks that nobody wants and it's not worth anything. But if you go buy a building that's collateral, banks will, Banks will start to talk to you.
- [52:58]
Eric
Right?
- [52:59]
David T. Denny
And so the banks that are involved in the community and want to see sort of this environment grow, that's where you go. And I'm not saying you don't go to a big bank because there are big banks with, with a lot of pros that understand the restaurant industry. But once you have a, once you have an asset like, hey, I'm going to buy a building, I'm borrowing money and I'm going to build a restaurant in it. That's collateral. That's what the bank can get behind. And so you just have a bit. You have better terms.
- [53:25]
Chelsea Masters
And don't underestimate finding cities for those out there who say, you know, real estate is completely out of my reach. Don't underestimate cities, especially some of the smaller cities that we were talking about earlier outside on the periphery of the largest cities that have these economic development funds that they would love to give to small independent restaurants who are going to make their city more vibrant.
- [53:47]
Eric
I think that's where the most opportunity is right now in small cities and small towns and even towns like, like when I was driving from San Antonio to. Or sorry, from Houston to San Antonio, I'm like, where am I going to sleep tonight? Because I use, I use this app I mentioned off air called Harvest Host, which basically lets you find like farms and vineyards and breweries where you can park your rv. But it forces you to get off the freeway. Right. Otherwise you wouldn't know these things exist. Because when we built the, the highway system in America, like we bypass all the downtowns, like there's these bones all across America, like these towns that are just there empty, waiting. And you would never know they exist because you're just flying 90 miles an hour, pass it a mile offset from. From where the town is. Right. So it forced me into this dusty little old town Texas town called Flat Tonia. Have you ever heard of it?
- [54:38]
David T. Denny
No, but I love it. I want to go to it so bad and see if it's actually flat.
- [54:44]
Eric
And it's right in between San Antonio and Houston. So not in the middle of nowhere. Only an hour in either direction on either side of these metropolis areas.
- [54:52]
David T. Denny
Yeah.
- [54:53]
Eric
And I was like, this is the cutest little effing town. Half of the town was empty or not really. Like the storefronts were empty, but it was like a, like an old Western, like what you would imagine kind of town. Yeah. And there were some really cool like modern stores in those towns. Like markets with like healthy food, like, like small market stores with sourcing local meat. Healthy food, like gluten free, like no gmo. I was like, this is a very like, like, I guess, what's the word? Progressive in, in this dusty town. I would have never expected that. Then I went across the street and there was this little restaurant called Darlin's Diner. And it was started, it was started by a young entrepreneur, a badass lady, Taylor Sweating I think is her name. And I, I totally wasn't Expecting to do an interview in this town. But I was like, will you. You need to be a guest in my. Her story was cool. She. She was 24 years old, bought the building. This is where I'm going with this. In that town, I guarantee you, 10 years from now is going to be a happen. Cool, hip town.
- [55:58]
David T. Denny
Yeah.
- [55:59]
Eric
And I think that the next generation, like. Like the Gen A's, Gen Z's are gonna want that because they're sick of the disconnected world we live in. They want a community. And the community is already built. You just got to move in.
- [56:11]
Chelsea Masters
Right. Disconnection. And then also sort of monolithic nature of. To your point, on, you know, the national chains which we. We've been talking recently about the fears behind, well, Domino's just monolithic nature.
- [56:25]
Eric
I'm gonna have to use that. What you talking about? But, yeah, like.
- [56:27]
Chelsea Masters
But like, you know, Domino's Pizzas closing 250 stores. And there's. And there's. Understandably, there's a lot of fear behind that, but I. I personally don't necessarily see that as a reflection of the restaurant and industry as a whole. I actually see that a little bit differently, as potentially the changing nature of consumer taste and a potential opportunity. Absolutely right. Opportunity to be. To be different. To be the local guy. Because I don't see the same. The same sort of. Oh, dear. Oh, no. Moments when we're talking about the local pizza chains as we're seeing in the news right now with, you know, mod market, Domino's. I don't know if there's any others today. I haven't looked.
- [57:16]
Eric
Mod Pizza.
- [57:17]
Chelsea Masters
Mod Pizza. Sorry, not my market. Oh, dear. I meant my pizza.
- [57:22]
David T. Denny
Well, there's definitely a pendulum swing away from.
- [57:25]
Eric
I love that acronym.
- [57:26]
David T. Denny
It. Is that an acronym or.
- [57:28]
Eric
What's the word I'm looking for?
- [57:29]
Chelsea Masters
Metaphor.
- [57:30]
Eric
Sorry, it's been a long week. You're my seventh interview. You in the. Sorry.
- [57:35]
David T. Denny
So the pendulum is swinging away from sort of the Gen X and millennial consumerism toward vintage. And like you said, the disconnect.
- [57:45]
Eric
They're for the first time, they're starting to unplug from social media and they're going analog. Thank God I've been there this whole time. Like, when can we come back to reality?
- [57:53]
David T. Denny
But it. So. But if you're talking about if you want to. If you want to export yourself to Flatonia and you want to open a restaurant, the hard thing is, if that town has a thousand people, the cost of beef isn't any different there than it is in Dallas. Unless It's. Unless it's more.
- [58:09]
Eric
Well, back to the point earlier I was making about all we know is what we know right now, but also if you're alive today, post World War II, the entire food system was industrialized, so all we know is cheap, shitty food.
- [58:22]
David T. Denny
Right?
- [58:22]
Eric
So we ex, we, we have acclimated to food being 9% of our income or less. When pre World War II, like pre World War I, upwards of 20% of our income went towards food. So food isn't any more expensive than it was a dead person ago. You know what I'm saying? But all we know right now is that food is cheap and it's getting expensive. No, it's getting back to what it should cost. But you. That when it costs more, you were, you weren't alive. You were a glimmer in your grandpa's eye at that point, you know, like you were just a sparkle. You weren't here yet. Food's going back to the cost of what it should be. It's not cheap to produce good food, but we've acclimated to shitty food. Thank you. Corporate America. Like, that's another byproduct of, like, this world we lived in. I'm ranting right now.
- [59:11]
David T. Denny
No, no, it's fine.
- [59:13]
Chelsea Masters
What are your interesting. No, that's an interesting.
- [59:15]
David T. Denny
Well, and that's how, that's why people who appreciate that will pay a premium for it.
- [59:19]
Eric
Right?
- [59:19]
Chelsea Masters
Absolutely.
- [59:20]
David T. Denny
You know, and I mean, I read an article this morning that said that the, it's actually from fall of 25. I just found it this morning. But the primary driver of restaurant sales are the, is the economic block of people that make over $100,000 a year because that disposable income is allowing them to spend more money in restaurants.
- [59:42]
Eric
Say that one more time.
- [59:43]
David T. Denny
So the primary driver of restaurant sales, at least in fall of 2025, which wasn't that long ago, four months ago, three months ago, is, is the, is the group of people that make over $100,000 a year in income individually because they have the money to spend disposable income. Correct. And that's just not a surprise to me. Right, Right. Because if you're, if you're at subsistence level, you're going to buy what you can afford.
- [60:06]
Eric
Right.
- [60:07]
David T. Denny
And I mean, it's that we're looking now to the government to sort of make that affordable food healthier.
- [60:13]
Eric
Right.
- [60:13]
David T. Denny
Okay. Which is either going to happen or it's not. But, but the specialty restaurant, the Baker, the, the craft cocktail, that's still out there. The Artist like the people that are churning their own butter. Right. And serving it on a table.
- [60:30]
Eric
Right.
- [60:30]
David T. Denny
Like there's a huge market for that. Because people want to know that their food is clean.
- [60:35]
Chelsea Masters
And to that point, never underestimate the capacity and ability for you to be the, the flag that draws people to Flatonia.
- [60:42]
Eric
Yeah, you're bringing up a really cool point. And I think that something I'm really excited about, the author, Joe Pine of the Experience Economy, it just published his most recent book called the Transformation Economy. And his argument is that we're coming out of the experience economy and we're moving into the transformation economy. And the transformation economy is literally that people want to help getting from point A to point B. They want to transform. And the restaurant industry is primely positioned to capitalize on this, this new trend where people, because our, our, we have so much influence on the well being of people. Because it's the two things people. Or maybe, I mean we need water, we need oxygen. Right. We need those things. But we need sustenance and we need human connectivity. And what we put into our bodies has a direct influence on our health. Our trend. We want to be healthier, we want to get better, we want to elevate, we want to ascend as human beings. Well, it starts with surrounding ourselves with people, good people and putting good things into our body. Not just food, but also information. And that's where surrounding ourselves with the right people affects us. So we, we're in this position to, to be the arena where transformation happens. As long as we have clear mission statements of this is our purpose as our restaurateur, to make our community healthier by putting good food into their body and teaching them about how food can make your life better and how community can make your life better. Like we are prime lease like situated to be right there waiting for, for the transformation Economy. It gets me really excited.
- [62:20]
David T. Denny
I mean I've been waiting on it.
- [62:22]
Eric
Yeah.
- [62:22]
David T. Denny
For 20 years. You know, because it seems like a no brainer.
- [62:26]
Eric
Right. We, we came out of the experience Economy and to your point that things got so expensive.
- [62:33]
David T. Denny
Yeah.
- [62:34]
Eric
Because you're not just paying for the food anymore. You're paying for the rent, you're paying for the million dollar build out and none of that matters. Yeah. The experience that there is something to be said about a space. But the restaurant industry isn't about space. It's about people and relationships.
- [62:54]
David T. Denny
Juxtapose that with the coffee shops that intentionally don't put plugs.
- [62:58]
Eric
Right.
- [62:59]
David T. Denny
Don't put cushions in their chairs, they Want, that's a much more transactional relationship when you just want people to come in, buy coffee and leave and you don't want to be that third space. It's definitely a choice that's available to you, but it's not necessarily a choice that resonates with, with the majority of guests. And you know, every coffee shop in the world has the struggle with how do we deal with people who buy one cup of coffee and park all day or the, or the people, or how do we sell more coffee and keep our space available to guests. But, but part of that is in design.
- [63:33]
Eric
Yeah.
- [63:34]
David T. Denny
You know, the design, it's not unimportant. It's just not the most important thing.
- [63:40]
Eric
Right.
- [63:40]
David T. Denny
You know, I mean you can have a patio and you can have roll up garage doors and you know, especially in Texas, like patios nine months of the year, like at least maybe 10.
- [63:49]
Eric
Well, I mean it's February right now and I've been enjoying this, this 70, 80 degree weather in Texas.
- [63:55]
David T. Denny
So the design has to, has to be sort of a manifestation of your corporate culture, of your restaurant culture.
- [64:06]
Eric
Yeah. This episode is brought to you by Restaurant Technologies, the leader in automated cooking oil management. Unstoppable restaurant owners know which services to keep in house and which services to outsource. And oil management is one of those things you should outsource. Their total oil management solution is an end to end closed loop automated system that delivers, monitors, filters, collects and recycles your cooking oil, eliminating one of the dirtiest jobs in the kitchen. Create a more efficient food service operation and ensure consistent food quality with a safer, smarter and sustainable cooking oil solution. Restaurant technology services over 45,000 customers nationwide, including countless past guests on the show. Automate your oil and elevate your kitchen by visiting RTI Inc. Or call 888-779-5314 to get started back on this vein of the tail wagging the dog. In this example, the, the dog is the independent restaurant industry and the tail is all the adjacent industries that need the dog to survive. Right. When I say the tail wagging the dog, what comes to mind that we,
- [65:23]
David T. Denny
we haven't discussed linen companies is one that came up earlier. Yeah, right. I mean you get, you get your normal restaurant owner who is going to get pitched by a linen company and these, most of the linen companies that are not local are billion dollar companies and they're going to come in with a purchase order and you're. So your average small business owner isn't necessarily going to read the four point font on the back of the side of the terms and conditions. Well, one of those things that it's going to say is if you break this agreement, we're going to accelerate the next three years of your contract and charge you for it right then.
- [65:57]
Chelsea Masters
And oh, and by the way, we have automatic renewal.
- [66:01]
Eric
Add that agreement to your whatever LLM and search for those words and make sure it's not there.
- [66:07]
David T. Denny
Yeah. Because what they, what they also are notorious for doing often is they'll go in the back door and have, you know, the kitchen manager sign it or a cook or whatever. And then if you say I didn't sign this renewal or I didn't sign this linen contract for my second unit, I was going to go with another store for my, another vendor for my second unit. They got somebody in the kitchen to sign it. Well, then you get to fight a billion dollar company to say that that person didn't have authority to sign your contract.
- [66:35]
Eric
Right.
- [66:36]
David T. Denny
And so it's, it's not inexpensive to create a local linen company. You got to buy a lot of product and have vans and have marketing and do all that stuff. But it sure would be more relationships.
- [66:49]
Eric
No, I was literally thinking recently it would be a lot of fun if I started, if I wanted to start a restaurant, to start all the adjacent companies that serve restaurants first and to use those companies to be able to afford to open a restaurant.
- [67:03]
David T. Denny
Vertical monopoly clients that have their own construction companies because the overhead is so
- [67:07]
Eric
much smaller to start the adjacent.
- [67:09]
David T. Denny
Sure.
- [67:10]
Eric
I mean generally speaking, relative to what it costs to open a restaurant and the headache of employees and all the, like, it's, you can out, you can, they're easier to streamline. Like you can hire two employees to like pick up linens and like, I don't know. Yeah, maybe I'm making it.
- [67:25]
David T. Denny
Labor's not cheap.
- [67:25]
Eric
Right.
- [67:26]
David T. Denny
But, but so that's, that's one and I, and we've beaten the whole developer thing to death. But the big sort of multi billion dollar REIT sort of national tenant, I mean national landlord companies like they are, they are wagging all the dogs at the same time. Like they're, generally speaking, they're, they're the worst actor than in, in the cost matrix of restaurants and then, and then commodity prices, which restaurateurs have no control whatsoever.
- [67:53]
Eric
Well, I think that's really where it started from with the restaurateur not being the beneficiary of, of the restaurant or the community because you have these restaurants that go into crappy neighborhoods that bring life to the neighborhoods that put those neighborhoods on the map and then raise the property value and there's, and then their rent goes up. They're literally like the opposite of the beneficiary of hard work.
- [68:13]
David T. Denny
Well, in a pass through lease, you have to pay your share of the landlord's property taxes. So when you take their dilapidated building and then you spend a million dollars to build it out, it instantaneously gets more valuable.
- [68:27]
Eric
Right.
- [68:27]
David T. Denny
And then depending on how you value the property, it could be either it could be valued on asset value or it could be valid on income value. So if you do great, that property value is going to go up and you have to pay it. The landlord doesn't, doesn't usually pay the property tax.
- [68:42]
Eric
How do we make a difference on that? I think that's a big machine.
- [68:46]
David T. Denny
How do we, I mean, you know what I would love to see is restaurant people get together and start owning shopping centers. Not shopping, not a shopping center necessarily, but owning the, the three unit building where they're going to have, you know, the trifecta of pizza, burgers and tacos or whatever it is. Right.
- [69:03]
Eric
Pulling resources.
- [69:04]
Chelsea Masters
Yeah. What's our, what's our appetite for setting up REITs.
- [69:07]
David T. Denny
Say that again.
- [69:09]
Chelsea Masters
Setting up real estate trusts. Investment trust.
- [69:12]
Eric
Yeah, but this is the kind of conversation like it's always the restaurant owners that come to get together and work together that rise to the top and there's opportunity, there's strength in numbers. If you have the most badass brands in town, you have influence, you have pull, you can go make things happen. But I don't think most restaurant owners know what that game is because they're too busy mastering the the four walls game of being a good restaurant, which is a full time job.
- [69:36]
David T. Denny
And you know, the thing that I try to encourage them to do too is once you have that one successful restaurant that it, you almost have to build a second unit to diversify your income stream. Right. You have to be in multiple trade areas with multiple day parts. Even if you're using two units of the same concept. Yeah, it's, it's fun to create two concepts. It's awesome.
- [70:00]
Eric
Have you heard of the company Automatic? Automatic I think is what it is.
- [70:04]
David T. Denny
I don't think so.
- [70:05]
Eric
So they are a development company or. I don't know if it's actual company or if it's their summit that is called automatic. But it's a mixed use. Developments.
- [70:13]
David T. Denny
Okay.
- [70:13]
Eric
And they are, they've learned. I hope I'm not speaking out of place. I'm pretty sure this is not Like a secret. And if it is, I. This episode won't go live until after I try to go to the summit. So hopefully. So it's basically this idea that like a mixed use space is like you're seeing the pop up all over America right now where it's like restaurant, anchor, right? And then there's like retail and office buildings and then like condos above. Like it's all on one. So you literally have this like, like community in a box that you just like, boom. Everything you need for a standalone community is right there. And they're just building these across America right now. And they realize that if they can get a really good anchor restaurant tenant that they can instantly add $2 per square foot to all that retail and Absolutely. Condo space. And they realize, well, throwing a Applebee's in there isn't as valuable as throwing a. I don't know what would be a really well known brand here in Dallas, Texas. That's like a leading. But like a Mustin Turner in Atlanta, right?
- [71:18]
David T. Denny
Yeah. Neighborhood services.
- [71:20]
Eric
Yeah, like, like the leading restaurant tour right in that market, in small markets across America because that's where the momentum is. So they say we're in Oklahoma City, right. And like who is like the leading restaurateur in that market that has the respect from that local market. We take their flagship concept and we open a second location in one of these mixed use locations. Everyone wants to live because they're opening one of the. So they're hosting these summits where they invite all these operators from across the country, they learn more about mixed use spaces. This is where I might get in trouble with Atomic. I'm trying to get them on the show and I want to piss anybody off. But like, how do we get to the point where owners aren't just renting the space, but they're having equity space creating this.
- [72:04]
David T. Denny
If you're, if you're leasing space in a, in an asset that's owned by a billion dollar company that's run by asset managers, you will not get that right. It has to be a local owner that would be willing to partner with you in some aspect. But you're right that you don't fill an apartment building and then try to attack restaurant, attract restaurants to be the tenant at the bottom. With just 300 units full of people, you build the, you, you put the cool restaurant, the Lore site plan and you use that to attract your re your apartment tenants.
- [72:41]
Eric
Well, here's the thing. Why I think it's important that we have these conversations to get Ahead of it. Because these are things are coming to your market. Right. And if we are smart, we can. We can. And if we have the influence as the leading restaurant tour in that market, we can make sure that, like, we're getting equity in the project, you know, like, how do we. You want me to be a part of that? Well, okay, I want 1% or something, you know, like, how do we start educating people? Like, they literally need you for their business model. You are the keystone, know that. And you use it to keep the. Like to have control of these giant entities and to spread out the wealth.
- [73:21]
David T. Denny
Well, every landlord in the history of landlords has told their prospective tenant, we're going to be partners on this. And they're liars. Because once your ink is dry, you're. You're at verse, as I say, you're.
- [73:33]
Chelsea Masters
You're sharing profits with them potentially.
- [73:35]
Eric
Yeah.
- [73:36]
Chelsea Masters
But they're not necessarily going to be sharing profits with you.
- [73:38]
Eric
Right. So I think. I do think we're at this really unique time in history. To your point, David, that there is a pendulum.
- [73:45]
David T. Denny
Yeah.
- [73:46]
Eric
That swings left and right, left and right. It goes from one side to the other side. It's generational. It's constantly swaying back and forth. And we've swung far in one direction and we're about to start swinging in the other direction. So when that pendulum comes back through, we need to be ready for it.
- [74:02]
David T. Denny
And the place to do that is in the smaller markets that you're talking about, where the institutional investment has not captured the prime real estate at every prime intersection in the town.
- [74:14]
Eric
Right. I think AI is a big part of this pendulum swing. The next generation of people with different values is a part this, this collective consciousness that seems to be happening right now because we're able to fragment and choose our source of information where we can really be proactive and engineer a future that's best for everyone. And I think the restaurant industry is at the core of that. How do we consciously move ahead and use our influence to not just revolution started in bars, like we've been at the. Like, like, let's get back to that mindset, you know, like, how do we do it? So back to this idea of the tail wagging the dog. What else? What are the other tales out there that are influencing my mind goes to tech technology companies, third parties, who literally control and own all of consumer behavior.
- [75:08]
David T. Denny
Well, and all the data that you generate for them.
- [75:11]
Chelsea Masters
I was gonna say credit card companies.
- [75:13]
Eric
I knew we had to bring that to the. The conversation. And we have about 15 minutes left.
- [75:18]
David T. Denny
Credit card companies, but also the POS systems. So either they're the credit card processor or they're not. But the POS system vendors own a lot of data. The credit card processing, the credit card companies, the Visa, MasterCard and American Express, own the most data. And they're. If, if anybody tells you that's not a monopoly, they're, You're. They're crazy.
- [75:38]
Eric
Right.
- [75:40]
David T. Denny
But. But not only, not only that, that small sliver of your tech stack, but also what tech are you deploying inside the restaurant? Are you, Are you not using AI to onboard and, and begin sort of your HR and hiring process? I mean, there's so many options available to people, and you can do all of it as long as you have money for it, right?
- [76:01]
Eric
You know, what do you mean by that? You can do all of it, like in house?
- [76:03]
David T. Denny
Well, yeah, you can afford it all. And then long as you have money, you know, you can afford to have all the latest technological tidbits.
- [76:11]
Eric
Right.
- [76:12]
David T. Denny
Systems, as long as you can afford IT efficiencies. If you don't have the money, if you don't have the, the budget, you know, to put an AI hiring platform to go through the resumes. Like, so if somebody walks into your restaurant, scans a QR code, it takes them to an AI chatbot to schedule their interview to run their resume. Like those exist out there and they're not free.
- [76:33]
Eric
Right. You know, you're also using an example that is a relatively new problem. Sure. Because before you just walked in and we talked to you, or you're the brother of a server, or like, what. When did we just get back to hiring people? Not data?
- [76:51]
Chelsea Masters
That's, that's how I feel about that. You know, how hospitable are you if your hiring starts with a completely digitized option that doesn't involve a human being until maybe the day they show up.
- [77:07]
Eric
Think about the information that people, future employees, are putting on the marketplace to get hired. You think that, that they're just writing down something? No, they're using AI to develop that resume, that cover letter. So we're moving into, like, we're moving to this world where, like, it's a literal world of, you know, and like, that's what we're sifting through to get to the truth. Whereas I, my hope is that AI breaks the system because nobody wants to be a part of the system. So they use AI to streamline the system, and it's just this goobly glob nonsense. Yeah. That people are like, well, I guess I'M just going to have to like talk to people again.
- [77:47]
David T. Denny
Yeah. What do you.
- [77:47]
Eric
What, have a good reputation?
- [77:49]
David T. Denny
Where are you going to focus your effort? Right, so there's a restaurant group here locally. And so there's the. And it's colloquially known as Marty B. Okay. Marty. Marty B. Marty Land. So he owns 23 acres of, of real estate. He has 10 restaurants. He's putting another five or so on the ground.
- [78:11]
Chelsea Masters
And he's buying up some legacy brands too.
- [78:15]
Eric
So.
- [78:15]
David T. Denny
So Marty B's people are not using AI to onboard. They're using the human process. Savage in and. And they're not a client. I just am a big fan of how they do things. And so they were. They're gonna find a future guest too. Oh, he would be a wonderful guest for you, Marty Bryan is his name. B R y a no, Mr. Denton county himself. Oh man. So. So they will sit down with a prospective hire and tell them about their mission. Tell them like their actual mission statement. They'll tell them about their corporate culture. They'll say, hey, here's what we. Here's what you can do. Here is what you can't. And you know, it might or might not be a good fit. And if you can't put your. You can't run your resume through AI and fool anybody when they're sitting down and having a conversation.
- [79:05]
Eric
Right. And that's a cool thing. That's why I drive across the country. Because I'm not just talking to people. I'm feeling people, you know, And I'm also going to that community and talking to people. Who, who's doing it right? Well, there's this cool guy down the street, Marty B. Noted. You know. And then there's the conversation that happens after we're hit record. Like who else? Like who's doing all right? Like who's got the reputation like that you can't get through AI And I think we're. I just think it's forcing us almost off these platforms forms because it's like not. Moore's Law says technology improves at an exponential rate. Humans don't biologically evolve at an exponential rate. We can't develop neuroplasticity like grooves like, like, like, like neural pathways in our brain faster than the. The world is evolving. It's not humanly possible. Eventually we're going to hit our firewall. Yeah, that's what I think. Think at least it's coming. So. So back to this idea of technology in the credit card processing. From a legal standpoint, what can we do to Protect ourselves. How can we change that situation?
- [80:15]
David T. Denny
Well, I mean, everybody's got to have credit card processing. So, you know, just, just taking the one that the POS vendor tries to sell you is probably not the best choice. Right. Like, you just have to take a little time to shop. And sometimes it's Chase Payment Tech. Right, right. And JP Morgan Chase is the largest credit card processor, I think, in the world.
- [80:35]
Eric
How many are there? Like, what percentage of all processing is among. Like, is it the top three? Are they responsible for like 90% of all processing?
- [80:43]
David T. Denny
Oh, I don't, I don't know. I don't know that statistic, but. Well, but some. But, but we know that Square and Toast do it. They have a merchant process processing capacity. But what I have seen is that the banks are much more willing to share the data in a meaningful way. And so I know that Chase has a dashboard for its customers, and they're able to see tons of demographic information and spend and, you know, so where do they live? Where do they come from?
- [81:13]
Eric
That terrifies me that American Express now owns Resi and Tonight Talk, and they're only competition.
- [81:20]
David T. Denny
And Visa owns Door Dash.
- [81:21]
Eric
And Visa owns Door Dash.
- [81:23]
David T. Denny
Yeah.
- [81:23]
Eric
And who. I was curious about that. Do you know who owns Open Table? I think I had looked it up.
- [81:28]
David T. Denny
That's what I meant. Open Table. Visa owns Open Table.
- [81:31]
Eric
So there is some other entity that they go by. So, yeah, not Doordash, the. But that's. That's also terrifying. So these are the reasons why I'm afraid to go to these companies that sponsors.
- [81:41]
David T. Denny
They're building lifestyle patterns on all of them, us, you know, like, they don't just know what I spend at rei, they know what I spend in every restaurant. How frequently do I make restaurant reservations, whatever.
- [81:52]
Eric
So, so they know your, they own the people that process your payments, process your consumer habits. Because all consumer habit is done through apps. They own the apps. They, they own your habits. And like, that's the thing. I don't think restaurant owners understand. Understand. We're like, well, you know, they bring in a lot of business. It's marketing. And it's just like, you don't have any influence over your guests and you
- [82:18]
Chelsea Masters
have no control over your marketing at the end of the day. Because a lot of those terms of service say that any data that they accumulate belongs to them, not you. So if at some point you want to say, sorry, guys, we're going to go to a different provider, they have all of your consumer data. You don't.
- [82:33]
Eric
So data is super important. But it's what you can do with that, that data when you, when you also own the interface. But the, the consumer have like the actual apps that are literally engineered to persuade people and to addict people and to make it a path of least resistance from hungry to food on way like two clicks and they're influencing you. They own the marketplace. You pay them for influence. Like this is a tail fucking wagging a dog situation and they've gamified it
- [83:05]
David T. Denny
because why did I use open table from the day that it opened is so that I could get reward points.
- [83:09]
Chelsea Masters
Exactly.
- [83:10]
David T. Denny
You know, why do I stay at Marriott Hotel? So I can get points.
- [83:13]
Chelsea Masters
You know, why do I still get Starbucks on occasion despite the fact we have this killer machine over here that makes a solid cup of coffee.
- [83:21]
Eric
Right.
- [83:21]
Chelsea Masters
Well, Points.
- [83:22]
David T. Denny
Right.
- [83:23]
Eric
So it's like. And I think that it's engineered for consumer experience ignorance. They don't want you to know how the game's played. They just want it to be easy. And I think that we, we sacrifice so much for convenience and cost. And that's the thing that I don't think like that's the hurdle to get over is educating the consumer. Like your behaviors directly influence the direction our country is going. And I don't know, it is 506.
- [83:52]
David T. Denny
It's tough. It's scary, man. You ended us on a scary note.
- [83:56]
Eric
Try to end this on a positive note.
- [83:58]
David T. Denny
Well, it's still. So it's. Restaurant industry is still the best first job in America. Yeah. Right. Without. Without a doubt. Yeah. It's like playing on team sports. Like you just learn so much.
- [84:09]
Eric
Right.
- [84:10]
David T. Denny
And it's a great way to make a living when you're young. When you're young.
- [84:13]
Eric
Right.
- [84:15]
David T. Denny
So. So that's good. I'm. If, if I wasn't so on March 16, 2020, I canceled all of our magazines subscriptions because I was certain we were going to go out of business because of COVID Because that was the day they shut all the restaurants down. We're still here. Right. The restaurant industry is still strong. I mean closures get clicks, dude. And so what do we, what do we notice more of news articles that, that focus on restaurant closers. Oh, this restaurant closed after so many years. This restaurant closed after, after 10 years. You know. You know what 10 years was? Their lease ended, man. Yeah. Like they just didn't renew their lease. Yeah.
- [84:53]
Eric
Like their rent went up.
- [84:54]
David T. Denny
They didn't fail then. They didn't necessarily.
- [84:57]
Eric
They found a better deal.
- [84:58]
David T. Denny
They just stopped. Yeah. You know. Right. Like they maybe go back. Go Back in to sell shoes.
- [85:02]
Eric
Ironically, that's when my parents closed. Their restaurant was after 10 years because their lease was up and there was a new. They had a plan to move into a better location on a corner in the middle of like, like Main and Maine. And the, the woman who owned that property, Carmen, owned Carmen's Fried chicken for like 70 years. She was like 90 something. And she said to my parents when they came to terms, like verbal agreement, I can rest in peace. And then the next day my parents went to go meet up with her and she was dead. And the. That and the deal never went through because she passed in the paperwork, never got signed. And I'm not sorry. This is probably. We love Carmen. You know, you're a staple in our community. Carmen's Fried Chicken. Everyone loved you. And we were like, it is sad. And I don't mean to make light of that, but they. When you're an independent restaurant owner, you live day to day. They didn't have a week to find a new location, so that's when the restaurant ended. To your point.
- [86:00]
Chelsea Masters
Yeah, but it, I mean, to David's point, it's not a failure, it's a run.
- [86:04]
David T. Denny
Right, Right.
- [86:05]
Chelsea Masters
And now you have the idea for the next thing you want to do.
- [86:08]
Eric
Yeah.
- [86:08]
David T. Denny
Yeah. So I, I think the next 20 years in restaurants, I think we're going to see a lot more focus on nutrition. I think we're going to see a lot more focus on. Again, I think experience is still going to be really important, but I think culture. Culture is what kills transformation economy. Culture is going to do it. And so.
- [86:26]
Chelsea Masters
And social connectivity. Yeah, I think is going to be an upand cominging thing.
- [86:31]
David T. Denny
Yeah. And so.
- [86:31]
Eric
Well, that is directly tied to, well, our health, wellness. It's. Those two are entwined.
- [86:37]
David T. Denny
So, I mean, I, we wouldn't be doing this if we weren't bullish on the industry. Yeah. I, I'm not just doing this job out of hope, not just hoping that it works out every day. Like, it's, it's great. It's a great industry. And what we love to do is help people succeed.
- [86:53]
Eric
Yeah.
- [86:53]
David T. Denny
You know, and I think the closures, like the failures that we have seen probably in, in the 20 years that this firm's been around are few and far between. Yeah. Right. Sometimes people decide to do something else, but the, but the ones that genuinely failed are, are very few. Yeah.
- [87:10]
Eric
Well, Chelsea, David, you guys are. Are smart people. I want to learn more about these topics that we touched on today. With that said, who comes to mind Are there people out there, leaders in this space that are sharing information?
- [87:26]
David T. Denny
Yeah.
- [87:26]
Eric
And awakening.
- [87:27]
David T. Denny
So there's a guy you need to talk to for sure, named Jeffrey Yarbrough. And so Jeffrey started and actually started in the fashion industry. And then he became sort of one of the preeminent nightclub guys in the 80s here, locally owned restaurants. I mean, built them, closed them. Right. Like, built him up, went bankrupt. He opened a restaurant in downtown Houston, and then they decided they were going to build the light rail right in front of his restaurant when they got the super bowl. And so they tore the street up and no one could get there. Went bankrupt. And he had just built it. So, like, stuff happens, right? Yeah. He's a real estate broker by training. So he is one of those tenants, side restaurant real estate brokers who also has experience. And guess what? Now he's back in the restaurant business. And he owns multiple different. He owns, you know, a beer bar and a burger joint and some other stuff. And that is anybody. There's almost nobody whose life's work is hospitality like this guy. And he's a great storyteller, and I think he would really benefit. Nobody comes away from a Jeffrey encounter without learning something.
- [88:39]
Eric
And I would love to reconnect with him because he's been a guest on the show, but I think it would be really cool to dive into just like we did today. Like, there was no plan coming here today. David subscribes to my newsletter. He saw that I was coming to town. He said, let's grab a drink. And I said, let's grab a drink and talk into a microphone. And we made that happen. Chelsea, I'm so happy that you're able to join us, but I want to do more conversations like this where I go back to my network across the country of thoughts, leaders of specialists, and say, like, how do we start let letting the dog wag its own tail again? Like, how do we put the power back into the hands of the independence? Because I think that just people, independent restaurant operators generally just don't know how the big picture all fits together. And I think we have to get out of our four walls. We have to look beyond the horizon, and we have to start thinking, like, where do we want to be and how do we collectively communicate and make that happen? Because we have the numbers.
- [89:35]
David T. Denny
Yeah. Find a way to get to the table. Yeah.
- [89:36]
Eric
This has been a lot of fun. Any final thoughts, Chelsea?
- [89:39]
Chelsea Masters
Oh, no, I'm good.
- [89:41]
Eric
Well, how can we connect with the two of you if we enjoy today's conversation? You are lawyers. You aren't limited to Texas.
- [89:48]
David T. Denny
No, we. We are not. We. There are some restrictions on what we do in other states. I'm licensed in Texas and Tennessee. Okay, but. But www.foodbevlaw.com like food beverage law, right? Foodbev. Law.com is the way to find us. Yep.
- [90:05]
Eric
And I'd love to get you to join us in conversation at Restaurant unstoppable network for 30 minutes. If you guys ever want to, we'll use this episode to promote it. Kind of put you on the spot there.
- [90:14]
David T. Denny
Okay, I guess.
- [90:14]
Eric
You did well. This is where I say thank you so much. There is no questioning. You are unstable, unstoppable. Cheers. You got nothing for me? You don't want to say anything? You're going to make fun of me for saying you're unstoppable?
- [90:28]
David T. Denny
No, no, I thought we were.
- [90:29]
Eric
Shut it there. You're fine. There's another episode wrapped up here at Restaurant Unstoppable. Special thanks to our guest today, David T. Denny and Chelsea Masters, experts at law. You could call them lawyers. This was a lot of fun. I always enjoyed connecting with David, and now I got to connect with his business partner, Chelsea. And these folks are awesome. I really enjoyed today's conversation. I hope you did too. And if you want to connect with David and Chelsea, they're gonna be joining us live for coffee with Eric on April 27 4/27. This will be a great conversation. If you have any legal questions you want to ask or just kick the can around with these two, they're really smart. The conversation is always good. Would love to have you join. And the whole idea behind Restaurant Stoppable Network is to connect to you with the folks I'm getting on the show. We're. We. We are literally building a network of badass restaurant tours and the specialists that they're going to. Denny, David T. Denny and Chelsea Masters. These are specialists. They are referred to me organically. We have a whole network of these organically referred word of mouth individuals. We're building a meritocracy and we want you to be a part of it. If you want to join this conversation, head over to restaurant stoppable.com CWE will get you access to this conversation, but we would love for you to join this and all future conversations by heading over to Restaurant Unstoppable Live. We'll see you there.