Arjav Ezekiel (04:36.034)Yeah, yeah.
Arjav Ezekiel (04:41.239)Entirely.
Matthew Conway (04:44.302)So I think, well, I want to get into and Sharkey can lead that, like, let's go back to Danny Meyer and your time at Union Square and how you feel about those things. But I think you're the most relevant person because you're actually literally forging our industry, forging our industry into a new era where so many people have mimicked, if not all, some of the changes you've made to be more profitable as a business, but also to still rely on gratuity, even if it's not included.
to help with your payroll and overall bottom line. And I think that that's a really interesting topic. It's much different than hospitality included, but you'd be in a really bad place if you didn't get gratuity for most of your customers. And I've also seen you publicly kind of, you know, bout with folks who are like, you know, we didn't want a tip, but we had to. And you've come out and said, nobody forced you to tip. So I think there's a lot of meat on the bones. We don't have a lot of time. Shark, you do want to like set it up?
Joshua Sharkey (05:40.01)Yeah, well, so it sounds like the core topic here that we're going to talk about is tips included and our thoughts on that. There's a bunch of other meaty topics. We probably won't get to any of them, sounds like. And maybe this is just what we'll talk about today.
Arjav Ezekiel (05:52.302)You guys talked about NOAA too, huh? We did. Did you guys get into the controversy?
Joshua Sharkey (05:59.306)Not enough. So we could we could jump back into that a couple. I'll throw a couple of things out there just in case. A lot of these are Matt, you might scoff at whatever. But you're 86 Amazon Go, Amazon shut down Amazon Go. But that was super interesting to talk about why, because that technology is pretty dope. But it didn't work because of the experience. And I think experience is something that keeps coming up for me in hospitality, restaurants, experiential like.
Businesses keep popping up more and more, you they like the entertainment like you guys have seen these things popping up There's tons of these things but there's a there's a big sort of contradiction between we're getting all these entertainment and like Brandios type restaurants. There's more of this grand experience, but it's not actually correlating to people happier with the experience It's just better revenue models better margins so we could talk about that. There's something interesting I think with DTC grocery So I don't know if you guys saw but toast partnered with Instacart
I already saw this pattern coming because there's a large food distributor called Gordon Food Service that has a DTC where you can sort of order goods from your home or from restaurant. But Instacart is now, we've seen a bunch of our customers already doing this. You can buy goods for your restaurant directly from Instacart, like instantly. So you're running low and you can kind of like buy things on the fly. And so now they partner with Toast to do that even more, to sort of double down on restaurants.
being able to buy. You're doing that from like consumer grocery, not from. Yeah. So they're literally buying direct from. So this is like emergency. Yeah. It's more like emergency like, okay, I'm on the fly. I need some cilantro and this and this and this. can't get, Balador's not coming until Wednesday. So that's part of it. There's more. What happened?
Matthew Conway (07:43.384)What's
Joshua Sharkey (07:47.75)How about I remember, you know, at Belay, actually they wouldn't, Dairyland wouldn't sell us anything anymore. So we had to go to the bodega to buy milk and butter. But all right, so we have that. I think that's interesting. If we don't get in today, we'll get next time. PAR acquired Bridge. Bridge is like this customer intelligence where you can sort of tie who that person is that bought from you, whether they bought online or they bought in your store or they bought in your shop. There's a lot of meat there, which we probably won't get that.
today. The forecast came out for restaurant sales in twenty twenty six. They're forecasting one point five five trillion in restaurant revenue this year. And that's not from an increase in traffic, they believe, just higher, higher menu prices. So those are some things we can get into. But we'll start here with tips included. And I think it's important to call out Matt. You already teed up our job a bit who's on the show. I'm not sure I ever met someone who built a restaurant and like paid it back.
paid back the majority of it within, I don't know, it a year or something like that? Yeah, 10 months. Who does that? You know, it's wild. And there's obviously, you know, a method to the madness. So I'm only saying that because of the, for the audience of the, you know, for context on your, your opinion on tips, tips included, why they matter and the subject matter. So like, let's just dig in.
Arjav Ezekiel (08:50.35)It's like 10 months of thinking.
Joshua Sharkey (09:13.774)I'll be honest, I actually don't have as much of an opinion here just because I didn't really experience it enough. What I will say is I'm going to steel man the argument to tee us off because there was some like hate towards Danny Meyer on that episode a couple of episodes ago. And I'm just going to read what he said about why he did it. He said, he remains an advocate for the philosophy.
But he acknowledged that one company cannot change a deep seated American cultural habit alone for no tipping to work. likely requires a massive industry wide shift or a change in federal labor labor laws. The pros and pros increased pay for cooks and dishwashers, more stable, predictable weekly income for the staff, reduced legal risks regarding typical compliance and promoted a teen culture rather than a front versus back. These are his pros versus.
Matthew Conway (10:10.168)This is Danny's works,
Joshua Sharkey (10:11.628)Yeah. Cons. Experienced servers saw a ceiling on their earnings. Customers. so now these, these are not his cons. These are what were the, were just as the perceived cons of what happened. Customers perceive the restaurant as too expensive because the check. Difficult to compete for talent, especially during labor shortages. Matt, you, you called that out. And then diners missed the traditional sort of reward of like the ritual of actually tipping a server when they did something well. So this is, this is going to be for you all mostly because I don't have
Enough of an opinion here, so shh-
Matthew Conway (10:42.808)Sure, but before anybody spikes into this, are we supposed to believe, listening to these comments, that that research wasn't done before he grabbed the flag and ran into the middle of Manhattan and planted it as, I'm the all tips inclusive guy and everybody's gonna follow me? He knew all of those potential or likely outcomes before he became the poster boy for this.
Arjav Ezekiel (11:05.71)I don't think so.
Joshua Sharkey (11:06.83)No, you don't think so. Again, think the idea, look, I don't, and again, I don't have an opinion. I like Danny. I think he has generally good intent. And I mean that. I worked for him. Like there's things I really do like about like how he runs his business. I don't know if it was altruistic. I do think he probably had some good intent here. I don't know if he thought through all the downstream effects. When you said to me like that notion of
Well, all the great servers now are just gonna work breakfast because the tips are the same, so it doesn't really matter. I don't even thought about that. So, I'm not an idiot. Yeah, and I work at the back of the house. But it didn't even cross my mind, right? So I don't know whether he... Our job probably has a much better perspective on...
Matthew Conway (11:40.878)work in the back of the house.
Arjav Ezekiel (11:51.406)I guess my question is, is the criticism of Danny like, Hey, you tried and failed. Therefore you're not like, therefore we're mad. I'm trying to understand what the thesis of like the complaint is, guess.
Joshua Sharkey (12:05.932)I guess for me, the, wouldn't call it arrogance. I would call it an obliviousness to believe, you know, I actually looked up, I remember like the article that came out or how it was published that like this was, this effort was being made. was, it was Danny Meyer. was Gabe Stolman. It was Tom Clicchio. It was Andrew Tarlow. It was these guys who sort of fancy themselves.
as the moral compass to the industry. And to me, was an utter lack of awareness of simple economics and not just awareness of simple economics, a belief that their brands were above capitalism. To me, that is what
Matthew Conway (12:59.116)and
Ultimately
Joshua Sharkey (13:03.83)led me to lose a tremendous amount of respect for anyone who participated in the leadership. Listen, I'm all for all tips included. I'm all for better quality of life for people who work in the hospitality industry. I understand the why behind trying to make this move and understanding like the potential benefits that it could be for men of hospitality employees. What is just laughable to me is that
They believed that they could do it with like five hospitality groups, like really small. Well, we talk about Unisquare Hospitality Group, Unisquare Hospitality Group is a tiny organization in comparison to hundreds, if not thousands of other restaurant groups across what is the alternative? What I don't understand is when you say like the arrogance of them believing they could do it, what's the alternative? If they didn't start it, how would it...
Arjav Ezekiel (14:00.686)But can I also just add, isn't that the thrust of entrepreneurship? Don't you have to have a certain belief in yourself to be able to change something that is like, to me, you can make the same argument about Jeff Bezos. You can make the same argument about Mark Zuckerberg, about the fact that you have to have a certain arrogance in your ability to change something against the... Danny did, hospitality included was around for five years.
Right? Like at his restaurants and COVID hit, like, and that was a great excuse to get out. It wasn't working. I guess the thing I would push back on is that like, if you see a problem and you just keep walking by it, that's not leadership. Right? Like if you see a problem and you say, you know what, like we're going to try, we know this is going to be really hard and we're probably going to fail. But in order to like give this a shot, we're going to have to just fucking try. I think that's important.
I think that is the thrust of leadership. And I think, I think you can, you can make an argument that maybe the like rollout in the messaging maybe was felt like, you know, nails on a chalkboard to some people, but who are not in a position to like participate in it. Yes, I could accept that, but I have a hard time penalizing somebody for seeing a problem and saying, I'm going to take a whack at this, even though it's like completely.
likely that I'm gonna fail.
Joshua Sharkey (15:31.534)I also think that it's impossible to predict human behavior and it's very easy after the fact to say, of course that happened. That's I told you so that they would, that this would happen. But you know, you don't actually know until you do it. There's no way to say, I mean, we can, we can all sort of pontificate and sure. You think it's impossible to predict. And I hear everything you're saying until, until you try to actually solve a problem by, by diving in, you don't actually know that.
Matthew Conway (15:49.505)No
Joshua Sharkey (16:00.758)You can, you can do it. That's true leadership. What we're talking about fundamentally here is socialism versus capitalism, right? You're democratizing the, the wages that, that exist within an entire market, right? So, tend to do it with an entire market with 50 restaurants out of hundreds of thousands. So you're basically saying this small sect of 50 to a hundred restaurants.
Matthew Conway (16:08.92)choice.
Joshua Sharkey (16:30.606)is going to lead the charge. And by the way, these are like really upscale fine dining restaurants, like, like 0.5 % of what makes up the restaurant industry to believe that. And I truly do believe that they thought that their brands had so much brand equity that people would forgo making more money in other restaurants just to simply work in these restaurants. That to me,
is the definition of arrogance.
Matthew Conway (17:03.104)But I will-
Arjav Ezekiel (17:03.854)I'll just, I'll just add this. Like, I think, I don't think you're wrong in the sense that like, I think they assumed they were going to bleed out people and they did. Right. But I was a Grand Ration Tower and during hospitality included, were still people there like Mike Widows who'd been, who helped unbox the chairs when they first opened who stuck around, you know, there were like a lot of the OGs who stuck around. Were they annoyed by it? Yes. Did it keep a cratous ceiling on like what they like could make? Yes.
But that's to me like, hospitality included didn't work not because people left. That's like the, that's the wrong conclusion. Hospitality included did not work. Like those restaurants were still staff. Those restaurants still had employees. Like I ran Gramercy Tavern and we had a full suite of who were there.
Matthew Conway (17:55.191)With the fit with
Joshua Sharkey (17:55.822)The same level of I th-
Matthew Conway (17:58.414)So there wasn't a die.
Arjav Ezekiel (18:00.63)Is it generally? Yes. No, there was a dilution of talent, but then you put that onus on the management's team to say like we need to train people up.
Matthew Conway (18:08.312)The issue has-
Arjav Ezekiel (18:14.094)There was a server class that did not leave.
Joshua Sharkey (18:17.614)But Arjov and Matt, maybe, again, I don't know, but I don't quite understand this notion of socialism. Wouldn't the idea be that, okay, tips included for everybody. I think that's great because everybody has a part in this process, right? But if I'm doing that, right, and then I have a server who's great, I could just pay them more base.
Matthew Conway (18:42.742)I'm not going to jump on board with the full socialism thing, however I do agree with Michael's points on several things. answer Arjav, this is tricky for me. I don't believe they did it intending to fail, or even with the idea that it was a possibility of failure. I agree with Michael's assessment that the arrogance of the clout they had in the markets was that not only were they going to do this internally,
But they were gathering a person and going out to the press to try to put pressure on other people and larger organizations to fall in line. that was the. We would see what they do. Let me finish.
Joshua Sharkey (19:19.884)only way to succeed what they should.
Joshua Sharkey (19:26.43)Hold on,
Matthew Conway (19:32.222)Let me finish. I do agree that leadership, especially when you're changing big things, and I think we all agree that the end result of what you want from tips and hospitality included, we all want that, right? We all agree on that. That's easy. And it is going to take a big or small ship, however you want to size the ship to make some changes. Our job's original question was, what's the beef? And for me, as a long time...
General manager and person on the floor in a fine dining restaurant in Manhattan. I don't care I think everything else falls below Manhattan as far as just if it's happening in Manhattan or New York It's happening everywhere on some level try to get people to come in on a subway take an hour both ways and get up to give World-class service and now have them make 40 % less than they were making last month last year last whatever I go to France all the time. You know what sucks about France?
Joshua Sharkey (20:29.816)Service.
Matthew Conway (20:30.68)You know what they don't do? They don't get tips there. They don't give a fuck about you because they know they're not even getting a euro. The idea of me having to go out and get 50 people to all get hyped up seven nights a week to go out and lay their blood, sweat and tears on the floor to make every guest so happy and not give them the tips that they have earned was a non-negotiable starting line for me. And if Danny went and did it in his little
area and said, look, it's working. Come follow me. That's one thing he came out and said, we're doing this. This is the right way and you should follow us. And I had have conversations with my owner. It was like, well, if Danny's doing it, so should we. And I'm like, I'll resign tomorrow because I know that our job can say whatever he wants. I've been to Grammys, Stavro Tavern. I've been to MOBA. I've been to all of their restaurants and the service level severely suffered in at least the initial impact zone after the area.
Arjav Ezekiel (21:24.344)I'm not going defend that. not arguing that. I think there's two tiers of what we're talking about, right? We're talking about the macro level stuff, which is what is the impact of doing something like this? Do we agree that tipping culture is broken in this country? Do we agree that things need to be fixed? Then we can talk about was was was H.I. the right solution to this problem? And I would argue in hindsight, it was not.
Right? Like, I think it's very clear that HI was not the right-
Matthew Conway (21:57.678)Isn't it just legendary?
Joshua Sharkey (21:58.474)Isn't it just legislature? That's a political thing. It's not a private sector thing.
Arjav Ezekiel (22:04.643)What do you mean?
Joshua Sharkey (22:07.124)The whole purpose of this was to try to change like how the industry works. Right. So the only way to do that is to actually have legislature that's written to change the concept of tipping, right. To make it, to either abolish it, to make it illegal, to make it unconstitutional. The only way you do that is through legislature. It's not through the like five companies, five very small companies in the private sector say we're going to lead the way and then we're going to try to pressure
Albany to try to make legislative changes to fix it after we've shown that A, it doesn't work and B, like we're, we're just going for it. To me, the whole thing showed complete lack of sophistication in their entrepreneurial abilities. I go back to arrogance. They were trying to create a, trying to, trying to make what is a political change and do it through the private sector, which maybe there's precedent for that.
Matthew Conway (22:48.59)a compa-
Joshua Sharkey (23:05.144)But this is a such massive undertaking that they thought their tiny little companies could lead the way. And it was just a gross, gross, gross oversight. think saying tiny little companies in size is one thing, but in influence is a different thing. And Danny Meyer and USHD is one of the most influential restaurant groups. So like they might be infant compared to Let Us Entertain You, which is also an influential group, obviously, but they...
Matthew Conway (23:06.328)channel.
Joshua Sharkey (23:32.792)They have a lot more influence and I don't know, think if they didn't do it, then they're just lobbyists.
Arjav Ezekiel (23:39.918)But can I just add one thing? I think like a big part of like why it actually failed had less to do with like what I think the public perceived as like people leaving. It had to do with the basic unit economics of like running a restaurant. Right? So if you keep like, they assumed, I think one of the wrong assumptions that they made was that if you're used to buying a $60 bottle of wine and tipping $12 on top of it, you would now buy a $72 bottle of wine. Turns out.
people don't do that math. If they're looking for a $60 bottle, they're buying a $60 bottle. And what do they end up doing? They're actually not buying a $50 bottle, right? With the tip included that presents at $62. So they saw a decline in sales and like, like everything, like, I think this is where you're right. It's like capitalism wins out, right? Like I think at the end of the day, it was like, this is a wonderful idea, but our revenue has dropped precipitously. This is not a sustainable thing for the long term.
Joshua Sharkey (24:37.804)Well, I mean, I think I have a different, like a different take here. This might be... Without being offensive.
Matthew Conway (24:47.394)Be offensive.
Joshua Sharkey (24:49.196)Well, I mean, so here's the thing is I think about like being a cook, right? In any restaurant or and that's a really great restaurant. Right. I'm coming in early. Right. I am going to go work with the butcher in the morning. I'm going to go work with the with the baker. I'm going to go like go to the extra stations. I'm going to do stuff on the side. I'm learning and like my job is to make incredible food. Right. I get paid very little for that. Right. But that's my job. Right. And my job is also to keep getting better.
And I would argue that the job of a great service person is the same thing as to create, is to give incredible service. Not so that there's an exponential return for a more expensive bottle versus a less expensive bottle, but because your job is to give incredible hospitality and make people feel good. And that's your job. That's not like, why is it that like, that the server gets exponentially more dollars for doing their job really well, but the cooks don't? I don't understand that.
Arjav Ezekiel (25:54.67)I think you're totally right Josh, but like this is yeah, when you look at what Danny was trying to do He looked at the unit economics of a restaurant. It was like how do I pay these cooks more more? How do I increase like people's standard of living? Yeah, and with the margins the way they are the only way you can do that is to look at the tip pool and figure out how do we reallocate the shit? Right like what we do at birdies is a version of that but like we because we're in Texas
There's no rule about like you've spent 80 % of your time facing a guest before you're like eligible, we just don't take the tip credit. Right? So like, I think what we need to be talking about here is like, Hey, labor is going to be the thing that we have to solve for. If we want to make restaurants, you know, you can blame your landlords all you want, but like at the end of the day, labor is the thing that is like killing restaurants because it takes a lot of people to produce food, a lot of people to produce a great experience.
Until you solve for labor, you're not going to end up in a better place as a business. So what's happening? We're talking about AI, we're talking about automation, we're talking about robotics, we're talking about H.I. When what I think we should be talking about as a potential solution is, hey, like have some strict parameters on how the tip pool can be allocated, but allow it to be allocated between the dining room and the kitchen in a fair way. In a more fair way, just leaving all that money for the
dining room doesn't feel fair to me. Right? Like the cooks are producing the materials that are like actually creating value in the restaurant in a real way. In my opinion, I say this as a dining room guy, like we are like the frosting on top. We can take it to the next level. And like, we're a huge part of that experience. like, no one believes in hospitality more than I do, but like, let's be fair about how we're allocating the tip pool. A hundred percent of it should not belong to the dining room.
in my opinion. Okay. That's another way we can solve for this labor issue, which is to say like, okay, like we should, we spent all our time talking about like, you know, bullshit in my opinion, when we should be talking about, like we shouldn't be writing laws to allow people to distribute tip pools more evenly with like real safeguards around making sure management is not touching any of that. like outside of management, we should be allowed to spread it out because like what's happening now is you have these like
Arjav Ezekiel (28:18.83)Gratuity lines or service included lines that's considered revenue, right? So you're getting taxed on top of that and then the owner can distribute it how it wants if there's no guarantee That's gonna be a tip because it's considered revenue Right. Yeah, I mean Yeah, I got off my box, but I think
Matthew Conway (28:35.618)I labor is the relation. I agree with your thought process there, but what I brought up two weeks ago and what I'll throw you here, which I think is important, when you open a restaurant, forget where it is in the eight and twenties, an operator has an opportunity to pay his dishwasher more than anybody in the restaurant if he wants. It's one of the most important positions in a really busy restaurant. There's a hierarchy or structure to how people get paid.
I'm not going to sit here and say that the front of the house deserves three times more than I don't care about that argument. But what I do care about is often the owner operators spending five grand a month on PR and 10 grand a shoot for their photo shoots with their favorite photographer and whatever. And the cook's still making 16 bucks an hour. I think it's an industry choice for the operator to pay cooks less. And a lot of that.
But a lot of the high-end restaurants that we're talking about
Arjav Ezekiel (29:34.222)Matthew, but like, let me ask you question. Like when you were in New York, what was like average labor? Like cut out the PR and all that other bullshit. What were like, what were your labor costs as a of total income? Okay. So tell me like, okay, you add 40%, you add 30 for food, right? You add like another 20.
Matthew Conway (29:44.854)approaching 40.
Matthew Conway (29:53.506)everything is not sustainable.
Joshua Sharkey (29:53.902)70 %
Arjav Ezekiel (29:57.224)That's my point. It's like, it's not about the photography. It's not about the PR. It's like a labor concert.
Joshua Sharkey (30:03.736)Star photography are de minimis cost relative to like the total cost of your business. like there's two things. One, when I think about tips, gratuity, I, you know, I pay sales reps, right? And they get a percentage of the revenue that they bring in. Right. And there's a different percentage and a different pay rate based on are you fielding things that already came in and you're basically just like taking orders versus did you go get revenue and you're to get a higher percentage and you get more base and things like that?
And I think it would be different if the servers were going acquiring the customers, bringing those customers in, generating revenue for the business as opposed to taking all the inbound, all the orders that come in and just basically facilitating them because there's a difference there. Are you generating more revenue for me by like that wouldn't have come here otherwise versus like, you just servicing folks that are here? In theory, Josh, that's a really good, that's a, there's two things to really unpack there. So that's a really good analogy between those two.
I'll lay finish. don't you? Yeah, because there's two directions we can go here with that. Because there's that because I think there is an opportunity there, by the way, because we do pay for PR. We pay for all these things. But there's we especially with with how much we all sort of like can go direct to consumers. There could be an opportunity to generate more business for the restaurant, you know, as somebody that's in hospitality. But the other piece of this is, I mean, let's be honest, and maybe this is just pointless to talk about. We should be charging way more for what we're doing. There's no business where
your operating costs are so high, your labor, your food, your OPEX, all these things, and then you're charging this sort of very small markup relative to all your costs. If we were actually able to charge what any other business charges for their services and cogs, your dinner would be very expensive, but that's actually what it should cost because you...
in order to stay in business. And that's why people you have to charge enough to stay in business for them. And then people can decide if they want to go or not. But really, the the stake were upset because it's forty two dollars. It probably should be eighty dollars because that's how you actually run a business is you have to have good enough margins that you can sustain this over time. And no matter what you do, you can optimize all you want. You can find robots, you can do all these things. But no matter what, like your margins are going to be slim.
Joshua Sharkey (32:22.422)So either you're either right away to charge more or just accept it. Coming back to, I mean, the unfortunate reality of we live in a capitalist society, a capitalist country. If you charge 80 bucks for your steak, where's your customer going to go? Your customer is going to go to a place that charges 50 bucks for a steak. So it's a race to the bottom. It's no different than you paying your sales reps, either SGR or their AEs, versus servers.
essentially a commission, you're going to pay your reps a lower commission if the market called for that, right? If you could pay a 1 % commission versus a 8 % commission on new business, you would. If you could still attract the highest level of talent, you would do that. It's no different than servers in the front of the house. A server who's going to be able to keep their prorata share of the tip pool is going to work in a house that allows them to do that.
they're going to try to earn the most amount of money they can possibly make versus the alternatives.
Arjav Ezekiel (33:29.006)I don't think that's the, like, I think that misses, I think that might be true in New York. Okay? I don't know if that's like true everywhere. I think purpose is really important for these young people. think finding connection to a culture is really important. don't just think that. is really important. like, you know, and I think about my own career, I have frequently turned down higher paying jobs for better cultural effects.
So like, don't buy this idea that like people are only in it for the money. I think there's a certain class of server that is, but those people are usually people who have other things they're doing on the side. think people who have committed their life to this are more interested in like finding places that they can have a reliable schedule where like they're not being asked to work on the like on days or being called in on days or not being like, you know, not scheduled for that they're paid fairly, but like not like, like
Birdies is not the highest paying job in Austin, but we have a ton of people that have been around for three plus years. Right. And I think part of that has to do with like culture. I also think we opened with a certain like level of like different differentiation between other restaurants. And I think people who we hire understood that. Like we tell people before they hire, like this is a shared tip pool and tips are distributed based on the number of hours you work. Not like by position. We don't do points.
And like we found that those people don't care if they're coming from coffee, for example, it's still the highest paying job they've ever had. Right. So I think part of it is you have to look for talent in like different places. If you're going to do it. I think if you're going to do something like hospitality included, just an example, which I don't think you should, but like. If you did something different, think if opening a restaurant with a different set of rules, rather than implementing it on top of a restaurant like Gramercy Tavern, that's 30 years old at that point, or 25 years old at that point, like.
Matthew Conway (35:20.13)Agreed.
Arjav Ezekiel (35:20.632)Totally different set of game, right? Like when you open it
Joshua Sharkey (35:22.878)How do you somebody do? How does somebody do what you did? So like can you just unpack let's just say? ushg or Stop pick a group like not as not a one unit group like like a one-in-a-restaurant like how does somebody do what you did the way you started your restaurant where there's where it is pulled and you know there everybody's got you know a piece of the pie how can how can More restaurants do what you did
Arjav Ezekiel (35:50.354)I think the way we thought, I don't want to lecture like restaurants and how to do things the way we did, but I'll share my kind of thought process and why we did what we did. Like I think when we opened Birdies, there was this great conversation happening nationally about like restaurants having to reset, right? It was like after the pandemic, this was not sustainable anymore. Like how do we make restaurants more profitable? Like there were so many conversations around how restaurants had no longer become sustainable for employees or employers, right? And I think we,
just decided we needed to like think about what the decision tree was and how to take care of our restaurant. And that started with us because we're like where the head of the beast. If we're not taking care of ourselves, Tracy and I, we really can't take care of anybody else. was kind of like the oxygen mask analogy. And then, you know, we decided when we opened, we were going to say like, Hey, this business model doesn't work. If we were going to look at restaurants, knowing nothing, starting at first principles, knowing the economics of what it looks like to run a restaurant today, what does it look like?
Right. And we looked at different models, et cetera. And then we said, like, the only thing that we have to solve for really to be successful over the long term is labor, the cost of labor continuing to rise. And if we could figure out a solution to that while taking really good care of our team, then we had an opportunity to be successful. So, you know, one of the things we did was like, okay, like we don't want more than like 18 people on our team. Like, and we need to be able to be a high volume restaurant.
with seven people in the dining room floor, one manager in the kitchen, one manager in the dining room and like five cooks. Is that possible? And then, so like we worked backwards from that idea, right? Like then it was like, okay, this is what the menu has to look like to be able to execute at that level. Like this is what our labor costs have to look like. You know, this is the kind of volume we need to do to make sense. I think long story short, think
Well, the thing that we clicked into is that like the biggest risk we took was like doing counter service, like were people willing to wait in line, you know, for a $35 entree, but wait an hour and a half. And like, that was an unknown, you know, we didn't know if people were going to do that. And when we moved to prefix, like in April, that was really scary. It was like one of the scariest moments you had as a business, but we decided to do it because we're like, we don't want to be this busy and be doing all the cart. Like this doesn't make sense anymore. You know what I mean? So like.
Arjav Ezekiel (38:16.142)Then the question because do people wait in line for a $79 prefix menu? You know, and I think the thing that we've realized is like people, like you talked about experience is really important. If you can create an environment and experience for guests that like makes them excited and feel seen, like they're going to keep coming back for it. But, but I think you have to start with like your first principles. Like what's important to you as an operator? Like what are the things that you, when you came up in restaurants you didn't like?
Like I'm married to the chef of the restaurant, you know, she hated getting paid $12 an hour while people in the dining room were making 50. She always talks about when she was a dill post, so like she made 25,000 servers made 125. You know, like, and so we said, how do we fix that? And like, we looked at the laws in Texas and we figured out like how we could make a small impact on that, you know? but the biggest thing is that it has increased our margins. It's like made us a profitable restaurant. And I think.
that part, we need to be talking about that stuff more because like there are solutions to like some of these things that have ailed restaurants for long time. You can't do them everywhere, but you have to start thinking about the model differently for any, like to be successful.
Matthew Conway (39:25.582)And Sharkey and I have talked about this extensively both on this current iteration of this and previously when I've come on the pod. And to your point, Arjav, kudos to making those decisions the way that you did. It's so much easier to start by giving healthcare, by giving a higher wage, by distributing wages differently, by creating the path that you want and then filling into that than being...
whether you're a leader or not in a situation where those restaurateurs have these ways that have been the same. And part of the reason why I didn't go back to New York after COVID was because the people that wanted to bring me back weren't willing to change the broken ass way we've done this industry for so long. And I was unwilling. And like one of the big things we did at Tipling early on was do things.
like give healthcare that we didn't think was going to be possible to financially succeed, but I was like, fuck it, let's start with it and then try to get there. And if we don't, we'll fail, but it's better than going all that way and then not being able to do what we wanted to do and feeling bad about it. like feeling good about it.
Arjav Ezekiel (40:30.67)100%. And you think about it as a cost of doing business thing rather than like an unnecessary expense thing, you're adding. 100%. And I think like opening, we opened with healthcare because like Tracy and I needed health insurance. And we're like, well, we're going to have to get health insurance. Like we may as well offer it to everybody else. You what I mean? Like we're in the process right now of like vetting 401ks. Cause I'm like, these kids, if we're going to truly, if our mission is to make restaurants a career, these people have to think about their retirement. We have to help with that. You know what I mean? So like.
Matthew Conway (40:36.558)Tomator.
Arjav Ezekiel (41:00.27)I think there's, it's like for us, it's always been about a mission, which is like, want to make, create models that can like help this industry think about how we can continue to professionalize this industry and create business models that allow you to be profitable and how those two things can coexist. Like that's what I'm interested in searching for. You know what I mean?
Matthew Conway (41:19.19)Arjan, how much did you look at barbecue as a precedent for your concept? I'm definitely not taking anything away from what you've achieved. And you seem to be like kind of first mover on, you know, on a more sophisticated dining experience, but barbecue has been doing this for forever, a very long time, which is to me the best business, right? I'm curious, how did you, how did you comp barbecue to?
As much as you Did that help you give? that help you? Okay.
Arjav Ezekiel (41:51.194)I think barbecue and tacos in Austin helped me believe that there was a market that was willing to stand in line for things. I think we went to, when we went to like LA and ate at like squirrel and destroyer, like I remember eating a destroyer and was like, this is different. Like this is a different kind of business model than I'm like used to seeing. And it was a breakfast, you know, it was like different. it was not, I think one of the
The question Tracy and I asked was like, is there a world in which we can like make this feel like a full service restaurant when people sit down and just cut out a few things that like are not important? And I think we have continued to hone that and work on it. And it's like, I think we're to me from the way I like to eat at a restaurant, like Birdies is the way I like eating at a restaurant, which is like, I love having a great first interaction with somebody.
I like having the things I need when I need them, but then I'm at a restaurant to spend time with the person across from me. You know what mean? Like it allows me this space to like have that experience where I'm like, if I'm having dinner with Matthew, like it's just us catching up without like constant interruptions.
Joshua Sharkey (42:57.198)This show is brought to you by, you guessed it, Me's. Me's helps thousands of restaurants and food service businesses all over world build profitable menus and scale their business successfully.
If you're looking to organize your recipe IP and train your team to put out consistent product every day in less time than ever before, then Miii's is just for you. And you can transform all those old Google Docs and Word Docs and PDFs and spreadsheets and Google Sheets into dynamic actual recipes in Miii's in lightning speed. Plus, stop all that manual work of processing invoices because Miii's will digitize all your purchases automatically.
And there's a built-in database of ingredient yields, prep yields, and unit of measure conversions for every ingredient, which means you're going to get laser accurate food costs in a fraction of the time. Visit www.getmees.com. That's G-E-T-M-E-E-Z dot com to learn more. And check out the show notes moving forward because we're going to be adding promotions and discount codes so that all of you lovely and brilliant Mees Podcast listeners get a sweet deal on Mees.
Matthew Conway (44:01.422)So all you've cut out really is that that like middle layer where you get seated and someone has to come out and there's like that gap and then the pitch. Yeah. All that bullshit. I think about how much you.
Arjav Ezekiel (44:13.078)And then the check. The worst part of a dining experience is like waiting for the fucking check. Yeah. So like when you're done with your meal, you just get up and leave. Yeah. Like it's awesome to me, like the way I like eating and it solves for all the things I hated about like fine dining and like you're getting a six course tasting menu, you know, at this restaurant. Like the great thing is you don't need a reservation. You can just walk in. So and it's seventy nine bucks. So it's like.
It allows us to be really creative on the backend. the menu changes, Tracy changes the menu every month, top to bottom. so she and her cooks get to be creative and like have all the excitement and energy they would have like a great, you know, fine dining restaurant. We bring all kinds of incredible hospitality touches. I'm like really proud of to the restaurant. And that's by listening at the counter. Like we have all these coded things that we do, like for guests to saying, this is their 10th anniversary and they got married in Portugal.
Like, you know, we'll talk, like the front counter persons like typing all this stuff and we had buttons for all of it. And then we track it. And at the end of the night, we can pour them like a bottle of 10 year old port from, you know, like the place they want, whatever it is. Like, I think there are opportunities. You just have to have the right leadership in place to take advantage of those things. I think in counter service. And I think there's a restaurant that's about to open in DC called Ry Bunny. was like the folks who ran Tail Up Goat, which was a Michelin star restaurant. They are about to open.
of fine dining, counter service restaurants. So I think people are going to start trying this as they come to the end of their leases where they're just like, okay, like what do we have to lose? The last model didn't work so great. Like let's try something else. Right. And I think the innovation has to be around labor. And I think the innovation has to like there, we need to continue to innovate. I think restaurants haven't changed since antiquity in their structure and their model. like, we have to think about what it don't think the choice is between fine dining and like
Fast casual. think that's like the wrong kind of paradigm. It's like, how do we like think about the best of this world and the best of this world? And like, what does this world get right that this world doesn't get right? And let's find ways to connect those things and create new models. That's what's exciting, I think.
Joshua Sharkey (46:21.602)Matt, you had, I want to ask Arja a question, but Matt, you were saying to me after he started talking about his model, so I want to make sure if you had something you wanted to.
Matthew Conway (46:30.126)I mean, there's a couple of things there. Just quickly. I have unfortunately not been to birdies. I've been making an effort for a while now. But like when you describe that model and I absolutely agree with you, I hate the waiting for the check, the whole thing about the check. I love to pay upfront. But as somebody that loves to tip, I think based on I would feel you tip at the counter first, right? I get again, for me, it would be hard to give up 22 % because I
Arjav Ezekiel (46:52.046)Yeah, and the average is 22%.
Matthew Conway (47:00.43)base my tip on the type of service that I get. And if I've never been there to want to give 22 % before I've had the experience would feel weird to me. You're you're getting that experience that part of your experience is your interaction with the counter percent. Yeah, but if you're going to have a tasting menu that's multiple course and again,
Arjav Ezekiel (47:11.638)And look!
Matthew Conway (47:21.176)Clearly I understand birdies. hear you. There's a lot that can go wrong between counter and excuse. I would dress birdies because I know them, but like if I was just walking into a normal restaurant, especially just whatever, like that would be a little weird to me to feel that way. But aside from that, but that's like one little hiccup in this idea.
Arjav Ezekiel (47:37.378)Your check's like 400 bucks and you're tipping like 90 bucks of the fine power.
Matthew Conway (47:41.102)But again, blending those two worlds that you're talking about, think is amazing. Yeah, but he's proven it. He's proven it out. People are willing to do And somewhere where you need to go is is blending the thing. But going back to, when you guys said, oh, hey, you know, don't look at the photographs and the PR because it's such a small percentage. The thing I would say to that is almost everybody that we've named in this episode or whatever talked about.
And I think it's fair to say from everybody's standpoint, we have respect for all of the people who've done the hard work, even if we've given some criticism. I have immense respect for all of these people. None of them are poor, right? All of these motherfuckers are living a very lavish life. And you're saying, look how hard it is, 40 % labor lives. Like, well, go down the list of people we just talked about. All of them are doing very well. Now, some of them are doing well because of Shake Shack or a TV show or whatever else.
But even before that with multiple units, they weren't struggling to pay their bills. So you're saying on one hand, labor, it's like, how do you make it with 70 % just here? it's like, when collectively they've got all these restaurants, they've got enough to pay their cook a wage that at least makes it more than competitive for the other people to attract the talent and not expect people like Sharkey that just want to do the work. And I think that what you said, Arjav, about building culture and things like that.
which is my biggest knock outside of the conversation we're having is there's not enough people like you or restaurants like Birdie's that I think really want to invest in the next generation and hire the person from Starbucks and show them the way that you want it done. And so there's this kind of like more so in the back of the house, probably like there's more chefs that want their name in the paper and to be known as a great chef, but are they willing to hire the cook from Chipotle and turn them into a sous chef?
I think that mentorship is lacking a little bit. And I think that it will always be a great industry, no matter what your model is. If you model your restaurant from the beginning as a place that wants to do that. And I think early on, all of those USGH restaurants and whatever, HG restaurants were, they were doing that early on, but you get to the point where like,
Matthew Conway (49:43.34)I don't know, you've been doing it so long that you're not actually present and doing it anymore. And it'll probably happen to you someday too, which is why I think that window, which we've talked about on these things of greatness at restaurants is usually pretty small because you have to want to be in there doing the labor to bring everybody up with you. And eventually you either get too many units, you get tired of it, you get old, your knees can't do it, whatever the case may be. But I do think finding that middle zone is important.
Arjav Ezekiel (50:09.24)this is the case against scaling. is this, this is like a great, this is to me, like one of the better arguments against scaling. Cause I heard your last podcast, you guys were talking about like even birdies, like to really make an impact, you got to be able to scale that idea. And I think like, to me, like ideas can scale without like your brick and mortars scaling. And that really has to do with like talking about it and creating playbooks that everyone can share in. Right. And I think like, like to, to your point, Matthew, like I think
These guys are doing really well for themselves, right? But they weren't always doing well for themselves. And I think like looking at like Danny's playbook, for example, like it took him 10 years between like Union Square Cafe and Gramercy. Right? Like, and now think about how many deals even like we've gotten probably thrown in the last like four years, or everyone sees like a little whiff of success and everyone's like chasing the next great deal at like what cost. People don't like people open their next restaurants. They don't have a bench. Right. And then what happens? They don't have a bench. They don't have time for mentorship.
They don't have time to like, so both restaurants suffer, you know, at the same time. And then like, what happens to your idea? The idea fails. Right. So I think like, you're right. Like we need to be investing in mentorship. think the dining room, like I'm a little biased here, but I think over the next 15 years, the dining room is going to be the most important part of a restaurant. think the good restaurants and great restaurants, the margin that separates them now is like not as much as it once was. think.
There are so many great restaurants in the country. The thing that separates them now is the dining room because there are not that many great dining rooms left in the country. And I think we need to be investing in the next generation of great dining room talent. You know, I don't think we have a bench in the dining room. I can't, I can probably kind of one like hand how many names of people I know who run great dining rooms at this point. And I think we need to be talking more about the importance of the dining room. think.
Things like the beer awards need to be like finding ways not to just reward beverage professionals, like dining room professionals. I consider myself a dining room professional, not a beverage professional. You know, like I think we need to be talking about like rewarding and creating an environment where we're creating incentives for people in the dining room to grow into leadership roles where hospitality is like an important element of like, you know, our ethos.
Joshua Sharkey (52:33.11)This is, I mean, this is, think we should define scale. Scale doesn't mean you have to open 10 more restaurants, but scale does mean that you need to scale your org enough that like there's more opportunities for the people. That might mean that it's horizontal scale, not vertical where you're.
Arjav Ezekiel (52:46.158)talk about like in terms of ideas, right? Like I think about Franklin Barbecue. Franklin Barbecue is one location. It changed the entire barbecue industry.
Joshua Sharkey (52:52.898)Yeah, yeah. But again, there's only so many people that work at Franklin Barbecue, so they can only impact the employees there. And I think there's something to being able to impact many employees. What I think is a really compelling and exciting opportunity in the restaurant industry, given AI, I know I would talk about AI a lot, is that these sort of hands-on jobs are going to be where a lot of the value is going to be driven.
plumbers, electricians, like that are where like those are not being replaced by AI then and actually they're going to be even more valuable and they're going to be you know more efficient and the idea of hospitality and I'm going argue it's not just the dining room it's also in the kitchen that there's going to be so much more value here and I think that historically we weren't able to really consider the restaurant a career. For most people it was a job.
Yeah. So, a means to like, eventually I'll do something else, but for now I'm going to do this thing. I think that it actually can be a career, especially with people like you doing what you're doing. But I also think that because of all of the things that are going to be possible when AI is improving the yield of everything that we're growing in the farm, right? You're going to see like literally like four or 5 % reduction in costs just from like
optimizing the yield of everything that happens in the farm because you know, precisely what the weather is going to be and optimizing supply chain, optimizing waste, all these things. There is a, there's a very realistic future.
Arjav Ezekiel (54:22.252)You're see actual costs go down because of that
Joshua Sharkey (54:24.878)I think there is a very realistic future where the cost of cogs can go down in the short term by the way here's what happens back and I see you shaking your head right
Matthew Conway (54:35.342)You're gonna take the money and you know that. There's going to Price and there'll be pricing pressure, right? Someone will charge less and volume will go up.
Joshua Sharkey (54:43.51)Like, so no matter what you do, like the cost of everything is going to start going down because things will be costing less over time because labor is costing significantly less across the board. We don't see the connection to this in the restaurant because we're not like, you know, it's not replacing things that we're doing in the restaurant. starting to, accounting and things like that. But over time, it's going to be a lot more. And the cost, there's a downstream effect of that, of like how you get your food.
the supply chain of the truck that brings your food and like who's growing the food and who's storing it. It's going to be cheaper to store. It's going to be cheaper to understand how much to store. So your inventory is better. So you're not losing so much waste in the warehouse, not the restaurant in the warehouse that's actually providing it. And all those things downstream are going to mean that the cost of these things are going to go down significantly. Now, will people try to like just take advantage of that and charge the same price? Yes. But eventually it will catch on. And there's there's a go. There's a very realistic.
opportunity for these costs to be significantly lower.
Arjav Ezekiel (55:42.082)think just in your term example is like, know, with COVID everyone was talking about supply chain issues and why prices needed to go up. Those prices have not gone down for any of us, even though the supply chain pressures have been like vastly relieved.
Matthew Conway (55:54.606)Take it a step before that. Trump's original tariffs on the wine industry, and that very first time where he hit European goods that were like whatever, people would change. It was a certain alcohol percentage. So everybody was writing it, faking their alcohol percentage on their label to avoid them. Those cost increases that happened then, which is before COVID, never went down up until COVID. And then they went up again because of supply chains and now more.
tariffs. So the cost of wine in the period of time, I've never seen it go down in seven years, year over year, prices go up dramatically. And now all of those, all that labor and cost of goods and corks and shipping problems, all of that's all been reduced. We haven't seen a penny decrease in the seven years since the original tariffs were put on. And it's because the people, once you start getting that dollar, whether you're the cork supplier, the winemaker, the farmer, the laborer,
You don't want to give up any of that money. That's human nature. The fact that you think they're going to magically give it back is
Joshua Sharkey (56:55.598)It might be so I might be pie in the sky thinking here that that's the case but there's there's another side to this and again I do think that there's opportunity but there is also a side where like if if if all these things cost less Right that means no matter what there's there's there's now a surplus in the economy of dollars, right? So it might mean that you can just charge more because people their dollar goes farther because everything in the market costs You know that the costs are going down. I don't know but like there there definitely is a world where restaurants
can become a lot more of a career than just a job. agree with that. It's gonna take more than ever.
Matthew Conway (57:30.446)I'd actually, I'd like to take the conversation full circle right now to both give our job a pat on the back and then also prove that I was right about dating my partner. So first off, you looked at a problem, you looked at, you were conceptualizing a business. You started with the problem, right? Sounds like you started with, how do we make a restaurant more profitable? You looked at the
the middle of the P and L, where you look at your prime cost, you're like, labor's the thing. How do we sell for labor? You conceptualize an entire business around solid for that. And I'm sure there was a handful of other variables that went into it as well, but really how do we optimize labor? You spent who knows how many hours, weeks, months, years plotting this out. You take the risk, you execute, it works. That is the entrepreneurial spirit.
Right. That to me is like you looking at a problem, solving that problem, taking it back to Danny and these few other guys saying that they had the entrepreneurial spirit to take the risk. What work did they do? Right. How did they real like, what was the actual real work that they went into creating a new experience in order to meet this new function? They didn't, they used, they, tried to use their, you know,
their, their cache, their brands to jumpstart a movement. That to me is not the definition of entrepreneurial spirit. I believe that they were wrong and I believe the market proved that was exactly,
Joshua Sharkey (59:14.636)So mad, Mike. So mad.
Matthew Conway (59:16.638)Restaurant tour and you tried to knock that before And if I sounded on your side about that great Danny's still one of the great restaurant tours ever to live No doubt about that. And so while I to our jobs point he made a mistake. He swung He missed maybe he over calculated his clout or whatever. It didn't work He took his lumps and kept it moving but it takes nothing away from his greatness as a as a And as I said as I said before it's greatness in empowering chefs
Joshua Sharkey (59:24.724)ever.
Arjav Ezekiel (59:39.768)I too.
Matthew Conway (59:45.226)in his own restaurant to not, he's not, doesn't want to be the, on the, lead. He doesn't want the spotlight. He puts it on the chefs. He allows each individual restaurant to operate with its own identity. Most people want everything to be so the same. They want to uniform everything. He was the first great one to say, be yourself, have your own identity. Let's do Indian fine dining. He was, he was the guy who did that. He'll always be a great one for doing that. Even if you made one mistake, I will be with you on how bad I think the mistake was. But it's like, if you look at the grand, grandiosity of his
And to experience in New York City, he's a 10 out of 10.
Arjav Ezekiel (01:00:17.516)I think it's unimpeachable that like he's one of the great restaurateurs of all time. You know, I think like, I think it's like, like to use a basketball analogy, you can knock LeBron all you want for the decision and all the baggage that comes with him. But like, he's still one of the greatest players of all time. So like, and I think Danny's influence, like, you know, I think goes beyond restaurants. Like I think, I think about enlightened hospitality investments, like something he started doing, right? Like where they started making
minority investments in companies as a hospitality group, as a side hustle to hedge against restaurants. Like, Fortune 500 companies do that. You know who else does that? Like, we do that now. Because we learned that lesson by looking at what Danny did. You know, it's like, how do we make small bets instead of like, creating a CPG company? Like, what does that look like? You know?
Matthew Conway (01:01:07.291)That's a whole other that's a whole other that's been a challenge that's been a challenge fund and
Arjav Ezekiel (01:01:13.634)I mean through Spax all that I get it like but it's an interesting idea. I'm not saying it's been I'm not saying it's still around. I mean
Matthew Conway (01:01:21.358)It's a tour. How many how many hits?
Arjav Ezekiel (01:01:25.998)I mean, I think...
Matthew Conway (01:01:26.934)Rezi, Rezi, Rezi, Rezi was a Well, was it was a hit. wasn't it wasn't a crazy hit.
Arjav Ezekiel (01:01:29.1)Yeah.
Arjav Ezekiel (01:01:35.214)I mean how much did AMX acquire Rezzy for?
Matthew Conway (01:01:38.702)hundreds of millions. No, no, I think it was 175. That's hundreds.
Matthew Conway (01:01:47.018)Maybe they made 10, 15, 20 X on that investment. It was great.
Joshua Sharkey (01:01:51.342)I mean look, they got 7 rooms, QPOS, know, 7 rooms, QPOS, those are both like, like doing really well. 7 shifts is doing really well.
Matthew Conway (01:02:04.696)Seven shifts, they invested it at a peak multiple. The seven shifts is good. They're going to, that's going to be a zero for them. I think they invent, they led the B or they led the A at it like that.
Arjav Ezekiel (01:02:21.518)There was some, there's some, I think, I think you might be under, mean, I listen, I like any fund. think everyone's looking for the one pie in the sky thing that's going to like make up for their loss everywhere else. But I do think like, I mean, even bento box like had an exit, right? Like I think the fund is still around and has grown from what I've heard, like the number of people they have on it. know a bunch of entrepreneurs who've talked to a lot of entrepreneurs in the food space still think of that fund as like something that can add a ton of gasoline to the fire that they're trying to build. like.
You know, you can look at it and say like, yeah, like what have they actually hit on? But it's like, they wouldn't be around and still be doing it at the level they're doing it if they weren't doing something right. know?
Joshua Sharkey (01:03:02.742)I speak with Harry pretty often from the fun. think he's a really sharp dude. He's always very curious and try and understand that the industry, I think they, and they still have some folks in their, in their port code that are, that are doing well, but they haven't exited yet, but I wouldn't say it's by any means it's, I think it's probably.
Matthew Conway (01:03:17.295)What do you think the terminal value of that fund is going to look like? What do you the returns are look like? On an IR basis?
Joshua Sharkey (01:03:24.206)There's just too many variables and it's too early. the time horizons, at least another 10 years.
Matthew Conway (01:03:32.546)I mean, your average venture fund is a seven year hold, right? So they're, they're, they're well beyond their, their initial cap rates.
Arjav Ezekiel (01:03:41.166)But I think like, just want to like, I think, yeah, you can talk about like whether or not they're executing well, but it's sometimes like, it's the idea that like inspires the next person to do it. Right. And I think like that idea was an important one for me. Right. Like I thought about my business differently and I thought about like, Hey, like, it doesn't make sense to just have a brick and mortar space. You know, like, what does it look like if I'm hedging a little bit?
Why aren't like, what am I doing with when I am profitable? What am I doing with that profit? Like how am I trying to like service our restaurant in that way? Like how are we like, you know, are there things that we could be doing for our team if like one of these things hits big? Like those are the ways like we think about it. So it's not necessarily just about like, is high? Like what's their IRR or seven years, et cetera. It's like, is this an interesting idea? Are there things we can learn from those ideas? Like an example of that is like Danny.
rethinking about like, you know, the stakeholders, you know, and I was like, that was a pretty revolutionary thing at the time to put your investors last. Yeah. You know, and I think that's something that like, yeah. And I think that's something that has impacted like operators. Like I think about my business like that and I've maybe moved the stakeholders a little bit. Right. I still, it has allowed me permission to do that.
I think Gramercy Tavern is one of the great restaurants of the world. think you can talk about whether it's still as good as it once was or not. Its impact is unimpeachable. And I think the same thing is true of Danny. And I think Danny has grown. Like Danny Shake Shack changed him, right? And then now Daily Provisions has the opportunity, I think, to do the same thing. How many people have an opportunity to do that twice in their career? Not a whole lot.
Matthew Conway (01:05:20.206)Tracy, what do you think? What are you thinking?
Joshua Sharkey (01:05:25.494)You know, for me, like anybody that's in the arena, I have a hard time like bashing because, you know, we all know we're all starting businesses. It's never fucking easy. Right. None of this is easy. And from the outside, it's easy to see what the flaws are. Anybody that's trying these things and putting, know, putting themselves out there is, is, know, in my book, it's just hard for me to really bash anybody because in that regard, right, because they're you're just trying and you're putting things out there.
10 of them will fail and one of them will be great. But like it's also to Arja's point that, you know, it is what then inspires the next person. think, you you were, I don't want to say you were bashing, you know, Chang, Matt, but like there are good things about his, what he's done. don't like some restaurants, some others, but like it's hard for me to see many people that have done the breadth of things that he's done. And it's so inspiring and also infuriating. Like how the fuck do you do all these things? You got to.
recent R &D lab and a magazine and these shows and all the, but whether all of them are good or not. And you got like this thing, this, this like thing with Dax and all these, it inspires the next person to be like, Oh, that's interesting. And then they can focus all their energy on one of those ideas and make it even better. But like putting yourself out there, think is, you know, to our jobs point, if we sort of tie this full circle, the restaurant industry has been the same forever. Right. And what's cool now is that now people are trying new things and rethinking the way that, um,
to think about a restaurant. Eli Felbin, who we had on, is doing similar things. And Arzav might fail the next thing, Eli might fail the next thing, but then someone's like, oh, that was a really good idea, though. Just the wrong approach, the wrong market.
Arjav Ezekiel (01:07:03.192)Timing, yeah.
Matthew Conway (01:07:05.23)And we discussed this, I've failed quite a bit in my career. know, taquiturria, there's things that I learned from them all. Maybe the press wouldn't be so successful right now if I hadn't had my failures with taquiturria, maybe more from a business standpoint than... So you learn things as you go. I think it's safe to say that I couldn't have been bashing David Chang because I admitted how many times I'd eaten at all of his restaurants. So if I kept going back, there was something...
you know, worth going back, aside from that both of them were a block from my house. But what I did bash, will bash, and will forever bash is embracing an anti-hospitality from the top down approach. And I think he's moved away from that as he's gotten a little bit older and probably less involved in his restaurants. I read the article where, you know, 15 years ago where he was openly embracing anti-hospitality and for, to our jobs point about
how the dining room's gonna need to lead and how that really separates people. I can't just get in line and bow to somebody because he's got some noodle shops that he did good things with that I wanted to go to, but he wouldn't change my fork when I asked or whatever. Hospitality has to be the core of everything we do moving forward or there's no reason to be doing it. So David Chang, all the respect in the world. Anti-hospitality, boo.
Joshua Sharkey (01:08:23.391)Look, I agree. Again, I think that the point I made was that there was almost a necessity to go to the other end of the spectrum to break it so that we can find a good middle ground because it was white tablecloth, got to get dressed up and you're almost at the behest of the server and they're like, and it was, you almost had to go to the other way so that we could find the balance in between because the server is like, you know, like you remember 25.
Matthew Conway (01:08:49.655)That's what Danny Meyer did with H.I.
Joshua Sharkey (01:08:52.398)You remember like 30 years ago, the idea like, this is like, this is almost non-existent now, but you know, like we're all in our 40s, like I think like the, 20 years ago you went to- I'm not. Fuck you, man. Whatever. 20 years ago you were to find any restaurant with people that are not in the restaurant industry and there's a fear, there's an anxiety, like, did I do this right? Is this the right way I'm supposed to ask for this? Is this, and it's, that's hospitality.
Matthew Conway (01:08:54.42)Try to break it and he got broken.
Matthew Conway (01:09:05.134)are
Arjav Ezekiel (01:09:05.602)Don't come in that
Arjav Ezekiel (01:09:21.506)Fork for my fish, or...
Joshua Sharkey (01:09:22.573)Yeah, am I supposed to have this and I don't know about this and like that also that feeling is like that's what it was and that was considered great and that had to be ripped out and I think the Chang's Chang's was really just more of I think a response to that to say wait a second this needs to be completely ripped out he went the wrong way but that was 15 years ago it was probably 30-something years old like you know we we do we do things that are like you know extreme and then we learn from them but I think if he didn't do that
The middle ground probably wouldn't have happened.
Arjav Ezekiel (01:09:53.229)Does it undermine what that restaurant, Mubafuku Sambar was and its importance to the culinary landscape? I don't think so. I think Chang, for all of his proclivities as a human being, has still created new pathways for restaurants. And I think about thinking about the media landscape and understanding that, understanding CPG. think he's an entrepreneur in that sense. And I think...
If you, you know, I think like any job you go through life, like looking at people and saying like, what are the things that can be like borrowed or be inspired by here? And what are the things I don't want from this person? know? And I think that's probably true of my time at like USHE. I think that's probably true of when I look at Chang's career, like what are the things and like, I hope people say that about my career, you know? It means like I made an impact.
If people are looking at me and like, what can I borrow from that guy? And what do I not want to borrow from that person? Like, it means like, okay, like this person did enough to be like relevant and like make a difference. know? And I think that's something that I think we need to be a little bit more mindful of because I think there aren't that many people in our industry that we can really look up to. Right? It's a very small room. Like you think about how many restaurants exist.
And then you think about how many people that we really talk about or like have inspired us or whatever it is. So it's not a very big room. And I think it's important that we like hold them to account. It's also important that like when appropriate we spend time with them, we learn from them because like there are battle scars that people have like endured and there's things we can learn from people. You know what I mean? Despite their flaws and their failures. That's my work.
Matthew Conway (01:11:32.622)And just to wrap it up on my end, because I know we're coming down to the end here, the reason why I wanted to have you on as a guest is because I don't think enough people, you know, I agree with you, Sharkey, bashing isn't the way I want to support my whole industry as a whole, flaws, warts and all. And sometimes I do take a negative approach or comments. I do want it to be, but it's because I care. And I do think that holding people to account and being truthful about your own truths is important and not enough people do it.
And I know that not only does Arjov do that openly, which I think makes him a unique gem in our industry, but he's also very vocal about, you know, speaking up for the guy who doesn't get heard often. like, you know, when he won his beard award, I sent him a text, like, so proud because you've always used your platform, even when you didn't have a big one, to say things that a lot of other people that have bigger platforms and have the safety of that have not. And so I do think there's a fine line between bashing and
honest feedback and using your platform to speak up for the little guy and doing good. And I knew that he would be honest about the tips included or whatever his opinions were and moving forward. I think it's an interesting conversation. I'm happy to have it with all four of you. Three of you.
Arjav Ezekiel (01:12:44.948)Thanks Matthew, that's very generous.
Joshua Sharkey (01:12:46.648)Yeah, I couldn't agree more. I'll end it with this is that I, this is how I look at this is I, I implore everybody to, especially in the restaurant industry is just be grateful for even not just the things you learn that are the good things, but I'm grateful for all the shitty things that some of the chefs did that I work with and the shitty experiences I had. I'm grateful for them even though they, they suck because in the same way that Matt, you wouldn't be taking care of your employees in such an incredible way you are today. If you didn't go through such a
traumatic thing before, right? You you would, but it wouldn't be as, as acute, you know, and the things that we do, whether it's because we learn the right way or we experienced the incredibly like terrible thing are what inspire us or impact us or like, you know, catalyze us to do the next thing. So I'm glad those things happen, whether they're good or bad, because it's, it's what makes you do what you do at Tipling House and what makes our job do what he does that Mike do what he does is, is that, you know, good or bad?
You know, just, they help us decide how we make things better.
Arjav Ezekiel (01:13:48.782)Can I add one thing before we leave? I think you're absolutely right. But I think there's like also this thing that has like bugged me for a while about this industry where we spend more of our time talking about the things that are broken than talking about the things that are going great. You know? And I think one of the things that like we have to remember is that like everything that we see, everything that we take, everything that we do is in service of like bringing hopefully more great talent into this industry. And I think this industry is...
In my opinion, one of the most important industries in any business anywhere, because I think it brings out the best of humanity. think we talk about, talk about AI a lot, Like I think as the world gets more isolated and people are working from home, like restaurants are going to be the last real vestiges of human interaction. And I think we have a really important responsibility, in my opinion, to humanity over this, like next 20 years, as we go through this rapid shift.
about creating places where people can come together, like be human. And I think we should be talking about like the value we bring to society and why we're an important piece, not just of society and, culture. And till we start talking about how great we are and how important we are, we're never going to be valued in a way that allows us to feel that way. Right.
Matthew Conway (01:15:09.676)think it's the last retail business standing. It's not going anywhere.
Arjav Ezekiel (01:15:16.302)It's not going anywhere. And I think it's to be the last thing that just gets, I just don't think restaurants at our level are going to be disrupted in that, like with AI. I think AI is going to enhance our businesses in some ways, but I think we need to be talking a lot about like the value we bring to society and to culture because we deserve to be treated with a lot more respect than we are by our governments, by the people that walk into our doors. We are a
bulwark, I think, of humanity. And I think it's really important that we, as an industry, talk about that more and more and more, because what you say out loud is inevitably what you end up becoming. So I think that that's all I want to say.
Matthew Conway (01:15:56.088)Love that. Love that, Arja.
Joshua Sharkey (01:15:58.658)Yeah, I mean, what did Eli say in the last one? said one in 10 people in the US work in the restaurant industry.
Michael Jacober (01:16:06.486)Smile.
Arjav Ezekiel (01:16:06.85)most everybody's first job ever.
Matthew Conway (01:16:08.92)said currently or I think it's even higher than that. I think substantially higher than have worked in the hospitality business.
Joshua Sharkey (01:16:13.44)Arjav Ezekiel (01:16:17.134)How many people's first job is hospitality? It could be like 30 % at least, you know?
Matthew Conway (01:16:20.031)Gotta be high. Very.
Joshua Sharkey (01:16:24.854)Arja, thank you for coming on. You're always welcome to come back. Next time there needs to be more arguments and bashing Matt a little bit more.
Matthew Conway (01:16:35.747)Every time we get a guess I get off the hook.
Joshua Sharkey (01:16:38.574)Yeah, it's not enough, but our job. Ben and I actually haven't been to Birdie's yet either yet. So next time I'm in Austin, I'm definitely
Arjav Ezekiel (01:16:45.71)Please, all of you are always welcome.
Joshua Sharkey (01:16:47.918)Appreciate it. That's getm.ez.josh. I have my podcast there, the Meeze Podcast, plus some other shows and interviews, starting to write some stories and blog posts, some recipes, recaps, things like that. So I think you'll enjoy it. Again, it's getmeeze.com.
Thank you very much. Very grateful.
