1278: Dan Simons, co-founder of Founding Farmers Restaurant Group

Summary

Restaurant Unstoppable Ep. 1278 – Dan Simons, Co-founder of Founding Farmers Restaurant Group

Date: June 22, 2026
Host: Eric Cacciatore
Guest: Dan Simons

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Episode Overview

This episode is a deep dive into the entrepreneurial journey, values, and systemic strategies of Dan Simons, co-founder of the Founding Farmers Restaurant Group. Eric and Dan explore what it takes to build and sustain a mission-driven, people-first restaurant group while scaling in a challenging industry. Dan shares candid lessons from early failures, the necessity of intentional culture, and the innovative business model integrating family farms with restaurant operations. The conversation also touches on conscious capitalism, mental health, employee empowerment, and the next wave of AI-driven restaurant technology.

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Key Discussion Points & Insights

1. Guiding Principles and Values

• Intentional Use of Time
  • Quote: "There's 168 hours in a week. Ideally, I sleep for 56 of them. That gives me 112 hours. And if used intentionally week after week after week, 112 hours is a tremendous amount of time with which to create value and create a life with no regrets..." – Dan (04:05)
• Human Connection
  • Relationships and time with people are paramount. Management is fundamentally about relationships and emotional awareness.

2. Business Model and Organizational Snapshot

• Founding Farmers Stats:
  • 8 locations, $100 million sales, 1600 employees, full-service and catering divisions
  • Vertical integration: their own distillery, bakehouse, catering company, production team
  • Average per-unit sales: $13 million; busiest unit: $20 million; average seat count: ~260
  • Efficient operations: aiming to move prime costs from 55% to 50% (09:17)

3. Defining Company Culture

• Measuring Culture:
  • Via employee surveys and AI-powered sentiment analysis of customer reviews
  • Quote: "When the guest writes something like, 'I just love the way the server made me feel,' what I know is the server only made the guest feel loved if the server felt loved." – Dan (11:26)
• Generosity & Gratitude: Hospitality as a two-way street between hosts and guests

4. Career Evolution and Mentorship

• Early Career:
  • Started as a bar back, bartended at TGI Fridays – recognized for talent and moved into management
  • Importance of professional, positive restaurant environments over toxic kitchen stereotypes
• Mentorship:
  • Tony Grillo (TGI Fridays GM) – taught Dan to trust himself and focus on personal growth through positive reinforcement
  • Quote: "He made me feel like I mattered... whatever I struggled with, I could learn and get better at." – Dan (18:44)
• Path through Cheesecake Factory:
  • Involved in building the management training program, which became foundational for his systems-focused approach (28:28)

5. The Leap to Entrepreneurship & Lessons from Failure

• Jump from Corporate to Start-Up:
  • Experience at Eatsy’s (Phil Romano's startup): exposure to retail, bakery, CPG, and market-category management broader than restaurants
• Critical Failure:
  • First owned restaurant (Coopies) failed; main lessons:
    • Don’t impose what you think customers “should” want—market fit is everything
    • The danger of ignoring financial indicators and not recognizing the point of no return
    • Quote: “We tried to open a brand and a concept in a place where the customer didn’t want it.” – Dan (55:15)

6. Conscious Partnerships & Vertical Integration

• Partnership with North Dakota Farmers Union:
  • Mission: support family farms, educate consumers, and promote conscious capitalism
  • Created Founding Farmers with $5 million investment in 2008, after both their own and the farmers’ restaurant attempts initially failed
  • Built a unique restaurant-ownership and supply-chain model prioritizing farmers and transparency
  • Quote: “They had a very clear mission of wanting to be able to spread the message to Americans the difference between a family farmer and a corporate farming producer.” – Dan (64:13)

7. Growth, Scaling, and Maintaining Values

• Slow & Steady Scaling:
  • Deliberate pace to preserve culture and quality (“siblings not twins” concept for locations)
  • Expansion built on maintaining core values, “Constitution” document, and managing sustainable growth over fast, equity-driven scaling (43:13–44:00)
• Challenges at Scale:
  • Scaling brings loss of flexibility and intimacy; intentional language (“we,” “us”) is used to reinforce collective culture beyond Dunbar’s number (25:14–26:35)
  • Three simultaneous openings (“the triplets”) were the hardest test for the company—lack of bench depth became evident (96:09)
• Evolution Post-Challenges:
  • Learned the necessity of talent density, support structures, and retention; managing partners in each location with actual profit sharing, no regional managers (102:11)

8. Profit Sharing, Empowerment, and Organization

• Profit Sharing over Equity:
  • Belief that profit sharing aligns better with the realities of restaurant economics for most managers/operators (117:41)
  • Open-book management: operators understand and influence the full P&L, reinforcing “ownership” without equity

9. AI and Tech Stack in Operations

• Tech stack includes:
  • OpenTable (reservations, CRM, loyalty), Mailchimp, Toast POS, ME's (menu/recipe), Hotschedules, Axial Shift (employee comms), Microsoft/SharePoint, Hermetic AI (guest comms)
• Innovative Use of AI:
  • AI task force uses Claude CoWork for review aggregation, sentiment analysis, report generation, and other workflow automation
  • Quote: “Claude can, on a schedule, pull down reviews, distill them, create data visualizations… The dashboard arrives with none of my humans doing the work.” – Dan (126:45)
• AI is leveraged for both guest-facing applications (Hermetic AI, phone/chat) and internal process automation

10. Conscious Capitalism, Mental Health, and Self-Leadership

• Self-leadership is foundational:
  • “If you can’t lead yourself, you have no business trying to lead anybody else.” – Dan (107:15)
• Mental Health Openness:
  • Dan’s own therapy and vulnerability sets example for employees; authenticity is honesty, not weakness (113:51)
• Organizational Ethos:
  • Written “Constitution” guides values, culture, and ensures everyone’s empowered to hold each other, including leadership, to standards (48:43; 133:29)

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Notable Quotes & Memorable Moments

• On Time and Intentionality:
  "112 hours is a tremendous amount of time with which to create value and create a life with no regrets..." – Dan (04:05)
• On Being Seen:
  "You have to see more in people than they see in themselves and teach them how to see that aptitude in the mirror." – Dan (14:50)
• On Failure:
  "You can't try to give the customer something they don't want, even if you're certain you know better what's best for them." – Dan (54:05)
• On Company Constitution:
  "We intentionally called it the Constitution because we wanted it, the document itself, to be more powerful than either of us." – Dan (48:43)
• On Leadership:
  “If you can’t lead yourself, you have no business trying to lead anybody else.” – Dan (107:15)
• On Mental Health:
  “If you show your people that you’re allegedly superhuman, you’re a terrible leader. First of all, you’re lying… and you’re really setting them up to fail.” – Dan (113:00)
• On Partnership:
  “I just have no interest in winning alone. Sounds super lonely. I don't really like doing anything alone.” – Dan (60:38)
• On Scaling:
  “How much do you need? Like, at what point do you start sacrificing quality of relationships for quantity of money?...I'm just trying to do what I believe is right and natural for what our business...and frankly for what we're good enough.” – Dan (43:13)
• On AI:
  “Claude can… pull down reviews... distill them... [and send out a report] with none of my humans doing the work.” – Dan (126:45)

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Timestamps for Significant Segments

• 04:05 – Dan’s Mantra: Time and Intentionality
• 10:47 – Measuring Company Culture
• 13:59 – TGI Fridays and Mentorship
• 19:04 – Learning to Trust Yourself as a Leader
• 24:32 – Cheesecake Factory Lessons & Vision
• 29:02 – Outgrowing the GM Track, Building Training Programs
• 34:24 – Phil Romano & Expanding Beyond Restaurants
• 46:17 – Defining ‘Yuck’ Business Culture; Experience with Discrimination
• 48:43 – Writing the “Constitution”
• 54:04 – Lessons from Failure: Customer Fit
• 64:13 – North Dakota Farmers Union Partnership & Mission
• 96:09 – Scaling Pains: Opening the “Triplets”
• 102:11 – Lessons from Rapid Growth
• 107:15 – Self-Leadership & Starting With Self
• 113:00 – Mental Health, Therapy & Honest Leadership
• 117:32 – Profit Sharing vs. Equity
• 119:47 – Tech Stack Overview
• 125:11 – AI Task Force and Claude Integration

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Useful Takeaways for Restaurateurs

• Define core values early and in writing—democratize accountability.
• Scaling brings growing pains; intentional, values-driven growth can mitigate loss of identity.
• True partnership (with investors, staff, farmers) multiplies impact and resilience.
• Focus on cultural alignment in hiring and promotions, not just skills.
• Continuous learning, self-leadership, and mental health transparency drive high retention.
• Leverage AI and modern tech to reduce friction in operations, but don’t lose the human touch in hospitality.

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How to Connect with Dan Simons and Founding Farmers

• Website: foundingfarmers.com
• Dan’s LinkedIn & Instagram: Search “Dan Simons” for personal updates
• Podcast: Dan Simon Says & Founding DC (entrepreneurship focus)

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Final Wisdom from Dan Simons

1. Take care of yourself, so you can take care of those around you.
2. Nothing else matters but the people. (134:49–135:02)

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Recommended Further Listening:

• Kevin Boehm (Boka Group, Chicago)
• Will Guidara
• Aaron Silverman (DC)

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For more show notes, resources, and links, visit RestaurantUnstoppable.com.

Transcript

[A]

What up Unstoppables? Quick favor to ask before we hit play on today's episode and that is please follow and subscribe to this podcast. Nearly 70% of the people that listen to the show or view it do not subscribe or follow. And you owe it to yourself to do just that. Because if you do, when we get an amazing guest on the show that gets a lot of likes, a lot of shares, a lot of views, the algorithm is paying attention and it will push that episode to your feed so you'll get our best content. Not to mention it is absolutely free to you and it is the most impactful thing you can do to support this mission. Mission to inspire, empower and to transform the industry. And I can't do it alone. I need your support. Thank you in advance. 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 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 restaurant owners Are you still using ADP paychecks or indeed, 35,000 plus restaurants have already switched to Workstream, the all in one payroll, hiring and HR platform actually built for restaurants. 46 of the top 50 restaurant brands rely on Workstream to hire faster, stay compliant and run payroll in minutes across all their locations. Visit Workstream US/Unstoppable for three months free payroll. That's Workstream US S/Unstoppable. 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 888-779-5314. To get started with excitement. Allow me to introduce to you today's guest co founder of founding Farmers Restaurant Group, Dan Simons. My man. Dan, are you feeling unstoppable today?

[B]

I'm ready. I'm ready.

[A]

I'm so excited to be here. Really excited for just like I give myself an hour. You give yourself 12 hours before your interviews. Man, that is impressive. I don't know how you find the time to do 12 hours of research, but I really admire that. But in the one hour I gave myself to get familiar with you conscious capitalism employee well being, mental health, being a part of your community and being on the boards of multiple, multiple boards, being involved in your college, you know, there's, there's so many things that you're doing that just resonate with me and I can't wait to dive into it. Before that, I just have to give a quick shout out to U.S. foods. Thank you for making this introduction. You're the last of my DC interviews and they have not disappointed me. Everyone I've spoken to has been amazing. So thank you, U.S. foods. And before we dive into you are and how you got to where you are today, let's get that motivational inspirational ball rolling with a success quote or a mantra.

[B]

What do you offer us mantra wise? I go to there's 168 hours in a week. Ideally, I sleep for 56 of them. That gives me 112 hours. And if used intentionally week after week after week, 112hours is a tremendous amount of time with which to create value and create a life with no regrets and to do things that really line up with what matters to me. And that's, I think, is a guiding mantra that captures it.

[A]

Would you say intentionality with time is top on your list?

[B]

Top.

[A]

What's second on your list?

[B]

Human connection.

[A]

I was hoping you would say that. So time with specific people who you spend your time with is I think, probably the most important thing. If you master anything, it's that time management and relationship management and I'm ready

[B]

to be dead tomorrow. It might sound like a strange place to start a conversation, but it's the one thing we know for sure this thing is coming to an end.

[A]

Yeah.

[B]

So why not do things intentionally for as long as I'm lucky enough to be here?

[A]

I think that's a very great thing to be able to say and not weird at all. That's the goal, right? To be satisfied and great way to get this thing started. So before we dive into your story, just give us a snapshot. Eight total locations catering. Anything else that we should know about? In terms of what Founding Farmers is.

[B]

Sure. Full Service restaurant. We think of ourselves as probably upscale. Polished upscale. Upscale, casual. Something like that. Breakfast, lunch and dinner, open 365 days a year. Do about $100 million in sales. All rolled up. We have about 1600 employees. And in addition to the full service restaurants and the sister company, Full Service catering and events company, we also have our own distill. And then in house, we have our own bakery and production team as well.

[A]

So that bakery is where we located today, correct or no?

[B]

Originally. So we're at Farmers Fishers Bakers in Georgetown today. Originally, when we just had two restaurants, our bakery was in this restaurant.

[A]

Got it.

[B]

Then as we've grown, we've co. We've moved that bakery twice, actually.

[A]

So you have a commissary today?

[B]

We do.

[A]

Got it. So on top of the eight locations, you have a commissary. Your distillery is one of the locations, is it not?

[B]

Yes. The distilleries inside. Founding Farmers and Distillers, which is in Chinatown in D.C. got it.

[A]

And you have one other concept that is a Founding Fathers, but seems conceptually a little different in Prince of Russia. Is it?

[B]

I. I like that. Prince of Russia. I'm going to reframe that. To King of Prussia. No, no, but Prince of Russia. I like it. I see.

[A]

You got Russia. I got. I'm dyslexic. I should mention that.

[B]

That's all good.

[A]

Clear words get jumbled up in my brain.

[B]

I knew exactly what you.

[A]

Thank you for correcting me.

[B]

King of Prussia, Pennsylvania, just outside of Philly. And we do have a Founding Farmers located there.

[A]

And that is more of a lifestyle concept. I saw that. Are you taking a different approach with that or is it that just someone else's words?

[B]

So that's. I would say someone else's words. It is a Founding Farmers, but we from day one didn't want to build a chain. So while we use the same brand name or sort of derivations prefix suffix around Founding Farmers, each restaurant is designed. Totally unique design. We change the menu in every restaurant. The restaurants have. So there's like the shared DNA. We think of the restaurants as siblings as opposed to twins.

[A]

Yeah, I love that. Are you familiar with Angie's in Arizona?

[B]

No.

[A]

So they started with Angie's Lobster, then they went to Angie's Prime. Now they have some other thing, but it's the same Thing where they have an overarching brand, Angie's, so you can think like quality brand, recognize the brand, but then they do one thing really well underneath that and they vertically integrate the supply chain for all those one things. So there's some similarities too because you're also using vertical integration with your restaurants because you sell all of your distilled alcohol throughout your restaurants, correct?

[B]

That's right. So we definitely, we're inspired to pursue the vertical integration because our partner, they own more of the company than I do, is the North Dakota Farmers Union.

[A]

Yeah, that's probably the biggest element of the vertical integration.

[B]

And so with them we own an 18 wheeler. We're adding more trucks to that fleet and we can bring family farm produced product straight in, skip out the middleman, shorten the supply chain, bring those products straight into our own distribution.

[A]

Can't wait to get into that. I'm sure we will. So over 100 million sales, eight locations, catering. What is your per unit average in terms of sale?

[B]

Probably 13 million. But. But when there's only 8 average can be deceiving. So our slowest restaurant is probably 9 million.

[A]

Still not horrible.

[B]

And our busiest restaurant is 20 million

[A]

average seats across all locations?

[B]

260.

[A]

What about the most well performing location? How many seats?

[B]

265.

[A]

So it's just, it's always full.

[B]

It's always full. You know, it's ten turns. Monster.

[A]

What are you averaging for your prime cost? Their cost of goods and labor?

[B]

Yeah. So 55. But that's really, you know, really, I'm not 55 is just not okay anymore.

[A]

Yeah.

[B]

So we're on the way to 50 with our prime.

[A]

I'm surprised because of how much labor you have with everything from scratch. Right. I was like, if they're under 60, I'll be really surprised. So that the fact that you're doing what you're doing and I'm sure we'll figure out how you're finding that, that moving the needle on those points. But I think that's been, I mean that's a lot better than a lot of people today.

[B]

It's a, it's predicated on high volume and it's predicated on intense commitment to systems and efficiency of the way the ingredients flow through the operation. Everything's a primary outlet, secondary, tertiary, and so that all folds in together.

[A]

And in terms of catering, is that lumped into, I mean what is your split on catering? What does that contribute to the total sales?

[B]

We started that company about three years ago, so it'll do probably 6 to 7 million this year. And that's in that 100 million.

[A]

I think we got everything we need to get back into where it all makes sense to start sharing your story. So where does it make sense? Take us there?

[B]

Well, my favorite thing to talk about is always the people. And I appreciate, you know, in your introduction, those are some kind words. I do work on a lot of different things that I'm passionate about. And the only reason I'm able to do that is I have an amazing business partner. Our team is incredible. And so it affords me the luxury to really play the long game at this point as a restaurateur. And our company is built not around quarterly returns. It's built in long term value creation. And for us, we're really measuring culture as part of that value creation. We're measuring what we buy from the farmer supply chain as part of that value creation.

[A]

How do you measure culture?

[B]

You do it in tangible ways like employee surveys. You do it in less direct ways like the sentiment that gets expressed in reviews. So I really look for and measure and with the AI tools and everything now you can really do the sentiment analysis on all the reviews that are out there. We get a ton of reviews. And when I am reading the language and the words that I know are an outcome of great culture, when the guest writes something like, I just love the way the server made me feel, what I know is the server only made the guest feel loved if the server felt loved.

[A]

Yeah. It's a two way street. I think we forget that the root of hospitality is it means host and guest. It's not a one way street.

[B]

And for me it means to give love and to receive love.

[A]

Yeah.

[B]

And to do both of those things functionally with the team is what builds the team. And then the guests feel that. And so we found, we have found several really effective ways to measure culture.

[A]

Generosity and gratitude. Yeah. Awesome. So you that you're kind of unpackaging. You know, we got into why or how you measure culture, but for you it's about the relationships and the people you surround yourself with. But when did you know restaurants was your path?

[B]

Probably freshman year in college.

[A]

Okay.

[B]

I was started off as a bar back, worked the door at college bar and really quickly it became a replacement for sports. For me, I really missed my high school sports. Tried to wrestle in college D1 program. I just wasn't good enough. And I missed the camaraderie. I missed the challenge. I missed the apprehension before a big match was the same thing as the apprehension Before a big shift. And so by the end of my freshman year, I had really replaced that kind of competitive sport with working in restaurants. And I started to think, wow, this is awesome. I didn't certainly have any vision at that point, like, oh, this is what I'm gonna do. I was in college. I was a business major. I thought at some point I would, like, grow up and get a real job. And I just apparently never grew up and never got a real job.

[A]

So it was a part of being a part of something that a lot of people were like the team mentality of going into something. The rush. Was there a moment that you can think of where you're just like that? It was clear, like, I want to do this the rest of my life.

[B]

No.

[A]

Yeah.

[B]

No.

[A]

Well, you were studying business, right?

[B]

At this time, I was studying business as an undergrad. And, you know, fast forward to after four years of college, towards the end of that, I was a bartender at TGI Fridays. And this was 1992, so being a Friday's bartender was pretty cool back then for the younger generation.

[A]

Great company to be a part of, especially in 1992. They're popping off.

[B]

It was, you know, systems driven, really popular, banging, busy. And my regional manager came in and sat down with me and said, hey, have you thought about this as a career? They ended up making me a job offer to go into management upon graduation. And I went through the MIT program. They flew me to Dallas. We spent time down there.

[A]

What's the MIT program?

[B]

Manager and training. And highly structured between classroom, on the shift, academic, nowhere to hide that we were learning the material, absorbing the culture, and really learning the practice of management and the systems from inventory to all of it. And so that's what gave me my foundation as a restaurant manager.

[A]

So this is a huge point of evolution for you. From I love doing this work to somebody has seen me. And I think that is the most important thing that we can do as managers, is see people who are good at this and say, you're good at this. We might not know we're good at it until somebody brings that to our consciousness of, hey, oh, you see me for this thing that I do. That's a reinforced habit. Right? Or that's a behavior that's. You're reinforcing that behavior. And I think it's that low road of constant impressions of people see that I'm good at this. Maybe this is what I'm supposed to do.

[B]

Eric, you're right. And it's interesting. Nobody has reflected that back to me about that phase, but I see that we do that now as leaders, and we're always talking about this with our staff. You have to see more in people than they see in themselves and teach them how to see that aptitude in the mirror. And, and that's how we get our. Most. People don't grow up saying, like, I want to be a chef, I want to be a restaurant manager. I mean, this sort of like non glamorous, gritty work, as you know. And so. But every human likes to be seen. Every human likes to have their effort validated. And all of a sudden, when restaurants become that validator. I also was always in professional restaurant environments. So our industry gets a bad rap. But I came up on what I would call the corporate and professional side of the industry. Nobody was yelling and screaming at each other. Nobody was throwing pants. That's not what I learned in the business. I learned how to do math. I learned how to count. I learned how to cook. You know, I learned how to the science of it. I learned how to work as a team.

[A]

Yeah. I mean, like Danny Meyer would make the argument that you're, you're either 51% or, or you're not. Right. You're either on that side of being, you know, you're extroverted, you're empathetic. Like, you're, you're excited to be around people. You care, you, you actually care what people think and how you make people feel like you. It's harder to train that. Right. But if you have it, what you're usually missing is all the science of the business on the back end. And I think the path you took to go into the corporate world, starting with, with TGI Friday and then going to the Cheesecake Factory, which we haven't mentioned yet, from 1992 to 2000 or 1996. 6. Right. Or was it in the early. No. Then you went to Etsy, right?

[B]

Yeah.

[A]

And you were there until the early 2000s. All corporations.

[B]

That's right, all corporations. And so, you know, Fridays was pretty big when I was there, and I actually got to see Fridays, in my opinion, lose its way. When I started, everything was cooked from scratch.

[A]

Where were they when you. When you started? How many locations?

[B]

They must add 600 plus by the early 90s, I would think so because there was already international growth. When I started at Fridays in 1989, we made everything from scratch. By the time I Left Fridays in 94, we weren't making anything from scratch. So I saw the food disappear. Food production outsourced. Everything Then I went to Cheesecake, and when I started at Cheesecake, there were six restaurants. So it was a little like. I think back, it's, like, smaller than my company is now.

[A]

That's wild.

[B]

And I got to see that grow. And I think when I left, there were probably 20. Then I went to Etsy's in Texas, which was backed by Brinker. But I got to do a startup with a corporate parent, which is. It is like, what a blessing to be able to do that startup without financial stress. A startup with all of those resources and expertise. But yet, starting at store one, that was pretty cool.

[A]

So before we move on from TGI Fridays, what was the. The biggest way you elevated yourself?

[B]

You.

[A]

You transformed, you grew during that time.

[B]

I just got to give credit to my mentors. You know, I was just a kid. I knew how to work hard. I knew how to listen, I knew how to learn. And I loved the grind. Like, I still. I would say to people, I kind of still say, I can't believe I get paid to do this. Like, I loved going to work. And what my mentors did was they harnessed that and pointed me in the right direction. You know, I was immature. I probably focused too much on the girls. There was, you know, I was whatever, 21 or 22 years old, but I had amazing mentors.

[A]

Is there one mentor, one face you're seeing right now?

[B]

Tony Grillo, this guy, he was a gm. So many people in the industry know Tony. He was a GM when I was a, you know, bartender and a young manager and just took me under his wing. We're still friends today.

[A]

How did Tony make you feel? Feel

[B]

like I mattered? Like he would want me in a, like, starting position, like I could help the team win that, that whatever I struggled with, I could learn and get better at.

[A]

He.

[B]

He really. Those are the feelings that come to mind.

[A]

What was the biggest thing he taught you?

[B]

Think to trust myself. Don't be scared. You know, those Fridays restaurant, you know, we were doing whatever big volume back then, $150,000 a week. You know, think about it. In the 90s, how much was that? And he. And I was intimidated at first by the kitchen. You know, work, an expo on a Friday night. And Tony was just. He reminded me of my wrestling coach from high school. He's like, we got this.

[A]

Yeah.

[B]

And it was. It was, you got this. But it was also, we got this. And helped really build that confidence in me.

[A]

So you said, and you're kind of reinforcing this now, that he helped you trust yourself. How do you get somebody to trust,

[B]

to help them trust themselves, provide evidence to them of just how many good decisions they actually make. People spend a lot of their time criticizing themselves, focusing on the negative. Like mistakes are outsized in our mind, but it's evolution. That's right. That's right. It's how we survive. And so I think as leaders, we can just show people, look at all the really good stuff. You did that. Yeah, fine. You just dropped that plate. So what?

[A]

Also, look how far you've come. I think as entrepreneurs we're always looking to the horizon because where we are isn't where we want to be. We're never, we're always what's the next thing? What's the next thing? And we forget to stop and look back like, holy, I did all that. 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 moxy platform which doesn't just make it easy to place your US Foods order, but it uses AI powered technology to help you 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 expect more to learn how to become a US Foods customer again. That's usfoods.com expect more like and I'm

[B]

not natively stop and celebrate what I have learned over the years is but I'm happy to celebrate others and that's part of being noticed. So I'm good with taking a moment to acknowledge what someone else has done. I don't really do it for myself but I don't need it because I have what you just said which is I'm just. I'm on to the next. I'm on to the future. What's at the horizon? Yeah, you know.

[A]

So why did you leave TGI Friday?

[B]

I got an opportunity to join cheesecake

[A]

and where was you said six locations. How did you know that that was a popping off spot? They started on the or what do they. They started in this area west coast la. Okay. Yeah, that's right. I've had a lot of cheesecake alum

[B]

on the show, first one was in Beverly Hills and then Marina del Rey, Redondo Beach. The opportunity that I had there. So a recruiter. I mean, this was back in the days. Like, I found a recruiter in Nation's restaurant news print ad and called them on the telephone. And this is pre, like, any relevance to the Internet. And I actually only wanted to work in Europe. That was my plan. I'd studied international business in school. My parents from Europe. And I'd said to the recruiter, I'm looking for, like, some American brands that operate in Europe, so I can. I can be useful as an American, but I want to go live over there and work over there. And he said, fine, I have opportunities for you, but there's one guy I want you to talk to in the US Little company. It's called the Cheesecake Factory. The guy's name is Mike Vakurovich. I'm like, the Cheesecake Factory. I kind of want to work at a factory.

[A]

That name sounds familiar.

[B]

Mike is amazing. He is my business partner today. And so I got on the phone with him. I remember it to this day. It was a two and a half hour phone interview. And this is like, you know, that must have been. I started there. So, you know, this is like, it was probably a cordless phone, but this is the days of telephones. And Mike's 15 years older than I am. And we just clicked on the phone and I thought, oh, this is a guy I want to work for. He was talking about culture, and he was talking about the math of the P and L, and he was talking about the people, and he was talking about the food, and he was. And they loved hiring people from Fridays. So Cheesecake really aspired to be like Fridays.

[A]

They were. Yeah, they were able to hold on to their culture for a long time. Fridays. Part of that, I'm sure, was because of. They put people on growth tracks. You're a beautiful example of that. They identify people who have it and say, you can get here and here's exactly how, and we're gonna put you on the road.

[B]

They put us on the road. They kept people for a long time. I mean, Tony Grillo, who I was referring to earlier, ended up owning a whole group of TGI Fridays. I think he probably still owns a couple. And so the great companies, they. They keep people in the right ways for the right reasons.

[A]

So you were talking about Mike V. Your current business partner. Your first point of contact was applying to the Cheesecake Factory. Everything he was saying was resonating with you. Culture but what was he saying? Like, that's like, all baseline stuff. Like, what was the. At the core of what he was saying that really resonated with you?

[B]

The opportunity that he was laying out the volume they were doing, the growth plans. The company had just gone public. I understood enough to understand that companies that are going to grow need funding.

[A]

And they were public at six locations. Yeah. Wow.

[B]

Yeah, it was a different day. It was a different day back then.

[A]

But they were also doing crazy volume.

[B]

Crazy volume.

[A]

Yeah. So what was like at that point,

[B]

what was 10 million was probably the average. Yeah.

[A]

With six locations. So, yeah, you're doing all right. I think what's going through my mind as I hear you talk is the power of vision. So he got you on board with the vision. This is where we're going. He's.

[B]

That's right. And the combo of this is where we're going and the pronoun of we think that in our conversation, he. He wasn't selling me what his vision was for himself. He wasn't telling me about the founder, David Overton, and what David's vision was for himself, himself. He was saying, this is the vision. And we together. You know, you can join us. And words like we and us and vision and future and opportunity. Pretty compelling.

[A]

Yeah. I'm a huge geek over Dunbar's number. Are you familiar with Dunbar's number? I'm trying to make everyone familiar with Dunbar's number. I won't get into the weeds of what Dunbar's number is, but there's a point that 150 relationships, which is like the average amount of relationships a human can handle. You probably heard that before, Right? So that's Dunbar's number, where beyond 150, it goes from us versus us and we or me us to them. So intentionally using that language beyond 150 is a good psychological trick to keep the culture going beyond that, because beyond that number of 150, we just can't keep it all straight in our heads. And like, fractions start. Like lead. Like fraction of leadership starts. So using that language intentionally can be a powerful tool.

[B]

And as we've grown, you know, when I think about what does it mean to have 1600 employees? It's just one plus one plus one. It's 1600 individuals. And so it does take language and intentionality to make sure that we bring it together as a collective, but that we still acknowledge and humanize and try to care for the individuals. Because everyone has their own life experience going on, we have to create some overlap so that their vision for their life is beneficial when they're at work. Right. Otherwise you grow apart and people leave.

[A]

You gotta make sure it's not just lip service, but the words actually, you fall through. Yeah. Right. So you were there from 1994 to 92,000.

[B]

97. 97. 97.

[A]

3 years. Where did Cheesecake go during your tenure there?

[B]

So, and it was probably. It was like, it was probably four years, depending on how that. I think there were 18 restaurants when I left. Okay, but where did.

[A]

What was your growth there within that organization?

[B]

So I started as a manager, you know, manager agm. And then I moved from OPS into. I was kind of the. One of the Micro Mike V. My partner now plucked me out. He's like, look, you could be a GM or you could build the management training program. And I said, I want to build the training program. I loved the training.

[A]

Why did he pin you as the person for that job?

[B]

I was already showing, I think, an aptitude to do the OPS training on Expo on just. I had really taken what I had learned at Fridays and brought that structured learning, structured measurement and implementation. Because when I got to Cheesecake, it was the wild, wild West. Things weren't really written down and it wasn't clear and I was. I'd come from Fridays where everything was written down. So I think I brought that when I was there.

[A]

So you had the experience, the perspective inside look to a corporation like Fridays, and you could take that into the Cheesecake Factory. Plus, I'm assuming that you had. You gravitated towards implementer type work.

[B]

I'm an operator.

[A]

Yeah.

[B]

So you gotta. You gotta be able to say how to do the thing. You gotta be able to write that thing down, and then you gotta be able to do the thing, and then you'll be able to teach people to do the thing so that you can go do the next thing, figure it out, write it down, pass it on.

[A]

So why was this path better for you than being a manager? What was Cheesecake Factory missing if you had only become a manager?

[B]

I was. And the reason that I ended up leaving, I could already see that I might get a little bored because as the company was growing and we were starting to really systematize and document the cheesecake, it started to feel like it needed to become corporate. And that system is what a company must have. But that can also start to shrink down any of the entrepreneurial thing, hey, look, this is now figured out. Build it, put it in stone. I was part of writing that foundational stuff, but I Started to think. I remember I talked to David Overton when I was leaving, and he said, look, we're going to create new. Because I said, I think I might. I'm worried I'm going to get a little bored. And he said, look, we're going to create a new brand. There's exciting things to do. But really, Mike V. Had left. And that was my relationship.

[A]

Yeah, people don't leave. Leave concepts, they leave managers.

[B]

That's right.

[A]

Also follow.

[B]

And they follow managers.

[A]

Yeah, 100%. I'm happy you brought up the idea of as you scale, you get more. You have to get more rigid. And within that rigidity, people. It's harder for the people that are a part of that to contribute in a certain way. So I was just talking to Ed, your. I think, the manager. Manager. Yeah, man. I was doing a little research, and I'm like, what do you. How long you been here? Seven years. That's a good sign. I was like, what do you. What do you like about working here? And he said that if there's something, a way to do something better and I can see it, we can do something about it. And I feel seen and as you scale that those opportunities come fewer and far in between because that rolling out that change across hundreds, if not thousands of locations, you can't do it. And it has to stay consistent. So what are your thoughts on that statement?

[B]

The balance here is knowing that actually things can always be better. So the challenge that I say, when someone says, well, I'd like to be able to contribute more, my response is, great, be smarter. Your ideas actually have to be better than the status quo. Change for change's sake. So you have a different idea of doing it. But if the outcome's just going to be different but not necessarily better, why should we change? And so we're able to have those sorts of direct conversations with our people again. We have a culture of trust that makes that sort of straight talk permissible. And we end up keeping really talented people who want to not just connect the dots that have already been drawn out for them every day. They want to elevate, but they understand it's not a party one. Yeah. Got to be able to systematize that idea. Have you measured it? Have you tested it? Are you sure? Can you prove it? Can you put it in writing? Can you show it to me? Okay, great. It's good enough. We have the evidence. Great. Let's roll it out.

[A]

Yeah, I love that. So you saw that you could be getting bored with Cheesecake Factory. So ultimately you want to move on to newer, exciting things. But how did you grow? Before we roll off a Cheesecake Factory, how did you come out of that a better man?

[B]

Again, I go to mentorship. This one is a mentor from afar. But I really became a disciple of Stephen Covey's work. And actually a college professor had said, you need to read this book, 7 Habits of Highly Effective People. I didn't read it like a lot of young people, like, good advice is

[A]

given, but if it was an audiobook, you would have read it.

[B]

But that was before audiobooks exist. That's right. So in my early 20s as a manager, I became an absolute disciple of that. I went to some of the Stephen Covey seminars, leadership development, using his habits and practices. And that became my language and my mantra and learning to look in the mirror, hold myself accountable, self assess and self correct and understanding that criticism is the biggest gift someone can give me. It's not to be defended against, it's to be absorbed.

[A]

Why?

[B]

It's the only way really to grow. So why pro athletes watch game tape.

[A]

It makes you more aware.

[B]

And it's our blind spots that hold us back. So you can't fix it if you don't know it's a problem. And especially if you have the confidence. You know, people tend to like their own ideas and presume they're pretty good. Yeah, except some of our ideas suck. And there's lots of stuff we're not good at. We just need to be told right

[A]

back to why it's so important to tell somebody when they're doing something. Well, again, it's like that self awareness, it's reinforcing the good behavior, the good, the thing you're good at. But also we need to reinforce the things we're not good at. So we know that maybe that's not my lane, or maybe I could be doing it better, or maybe I'm just more self aware now. And they say self awareness is the peak of emotional intelligence. Right. So like we're, we always have to

[B]

be looking for that feedback and none of us can be perfectly self aware. It's just not a thing. Right. That's why these expressions like a bird's eye view and be reflective and we have blind spots, so we need help with it, but it is up to us to engage that help and inspire people to want to give us, you know, if you don't accept criticism, people just stop giving it to you.

[A]

Yeah, I'm loving the conversation, but we have a big career to unpackage And I feel like I need to move it forward to where you start getting to, like, the more entrepreneurial side. Like, I'm assuming the entrepreneurial bug hit you when you were with ET and

[B]

at ETs, you know, and again, so much of career and life is luck or good fortune. Opportunity presents itself. So Etsy's based in Dallas, created by Phil Romano, prolific, you know, restaurateur, did all sorts of stuff from Fuddruck Owners to Macaroni Grill. You know, the guy's remarkable. And it took me from being a restaurant person, you know, if that's one slice of the food and beverage pie is restaurants. And it taught me fresh food retail, it taught me bakery, it taught me catering. And I. I just didn't know anything about fresh food retail. And it just. I learned so much more. And that really expanded my mind and lit me up entrepreneurially that there's so much more to this than just restaurants,

[A]

specifically the retail catering side of things,

[B]

the retail catering side. And just doing this, you know, Eatsy's is part restaurant, part part market. Home meal replacement was the phrase at the time. And Phil Romano, I think, really pioneered that phrase. And so I, you know, I didn't know what category management was. That wasn't. That's not a word that restaurant managers used. But wine managers in retail, they know what category management is. And so it's just the difference between cost and margin. Same things, just depends how you look at the math. And Eatsy's, you know, I learned how to run a coffee bar. I understood what that meant. I understood what this consumer package. I didn't know what cpg. I didn't even know the acronym cpg. Oh, what is consumer packaged goods? Oh, what are these brands? What's the fancy food show in New York? As a restaurant guy, I never would have gone to that. So those are ways that opened my eyes.

[A]

Got it. What was it about this experience that you knew was the right next step for you? Like, where. Where, like, did you have a vision for yourself at the end of your tenure at the Cheesecake Factory? What was the vision for you?

[B]

I was definitely, like, working on business plans by that point for myself, thinking, oh, I could do my own thing.

[A]

The bug has bit.

[B]

Yes.

[A]

You want to open a restaurant?

[B]

I want to open my own place.

[A]

Why was Etsy's the place to go next to make you successful in opening your own place?

[B]

So my mentor went there step one, Mike. Right. Went step two. It was starting with one place, and so I could see the trajectory, you know, like, oh, okay, I'm working for companies. They're getting smaller and smaller and smaller. And as much as I have, I had no idea what it meant to start my own company. I knew it meant starting at zero. So I thought, well, if I can work as close to zero while getting paid. Where was etc when you joined Based in Dallas and the first rest. The first location had probably been open, open less than a year.

[A]

Got it. So you're new. Where were they when you left in 2004?

[B]

So we grew to eight locations and then the wheels came off and then we shrunk it back down to probably three or four. So it had grown to be about an $80 million $90 million company. It was probably a $35 million year company when I left. So I got to see private equity come in, destroy it. I got to see the founder buy it back. I learned about worthless stock options of which I had a whole drawer full. So I learned a lot.

[A]

What did you learn? Not to do? What. What mistakes did you witness there that you said, I will never do that if I open a restaurant?

[B]

I saw executive leadership make decisions fully disconnected from operational reality. Just thinking about growth and top line. And it was backed by Brinker, you know, huge, obviously restaurant company. And so they were just thinking, oh, let's go. Like, oh, these. The operators are figuring this thing out. Let's go open a whole bunch. Let's.

[A]

Their mind is blue market, you know, blue ocean effects.

[B]

That's right. We're ahead. This thing is early move now before

[A]

someone else takes it, let's go sign

[B]

a bunch of leases. And we were saying, hey, we're muscling this thing. It's not documented. It's not controlled. Like it's sheer muscle and talent. So I saw that big lesson learned

[A]

is Brinker private equity, Are they considered private?

[B]

They're public.

[A]

Public. Yeah, that's right. What's the biggest difference between private equity and public? I mean, it seems pretty obvious, but

[B]

I'm not. I'm not really a fan of either because I like being a smaller business restaurateur. And I want to believe that culture, hospitality, food quality, the guest experience, I want to believe that that wins the day. I want to believe that creates enterprise value. Except the fact is I'm wrong that the largest enterprise value in our industry has been made and demonstrated by the companies who let go of certain aspects there and just systematize and scale And I mean, McDonald's is a real estate plan.

[A]

Do you have thoughts as to why,

[B]

why it works or why I feel that way.

[A]

Like, what. What is it about the current ecosystem that we exist in the United States marketplace, or the global marketplace for that matter, that makes it so that the things you just listed, hospitality service, carrying the human side. If you focus on that, it's not enough.

[B]

Complexity doesn't scale.

[A]

Like, so what's the most complex thing about what you just shared? I have an idea. But I'm curious what you say there's

[B]

no way that McDonald's could sell a billion hamburgers if they weren't frozen and coming out of a factory.

[A]

Yeah. You started talking about McDonald's. What was your train thought there before I pulled you up?

[B]

Just that they're the ultimate. Like, I have no criticism for them. Like, value creation. I wish I owned it. I, you know, I wish I bought the stock 50 years ago, but I don't want to do that. So that. That, for me, is where public companies look. You need liquidity. If you want to grow, you need cash. There's two ways to get it. The public markets or the private markets. Or, you know, or sugar daddy or some.

[A]

Yeah. Or, you know, slow and steady. Right. Putting away a little at a time, A little at a time, a little at a time. But then you get to a point where you're at like eight or 10 locations, where the next phase of growth isn't going to be a little bit. It's going to be twice as big as we currently are, which means we need twice as much money as we currently have.

[B]

Eric, people say to me all the time, including some of our investors, you know, Dan, you and Mike and the team, you've built this brand, founding farmers and people like, you know, scale it and let's roll it out. Let's scale it. And I realized that could be done. I don't think it could be done with the same commitment that we have right now. Every single piece of bread that a guest eats in one of our restaurants comes from our bakery. That's going to be hard to do if we open 25 more restaurants. Right. So. But I'm good with slow and steady.

[A]

Yeah. I mean, look at Peter's. If, you know, are you familiar with Pete Terry's? If you ever been to Austin, Texas?

[B]

Y.

[A]

Did you notice the burger chain that's out there everywhere? It's like an art deco, like, on the side of the house, I'm sure. Yeah, they. I think they scaled the 23 locations in and around Austin alone before ever scaling out of that market. You know where they went? San Marcos, 45 minutes south. And then where they go after that? San Antonio. But they did it so slow. And I think the other thing too is qsr and they serve burger and fries. So the, the amount of extra assets you need to get to that. Those other additional locations, it's not like building out 300 seat restaurants. Yeah.

[B]

And I, you know, I gotta send 30 trainers to an opening.

[A]

Right.

[B]

You start putting that people on planes, you can do it. Obviously people do it, but you need to take in a lot of capital to do so. But look, we opened the first restaurant 18 years ago. So if it took us 18 years to get to 100 million. If it took us another 18, and it won't, but let's just say it takes us 10 years and we get to 200 million. I mean, I don't know, how big do you need to be like, what are you trying to do? 200 million sounds like a lot.

[A]

Those words literally came out of my mouth when Colleen and I were having a conversation before the. She is sitting so patiently and quietly off camera right now. So. Yeah, I mean, I'm with you. Like, how much do you need? Like, at what point do you start sacrificing quality of relationships for quantity of money? Right. And I think there's a. We know through studying human behavior that there is a balance for if you're. If you're trying to achieve happiness, there is a balance that. And who knows exactly where that is? And who knows if that point of balance is the same for every restaurant? Maybe different concepts lend different.

[B]

You know, that's right. Like different operating systems, different size.

[A]

Right.

[B]

I think of each business as growing from a seed. And that seed has the DNA that's in it. If you try to juice it up and abnormally grow it more than what was in that DNA and appropriate for it, you know, it gets top heavy and it collapses on itself. So I just think of. It might sound a little soft and squishy, but I'm just trying to do what I believe is right and natural for what our business and frankly for what we're good enough. Maybe if we were better or had different skills, we'd be bigger or we do more.

[A]

Yeah. So you kind of were starting to allude to where ET was going when you left. I noticed a pattern. Wherever Mike V Goes, you might not be too far behind. So was he starting to look into the future of what was next for him? And were you a part of that vision?

[B]

So Mike was The COO at ETs, the CEO, the COO and the CFO. All got fired after three years.

[A]

Was he?

[B]

He was, yeah. So they got washed out. I stayed for three more years. After they left, Mike went to go run another company. He ran Al Copeland's company in. In New Orleans. Al Copeland started Popeye, founded Popeyes Chicken, and then he had Copeland's Restaurants. And so Mike was running and growing his company. And so we stayed in touch. We worked apart for those three years. And then Etsy's was being sold, Private equity was coming in. I pretty quickly got a taste of what it's like to be old management. Like, they're really nice and you're really smart and you can do a lot of good until the day they put the ink on the paper and they're like, we gotta get rid of this guy.

[A]

Yeah.

[B]

So I negotiated my exit there with my worthless stock options, and I called Mike and said, hey. What? He had tried to recruit me to go there. I'm like, I'm not. I'm not moving there.

[A]

New Orleans?

[B]

Yeah. I just didn't want to be there, and I didn't want to work for Al Copeland. Like, there was no way that was going to be a culture that lined up for me. And Mike said. When I called him, he said, you know, I'm kind of done here. And he said, I think I'm kind of done working for anyone else. And I said, me too. And then we're like, let's do a thing.

[A]

So you're both operations?

[B]

Yes.

[A]

Okay.

[B]

So he's much stronger culinarily than I am, but we are both operations operators.

[A]

Got it. Before we talk about what happened thereafter, again, this idea of transformation, what was the biggest impact? How did you come out of et? Better? What were you more clear about?

[B]

I was totally devoted to culture and ethical business. I just. Some of the stuff I saw and heard there.

[A]

What's the craziest thing that you heard or saw that just made you go, yuck?

[B]

You really want to hear that? Yeah. It's so easy for me to answer because it's egregious. We had our own. Every. Ets had a bakery, like, full scratch, artisan bakery. And baking is a super cool thing to watch. There's little windows in the. In the. In the oven so you can look at the bread.

[A]

It's called the culture. And the cool thing is it's literally like this living culture organism thing that, like, exists. It is really cool.

[B]

And so I was walking by that oven, and one of the leaders of the company looked in the oven and made a joke about the Holocaust. Looking in the oven. I'm Jewish.

[A]

Yeah.

[B]

By the way, that's fucking egregious whether you're Jewish or not. Right. So it's just an unacceptable thing to say. And it has just, it stuck with me forever because it represented a, that I didn't, you know, I didn't address it like I was appalled. But you know, power, money, hierarchy, do I want to get fired? I want to grab this guy by the throat right now. Like, you know, so I just kept my mouth shut and it bothered me so much and still bothers me to this day that it just doubled down on my commitment to, I want to run a company that no one ever has to be in that situation that I was in where nobody would dream of saying something like that. And if someone did say something like that, someone else is going to address it.

[A]

Yeah, yeah. You keep saying things that make me think of Tom Walter in his book. It's My company Too. He ran a catering company out of Chicago, somewhere in that part of the country. The name of his company is escaping me, but the most prominent catering company in that, that area, and the whole idea behind it's my company too, is creating an entangled organization that if, if you are listing that these are our core values and this is how we behave, if somebody steps outside of that, anyone in the organization is empowered to call it out. So if you're the CEO or the COO and you make an off color joke that is completely against one of your core values, then you are empowered and encouraged to correct that person. And I think it's, it's come up twice in today's conversation that I thought of that book listening to you talk. And that's one of them right there.

[B]

So we wrote down our manifesto, you know, when Mike and I started here, and it's, you know, it's an eight page document. We call it the Constitution and it lays out our core values in detail. The why, the how. And we intentionally called it the Constitution because we wanted it, the document itself, to be more powerful than either of us.

[A]

On brand too.

[B]

And it was the. It is on brand. And that was the manifestation of those lessons that we had both learned of, like working for, you know, maniacs over the years and people who make it all about them and who do as I say, not as I do, etc. And so we said, hey, if we write it all down and we teach it and we really treat it like the Constitution, you know, we're never perfect, but just like the way our country uses it, the Constitution does win the day.

[A]

Right?

[B]

Takes a court battle, but people stand up. They have to be taught how to use it. But it does win the day.

[A]

Yeah, I think the other thing, too, the Constitution is built to teach people, specifically the people who were writing it, how to act. And I think when we're writing our core values, our vision, our mission, all these different things are our processes we're thinking about. We're rating this for our team. But no, you're writing it for you. It's keeping you.

[B]

That is exactly right. Because who is most dangerous to the company? The leaders.

[A]

Yeah.

[B]

They're the most dangerous when they stop listening. They're the most dangerous when they're sure they're right. They're the most dangerous when they think the rules don't apply to them. And when companies are destroyed and failed, it is generally the leaders that have destroyed and failed their company.

[A]

The Constitution, it was an agreement amongst the founding fathers. This is who we are. This is who we're committed to being

[B]

going forward and who we might be worried we might not be. Unless we build a system to document

[A]

it, writing it down, we all sign off on this. This is who we are. If you're not this, we can call you out on it.

[B]

Yeah. So we teach it. It's in English, it's in Spanish. We have classrooms around it. We teach it at all levels of the company. Mike and I still teach our Constitution classes ourselves to every single salaried person that we hire. It's in our hourly orientation. And when Mike or I feel short, you know, if I'm rude to someone or I'm not walking my talk, someone holds me accountable.

[A]

Organization.

[B]

Yeah, and it's, you know, the self policing organization using constitutional structure. It's powerful.

[A]

Yeah. So what was the vision in 2004, 2005? You're building this. Clearly, Mike V is really good at delivering visions and inspiring people. So I know you likely had a good one. What was the vision back then?

[B]

So we were both effectively quitting our corporate jobs. So get we got a taste of entrepreneurship and we separately had our own vision of the type of restaurant that we wanted to open. I'd done a business plan for a concept I wanted to do. He'd done a business plan for his concept. But like a lot of people, when you quit your corporate job, you need money. And so we started a consulting firm, you know, having no idea how to do that, but, you know, any moron can say they're a consultant. And so that's what we did.

[A]

Yeah, I mean, you had the lineage.

[B]

We had the lineage.

[A]

The two of you, of course we had.

[B]

Right. So we leveraged that. And this was early in the Internet days, and I built a website, and you can make yourself look a lot bigger on the web. So I optimized it for the phrase restaurant consultant. And we started getting clients from all over the world.

[A]

Yeah.

[B]

So we built that up, always with the goal of we'll make money, we'll look, we'll keep learning, and then we'll raise capital to do our own restaurants. And so that's. That's how we founded the company. And then. And our first restaurant that we finally raised enough money, 2005, and it failed.

[A]

But we are sitting in that restaurant today, are we not?

[B]

This is the second restaurant that was effect. But I did create this. The North Dakota Farmers Union had already invested in this with someone else, and

[A]

this had failed as well in this meaning, so. So in 2005, you founded Agraria.

[B]

The North Dakota Farmers Union founded.

[A]

Okay, so how did you come into the world of the North Dakota Farmers Unit?

[B]

They called our consulting firm.

[A]

Okay.

[B]

And said, we've invested in a restaurant. We're losing a ton of money. We're getting killed. We'd hired some other alleged restaurant person. This is a bad sitch. We need someone to help us. That was how we got connected with that. At the same time that we got involved in that consulting project with them, we had opened our own first restaurant that Mike and I owned entirely.

[A]

What was that?

[B]

It was a. It was in just outside of Dallas, Garland, Texas. It was called Coopies. As in coop and pies. Like chicken coop and pies. My oldest son name is Cooper as well, so I like the sentiment. By the way, if your restaurant's gonna fail, don't name it after one of your kids sort of hangs around complex

[A]

for the rest of his life.

[B]

And so we opened small, 3,000 square feet, you know, Southern food, fried chicken, great little restaurant. And we failed for several reasons, but primarily, I mean, we just weren't good enough. But we weren't capitalized enough. We didn't understand. Understand the depth of capital needed to get through the hard time.

[A]

You were spending someone else's money all this time. You just had the money there and you were going through the motions, but you didn't really have the idea of was it raising the money or.

[B]

We raised some money. So we put in some of our own money. We signed. We owed about a million dollars. When that restaurant closed, we took us 10 years. We paid it all back.

[A]

When did you open that restaurant 2005. Okay. So that was 2005 to 2000. 2007.

[B]

Yeah. Closed in 2006. Okay.

[A]

Hardest lesson from that,

[B]

I would say best lesson, which might be slightly different than hardest.

[A]

Hardest is the best.

[B]

Yeah. Yeah. Right? Yeah. You can't try to give the customer something they don't want. Even if you're certain you know better what's best for them.

[A]

What were you trying to give them?

[B]

We were the. The quality of ingredients that we were using in where we opened this restaurant, Garland, Texas. We thought, oh, look. Look at all these kind of fried chicken places. They've been around for a long time. But, like, we can do it with better chicken. We can do the iced tea, better quality tea. We can actually do fresh green beans instead of out of a can. And it's just gonna be better. Shortcut to, like, I know better, you know, I know what is best for you. I never thought to stop to ask those customers in those other restaurants that they were going to loyally, do you want it to be any different? Had I just asked and listened, they would have said to me, what do you mean? These green beans are great.

[A]

Yeah.

[B]

And I might have said, like, well, have you ever had fresh green beans? And once they looked at. At me, the sort of, like, with confused eyes might have been like, oh, no. Like, they're good with. With this.

[A]

Yeah.

[B]

So we tried to open a brand and a concept in a place where the customer didn't want it.

[A]

Yeah. So you were focused on quality, but you were in a market that was prioritizing cost and convenience.

[B]

Yeah.

[A]

And.

[B]

And nostalgia and familiarity.

[A]

Right. Like, this is a fried chicken. Why are you trying to break the. The fried chicken.

[B]

That's right. And they were like, what do you mean? This is already awesome.

[A]

Right.

[B]

And we were like, oh, no, we know more awesome. And they were like, no, you don't.

[A]

Yeah. Yeah. So not being open to, like, listen to that feedback and pivot. But maybe if you did, you wouldn't have been in love with what you're doing.

[B]

I think maybe I needed to do more homework early. Frankly, the biggest lesson there is to remember that other opinions exist.

[A]

Right.

[B]

Aside from just our entrepreneurial enthusiasm. I've got the best idea. You might want to ask me.

[A]

It was like a market fit, too. Maybe the world you came up in, the world that Mike V. Came up in, the vision you had wasn't meant to be seated in Garland, Texas.

[B]

That's right. And so I didn't understand the market. And again, that was like, the Arrogance on my part.

[A]

Right.

[B]

And the other biggest lesson was the restaurant was a failure six months before we finally closed it. And we didn't know what our own failure looked like. So like Dead man walking as a restaurant, we were using those Chase convenience checks, signing them, paying the 30% fee, and on the belief of we'll do what we've always done, work hard, do it right, like we'll get through it. When if I had the analytical experience and the objectivity, I could have just said, we need to stop digging this hole. Yeah, we are never going to get out of it. And that was a, that was a lesson that apparently couldn't teach myself until I just lived through it and then had the hindsight of like, wow, I just didn't know what my own failure looked like.

[A]

So you started founding fathers in 2008 after a year and a half, two year process of getting into a million dollars in debt.

[B]

Yes.

[A]

And you were able to start a new restaurant with a million dollars of debt.

[B]

Yes.

[A]

So that is an achievement in itself. I think it's a testament to your grit. Right. To just find a way. And that way was, it seemed like an alignment with your future partners and go ahead.

[B]

It was of you touched on those things. It was just keep going. For me, it meant living in my mother in law's basement for three years. And we got lucky that we did some work for the North Dakota Farmers Union and then fast forward a little bit, they became our partner and they put $5 million into a new project with us where, you know, they're not restaurateurs, they're farmers and they're investors. And we created founding farmers. And so yes, other people's money, but we built a relationship with them. There was two way trust. And Mike and I said to them, hey, we'll do our best restaurant for you, but we won't do it as consultants, we won't do it as a management company, we'll do it as partners because we want to have our own restaurants. And they trusted us and we trusted them.

[A]

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[B]

I just have no interest in winning a loan. Sounds super lonely. I don't really like doing anything alone. I don't like. If I was gonna go get my dry cleaning right now, I'd be like, eric, you want to come with me? I just, I like being with someone else and I love the shared victory. And I think I probably also love the brutality of the shared defeat and then the like, let's get up. I. I just, I like the group, I like the team. And so, you know, I'm the youngest of four. I just grew up in a family. Like, great parents, great siblings. I really like the camaraderie. I grew up in New England, so I've got some of those just north of Boston. Where Little town called Linfield. The North Shore.

[A]

I live in Haverhill.

[B]

Oh, yeah. Nice. Okay. Look at us.

[A]

Yeah, right down the corner.

[B]

So, you know, like some of my best friends today. I'm 56 years old. I'll be 56 a summer. Are the guys that I was friends with when I was little. So I like relationships and Mike V. And I now, you know, that first phone call was, you know, the end of 1993.

[A]

Yeah, yeah. I think it's. I think there's something to be said about partnership showing up. If we are truly in the game of elevating people, creating opportunity for people. I think the only way to really provide. Providing security to people. The. The. The. The elevated version of security is assets is, you know, you have Social Security with the. The group you're a part of, the restaurant group you're a part of. But what about liquid assets? Like. Like, you know, financial security? I think the only way you build financial security is by owning the. The thing and treating that profit the way profit it's supposed to be treated to grow assets, you know, so, like. And if you're smart, like, you're only gonna work your hardest for something that you got skin in the game for. Like, you're gonna show up differently if you got skin in the game.

[B]

My take is that that depends on the people. Some people work their hardest on behalf of someone else.

[A]

There's truth to that.

[B]

Some people actually perform better with their obligations to others rather than their obligations to themselves. My wife's an artist. She's a painter. And while she likes to paint what she wants to paint, she performs better on a deadline when there's a commission that she has a client for rather than just managing herself as an entrepreneur.

[A]

Don't want to let somebody else down.

[B]

That's right. And so I think that there is part of me as well. I love the partnership. I'm never gonna let Mike V. Down. I'm never gonna let Chef Joe down. I'm never gonna let any of my team down that I have these long relationships with, but I probably would let myself down.

[A]

Yeah. Yeah. You're more willing. I mean, that's what keeps me showing up every day, is knowing that I'm committed to this. My listeners benefit from this. I don't do this for myself. You know, I mean, I do love

[B]

it, but you believe you're creating value for others, and so you want to keep giving. And even every days you have give up, you're like, no, you. You know what? This is useful.

[A]

Yeah. Yeah, for sure. So back to the vision. When you're coming together with these, like, I think. I think, too, just the business model. So 50% of this business is owned by the North Dakota Farming Association. I'm not saying.

[B]

North Dakota Farmers Union.

[A]

Union. Thank you very much. What was. What was their vision? What were they, like, what did they sell you on? Like, what were they trying to do?

[B]

They had a very clear mission of wanting to be able to spread the message to Americans. The difference between a family farmer and a corporate farming producer.

[A]

Yeah.

[B]

They had a clear mission of wanting to increase the amount of family farmed product purchased. They had a clear mission of wanting to be able to influence the restaurant industry through role modeling. And they had a clear mission of wanting to try to influence, you know, the general population that when they go into a grocery store to sort of take note and be taught, like there's a question to ask who grew this? And I would say probably they also like the idea of influencing elected officials. And so if you think about, if you're an American family farmer and your way of life is just under assault, and it's under assault legislatively, it's under assault from a capitalist standpoint. You need new and innovative ideas. And so investing in restaurants and thinking could they vertically integrate, could they help get the farmers a larger share of the food dollar instead of the value adders in the middle and the distributors in the middle. The middle. And so that was their vision of creating a farmer owned restaurant to accomplish those goals.

[A]

Yeah. And you said something, and I hope this doesn't bring us down a huge rabbit hole, but I'm gonna say it anyway, that they were under assault. The farmer was under assault from big food, centralized food. And I, I think that it's really important. And I don't know if you believe this statement. I don't want to make any assumptions. I think the independent restaurant industry is also under assault right now. And I think that if we don't learn from what the fart will happen to the farmers, we're next.

[B]

Yeah. Both of your statements I completely agree with.

[A]

Yeah. And that's what, you know, this podcast is really trying to bring light to is how do we find better solutions, conscious solutions that make everyone that are. That's a part of this country better, not just the few at the top.

[B]

So 15 years ago there were probably. Just make sure that my numbers are right. Let's say 20 years ago there were more than 2,000 family owned dairy farms in the state of North Dakota. Wow. How many do you think there are today?

[A]

One.

[B]

A little bit better than that. Like less than 15. Right. Just some insane. So. And I think the statistics help. And when you put on a chart for people, what is the family farmer share of the farm food dollar? It's over the last 40 years, you know, like when you. Yeah. Like when you spend a dollar on. Yeah. And it.

[A]

2%.

[B]

Yeah, exactly. And it's gone from what used to be, you know, $0.52, $0.46, $0.35 down to $0.07. The farmers are still doing the work.

[A]

Right.

[B]

And so when America loses its family farmers, it will take a serious blow in national security. We built this country because we could produce Our own food. We have stayed strong because we have been a net exporter. Right. We're able to produce, feed all that we want, and then feed others, which gives us power over other countries. So family farming, See, this is what happens with the rabbit hole. But family farming is part of the backbone of what makes America America. And once you learn that, you know, four companies control 90% of the pork production, and two of those companies are owned by Chinese parent companies, not knocking the Chinese. I'm not making a political statement or a cultural statement. I'm just making a geopolitical reality. Staying here, that money is not staying here. And then who's making those decisions? And then who cares what toxic ingredients? Who cares how long the soil lasts to, you know, like. And so I think that our independent restaurant industry is in the same boat.

[A]

Yeah, 100%. And hopefully. I think the cool thing is that there's still time. And the second largest industry in the

[B]

country as private employer. Yes.

[A]

Yeah. So we have influence. I don't think we realize the influence we have. I think not just because there's. There's strength in numbers in terms of. There are more independent restaurant owners than there are corporate. More independent restaurants than corporate restaurants in the country. So we have. The numbers are in our favor, but we have influence in communities, and we can cons. We can influence consumer behavior. And I think that that is even a reverse flow situation right now, where the restaurant industry is dominated by consumer behavior, not vice versa.

[B]

I find that our industry is also in the independent world, full of people, operators, chefs, restaurateurs, who really care about their communities. You know, people want to talk. And look, I talk a lot about mental health and the struggles that we have in our industry. But the fact is, all every industry, humans have mental health struggles, right? Our industry. Look at what we donate, look at the careers that we build, look at the career paths that we create. And we do need to get smarter with how we support each other, how we increase our odds of staying in business. And I am a big fan of studying the restaurant business model and helping independent restaurateurs understand you got to know how to negotiate with your landlord, which also means you got to influence everyone in your city. I'm not a collusion guy, but I am an influence guy. Awareness. It's like, you know what? Don't pay that rent. Like, don't. Like, you need a gross rent number at 5 or 6%. And if you're gonna do a rent deal, more than that, you are jeopardizing the future of Your business, if you

[A]

do pay it then that becomes the market.

[B]

That's right. So now that's right. So you raised the market for the landlord. Someone else could do it. Other entrepreneurs. Restaurant tours are sort of like, well other people make it and they pay this. Except other people don't make it.

[A]

That's the thing. Which is a big reason full transparency. Why I start every episode by saying what kind of revenue are you doing? What percentage of that is profit? Because I'm trying to get the fact out. Well one benchmarking the industry like what? There are so many different business models in this industry. There is no one like model that works right for everyone. So you need to know what type of model and what type of market can you do if you do well, like what does that look like? And then I think there's the reality too is a lot of the people that are winning the Michelin stars and the, the getting the, the, the, the press, the awards, they're not necessarily profitable models and they need awards to pay it. Be able to pay the bills because their costs are so out of control. You need outrageous costs to get the attention. You know. Do you agree or disagree with that?

[B]

I'm so glad you highlighted that. If you want to run a business, you should not be emulating someone who actually is not running a business business. And so when a restaurant is a vanity project backed by a few super wealthy investors who don't care about their ROI and they will fund a restaurant in pursuit of X accomplishment, you know, if the goal is to win a gold medal, but a gold medal, let's just say doesn't pay you anything. In some sports it doesn't. In some sports it doesn't in a way.

[A]

So marketing, it will drive traffic until somebody else gets that medal.

[B]

That's right. And, and then what are you left with? So for, for most independent operators, we're never going to win a Michelin star and I would theorize we shouldn't try to if our goal is to put our kids through college and our goal is to have a truly a business that lasts the test of time. Time. I don't want that award. I want to win Diners Choice awards and I want my occupancy costs to really be, I say six, but let's just say 8% or less. And I want to have a real profit architecture so that I can pay off my bankers, I can give my investors their return so that they would want to invest again if I want to grow my business. And so we shouldn't Be emulating or chasing things that don't create roi because otherwise, for real business people, you've got to pay our bills. Yeah, I mean, can I clarify? Because I'm not saying that there are no real businesses that have Michelin stars. There. Absolutely.

[A]

There are people that figured it out. They're in it for the right reasons. That's right.

[B]

So. So it's important because I'm not criticizing, but I think it goes off and unsaid that people don't understand. Like, oh, that restaurant had a great run. You know, it was seven years or it was whatever. It's like, did the investors ever make any money? Well. Oh, nobody asked that question.

[A]

I just think we, we hold those awards at such high esteem within the industry and then I think we forget that their mark. These things are marketing machines. That's what they are. They're marketing machines. And while it's nice to be seen and appreciated by your peers in the industry, that must feel phenomenal. Is that what it's about? And do we put too much emphasis on that? And are we starting to like, are we, you know, like, we're human, Like, I get it, you know, we want these things. It feels good. But then once you get that star, then it's like, okay, now what? I gotta keep it. And that pressure is something I've heard is not fun.

[B]

And look, if the pressure puts you in the hospital, if the pressure you think justifies, like at noma, you know, being an asshole to people, I mean, look, everybody gets to live their own life. But I don't want our industry to have that rap. And I don't want people coming into our industry to think that that's what they need to do. You don't have to destroy yourself, you don't have to destroy anyone else. And you don't have to necessarily go broke.

[A]

We wear like a badge of honor. Like, I work harder than anybody else

[B]

and it's just not a badge of honor. The badge of honor is I can pay all my people. I can invest in my long term savings this week. That's right. I spend time with my kids. I could pay for my kids, travel, baseball team.

[A]

I'm giving opportunity to other people.

[B]

I'm lifting people up. I'm creating pathways and jobs.

[A]

Yeah. And this is what I try to put under the magnifying glass. You know, it's like, what is the best? What is better? What is growth?

[B]

And I love these questions. And they should be under the magic because each of us is allowed to have our own unique answer.

[A]

Diversity is beautiful.

[B]

I just want it to be fair for people.

[A]

Right.

[B]

That you understand that you can build a good life for yourself and others along the way in this industry. But to do so, you got to be careful who you. Who you're. Who you're copying.

[A]

So let's go back. This is fun. I love these little rabbit holes, by the way. I swim in these rabbit holes. So back to how we got here. Here, your partners in a different business model. So this all started with trying to find a better way to vertically integrate farms into restaurants, to. To make sure more of that money is going to the farmer and to find a better way to create awareness about supporting local farms. So that. Did that appeal to you? Was that a big part of why you wanted to do this? Was this aligned with what you wanted to do when you had a vision for yourself?

[B]

I would have never thought of that if I hadn't been taught about this and had my eyes open to it by the team and the farmers in North Dakota. I'm, you know, I'm an east coast guy. I didn't know anything about farming. I didn't walk into a grocery store. You know, I. I wasn't quite as bad as I assumed. The lettuce grew off those metal shelves, you know, at the grocery store. But, no, I was taught this stuff and shown it. I didn't know what the farmer share the food dollar meant until I went to a lecture and had a farmer teach me.

[A]

Yeah, I mean, I'm just gonna throw it out there. I would love to get these folks on the show. I think it'd be really cool to hear their story and what they're doing to encourage more farmers across America to take this approach.

[B]

They would love to talk about it.

[A]

Yeah, it's all connected. So. So they. They got you. You're like, we're in. This is great. They did. I hear they put up how many?

[B]

Five million dollars.

[A]

Five million. That was what got you open.

[B]

That's what opened the first founding.

[A]

Did you need more than that, or is that. Did that cover everything?

[B]

No, that got us open. We had some TI money from the landlord. And again, this was 2008. Things were a lot less expensive. But you're not gonna open a founding farmers for $5 million.

[A]

Right. And this is. Yeah, it's a beautiful location. Oh, like, this is the only one I've been to, but it's beautiful.

[B]

Thank you.

[A]

This is where we are currently sitting is the original location.

[B]

This was there. This was the farm farmer's original restaurant. And it Was called Agraria.

[A]

Agraria.

[B]

That restaurant failed. And then it's been through. We. We then created Agraria Farmers and Fishers. Then we created Farmers. We had founding farmers up the street, which, which we had opened while this was going through transition.

[A]

When did this open?

[B]

This originally opened in 2000. So it's the failed version, opened in 2005.

[A]

So when you were in Texas doing your failure, they were here with their original partners.

[B]

Failing. Yes.

[A]

Got it. And then you came along and.

[B]

And in 2008, 2006, with them. So I was still failing while we were helping address this failure.

[A]

Yeah.

[B]

And then we said to them, look, we can solve your cash flow problems here and get this one to break even. They had chance, a $10 million letter of credit on the lease. Again, the lease, like get advice on the leases. You know, these things can be such a disaster. And we help them management wise and consulting wise here, while simultaneously, much to my amazement, they were like, wow, we really trust you guys. We want to do another restaurant. And I'm thinking you do. You know, okay, that's great. And so we said, great. But we need to start with a. We need to start with a blank piece of paper and budget. So you give us the 5 million bucks, we'll take your vision of what a farmer owned restaurant is and let us create that. And that is what we opened in September 2008 on Pennsylvania Avenue, just up the street from where we are in Georgetown. And that was the first founding farmers.

[A]

Got it.

[B]

Then we came back down here. This restaurant that that we're sitting in was destroyed by a flood. A great biblical, fabulous flood, by the way, because it needed to be destroyed.

[A]

Great casting. Gave me the whole background of how this area floods because of like the water, like will come rushing in, hit that wall, and like backflow up over here. Or bottlenecks.

[B]

Yeah, yeah, it's wild. And they didn't lift up the flood walls, thankfully, because it worked out really well. The restaurant was destroyed and we got to rebrand and rebuild an entirely new restaurant. And that's what gave us the opportunity and the insurance money to build farmers, fishers, bakers.

[A]

That was in 2015.

[B]

Yes.

[A]

So I think it makes sense now to get in our airplane, zoom up to 30,000ft, fly over the rest of your career since 2008 until we get to where we are today, just to get it all out there. And then we'll get in the helicopter and we'll hover over these, these stops.

[B]

Love it.

[A]

2008, first Founding Farmers opens in DC. 2010, you opened Moco's Founding Farmers. Two years later, 2015, you come back here to open the third Founding Farmers, Fishers and Bakers. 2016, you opened Founding Farmers and Distillers. 2017, you opened Founding Farmers, Tyson. So now you're up to four locations, or this is your fifth location.

[B]

That was five.

[A]

That was five. One, two, three, four. That's the fifth location. 2019, actually looks like you opened two in 2000.

[B]

They were really close. We have. We call the next three the Triplets.

[A]

Got it.

[B]

They were unintentionally, almost simultaneous.

[A]

Reston Station and then King of Prussia, not Prince of Russia.

[B]

I do love that, though, by the way, man.

[A]

My dyslexia, like, bubbles up in the funniest way sometimes. So 2019, and then you guys kind of. I think there was. And then there was Founding Farmers Alexandria. And that's the last location.

[B]

That's right, because we didn't open anything during COVID And then Founding Farmers Alexandria, which we just opened one year ago, was our first new restaurant post Covid.

[A]

Got it. But you're going through. You're looking at Alexandria during. In 2020. But it didn't happen. Is that what happened?

[B]

I was. Well, 2020. No, I wasn't looking there yet. We were looking to grow.

[A]

Okay.

[B]

And then covet hit, and we were just looking to survive. And then we had a landlord that loved us, and we did a really good deal for Alexandria.

[A]

Got it. And that. Now that location is Founding Farmers Barbecue.

[B]

It has Founding Farmers Barbecue in it.

[A]

Okay, cool. Lots of stuff we just unpackaged there, but I want to make sure it all came out. So looking at that journey, let's find you. What was the first year like?

[B]

The first year? 2008.

[A]

Yeah.

[B]

We. We thought we could do six and a half million. We did eight million. And it just never looked back. It was just a. Sometimes you just hit it. The world was falling off a financial cliff September 2008. And I think we did a good job. Our intent resonated. We were trying to build a downtown restaurant that felt great, looked great, but that was much less expensive than the typical downtown D.C. restaurants. And in 2008, nobody was talking about farmers. Nobody was talking about the environment. You know, we did LEED certification. We filled out our own water. We didn't charge the guests and still don't for. We don't sell bottled water. You know, glass bottle comes from China, gets shipped across the seas in a cardboard box made wherever stops in France allegedly filled up from China. Spring is chip.

[A]

You know, is right down the street.

[B]

I mean, so down the street, we gave up that check average in order to do what we felt was right for the planet, the community, etc. And we tried to really keep the prices down.

[A]

So it's what the market wanted. But what, like, what was it about the brand and what you're trying to

[B]

do that hit, I think at the time, the value our cook from scratch farmer owned message was really a new message. People just hadn't heard that. And I think when people, you know, there's a recession and people are worried financially and there's sort of a flight to comfort. So it's like, yeah, come on in and have a grilled cheese and tomato soup. And guess what? We know the farmer that produces that cheese. The bread comes from our own bakery. We made that tomato soup fresh the morning, you know, and it's 10 bucks.

[A]

Yeah. North Dakota Farmers Union.

[B]

Yes.

[A]

We're a long way away from home right now. Why D.C. why did they do this here?

[B]

They had commissioned an advisory firm sort of study the national market when they were thinking about restaurants, and they narrowed it down to a few cities and really DC ended up bubbling to the top of their list because it was really, it reads statistically as it's recession proof. So that's one thing, by the way, which we have blown a hole in that because we are now like, it is a tough time in the hospitality industry in D.C. right now. But prior to this, they liked it for its recession proof. They liked it for the fact that it had regulars, like people live here. And it has tourism, proximity to Capitol Hill and elected officials, and a really robust independent farm supply chain in this Chesapeake Bay watershed from Pennsylvania and Maryland and Virginia. Great family farming communities. Because while we buy a lot from North Dakota, they're commodity producers. All our flour for our bakery, for example, comes from North Dakota. But that's. You're not getting your lettuce and your tomatoes from North Dakota.

[A]

But isn't lettuce in tomatoes that would be defined as a commodity? Would it not be.

[B]

Not in the way. When you think about commodity farming, you're thinking grain, soy, you know, like, just like the corn. Those. Yeah, those sorts of commodities.

[A]

Got it. Okay. So you're getting your, like your base product, like your, to your point, the grain, the, the corn, the things that are produced on a large scale.

[B]

We get that from North Dakota, where we can also. North Dakota is one of the largest honey producers. We work with the really lovely couple bee farmers, Nick and Tawny, out of North Dakota. All Our honey, we use a lot of honey, comes straight from their apiaries on the truck that the North Dakota Farmers Union owns and straight into our distribution here. So and then, then the North Dakota farmers, they don't care that we buy from them. They care that we buy from family farmers and not big corporate ag.

[A]

So it's more of an investment. Create awareness about supporting your local farms.

[B]

Yes. Because family farmers know that they, they rise or fall together.

[A]

Is it a way to create more awareness around joining your local farming union? Yes.

[B]

Yep. So it. All of those things. And if the North Dakota Farmers Union helps the Wisconsin farmers Union be stronger, and if they maybe want to give concept like, then they want to show and they want to maybe there's some farmers in New Hampshire that want to create a farmers union. So it starts with awareness and then resources and support.

[A]

Yeah. And furthermore, how do restaurants get involved with those unions? I think that's the key here. The rub of where this podcast really meets the rubber. You know, if this podcast is the car and the road is the farming industry, like, how do you connect those two to do it? Right. So what, what percent of goods, cost of goods goes towards your partners? I'm curious if you had a guess.

[B]

So we have to define partner when we say that. So some of our farmer partners are actually individual farmers. So we also created a mechanism so that individual farmers could invest as equity investors even if they're not accredited, which usually would. Would exclude people from a, from a private equity investor.

[A]

Accredited in the sense of.

[B]

So to be. In a legal definition in the US Finance code, an accredited investor is someone that, that earns above X amount of money, that has X amount of net worth. These laws came out of the, the Great Depression where people had been like built out of their money.

[A]

In other words, a professional investor.

[B]

That's right.

[A]

Yeah.

[B]

So accredited investor. So we built a mechanism. The North Dakota farmers you built union built a mechanism where small investors could invest a small amount of money and they would then be protected by the entity that they built to bring in their investment. So we have some folks who invest with us, which means they get a share of the profits. They also sell us product so they can be on the sell side. Right. To us, that would be like the deepest possible relationship.

[A]

That's literal vertical integration. Investing in.

[B]

That's right. And then selling something to that. And then we have other farmers who don't supply us anything. They're just investors. And they get just like any. When we do profit distributions, they get their share pro rata for what they have invested. And they love that our messaging helps them because we're raising awareness to buy family farmed product. And so probably a third, I would say a small percentage goes to someone who is both an investor and a supplier. That's a pretty. That's a pretty small group, as you would imagine.

[A]

A third of your cost of goods.

[B]

Like 33 for that group. No, that's probably 8%. Someone who's written us an investment check and sells us a product.

[A]

Got it.

[B]

I would say 70% of what we buy comes through some family farm individual or co op or aggregator of someone that we know and have a relationship with that lines up with our ethos of family farmed product. Got it.

[A]

And then you also have two or three 18 wheelers too, right?

[B]

Two.

[A]

And that does how many trips back and forth?

[B]

Yeah. So it's really every two week. We've been at like the second one. So when I say we, the North Dakota Farmers Union owns those trucks and those drivers are employees of the North Dakota Dakota Farmers Union. But it's we because that's the purpose of those. So we had one started with one. There was the strategy to add a second one. I think the second one got sort of derailed. But it's really every two weeks. That's what the. That's what the trip is.

[A]

And that truck is hitting farms between North Dakota.

[B]

Exactly. Starts in North Dakota, goes through Wisconsin, goes down to Kentucky and picks up our grits and then comes up into D.C. got it.

[A]

So from all the goods that you're purchasing, about 70% of those goods come from farms in your network, whether it be the union or investors or people that are just farmers.

[B]

That's right. That meet our definition. So our definition is who owns the land and when. If it's corporation governed by a board of directors owns that farming land, that needs to be in the absolute. That is what I try to avoid buying. But it's really important. I'm glad you asked. A percentage is. We're not perfect. You know, if you. You can still come here to any of our restaurants and you can get a Diet Coke and it comes in a diet Coke can. Yeah. That ain't coming from the family farm

[A]

supplier, that syrup company or that.

[B]

Right. Like, so you can get a sweet and low. If you want a sweetener, you can get Heinz organic ketchup. In my restaurant, I. We originally tried to make our own soda. People really wanted Coke. We tried to make our own ketchup. I couldn't match the viscosity. So we're not a hundred percent, and I don't think you could feasibly do that. But we are way into the more than 50% of what we do comes from the supply chain that lines up with our ethos.

[A]

So US Foods, I'm assuming. Q. US Foods, this is where they come into the picture. How long have you been working with US Foods?

[B]

If not from the exact. I would. It's got to be 15 years. And they have been amazing at being willing to. I mean, we are such a nuisance. You know, we, we are such a nuisance because we don't. We're not going to order out of a catalog and we're not going to order the mainstream stock products. The vast majority of the time, we're not going to. And they have been willing. When Chef Joe, who's been with me and Mike forever, he's amazing. Joe Getz just, he's our, he's our top chef, created, you know, all of the food. Really gifted guy. He works closely. When he finds a farmer, whether it's a North Dakota supplier, someone that comes to us through another farmer's union, he can then go to US Foods and say, hey, will you, will you bring this in?

[A]

Yes.

[B]

And so someone still needs to be the distributor. Someone needs to do Last Mile. And even though we do a lot of Last Mile to ourselves, because we have our own, we call it the Culinary Barn. We have our own production facility. You need a partner. Like, we still have a produce vendor, Keeney Produce, but we chose them because they're family owned, third generation. Now, US Foods is a corporation, but their commitment to the independent farm market and the independent restaurant market is very different than the typical broadliners.

[A]

I've been pretty outspoken about this. The so for two years I was in pursuit of US Foods to become a sponsor of this podcast because one, everything I was hearing from people when I saw the US Foods trucks in the parking lot. What's, what's your relationship with US Foods like? It's a partnership. Like, I've been with my, my rep for years. Like anything. Like they, they, it's a true partnership. Like, they have my back. And two, what they do to help get small farms access to distribution, I think is so important. I had Dean and Peeler on the podcast. I don't know if you know Dean, you might, you're actually like, I don't know if you're using his products or not, but vertically integrated, their whole farming, from selecting the semen to not I'm trying to be crude, but it's literally where it starts.

[B]

Sure.

[A]

Selecting the bull semen to the insemination to the. Growing the feed like they. They. They own every part of growing that animal to the production facility where they work with the restaurant to produce the cut they want, the. The marinade they want and packaged so it can be cut to spec with the, you know, intellectual property of that restaurant. And then the only thing that they didn't have was distribution, and that's where US Foods came in. So, like, it gives. I think it's. There needs to be somebody willing to do that hard work to help bridge the gap, to make it possible. And they do that.

[B]

And they. They prioritize the relationship and I think their own brand and the long game over that. Over the slotting fee or the margin on this one thing. Right. Like, that's why I say, I acknowledge, yeah, we're a nuisance to. To a vendor like that, but I also think we're a value creator for them, and that makes them plus us together.

[A]

You make them better because your chefs are doing the work to find out the farms that you want to source from. If they bring those farms into their network, that makes their. Their service better.

[B]

And at our volume, you know, sometimes people think like, oh, who do you get your tomatoes from? As if there's like, one tomato guy with a truck who could keep up with our volume of tomato supply and be like, you need some of the aggregators and the distributors who are willing to, you know, you need insurance on this product. You can't buy product into a restaurant like ours and not understand the sort of chain of custody and the supply and the insurance related to the transportation of that product. Product.

[A]

Yeah. Yeah. So I could go into a rabbit hole at this. I think it's really fascinating stuff, but I want to make sure your whole story comes out and we get to where we are today. So I've noticed that there seems to be, like, in terms of the. The evolution of a restaurant tour, one to three units getting to that third unit, they kind of hit a wall, and then they seem to break through a wall right around four units, and then they can. They can operate status quo till about 10 units and they hit another wall again. Would you say that that kind of lines up with your point of evolution

[B]

as a restaurateur, the structure as you frame it? I completely agree with. There are these much harder phases and moments, then there's a little momentum, then there's the next kick in the teeth. You said it more elegantly. So for us, the zero to one really hard.

[A]

Yeah, that's the first one.

[B]

You know, it's really hard getting open.

[A]

And then you can get to three. Doing it the way you did, number one.

[B]

Yep. Getting to four. So zero to one really hard. From one to four. Pretty straightforward. And Mike and I have a lot of experience and we also had a. Our own network. We could hire people. Like we're growing. We were just making phone calls to friends in the industry.

[A]

How many people did you pull in?

[B]

Oh, so many. Yeah, so many. And then, then we had the triplets and that. So we had signed three deals to grow. And the restaurants were supposed to open 18 months apart. And we thought, okay, that will, Will. Will go from 4 to 5, 18 months to 6, 18 months to 7. The first one got delayed, the second one came on time, and the third one came early. So we opened three restaurants in about a nine month span.

[A]

That was after your third restaurant.

[B]

That was after our fourth. So it's five, six, seven. And we weren't strong enough. We didn't have the bench, we didn't have the depth to do all that work at a high level at the same time. And so we really have to look away from restaurants. 1, 2, 3, 4. And it's not like we could afford to hire a ton more people to sort of look back as we looked forward. So those first four restaurants, it's like if you have four kids and then you have four more. So we just. And because the triplets came together, which was Reston farmers and distillers and founding farmers in Pennsylvania, King of Prussia, it really stress stretched us and we didn't perform as well. And two of the restaurants went over budget with construction and. But with the pressure from the leases, we had to get open. The one that was coming, the one that was late, we had to push on. The one that was on time, I couldn't delay it. And then the one that had the opportunity to come early, we attended that point. The landlord, basically, we had some incentive to come early and we just went for it. So that was. That was the really the hardest phase in the company.

[A]

And that was from going from four to eight.

[B]

Sorry, four to four to four to seven. Yeah. Then we recovered. Then Covid and we recovered and we were great. Then it was like January 2020. Triplets were okay. And then covet hit. Yeah. And then you got to deal with all of that. I find Covid kind of boring to talk about.

[A]

Yeah, me too. Well, how did it come out better?

[B]

And then, you know, and then we opened eight Number eight, you know, a couple years after Covid. Got it.

[A]

So how many locate or how many on average, how many employees do you have per location?

[B]

150.

[A]

Interesting. Do you want. Do you know why that number is interesting?

[B]

Well, you're burnt. You're right. It's the. The number relationship.

[A]

Yeah. So. So Dunbar's. I'm gonna get into it. So Dunbar's number is actually not one number. It's a series of numbers. And Those numbers are 1.5515-5015-0500-1500. I think it might. I think it might stop there. It might continue to go. But the idea is at each one of those points, it seems to be the. The number where human. Humans work the best together. There's something going on that. Getting to those points. There seems to be. And you see these numbers, like, if you study, like, humanity and us, how we function in groups like those, there's consistencies in those numbers. Like, if you look at the military, there's consistency in how they scale tribal units. Consistency, like what, a tribe, like a hunter gatherer band versus like a group versus, like a. It's interesting. There's a lot of parallels. So. So you get to 150 is one unit, right? They would say that the next thing you want to do is get to 500 as fast as possible. So you don't open one more. You open. That'd be two more, right? You want to go from one to three, quick.

[B]

I see.

[A]

Yeah, yeah. And then the next number would be 500, right? No, it would be 1500. So then you. You kind of wait at three until you're busting at the seams. You get that bench, you got your culture carriers, and then it's a boom explosion to get to. It would be whatever. How many units. 5000 employees is how many employees are

[B]

yet now we have about 1600.

[A]

So.

[B]

Because, like, our. The busiest restaurants have over 200 employees.

[A]

So 15, I think. Is that one of them? Yeah, 15,000 is one of those numbers. So I think. So theoretically, if you were looking to scale again, the goal would be to slow down for a long time until you're busting at the seams, like hovering around 1500, and then you get that deep bench. And then it would be going to get to 5,000 or 16 units as fast as possible, which, going back to

[B]

our earlier conversation, to actually grow in that kind of burst, you need a lot of capital.

[A]

You need a lot of people, and you need a lot of people.

[B]

And see, that's right, because you need a Lot of additional resource to do that.

[A]

Right. So the question is, do you want to go beyond eight. Right. Or at that number, 1500, 1600 people. You're at a, in terms of like human behavior.

[B]

Sweet spot. Yeah.

[A]

It's like how big? I guess that's kind of where you are now. But are we skipping over anything?

[B]

Yeah, I mean, I think the size of our company now is really, it's really doable. It's really manageable. I can imagine it at double the size. It's hard for me to imagine it beyond that. But we've also, again, we're sort of like one foot in front of the other.

[A]

Yeah.

[B]

One brick after the other. And then it's opportunistic. Like when we're good enough and strong enough and we get an opportunity to grow and the deal is, is right. Like I'm not signing any deals. That's a landlord's paying for the build out.

[A]

The. That, that idea of scale is fascinating. The book is called the Social Brain. Robin Dunbar is a co author with two women who are based in Europe and their names are escaping me. I apologize ladies, but their business, they're like the business coach, business people and he's like the, like the, the scientist that studies monkeys and they're bringing like that whole thing. Anyway, it's a fascinating book. I want to, I think that there's definitely something going on there with the patterns that you see when, where people go to private equity, you know, so. But in terms of your story, for bringing it back to your story, what were the points? So you said that you had the triplets. Right. And it was hard. How did you come. Usually when we do the hardest thing is when we come out even better. Right. So how did that hard thing, having triplets getting from four to seven in a less than a year, how did that come out? When you came out of that, why were you. Or how are you better?

[B]

We had an even better understanding of the kind of talent, the leadership talent that it really takes to launch and stabilize one of the restaurants. And when I say the talent, it's. It's both. So we, we have general managers but, but bigger than the gentleman. We have a managing partner in every store and they're in the profit share. And so we have folks who could be VPs of operations at other, you know, other like typical corporate structures. But for us they can run one unit because, you know, when you're doing $15 million a year at a one restaurant, you can afford to really pay people. But we don't have regional managers. There isn't. We don't have those layers kind of burning up the money. So we saw coming out of the triplets that for us to make progress faster, we needed more talent, both on the support team and in some of those operations positions. And so I think we are. We are stronger. And when we opened Founding Farmers in Alexandria, which is like sort of, you know, 17 years of lessons learned and coming out of the hardest phase, we really had the right people in. In the right place with the right support and not overwhelmed and stretched too thin. Like, let the talent focus on the work and set people up to succeed.

[A]

The reason why I brought that whole conversation about, like, Dunbar's number and like, these points of scale, it's almost coincidental that you're at that point where the next time you grew, you need to do it fast. And that's what they say is like, they. When you were at that point with your company where, like, the next time you scale, it can't be a slow thing because it's going to create division. It has to be quick. And it seems like it just kind of worked out that way for you. But I think it might have been a blessing in disguise.

[B]

I agree with you. I mean, a lot of good comes out of the hard stuff.

[A]

Yeah.

[B]

I mean, if you go all the way back, a ton of the recipes in Founding Farmers, Chef Joe and my partner Mike, they created those in our first restaurant that failed. So, like, what comes out of the failure? All those recipes.

[A]

Right.

[B]

And so there is always the. The most valuable lessons comes out of the hardest stuff.

[A]

So we're at the point of the conversation where, I mean, anything that did not come out of today's conversation in terms of behind every great restaurant's a great person and that we're really here to share your story and how you've evolved as a restaurateur. How are you better today? How have you transformed? What is your evolution? Anything that hasn't come out that, you know, up to this point where we are current time in your operation, before we dive into where you are today,

[B]

you know, this topic of just people blooming, the individual restaurateur, the leaders blooming. When we talk about valuable lessons. I just have so much evidence that when we invest in the people and we really have low turnover and we can retain people through the most difficult things in their life. So many people change jobs when they have a mental health struggle. So many people change jobs when they get divorced. So many people change jobs when they struggle with addiction. So many People change jobs when they have like a self esteem problem. So many people change jobs when their boss is an asshole. Like we have all these reasons that cause turnover. People leave jobs because they don't have any vision, they don't feel seen where they are, et cetera. And I feel like we have this enormous case study at a tactical level of when trying to solve or address those sorts of topics, the retention skyrockets, the institutional knowledge skyrockets, the problem solving ability skyrockets, the ability to serve the guests, the ability to get through things like the triplets just improve. So that that topic is always running in the background for me, no matter what we're talking about. Because at the end of the day, it's about the people. Yeah. This business is about the people.

[A]

Yeah. Some people say we're not in the business of food, we're in the business of creating experiences. I would say we're in the business of transforming individuals. And it starts with ourself and it starts then with the people that are closest to us. I would say maybe your family first. Right. And then it's your partners, the people that you're in business with. And then I think from there it goes to your staff. And I think some people say that's not Danny Myers enlightened hospitality, like that's out of order. He says it starts with your guests or staff and then it goes to your guests and then it goes to your partners, and then it goes to I think your vendors or something like that, your community, then your partners. And I can't remember the, the order

[B]

of Danny's approach is a winning approach. I agree with you and I appreciate that you brought up self. And I don't know if Danny talks about it. I'm sure, you know, Dan and I have talked. He's, he's wonderful and I, and I'm confident.

[A]

Shaking a stick at him.

[B]

Yeah. I'm confident that Danny would agree with what, what I'm about to say. If you can't lead yourself, you have no business trying to lead anybody else.

[A]

Yeah.

[B]

So of course it starts with self. And any leader who doesn't know that will never accomplish what they could have accomplished otherwise.

[A]

Yeah. You are never going to inspire somebody to go beyond you. Right. If they do, they will go beyond you somewhere elsewhere. Exactly. So if you want to continue to elevate people, the only way you can do that is by elevating, elevating yourself. Because as you move up a rung, you create a void. And that makes that, you know, and like the Only way you can create opportunity for others is by removing yourself. Or don't. The best way to remove yourself is by going up a level by elevating. So it starts with you as you elevate. The natural things that happen thereafter is you create voids others can elevate. You're lifting them as you go. So I, I came up with this thinking about this, looking at dating my inhospitality coupled with those points of humans like Dunbar's number. So 1.5.1 is obviously you, you double that. You're at, you know, two, but the average is 1.5. That's your, your partner, your life partner. Five is your family. And then 15 is like your closest group of people. Those are your bit like theoretically, those are like your, your business partners. Like who's closer to you than your wife?

[B]

I mean I spend more time with and I've got three kids, but I certainly spend more time with my partner and at work and my team at work than I do with anybody else.

[A]

So those are the most important things is the people that you are in. Like you only can pick 150 people and those, the ones at the top of your list are the most important important that you're going to be successful. It's going to be your business partners. It's going to be the people that you go into business with. If they're not your immediate partners and they're the, the people that have other businesses that you do business with. Right. If you take care of those people, then that creates an ecosystem where you collectively can lift the next which is the people that come choose to be a part of what you're doing. The choose you. The people that come work for you. I think that's where I think Danny and I like, I don't agree with what he said because I think you should put your everything into you then your family, then your partners. And if you do that, you're creating a healthy ecosystem to the sky's the limit. You're. You're a rocket ship.

[B]

I mean there just is no arguing with. You need to put on your own oxygen mask before you put it on your kid next to you. You just do.

[A]

Yeah.

[B]

Regardless of what else you think I want to save my kid. I want to do whatever is like no, you got to take care of yourself.

[A]

Right.

[B]

And it includes, you know, we talk about relationships and as you're talking about Dunbar's number, I think it's important to add into that. That includes getting rid of the people that aren't good matches for, for the relationships. Right. So many people have someone in that 1.4, even in the 1.5, like, you know, if you married the wrong person and it's a disaster. That's why, like, I love divorce. I like breakups, I love getting fired, I like firing people. Like, I love all of the things that say, like, if this relationship is not a winner, change it. Everybody deserves to be in a winning relationship. So break up and go do it. Because if all your energy, you know, when people like, oh, well, I'm all for marriage therapy, but like, for relationships, really hard in the beginning, really hard, I would just find a different relationship.

[A]

Yeah. But we got down this whole path of you saying, you know, talking about the importance of taking care of your staff and their mental health. But, like, I think the point I was trying to make is it has to start with you. Because if you're not at that place of good mental health, sure, you need to get there first so you can teach other people.

[B]

Totally. That's why, like, you know, that's why I have a therapist. It's why I've been in therapy multiple times over the years. It's why when I've been on Zoloft for anxiety and for dealing with my concussion, I think it's a fantastic drug. It's why my therapist that I see for the eating disorder struggles that I have, like, she's a superstar for me. She's just a great teacher. She helps me be a better version of myself. It's why when I got a concussion, like, if you see on my Instagram, I'm still like all these years later, like, shouting out and celebrating the doctors at Inova in Northern Virginia who really, like, cured me and saved me after having headache and symptoms every single day for four plus years. And so I need those solutions for myself or I'm going to be, frankly, if I didn't address the struggles that I have had in my brain and in my body, I'd have a headache every single day. I'd be an anxious mess. I'd be some version of, you know, body dysmorphic and bulimic. Like, I'd walk with a limp because you gotta have a physical therapist as well, you know. And yet, by acknowledging these struggles, finding resources to help me with them, I'm not dragging any of those permanent problems with me. They're all still part of me. He's somewhere in there, there. And I can role model that for my team.

[A]

Exactly. And that's what I was thinking the whole time is you're Pulling. You're not pushing. You're saying, this is how I lead my life. I'm going to be vulnerable with you right now and show you my warts, and I'm going to show you my underbelly and show you my vulnerabilities. But in doing this, I'm stronger because now you trust me more, and you see that I can get through these things. Now I inspire you to get over your things. Own them first. That's the first step.

[B]

Show your people that you're allegedly superhuman. You're a terrible leader. First of all, you're lying. No such thing as a superhuman. And you are really setting them up to fail because they think that, oh, well, I can't. Can't cry. Can't show your vulnerabilities. Can't be stressed. Can't do whatever. I guess I got to work every single day. I guess I got to deny my problems. I guess I got a whatever, and it just ends up in a really ugly train wreck. So it's not. It's not strength. And by the way, that's not what the best pro athletes are doing. That's not what the Navy SEALs are doing. That's. You know, people have performance coaches.

[A]

Yeah.

[B]

Like, people are addressing the shortcoming, and then you tell that. And I don't. I've been really vocal about this lately. It's not. It is not being vulnerable. It is simply being honest.

[A]

Yeah.

[B]

Because the vocabulary seems to really affect people. Like, being vulnerable. That sounds weak. I don't want to be vulnerable. I'm told not to be, like, vulnerable sounds like a problem. Yeah, but, like, who can argue with just being honest?

[A]

Right?

[B]

Nobody's running around being like. No, I think the best path is I should be a liar.

[A]

Right.

[B]

Okay, so if we're agreed that being honest is good, why don't you just tell the truth? Yeah.

[A]

And the first person you have to be honest with is yourself.

[B]

That's right.

[A]

Yeah. So while we're talking about the importance of people and, you know, elevating people, I would love to understand, at eight locations, what is your organizational structure? I'm assuming at the top, you got you and Mike V. You also have your investors and partners with the. The Farmers Union. Are there any other equity partners at the top?

[B]

Not with control. Okay, we have some other investors, but in sort of the org chart and structure, the North Dakota Farmers Union, they have a board of directors that governs them, and then Mike and I are effectively our board. And then one of us and one of them. And that's the. That's the governance. Yeah. And then we're super flat. So our view, like culturally and our org chart reflects it, is that the support team supports the operators. So it is that inverted pyramid. And there is no.

[A]

So you're at the bottom and. And above you is who, what.

[B]

So like there's. We have a cfo. We have an amazing finance and accounting team. We have Jillian, our VP of hr. She's got a couple folks on her HR team. Megan runs marketing, which is like digital and all of that. We've got some folks in facility. We fix a lot of stuff. We call them the farm fixers. They do. We do a lot in house. Fixing our own furniture, refinishing tables, all of that. So accounting marketing is probably a couple others. But from a authority standpoint, our managing partners, there was one in each of those eight restaurants and one in the catering and events company. They are really the most powerful. If you. If you want to talk about like org chart authority and whose business card carries the weight. And the rest of us serve what the managing partners eat because the managing partners. Partners run the ops units. The ops units make all the money. And all the rest of us, from marketing to accounting to finance to strategy to vision to it. I shouldn't leave out the IT team. Brandon and Pretty, they're great. Especially now with everything we're doing with AI.

[A]

That's one thing we still have to talk about. So I want to make sure we get there too.

[B]

I'm neck deep in it. I love it. Great topic. And so there's no regional operations management. And then there's Chef Joe and Chef Caitlin, Chef Jasmine, you know, the culinary team.

[A]

Are they operating partners too or they.

[B]

They're really, I would say authority and power sort of at that same level.

[A]

And then you have managers in and managers and.

[B]

Yeah, so we have executive chefs and sous chefs, and we have general managers and managers and the executive chef. And if there's a general manager, they report to the manager partner in that restaurant. And then we have a couple folks in training who develop material, do audits, teach classes, and do all of that.

[A]

Got it. We have the organizational structure. I know that you do profit sharing, and I think that this is a great thing that more restaurants can do to incentivize people. To offer more security. Yes, to incentivize people to show up differently. Maybe they don't actually own equity, but they, they understand how to use that profit. To use it to invest in assets. Right. To build wealth. This is a great wealth building framework. So how do we get into profit sharing? What is your advice for that?

[B]

So in most restaurants in America it's way better for someone to have profit sharing than to have equity.

[A]

Why?

[B]

Because most restaurants in America are not going to have a transaction where the Equity is sold at 6x or 10x or 12x. What it went in most equity in restaurants in America is it's about cash. On cash returns. There's profit generated this year that goes back to the investors or it goes back to the owner. So I much prefer to see the lead operators in a profit share. And I use profit share instead of bonus. Bonus is fine in a big corporate structure where the money exists regardless of whether the cash flow exists because the whole enterprise can have the money. But in smaller independence like the world that we're in, I can't pay a bonus unless there's actually cash flow at the end of the day. So it's not. Did you just hit your food cost?

[A]

Right. Output is directly tied to input. So if you want to influence the output and your your personal profit bonus, then show up, show up.

[B]

And so what that means for us is what we teach. Totally open book Pl there's no store level controllables profit after controllable expenses. Like a lot of that language comes out of the corporate world. But we are teaching people from the top line, fully loaded P and L all the way down to cash flow. There is no other corporate P, L, it's at the stores. And that cash flow is what the managing partners and the and sometimes some of the other operators in the store, that's what the profit share is paid out of actual profit.

[A]

Got it. Okay, so you're kind of alluding to technology systems. I know you're an operations guy. Where are you with your tech stack today? Can you run through that or do we need to call the IT person?

[B]

Yeah, no, no, I can run you through all of it. The tech stack is big. I would need to show you a diagram but I can tell you the big hitters on the tech stack. So OpenTable is reservations and table management and CRM and loyalty. So I'm a huge fan of OpenTable. Super robust software does way more than a lot of operators understand.

[A]

Does it say SMN SMS in there too or.

[B]

No, it does SMS as well.

[A]

You don't use it for email or you do?

[B]

Yeah, we use mailchimp but the two are integrated so we actually do a lot of email comms and the open table guest relationship management. The features just continue to roll out. Really impressive.

[A]

So you can do segmentation and link that with mailchimp.

[B]

Yes, got it. And then for pos, we use Toast. Strong product. We use the TOAST handhelds. We rolled those out a couple of years ago. Some good functionality there. And so. And then like, okay, what do we want to think about? Menu, recipe, kitchen training. We use MI's.

[A]

Ah, love me.

[B]

Josh Arkey. Yeah, Josh is great. Have you had him on the show?

[A]

I have. He's been a sponsor of the podcast.

[B]

Yeah, he's great.

[A]

Very fortunate.

[B]

Yeah. So me's really strong for us. We used to use a learning management system. We don't use a standalone one. And we actually have. Most of our stuff is now hosted inside SharePoint. So we're not a Google shop. We use the Microsoft products.

[A]

Why Microsoft?

[B]

I think the stability of it. I'm a Mac guy, but an Office for Mac is a good product. It's just kind of where we were. And then at this point I just like, I think I'm old. Like, I hate the way Gmail looks. I don't like the way the Google products looked. So we stick in that.

[A]

More security in Microsoft too. I think it's a little bit more like Google's game is the free. The freemium model. Yeah.

[B]

And it just. I don't know, I think I aspire to try to operate like a. Like a restaurant corporation.

[A]

Right.

[B]

And Microsoft just has felt as buggy as it is. It's just felt. Not the freemium approach.

[A]

Yeah. I think that there's. You're paying. When you're paying a monthly subscription for something, I think you do get more. And if I think it might, I. Even if it's security, even if you're not the product, that's something. Right. I think that's pretty important. So we're on. Talked about OpenTable, Mailchimp, Toast, pos me for your menu recipe development and scaling. And are you using their costing and purchasing and all that?

[B]

Not using their purchasing? We do. Oh, we do have. We do use their costing.

[A]

Got it.

[B]

Then hot schedules.

[A]

Hot schedules for labor management. And.

[B]

And now we've been testing. I don't know if my team has greenlighted it, but there's another product called Axial Shift. Axial Shift, Yeah. That my team has been, you know, raving about. It's in this same, you know, scheduling employee comms. This has been a place that we struggled with in our tech stack, you know, in the old days of regular phone numbers and sort of printed newsletters. You can see I'm old, you know, sort of easier to get information and then to the, to the hourly level. But the hourly employees, they don't really want to log into the HRIS system and use the portal and do whatever. So we've, we've and hot schedules just isn't great at two way comms with employees and really reaching everybody via cell phone. We also follow all the laws so I try not to just use the whatever like the.me groups and the WhatsApp groups. Like from an HR perspective you really should have, people should opt in if you're going to text them and you really shouldn't have your managers also sort of in the hourly comms if the hourlies don't know they're there.

[A]

Yeah.

[B]

So Jillian, who runs HR for us, tries to like, you know, keep. She'd be proud of me for bringing up, bringing up such things.

[A]

Yeah. So axle shift is just a way to distribute distribution for like information.

[B]

Yeah. And I also, I think it's scheduling. I think it's probably a hot schedules competitor.

[A]

Anything that's recent that you've done that's like really you've noticed like move the needle in terms of adopting technology.

[B]

Claude.

[A]

Yeah.

[B]

Okay, so now we're getting into Claude is my guy.

[A]

How are you using AI today?

[B]

So four months ago we formed AI task force. I think there's 15 of us or 16 of us on the task force. We plucked people out from each little area of the company and we've been coming together to educate, to build strategy, to run some tests and then come back together. Of course I built the AI Task Force playbook using Claude and the timing has been really good for us because as Claude, we were in already and working with Claude trying to decide what we were going to choose for enterprise. I think it's a big question for everybody to like, you know, first of all, you got to pick one of these like you're going to be a GPT shop, you're going to be a Claude shop and then what's your why? My why for Claude was I do think the ethics of a company in this AI space matters. So while it's hard to know who to trust, it seemed pretty clear who not to trust. So I liked where Claude was drawing some boundaries and what they stood up for. That's really proven out in the last month or so with them being in the news and then when they rolled out Cowork, we were already testing some stuff and several of our team, like I just love tech and our IT folks are obviously great at it, but we have a couple of Operators and managing partners who love tech. And so we've been building some workflows in Cowork.

[A]

So. So give me an example of what your life with cloud looks like today. How are you using cloud in your restaurant to be more efficient?

[B]

So we are now able to, I'll give you like a very specific with all of our, let's say Yelp reviews, there's some other platforms because we get a lot of open table reviews, but let's say online reviews before Claude, we sort of manually pull those down, drop them into a spreadsheet, create our own averages, our own trends, how it's going, look for, do use another product for sentiment analysis and try to understand where the problems are without being too influenced by anecdotal, like someone who writes like you suck in all caps. So now what that looks like using a workflow in Claude Cowork is Claude can running on his own. I've gendered him as male. You can call him whatever you want. I guess Claude can, on a schedule, running on a laptop, pull down reviews in a date range, distill them down, put them into a new format that Claude create, that we created with Claude so that we have like things we want the data visualized. It's all about like a couple of pie charts, a couple of graph charts, like what you know better than Word Cloud, but that sentiment of conveying it. And Cloud's able to do that and distribute that report on a weekly basis,

[A]

using it for like reputation management. What are people saying about us?

[B]

Yeah, yeah. And we will be at a point where I have no human that has to run that report or do that work, that that information, the dashboard of that will arrive in our inboxes with none of my humans doing the work.

[A]

But would a human then reach out and engage the people that are writing the reviews?

[B]

Yes. And we have that system. The. Our humans continue to do that. I don't particularly want that automated. I've been a fan of no copy paste humans.

[A]

I think what you just like laid out is a perfect example of, I think that the SaaS industry is going to be doing a overhaul in the next two years, either one. The players that are dominant right now, the costs are going to plummet because their operational costs, because you know they're going to be outsourcing, they're going to be using AI to develop their software. But also restaurateurs are. And you're a perfect example of this, developing their own software. You know, you may not have your own software per se, A, a SaaS

[B]

product, but it's a software functionality Claude's gonna do.

[A]

Are you using Vibe coding to develop that?

[B]

Not so. A couple of my IT guys are using Claude code. But right now our focus is really in Claude. Cowork for the workflow.

[A]

Yeah. I've had guests on the show. Albert Sanchez Betos in. Or is it Beatos? Sorry, Albert. He's developed his own labor management software. He's developed his own, I think like customer feedback system. Like, kind of like Ovation.

[B]

The thing my view on Vibe coding and using Claude code, I think it what's left out of the conversation is, is okay, but you gotta update your code, you gotta write patches to your software. You got like, do you.

[A]

Today you do, but tomorrow, sure.

[B]

So you can automate it, but Claude still needs to do it for you. But is Claude gonna pay attention to the competitive market and the changing needs of your software? Like software companies, they roll out a lot of features that you didn't know you needed, but they learned about them from other customers.

[A]

But that's true. But there are no two restaurants that are exactly the same. And I think that they try to create one stop solutions for a bunch of restaurants.

[B]

Yeah, that's right.

[A]

So I think that there's something to be said about diversity and you don't maybe have to keep your thumb on that, but your head of IT does. That just becomes a part of their world. Right?

[B]

Yeah. And they may be so efficient because Claude is doing so much work that the humans don't have to do.

[A]

And it's only going to get better.

[B]

I mean, look, that's the other. We'll see. Right? Billions have been wiped off the market value of these software companies.

[A]

So.

[B]

Yeah, but I wouldn't bet against the good software companies long term. And plus their price is going to be able to come way down. Which was your point. Right.

[A]

One of the two. Either they're going to become rendered obsolete or their prices are going to be way down. To your point, because there's still work that has to be done after you've developed the software. Software, like managing it, updating it, keeping it relevant. But I think to your point, you have, I mean. Or another point. But you have friends that own restaurants. Right. So you, you don't think that restaurant tours are just going to be like sharing solutions?

[B]

Yeah, no, I think, I think you're right.

[A]

Yeah.

[B]

It's got like Claude's little app store. I don't know what Claude's calling it. Right. But when I've got Claude and code, I caught Claude installed, I can click on that and I find all these other plugins. So if it's end up like the App Store, other restaurant will have our own little category.

[A]

Yeah.

[B]

Good tools made by other restaurant tours.

[A]

And I think it's really. I think it's a really exciting time. But I think one thing you talked about was we have to be very mindful about the platform we choose because whoever wins this AI race, that's going to be a big deal. Or maybe we intentionally keep it fragmented so there is no clear winner. Right. So that like there we go. By diversifying it and spreading out, they all kind of rise together. And that competitive market means we win.

[B]

It'll be interesting if there can be any diversity between OpenAI and anthropic. I mean it takes hundreds of millions of dollars to burn to be the top level LLM. So everything else is just going to sit on top of them.

[A]

That, that, that's just a new Google. That kind of. It's new meta. That's the next wave of Google.

[B]

Yeah.

[A]

Right.

[B]

But we're using tools also in our tech stack, like Hermetic. Hermetic AI for guest interface. Like when someone submits a web form because they want a large party, an event, something like that. RAI responds to them in eight seconds, engages with them, you'd never know it's not a human. It's great hospitality. So Hermetic is awesome. We use slang to answer the phones now those AIs are just sitting on top of GPT or Claude or sitting on top of multiple of those. So I think we're gonna get a. There's gonna be a ton of diversity at that level of all of these little tools.

[A]

Yeah.

[B]

But I am a little worried about just a couple of tech oligarchs.

[A]

Yeah.

[B]

Well, I mean, it's a little worrisome.

[A]

I think all the other times it's happened, we didn't see it coming. Right. Like Google, who saw that coming? Meta, who saw that coming because it was all so unprecedented. But now is it for the first time where I think our consciousness has caught up to. Okay, we know this pattern.

[B]

Right.

[A]

So like how do we. Conscious capitalism, which I know you're a huge advocate for, share information, fragment the. The. The. Our attention to get information from different sources. I think podcasting is an amazing source of that to hear from different people. Right. We can choose our future. And I think that's at the core of consciousness. It's knowing that you can manifest destiny. It's making a choice to do hard things to to affect the probability of an outcome. And if we collectively do that, second largest industry in the world or behind government, we can make a difference, man. I think revolutions always happen in the restaurant industry and I think there's a, a new one about that.

[B]

And we have a. There's a lot of talent in this business.

[A]

Yeah, I could keep talking to you. We are almost at 5 o', clock, 12 minutes over our recording time, so I'm going to wrap it up. A couple questions we asked all of our guests. What is one thing about your business? A value process, a system that's truly uncommon and has made you unstoppable?

[B]

Probably our commitment to putting our constitution in writing and we've got 18 years of track record of it holding us

[A]

accountable to constitution too. And I love that it's also on brand. The mission statement is to change the world by inspiring, empowering and transforming the industry. We do that by transforming one owner at a time. How have you personally transformed? How are you a better man than the man you were when you got started in this industry?

[B]

You know, you make a lot of mistakes, you lose a lot of money and you get genuinely humbled. And I think I, I love that. I much prefer this less confident version of myself that I hope has more awareness of just how much I don't know and the desire to, you know, pursue that and my quest to just help as many people as I can.

[A]

Awesome. This is the last question before we wrap it up officially. If you got the news you'd be leaving this world tomorrow. All the memories of you you work in your restaurants would be lost with your departure. With the exception of three pieces of wisdom that you could leave behind for the the good of humanity and your legacy. What would those three pieces of wisdom be?

[B]

Take care of yourself 1. So that you can take care of those around you.

[A]

Is that still one or two?

[B]

I think that's two.

[A]

Two.

[B]

And nothing else matters but the people.

[A]

Three. This has been so much fun, Dan. Thank you so much. I found you through word of mouth. Word of mouth is my north star. Who do you respect and admire in the industry? And honestly, I've really enjoyed this conversation. Who is another you? Somebody out there doing good work, choosing to do hard things because the hard things, the right thing, making a difference, making an impact. Who thinks scaling is doing what you're already doing better? Who are those people?

[B]

My buddy Kevin Boehm who owns Boca Restaurant Group in Chicago. Have you had Kevin?

[A]

A couple times, but he's due for an new. He's due for round three.

[B]

Kevin's great. Will Gudera. Will is awesome. Like every time I'm with him, listening to him, talking to him, he is awesome. He's in Nashville now. Aaron Silverman here in dc. You know, especially since an interesting that I brought up Will and Kevin. Those are guys who can run award winning restaurants and do it and understand that there's a profit mechanism and that it's, you know, sustainability is about being in business long term and you can win awards, you can do it the right way, you can treat people the right way and you can be elite. I do think that those guys are elite. I think Aaron Silverman in dc, he's a Michelin star guy, young guy, and I think he does a lot of stuff really well. And he's a thinker, he cares about people. So those are, those are some of the, the guys that come to mind.

[A]

Kevin, I would love to connect with you when I'm in the Midwest later this year. Will, I would love to get Will on the show multiple times referred if you ever want to make that introduction. No pressure. Dan, Aaron, first time mentioned on the show. I'd love to connect with you. All of you coming after you. Look out. And if we enjoyed today's conversation and we want to follow you, check out your work, maybe come work for you. What's the best way to connect?

[B]

My restaurants, founding farmers.com and then my personal LinkedIn, Instagram. Don't forget the podcast at Dan Simon says. And then my podcast is founding dc, which is all about entrepreneurship, not just restaurants. Entrepreneurship across the board, I think. Did I say all the things? So those all the things.

[A]

And I listened to your episode with. Is it Brett Shulman? Yes. Father of Kava. I had him on the show like 12 years ago. It was great to hear that conversation with you. You do a great job. You're a natural.

[B]

Thank you.

[A]

So it's a, it's an awesome podcast. Check it out. I'll link to that in the show notes as well. This is where I say thank you so much, man. I literally cannot do what I do without people like you carving out two plus hours of their day to let me ask these invasive questions, to dive deep into your world, to better understand you. I can't do what I do without people like you. And there is no questioning. You are unstoppable.

[B]

We're in it together. Thanks for having me.

[A]

Cheers.