Episode Transcript
[00:00:01] Speaker A: So my guest on today's show is Anthony Valletta. He is the president of Bar Taco. It's a restaurant group with 26 different restaurants across 14 different states. And they have done something very, very cool with their labor model, something I've been talking about for the better part of two years. They've done it and it's actually working. I can't wait to you to hear their story. Don't go anywhere.
There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never see, and those who can see when shown. This is Restaurant Strategy, a podcast with answers for anyone who's looking.
Hey everyone, thanks for tuning in. My name is Chip Close and this is Restaurant Strategy, a weekly podcast dedicated entirely to helping you build a more profitable restaurant. Each week I leverage my 20 plus years in the industry to help you build that more profitable and more sustainable business. I also work with owners and operators all over the world through my P3 mastermind program. What are the three Ps? They stand for profit, process and progress. We meet every single week, two hours every single week to help you build that sustainable restaurant, that profitable restaurant again. If you are running a busy restaurant with a great following, generating a lot of revenue, but struggle to drop enough money to the bottom line, we always talk about consistent, predictable profits. If you struggle to do that, then get in touch. Schedule a free call with me or one of my coaches. RestaurantStrategyPodcast.com Schedule we'll get to learn more about you and your restaurant. You'll get to ask some questions about the program to see if you're a good fit for the program. We'll tell you how it works. We'll talk about some of the impact we make. Again, visit restaurantstrategypodcast.com schedule as always, that link is in the show notes now. Thousands of restaurants across the country use Kickfin to send instant cashless tip payouts directly to their employees bank accounts the second their shift ends. It's a really simple solution to a really big problem because let's face it, paying out cash tips to your workers day after day, shift after shift, it's kind of a nightmare. Tedious tip distribution takes managers away from work that matters. It's hard to track payments, which leads to accounting and compliance headaches. Plus, you cash tip outs create the perfect opportunity for theft. And there's never enough cash on hand to pay out those tips. So managers are constantly making bank runs. Bottom line, there's never been a secure, efficient way to tip out until now. Meet Kickfin. Kickfin is an easy to use software that sends real time cashless tip payouts straight to your employees. Bank accounts 24, 7, 365. Tipping out with Kickfin gives managers and operators hours back in their day. It makes reporting a breeze and protects your business from mistakes and theft. And employees love it. So it's one of the best recruiting tools out there. Best of all, restaurants can have Kickfin up and running overnight. Employees can enroll in seconds. No hardware, no contracts, no setup fees. Get in touch today for a personalized demo and see how restaurants and bars across the country are tipping out with Kickfin. Visit kickfin.com demo. As always, you'll find that link in the show notes.
Now, as I said at the top, my guest today is Anthony Valletta. He is the president of Bar Taco. It's a small and growing, growing restaurant group now with 26 locations spread across 14 states. And they've done something very, very cool over the last two years with their labor model. We're going to get into all of that and more. Anthony, welcome to the show.
[00:03:40] Speaker B: Thanks. Great to be here, Chip. I appreciate you having me.
[00:03:42] Speaker A: My pleasure. So let's start off, give a little context. How long have you been with the company and you recently got promoted to president. So let's, let's talk about all that before we dive in too deep into the restaurant.
[00:03:52] Speaker B: Yeah, a little bit over a year and a half now with Bartaco. Kind of came on as the senior vice president of operations. Had to kind of earn my stars and stripes. The great thing why I love the opportunity was Scott, our founder and CEO, said, hey, I can't give just anyone that title. You've got to earn it. We've got some amazing tenure of incredible people that have built this brand. And I can't just put anyone in front of them. So it's like if you come in and kind of show us you can get it done, we'll move you up. And fortunately, I've got an amazing team and had a really good first few months and moved up last September.
[00:04:27] Speaker A: Yeah, it's pretty cool. And talk to me, talk to the listeners about some of your history because you obviously didn't just plop into Bar Taco. So talk to me about where you came from and what sort of prepped you for this experience.
[00:04:39] Speaker B: Yeah, absolutely. So before here, I was the COO for a restaurant tech startup out in Colorado called Bird Call. So fast, casual, all natural, killer concept, building our own KDS and POS system kind of dove into more of that fast food, fast casual world. So I was in Colorado for about two years. Before that, I worked with Chef Michael Mina out of California. Michelin chef, spent two years as a COO for him focusing on his international smoke concept, a partnership with Aisha and Steph Curry. So I had a couple years with Michael and before that, seven years with Del. Frisco's direct operations, oversaw Midwest, Northeast, Mid Atlantic, Colorado, kind of all over the charts, and then a bunch of our stuff before that, from Darden to small owned concepts.
So everything from international to domestic, from fast food to fine dining all across the country and a little bit across the globe. So very fortunate to have the experience I've had.
[00:05:37] Speaker A: Yeah. So talk to me, because you've got a lot of experience in operations, and a lot of times we'll either ignore operations or we'll talk about operations without knowing what operations is. How do you like to think of that? Right? Because there's back of house, front of house, but there's operations. So talk to me about how you wrap your head around that and how you explain that to the people that you work with.
[00:05:57] Speaker B: And for sure, I mean, listen, operations is where the rubber meets the road. You know, we don't have a corporate office. We have a restaurant support center.
Our employees, our managers, that those are our guests as employees.
My guest is my employee. My managers, my leaders, we serve them. And that's operations is where everything comes to life. You can put amazing ideas on paper from a marketing team. You can put incredible food in an R and D kitchen that looks great and tastes great. But the actual application of that day to day for our guests and for our internal guests, our staff is really what makes and breaks companies. I've met plenty of operators, quote, unquote, that are out there that have amazing ideas, but they just can't execute them. And it's a lot harder than it sounds. So to me, operations is the 247 life that we live. And it is 247 of really bringing to life what our brand is supposed to be for our guests.
[00:06:53] Speaker A: So talk to me about your education at what point, because I agree with you. So I believe in profit first. You know, there's that Gary Keller book, the one thing which I talk about a great deal, but it's like the business exists to generate profit, right? To increase shareholder value. And we don't spend enough time talking about that. And what I spend a great deal of time talking about is how great food, great service, great Decor, all of that is in service of the bottom line. The only reason a business exists is to generate profit so that we can spin that profit into growth and capital for, for new investments, for whatever it is investing in more people in more towns and more communities, however we choose to do that. But first we need to make sure the operation is generating net income so that it's profit first. So that's the approach I take. And it took me a long time in the industry to really understand that or to work with people that understood that and really taught me that. So talk to me a little bit as you sort of went through, through your resume here and there was some stuff that you didn't talk about before that, but talk to me about when you started putting that together and you realized sort of the importance of that.
[00:08:05] Speaker B: Yeah, it's a great question. You know, I was fortunate. I went to school at Boston University at their school Hospitality and the program at the time, I think my graduating class was like 40 something people for behemoth of the school. But really in school they really taught me the value of what that means, right? Is that, listen, there's great concepts that can't stay in business and there's great places that make great bottom line, but they go out of business as well because they're only focusing on the bottom line. And without sales on the top, there is no profit on the bottom. So I learned it, but the real application came. I came out of school and worked for. It was called Rare Hospitality, but Darden has since bought them with Longhorn Steakhouse. Great brand learn systems and procedures and diligence and learn just kind of the systems of becoming profitable. But until I was off on my own, we had three restaurants, mom and pop. Like, you know, literally each week the goal was to make payroll, right? Like moving around. I just need to make sure my staff gets paid. I'll get paid at some point.
And when you, when you have taken on some investors and the most important thing that you need to do is make payroll to pay your team and to pay your vendors, you really understand that no matter what's in your mind about how the experience is, if the guests don't resonate and come back and increase frequency and increase spend and experience your restaurant at different meal periods, there's no profit to be had and there's no business to continue. And all of a sudden your mind gets shifted too much to bottom line and you make decisions that you probably shouldn't make about. I'll go with a cheaper linen, a cheaper plate. And that all slowly erodes that top line. So when I only had three restaurants and was running these week to week, literally losing sleep over what that bottom line read, I learned really quick the value of the top line dollar and of saving every penny that came after that without jeopardizing the guest experience.
I think honestly, having the behemoth of a Darden, right, the systems and procedures, and then going into having nothing, those two honestly laid such an amazing foundation that from there I was fortunate to go on Delfrisco's and just build and build. And I had great success with them as the most profitable operator that they had because I thought like a mom and pop, they couldn't make payroll. But I had the systems and mindset of big brands like a dart.
[00:10:30] Speaker A: Yeah. Talk to me about working for the chains.
Most of the listeners here to this show are independents.
One of the things that I found a lot where I'll consult or I'll coach with clients and they'll bring in somebody from a big chain and they think they won the lottery. So this is somebody great. They know all these systems and everything. And one of the real failings of some of those organizations that I've seen over the years is that they take a manager, they plug them in, but they don't teach them the systems. It just says, do this and do this and do this and you will succeed. Succeed. And oftentimes, especially at like the independent level, you need someone who understands how to implement those, why we have those, how to sort of optimize or fine tune different of those. So talk to me because you're talking about having experiences on both sides of that, and you've obviously come through the chain experience with understanding sort of the matrix of it, why all these systems are in place and all that. So talk to me about the challenge there because surely as Bar Taco, which we'll get you, continues to grow and expand, that's got to be heavy on your mind, too. How do we put these into place and yet.
And yet make sure everybody understands what we do, how we do, but most importantly, why we do it. Talk to me a little bit about that.
[00:11:45] Speaker B: Absolutely. And the key word to use multiple times, chef, is the why. Right?
[00:11:48] Speaker A: Yeah.
[00:11:49] Speaker B: The big thing I think that we have found and that I found, you know, chain restaurants are amazing. They've obviously they're around and they have so many for a reason. But the most important thing, the thing that keeps me up at night, the burden that I think I wear the most in my shoes now as we Grow is chains.
They lose a lot of the soul, they lose a lot of the vibe. The way the environment feels when you walk into a restaurant, those mom and pop independent restaurants or two, three restaurant groups you walk in at just feels different, right? Yeah, I can walk in, I'm not saying bad with this concept, but I can walk into an Olive Garden in Boise, Idaho, in Jacksonville, Florida, in, you know, Boston, Massachusetts, and I know what the bathroom is. I know what the plate like, recite the playlist, a point to them, it makes sense, right? The guests can get the same consistent, you know, product everywhere across the country. It looks exactly the same.
And there's an art and a science to that. Right. That's a challenge to take 600 plus units and serve the same dish everywhere.
But to us, and I think a lot more of what the guest is looking for, I think a lot more of that independent operator mind that I've kind of grown up with and appreciate more, is we want the experience. We want people to feel the difference when you walk into a bar, taco or your local pub that you go in for a drink on a Friday night, and it's about the engagement with the guests, the personalized service, and feeling like you're part of the community. So to me, the part as we grow and in general, for smaller operators, it's like, I think they have the leg up now. I truly believe that guests are shying away from the chains in certain regard. I think fast food's a little different, but in the full service dining, I firmly believe that people are. The chains don't excite them. They want something different. They want something that feels pretty. They want something that feels like their support in the communities that they live or work or play in.
That's huge. I think for operators like us at 26 locations, we try tirelessly to make sure that we are not a chain. We're a chain because we're 26 restaurants, but we don't ever want to feel that way. And the biggest comment I get, I live in Connecticut, where the brand started, and I've met a bunch of people. We moved here a year and a half ago, and they're like, wait, you have more than three? Because there's three in the market. And to me, it's the compliment ever, because they don't see it as this massive brand. They see it as something that's local to them and as a part of their daily regime.
And I think that's what keeps all of us up at night. And I think the independence as Much as for many decades, we had it harder. Right. Because you were fighting against the behemoths of the world. Now people are starting to shift and say, I want to. I want to go there.
[00:14:36] Speaker A: Yeah, yeah.
[00:14:37] Speaker B: Just exciting. But it's hard as you scale.
[00:14:39] Speaker A: Yeah. So I want to talk specifically about that, because I know you've been very intentional about it, as you. As you must have. I will say that when my wife and I lived in Brooklyn, we've since moved out to New Jersey. We lived in Brooklyn. Her cousin lived downstairs, actually, in the same building. And they go to Vermont every summer for vacation. And every. Every year they go on their trip. As they cut up through the Bronx and across New York and into Connecticut, they say, oh, we always stop at our favorite restaurant, and we're like, oh, what is it? So it's this really great place. It's this little place called Bar Taco. And I was like, oh, it's like a big. That's like a big group. Like, they got like a. Like a dozen or two dozen of them. I said, no, no, no, you're thinking of something else. It's this. And we're doing research. I said, no, no, no. I know. I said, look it up. And they swore. I mean, they've been going up to there for eight years. I want to say. Eight years they've been going to Vermont. And every year they stop at this thing for the last several years. And they, like, couldn't believe it. And I, like, shattered something. And by the end of it, they were like, well, but it doesn't matter, because it's like this small thing. So a testament to you. I mean, it really is what you're saying. I mean, they just. They didn't realize. They didn't know. And I just sort of said, no, no, no, I know of this company. We probably had this conversation, you know, I don't know, six or seven months ago. It was probably last summer as they were sort of gearing up for their trip. It was very, very funny.
[00:15:55] Speaker B: I love that.
[00:15:56] Speaker A: Talk to me about how. Because you're a big little group, how do you.
How do you do that? How do you expand and put systems into place so that you have a dashboard and you can keep track of certain metrics or benchmarks? But how do you keep the soul in a place as you get so far away from the founders, you get so far away from the originals? Talk to me about how you guys, as a company think about that or have thought about that.
[00:16:24] Speaker B: Yeah, there's a couple of different ways I think the most important is our people.
When we look to open up new restaurants, we have a policy that you have to either be an existing GM or EC to open a new store, or if we're hiring you for a new store, you have to work in our system for six months, post training before you can even go. To represent our location in a new market, a new restaurant, something of that nature.
And for us it's important because there's amazing training programs out there. Right. Plenty of companies have exceptional training programs. We could sit here and list off probably the same list of top few that we know of for decades. And those things are great, but I think there's no soul to it. You understand the brand and why it exists and what it's supposed to feel like. From the music to the decor, to the ambiance to the staff, all those things are so important to really making sure it feels local and feels like it's a one off restaurant, like they experience on their drive up to Vermont.
So we put a really, really big emphasis particularly on new stores, on the people that we select to lead and making sure they understand what that means to lead from bar taco, meaning being in a community environment, giving back to your community, hiring the right people in the restaurant that have the right feel.
You know, we've looked at the landscape of hiring and yeah, a lot of the workforce has left. It's been challenging, just like it is for everybody else. But for us, we've actually probably hired more unorthodox people that most are like, I don't know, the experience isn't great. And we look at them and say, no, the personality is great. They appreciate what we do and they like the brand. I can train them to run a restaurant. Like at the end of the day, that's, that's not the hard part. The hard part is being a good leader and being a good person. Right. And the right fit. So I think one component we really lean into is the way we recruit the people we recruit and how long they actually are in our DNA. Ignore the training piece. Just how long are you in the fold? Hearing the language, hearing the things that we're fanatical about and hearing the things that we don't care about. A lot of those things are very, very different than the everyday restaurant group from a design perspective. You know, obviously one of our founders is the CEO, one of the other founders is the chairman of the board, and the third founder is consulting for us on a design perspective. And that was always his forte.
And each location that We've now, since we've acquired back from Del Frisco's, we've been owning it again.
We've been really intentional with design because again, like one earlier, you know where the bathroom is, you know what it looks like. We've started really evolving the brand as to does it look like the neighborhood you're in? We opened in Wynwood in Miami, and it's totally different than any bar taco you'll see. We're opening in Bucktown, Chicago today. Totally different than any bar taco you're going to see. Like, we're really starting to create this revolution, or evolution, for that matter, of the brand that feels more like the environment that you're in and not like, okay, yep, I see the blue and white walls. I see the metal chairs. There are iconic things within design that we keep that are just who we are at the Soul. But we change so much. So every location feels a little different. So when you have the people creating the vibe and the design feels different, and then we change the music based off the local clientele, you know, more country music in Nashville, you know, things of that nature makes a big difference. So to us, that's the key component. I think the last and probably most important thing.
There are systems that are important to be fanatical about. Safety, sanitation, you know, line checks, those things. Right. We want to make sure we're upholding our quality standards. But I think when places get too large, they want to control too much.
To us, we the first thing in the morning.
There's four things I look at in the example. Same order every single morning. And this is how the brand lives. The first thing is employee satisfaction. Our employees actually give us a rating every single day, every single shift of the week, just like a guest does. And they can write comments just like a guest does. So first thing, are our employees being taken care of and are they in a good environment? Number two, I read every single guest review from every single restaurant every single day, and our teams do that. Those are the two most important things. It's followed by sales and lastly by labor.
And that's important because our systems and procedures are meant to drive great experience.
If you get too regimented, all you're driving is labor and cogs and you're hoping that sales come some marketing email right to us. We make changes and we try to not be so militant because we will make adjustments on the fly based off guest feedback, based off employee feedback. So we want to be nimble and we want to bring people in that are not too, you know, quote unquote corporate. We love the independence. Like I love hiring people from 1, 2, 3 restaurant groups because they can think for themselves and they want to think for themselves and they want to be an entrepreneur at heart, but they appreciate and respect the supportive systems and standards. So we try to tee that line really closely.
[00:21:33] Speaker A: So one of the things that I spend a lot of time talking about with my clients, the members who are in my mastermind, I said, for me it all comes down to education and empowerment and then finally support, right? You educate the people what they need to do. This is how we do it, right? All of that. You show them the tools that they have available to them to accomplish the goal. You empower them then to make the difficult decisions throughout the day, the week, the month, and then ultimately you provide the support. Say, this is what I need you to do, right? This is how you would do that. I empowered you to make the difficult decisions. And if you ever need help with any of this stuff, we're here for support. I'm here to get, I'm here as a second set of eyes. I'm here to help you troubleshoot. I'm here to have a difficult conversation or be part of a difficult conversation that you may not feel comfortable having on your own, et cetera. My question to you, and you're nodding your head, so I'm guessing there's some alignment in the way that I teach leadership and I think the way you think about leadership. But talk to me specifically. Specifically, because as you've said, and it's great, I love it that there are systems in place, but it doesn't work all the time. And you want to empower people to sort of think on their own and be sort of a free thinking leader, which I love. Talk to me about how that works out in practice because again, 26 different units spread across the entire country.
Give me an example, if you can, of somebody when a GM says that's we just can't do it that way, we have to do it this way here, it's just going to work better for us. And how does something like that unfold? How do those conversations happen with you and the rest of the people in upper leadership?
[00:23:03] Speaker B: Yeah, it's a great question and I agree with what you said. Right.
I think where we lean into the systems is more on the supporting infrastructure. So if a GM in Hyde park calls me and said, I just can't do it that way, this is why I think preliminarily before that we really try to create an environment where they feel they can say that and don't feel like, well, we said do it this way. They just do it and they muscle through it and it's tough. But when they come through and say, hey, I need to do it this way, typically it's okay, great, let's expl. Why do we have to do it differently?
What does that mean? What support do you now need because you're doing something a little bit differently than the rest of the company? And how do we monitor success? And I think that last question is where our standards and systems come in. Of we are data geeks, and right now in the world, that's it, right? Everybody's got more data than they know what to do with.
So to us, we just want to prove or disprove that there's ROI in the way that we're doing it. So if you need to do it differently in Hyde park or in Chapel Hill, perfect. Let's just make sure we can justify that. It actually is logical and not just someone saying, I don't want to do it that way because it's change, and change is hard.
So we spend a lot more time understanding what's the roi, what are the adjustments, and trying to celebrate those people that are doing things a little bit differently. We had a GM very recently that adjusted our service model in one of our locations, unbeknownst to us, and came back and said, hey, for two months we've been doing this and look at the impact that's made. They were leading the company in guest sentiment. They dropped almost 200 basis points in labor.
And I said, well, tell us how you're doing it. And she explained it. And the rest of the company now has adopted that model. So we celebrate things like that. Other people say, okay, maybe I can try something.
And I think the most important way to really celebrate the fact that we want people to do it.
I send out emails before I do my 1. On ones with my team and on group calls, we talk about this. One of the first questions is, tell me what you failed at since our last discussion.
And people get really nervous about that question. So, like, I don't want to tell my boss that I fail at something and we want to celebrate failure. Because if you're failing, it means you're trying.
[00:25:22] Speaker A: Yep.
[00:25:22] Speaker B: If you're not failing, you take a system, you follow it every day. Right. Maybe I missed a line check. At the end of the day, it's like, oh, you failed because you missed one line check. Great. Like, that's not the end of the world. I want someone to fail because they tried something really different and you know, nine times out of ten they probably fall on their face. But that one time is really valuable. And odds are it's because they're trying to make the brand better. Sorry.
[00:25:45] Speaker A: Yeah.
[00:25:46] Speaker B: The big thing for us is if you have that environment of celebrating failure and encouraging, you know, something different, you end up coming up with better systems, but they're self funded, if you will. And so that's what we try to go for. So our we listen. We've got systems and procedures and checks and balances like everybody else, but it's not like so disciplined where you're walking around with a checkboard every day and oh, yep, it's 10 o', clock, I've done this, this and this. We have a few things that we know are really important because it's about the safety of our team and guests, about the consistency of our food and beverage. But other than that, the most important job our people have. And we tell them every day, you throw the best party in town. We don't sell tacos and tequila, we sell fun. And when the doors open at 11 o', clock, I don't care what else is going on.
Your job is to sell fun. And fun means music and food and booze and everything. And I think pushing that message allows us to not feel corporate and systemized. It allows them to feel a bit freer. How to make that happen?
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Yeah, okay, so you brought up this, and I love that one thing sort of led into the other and I didn't ask this question. I wasn't trying to lead you here. I'm just glad that we wound up there. This is a, I think a really great conversation about leadership and how you delegate and empower and all that stuff, which is great.
You sort of said the buzzword that I really, that really prompted me to reach out to you because I read this article that you were featured in and you have since been featured on just about every major podcast. Like I said earlier, I hope people aren't sick of hearing from you because I think what you have to say is very, very compelling.
Talk to me about this service model, this thing that changed because I've been, I've been talking about this for going on over two years now.
I believe something new is coming. I believe there's a new kind of restaurant.
It's, it's just about the hill that I'm going to die on, except it's just going to become obvious over the next 24 months. I am convinced of it. Talk to me about what you guys discovered. So talk to me about that.
[00:29:17] Speaker B: Yeah, we agree with you wholeheartedly. And we are, because we agree with you, we are a very open book about our service model. So I'll share everything with you. But we probably hear from an operator, a CEO, someone at least every other week saying, can you tell me how you do this? And we tell them everything because we do think this is great for the industry.
Listen, we've got like everybody else, commodity prices are tough, inflation is tough, labor is going up. I mean, we have so many things fighting against us. And I think as much as we hate that ugly term like pre Covid, post Covid, which, you know, so fatigued hearing it. But I think the reality, I think the benefit what happened during COVID I think the guests and the staff, they could accelerated our enhancement and usage of technology by five years. I think this was going to happen.
It just was a matter of time. When it slowly happened versus Covid forced us to get used to QR codes and things of that nature. So when Covid hit, everybody went to QR codes. We all thought they were dead. Now they're very alive.
And instead of it just being your menu and this cheap PDF thing that you're scrolling through and zooming in, we partnered with this company called 1Dyne. At the time they were were very small.
I think their closest restaurant group was five or six.
And we said, listen, we will partner with you, but you have to deal with about 1,000 trouble tickets from us every single day. But we'll help spread this across the industry.
So the concept was, as a lot of people left the industry, it was hard to hire staff.
Hospitality was becoming tough because people were cutting back staff to make up for the increased wage and thus say there has to be a solution in a way in which we can increase hospitality, decrease labor, and utilize this tech boom for the better of our service. So now we have what we call on demand hospitality. So the guest scans in their QR code.
That not only becomes your menu, but your ordering platform. It's like shopping on Amazon. Put it in your cart, when your cart has what you want, boom, you hit it. And food comes as it's ready. Because we're a tapas style restaurant, it actually increased our basket size, which we actually didn't think was gonna be the case, but it was.
[00:31:30] Speaker A: And then we thought, these studies are so compelling, there's so much data.
[00:31:35] Speaker B: And you think about from a guest perspective, and I use this analogy to all the time, think about those points when you're sitting in a restaurant where you need to find your server. I want a second cocktail, I want my chef, and I can't get it. And it's not the server's fault. They're just, I see it today, right? Servers are taking eight, nine table sections and they just handle it. And it's not their fault. It really isn't their fault. So we say, well, how do we give that time back to the guest, right? And when you're done, by the way, you just get to walk out. Because we put your credit card in, just walk out the door. When you want to go, you're out 100%.
So that from a guest point of view, the goal was to reduce friction. And we're constantly working on the UX UI of the app. But overall, the whole goal was reduce friction and tailored to the gen Z, gen X, gen Y, which it is.
On the operations side, we eliminated servers because we didn't need them anymore. And we created this new position called service leaders. So service Leaders is a hybrid of a manager and a server. They are a salaried employee, they are a bonus employee. They have areas of responsibility in the restaurant for the financial well being of the restaurant.
And they take what we call a zone. So they oversee a dozen dozen half tables.
And within there we have our hourly employees busing tables or running food and things of that nature. But like I mentioned earlier, their only job is to engage the guest. That's it.
And we implemented this post Covid and our guest sentiment was in the high threes. 3.839 out of 5.
We have consistently month to month for 18 months now rose are rolling. Last quarter's guest sentiment was a 4.73 out of 5. We have hit, I don't know any group of our size that can achieve that level of guest sentiment.
On top of it, we've built this amazing pipeline for our growth. Now I have, we've doubled the amount of managers in this new model. But now I have this huge bench that now wants to become AGMs and GMs and directors. So when we're opening up six, eight restaurants a year, I now have this natural pipeline.
And it's been very different. And when we first launched it, it was tough to convince someone of this job because you're not a server, but you're not a manager, you're in between.
But the real benefit came is that because there's no servers, we are now a fully pooled house.
So all of our hourly employees in the restaurant, everyone makes the same amount of money per hour. Every single person, no matter 10 year age, no matter what it is. So all of the inconsistencies of pay are eliminated immediately.
They make the base wage, which each restaurant is different base wage and they pull the tips, they split by hour. So when we did this, we have employees in peak season making up to $40 an hour, as low as $20 an hour. Right. I mean it's waves, right? Saturday night you make more, Monday night you make less. But the average wage is about 24 bucks an hour across our brand.
And we're ahead of most markets in pay. And we're seeing employees quit second jobs because what they're making, which to us
[00:34:40] Speaker A: is remarkable, that's the whole, you know, and we can. That's a whole, that's a whole nother, that's a whole other podcast. I want to stop you right here and understand. So the hourly people are your, your bartenders, your bussers, your food runners, and then obviously the back of house, the cooks the prep cooks, dishwashers, all of that. Right, Mike? Do I have that right?
[00:35:01] Speaker B: That's correct. We call them all dragonflies.
Bartenders eat what they kill. So they're. They're a traditional model, but everybody else in the restaurant is on that tip share, including the back of us.
[00:35:12] Speaker A: Okay, and are there weighted points? Right, because we've all worked with tip pools or just everything just split even, split evenly.
[00:35:21] Speaker B: So I've got. I have team members that literally will be prepping today. They'll run food tomorrow. They'll host on Friday.
It's created this environment of immense amount of teamwork because now somebody calls out, it's the biggest challenge, right? People are calling out.
I start cross training people. It's like, well, Chip, you're not running food tonight. You're going to work on Cold station.
And there's no, hey, I'm not making the same money, because everyone's making the same.
And what actually happened, this wasn't even the intent, but it was amazing. Is our labor is now self governed because the staff that understands, it's like, well, wait, if Chip is slow and not holding his end of the bargain, he's actually hurting my pocket. I either want him out or I want him trained up. So we say we coach him up or coach him out.
So now all of a sudden, our labor started going down, and the manager's like, we're not really doing anything differently. The staff was doing something differently. They're like, hey, this guy's got to go. He's. He's not holding up.
[00:36:14] Speaker A: It's one of the biggest changes that happens when you institute a tip pool. And I always. I always hear this from restaurant groups who really are resistant to it. And listen, I live in. I live and have worked the majority of my career in New York City, so I recognize it. In a big market like that, tip pools are more prevalent than in a smaller market. But at the end of the day, you do get more teamwork, and you do get teamwork the other way, because people work together and say, hey, that guy's no good. Hey, that guy's not pulling his way. We got a coach him up or coach him out. I love that term.
Talk to me about the execution of.
Talk to me about the steps of service, because I agree with everything you're telling. I have given talk after talk after talk. They gave a big talk in Las Vegas last year at Bar and Restaurant Expo about this. And I specifically used a bunch of case studies. The case study that I used at the Fast casual or the quick service level was McDonald's. Say what you will about McDonald's, the case study is absolutely locked solid. When you look at the increase of their, the guest satisfaction, when you look at the increase their basket size, when you look at the, how they cut down table turn times, when you look at like the profitability, the return. Right. Like, it was all, it's all there in the data. Whether you like McDonald's or not, whether you like kiosk or not, the data says that people like using them. They use them more than anything else. That, that we freed up the people to be less transactional and be more friendly and keep the dining rooms cleaner. All of things which were giant strikes against McDonald's. So talk to me again from the bar taco perspective, Talk to me about, I walk into the restaurant, talk to me about how that experience is going to look.
[00:37:53] Speaker B: Yep. So you walk in, we've got our host, Dragonfly up front, one of our managers, and they, they greet you, grab your name, do the works. As they're walking you to the table, we ask a few inquiring questions about the experience you're going to have. We ask if you've been in before because that lets us know if you've seen our QR dining.
If you have, we ask you, how did you enjoy the on demand hospitality? Because we immediately want to know if there was friction. We have a way to adjust that.
If they're like, oh, it was great, we loved it. Okay, fantastic. Then you're set up, queued to go. We're going to let you do your thing. If they haven't been in before, we have these little Dragonfly cards they actually get, they get marked up on the table and that signals one of our employees to go over and spiel them and walk them through how to use on demand hospitality so they get a welcoming. In the third option, there's three different options. One is, I've been here, I know what I'm doing. Leave me alone. Cool. We're going to check in, have a good time. Two is, it's your first time. I'm just going to introduce you to the, the on demand hospitality. And I'm going to make a mental note to check in a couple more times in the beginning just to make sure everything's gone in correctly and there's no friction. The third one is I've used it before and I hate it. Which happens. It's about 14% of our guests pre Covid bartaco. We used to use sushi carts. So you put everything on A sushi card. And you pop it up and you have your server and they take care of the order. So we call it pivot to paper. So if we read the guest and they just say, I can't stand it, or like, I don't know, I really don't want to do it, hey, we've got another option. We can give you a paper sushi card you can put up here and we'll ring the order in for you. So there's three ways to experience this that we're not trying to alienate someone and say, if you don't like it, just go away. Which I think is the benefit of what we do. In comparison to, you know, a McDonald's where everything is on the kiosk, right. You don't have an option to do anything else. It's like this is the way you order here. Again, them, which works fine for us. We're trying to create this environment that's more dynamic, right? So that's how you get greedy when you sit down from then on out, you're on your phone, you plug in your credit card, everything's there and you just order away. And at that point we're just engaging, having fun. You know, all the things that we do to throw a great party. That's the whole goal. And that's what happens once you sit down.
[00:40:05] Speaker A: So you order drinks, the order gets sent to the service bar, somebody makes the drinks, runner just brings the drinks, says, hey, here's, here are your drinks. Right?
[00:40:16] Speaker B: That's it.
[00:40:17] Speaker A: Same thing with the food. Food just sort of comes out as it's ordered, right?
[00:40:21] Speaker B: That's right. Tapas style restaurant, always going to keep coming, right?
[00:40:24] Speaker A: So what happens if you get it and you're like this, this is the wrong food.
What?
[00:40:28] Speaker B: The service leaders are constantly checking in. Just like, it's almost like a server. They're, they're. We put them in zones and we actually worked with a company called Service Physics about just over a year ago. These are some of the guys that were responsible for the Starbucks app and the training that went with it years ago.
Really great group. We actually had them come into a restaurant and I said, find me every reason that a service leader would have to leave their zone during a shift.
And they came up with this list of all the items. I said, okay, now I want to figure out how we can take all of those items off the list so that the service leader literally is still standing in the middle of this zone pretty much all night. And by doing that, they're always Accessible, right?
[00:41:09] Speaker A: Yep.
[00:41:10] Speaker B: On top of that, part of the old model of Bartaca. And we still do it. Now, that Dragonfly card that I mentioned, when we spiel you and you sit down, if you ever need anything and you can't find us, put this card up. It's like a bat signal, right? Everybody in our restaurant this, like, it's amazing. You'll be talking with our managers. And if you see, when those things go up, they could be mid sentence, like chatting with a friend, friend, and they're gone. So there's two ways to do it, right? Our job is to the table, but the second way is if we miss it, put that card up instantly. Our job is to run over to you. So again, we've helped the guests signal us in a way that's convenient to them so we're not intrusive.
[00:41:45] Speaker A: So it's funny, it reminds me, I've spent again, a great deal of time in fine dining and I'm reminded of the captain front waiter, back waiter system that many three Michelin star restaurants use, right? And when I tell people who aren't in the industry or who don't work at that level, who have never worked at that level, as you have to understand, a captain stands in the middle of their station the entire night, does not leave the floor. They take the order. They give the piece of paper to the front waiter. The front waiter goes around the corner and rings it in. The back waiter is the one bringing this, clearing this. The front waiter marks the table. He rings in a drink. The front waiter brings them the drink, and then the captain will serve you, bring them to it. They're like, you know, they're like little tentacles, like sending them out into other parts of the restaurant. Go check on this food. Go check in the back. The captain does not leave the floor. They are there to be the salesman, right? Which is. And to be the main ambassador for hospitality. When I explain this to people, when they don't understand, I said, you know, full service restaurant is not a very efficient or effective way to run a restaurant. You know, the two biggest issues we hear over and over again in the restaurant industry are two biggest issues over and over, right? Took too long. Couldn't find my server. Right. It was taking too long. And I couldn't find my server to complain about it. Yeah, I couldn't find my server. It was taking too long for me to be able to order a glass of wine and just the just being able to have somebody right there. My wife and I famously pretty much always dine at the bar, if we can help it, we will always dine at the bar because I can always just raise a finger and a bartender's right. Bartender's right in front of me. There's something I need. They're right there. And I. I don't like being in a dining room and feel like I'm bothering somebody to get me something they've forgotten to give me. Hey, I need a spoon. I ordered a soup and you didn't mark me with a spoon. Hey, whatever it is I need, I try to convince people that this is better. By getting rid of service touches, you're actually improving the hospitality, which is exactly what you're.
Is exactly what you're saying here, right. Is that you gotten rid of touches, you know, steps of service. But in its place, we can now. We now have the time because we're not doing all that other stuff. We now have the time to be more focused on the hospitality. Talk to me about some more of the things that you've gained over the course of doing this.
[00:44:00] Speaker B: Yeah, I think, you know, and you made a ton of great points. I couldn't agree more with what you're saying. That's. That's the key component to all of it, right? It's when we look at our filter of making adjustments, is this better for the guest? That. That's the filter. It's the only one, right? Is it better for the guests? If it is, let's do it. If not, get rid of it. But for us, the brand is about simplicity in itself. So to your point about missing a spoon, it's like, okay, what can we also do to reduce the need of. Oh, I forgot a spoon, I forgot a fork. All of our silverware is set in cans on the table, ready to go. More than. More than is enough. If there's four guests, there's six settings there. It's like, so that way you've got enough, right? When we bring for the kitchen, everything's already marked, so it's like, you don't. There should be no need for it, right? If we do that. The front waiter, back waiter thing you mentioned is funny because that's actually where this all started from, is I have a fine dining background. Our CEO used to run Barcelona, our sister restaurant. And same thing. It was a fine dining perspective. So we looked at that front, back waiter and said, hey, let's use this as a model, right? And then let's take it down to our kind of our style.
But for us, the biggest thing is that we've seen an adjustment in frequency. We've been now measuring frequency of our guests. Our frequency is like almost double that of our pure set, which in full service dining is impressive. Right? QSR much, much better use case. But in full service, we've got a frequency of like 4 per month, which is. I couldn't. The data came out. I'm like, it has to be wrong. Please rerun it. Yeah.
But I think, one, you can experience our brand in many different ways. The style of dining that we have, that's one part of it. But the second component is that because as you said earlier, we can really focus on hospitality and engagement.
The staff feels so connected to our guests. I was in our store in Westport, Connecticut, for Cinco de Mayo, our busiest day this past Friday, and I was blown away.
Guests walking the front door, giving hugs to every manager. Like, everyone knew. It felt like the old cheers thing, right? Like, oh, hey, Martin, how are you doing? Right. But it was incredible. And that doesn't really always exist in traditional dining because it's hard to. Right. And it's. It's the old adage, like, people go to bartender. People go to bars to see bartenders, not bars. Yeah, it's the same thing. People come in to see our staff because of how they take care of them. And everyone knew everybody. So to me, that was the biggest benefit of the. This is like our staff not only got to engage, but you got to really have good conversation. I watched managers taking kids outside throwing paper airplane contests to get the kids engaged.
Like, during the traditional model, it's hard because you don't have time. Right. You're already paying these guys a fortune. You're already servers, already running eight, nine tables. You don't have the availability to really create meaningful connections. I think that's been the biggest win for us that we preached in the mountaintops. Like, this works. It is such a system. And our team has more fun. You know, it's more fun to be at work that way.
[00:46:59] Speaker A: So it's a really good point because the job of a server is stressful. If it's quiet, if it's a slow restaurant, you've cut the restaurant way down. You've got three people. They each got 18 table stations. They're running all of the guts tables in the patio, tables up on the mezzanine. Back here in this corner, like, they're just running all over the place. And they still have the same six tables. They're just spread all throughout or they're really busy. They got a 5, 6 table station and they're just running like crazy over these and it's not fun, to your point. And you don't have time to stop and make small talk or play paper airplane contests and things like that. When we talk about hospitality, we often lose sight of that. Like what that is. People come in, they order and then they have to wait. Like that's annoying, right? That there's. And there's an opportunity there. If you only, if you only think about it, talk to me. I mean, this is, I believe this is the future. I believe what's going to happen is that fast, casual, quick service are going to continue to thrive because convenience and urgency, I don't think will are going to leave, let's say, the American lifestyle anytime soon.
I think fine dining is not going anywhere. I think there's always an opportunity to celebrate, to mark a moment. I think we all have those, those, those points in our life. And I think the middle, full service restaurants, family restaurants, things like that, I think they're going to have it harder. Especially as you said, labor goes up, food costs continue to go up. Right. Even as inflation eases. What's missing from the front page of the New York Times is that it's not easing for food, for food, fuel, largely, it's not. The gas pump may feel a little bit lower, but not for, for jet fuel. And things like we lose sight of that and certainly not, not our food. Right. We've got our food touches. So many middlemen between the farm and the plate. There's so many people who touch that and they all add their piece onto that.
I think this thing, I think what you guys have created is exactly what I've envisioned, which is why I wanted to have you on the show that we, so we can have this conversation.
What's it going to take for more people to catch on and say, hey, I mean, you've cut how many points off your, off your labor because you're doing it this way, right? I mean, you said a few minutes ago 200 basis points. I mean, you know, losing 2, 3, 4, 5 points off your labor is huge. And for a lot of restaurants, I think it could be as much as five points plus.
[00:49:27] Speaker B: I agree.
[00:49:28] Speaker A: Which drops right to the bottom line. P.S.
[00:49:31] Speaker B: absolutely. Yeah. And we ran great labor before. We were very, very profitable and efficient concept before. So I think you're right. Could get to 500 basis points. And I agree with your statement. And I do think fine dining is not going anywhere. I don't think this is a fine dining model. I think this is A casual dining, fast casual dining, that abridged perspective. But I think to your question, I think it's just going to take someone to take the chance and be diligent with the fact that, hey, it's not easy. If it was easy, everyone would be doing it, as this expression goes. And, you know, somebody had to kind of pioneer it. And we. We happen to be that advocate. And now people are starting to recreate it.
I think ultimately, just going to take people slowly to adopt it. And I think at some point, you're going to see one of the big boys take this down.
[00:50:16] Speaker A: That's right.
[00:50:17] Speaker B: That's going to be like, Panera just partnered up. They're doing, I think, 60 locations different because they're much more of a, you know, fast. I wouldn't say fast food.
[00:50:25] Speaker A: They're not a full service model anymore.
[00:50:27] Speaker B: Right. So. But. But I think it still helps with the guests being comfortable using the technology. Right. The McDonald's kiosk helps them use the technology.
But I think it's gonna take one or two of the big guys to swallow it and say, I'm gonna figure it out and do it.
But like I said, we could cause almost every other week and people like, tell me how to do it. Just tell me.
And a couple of them was funny. I was at the Restaurant Leadership Conference in Arizona a couple weeks ago, and I talked with this one CEO and he goes, oh, God, we tried it for six months and it was hell on wheels. And we just. We gave up. And they just gave up. I'm like, I wish we had just kept going. I said, trust me, it wasn't easy. We're now almost two years in. It sounds easy, but, you know, we had to really make some changes. We turned over a lot of staff to get people that believed that this was the future.
So I think it's. It's just going to take an open mind. People have to realize that labor is getting higher, commodities getting higher, inflation's going up, the pressures won't stop, and either get ahead of it. Right. And try something different, or you'll catch up when you're behind. But how much money do you lose between now and then?
[00:51:35] Speaker A: Right. Yeah. And that's the thing. Like, I think this will help. I think there's such a opportunity for independence to do this and succeed at this. And I agree with you. I think it's going to take one big boy. I think Chili's is going to do it, Applebee's is going to do it. And what's going to happen then this is what I'm really afraid of is that then guests will come to expect. Expect it. And there will be immense pressure on all the independents to adopt it and to adopt it very quickly.
That I think, and, and, you know, independence, it's harder because infrastructure costs money and, you know, upending the whole style of service, but having to do it when you got six months Runway is different than six weeks Runway. And I think if you did it on your own time, that. My very real fear is that, like we said to your point, that one of the big boys is going to do it, and then everyone, guests are just going to come to expect it. It's going to be a great experience, as you're finding now that a lot of people really embrace it and enjoy it.
And then. And then the independents aren't. Are going to be forced into it. Sort of like QR codes, sort of like online ordering, sort of like all the things that were friction points during the pandemic that ended up helping everybody but were really hard because they had to hurry up and do it really quickly.
For me, I think it's the same thing. And we're Talking about roughly 50 or 60% of the restaurants in this country are this full service model that would benefit from. From this, from cutting a significant amount of labor. And I know so many people out there struggle with it. My joke I kept making the last two years. I can't find waiters. I can't find waiters. I would say, why do you still have waiters? My buddy Sean Walshef runs a barbecue place out in San Diego.
He's got. They call them ambassadors, right? They call them hospitality ambassadors.
Same sort of thing, right? Like they run it basically like you run it. And he's been doing that for, you know, going on three years now. He's like, after the pandemic, we just never moved it back.
[00:53:31] Speaker B: Yeah, I think, I think you're right. I think the other thing, too, and I agree with your concern. I think that's a very fair comment. I think the other thing is if they wait to the back end now, it's like, oh, you're just a corporate restaurant now. Like, the independents have that special sauce, right? Of. Yeah, you're, you know, the local Mexican place isn't Chili's. Right. They're whoever, right? The second Chili's does it and you do it now, the comment, the conversation changes to, oh, you're trying to be like them. You're gonna be a corporate restaurant now. Now you're not my local mom. And pop versus you're doing it because you wanted something different. And I trust in you and I believe in you. I think that that's added to the same thing that you've got for your fear. For sure.
[00:54:11] Speaker A: I love it. Listen, I love this entire conversation. I appreciate you, your willingness to.
To be transparent and to share this story with not only me, but everybody, certainly all the listeners. And like I said, go check out. Because a lot of these interviews that happen he's been doing the last month or two are fantastic. And I tried to cover different things than. Than you've covered, and I tried to find a couple of different angles here, but you're. You articulate it really beautifully, what you guys are all about and how you did it. So I appreciate you sharing that story. Before I let you go, I got five quick questions for you. You got time for five quick questions?
[00:54:44] Speaker B: Let's do it. Absolutely.
[00:54:46] Speaker A: This is the fun part. Tell me, what's the last great meal you had?
[00:54:50] Speaker B: Last great meal I had. I went to Le Bernardin, actually, in New York City with my best friend who lives in a town over from me for his 40th, and just. It was everything that you would expect to when you built up. I'd never gone before. So a remarkable meal.
[00:55:05] Speaker A: Amazing. I love it. What's the last great hospitality touch you've had?
[00:55:10] Speaker B: Oh, great question. Lost great hospitality touch I had.
Think about that for a second.
[00:55:20] Speaker A: Wow.
[00:55:20] Speaker B: That's a really good question, actually, I'll tell you. I went out last weekend. There's a local, funny enough Mexican restaurant in my town downtown. We were in between taxiing my kids around for, you know, sports on Saturday. Wife's like passing ships in the night. And we had literally 35 minutes right before kind of that dinner rush. Hey, let's just pop in. We've been in a couple times, and we walked in the door, we got our kids, all the jerseys, everything. And the owner, who had met me maybe twice, met my wife a handful of times, walks up, recognizes us, says, hey, what are you guys coming in to do today? So just a quick drink and food, and they're already. They're on a weight. She goes, don't worry about it. I've got you set up. I'm putting you guys outside. They walked over. They had us in and out in 30 minutes with some drinks and food, but the amount of, like, table touches that mattered. They stopped by with refill for my kids drinks. They brought over crayons with coloring books to us. They had a little toy figurine because my son was bouncing off the tables and dropped it off. And I left realizing like, God, it could have been so chaotic. But my wife and I sat and had a conversation with our friends, enjoyed a cocktail relatively peacefully with six kids, you know, going nuts to their side. And to me, it was the unspoken hospitality that keeps me going back. Like, they don't have the best food and drink in the entire, you know, town, but their hospitality, they just get it. And they immediately acted. And in 30 minutes, I experienced more hospitality and genuine engagement than I have in, in months.
[00:56:52] Speaker A: I love it. All right, tell me, if a genie came down, could grant you one wish as it relates to our industry, what would it be? What would you wish for?
[00:57:01] Speaker B: One wish for the industry. What would I wish for?
Goodness.
You know, I actually would wish that every, every person in the workforce would work in our industry at one point in their career.
[00:57:19] Speaker A: All right, so apologies. We lost Anthony at the very end there. If I can get him again, we'll get him back. We'll get the answers to his last couple of those last couple of questions. But I think the, the main part was very, very obvious. I think we certainly got to the meat of what I wanted to discuss.
I'm going to put all the links in the show notes for, for Bartaco. You can check that out. I'm also going to share some of the other interviews he's done, some of the other podcasts, just because I think they're really good. Really smart, cool guy. Glad to have him. Appreciate taking the time again. I want to remind you, we're always accepting new members into the P3 mastermind program. If you want to talk to one of either me or one of my coaches about the program, set up a call. Restaurantstrategypodcast.com schedule that link is also in the show notes. Free 30 minute strategy session. We'll get to learn more about you. You'll get to learn more about the program. We look forward to having you. Thanks again, guys. Appreciate being here every single week and I will talk to you next time.
