August 14, 2025 • 36 mins
US restaurant spending has been resilient, and guests are looking for a better sit-down experience, SPB Hospitality CEO Josh Kern tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Kern sits down with BI senior restaurant and foodservice analyst Michael Halen to discuss how the company’s brands, including J. Alexander’s and Krystal, are performing this year. He also comments on M&A and refranchising opportunities as well as dirty sodas and the impact of GLP-1s.
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Episode Transcript
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Speaker 1 (00:11):
Welcome to Chopping It Up.
Speaker 2 (00:12):
I'm your host, Mike Hanlon, the Senior Restaurant and Food
Service Analyst at Bloomberg Intelligence. Our research and that a
bi's five hundred analysts around the globe can be found
exclusively on the Bloomberg terminal. If you enjoy the pod,
open up your phone and give us a five star
review on Apple or Spotify.
Speaker 1 (00:29):
Today we're joined by Josh Kern.
Speaker 2 (00:31):
Josh is the CEO of SPB Hospitality, a Houston based
multi concept restaurant company with almost five hundred units across
eight brands, Crystal Jay, Alexander's, Logan's Roadhouse, Stony River, Amada,
Leo's Italian Kitchen, Ember Smoked Barbecue, and Village Whiskey.
Speaker 1 (00:49):
Thanks for joining me, Josh. Did I get all those right?
Speaker 3 (00:51):
You got them? Yeah?
Speaker 4 (00:52):
It's always tough to say SPB, Believe me. I stumble
over that all the time, and I misspell hospitality. I
forget the so many times I'm typing too fast. So yeah,
you got it right for sure?
Speaker 3 (01:04):
All right?
Speaker 1 (01:04):
Good stuff, man.
Speaker 2 (01:05):
You've been at SPB for almost seven years now. What
initially attracted you to the gig?
Speaker 4 (01:10):
Yeah, I mean I came in when it was under
the umbrella of craft Works Holdings, and the thesis at that
point in time was really to start this this multi
concept and try and use utilize shared services. And so
I was attracted to the fact that you know, had
a collection of brands on one side, and was acquiring
Logan's Roadhouse at the time, and so I thought, I
was fascinating to use my marketing background to you to
(01:33):
really amplify, you know, the overall guest experience, and then
how do you kind of manage all those different contracts
and vendors h and then you know, basically put this
you know, lego into a system and then figure out
how to drive the company forward, but always be mindful
of the consumer and the guests that are coming in
the restaurant.
Speaker 3 (01:52):
So I thought that was.
Speaker 4 (01:52):
A great opportunity to really grow. And I certainly have
learned a lot from from those initial days. And you know,
back in eighteen.
Speaker 2 (02:01):
I'm sure there's been a lot of changes to the
portfolio of late What motivated the sale of your brew
house concepts in December and more recently the old Chicago
Pizza and tap Room divestiture.
Speaker 3 (02:13):
Yeah, great question.
Speaker 4 (02:14):
These these are legacy brands, particularly kind of you know,
rock Bottom on the brewery side and Gordon Beers. You know,
they were the og of breweries and started, you know
twenty five thirty years ago when it was super hot
to have a brewery and a restaurant bolted onto one another,
and it just over the years consumers really started to
(02:34):
push away, and some of it was just you know beer,
you know, craft beer kind of came out of flavor
because you had all these micro breweries in local communities
across the country, you know, started chipping away from that
core beer person and then going in a restaurant and
having all those smells, it just started to lose its way,
and they were maybe they're massive. We were talking sixteen
(02:57):
thousand to nineteen thousand square feet and as you know,
as you know, being immersed in the in this in
this category that's expensive on the facility side, and if
you're trying to remodel and trying to do private dining,
you know, all those things just certainly, you know, had
some impact. And you know, then you add a little
bit of sprinkle of of of what happened with COVID
(03:17):
certainly was was a factor that product fast forward and
you know what was happening on the Breu side, So
we we were looking pretty hard to to move that on.
But we love the brand, so you know, wanted to
make sure it was in good hands. The Kelly group
kind of stepped up and took some of those uh,
those brands.
Speaker 2 (03:33):
Uh.
Speaker 4 (03:33):
And then with Old Chicago, you know, tough category with
pizza and beer. You know, kind of you got those
two worlds that are you know, had some interesting opportunities
during COVID for sure, pizza was certainly the go to item,
and you know people were were used to delivery and all.
Speaker 3 (03:50):
That good stuff. But you know, just over the years.
Speaker 4 (03:52):
You know, another legacy brand where OC was just you
know getting picked apart in different areas. You had some
older leases that were out there. It's kind of some
trade areas that were just kind of off the beaten path,
and so it was it was hard, and it became
a little bit of a distraction with our other brands
because of just the nature of that particular business a
little bit different than the rest of our brands is that,
(04:14):
you know, we're really heavy on the southeast part of
the country. In Old Chicago's a little bit more kind
of in the West, and and started in Denver, and
so that's really when we started to see there an
opportunity to kind of spin that one out. Had some
really great interest, you know, Morgan Kingston was you know,
our advisors on on that that initiative, and uh, they
(04:35):
did a great job and we had some interesting folks
that came to table, and so we we just closed
it last Monday, and certainly was was an interesting process,
but happy that another group has come into the end
of the frame and we'll be able to take the
brand to new heights hopefully.
Speaker 2 (04:52):
Cool and you're not just divesting brands. You know, you
purchased a model last year. What attracted you to that one?
Speaker 3 (04:58):
Yeah, I mean we were you know, we were looking
at all.
Speaker 4 (05:00):
Sorts of interesting things last year, and you know we
were looking at something that was over four hundred units
and you know, those those type of propositions. You know,
it was a legacy brand. And you know, while we're
good at kind of resuscitating you know, brands, you know,
it becomes a time when that's.
Speaker 3 (05:17):
All you're doing.
Speaker 4 (05:18):
You're managing really you know the real estate.
Speaker 3 (05:21):
Side of things.
Speaker 4 (05:21):
You're really getting hyper focused on labor and food costs.
And then that might be the detriment of the guest
experience because you're just not getting the traffic on those sides.
So we we pivoted and wanted to kind of, you know,
take something that was up and coming concept that was
relevant to kind of the next generation of consumers in
terms of international flavors, and then something that we also
(05:43):
are very good at is growing restaurants, so designing new restaurants,
and so we thought that that was a good opportunity
for you for SPV to allow the great group of
people that we have within our support centers to apply
their talents in terms.
Speaker 3 (05:57):
Of growth and development.
Speaker 4 (05:59):
You know, working with Chef Jose Garcis, who's you know,
a legend within the culinary you know world, and adding
kind of his inspiration and his abilities to kind of,
you know, weigh in on what we're trying to build.
We thought it was a good kind of pivot for
us to be a little bit smaller to look at
really some some markets that are you know, that will
support kind of a you know, Spanish tapist concept.
Speaker 3 (06:22):
Uh So we thought that was a good opportunity.
Speaker 4 (06:24):
And our friends Barcelona, you know, they're they're doing a
heck of a job, and so we know there's white
space in many markets across the country, and so we
leaned into that and the other thing that Jose brings
to the to the tables. He's a great concept, you
know person, he's a great chef, really knows how we can.
Speaker 3 (06:40):
Kind of pivot in different areas.
Speaker 4 (06:42):
So he's got a you know, an interesting coffee concept
that we're starting to you know, to kick around. And
you know, as we look at real estate for other
properties like d Alexander's, you know, we get we get
some of these properties that are you know, that are
interested in a chef driven concepts that could stem from
you know that that am part into those PM day
parts and so it allows us to kind of customize
(07:05):
and help landlords across the country to help differentiate what
we bring to the table. And so he's been really
good on that side of the business and just a
really great person in general, which we really like. We're
all about people and so working you know together and
collaboratively is something that we thought would be great to
bolt onto SPB as we divest some legacy brands and
(07:28):
bring in some new things across the country.
Speaker 2 (07:30):
Yeah, very cool, and it's interesting that you're willing to
both resuscitate brands as well as you know, grow emerging ones.
That really opens up the funnel when it comes to
potential acquisition targets one.
Speaker 4 (07:43):
Hundred percent, you know, and we're a little bit you know,
different because we also have some franchise you know, Old
Chicago is about, you know, fifty percent franchised, Logans has
a component of it, and Crystal Brands are about sixty
five percent franchise. So we also have that side of
the business, which is very interesting, especially when you talking
about M and A activity, because there's some big franchise
(08:06):
you know, groups that are out there that are really interested.
There's groups that are you know, specializing carve outs that
that are interested, and then we are also looking.
Speaker 3 (08:14):
Kind of some of those opportunities.
Speaker 4 (08:15):
So I guess what the you know, the headline there
is we're not afraid if it's a franchise entity or
if it's not, because our j Alexander's business is one
hundred percent corporate. So it just adds up, you know,
and you've got some some different personalities when you're working
with franchisees who are invested in a brand, you know,
versus quote unquote corporate ones, and so you know, we're
we're we're I think we're really good in terms of
(08:36):
managing those relationships as well. So it's a little bit
different in terms of what we have going, which you know,
just makes it really interesting.
Speaker 2 (08:46):
Yeah, I mean, franchising is a very different business than
owning and operating restaurants. That's cool, And let's dig in
more on Jay Alexander's that's your primary growth vehicle. Can
you talk about what makes that change special?
Speaker 4 (08:58):
You know, it's it's it's one of those brands where
you know, hospitality is is really kind of stem to
stern and so you know, really from you know, starting
from the menu that's been highly cultivated. It's got some
regional nuances. So you know in Naples, Florida, you know,
we've got a little bit more seafood, a little bit
more salads to kind of meet the you know, the
guests expectations on that front, and so really highly cultivated,
(09:22):
you know, very scratch kitchen. You know, they do a
taste plate. You know, every morning they go through with
you know and taste you know, every single sauce and
you know, going through the walk you know, the walk
ins and making sure that everything's ready for service, and
they thought everything through, and you know, really specialized group
that's back of the house and really engaging and in
(09:44):
great tenure. I mean, we've got some some gms that
you know, have been with the brand for you know,
twenty twenty five years, some kitchen managers that kind of
have that same tenure. So really that kind of really
is is different in the industry in terms of having
some some you know, some people that are making careers
out of just such a great opportunity. So it starts
with that menu. But our service is just it's really polished.
(10:08):
It really meets the you know we we preach, so
you know, making eigeh contact with guests and you know,
they have a very refined uniform package in terms of
what their expectations are to you know, to come in
and be restaurant ready and making sure your your fingernails
are manicured, you know, both males and females, and and
making sure that we thought of everything when it comes
(10:29):
to that overall experience, and and and and really have
have done a nice job. And I think the great
thing about that is just consistency when you go through
kind of reviews, whether that's on Yelp or you know,
Google or you name it. You know, we really have
you know, that high expectations. We try and meet every
every expectation of the guests that comes in. And I
(10:50):
think we just do a really great job and you
know what you're going to get when you go into
Jay's and have a good time. And so it's kind
of that that magic that that's out there. But I
do think at the end of the day, it comes
down to those those those carrying gms that really run
great shifts each and every day, uh and just really
motivate the team and you know, have rally alleys before
(11:11):
a shift or pre shift and uh and just really
kind of work together on that front. So that's that's
the magic that we see every day for sure.
Speaker 2 (11:19):
Yeah, you can't run great restaurants without great gms, man exactly.
Speaker 4 (11:23):
I mean they're the heartbeat of of what goes on
and you know, and and and they have to deal
with all sorts of craziness.
Speaker 3 (11:29):
I mean, it's been interesting the past couple of years.
Speaker 4 (11:32):
You know, it's it's those outside influences that just it's tough,
right everything from you know, we saw this inflationary pressure
you know, we sell a ton of high quality steaks
and seafood, and you know, steaks are spiking through the roof,
and you know, then you get the crazy weather and flooding.
We have, ah, we have a location that's that flooded out.
It's still closed, and you know, you got to you
(11:54):
got to earn back those guests.
Speaker 3 (11:55):
You know, since you've been closed for two two three.
Speaker 4 (11:58):
Weeks, you got to get at back out there and
and let people know that you're open. So there's just
you know, it seems like, you know, there's always something
that's coming into into into the world, and so we
have to we have to really manage that process to
to keep people focused and and and the good thing is,
you know, it can be corporate that can really you know,
you know, can screw things up because you know, if
(12:19):
we add a new system every day, or we add
a new initiative, or you know, do things that are
going to distract at the unit level. You know, we
try not to do that to the best of our abilities. Obviously,
we want to adapt to the marketplace, and there's you know,
there's some good technology that we can look at and
but that we're very mindful of just not upsetting that
apple Apple cart. But at the same time, we can't
(12:39):
be asleep at the wheel. I mean, Jay's has to evolve.
It's consumer set. It's getting a little bit older and
the guests that we see out there, and so you know,
we're looking at initiatives to get that younger generation in.
You know, we've been spending time and in this kind
of non alcoholic you know, mocktail arena, uh, you know,
to really you know, it's it is definitely changing before
(13:00):
or our eyes in terms of how people are kind
of interacting with the brand. So we don't want to
be resting on our laurels and take for granted that
we've got a built in guest base that we want
to attract new guests as much as we possibly can.
Speaker 2 (13:14):
Yeah, this industry will keep you on your toes, that's
for sure. Are there any pockets in the US where
at Jay Alexander's is strong and how fast we're expanding.
Speaker 4 (13:24):
Yeah, I mean, you know, Florida market for US has
always been traditionally really really good market, and so we're
going into Orlando in Q one. We've got that site
all squared away. We're looking at Sarasota as a potential site.
And then we've done really well in Texas, so our
Houston location, our San Antonio locations, and so we're going
(13:45):
hot and heavy into Dallas. And it's just one of
those concepts where it's got a you know, good brand recognition.
And so we're going into into Dallas. We've got a
couple that are going to be coming on one end
of this year, another one in Q one of next
year prosper UH and then we're going back into the
Arizona market and Chandler UH and so you know, going
(14:06):
a little bit west. So it's it's it does well
kind of in in those kind of higher demographic areas
and have that really nice balance between that that lunch
and dinner business although excus, you know heavy dinner. But
and then in the South, I mean, our Michigan locations are.
Speaker 3 (14:24):
Doing really well.
Speaker 4 (14:25):
I mean, it's it's it's interesting to see what happens
in Troy, Michigan at Somerset Collection that one rock and
Roll Rocks and Rolls Tennessee locations and you know, certainly
within Nashville are doing great. Our our Franklin, Tennessee is
is probably the number one the system. Maybe you know
close with plantation down Florida. But so you know, really
(14:46):
has some some some great opportunities and we continue to
look and see, you know, are there smaller adaptations of
a Jay's like a Jay's Light, you know, similar to
what our friends at at Hillstone or Houston's do with
with their Honor bar concepts. And you know, there's some
elasticity that we're you know, we're kicking around, you know,
what what can we do on that front? And can
we go in a smaller footprint and still kind of
(15:07):
has some interesting aspects of the brand.
Speaker 3 (15:09):
So it keeps us on our toes for sure. Cool.
Speaker 1 (15:13):
What kind of au vs are you doing system wide?
Speaker 2 (15:16):
And what kind of AUVs are you looking at for
new stores and maybe some of these smaller units.
Speaker 4 (15:21):
Yeah, I mean we we sit about seven four on
a Jay's so very healthy. Continues to grow, you know really,
you know nice, that's why we're attracted to the Paulice
casual concept. And he can't take for granted, right that
that consumer you know, it has been you know that
it's been an interesting year in terms of of their
of their burrow and K's and wallets, but you know
(15:43):
they've been you know, we haven't seen a dip knock
on wood for for Jay Alexander's and we we we
have you know, nice healthy traffic counts, and I do
think that it all spirals back to that hospitality and
people are just continuing to look at, you know, being
treated a little bit different and if it's a special
event or a date night going in there and having
a refined sense of hospitality, you know, it's just harder
(16:06):
and harder to.
Speaker 3 (16:06):
Find these days.
Speaker 4 (16:07):
And as consumers continue to eat out, it's you know,
I think they're a little bit tired of kind of
that fast casual experience, you know. So I think that
having you know, not not to that really white tablecloth experience,
like we don't want to be you know, too too
far where it's exclusive on that front, we think there's
a very nice balance in between the you know, casual
(16:29):
plus environment that really is allowing our guests to feel
a little bit more special and take that opportunity to
you know, to come in you know, two three times
a week and get something different. Because our menu has
daily specials in addition to the things that are always
on the menu, so we're certainly conscious of that.
Speaker 2 (16:47):
Cool Crystal was acquired in twenty twenty two. I believe
the chain wasn't doing very well when you made the acquisition.
How are things going now with the chain?
Speaker 3 (16:58):
Yeah, I mean it's it's in better shape.
Speaker 4 (17:00):
We inherited a mess, uh and certainly we had to
kind of take it down to the studs in terms
of you know, all those things that I've talked about,
you know with you today is you know, even in
a drive through, there's a degree of hospitality and and
so that that guest experience really wasn't working out too well.
So you know, we we we put some new team
members that are you know, really driving the brand. I've
(17:20):
got an amazing leader and Amanda Hide, who you know
from an operation standpoint, you know, she she leads with
with tough love. Right there's you know, you've got to
put your arms around people sometimes and and and and
really build them up. But at the same time, we
got to hold people accountable to you know, the expectations
that we have. And it's a you know, that's a fierce, fierce.
Speaker 3 (17:40):
Category to be in. And you know, everyone.
Speaker 4 (17:42):
From you know, from McDonald's to White Castle to you know,
to locals that are in the marketplace.
Speaker 3 (17:47):
It's tough.
Speaker 4 (17:48):
So we concentrated on the basics, you know, you know,
getting that you know about eighty three percent is through
the drive through, so you know, anyone can say, oh well,
let's focus them and drive through. So we really have
tried to make got the best experience possible, investing a
little bit and kind of those digital menu boards and
getting that experience a little better to help quite frankly,
(18:08):
not only the guests that are coming to those drive throughs,
but our team members that you know have better headsets,
have better ways to get those systems in, get that
food out hot and fresh, and so you know, how
to concentrate on those elements. But at the same time,
couldn't fix everything at once, right, I mean there's you know,
you can see twenty things that are that need to
be addressed, but there's only a few that you really
can focus on. So over the past two years, you know,
(18:31):
we've we've really you know, focused on on the basics,
and now we're evolving in terms of, you know, a
little bit more innovation, getting into the fun nature that
you know that Crystal has been afforded. I mean it's
a funky brand. It's been around ninety I think it
celebrates its ninety fourth birthday next month, and so it's
it's had some fun in its history, and I think
(18:52):
it got away from that that it was just very transactional.
It got full of itself. It started to you know,
to go on different paths. And so now just you know,
focused on you know, how do we you know, talk
about the brand in a unique way, how do we
continue to be a little bit irreverent at the same time,
you know, make sure we're meeting expectations of you know,
what people want to spend dollars on. So, uh, it's
(19:14):
been interesting, and we're not there yet. I mean we're
you know, we're probably fifty percent you know down the line.
You know, there's still plenty to do. You know, you've
got facilities that are you know, we're built in the
seventies and so you can imagine some of the facilities
on that front, and you know, if you touch it,
then you got it. You get back in some ada issues.
So again, just like you know, being in this industry,
(19:36):
there's always something that that happens on that front. And
and so, you know, super proud of what the team's
been done. But I had been doing but lots there
to to to notice in the future. We've we've we've
seen our fair share of crime the past year, you know,
a lot of smash and grabs. You know, it seems
(19:56):
to be a little bit. It seems like the past
month things of stilled a little bit.
Speaker 3 (20:01):
But it was rough, man, it.
Speaker 4 (20:03):
Was there was some weird stuff just in terms of
what we would see. And you know, some of it's
the trade area, some of it's just the culture that
we're in, you know today. But uh, I'm happy that
things seem to be getting a little bit more normal.
And we're always going to have some crime in there,
but but it seems like it's it's subsiding slightly.
Speaker 2 (20:23):
Yeah, that's unfortunate, but it sounds like as a former marketer,
this could be one that's fun, uh.
Speaker 3 (20:29):
To revive through.
Speaker 1 (20:30):
Yeah, I mean part of the business, right.
Speaker 4 (20:32):
It's an it's an acquired taste and and and you
know the best thing about this is that you know,
consumers will not let Crystal die like, you know, different
from when I was talking about rock Bottom, like you know,
rock Bottom and a brewery. I think consumers were like, eh,
you know, okay, it was it's had its day, But man,
Crystal just has you know this this loyal followers, and
they're very diverse. I mean they are all all sorts
(20:54):
of spectrums from you know, your your you know your
your your, your folks in Tennessee your folks, and you
know kind of in the and Georgia. I mean, there's
just it's very interesting just to see who comes through
those drive throughs. Get a lot of nostalgic you know,
you know, moms and dads that want to take their
kids into Crystal because they had an experience and their
grandparents had an experience and so we we know there's
(21:16):
something to tap in there on that generational side, and
you know, how do you tell those stories?
Speaker 3 (21:20):
And so you know, that is the fun side of it.
It's getting a little bit more fun. I mean it
was it was tough.
Speaker 4 (21:27):
And our teams, if you can imagine, you know, I've
got some folks that work on Jay Alexander's that are
doing some things on Crystal and just to get their mindset,
you know, away from Okay, you're you know, you're you've
got a totally different environment at a Jay's. You know,
how do you kind of pivot and you know, use
the basic tenets of restaurant one oh one to apply
(21:47):
that into a into a QSR. And you know, some
people it takes a unique person.
Speaker 3 (21:51):
You know. Some people are good with it.
Speaker 4 (21:53):
Some people, you know, it's a it's a challenge and
they can't accept it that way.
Speaker 3 (21:57):
And you know, I've got to mold the.
Speaker 4 (21:58):
Team to you know, to find in our strengths and
our weaknesses and put people, you know, against the brands,
you know, where they really can adapt. And we've got
some great people that certainly have done that along the way,
which I love.
Speaker 2 (22:12):
You're refranchising the chain. What percentage of the store base
do you want to retain and what are your plans
for the proceeds.
Speaker 4 (22:19):
Yeah, I mean I think, like you know, eighty percent
just kind of seems like the right thing to do.
And in the Crystal side, certainly want to invest in
in upkeep and facilities and remodels across the system. And
it's obviously a little bit easier if you're you know,
in that franchise community on that front. So that's that's
really what I've been been trying to focus on and
(22:41):
get that number as high as human as possible.
Speaker 3 (22:45):
And it's got a good base.
Speaker 4 (22:46):
I mean, we had to reinvigorate and invigorate you know,
our franchise Ease. They were kind of not treated the
best throughout their time, but we've done a nice job
of turning them around.
Speaker 3 (22:56):
For sure.
Speaker 2 (22:57):
Are you growing the other brands in the portfolio and
if not, what are you doing with the cash that
they generate?
Speaker 4 (23:02):
Yeah, I mean we we've been doing a little bit
of growth. We just opened a new Logans, uh and
so you know, we're very cautious on that front because Logans,
you know, we've we've kind of trimmed the portfolio and
tried to just continue. You know, we've got a lot
of or had a lot of work to do in
the in the Logan side, so you know, it's probably
(23:23):
slow growth on that front. A lot more growth on
the Ammoda Jays and Stony side. But yeah, just reinvesting
in the brand. You know, again, Logan's legacy brand. You know,
got some assets that that need some.
Speaker 3 (23:34):
Tender love and care.
Speaker 4 (23:35):
The nice thing about a road house is that, you know,
a remodel is not you know, you don't have to
do too much and there's probably more back of the
house and restrooms to to really meet to kind of
where we expect things. So that's where we've been putting
you know, that capital and then certainly looking for you know,
what we can do on the M and a side
of things and and kicking around the tires to see,
(23:57):
you know, with some of these proceeds, are that you know,
is there an opportunity to find something you know that
that's you know, in that polished arena that might be
you know, six to twenty units, are you know, our
our big pieces, you know, can't has the concept grown
out of its home market? That always is a challenge
as a concept person at heart is you know, we've
(24:18):
got some great concepts and you know, all these cities
across the country, but can you break out and have
they proven themselves successful you know, getting out of a
home market. So that's where we're starting to you know,
when when we get the you know, any information on
on brands for sale, that's kind of what we ask ourselves.
Speaker 2 (24:36):
And clearly you have a broad purchasing basket. So how
will SPB be impacted by the tariffs?
Speaker 4 (24:43):
Yeah, I mean, you know, when that first came on,
you know, we were, you know, we were you know,
very you know, nervous about what we're seeing so you
know we've started to look at things, you know, domestically
canola oil. You know, we bought some that was in Canada.
We've kind of looked at that on a domestic basis
and found suppliers the challenges everybody else is doing at
(25:06):
the same time, so you know, we've got to balance
the cost.
Speaker 3 (25:09):
You know that that's out there.
Speaker 4 (25:10):
But you know we've been we're big in some respects
but small in others, so we can be a little
bit more nimble. So you know, that was certainly a
factor in Canada was you know, was not on our
bingo card.
Speaker 3 (25:21):
You know, there would there'd be some challenges, but.
Speaker 4 (25:23):
Clearly that's been something we've had to adapt on that front.
There was a little bit of spirits on that as well.
And then you know, really looking at produce side of things,
and you know, particularly on avocados and what's happening on
that front. Tomatoes now are are deeply impacted and so
you know that there are there are things that we
(25:43):
can you know, because we're big, we can kind of
absorb the costs to a certain extent, and so we've
been we've been you know, watching that across the lines.
Spirits is another one where there's a little bit of noise.
But you know, we we haven't been past you know,
we haven't taken price on the brands. You know, this year,
I think that you know, like a lot of brands
(26:04):
the past couple of years, you know, we certainly had
our fair share, you know, across the different dimensions. I
do still think that for the value and for the
quality at A J's and a Stony, you're you know,
the guest is getting to steal still out there. I mean,
we're very conscious of where we sit with our competitors
out there, and we didn't really not raised prices.
Speaker 3 (26:27):
You know, We've done a little.
Speaker 4 (26:28):
Bit here and there around the edges because of you know,
the basket of goods as you mentioned. But but but yeah,
tariff seemed to be getting at least you know, it's
the uncertainty was the piece that was really driving you
know a lot of the quick reactions. But now you know,
it's something we're watching, you know, the cattle front and
the and the thinning of cattle.
Speaker 3 (26:49):
You know, that was you know, the you know, the past.
Speaker 4 (26:51):
Twelve months or so that's impacted us. And so we've
been really you know, we've we've been moving around some
of our vendor relationships and and really, you know, we
don't want to sacrifice quality, but we also need to
be mindful of what we're what we're buying at. And
so with the amount of of of of you know,
beef and proteins and and the trends that we're seeing
with with with consumers out there, you know, we're very
(27:14):
cognizant on that front. And you know, can we put
daily you know, features out that are in seafood or
chicken to help kind of you know, merchandise that as
we build things out.
Speaker 1 (27:27):
And what do you see in from the US consumer
across your brands?
Speaker 3 (27:30):
Uh?
Speaker 1 (27:30):
And has this year and has anything surprised you?
Speaker 4 (27:34):
I mean, I guess the resiliency of of consumers. You
know that they you know, like all of us. It's
just there's been all sorts of different things, whether that's
you know, early in the year near four oh one
K was you know, getting a little bit whacked uh
And so that would help, you know, that would hurt
in theory the you know, your your higher social income
guests out there, and so I think it's just that
(27:56):
that that they've you know, the guests have been have
been really looking for a better, you know, sit down experience,
and I don't know if it's just you know, people
are tired of of kind of the QSR and fast
casual experience and wanting a little bit more of a
sit down.
Speaker 3 (28:11):
And I think that you.
Speaker 4 (28:13):
Know, casual, polished casual. We've gotten better in terms of
ticket times, and you know, you can make it a
faster experience, you know, whether that's paying at the table,
you know, through you know, mobile point point of sale systems, you.
Speaker 3 (28:27):
Know, ordering drinks a little bit faster.
Speaker 4 (28:29):
So I think that you know, you know, guests are
being are able to really use you know, the brand
a little bit better.
Speaker 3 (28:34):
And we've been you know, been.
Speaker 4 (28:35):
Able to adapt to meet that that that that experience
a little bit more on that front. And I think
you know, while you know, door Dash and Uber Eats
is still a pretty strong percent of our business, you know,
we're seeing more and more people coming in, We're seeing
more people skipping the door dash and going back to
you know, ordering it online and then picking up and
avoiding all those fees. So I think that that you know,
(28:56):
consumers have just continue to you know, they're smart and
they know, hey, I can save eight, ten, twelve bucks
by not having it delivered, and you know, I'll hop
in the car and go get it like I used
to do and you know, good old days of twenty
eighteen or whatever.
Speaker 3 (29:10):
So it's it's it's.
Speaker 4 (29:13):
Been interesting to see, you know, folks on that front,
on the crystal side. You know, it's been value has
still been the name of the game, bundles, getting.
Speaker 3 (29:21):
More for your buck.
Speaker 4 (29:22):
You know, we certainly you know, have those programs in place, logans,
you know, we also have the real deal, you know,
so you're getting you know, a nice sizeable uh you
know meal that you know, and some people are taking
those home with them. We we haven't done you know,
a buy one, get one free and take one home
for h you know program. But we we've always had
(29:44):
large portions and I think people are you know, are
recognizing that you can stretch that dollar for you know,
for a for a robust meal. And Jay's has always
been just you know, massive portions. And you know that's
something that you know is on our radar, not so
much on the on the value side of things, but
g LP ones and you know, are people splitting you know,
the entrees a little bit more as their appetites you know,
(30:06):
are going down. I think people that are you know
that are you know, choose to go that route. They
still want to go out to eat, and they want
the experience and and all that good stuff. So you know,
I think that as long as we can meet them
and then have those you know, if it's proteins or
you know, you know, having you know, allowed people to
split without adding on three bucks or a plate split charge,
(30:27):
and we avoid all those those tactics. But yeah, there's
just it's it's definitely an interesting time out there.
Speaker 2 (30:33):
Just to follow up on that and the g LP
ones or is there any thought about you know, over
time how you know, maybe there should be some parts
of the menu that are geared towards you know, smaller
portion sizes or whatever it Maybe I'd imagine the mocktail
stuff feeds, you know, is feeding into that.
Speaker 4 (30:54):
Yeah, I mean, you know, when I I try and
talk to as many you know, guests as possible, love
being in restaurants, and then when I go out to
eat in other places, I always you know, just ask folks.
Speaker 3 (31:05):
And then when i've I've met.
Speaker 4 (31:06):
More people that are on you know, GLP ones, I
think that I don't think that it's it's quite like
a menu like gluten free was when it came onto
the scene where you got to separate.
Speaker 3 (31:17):
Gluten free menu.
Speaker 4 (31:19):
I don't think we would cultivate and call it a
you know whatever, a g l P one menu. I
think that we we would we look at these things
that we have enough that it was within these menus
that you know, you can go on a protein front
and you can really you know, capitalize on that front.
We do have smaller steak sizes, so I think fortunately
(31:41):
we've been built in on that front.
Speaker 3 (31:43):
On the alcohol side, no, we we we we have.
Speaker 4 (31:46):
We were a little slow and getting mocktails and and
so we've been really focusing on that and not just
you know, throwing together you know, you know, the orange
juice that we have and and throwing some club soda.
We we've been we've been really you know, spending time
across all of the different brands, even into crystal with
some you know, with kind of some you know, the
the icy platform and adding some cream and making a
(32:09):
doctor pepper you know, dirty soda if you will. So
we've been we've been looking at how we can really
do this and and not be so patronizing that it's
it's it's branded as much of g op front. But
those folks that are you know, that are on you know,
that have that in their lifestyle. They can find it
and they're not going to have to you know, go
through and we you know, are are our servers certainly
(32:29):
you know, they talk about it and know if someone
asks a looking for something that's you know, much more protein,
how can I get down to this front? Then that
they're they're they're trained to to really be able to
capitalize and talk through the menu.
Speaker 3 (32:41):
Itsl Yeah.
Speaker 2 (32:43):
McDonald's just mentioned that they're entering the dirty, dirty soda
business and there you know namesake stores.
Speaker 3 (32:50):
Exactly, so to go somewhere, right.
Speaker 2 (32:53):
Yeah, exactly. So you beat them, You beat them to
the punch. So nice work on that.
Speaker 4 (32:57):
If we could only be so lucky. But yeah, that
the ice, you know, I it's one of those things, right,
I'm I'm older consumer and like you know, just putting
you know, a cream and a sodas it was always
so foreign to me. But that I see doctor pepper
with you know mix, you know, it's it's good. I mean,
it's it's refreshing, it's different. And so we've been, we've
(33:18):
been you know, looking at that.
Speaker 3 (33:20):
You know, we.
Speaker 4 (33:20):
Certainly have been impacted by you know, the Maha movement.
You know, it's very interesting that it's such a you
know on the political spectrum that you know, you're seeing
states where you wouldn't imagine people would be talking about
additives and preservatives, you know, states like West Virginia and Texas.
I mean, I'm super I'm happy that we're we're.
Speaker 3 (33:42):
Going down that route.
Speaker 4 (33:43):
I don't you know, I'm I'm glad that we have
you know, lots of strong state restaurant associations that push
back on labeling everything on a menu, because that's usually
restaurants we get so you know, boxed in whether it
was calories ten to fifteen years ago, you know, now,
you know, trying to avoid mandates on you know, preservatives,
because if our pantry is across the system, I mean,
(34:04):
there's so many ingredients, you know, and while we you know,
we're very mindful of every ingredient that's going in there,
you know, if you're gonna have to disclaim all of those,
you're gonna have a novel on these menus. And and
so we're we're we're conscious of that.
Speaker 3 (34:19):
We we are.
Speaker 4 (34:20):
We've been Tallow on Crystal for I don't know, I'm
trying to get the exact date, but you know, something
like thirty something years, and they even started out even
before that. So we haven't been going out screaming, you know,
loud and proud about tallow because I don't want what
our friends at Stake and Shape encountered that. You know,
I'm super stoked that consumers were able to then say, oh, well,
(34:44):
why why don't you change your entire French fries recipe.
Speaker 3 (34:47):
Without all those oils.
Speaker 4 (34:48):
If you're gonna if you're gonna say, of tallow, well
why are you putting something that has of seed oiled
in that tallo If you're going to do it, go
go do it.
Speaker 3 (34:56):
And I love that.
Speaker 4 (34:56):
I mean, I think if you're really going to embrace
something like that, then apps do what you know in
an out burger is doing in terms of you know,
French fries that are you know, that are cleaned, that
are blanched, and that are put in the fryer, and
you know that's as clean as you could get an ingredient.
So I I, for one, I'm really excited that we're
talking about this, and you know why, you know why
(35:19):
ingredients are different in the US than they are in
the UK.
Speaker 3 (35:21):
And we've all gone and.
Speaker 4 (35:22):
Seen cheerios in London and cheerios in Houston. They're completely different,
and that's ridiculous. So I'm I'm I'm all for, you know,
the movement of just better ingredients for people. And if
you want to eat a skittle with all those colors
in it, that's your choice.
Speaker 3 (35:40):
So I don't I don't like.
Speaker 4 (35:41):
The fact that people have to be told, but I
embrace the fact that you know that there's a new
kind of you know, passion about food and what we're
putting in our bodies.
Speaker 2 (35:50):
I am too, and it shouldn't be a political issue
if you ask exactly exactly.
Speaker 3 (35:55):
Yeah, we should all embrace this for sure, no doubt.
Speaker 1 (35:58):
Josh, thanks again, man, this was fun.
Speaker 3 (36:00):
Yeah. Absolutely appreciate the time you got.
Speaker 2 (36:03):
It and I want to thank the audience for tuning in.
If you liked our discussion, please share it with your
friends and colleagues. Check back soon for an interview with
Brandon Solano, the CEO of Rave restaurant group ticker R
A V.
Welcome to Chopping It Up.
Speaker 2 (00:12):
I'm your host, Mike Hanlon, the Senior Restaurant and Food
Service Analyst at Bloomberg Intelligence. Our research and that a
bi's five hundred analysts around the globe can be found
exclusively on the Bloomberg terminal. If you enjoy the pod,
open up your phone and give us a five star
review on Apple or Spotify.
Speaker 1 (00:29):
Today we're joined by Josh Kern.
Speaker 2 (00:31):
Josh is the CEO of SPB Hospitality, a Houston based
multi concept restaurant company with almost five hundred units across
eight brands, Crystal Jay, Alexander's, Logan's Roadhouse, Stony River, Amada,
Leo's Italian Kitchen, Ember Smoked Barbecue, and Village Whiskey.
Speaker 1 (00:49):
Thanks for joining me, Josh. Did I get all those right?
Speaker 3 (00:51):
You got them? Yeah?
Speaker 4 (00:52):
It's always tough to say SPB, Believe me. I stumble
over that all the time, and I misspell hospitality. I
forget the so many times I'm typing too fast. So yeah,
you got it right for sure?
Speaker 3 (01:04):
All right?
Speaker 1 (01:04):
Good stuff, man.
Speaker 2 (01:05):
You've been at SPB for almost seven years now. What
initially attracted you to the gig?
Speaker 4 (01:10):
Yeah, I mean I came in when it was under
the umbrella of craft Works Holdings, and the thesis at that
point in time was really to start this this multi
concept and try and use utilize shared services. And so
I was attracted to the fact that you know, had
a collection of brands on one side, and was acquiring
Logan's Roadhouse at the time, and so I thought, I
was fascinating to use my marketing background to you to
(01:33):
really amplify, you know, the overall guest experience, and then
how do you kind of manage all those different contracts
and vendors h and then you know, basically put this
you know, lego into a system and then figure out
how to drive the company forward, but always be mindful
of the consumer and the guests that are coming in
the restaurant.
Speaker 3 (01:52):
So I thought that was.
Speaker 4 (01:52):
A great opportunity to really grow. And I certainly have
learned a lot from from those initial days. And you know,
back in eighteen.
Speaker 2 (02:01):
I'm sure there's been a lot of changes to the
portfolio of late What motivated the sale of your brew
house concepts in December and more recently the old Chicago
Pizza and tap Room divestiture.
Speaker 3 (02:13):
Yeah, great question.
Speaker 4 (02:14):
These these are legacy brands, particularly kind of you know,
rock Bottom on the brewery side and Gordon Beers. You know,
they were the og of breweries and started, you know
twenty five thirty years ago when it was super hot
to have a brewery and a restaurant bolted onto one another,
and it just over the years consumers really started to
(02:34):
push away, and some of it was just you know beer,
you know, craft beer kind of came out of flavor
because you had all these micro breweries in local communities
across the country, you know, started chipping away from that
core beer person and then going in a restaurant and
having all those smells, it just started to lose its way,
and they were maybe they're massive. We were talking sixteen
(02:57):
thousand to nineteen thousand square feet and as you know,
as you know, being immersed in the in this in
this category that's expensive on the facility side, and if
you're trying to remodel and trying to do private dining,
you know, all those things just certainly, you know, had
some impact. And you know, then you add a little
bit of sprinkle of of of what happened with COVID
(03:17):
certainly was was a factor that product fast forward and
you know what was happening on the Breu side, So
we we were looking pretty hard to to move that on.
But we love the brand, so you know, wanted to
make sure it was in good hands. The Kelly group
kind of stepped up and took some of those uh,
those brands.
Speaker 2 (03:33):
Uh.
Speaker 4 (03:33):
And then with Old Chicago, you know, tough category with
pizza and beer. You know, kind of you got those
two worlds that are you know, had some interesting opportunities
during COVID for sure, pizza was certainly the go to item,
and you know people were were used to delivery and all.
Speaker 3 (03:50):
That good stuff. But you know, just over the years.
Speaker 4 (03:52):
You know, another legacy brand where OC was just you
know getting picked apart in different areas. You had some
older leases that were out there. It's kind of some
trade areas that were just kind of off the beaten path,
and so it was it was hard, and it became
a little bit of a distraction with our other brands
because of just the nature of that particular business a
little bit different than the rest of our brands is that,
(04:14):
you know, we're really heavy on the southeast part of
the country. In Old Chicago's a little bit more kind
of in the West, and and started in Denver, and
so that's really when we started to see there an
opportunity to kind of spin that one out. Had some
really great interest, you know, Morgan Kingston was you know,
our advisors on on that that initiative, and uh, they
(04:35):
did a great job and we had some interesting folks
that came to table, and so we we just closed
it last Monday, and certainly was was an interesting process,
but happy that another group has come into the end
of the frame and we'll be able to take the
brand to new heights hopefully.
Speaker 2 (04:52):
Cool and you're not just divesting brands. You know, you
purchased a model last year. What attracted you to that one?
Speaker 3 (04:58):
Yeah, I mean we were you know, we were looking
at all.
Speaker 4 (05:00):
Sorts of interesting things last year, and you know we
were looking at something that was over four hundred units
and you know, those those type of propositions. You know,
it was a legacy brand. And you know, while we're
good at kind of resuscitating you know, brands, you know,
it becomes a time when that's.
Speaker 3 (05:17):
All you're doing.
Speaker 4 (05:18):
You're managing really you know the real estate.
Speaker 3 (05:21):
Side of things.
Speaker 4 (05:21):
You're really getting hyper focused on labor and food costs.
And then that might be the detriment of the guest
experience because you're just not getting the traffic on those sides.
So we we pivoted and wanted to kind of, you know,
take something that was up and coming concept that was
relevant to kind of the next generation of consumers in
terms of international flavors, and then something that we also
(05:43):
are very good at is growing restaurants, so designing new restaurants,
and so we thought that that was a good opportunity
for you for SPV to allow the great group of
people that we have within our support centers to apply
their talents in terms.
Speaker 3 (05:57):
Of growth and development.
Speaker 4 (05:59):
You know, working with Chef Jose Garcis, who's you know,
a legend within the culinary you know world, and adding
kind of his inspiration and his abilities to kind of,
you know, weigh in on what we're trying to build.
We thought it was a good kind of pivot for
us to be a little bit smaller to look at
really some some markets that are you know, that will
support kind of a you know, Spanish tapist concept.
Speaker 3 (06:22):
Uh So we thought that was a good opportunity.
Speaker 4 (06:24):
And our friends Barcelona, you know, they're they're doing a
heck of a job, and so we know there's white
space in many markets across the country, and so we
leaned into that and the other thing that Jose brings
to the to the tables. He's a great concept, you
know person, he's a great chef, really knows how we can.
Speaker 3 (06:40):
Kind of pivot in different areas.
Speaker 4 (06:42):
So he's got a you know, an interesting coffee concept
that we're starting to you know, to kick around. And
you know, as we look at real estate for other
properties like d Alexander's, you know, we get we get
some of these properties that are you know, that are
interested in a chef driven concepts that could stem from
you know that that am part into those PM day
parts and so it allows us to kind of customize
(07:05):
and help landlords across the country to help differentiate what
we bring to the table. And so he's been really
good on that side of the business and just a
really great person in general, which we really like. We're
all about people and so working you know together and
collaboratively is something that we thought would be great to
bolt onto SPB as we divest some legacy brands and
(07:28):
bring in some new things across the country.
Speaker 2 (07:30):
Yeah, very cool, and it's interesting that you're willing to
both resuscitate brands as well as you know, grow emerging ones.
That really opens up the funnel when it comes to
potential acquisition targets one.
Speaker 4 (07:43):
Hundred percent, you know, and we're a little bit you know,
different because we also have some franchise you know, Old
Chicago is about, you know, fifty percent franchised, Logans has
a component of it, and Crystal Brands are about sixty
five percent franchise. So we also have that side of
the business, which is very interesting, especially when you talking
about M and A activity, because there's some big franchise
(08:06):
you know, groups that are out there that are really interested.
There's groups that are you know, specializing carve outs that
that are interested, and then we are also looking.
Speaker 3 (08:14):
Kind of some of those opportunities.
Speaker 4 (08:15):
So I guess what the you know, the headline there
is we're not afraid if it's a franchise entity or
if it's not, because our j Alexander's business is one
hundred percent corporate. So it just adds up, you know,
and you've got some some different personalities when you're working
with franchisees who are invested in a brand, you know,
versus quote unquote corporate ones, and so you know, we're
we're we're I think we're really good in terms of
(08:36):
managing those relationships as well. So it's a little bit
different in terms of what we have going, which you know,
just makes it really interesting.
Speaker 2 (08:46):
Yeah, I mean, franchising is a very different business than
owning and operating restaurants. That's cool, And let's dig in
more on Jay Alexander's that's your primary growth vehicle. Can
you talk about what makes that change special?
Speaker 4 (08:58):
You know, it's it's it's one of those brands where
you know, hospitality is is really kind of stem to
stern and so you know, really from you know, starting
from the menu that's been highly cultivated. It's got some
regional nuances. So you know in Naples, Florida, you know,
we've got a little bit more seafood, a little bit
more salads to kind of meet the you know, the
guests expectations on that front, and so really highly cultivated,
(09:22):
you know, very scratch kitchen. You know, they do a
taste plate. You know, every morning they go through with
you know and taste you know, every single sauce and
you know, going through the walk you know, the walk
ins and making sure that everything's ready for service, and
they thought everything through, and you know, really specialized group
that's back of the house and really engaging and in
(09:44):
great tenure. I mean, we've got some some gms that
you know, have been with the brand for you know,
twenty twenty five years, some kitchen managers that kind of
have that same tenure. So really that kind of really
is is different in the industry in terms of having
some some you know, some people that are making careers
out of just such a great opportunity. So it starts
with that menu. But our service is just it's really polished.
(10:08):
It really meets the you know we we preach, so
you know, making eigeh contact with guests and you know,
they have a very refined uniform package in terms of
what their expectations are to you know, to come in
and be restaurant ready and making sure your your fingernails
are manicured, you know, both males and females, and and
making sure that we thought of everything when it comes
(10:29):
to that overall experience, and and and and really have
have done a nice job. And I think the great
thing about that is just consistency when you go through
kind of reviews, whether that's on Yelp or you know,
Google or you name it. You know, we really have
you know, that high expectations. We try and meet every
every expectation of the guests that comes in. And I
(10:50):
think we just do a really great job and you
know what you're going to get when you go into
Jay's and have a good time. And so it's kind
of that that magic that that's out there. But I
do think at the end of the day, it comes
down to those those those carrying gms that really run
great shifts each and every day, uh and just really
motivate the team and you know, have rally alleys before
(11:11):
a shift or pre shift and uh and just really
kind of work together on that front. So that's that's
the magic that we see every day for sure.
Speaker 2 (11:19):
Yeah, you can't run great restaurants without great gms, man exactly.
Speaker 4 (11:23):
I mean they're the heartbeat of of what goes on
and you know, and and and they have to deal
with all sorts of craziness.
Speaker 3 (11:29):
I mean, it's been interesting the past couple of years.
Speaker 4 (11:32):
You know, it's it's those outside influences that just it's tough,
right everything from you know, we saw this inflationary pressure
you know, we sell a ton of high quality steaks
and seafood, and you know, steaks are spiking through the roof,
and you know, then you get the crazy weather and flooding.
We have, ah, we have a location that's that flooded out.
It's still closed, and you know, you got to you
(11:54):
got to earn back those guests.
Speaker 3 (11:55):
You know, since you've been closed for two two three.
Speaker 4 (11:58):
Weeks, you got to get at back out there and
and let people know that you're open. So there's just
you know, it seems like, you know, there's always something
that's coming into into into the world, and so we
have to we have to really manage that process to
to keep people focused and and and the good thing is,
you know, it can be corporate that can really you know,
you know, can screw things up because you know, if
(12:19):
we add a new system every day, or we add
a new initiative, or you know, do things that are
going to distract at the unit level. You know, we
try not to do that to the best of our abilities. Obviously,
we want to adapt to the marketplace, and there's you know,
there's some good technology that we can look at and
but that we're very mindful of just not upsetting that
apple Apple cart. But at the same time, we can't
(12:39):
be asleep at the wheel. I mean, Jay's has to evolve.
It's consumer set. It's getting a little bit older and
the guests that we see out there, and so you know,
we're looking at initiatives to get that younger generation in.
You know, we've been spending time and in this kind
of non alcoholic you know, mocktail arena, uh, you know,
to really you know, it's it is definitely changing before
(13:00):
or our eyes in terms of how people are kind
of interacting with the brand. So we don't want to
be resting on our laurels and take for granted that
we've got a built in guest base that we want
to attract new guests as much as we possibly can.
Speaker 2 (13:14):
Yeah, this industry will keep you on your toes, that's
for sure. Are there any pockets in the US where
at Jay Alexander's is strong and how fast we're expanding.
Speaker 4 (13:24):
Yeah, I mean, you know, Florida market for US has
always been traditionally really really good market, and so we're
going into Orlando in Q one. We've got that site
all squared away. We're looking at Sarasota as a potential site.
And then we've done really well in Texas, so our
Houston location, our San Antonio locations, and so we're going
(13:45):
hot and heavy into Dallas. And it's just one of
those concepts where it's got a you know, good brand recognition.
And so we're going into into Dallas. We've got a
couple that are going to be coming on one end
of this year, another one in Q one of next
year prosper UH and then we're going back into the
Arizona market and Chandler UH and so you know, going
(14:06):
a little bit west. So it's it's it does well
kind of in in those kind of higher demographic areas
and have that really nice balance between that that lunch
and dinner business although excus, you know heavy dinner. But
and then in the South, I mean, our Michigan locations are.
Speaker 3 (14:24):
Doing really well.
Speaker 4 (14:25):
I mean, it's it's it's interesting to see what happens
in Troy, Michigan at Somerset Collection that one rock and
Roll Rocks and Rolls Tennessee locations and you know, certainly
within Nashville are doing great. Our our Franklin, Tennessee is
is probably the number one the system. Maybe you know
close with plantation down Florida. But so you know, really
(14:46):
has some some some great opportunities and we continue to
look and see, you know, are there smaller adaptations of
a Jay's like a Jay's Light, you know, similar to
what our friends at at Hillstone or Houston's do with
with their Honor bar concepts. And you know, there's some
elasticity that we're you know, we're kicking around, you know,
what what can we do on that front? And can
we go in a smaller footprint and still kind of
(15:07):
has some interesting aspects of the brand.
Speaker 3 (15:09):
So it keeps us on our toes for sure. Cool.
Speaker 1 (15:13):
What kind of au vs are you doing system wide?
Speaker 2 (15:16):
And what kind of AUVs are you looking at for
new stores and maybe some of these smaller units.
Speaker 4 (15:21):
Yeah, I mean we we sit about seven four on
a Jay's so very healthy. Continues to grow, you know really,
you know nice, that's why we're attracted to the Paulice
casual concept. And he can't take for granted, right that
that consumer you know, it has been you know that
it's been an interesting year in terms of of their
of their burrow and K's and wallets, but you know
(15:43):
they've been you know, we haven't seen a dip knock
on wood for for Jay Alexander's and we we we
have you know, nice healthy traffic counts, and I do
think that it all spirals back to that hospitality and
people are just continuing to look at, you know, being
treated a little bit different and if it's a special
event or a date night going in there and having
a refined sense of hospitality, you know, it's just harder
(16:06):
and harder to.
Speaker 3 (16:06):
Find these days.
Speaker 4 (16:07):
And as consumers continue to eat out, it's you know,
I think they're a little bit tired of kind of
that fast casual experience, you know. So I think that
having you know, not not to that really white tablecloth experience,
like we don't want to be you know, too too
far where it's exclusive on that front, we think there's
a very nice balance in between the you know, casual
(16:29):
plus environment that really is allowing our guests to feel
a little bit more special and take that opportunity to
you know, to come in you know, two three times
a week and get something different. Because our menu has
daily specials in addition to the things that are always
on the menu, so we're certainly conscious of that.
Speaker 2 (16:47):
Cool Crystal was acquired in twenty twenty two. I believe
the chain wasn't doing very well when you made the acquisition.
How are things going now with the chain?
Speaker 3 (16:58):
Yeah, I mean it's it's in better shape.
Speaker 4 (17:00):
We inherited a mess, uh and certainly we had to
kind of take it down to the studs in terms
of you know, all those things that I've talked about,
you know with you today is you know, even in
a drive through, there's a degree of hospitality and and
so that that guest experience really wasn't working out too well.
So you know, we we we put some new team
members that are you know, really driving the brand. I've
(17:20):
got an amazing leader and Amanda Hide, who you know
from an operation standpoint, you know, she she leads with
with tough love. Right there's you know, you've got to
put your arms around people sometimes and and and and
really build them up. But at the same time, we
got to hold people accountable to you know, the expectations
that we have. And it's a you know, that's a fierce, fierce.
Speaker 3 (17:40):
Category to be in. And you know, everyone.
Speaker 4 (17:42):
From you know, from McDonald's to White Castle to you know,
to locals that are in the marketplace.
Speaker 3 (17:47):
It's tough.
Speaker 4 (17:48):
So we concentrated on the basics, you know, you know,
getting that you know about eighty three percent is through
the drive through, so you know, anyone can say, oh well,
let's focus them and drive through. So we really have
tried to make got the best experience possible, investing a
little bit and kind of those digital menu boards and
getting that experience a little better to help quite frankly,
(18:08):
not only the guests that are coming to those drive throughs,
but our team members that you know have better headsets,
have better ways to get those systems in, get that
food out hot and fresh, and so you know, how
to concentrate on those elements. But at the same time,
couldn't fix everything at once, right, I mean there's you know,
you can see twenty things that are that need to
be addressed, but there's only a few that you really
can focus on. So over the past two years, you know,
(18:31):
we've we've really you know, focused on on the basics,
and now we're evolving in terms of, you know, a
little bit more innovation, getting into the fun nature that
you know that Crystal has been afforded. I mean it's
a funky brand. It's been around ninety I think it
celebrates its ninety fourth birthday next month, and so it's
it's had some fun in its history, and I think
(18:52):
it got away from that that it was just very transactional.
It got full of itself. It started to you know,
to go on different paths. And so now just you know,
focused on you know, how do we you know, talk
about the brand in a unique way, how do we
continue to be a little bit irreverent at the same time,
you know, make sure we're meeting expectations of you know,
what people want to spend dollars on. So, uh, it's
(19:14):
been interesting, and we're not there yet. I mean we're
you know, we're probably fifty percent you know down the line.
You know, there's still plenty to do. You know, you've
got facilities that are you know, we're built in the
seventies and so you can imagine some of the facilities
on that front, and you know, if you touch it,
then you got it. You get back in some ada issues.
So again, just like you know, being in this industry,
(19:36):
there's always something that that happens on that front. And
and so, you know, super proud of what the team's
been done. But I had been doing but lots there
to to to notice in the future. We've we've we've
seen our fair share of crime the past year, you know,
a lot of smash and grabs. You know, it seems
(19:56):
to be a little bit. It seems like the past
month things of stilled a little bit.
Speaker 3 (20:01):
But it was rough, man, it.
Speaker 4 (20:03):
Was there was some weird stuff just in terms of
what we would see. And you know, some of it's
the trade area, some of it's just the culture that
we're in, you know today. But uh, I'm happy that
things seem to be getting a little bit more normal.
And we're always going to have some crime in there,
but but it seems like it's it's subsiding slightly.
Speaker 2 (20:23):
Yeah, that's unfortunate, but it sounds like as a former marketer,
this could be one that's fun, uh.
Speaker 3 (20:29):
To revive through.
Speaker 1 (20:30):
Yeah, I mean part of the business, right.
Speaker 4 (20:32):
It's an it's an acquired taste and and and you
know the best thing about this is that you know,
consumers will not let Crystal die like, you know, different
from when I was talking about rock Bottom, like you know,
rock Bottom and a brewery. I think consumers were like, eh,
you know, okay, it was it's had its day, But man,
Crystal just has you know this this loyal followers, and
they're very diverse. I mean they are all all sorts
(20:54):
of spectrums from you know, your your you know your
your your, your folks in Tennessee your folks, and you
know kind of in the and Georgia. I mean, there's
just it's very interesting just to see who comes through
those drive throughs. Get a lot of nostalgic you know,
you know, moms and dads that want to take their
kids into Crystal because they had an experience and their
grandparents had an experience and so we we know there's
(21:16):
something to tap in there on that generational side, and
you know, how do you tell those stories?
Speaker 3 (21:20):
And so you know, that is the fun side of it.
It's getting a little bit more fun. I mean it
was it was tough.
Speaker 4 (21:27):
And our teams, if you can imagine, you know, I've
got some folks that work on Jay Alexander's that are
doing some things on Crystal and just to get their mindset,
you know, away from Okay, you're you know, you're you've
got a totally different environment at a Jay's. You know,
how do you kind of pivot and you know, use
the basic tenets of restaurant one oh one to apply
(21:47):
that into a into a QSR. And you know, some
people it takes a unique person.
Speaker 3 (21:51):
You know. Some people are good with it.
Speaker 4 (21:53):
Some people, you know, it's a it's a challenge and
they can't accept it that way.
Speaker 3 (21:57):
And you know, I've got to mold the.
Speaker 4 (21:58):
Team to you know, to find in our strengths and
our weaknesses and put people, you know, against the brands,
you know, where they really can adapt. And we've got
some great people that certainly have done that along the way,
which I love.
Speaker 2 (22:12):
You're refranchising the chain. What percentage of the store base
do you want to retain and what are your plans
for the proceeds.
Speaker 4 (22:19):
Yeah, I mean I think, like you know, eighty percent
just kind of seems like the right thing to do.
And in the Crystal side, certainly want to invest in
in upkeep and facilities and remodels across the system. And
it's obviously a little bit easier if you're you know,
in that franchise community on that front. So that's that's
really what I've been been trying to focus on and
(22:41):
get that number as high as human as possible.
Speaker 3 (22:45):
And it's got a good base.
Speaker 4 (22:46):
I mean, we had to reinvigorate and invigorate you know,
our franchise Ease. They were kind of not treated the
best throughout their time, but we've done a nice job
of turning them around.
Speaker 3 (22:56):
For sure.
Speaker 2 (22:57):
Are you growing the other brands in the portfolio and
if not, what are you doing with the cash that
they generate?
Speaker 4 (23:02):
Yeah, I mean we we've been doing a little bit
of growth. We just opened a new Logans, uh and
so you know, we're very cautious on that front because Logans,
you know, we've we've kind of trimmed the portfolio and
tried to just continue. You know, we've got a lot
of or had a lot of work to do in
the in the Logan side, so you know, it's probably
(23:23):
slow growth on that front. A lot more growth on
the Ammoda Jays and Stony side. But yeah, just reinvesting
in the brand. You know, again, Logan's legacy brand. You know,
got some assets that that need some.
Speaker 3 (23:34):
Tender love and care.
Speaker 4 (23:35):
The nice thing about a road house is that, you know,
a remodel is not you know, you don't have to
do too much and there's probably more back of the
house and restrooms to to really meet to kind of
where we expect things. So that's where we've been putting
you know, that capital and then certainly looking for you know,
what we can do on the M and a side
of things and and kicking around the tires to see,
(23:57):
you know, with some of these proceeds, are that you know,
is there an opportunity to find something you know that
that's you know, in that polished arena that might be
you know, six to twenty units, are you know, our
our big pieces, you know, can't has the concept grown
out of its home market? That always is a challenge
as a concept person at heart is you know, we've
(24:18):
got some great concepts and you know, all these cities
across the country, but can you break out and have
they proven themselves successful you know, getting out of a
home market. So that's where we're starting to you know,
when when we get the you know, any information on
on brands for sale, that's kind of what we ask ourselves.
Speaker 2 (24:36):
And clearly you have a broad purchasing basket. So how
will SPB be impacted by the tariffs?
Speaker 4 (24:43):
Yeah, I mean, you know, when that first came on,
you know, we were, you know, we were you know,
very you know, nervous about what we're seeing so you
know we've started to look at things, you know, domestically
canola oil. You know, we bought some that was in Canada.
We've kind of looked at that on a domestic basis
and found suppliers the challenges everybody else is doing at
(25:06):
the same time, so you know, we've got to balance
the cost.
Speaker 3 (25:09):
You know that that's out there.
Speaker 4 (25:10):
But you know we've been we're big in some respects
but small in others, so we can be a little
bit more nimble. So you know, that was certainly a
factor in Canada was you know, was not on our
bingo card.
Speaker 3 (25:21):
You know, there would there'd be some challenges, but.
Speaker 4 (25:23):
Clearly that's been something we've had to adapt on that front.
There was a little bit of spirits on that as well.
And then you know, really looking at produce side of things,
and you know, particularly on avocados and what's happening on
that front. Tomatoes now are are deeply impacted and so
you know that there are there are things that we
(25:43):
can you know, because we're big, we can kind of
absorb the costs to a certain extent, and so we've
been we've been you know, watching that across the lines.
Spirits is another one where there's a little bit of noise.
But you know, we we haven't been past you know,
we haven't taken price on the brands. You know, this year,
I think that you know, like a lot of brands
(26:04):
the past couple of years, you know, we certainly had
our fair share, you know, across the different dimensions. I
do still think that for the value and for the
quality at A J's and a Stony, you're you know,
the guest is getting to steal still out there. I mean,
we're very conscious of where we sit with our competitors
out there, and we didn't really not raised prices.
Speaker 3 (26:27):
You know, We've done a little.
Speaker 4 (26:28):
Bit here and there around the edges because of you know,
the basket of goods as you mentioned. But but but yeah,
tariff seemed to be getting at least you know, it's
the uncertainty was the piece that was really driving you
know a lot of the quick reactions. But now you know,
it's something we're watching, you know, the cattle front and
the and the thinning of cattle.
Speaker 3 (26:49):
You know, that was you know, the you know, the past.
Speaker 4 (26:51):
Twelve months or so that's impacted us. And so we've
been really you know, we've we've been moving around some
of our vendor relationships and and really, you know, we
don't want to sacrifice quality, but we also need to
be mindful of what we're what we're buying at. And
so with the amount of of of of you know,
beef and proteins and and the trends that we're seeing
with with with consumers out there, you know, we're very
(27:14):
cognizant on that front. And you know, can we put
daily you know, features out that are in seafood or
chicken to help kind of you know, merchandise that as
we build things out.
Speaker 1 (27:27):
And what do you see in from the US consumer
across your brands?
Speaker 3 (27:30):
Uh?
Speaker 1 (27:30):
And has this year and has anything surprised you?
Speaker 4 (27:34):
I mean, I guess the resiliency of of consumers. You
know that they you know, like all of us. It's
just there's been all sorts of different things, whether that's
you know, early in the year near four oh one
K was you know, getting a little bit whacked uh
And so that would help, you know, that would hurt
in theory the you know, your your higher social income
guests out there, and so I think it's just that
(27:56):
that that they've you know, the guests have been have
been really looking for a better, you know, sit down experience,
and I don't know if it's just you know, people
are tired of of kind of the QSR and fast
casual experience and wanting a little bit more of a
sit down.
Speaker 3 (28:11):
And I think that you.
Speaker 4 (28:13):
Know, casual, polished casual. We've gotten better in terms of
ticket times, and you know, you can make it a
faster experience, you know, whether that's paying at the table,
you know, through you know, mobile point point of sale systems, you.
Speaker 3 (28:27):
Know, ordering drinks a little bit faster.
Speaker 4 (28:29):
So I think that you know, you know, guests are
being are able to really use you know, the brand
a little bit better.
Speaker 3 (28:34):
And we've been you know, been.
Speaker 4 (28:35):
Able to adapt to meet that that that that experience
a little bit more on that front. And I think
you know, while you know, door Dash and Uber Eats
is still a pretty strong percent of our business, you know,
we're seeing more and more people coming in, We're seeing
more people skipping the door dash and going back to
you know, ordering it online and then picking up and
avoiding all those fees. So I think that that you know,
(28:56):
consumers have just continue to you know, they're smart and
they know, hey, I can save eight, ten, twelve bucks
by not having it delivered, and you know, I'll hop
in the car and go get it like I used
to do and you know, good old days of twenty
eighteen or whatever.
Speaker 3 (29:10):
So it's it's it's.
Speaker 4 (29:13):
Been interesting to see, you know, folks on that front,
on the crystal side. You know, it's been value has
still been the name of the game, bundles, getting.
Speaker 3 (29:21):
More for your buck.
Speaker 4 (29:22):
You know, we certainly you know, have those programs in place, logans,
you know, we also have the real deal, you know,
so you're getting you know, a nice sizeable uh you
know meal that you know, and some people are taking
those home with them. We we haven't done you know,
a buy one, get one free and take one home
for h you know program. But we we've always had
(29:44):
large portions and I think people are you know, are
recognizing that you can stretch that dollar for you know,
for a for a robust meal. And Jay's has always
been just you know, massive portions. And you know that's
something that you know is on our radar, not so
much on the on the value side of things, but
g LP ones and you know, are people splitting you know,
the entrees a little bit more as their appetites you know,
(30:06):
are going down. I think people that are you know
that are you know, choose to go that route. They
still want to go out to eat, and they want
the experience and and all that good stuff. So you know,
I think that as long as we can meet them
and then have those you know, if it's proteins or
you know, you know, having you know, allowed people to
split without adding on three bucks or a plate split charge,
(30:27):
and we avoid all those those tactics. But yeah, there's
just it's it's definitely an interesting time out there.
Speaker 2 (30:33):
Just to follow up on that and the g LP
ones or is there any thought about you know, over
time how you know, maybe there should be some parts
of the menu that are geared towards you know, smaller
portion sizes or whatever it Maybe I'd imagine the mocktail
stuff feeds, you know, is feeding into that.
Speaker 4 (30:54):
Yeah, I mean, you know, when I I try and
talk to as many you know, guests as possible, love
being in restaurants, and then when I go out to
eat in other places, I always you know, just ask folks.
Speaker 3 (31:05):
And then when i've I've met.
Speaker 4 (31:06):
More people that are on you know, GLP ones, I
think that I don't think that it's it's quite like
a menu like gluten free was when it came onto
the scene where you got to separate.
Speaker 3 (31:17):
Gluten free menu.
Speaker 4 (31:19):
I don't think we would cultivate and call it a
you know whatever, a g l P one menu. I
think that we we would we look at these things
that we have enough that it was within these menus
that you know, you can go on a protein front
and you can really you know, capitalize on that front.
We do have smaller steak sizes, so I think fortunately
(31:41):
we've been built in on that front.
Speaker 3 (31:43):
On the alcohol side, no, we we we we have.
Speaker 4 (31:46):
We were a little slow and getting mocktails and and
so we've been really focusing on that and not just
you know, throwing together you know, you know, the orange
juice that we have and and throwing some club soda.
We we've been we've been really you know, spending time
across all of the different brands, even into crystal with
some you know, with kind of some you know, the
the icy platform and adding some cream and making a
(32:09):
doctor pepper you know, dirty soda if you will. So
we've been we've been looking at how we can really
do this and and not be so patronizing that it's
it's it's branded as much of g op front. But
those folks that are you know, that are on you know,
that have that in their lifestyle. They can find it
and they're not going to have to you know, go
through and we you know, are are our servers certainly
(32:29):
you know, they talk about it and know if someone
asks a looking for something that's you know, much more protein,
how can I get down to this front? Then that
they're they're they're trained to to really be able to
capitalize and talk through the menu.
Speaker 3 (32:41):
Itsl Yeah.
Speaker 2 (32:43):
McDonald's just mentioned that they're entering the dirty, dirty soda
business and there you know namesake stores.
Speaker 3 (32:50):
Exactly, so to go somewhere, right.
Speaker 2 (32:53):
Yeah, exactly. So you beat them, You beat them to
the punch. So nice work on that.
Speaker 4 (32:57):
If we could only be so lucky. But yeah, that
the ice, you know, I it's one of those things, right,
I'm I'm older consumer and like you know, just putting
you know, a cream and a sodas it was always
so foreign to me. But that I see doctor pepper
with you know mix, you know, it's it's good. I mean,
it's it's refreshing, it's different. And so we've been, we've
(33:18):
been you know, looking at that.
Speaker 3 (33:20):
You know, we.
Speaker 4 (33:20):
Certainly have been impacted by you know, the Maha movement.
You know, it's very interesting that it's such a you
know on the political spectrum that you know, you're seeing
states where you wouldn't imagine people would be talking about
additives and preservatives, you know, states like West Virginia and Texas.
I mean, I'm super I'm happy that we're we're.
Speaker 3 (33:42):
Going down that route.
Speaker 4 (33:43):
I don't you know, I'm I'm glad that we have
you know, lots of strong state restaurant associations that push
back on labeling everything on a menu, because that's usually
restaurants we get so you know, boxed in whether it
was calories ten to fifteen years ago, you know, now,
you know, trying to avoid mandates on you know, preservatives,
because if our pantry is across the system, I mean,
(34:04):
there's so many ingredients, you know, and while we you know,
we're very mindful of every ingredient that's going in there,
you know, if you're gonna have to disclaim all of those,
you're gonna have a novel on these menus. And and
so we're we're we're conscious of that.
Speaker 3 (34:19):
We we are.
Speaker 4 (34:20):
We've been Tallow on Crystal for I don't know, I'm
trying to get the exact date, but you know, something
like thirty something years, and they even started out even
before that. So we haven't been going out screaming, you know,
loud and proud about tallow because I don't want what
our friends at Stake and Shape encountered that. You know,
I'm super stoked that consumers were able to then say, oh, well,
(34:44):
why why don't you change your entire French fries recipe.
Speaker 3 (34:47):
Without all those oils.
Speaker 4 (34:48):
If you're gonna if you're gonna say, of tallow, well
why are you putting something that has of seed oiled
in that tallo If you're going to do it, go
go do it.
Speaker 3 (34:56):
And I love that.
Speaker 4 (34:56):
I mean, I think if you're really going to embrace
something like that, then apps do what you know in
an out burger is doing in terms of you know,
French fries that are you know, that are cleaned, that
are blanched, and that are put in the fryer, and
you know that's as clean as you could get an ingredient.
So I I, for one, I'm really excited that we're
talking about this, and you know why, you know why
(35:19):
ingredients are different in the US than they are in
the UK.
Speaker 3 (35:21):
And we've all gone and.
Speaker 4 (35:22):
Seen cheerios in London and cheerios in Houston. They're completely different,
and that's ridiculous. So I'm I'm I'm all for, you know,
the movement of just better ingredients for people. And if
you want to eat a skittle with all those colors
in it, that's your choice.
Speaker 3 (35:40):
So I don't I don't like.
Speaker 4 (35:41):
The fact that people have to be told, but I
embrace the fact that you know that there's a new
kind of you know, passion about food and what we're
putting in our bodies.
Speaker 2 (35:50):
I am too, and it shouldn't be a political issue
if you ask exactly exactly.
Speaker 3 (35:55):
Yeah, we should all embrace this for sure, no doubt.
Speaker 1 (35:58):
Josh, thanks again, man, this was fun.
Speaker 3 (36:00):
Yeah. Absolutely appreciate the time you got.
Speaker 2 (36:03):
It and I want to thank the audience for tuning in.
If you liked our discussion, please share it with your
friends and colleagues. Check back soon for an interview with
Brandon Solano, the CEO of Rave restaurant group ticker R
A V.
Host
Michael Halen
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