March 24, 2025 • 56 mins
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What does it really take to make a restaurant successful in today’s challenging market? Giles from Blue Pan Pizza pulls back the curtain on the hidden risks that can make or break a restaurant before it even opens.
Most restaurateurs focus on menus and design, but overlook critical financial risks—especially personal guarantees in lease agreements. Giles shares how he stress-tests financial models to determine what it takes to break even and reach profitability, offering a masterclass in restaurant financial planning.
In a high-stakes industry, smart operators leverage both leadership and technology to stay ahead. From real-time financial tracking to labor management, restaurant technology helps streamline operations and reduce costly mistakes. If you’re looking for scalable solutions, check out RTI’s restaurant technology resources.
Beyond the numbers, Giles dives into reputation management, hiring for “unteachables,” and the importance of location strategy. His approach to guest recovery is especially valuable—focusing on making guests happy instead of being "right."
Despite Blue Pan’s reputation as Denver’s top Detroit-style pizzeria, Giles stays humble, always striving for improvement. Whether you’re an industry veteran or opening your first concept, this episode delivers essential strategies to avoid costly mistakes and build a thriving, sustainable restaurant.
Resources:
The Hospitality Leader's Roadmap
More from Christin:
Grab your free copy of my audiobook, The Hospitality Leader's Roadmap: Move from Ordinary to Extraordinary at christinmarvin.com/audio
Curious about one-on-one coaching or leadership workshops? Click this link to schedule a 15 minute strategy session.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Today I'm joined by Giles, who's a co-owner of Blue
Pan Pizza, which is a, in myopinion, the best Detroit style
pizza place in Denver.
He's got three locations.
He's been working hard with his, his team to develop and see
thriving over the last 10 or soyears and Giles is just an
(00:28):
extraordinary leader, very wellin tune with the community in
Denver, what's happening, veryinvolved in Eat Denver and just
an advocate for restaurantsdoing really, really well in the
state of Colorado.
We are going to talk todayabout how to manage risk and
(00:50):
he's going to really identifyeight key areas around how he
manages risk.
Before he opens a restaurant,he looks at the financial risk,
the employee risk, the food costrisk, the liability when it
comes to food safety and slipsand falls or employee accidents,
the workman's comp risk right.
The reputational risk, which isa very, very interesting part
(01:14):
of this conversation.
The location risk, the productconsistency risk as you scale.
And competition and his view oncompetition, which is very,
very interesting.
So tons of great advice andinsights from this episode.
I really hope that you get alot of value out of this and if
(01:36):
you know somebody that isgetting ready to open a
restaurant or is thinking aboutopening a restaurant.
This episode is a really greatresource for them of how to
really sit down and put pen topaper and think about all the
ways that they need to managerisk before they even sign on
the dotted line of that lease orbuy a building.
Hope you enjoy thisconversation.
Welcome to the RestaurantLeadership Podcast, the show
(01:58):
where restaurant leaders learntools, tactics and habits from
the world's greatest operators.
I'm your host, kristen Marvin,with Solutions by Kristen.
I've spent the last two decadesin the restaurant industry and
now partner with restaurantowners to develop their leaders
and scale their businessesthrough powerful one-on-one
coaching, group coaching andleadership workshops.
(02:21):
This show is complete withepisodes around coaching,
leadership development andinterviews with powerful
industry leaders.
You can now engage with me onthe show and share topics you'd
like to hear about, leadershiplessons you want to learn and
any feedback you have.
Simply click the link at thetop of the show notes and I will
(02:41):
give you a shout out on afuture episode.
Thanks, so the show notes and Iwill give you a shout out on a
future episode.
Thanks so much for listeningand I look forward to connecting
.
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Visit rti-inccom to learn moredash inccom to learn more Giles.
Thank you so much for joiningme today.
I'm super excited to talk abouthow you are defining risk, and
(04:55):
the last time we were togetherwe were going kind of deep down
the rabbit hole of the risk ofrunning restaurants in Denver,
where it is today higher thanever, riskier than ever, and
where it's been over the years.
So I'd love to just kind ofjump in here and have you talk
about how you are defining riskwhen it comes to business and
personal life.
Speaker 2 (05:16):
Well, thank you for having me on.
I'm really excited to talkabout the subject.
There is a lot going on inDenver to talk about, in
particular, within therestaurant scene.
Feel free to interrupt me atany time.
I tend to maybe talk a littletoo much sometimes, so
definitely don't hesitate tointerrupt.
Risk Managing risk is one of thetop components, if you will, of
(05:41):
opening and running a businesswhereby you own it, whereby you
are self-employed, and there aremany different kinds of risk.
I think a lot of times peoplestrictly associate risk with
money, and that is a very bigcomponent of how I define risk.
What's the risk of me notgetting money back?
(06:02):
What's the risk of an investorwe don't have investors but,
speaking generally, them notgetting their money back?
What's the risk of me and myteam being able to create a
profit margin so we can sustaina business over the long period
of time?
So that is a very basiccomponent when we're looking at
a new location.
We run financial models and westress test them pretty, pretty,
(06:26):
pretty hard and almost to apoint where people will say
we're too conservative.
But the trade-off is is beingself-employed, my business
partner and I have to take on anincredibly large amount of risk
in order to secure and open alocation, Risk that's so high
that if there's a failure, youcould very well be filing for
(06:51):
bankruptcy.
Why do I say that?
I think the general populationlet's just talk about leasing
for a minute I really think thegeneral population generally
thinks that if you lease a space, you open a restaurant, and it
doesn't do well, that you justgo sorry, John, not working out
here your key's back, Good luck.
And that's not the case.
(07:12):
Most leases require a personalguarantee from the owners to
personally fulfill the revenuestream.
Obviously the rents right, andmost of us are in long deals, ie
seven to 10 years.
So let's just say the totalrent over 10 years is a million
dollars.
My business partner, businesspartner I have to guarantee that
(07:33):
money comes in and it canreally, really play a big role
in our decision-making.
So just financial risk, right.
If this thing doesn't work,what type of financial
obligations are outstanding thatwould need to be unwound to
move forward?
One of them leasing,guaranteeing leases.
Speaker 1 (07:51):
Yeah, guy, let me double down on this real quick
before you continue on.
Are you able to write in yourlease agreements in Denver a
clause that if it's not working,you can get out, or is that not
an option?
Speaker 2 (08:07):
It's definitely an option and I think that's an
option that has really rearedits head over the past two years
because of the challengingcircumstances.
But I will say the industrynorm is very much tenants
guaranteeing a portion of ormost of a lease.
A lot of times I shouldn't saya lot sometimes you get
(08:28):
landlords who have no mortgageand their financial
circumstances are very different.
They can afford to wait it outfor the right tenant.
Some landlords need to getpeople in right away and if the
tenant's savvy enough andunderstands what they're signing
, yeah, negotiating some type ofbuyout or just a flat out
notice is something that can bevery much negotiated.
(08:51):
A lot of times what comes withthat?
Regardless, if you'reguaranteeing the lease, are the
improvements right?
A lot of times, not a lot.
Most of the time the tenant'spaying for the majority of the
construction and build out andif tenant fails, that all
becomes property of landlord.
Landlord has an improved spaceat mostly our expense, right, we
do get some TI, but there's abig value capture there for a
(09:14):
landlord in theory, whereby theycan release that space as
turnkey and a new tenant canopen up at a very low cost.
But, yes, negotiating, you know, limited or non-personal
guarantees.
Right now is a converse.
It's part of the conversationthat's that is happening with
with a lot of landlords andtenants.
Speaker 1 (09:37):
Hi everybody, we're taking a quick break to offer
you an exciting opportunity.
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(09:59):
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Now let's get back to the show.
When you create you and yourpartner, create this, your
forecast, your profit model forthe business, you said you'd
(10:21):
stress test it, stress test it.
How do you do that business?
Speaker 2 (10:25):
You said you'd stress test it.
Stress test it.
How do you do that?
We have very everything fromsales projections to cost
increases across the board, toproperty taxes being reassessed
at very high rates in every twoyears, insurance.
All those things have littlevariables, little cells where I
can up, where I can up, upper orup or lower the variable.
(10:46):
So it's more about you know,taking the most conservative
position in the worst casescenario um, in sales, and then
the worst case position on thecost side Um.
But we are fortunate to havetwo restaurants that have been
up for quite some time.
So we do have data, um.
But it's really more of afinancial modeling aspect of you
know at what point what has tohappen for the business to break
(11:09):
even, what has to happen forthe business to reach its
profitability goals and what hasto happen if God forbid.
You know we don't meet either.
So it's a veryfinancial-related Excel model
that we use and we play withprimarily our cost structure to
see if costs go up to a certainamount.
How does it impact us?
Minimum wage in Denver thatgoes up every year forever, that
(11:32):
does not sunset.
So that's kind of easy to model, you know, not easier because I
can make a reasonable guess asto what CPI might be, you know,
year over year.
But it's a lot of just punchingin numbers to see what happens
in a worst case scenario,whether it's sales or expenses.
Speaker 1 (11:52):
Got it.
How else are you defining riskoutside of finances?
Speaker 2 (11:57):
So you have employment risk, right?
What's the risk of, you know,an employee not lasting as long
as you'd like them to, whichcreates turnover costs?
While we're on that topic, youknow we have promoted from
within a lot in our company.
I mean, I mean a lot.
So when you promote somebody toa management position, in this
(12:19):
case, with very limitedmanagerial or even sometimes no
managerial experience, right?
What's the risk of being ableto teach and train that team
member to become a successfulmanager in a reasonable amount
of time?
So you know employment risk.
What's the chances of ourturnover being higher than we
(12:40):
want it to be?
That's another big, really bigcomponent.
And then food costs as well.
What's the risk of our cheese,and in particular our cheese,
you know, going up or down basedon the market?
So that's, we look atemployment risk.
We just look at generalliability risk.
People are going to slip andfall and all those types of
things that's going to happen.
That's why you have workman'scomp insurance.
(13:01):
Reputational risk, ourreputation.
We have worked day and nightfor almost 10 years to build our
reputation and we're verycognizant of the fact that it
can take 10 years to build itand one day to destroy it.
So if we're partnering withsomebody to do a tap takeover,
or another vendor to introduce anew topping or a special pizza
(13:26):
of the month, those are allthings that you know play large
parts in risk analysis outsideof the financial component.
Speaker 1 (13:37):
So I've heard you mention partnerships when it
comes to building yourreputation, but what other
things have you thought aboutand done over the last 10 years
to develop a good reputation?
Speaker 2 (13:46):
Um, a lot of stuff.
You know.
Trying to hire people whounderstand our culture and our
company vision and goals is thestart.
It is also very difficult totalk to somebody for one to two
hours, 30 to 60 minutes andunderstand how they're going to
react under pressure and thingslike that.
(14:07):
Um so uh, reputation is key andit starts with with good hiring
um patients.
You gotta be patient withpeople when you're training them
, because you do want goodpeople to stick around, but you
want them to be able to buildyour product consistently and
well.
You know a hundred out of ahundred um procedures.
(14:30):
You know people craveconsistency.
People want the same.
When people enjoy something.
They want that experience to bethe same the next time they go
back.
So having the appropriate buildmodels to make sure that
happens is huge in building ourreputation.
And then just the hospitalitycomponent of how we treat people
.
We are in the hospitality worldand we are going to deal with
(14:53):
people who are sometimes nothappy.
They might not be happy whenthey come into your restaurant.
Something might have happenedearlier in the day they're
taking it out on you or theymight not be happy with this
experience you provided.
I provide insane amounts ofleeway for my staff to make
judgment calls on correctingmistakes and how we correct them
(15:13):
if we make them.
In regards of comps and givecertificates and things like
that, I have often found thathow you respond to a mistake or
respond to a challenge reallyplays a large definition in our
reputation, because you have achoice.
You can either make it right,go above and beyond when you do
(15:34):
make a mistake, or you canchoose to ignore it and not deal
with it.
We are very much the former anda lot of times people think we
make mistakes and we don't, andwe don't argue we capitulate.
We make them happy, we dowhatever we can to make sure we
(15:57):
don't lose that customer andthey come back.
So you know, being accountableis huge in building a reputation
Accountability for things goingnot only good but bad and how
you make a decision to correctthe situation.
Reputations take so long tobuild.
Speaker 1 (16:04):
It's huge and I've never really thought of it in
terms of calculating risk for arestaurant before.
It makes so much sense.
But I don't think that this isa conversation that I've ever
engaged in.
We should do a panel on this.
Just think bigger.
It's great.
Speaker 2 (16:17):
Yeah, and I'm in the pizza world so I'm not a
steakhouse, right Steakhouse.
I probably want you slash.
Need you to come back two,maybe three times a year.
In the pizza world we reallyneed people to come back, you
know, hopefully weekly.
You really need repeat businessin this space to survive and
grow.
It's critical in the pizzaworld that you are able to
(16:40):
develop that reputation sopeople frequent you and support
you and help bring in new peopleas well.
Speaker 1 (16:47):
Absolutely so.
You've talked about thefinancial risk.
You've talked about theemployee aspect, food costs,
some historical data and kind ofkeeping an eye on trends that
are coming up in the future.
You've talked about liabilityand reputation Any other areas
of risk that you think about andmanage risk that you think
(17:14):
about and manage.
Speaker 2 (17:14):
I think you know that kind of sums up the big pillars
of risk, at least in my mindright now, and you know what
some of those things intertwinewith each other too.
You know, I would say foodsafety is always something we're
managing through checklists anddaily procedures.
There's a risk that you mightmake a mistake and God forbid
there's a bad outcome with acustomer from a food standpoint.
(17:35):
But food safety is huge as well.
But no, I think those all kindof are the big pillars of risk
that we are currently managing.
Speaker 1 (17:45):
How did you develop the skill to learn how to manage
risk?
How did you develop?
Speaker 2 (17:49):
the skill to learn how to manage risk Through lots
of mistakes, honestly, and I'vebeen self-employed nearly my
entire career.
I graduated college in 1999,december.
So, honestly, being anentrepreneur, I was a minority
partner in a real estate firmwhen I got out of college, so
learned a lot about risk therefrom the real estate
(18:11):
construction, in the real estatefinance world.
But, to be honest with you,it's a lot of it is just
understanding what you areagreeing to do when you decide,
in this case, to open arestaurant, and just thoughtful
and open.
You know dialogues with yourpartners and yourself about.
(18:32):
You know what decisions do wehave to make in order to make
this work.
But, you know, I wish there wasmore of a book on it.
You know, and some things youcan define very, very clearly.
But, in all honesty, learninghow to manage it really comes
from you know experience.
It comes from just being aware.
It comes from talking to otherpeople of more experience than
(18:53):
you and, honestly, some of it'scommon sense.
You know when you release itsays you're going to guarantee
this cashflow for 10 years andif you blow out, you know we can
take your house.
You know there's no textbookfor that.
You have to decide if that'ssomething you're willing to do
or not to do.
But I would say a lot ofmistakes, a lot of just learning
(19:17):
on the fly and also a lot oftalking to other people who are
willing to talk to me,especially in the early days.
Speaker 1 (19:24):
Yeah, hey there.
Podcast friends, I hope you'reenjoying these impactful
conversations and leadershipinsights I'm bringing you each
week.
Before we dive back intotoday's episode, I want to take
a moment and reach out and ask asmall favor.
That would go a long way insupporting the show.
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(19:45):
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(20:06):
review button and let me knowwhat you think.
Thanks a million for beingawesome listeners.
So let's talk about you've gotthree locations.
Now let's talk a little bitabout how risk differed with
each location.
What was it like for you withlocation one?
Speaker 2 (20:24):
Location one was, you know, really interesting.
So we leased a very small spotin the West Highland
neighborhood of Denver, about950 square feet.
One of the ways we managed riskin that scenario was the
previous tenant was a pizzeria,so there was a lot of
infrastructure in there that wasalready in place, not
(20:50):
maintained well, so the cost toopen that was much lower than it
would have been if we wouldhave started just from scratch,
from a shell.
And at that point in time whenwe opened, I had a full-time job
with the city of Denver, so Iwas working seven days a week,
about 15, 16 hours a day, umgoing to work and then coming to
(21:11):
the restaurant.
We didn't have any money to paya salary or even hourly for
myself and my partner.
Um, you know it was a lot ofsweat.
Um, on the finance side, we tooka $50,000 loan Um and the bank
made both of us put our homes upas collateral right For for a
$50,000 loan.
(21:31):
Um, you know that's alwaysscary, but it was necessary in
order to get those funds.
Um, it again turnkey.
We did do some, some work, butto to brand it to our own space,
but the fact that it wasturnkey and a lot of the
construction a lot of the majorinfrastructure was already there
and in good working order washuge.
(21:51):
And startup costs Startup costsat our first location was small
, mostly because costs werecrazy back then.
This is 2016.
So we felt like our downsidewas limited, with the exception
of putting your home.
You know putting your home upas collateral.
So really, you know low startupcosts and having the right
(22:18):
equipment is key.
You know it's really easy tocheap out on things and we can't
do that.
We have very specific equipmentto get the results that we need
to ensure quality and it wasjust a lot of sweat, a lot of
sweat.
Speaker 1 (22:29):
Did you, because that current space was a former
pizzeria?
Did you have a relationshipwith the former tenant?
Did you have an idea of whatsales looked like in that area?
No idea.
Speaker 2 (22:41):
No idea, no idea.
And on top of that, you knowthat that's a good question.
You know we were.
We opened a Detroit stylepizzeria, which didn't exist in
Denver at that time, and notonly did it not exist, because
of our quality and how we makeour pizza, we were the most
expensive pizzeria in town.
So not only were we bringing aproduct to the market that most
(23:11):
people had never had or heard of, our price point was high, so
there was definitely some risktaking there.
Now there are several pizzerias.
There are several pizzerias andrestaurants that serve Detroit
style pizza that are moreexpensive than us by 10% or more
.
But no, it did not have aprevious relationship with a
previous tenant.
Speaker 1 (23:25):
Got it, so let's talk about risk with location number
two.
Speaker 2 (23:30):
Location number two was similar.
The numbers were just bigger.
So we had to take a $400,000loan to open that location and
put in some cash that we hadmanaged to save.
Same scenario with a loan thatlarge.
We got an SBA loan.
So the interest rate's high andthe points on the loan to close
(23:51):
are very high because if wefail, the federal government the
SBA, you know pays back thebank 80% of what we do not pay
back again if we failed.
So add some zeros, had to do thesame thing, had to put up our
house as collateral, and thenjust the first, you know the
main challenge of being able tomake our product at another
(24:13):
location the same way.
The consistency was huge, rightthat's.
You know, kitchens aren't thesame in terms of environment
when it comes to making dough.
Heat, humidity, all sorts ofthings play large impacts in how
dough is made.
So, from a financial standpoint, more zeros.
From an employee standpoint,our team over doubled.
So many more people to manageright, many more personalities
(24:36):
to work with, many moreopportunities to build a team
right, which, you know,sometimes you hit the nail,
sometimes you miss, but you know.
And then also we opened thattwo years after we opened our
first location, so it was quick.
It was quick Um you know.
Speaker 1 (24:55):
so you knew you had a good reputation, you knew you
had a brand that was established, that was doing well, right, so
I'm sure that came into playwith number two.
But I mean taking a $50,000loan and going to an established
pizzeria and then opening aconcept two years later and
taking a four hundred thousanddollar loan.
I mean what?
What was the?
I mean, obviously you crunchedthe numbers and you kind of just
(25:16):
ran us through what you'relooking at, but what was it that
made you say, like you and yourpartner, like we feel
comfortable with this amount ofmoney in this investment.
Speaker 2 (25:26):
Great question.
I have to pick one answer tothat.
It's location.
Locations are huge.
I mean, I'm not telling you andprobably your audience anything
, they don't know, but choice oflocation is a giant component
of our risk analysis.
I probably should havementioned that actually Giant
(25:53):
giant.
And we are in those two.
Our first and our secondlocation are embedded in very
dense residential areas inDenver and there are very few
commercial corridors in Denverthat are immediately surrounded
by very dense, you know, singlefamily, mostly single family
homes and a couple of multi-unitapartment buildings.
I'm from Chicago originally,michigan originally, but moved
here from Chicago.
Chicago has 50 neighborhoodswith booming commercial
(26:16):
corridors and retail and foottraffic and cultural events and
activities and density and allthose things.
Denver does not have a hugeamount of commercial districts
like that.
So the second one the locationwas phenomenal and you know, and
it was slightly bigger.
We wanted more seats, right, butwe didn't, you know, want to go
(26:39):
overboard and I should probablytouch on that for a minute.
Another thing about our firstlocation was how small it was
right and I remember saying tomy partner look, if this thing
ends up, you know, going down inflames, you and I can
essentially run this place witha small group of people in a
worst case scenario, right.
So you know we're maintainingless space, we're building out
(27:00):
less space, et cetera.
Our second location we doubledin size to about 45 seats, but
still on the small side seats,but still on the small side.
You know you get these reallybig spaces that are really
expensive to maintain, to fillup, to heat, to cool.
So location and size werecritical in our decision-making
process and evaluating risk whenit came to choosing our first
(27:23):
and second location.
Speaker 1 (27:25):
How do you know what a good location is for your
concept?
Speaker 2 (27:29):
You know, I mean you have your textbook data right,
you have your demographics dataand things like that um that you
look at initially, but I don'twant to say a lot of it's gut
Cause it's not um, we are afamily style pizzeria and we are
model and our brand is verymuch family oriented, which some
(27:50):
people honestly don't like.
So there are people out therethat don't want to go to a
restaurant that have what theyperceive as a large amount of
children in there.
Right, we are very, very, veryfamily forward and so when we're
looking at a neighborhood,we're looking at not only the
demographic data as it relatesto density and household income,
but we're looking at, you know,the family unit.
(28:11):
You know.
An example would be Rhino.
We've had several opportunitiesto go into the Rhino
neighborhood in Denver.
We've turned them all down.
One of the main reasons we'veturned them down is because it's
a very apartment heavycommunity, which means you have
a lot of transient residencyright, very, very small home
ownership in Rhino.
(28:32):
So these apartment buildingsthat are that, these giant
buildings, while they createdensity, a certain percentage
every year leaves and new peoplecome in and then you have to
remarket to those new peopleright and try to get them into
your restaurant.
When you're in a family, whenyou're in a residential area
where you have families and highpercentage percentages of home
ownership, um, those two thingsare critical in making our
(28:55):
decision when it comes to to toa new location.
Speaker 1 (28:58):
Got it.
So what was special aboutlocation three for you?
Speaker 2 (29:02):
You know, location three.
Honestly, we kind of we strayedaway a little bit from
everything I just said.
Um, uh, the big thing was whenwe were going to do our third
location was we essentially hadto own the real estate, which is
difficult because real estateis expensive, building out
restaurants are expensive but wereally wanted to own the real
(29:23):
estate.
Speaker 1 (29:24):
What was important to you about owning it this time,
Giles?
Speaker 2 (29:28):
All sorts of things right.
The first thing is paying ourown mortgage.
I mean real estate is you know.
I mean real estate is, is, isis owning your own real estate
and paying your own mortgage ishuge, like I've always told my
partner.
The one rent check I've alwayskind of been excited to write
(29:49):
was the one for golden, becausewe're paying our own mortgage,
right, and rents are so high,right, that you know there are
many situations where theacquisition of the real estate,
if financed properly and undercertain conditions, will equal
what you would pay in rent.
So, first off, paying our ownmortgage is huge, paying down
(30:13):
our own mortgage is huge.
In addition to that, the GoldenProperty is about an acre and
it's on a pretty busy corridorstreet, not like a highway or
anything like that, but atwo-lane street, 30 miles an
hour and it's almost an acre.
So in this and it's where weare single tenant, meaning it's
(30:34):
only us.
So in this aspect, 10, 20 yearsdown the road there's, there's
probably a real estatedevelopment opportunity on a
site that large Right.
So so you know, can the site beredeveloped in the future?
Possibly Are there any ways toadd value through a
redevelopment or through arepositioning of the asset.
(30:56):
But owning that real estate andpaying our own rent is just.
It's a dream come true.
It comes with a lot ofresponsibility and added risk.
Right, you're taking a mortgage, you're definitely guaranteeing
a mortgage with the bankmortgage, you're definitely
guaranteeing a mortgage with thebank.
But and then you know just, youknow just having that real
(31:18):
estate in the event that, godforbid, something happens to the
restaurant, you know, seeingrestaurants that you know just
for 10 years they don't renewtheir lease, right, and they're
just out, and what's left iswhat's in your bank account and
they're just out, and what'sleft is what's in your bank
account and that sucks.
Speaker 1 (31:48):
So having another asset underlying the restaurant
asset for us was a really,really big deal, for not only
financial considerations for therestaurant but also just for
building wealth management aswell.
And Golden's going through thisextraordinary redevelopment as
a city.
Did you know that before youcame in?
Speaker 2 (31:58):
Good question.
I've been out here for 13 years, yeah, so that played a huge
role.
Actually, I should havementioned that I've been out
here for 13 years and ourrestaurant scene in Golden is
pretty stagnant, and that is notin a bad way, right.
What do I mean by stagnant?
There are not a lot ofrestaurant failures in downtown
(32:19):
Golden.
A lot of the restaurants havebeen there for years, if not
decades, so there's very littleturnover, right.
Additionally, it's a veryfamily centric community and the
options for family style diningor family dining at a kind of
an elevated food level areminimal, are minimal out here.
So we really, really, reallyget a lot of work.
(32:41):
I really believe we are fillinga needed gap out here in the
hospitality and dining scene inGolden.
And then, you know, we're doinglike a little kids play area
that no other restaurant inGolden's doing.
But the demographic, familymakeup, the density, things like
that, the lack of choice inGolden because restaurants
usually don't fail all thosekind of went into the bucket and
(33:05):
we concluded that, hey, youknow, this market has some depth
to it, it has some unfulfilleddemand and there's nobody else
doing what we are doingfood-wise.
So you know, we found thisproperty off-market and were
able to acquire it, and thetiming was great and then we
were able to open a little overa year ago.
Speaker 1 (33:24):
How do you factor in competition when you're looking
at new locations?
Speaker 2 (33:32):
in competition when you're looking at new locations.
You know this is going to soundreally stupid.
We really don't.
To be honest with you, doesthat mean we are not aware of
the pizza choices within aproximity of our restaurant?
Absolutely not.
We're always aware of what'saround us, right?
But we just believe that ourmodel is very unique, in
(33:55):
particular from the customerservice and hospitality side,
and our product is so unique aswell.
We've seen several pizzerias addDetroit style pizza.
Since we've opened, we've seena pizzeria or two add Detroit
style pizza very, very close toour first location.
Um, you know, but we were firstto market with that particular
(34:20):
product.
Um, so, while we do, we werevery aware of our surroundings
and who we're competing with.
What we have found is that ourproduct is very unique and not
really offered in a lot ofplaces around Denver.
When we opened our firstlocation, for example, there
were one, two, three, fourpizzerias within a mile and a
(34:43):
half, all of them existing, withreputations, right, pizzeria,
locale, hops and Pie who at thattime, who has an incredible
reputation.
They had been open for a longtime.
But I mean, and I remember ourlandlord saying do you guys
really think you can make itwith all this pizza.
And I said absolutely what weare doing.
Nobody else is doing.
(35:06):
So, while we are aware of ourcompetition, we are really,
really focused also ondemographics and just the food
scene in general in theimmediate vicinity of where we
choose a location we reallyfocus on.
You know Jeff Bezos says itreally well.
You know we really, reallyobsess and focus on our
(35:29):
customers, not our competitors,if that makes sense.
We want to be aware of whatthey're doing, we want to see
what they're doing, we want tosee what the public thinks is
really important, right, but youknow we don't spend an
inordinate amount of time, youknow, obsessing and analyzing
competitors when making alocation decision.
Obviously, if there's aDetroit-style pizzeria 20 yards
(35:52):
away, we're probably going totake a pass.
But you know, knowing themakeup of not only the pizzerias
around us but the food scene ingeneral, are two very big boxes
we look at.
Speaker 1 (36:06):
So things have changed so much in Denver over
the last five to 10 years as youmove forward in the next five
to 10 in the city.
How do you make the numberswork these days?
Speaker 2 (36:26):
It's very difficult and think about this.
There is so much out of ourcontrol on the cost side that
not only has it increased risk,but you know it's just gotten
(36:49):
harder and harder to have abusiness in this space and you
know, candidly, make enoughmoney to not only survive but to
justify the risk and sacrifice.
Um and Sorry, I forgot thequestion.
Shit, I'm sorry.
No, you're good.
Speaker 1 (36:59):
Just thinking about how you make the numbers work,
sorry, no, no, you're good.
Is there a stronger push?
And we talk about this a lotwith clients and in my network.
It feels like you've got to bereally good at marketing these
days.
It feels like you've got tohave a really good tech stack.
You've got to be involved indelivery, online ordering, the
(37:21):
takeout side of things.
The marketing's got to bereally strong.
The employee retention piecehas to be strong.
I mean really firing on allcylinders.
Do you think that's true?
Speaker 2 (37:32):
Absolutely, and we have limited tools right.
We have our pricing right.
We can increase prices.
We've increased prices threetimes in 10 years, right, so we
have not increased our pricesvery much historically,
especially if you compare it tothe increased cost, the
(37:53):
percentage of how much costshave gone up.
Operational efficiency is oneway, you know, we make the
numbers work, but you're onlygoing to squeeze so much juice
out of that orange, um, you know, it's really difficult to be
honest with you.
To be honest with you, andwe've come to the point where we
very much kind of understandthat if we want to continue to
(38:17):
be in this space, we're going tomake less money unless we can,
you know, start charging NewYork prices.
Right, so you have to beincredibly efficient on
operations.
You have to be incrediblyefficient on waste.
We've we re-bid out a lot ofour paper products recently,
right, so we just redesigned ourboxes and went with a new
(38:40):
company about six months ago andwe, the company we were using,
we were just getting killed onpricing.
Um, we found a new company andthey got our box price down by
about 46%, which is huge.
Um, we spent over well over$100,000 a year on boxes, just
(39:00):
boxes.
So those little unicorns per sehelp.
We also go line item by lineitem on all of our ingredients.
But the thing about ouringredients is we won't change
most of what we do.
Honestly, we will not changeour cheese, we haven't changed
anything.
But we always look at thoseline items to see what the costs
(39:24):
are.
I had another really goodthought about managing costs
Pricing back of house fee.
We have a 3% back of house fee.
I know there's a lot of debateabout that.
We pass through 100% of thatrevenue to the hourly rates of
(39:45):
our kitchen.
None of it is retained forbenefits.
None of it is retained for paidtime off.
None of it is retained to buy anew oven.
One for one goes right to ourkitchen.
So that helps make the numberswork from time to time as well.
Speaker 1 (40:00):
Giles, can I ask a question on that?
I know there's talk of Denvergetting rid of service fees.
Would that categorize as aservice fee?
And if you were forced to getrid of that, would you just take
price to offset?
Speaker 2 (40:13):
Great question.
I believe it would be a servicefee and yes, if that comes off,
we yeah, our prices go up.
Speaker 1 (40:23):
Do you?
Also do the 18 or 20% fee, likesome other restaurants who are
just the 3% Okay.
Speaker 2 (40:29):
Yeah, no, no, no, no, no.
But that would be a huge hit,right?
Because my team members are,you know, getting, you know,
money.
You know their hourly rate ishigher because of the fee.
The more they work, the morethey get, um, you know.
So, if that goes away, yeah, wewould have no choice um to but
to increase prices.
Um, recipes is another thing.
We make so much from scratch.
(40:53):
I mean so much, and you know,our salad dressings, with the
exception of Caesar, made fromscratch, all of our appetizers,
except one made from scratch,all of our sauces made from
scratch.
We blend cheese at certainratios and at certain shred
thicknesses.
Do all that by hand.
(41:14):
So you know, we have looked ata couple items and said look,
you know, could we buy marinara,rightara, instead of spending
five hours twice a week to makeit at each location?
If we did buy it, how good, bador ugly is it?
For the first time, looking atsome of our recipes and
wondering if there's a pre-madesolution, that's another way.
(41:38):
Yeah, yeah, but that's very hardbecause there can be a quality
compromise there which we aren'twilling to take.
Going back to fees a little bit, one of the things I really am
looking at and candidly I'm avery big proponent of are credit
card fees.
Right, the credit cardcompanies, straight up, have
(41:58):
monopoly on what they charge us.
It's not a secret.
You can talk to anybody on anypart of the political spectrum
and if they read, they'll knowthat credit card fees, that area
is very, very monopolized.
What about passing that fee tothe guest?
And hey, if you want to pay incash, I'm going to take 3% off
(42:19):
the tip or off the total.
Speaker 1 (42:20):
Yeah, a lot of restaurants do that in Tucson A
lot of businesses do that.
Speaker 2 (42:25):
I mean, I don't.
If I told you what our creditcard fees were monthly, your jaw
would hit the ground.
But let's put it this way Um,our rent our credit card fees
monthly are higher than our rent.
Um, they are higher than ourmonthly health insurance premium
costs that we pay for ouremployees.
(42:47):
It's like the third highestexpense buying food and labor.
Speaker 1 (42:51):
And it's usually food , labor, rent.
Yep, I was on a COGS panel thisweek, or attended, and we were
having this conversation.
Are you, have you gone back andtried to negotiate those fees
and if so, what have you beentold?
Speaker 2 (43:06):
Yes, I mean yes and no.
So here's one of the challengeswe deal with.
We use a point of sale systemcalled Hunger Rush and if we
have to use WorldPay as a creditcard processor, we have to, and
, honestly, most point of salesystems work that way.
Right, toast?
Yes, my understanding is thatthey will let you bid it out,
(43:28):
but they're very favorable to aparticular company.
There was a point of sale systemthat I won't name that we
looked at switching to butultimately decided not to due to
the experience we had.
They did a bait and switch.
I said you know what aboutcredit card processors?
Oh, giles, you know you can useanybody.
Okay, great, but here's who werecommend Signed up with.
(43:51):
The recommended one wasn'thappy, called them up, said
we're going to switch toWorldPay.
Oh, okay, you can definitelyswitch to WorldPay, but if you
read the fine print of yourservice contract, we can't
provide you any services,support services as it relates
to credit cards.
So if your credit card this orthat happens, don't call us.
(44:11):
And that was actually thatrelationship.
So I mean yeah.
So, yeah, that's a very longway of saying yes, but there are
very limited options and thepoint of sale company really,
really puts in place, you know,bumpers that kind of forced you
to use a credit card processor,but even if it's, even if they
don't Kristen, there's only twoor three.
Speaker 1 (44:30):
Yeah.
Speaker 2 (44:31):
You know, that's an industry I don't want to get off
on a tangent, but like that isan industry that I cannot figure
out why it has not beenreinvented in the past 10 years,
why nobody's been able todisrupt that industry.
Is, is, is.
I can't, I can't understand itwith all the technology I mean.
You know, I don't, you know, Idon't understand how a tech
(44:52):
entrepreneur, or just anentrepreneur, finance
entrepreneur, has not come upwith a credit card processing
system that's cheaper butprofitable.
Speaker 1 (44:59):
Yeah, if anybody listening, I'm stumped on this
too, so if you know anything,you can text me from the show,
but give us, give me some info.
I'd be happy to share it withGiles and and, uh, anybody else
that's interested in this.
I think that's a.
It's a huge conversation, it's,um, it's a big issue.
Speaker 2 (45:15):
For sure, something else we could definitely dive
into, um, and I'll say theperson or people who eventually
figure that out, you know areprobably going to end up, you
know, being on the beach in Maui.
It's just it's, you know, inretiring.
If you mean, if you couldfigure, if someone could figure
that out and compete with thebig boys and girls for less and
(45:38):
provide same service, you meanthat's a huge disruptor.
I think On the flip side, maybethe regulatory legal
environment, maybe thegovernment has restrictions in
place that make it hard to dothat.
I don't know.
But I honestly cannot believethat it's just processing it's
computers.
I cannot believe it hasn't beenreinvented.
Speaker 1 (45:58):
Yeah, no, it's a really great point.
It's computers.
I cannot believe it hasn't beenreinvented.
Yeah, no, it's a really greatpoint.
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(46:19):
Slash audio to download yourfree audio book today.
What's one area of yourbusiness Like if you looked at
one department?
If it's marketing operations,the financial aspect what's one
area that you would really liketo improve in?
Speaker 2 (46:50):
like to improve in?
That's a hard question.
One area, one area that I wouldlike to improve in is customer
service.
No matter how good of anexperience a customer has with
Blue Pan, no matter how manycompliments we get.
You know this sounds cliche,but every flippin' day we're
looking to provide a betterguest experience.
And it could be, and it happensso many ways.
(47:14):
There's a big, big restaurantgentleman in the Denver metro
area.
His name is Frank Day and he'sbig and he's been here for 50
years and the guy is remarkablerestaurant owner operator, just
remarkable for all sorts ofreasons.
Why do I bring up him?
(47:35):
Pre-covid, he came into BluePan, had lunch, you know, I met
him there blah, blah, blah, andhe said you know, hey, can I get
a cup of coffee?
We don't serve coffee, um.
So I said can you, can you?
Are you in a rush?
He said no.
I said give me a minute, ranacross the street and I asked
him you know, what kind ofcoffee do you like?
Oh, just medium.
You don't give me sugar, no,black's cool.
Went across the street, boughta cup of coffee and brought it
(47:59):
back.
It was that was just instinct,by the way, it was just uh, yeah
, that wasn't like you know.
I wasn't doing it cause it wasFrank Um, but no joke.
Customer service, customerservice.
Customer service.
10 out of 10.
Speaker 1 (48:13):
I love it.
There's a that takes me back toworking at the Broadmoor.
For five years we were, we weretold to never say no, so there
were oftentimes we would berunning across the lake to go
get a bottle of wine that theguests had enjoyed last night,
that we didn't have on the list,or a cigar that we didn't have
available, or an ingredient, andit's all about getting your
team to really understand how toprovide service outside of
(48:36):
their four walls, and you havesurrounded yourself with
businesses and are in areaswhere there's a lot of things
that you can access outside ofjust what is on your menu, and
that's an extraordinary thing Ithink a lot of people aren't
thinking about today.
Speaker 2 (48:51):
Absolutely right.
And you know, like I saidearlier, I don't leeway can have
a negative connotation, but theleeway that my business partner
and I give to our managementslash supervisory staff is very
large, for lack of a better term.
So why did I bring that up?
When we have, if we have, aregular come in, you know, if I
(49:15):
have a piece of BFD right, justmake sure that when you hit comp
you put the reason right.
You have a lot of flexibilityto provide customer service at
the highest level possible.
You know, at all times and Ilike that never say no.
That's a really, really, in myopinion, three powerful words.
I like that a lot, a lot.
(49:37):
But I think, if I'm being honest, I think customer service in
our industry, at least in Denver, is I hate to say it like that,
but for me personally it hasbeen a challenge sometimes just
to get some good customerservice.
(49:57):
When you go out and candidcandidly, you know, like if I'm
going to spend my time andhard-earned money going out to
eat is like our favorite thingto do.
Besides, you know whatevergoing on vacation, I guess, but
even then eating out is ourfavorite thing to do, you know,
and I think a lot of peoplemaybe might be a little burnt
out, might be a little.
(50:18):
You know PSTD from COVID butcustomer service right now can
be.
Finding good customer servicecan be a bit of a challenge.
Speaker 1 (50:24):
Well, and we were having conversations about this
when I was still in Denver andon the Denver board year I mean
10, 15 years ago, talking aboutthe service was in trouble and
since the pandemic, I mean theworkforce has completely changed
.
No-transcript more that goesinto it these days, and so it
(51:11):
puts so much pressure ontraining and and hiring.
It all starts with hiring, likeyou said, and hiring to your
core values and your vision,which is incredible.
So good for you.
Speaker 2 (51:22):
You're exactly right.
It starts with the hiring.
I like to use the wordunteachables a lot when I'm
trying to hire somebody.
Do they have the unteachables?
Do they have a positiveattitude?
Can they stay positive underpressure?
Do they work hard?
Will they go above and beyond?
Will they put the guest or evenanother team member ahead of
(51:45):
their own needs?
Like those are unteachables weare looking at when hiring.
I can teach you how to make apizza.
I can teach you our companyphilosophies, our vision,
mission.
I can teach those things.
I can't teach you to be nice.
In my opinion, I can't teachyou to work hard.
I can't teach you to be nice.
In my opinion, I can't teachyou to work hard.
I can't teach you to care.
You either have it or you don't.
(52:05):
And you're trying to evaluatethose, those variables, in a
very short period of time.
So you know, like an hourinterview.
So yeah, it starts with hiring,to your point.
Speaker 1 (52:15):
Do you stage we?
Speaker 2 (52:16):
do sometimes, you know, Um, we do sometimes um,
you know, yeah, yes, we do, wedo.
Speaker 1 (52:22):
Yeah, we do.
Speaker 2 (52:23):
We do.
Speaker 1 (52:24):
Love it Well yeah it's.
It's important.
I think it's.
It's a great way we were.
We were talking about this lastweek too.
It's so nice to just, yes, youcould.
You can have a niceconversation with someone, but
to actually see their instinctsand to see if they've got those
that visual can get those visualcues from people of needing
something or where their eyesare looking or are they looking
(52:46):
for something to do and keepthemselves busy.
That's a really difficult thingto pull out of an interview.
Speaker 2 (52:52):
Yep, totally right.
Speaker 1 (52:54):
Thank you so much for being here.
I, you know, obviously we'vebeen, you know, a huge fan of
yours since opening and weconsider you the the best
Detroit-style pizzeria in Denver.
And I'll tell you traveling theworld and traveling in the
nation.
We love pizza and we're alwaystrying different Detroit style,
(53:18):
and it just never measures up tothe product that you serve.
Speaker 2 (53:22):
That means more than you know.
You know, cause we do work very, very hard at trying to
accomplish that goal.
Um, you know our dough processfor our Detroit style pizza is
very long.
It's very labor intensive, um,and it's pro our process is
probably why most I don't knowif anybody else in Denver that
that does the same process we do, um, so you know there is a lot
(53:45):
of love, care and energy putinto every single pizza, um, and
all this love care and energyin the process.
You know, when everything'ssynced, our quality is, is is
acceptable.
Um, you know, and if it's not,we got to fix it.
You know, um got to fix itright away and make sure the
guest is taken care of.
Speaker 1 (54:03):
I love it.
Speaker 2 (54:04):
So you know, and like , you'll never hear us say we're
the best, but that's, that'sanother important thing.
Um, you know it's part ofactually our culture.
You know we don't go aroundtown saying we are the best, we
are the best at actually.
I actually tell my social mediaguy like I don't even want to
use those hashtags, right, andthat's probably a stupid
decision.
(54:24):
That's pizza Denver, I mean,that's a great hashtag, right,
but part of our core beliefs hasto do with humility, and you
will not see us running aroundtown saying we're the best ever
and if we are, we need to besmacked because it's all.
Customers are the only people,in my opinion, who are qualified
(54:46):
to make that judgment.
Speaker 1 (54:48):
Yeah, it's interesting, I think sometimes
people position themselves asthe best or they kind of enter
that mindset and then they stopgrowing from there.
They think they've got it allfigured out.
And I love your humilitybecause, just because you're all
you know, just knowing you,you're always learning, you're
so curious, you're involved,you're committed and you're
always you're just verythoughtful and intentional about
everything that you do and youworry about it in a really good
(55:11):
way, in a healthy way, which isjust you know.
Those are just incrediblecharacteristics of ownership.
So you bet.
Speaker 2 (55:18):
And, and you know, that kind of ties back to risk,
right, we're managing risk andhow do we manage it, whether
it's financial or reputational,and what you just said and how
we think and how we believe andhow we act and the decisions we
make about blue pan, um, youknow, hopefully you know.
You know um help us address therisk of you know, of not doing
well.
Hopefully we do better becauseof all those things.
Speaker 1 (55:41):
Yeah, absolutely.
Well, really appreciate theconversation and the time and I
can't wait.
Can't wait to get back thereand get some Brooklyn Bridge.
Hopefully it's still in thevenue.
Speaker 2 (55:50):
It's my favorite.
We are here for you.
We'd love to see you, as always.
Speaker 1 (55:55):
Anybody, for if you're listening, please go to
any of the Blue Pan locations,check out their product.
Go back once or twice a week.
It's just incredible stuff.
Giles and the team havesomething really special, so
that's going to do it for usthis week, you bet.
Thank you, and please sharethis episode with anyone in the
industry that you think couldbenefit.
We all need to stick together,share ideas, share stories, gain
(56:17):
insights from each other andbuild this community.
So we will talk to you.
Thank you, we'll talk to youall next week.
Speaker 2 (56:25):
Thank you so much for having me.
I appreciate you.
Speaker 1 (56:27):
Thank you, bye-bye.
Today I'm joined by Giles, who's a co-owner of Blue
Pan Pizza, which is a, in myopinion, the best Detroit style
pizza place in Denver.
He's got three locations.
He's been working hard with his, his team to develop and see
thriving over the last 10 or soyears and Giles is just an
(00:28):
extraordinary leader, very wellin tune with the community in
Denver, what's happening, veryinvolved in Eat Denver and just
an advocate for restaurantsdoing really, really well in the
state of Colorado.
We are going to talk todayabout how to manage risk and
(00:50):
he's going to really identifyeight key areas around how he
manages risk.
Before he opens a restaurant,he looks at the financial risk,
the employee risk, the food costrisk, the liability when it
comes to food safety and slipsand falls or employee accidents,
the workman's comp risk right.
The reputational risk, which isa very, very interesting part
(01:14):
of this conversation.
The location risk, the productconsistency risk as you scale.
And competition and his view oncompetition, which is very,
very interesting.
So tons of great advice andinsights from this episode.
I really hope that you get alot of value out of this and if
(01:36):
you know somebody that isgetting ready to open a
restaurant or is thinking aboutopening a restaurant.
This episode is a really greatresource for them of how to
really sit down and put pen topaper and think about all the
ways that they need to managerisk before they even sign on
the dotted line of that lease orbuy a building.
Hope you enjoy thisconversation.
Welcome to the RestaurantLeadership Podcast, the show
(01:58):
where restaurant leaders learntools, tactics and habits from
the world's greatest operators.
I'm your host, kristen Marvin,with Solutions by Kristen.
I've spent the last two decadesin the restaurant industry and
now partner with restaurantowners to develop their leaders
and scale their businessesthrough powerful one-on-one
coaching, group coaching andleadership workshops.
(02:21):
This show is complete withepisodes around coaching,
leadership development andinterviews with powerful
industry leaders.
You can now engage with me onthe show and share topics you'd
like to hear about, leadershiplessons you want to learn and
any feedback you have.
Simply click the link at thetop of the show notes and I will
(02:41):
give you a shout out on afuture episode.
Thanks, so the show notes and Iwill give you a shout out on a
future episode.
Thanks so much for listeningand I look forward to connecting
.
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Visit rti-inccom to learn moredash inccom to learn more Giles.
Thank you so much for joiningme today.
I'm super excited to talk abouthow you are defining risk, and
(04:55):
the last time we were togetherwe were going kind of deep down
the rabbit hole of the risk ofrunning restaurants in Denver,
where it is today higher thanever, riskier than ever, and
where it's been over the years.
So I'd love to just kind ofjump in here and have you talk
about how you are defining riskwhen it comes to business and
personal life.
Speaker 2 (05:16):
Well, thank you for having me on.
I'm really excited to talkabout the subject.
There is a lot going on inDenver to talk about, in
particular, within therestaurant scene.
Feel free to interrupt me atany time.
I tend to maybe talk a littletoo much sometimes, so
definitely don't hesitate tointerrupt.
Risk Managing risk is one of thetop components, if you will, of
(05:41):
opening and running a businesswhereby you own it, whereby you
are self-employed, and there aremany different kinds of risk.
I think a lot of times peoplestrictly associate risk with
money, and that is a very bigcomponent of how I define risk.
What's the risk of me notgetting money back?
(06:02):
What's the risk of an investorwe don't have investors but,
speaking generally, them notgetting their money back?
What's the risk of me and myteam being able to create a
profit margin so we can sustaina business over the long period
of time?
So that is a very basiccomponent when we're looking at
a new location.
We run financial models and westress test them pretty, pretty,
(06:26):
pretty hard and almost to apoint where people will say
we're too conservative.
But the trade-off is is beingself-employed, my business
partner and I have to take on anincredibly large amount of risk
in order to secure and open alocation, Risk that's so high
that if there's a failure, youcould very well be filing for
(06:51):
bankruptcy.
Why do I say that?
I think the general populationlet's just talk about leasing
for a minute I really think thegeneral population generally
thinks that if you lease a space, you open a restaurant, and it
doesn't do well, that you justgo sorry, John, not working out
here your key's back, Good luck.
And that's not the case.
(07:12):
Most leases require a personalguarantee from the owners to
personally fulfill the revenuestream.
Obviously the rents right, andmost of us are in long deals, ie
seven to 10 years.
So let's just say the totalrent over 10 years is a million
dollars.
My business partner, businesspartner I have to guarantee that
(07:33):
money comes in and it canreally, really play a big role
in our decision-making.
So just financial risk, right.
If this thing doesn't work,what type of financial
obligations are outstanding thatwould need to be unwound to
move forward?
One of them leasing,guaranteeing leases.
Speaker 1 (07:51):
Yeah, guy, let me double down on this real quick
before you continue on.
Are you able to write in yourlease agreements in Denver a
clause that if it's not working,you can get out, or is that not
an option?
Speaker 2 (08:07):
It's definitely an option and I think that's an
option that has really rearedits head over the past two years
because of the challengingcircumstances.
But I will say the industrynorm is very much tenants
guaranteeing a portion of ormost of a lease.
A lot of times I shouldn't saya lot sometimes you get
(08:28):
landlords who have no mortgageand their financial
circumstances are very different.
They can afford to wait it outfor the right tenant.
Some landlords need to getpeople in right away and if the
tenant's savvy enough andunderstands what they're signing
, yeah, negotiating some type ofbuyout or just a flat out
notice is something that can bevery much negotiated.
(08:51):
A lot of times what comes withthat?
Regardless, if you'reguaranteeing the lease, are the
improvements right?
A lot of times, not a lot.
Most of the time the tenant'spaying for the majority of the
construction and build out andif tenant fails, that all
becomes property of landlord.
Landlord has an improved spaceat mostly our expense, right, we
do get some TI, but there's abig value capture there for a
(09:14):
landlord in theory, whereby theycan release that space as
turnkey and a new tenant canopen up at a very low cost.
But, yes, negotiating, you know, limited or non-personal
guarantees.
Right now is a converse.
It's part of the conversationthat's that is happening with
with a lot of landlords andtenants.
Speaker 1 (09:37):
Hi everybody, we're taking a quick break to offer
you an exciting opportunity.
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(09:59):
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Now let's get back to the show.
When you create you and yourpartner, create this, your
forecast, your profit model forthe business, you said you'd
(10:21):
stress test it, stress test it.
How do you do that business?
Speaker 2 (10:25):
You said you'd stress test it.
Stress test it.
How do you do that?
We have very everything fromsales projections to cost
increases across the board, toproperty taxes being reassessed
at very high rates in every twoyears, insurance.
All those things have littlevariables, little cells where I
can up, where I can up, upper orup or lower the variable.
(10:46):
So it's more about you know,taking the most conservative
position in the worst casescenario um, in sales, and then
the worst case position on thecost side Um.
But we are fortunate to havetwo restaurants that have been
up for quite some time.
So we do have data, um.
But it's really more of afinancial modeling aspect of you
know at what point what has tohappen for the business to break
(11:09):
even, what has to happen forthe business to reach its
profitability goals and what hasto happen if God forbid.
You know we don't meet either.
So it's a veryfinancial-related Excel model
that we use and we play withprimarily our cost structure to
see if costs go up to a certainamount.
How does it impact us?
Minimum wage in Denver thatgoes up every year forever, that
(11:32):
does not sunset.
So that's kind of easy to model, you know, not easier because I
can make a reasonable guess asto what CPI might be, you know,
year over year.
But it's a lot of just punchingin numbers to see what happens
in a worst case scenario,whether it's sales or expenses.
Speaker 1 (11:52):
Got it.
How else are you defining riskoutside of finances?
Speaker 2 (11:57):
So you have employment risk, right?
What's the risk of, you know,an employee not lasting as long
as you'd like them to, whichcreates turnover costs?
While we're on that topic, youknow we have promoted from
within a lot in our company.
I mean, I mean a lot.
So when you promote somebody toa management position, in this
(12:19):
case, with very limitedmanagerial or even sometimes no
managerial experience, right?
What's the risk of being ableto teach and train that team
member to become a successfulmanager in a reasonable amount
of time?
So you know employment risk.
What's the chances of ourturnover being higher than we
(12:40):
want it to be?
That's another big, really bigcomponent.
And then food costs as well.
What's the risk of our cheese,and in particular our cheese,
you know, going up or down basedon the market?
So that's, we look atemployment risk.
We just look at generalliability risk.
People are going to slip andfall and all those types of
things that's going to happen.
That's why you have workman'scomp insurance.
(13:01):
Reputational risk, ourreputation.
We have worked day and nightfor almost 10 years to build our
reputation and we're verycognizant of the fact that it
can take 10 years to build itand one day to destroy it.
So if we're partnering withsomebody to do a tap takeover,
or another vendor to introduce anew topping or a special pizza
(13:26):
of the month, those are allthings that you know play large
parts in risk analysis outsideof the financial component.
Speaker 1 (13:37):
So I've heard you mention partnerships when it
comes to building yourreputation, but what other
things have you thought aboutand done over the last 10 years
to develop a good reputation?
Speaker 2 (13:46):
Um, a lot of stuff.
You know.
Trying to hire people whounderstand our culture and our
company vision and goals is thestart.
It is also very difficult totalk to somebody for one to two
hours, 30 to 60 minutes andunderstand how they're going to
react under pressure and thingslike that.
(14:07):
Um so uh, reputation is key andit starts with with good hiring
um patients.
You gotta be patient withpeople when you're training them
, because you do want goodpeople to stick around, but you
want them to be able to buildyour product consistently and
well.
You know a hundred out of ahundred um procedures.
(14:30):
You know people craveconsistency.
People want the same.
When people enjoy something.
They want that experience to bethe same the next time they go
back.
So having the appropriate buildmodels to make sure that
happens is huge in building ourreputation.
And then just the hospitalitycomponent of how we treat people
.
We are in the hospitality worldand we are going to deal with
(14:53):
people who are sometimes nothappy.
They might not be happy whenthey come into your restaurant.
Something might have happenedearlier in the day they're
taking it out on you or theymight not be happy with this
experience you provided.
I provide insane amounts ofleeway for my staff to make
judgment calls on correctingmistakes and how we correct them
(15:13):
if we make them.
In regards of comps and givecertificates and things like
that, I have often found thathow you respond to a mistake or
respond to a challenge reallyplays a large definition in our
reputation, because you have achoice.
You can either make it right,go above and beyond when you do
(15:34):
make a mistake, or you canchoose to ignore it and not deal
with it.
We are very much the former anda lot of times people think we
make mistakes and we don't, andwe don't argue we capitulate.
We make them happy, we dowhatever we can to make sure we
(15:57):
don't lose that customer andthey come back.
So you know, being accountableis huge in building a reputation
Accountability for things goingnot only good but bad and how
you make a decision to correctthe situation.
Reputations take so long tobuild.
Speaker 1 (16:04):
It's huge and I've never really thought of it in
terms of calculating risk for arestaurant before.
It makes so much sense.
But I don't think that this isa conversation that I've ever
engaged in.
We should do a panel on this.
Just think bigger.
It's great.
Speaker 2 (16:17):
Yeah, and I'm in the pizza world so I'm not a
steakhouse, right Steakhouse.
I probably want you slash.
Need you to come back two,maybe three times a year.
In the pizza world we reallyneed people to come back, you
know, hopefully weekly.
You really need repeat businessin this space to survive and
grow.
It's critical in the pizzaworld that you are able to
(16:40):
develop that reputation sopeople frequent you and support
you and help bring in new peopleas well.
Speaker 1 (16:47):
Absolutely so.
You've talked about thefinancial risk.
You've talked about theemployee aspect, food costs,
some historical data and kind ofkeeping an eye on trends that
are coming up in the future.
You've talked about liabilityand reputation Any other areas
of risk that you think about andmanage risk that you think
(17:14):
about and manage.
Speaker 2 (17:14):
I think you know that kind of sums up the big pillars
of risk, at least in my mindright now, and you know what
some of those things intertwinewith each other too.
You know, I would say foodsafety is always something we're
managing through checklists anddaily procedures.
There's a risk that you mightmake a mistake and God forbid
there's a bad outcome with acustomer from a food standpoint.
(17:35):
But food safety is huge as well.
But no, I think those all kindof are the big pillars of risk
that we are currently managing.
Speaker 1 (17:45):
How did you develop the skill to learn how to manage
risk?
How did you develop?
Speaker 2 (17:49):
the skill to learn how to manage risk Through lots
of mistakes, honestly, and I'vebeen self-employed nearly my
entire career.
I graduated college in 1999,december.
So, honestly, being anentrepreneur, I was a minority
partner in a real estate firmwhen I got out of college, so
learned a lot about risk therefrom the real estate
(18:11):
construction, in the real estatefinance world.
But, to be honest with you,it's a lot of it is just
understanding what you areagreeing to do when you decide,
in this case, to open arestaurant, and just thoughtful
and open.
You know dialogues with yourpartners and yourself about.
(18:32):
You know what decisions do wehave to make in order to make
this work.
But, you know, I wish there wasmore of a book on it.
You know, and some things youcan define very, very clearly.
But, in all honesty, learninghow to manage it really comes
from you know experience.
It comes from just being aware.
It comes from talking to otherpeople of more experience than
(18:53):
you and, honestly, some of it'scommon sense.
You know when you release itsays you're going to guarantee
this cashflow for 10 years andif you blow out, you know we can
take your house.
You know there's no textbookfor that.
You have to decide if that'ssomething you're willing to do
or not to do.
But I would say a lot ofmistakes, a lot of just learning
(19:17):
on the fly and also a lot oftalking to other people who are
willing to talk to me,especially in the early days.
Speaker 1 (19:24):
Yeah, hey there.
Podcast friends, I hope you'reenjoying these impactful
conversations and leadershipinsights I'm bringing you each
week.
Before we dive back intotoday's episode, I want to take
a moment and reach out and ask asmall favor.
That would go a long way insupporting the show.
If you've been loving thecontent I'm providing, please
take a moment to leave a ratingand review.
(19:45):
Wherever you listen to yourpodcasts, Not only does it make
my day, but it also plays apivotal role in helping the show
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Your reviews boost myvisibility, attract new
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So if you want to be part of myshow's growth journey, hit that
(20:06):
review button and let me knowwhat you think.
Thanks a million for beingawesome listeners.
So let's talk about you've gotthree locations.
Now let's talk a little bitabout how risk differed with
each location.
What was it like for you withlocation one?
Speaker 2 (20:24):
Location one was, you know, really interesting.
So we leased a very small spotin the West Highland
neighborhood of Denver, about950 square feet.
One of the ways we managed riskin that scenario was the
previous tenant was a pizzeria,so there was a lot of
infrastructure in there that wasalready in place, not
(20:50):
maintained well, so the cost toopen that was much lower than it
would have been if we wouldhave started just from scratch,
from a shell.
And at that point in time whenwe opened, I had a full-time job
with the city of Denver, so Iwas working seven days a week,
about 15, 16 hours a day, umgoing to work and then coming to
(21:11):
the restaurant.
We didn't have any money to paya salary or even hourly for
myself and my partner.
Um, you know it was a lot ofsweat.
Um, on the finance side, we tooka $50,000 loan Um and the bank
made both of us put our homes upas collateral right For for a
$50,000 loan.
(21:31):
Um, you know that's alwaysscary, but it was necessary in
order to get those funds.
Um, it again turnkey.
We did do some, some work, butto to brand it to our own space,
but the fact that it wasturnkey and a lot of the
construction a lot of the majorinfrastructure was already there
and in good working order washuge.
(21:51):
And startup costs Startup costsat our first location was small
, mostly because costs werecrazy back then.
This is 2016.
So we felt like our downsidewas limited, with the exception
of putting your home.
You know putting your home upas collateral.
So really, you know low startupcosts and having the right
(22:18):
equipment is key.
You know it's really easy tocheap out on things and we can't
do that.
We have very specific equipmentto get the results that we need
to ensure quality and it wasjust a lot of sweat, a lot of
sweat.
Speaker 1 (22:29):
Did you, because that current space was a former
pizzeria?
Did you have a relationshipwith the former tenant?
Did you have an idea of whatsales looked like in that area?
No idea.
Speaker 2 (22:41):
No idea, no idea.
And on top of that, you knowthat that's a good question.
You know we were.
We opened a Detroit stylepizzeria, which didn't exist in
Denver at that time, and notonly did it not exist, because
of our quality and how we makeour pizza, we were the most
expensive pizzeria in town.
So not only were we bringing aproduct to the market that most
(23:11):
people had never had or heard of, our price point was high, so
there was definitely some risktaking there.
Now there are several pizzerias.
There are several pizzerias andrestaurants that serve Detroit
style pizza that are moreexpensive than us by 10% or more
.
But no, it did not have aprevious relationship with a
previous tenant.
Speaker 1 (23:25):
Got it, so let's talk about risk with location number
two.
Speaker 2 (23:30):
Location number two was similar.
The numbers were just bigger.
So we had to take a $400,000loan to open that location and
put in some cash that we hadmanaged to save.
Same scenario with a loan thatlarge.
We got an SBA loan.
So the interest rate's high andthe points on the loan to close
(23:51):
are very high because if wefail, the federal government the
SBA, you know pays back thebank 80% of what we do not pay
back again if we failed.
So add some zeros, had to do thesame thing, had to put up our
house as collateral, and thenjust the first, you know the
main challenge of being able tomake our product at another
(24:13):
location the same way.
The consistency was huge, rightthat's.
You know, kitchens aren't thesame in terms of environment
when it comes to making dough.
Heat, humidity, all sorts ofthings play large impacts in how
dough is made.
So, from a financial standpoint, more zeros.
From an employee standpoint,our team over doubled.
So many more people to manageright, many more personalities
(24:36):
to work with, many moreopportunities to build a team
right, which, you know,sometimes you hit the nail,
sometimes you miss, but you know.
And then also we opened thattwo years after we opened our
first location, so it was quick.
It was quick Um you know.
Speaker 1 (24:55):
so you knew you had a good reputation, you knew you
had a brand that was established, that was doing well, right, so
I'm sure that came into playwith number two.
But I mean taking a $50,000loan and going to an established
pizzeria and then opening aconcept two years later and
taking a four hundred thousanddollar loan.
I mean what?
What was the?
I mean, obviously you crunchedthe numbers and you kind of just
(25:16):
ran us through what you'relooking at, but what was it that
made you say, like you and yourpartner, like we feel
comfortable with this amount ofmoney in this investment.
Speaker 2 (25:26):
Great question.
I have to pick one answer tothat.
It's location.
Locations are huge.
I mean, I'm not telling you andprobably your audience anything
, they don't know, but choice oflocation is a giant component
of our risk analysis.
I probably should havementioned that actually Giant
(25:53):
giant.
And we are in those two.
Our first and our secondlocation are embedded in very
dense residential areas inDenver and there are very few
commercial corridors in Denverthat are immediately surrounded
by very dense, you know, singlefamily, mostly single family
homes and a couple of multi-unitapartment buildings.
I'm from Chicago originally,michigan originally, but moved
here from Chicago.
Chicago has 50 neighborhoodswith booming commercial
(26:16):
corridors and retail and foottraffic and cultural events and
activities and density and allthose things.
Denver does not have a hugeamount of commercial districts
like that.
So the second one the locationwas phenomenal and you know, and
it was slightly bigger.
We wanted more seats, right, butwe didn't, you know, want to go
(26:39):
overboard and I should probablytouch on that for a minute.
Another thing about our firstlocation was how small it was
right and I remember saying tomy partner look, if this thing
ends up, you know, going down inflames, you and I can
essentially run this place witha small group of people in a
worst case scenario, right.
So you know we're maintainingless space, we're building out
(27:00):
less space, et cetera.
Our second location we doubledin size to about 45 seats, but
still on the small side seats,but still on the small side.
You know you get these reallybig spaces that are really
expensive to maintain, to fillup, to heat, to cool.
So location and size werecritical in our decision-making
process and evaluating risk whenit came to choosing our first
(27:23):
and second location.
Speaker 1 (27:25):
How do you know what a good location is for your
concept?
Speaker 2 (27:29):
You know, I mean you have your textbook data right,
you have your demographics dataand things like that um that you
look at initially, but I don'twant to say a lot of it's gut
Cause it's not um, we are afamily style pizzeria and we are
model and our brand is verymuch family oriented, which some
(27:50):
people honestly don't like.
So there are people out therethat don't want to go to a
restaurant that have what theyperceive as a large amount of
children in there.
Right, we are very, very, veryfamily forward and so when we're
looking at a neighborhood,we're looking at not only the
demographic data as it relatesto density and household income,
but we're looking at, you know,the family unit.
(28:11):
You know.
An example would be Rhino.
We've had several opportunitiesto go into the Rhino
neighborhood in Denver.
We've turned them all down.
One of the main reasons we'veturned them down is because it's
a very apartment heavycommunity, which means you have
a lot of transient residencyright, very, very small home
ownership in Rhino.
(28:32):
So these apartment buildingsthat are that, these giant
buildings, while they createdensity, a certain percentage
every year leaves and new peoplecome in and then you have to
remarket to those new peopleright and try to get them into
your restaurant.
When you're in a family, whenyou're in a residential area
where you have families and highpercentage percentages of home
ownership, um, those two thingsare critical in making our
(28:55):
decision when it comes to to toa new location.
Speaker 1 (28:58):
Got it.
So what was special aboutlocation three for you?
Speaker 2 (29:02):
You know, location three.
Honestly, we kind of we strayedaway a little bit from
everything I just said.
Um, uh, the big thing was whenwe were going to do our third
location was we essentially hadto own the real estate, which is
difficult because real estateis expensive, building out
restaurants are expensive but wereally wanted to own the real
(29:23):
estate.
Speaker 1 (29:24):
What was important to you about owning it this time,
Giles?
Speaker 2 (29:28):
All sorts of things right.
The first thing is paying ourown mortgage.
I mean real estate is you know.
I mean real estate is, is, isis owning your own real estate
and paying your own mortgage ishuge, like I've always told my
partner.
The one rent check I've alwayskind of been excited to write
(29:49):
was the one for golden, becausewe're paying our own mortgage,
right, and rents are so high,right, that you know there are
many situations where theacquisition of the real estate,
if financed properly and undercertain conditions, will equal
what you would pay in rent.
So, first off, paying our ownmortgage is huge, paying down
(30:13):
our own mortgage is huge.
In addition to that, the GoldenProperty is about an acre and
it's on a pretty busy corridorstreet, not like a highway or
anything like that, but atwo-lane street, 30 miles an
hour and it's almost an acre.
So in this and it's where weare single tenant, meaning it's
(30:34):
only us.
So in this aspect, 10, 20 yearsdown the road there's, there's
probably a real estatedevelopment opportunity on a
site that large Right.
So so you know, can the site beredeveloped in the future?
Possibly Are there any ways toadd value through a
redevelopment or through arepositioning of the asset.
(30:56):
But owning that real estate andpaying our own rent is just.
It's a dream come true.
It comes with a lot ofresponsibility and added risk.
Right, you're taking a mortgage, you're definitely guaranteeing
a mortgage with the bankmortgage, you're definitely
guaranteeing a mortgage with thebank.
But and then you know just, youknow just having that real
(31:18):
estate in the event that, godforbid, something happens to the
restaurant, you know, seeingrestaurants that you know just
for 10 years they don't renewtheir lease, right, and they're
just out, and what's left iswhat's in your bank account and
they're just out, and what'sleft is what's in your bank
account and that sucks.
Speaker 1 (31:48):
So having another asset underlying the restaurant
asset for us was a really,really big deal, for not only
financial considerations for therestaurant but also just for
building wealth management aswell.
And Golden's going through thisextraordinary redevelopment as
a city.
Did you know that before youcame in?
Speaker 2 (31:58):
Good question.
I've been out here for 13 years, yeah, so that played a huge
role.
Actually, I should havementioned that I've been out
here for 13 years and ourrestaurant scene in Golden is
pretty stagnant, and that is notin a bad way, right.
What do I mean by stagnant?
There are not a lot ofrestaurant failures in downtown
(32:19):
Golden.
A lot of the restaurants havebeen there for years, if not
decades, so there's very littleturnover, right.
Additionally, it's a veryfamily centric community and the
options for family style diningor family dining at a kind of
an elevated food level areminimal, are minimal out here.
So we really, really, reallyget a lot of work.
(32:41):
I really believe we are fillinga needed gap out here in the
hospitality and dining scene inGolden.
And then, you know, we're doinglike a little kids play area
that no other restaurant inGolden's doing.
But the demographic, familymakeup, the density, things like
that, the lack of choice inGolden because restaurants
usually don't fail all thosekind of went into the bucket and
(33:05):
we concluded that, hey, youknow, this market has some depth
to it, it has some unfulfilleddemand and there's nobody else
doing what we are doingfood-wise.
So you know, we found thisproperty off-market and were
able to acquire it, and thetiming was great and then we
were able to open a little overa year ago.
Speaker 1 (33:24):
How do you factor in competition when you're looking
at new locations?
Speaker 2 (33:32):
in competition when you're looking at new locations.
You know this is going to soundreally stupid.
We really don't.
To be honest with you, doesthat mean we are not aware of
the pizza choices within aproximity of our restaurant?
Absolutely not.
We're always aware of what'saround us, right?
But we just believe that ourmodel is very unique, in
(33:55):
particular from the customerservice and hospitality side,
and our product is so unique aswell.
We've seen several pizzerias addDetroit style pizza.
Since we've opened, we've seena pizzeria or two add Detroit
style pizza very, very close toour first location.
Um, you know, but we were firstto market with that particular
(34:20):
product.
Um, so, while we do, we werevery aware of our surroundings
and who we're competing with.
What we have found is that ourproduct is very unique and not
really offered in a lot ofplaces around Denver.
When we opened our firstlocation, for example, there
were one, two, three, fourpizzerias within a mile and a
(34:43):
half, all of them existing, withreputations, right, pizzeria,
locale, hops and Pie who at thattime, who has an incredible
reputation.
They had been open for a longtime.
But I mean, and I remember ourlandlord saying do you guys
really think you can make itwith all this pizza.
And I said absolutely what weare doing.
Nobody else is doing.
(35:06):
So, while we are aware of ourcompetition, we are really,
really focused also ondemographics and just the food
scene in general in theimmediate vicinity of where we
choose a location we reallyfocus on.
You know Jeff Bezos says itreally well.
You know we really, reallyobsess and focus on our
(35:29):
customers, not our competitors,if that makes sense.
We want to be aware of whatthey're doing, we want to see
what they're doing, we want tosee what the public thinks is
really important, right, but youknow we don't spend an
inordinate amount of time, youknow, obsessing and analyzing
competitors when making alocation decision.
Obviously, if there's aDetroit-style pizzeria 20 yards
(35:52):
away, we're probably going totake a pass.
But you know, knowing themakeup of not only the pizzerias
around us but the food scene ingeneral, are two very big boxes
we look at.
Speaker 1 (36:06):
So things have changed so much in Denver over
the last five to 10 years as youmove forward in the next five
to 10 in the city.
How do you make the numberswork these days?
Speaker 2 (36:26):
It's very difficult and think about this.
There is so much out of ourcontrol on the cost side that
not only has it increased risk,but you know it's just gotten
(36:49):
harder and harder to have abusiness in this space and you
know, candidly, make enoughmoney to not only survive but to
justify the risk and sacrifice.
Um and Sorry, I forgot thequestion.
Shit, I'm sorry.
No, you're good.
Speaker 1 (36:59):
Just thinking about how you make the numbers work,
sorry, no, no, you're good.
Is there a stronger push?
And we talk about this a lotwith clients and in my network.
It feels like you've got to bereally good at marketing these
days.
It feels like you've got tohave a really good tech stack.
You've got to be involved indelivery, online ordering, the
(37:21):
takeout side of things.
The marketing's got to bereally strong.
The employee retention piecehas to be strong.
I mean really firing on allcylinders.
Do you think that's true?
Speaker 2 (37:32):
Absolutely, and we have limited tools right.
We have our pricing right.
We can increase prices.
We've increased prices threetimes in 10 years, right, so we
have not increased our pricesvery much historically,
especially if you compare it tothe increased cost, the
(37:53):
percentage of how much costshave gone up.
Operational efficiency is oneway, you know, we make the
numbers work, but you're onlygoing to squeeze so much juice
out of that orange, um, you know, it's really difficult to be
honest with you.
To be honest with you, andwe've come to the point where we
very much kind of understandthat if we want to continue to
(38:17):
be in this space, we're going tomake less money unless we can,
you know, start charging NewYork prices.
Right, so you have to beincredibly efficient on
operations.
You have to be incrediblyefficient on waste.
We've we re-bid out a lot ofour paper products recently,
right, so we just redesigned ourboxes and went with a new
(38:40):
company about six months ago andwe, the company we were using,
we were just getting killed onpricing.
Um, we found a new company andthey got our box price down by
about 46%, which is huge.
Um, we spent over well over$100,000 a year on boxes, just
(39:00):
boxes.
So those little unicorns per sehelp.
We also go line item by lineitem on all of our ingredients.
But the thing about ouringredients is we won't change
most of what we do.
Honestly, we will not changeour cheese, we haven't changed
anything.
But we always look at thoseline items to see what the costs
(39:24):
are.
I had another really goodthought about managing costs
Pricing back of house fee.
We have a 3% back of house fee.
I know there's a lot of debateabout that.
We pass through 100% of thatrevenue to the hourly rates of
(39:45):
our kitchen.
None of it is retained forbenefits.
None of it is retained for paidtime off.
None of it is retained to buy anew oven.
One for one goes right to ourkitchen.
So that helps make the numberswork from time to time as well.
Speaker 1 (40:00):
Giles, can I ask a question on that?
I know there's talk of Denvergetting rid of service fees.
Would that categorize as aservice fee?
And if you were forced to getrid of that, would you just take
price to offset?
Speaker 2 (40:13):
Great question.
I believe it would be a servicefee and yes, if that comes off,
we yeah, our prices go up.
Speaker 1 (40:23):
Do you?
Also do the 18 or 20% fee, likesome other restaurants who are
just the 3% Okay.
Speaker 2 (40:29):
Yeah, no, no, no, no, no.
But that would be a huge hit,right?
Because my team members are,you know, getting, you know,
money.
You know their hourly rate ishigher because of the fee.
The more they work, the morethey get, um, you know.
So, if that goes away, yeah, wewould have no choice um to but
to increase prices.
Um, recipes is another thing.
We make so much from scratch.
(40:53):
I mean so much, and you know,our salad dressings, with the
exception of Caesar, made fromscratch, all of our appetizers,
except one made from scratch,all of our sauces made from
scratch.
We blend cheese at certainratios and at certain shred
thicknesses.
Do all that by hand.
(41:14):
So you know, we have looked ata couple items and said look,
you know, could we buy marinara,rightara, instead of spending
five hours twice a week to makeit at each location?
If we did buy it, how good, bador ugly is it?
For the first time, looking atsome of our recipes and
wondering if there's a pre-madesolution, that's another way.
(41:38):
Yeah, yeah, but that's very hardbecause there can be a quality
compromise there which we aren'twilling to take.
Going back to fees a little bit, one of the things I really am
looking at and candidly I'm avery big proponent of are credit
card fees.
Right, the credit cardcompanies, straight up, have
(41:58):
monopoly on what they charge us.
It's not a secret.
You can talk to anybody on anypart of the political spectrum
and if they read, they'll knowthat credit card fees, that area
is very, very monopolized.
What about passing that fee tothe guest?
And hey, if you want to pay incash, I'm going to take 3% off
(42:19):
the tip or off the total.
Speaker 1 (42:20):
Yeah, a lot of restaurants do that in Tucson A
lot of businesses do that.
Speaker 2 (42:25):
I mean, I don't.
If I told you what our creditcard fees were monthly, your jaw
would hit the ground.
But let's put it this way Um,our rent our credit card fees
monthly are higher than our rent.
Um, they are higher than ourmonthly health insurance premium
costs that we pay for ouremployees.
(42:47):
It's like the third highestexpense buying food and labor.
Speaker 1 (42:51):
And it's usually food , labor, rent.
Yep, I was on a COGS panel thisweek, or attended, and we were
having this conversation.
Are you, have you gone back andtried to negotiate those fees
and if so, what have you beentold?
Speaker 2 (43:06):
Yes, I mean yes and no.
So here's one of the challengeswe deal with.
We use a point of sale systemcalled Hunger Rush and if we
have to use WorldPay as a creditcard processor, we have to, and
, honestly, most point of salesystems work that way.
Right, toast?
Yes, my understanding is thatthey will let you bid it out,
(43:28):
but they're very favorable to aparticular company.
There was a point of sale systemthat I won't name that we
looked at switching to butultimately decided not to due to
the experience we had.
They did a bait and switch.
I said you know what aboutcredit card processors?
Oh, giles, you know you can useanybody.
Okay, great, but here's who werecommend Signed up with.
(43:51):
The recommended one wasn'thappy, called them up, said
we're going to switch toWorldPay.
Oh, okay, you can definitelyswitch to WorldPay, but if you
read the fine print of yourservice contract, we can't
provide you any services,support services as it relates
to credit cards.
So if your credit card this orthat happens, don't call us.
(44:11):
And that was actually thatrelationship.
So I mean yeah.
So, yeah, that's a very longway of saying yes, but there are
very limited options and thepoint of sale company really,
really puts in place, you know,bumpers that kind of forced you
to use a credit card processor,but even if it's, even if they
don't Kristen, there's only twoor three.
Speaker 1 (44:30):
Yeah.
Speaker 2 (44:31):
You know, that's an industry I don't want to get off
on a tangent, but like that isan industry that I cannot figure
out why it has not beenreinvented in the past 10 years,
why nobody's been able todisrupt that industry.
Is, is, is.
I can't, I can't understand itwith all the technology I mean.
You know, I don't, you know, Idon't understand how a tech
(44:52):
entrepreneur, or just anentrepreneur, finance
entrepreneur, has not come upwith a credit card processing
system that's cheaper butprofitable.
Speaker 1 (44:59):
Yeah, if anybody listening, I'm stumped on this
too, so if you know anything,you can text me from the show,
but give us, give me some info.
I'd be happy to share it withGiles and and, uh, anybody else
that's interested in this.
I think that's a.
It's a huge conversation, it's,um, it's a big issue.
Speaker 2 (45:15):
For sure, something else we could definitely dive
into, um, and I'll say theperson or people who eventually
figure that out, you know areprobably going to end up, you
know, being on the beach in Maui.
It's just it's, you know, inretiring.
If you mean, if you couldfigure, if someone could figure
that out and compete with thebig boys and girls for less and
(45:38):
provide same service, you meanthat's a huge disruptor.
I think On the flip side, maybethe regulatory legal
environment, maybe thegovernment has restrictions in
place that make it hard to dothat.
I don't know.
But I honestly cannot believethat it's just processing it's
computers.
I cannot believe it hasn't beenreinvented.
Speaker 1 (45:58):
Yeah, no, it's a really great point.
It's computers.
I cannot believe it hasn't beenreinvented.
Yeah, no, it's a really greatpoint.
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(46:19):
Slash audio to download yourfree audio book today.
What's one area of yourbusiness Like if you looked at
one department?
If it's marketing operations,the financial aspect what's one
area that you would really liketo improve in?
Speaker 2 (46:50):
like to improve in?
That's a hard question.
One area, one area that I wouldlike to improve in is customer
service.
No matter how good of anexperience a customer has with
Blue Pan, no matter how manycompliments we get.
You know this sounds cliche,but every flippin' day we're
looking to provide a betterguest experience.
And it could be, and it happensso many ways.
(47:14):
There's a big, big restaurantgentleman in the Denver metro
area.
His name is Frank Day and he'sbig and he's been here for 50
years and the guy is remarkablerestaurant owner operator, just
remarkable for all sorts ofreasons.
Why do I bring up him?
(47:35):
Pre-covid, he came into BluePan, had lunch, you know, I met
him there blah, blah, blah, andhe said you know, hey, can I get
a cup of coffee?
We don't serve coffee, um.
So I said can you, can you?
Are you in a rush?
He said no.
I said give me a minute, ranacross the street and I asked
him you know, what kind ofcoffee do you like?
Oh, just medium.
You don't give me sugar, no,black's cool.
Went across the street, boughta cup of coffee and brought it
(47:59):
back.
It was that was just instinct,by the way, it was just uh, yeah
, that wasn't like you know.
I wasn't doing it cause it wasFrank Um, but no joke.
Customer service, customerservice.
Customer service.
10 out of 10.
Speaker 1 (48:13):
I love it.
There's a that takes me back toworking at the Broadmoor.
For five years we were, we weretold to never say no, so there
were oftentimes we would berunning across the lake to go
get a bottle of wine that theguests had enjoyed last night,
that we didn't have on the list,or a cigar that we didn't have
available, or an ingredient, andit's all about getting your
team to really understand how toprovide service outside of
(48:36):
their four walls, and you havesurrounded yourself with
businesses and are in areaswhere there's a lot of things
that you can access outside ofjust what is on your menu, and
that's an extraordinary thing Ithink a lot of people aren't
thinking about today.
Speaker 2 (48:51):
Absolutely right.
And you know, like I saidearlier, I don't leeway can have
a negative connotation, but theleeway that my business partner
and I give to our managementslash supervisory staff is very
large, for lack of a better term.
So why did I bring that up?
When we have, if we have, aregular come in, you know, if I
(49:15):
have a piece of BFD right, justmake sure that when you hit comp
you put the reason right.
You have a lot of flexibilityto provide customer service at
the highest level possible.
You know, at all times and Ilike that never say no.
That's a really, really, in myopinion, three powerful words.
I like that a lot, a lot.
(49:37):
But I think, if I'm being honest, I think customer service in
our industry, at least in Denver, is I hate to say it like that,
but for me personally it hasbeen a challenge sometimes just
to get some good customerservice.
(49:57):
When you go out and candidcandidly, you know, like if I'm
going to spend my time andhard-earned money going out to
eat is like our favorite thingto do.
Besides, you know whatevergoing on vacation, I guess, but
even then eating out is ourfavorite thing to do, you know,
and I think a lot of peoplemaybe might be a little burnt
out, might be a little.
(50:18):
You know PSTD from COVID butcustomer service right now can
be.
Finding good customer servicecan be a bit of a challenge.
Speaker 1 (50:24):
Well, and we were having conversations about this
when I was still in Denver andon the Denver board year I mean
10, 15 years ago, talking aboutthe service was in trouble and
since the pandemic, I mean theworkforce has completely changed
.
No-transcript more that goesinto it these days, and so it
(51:11):
puts so much pressure ontraining and and hiring.
It all starts with hiring, likeyou said, and hiring to your
core values and your vision,which is incredible.
So good for you.
Speaker 2 (51:22):
You're exactly right.
It starts with the hiring.
I like to use the wordunteachables a lot when I'm
trying to hire somebody.
Do they have the unteachables?
Do they have a positiveattitude?
Can they stay positive underpressure?
Do they work hard?
Will they go above and beyond?
Will they put the guest or evenanother team member ahead of
(51:45):
their own needs?
Like those are unteachables weare looking at when hiring.
I can teach you how to make apizza.
I can teach you our companyphilosophies, our vision,
mission.
I can teach those things.
I can't teach you to be nice.
In my opinion, I can't teachyou to work hard.
I can't teach you to be nice.
In my opinion, I can't teachyou to work hard.
I can't teach you to care.
You either have it or you don't.
(52:05):
And you're trying to evaluatethose, those variables, in a
very short period of time.
So you know, like an hourinterview.
So yeah, it starts with hiring,to your point.
Speaker 1 (52:15):
Do you stage we?
Speaker 2 (52:16):
do sometimes, you know, Um, we do sometimes um,
you know, yeah, yes, we do, wedo.
Speaker 1 (52:22):
Yeah, we do.
Speaker 2 (52:23):
We do.
Speaker 1 (52:24):
Love it Well yeah it's.
It's important.
I think it's.
It's a great way we were.
We were talking about this lastweek too.
It's so nice to just, yes, youcould.
You can have a niceconversation with someone, but
to actually see their instinctsand to see if they've got those
that visual can get those visualcues from people of needing
something or where their eyesare looking or are they looking
(52:46):
for something to do and keepthemselves busy.
That's a really difficult thingto pull out of an interview.
Speaker 2 (52:52):
Yep, totally right.
Speaker 1 (52:54):
Thank you so much for being here.
I, you know, obviously we'vebeen, you know, a huge fan of
yours since opening and weconsider you the the best
Detroit-style pizzeria in Denver.
And I'll tell you traveling theworld and traveling in the
nation.
We love pizza and we're alwaystrying different Detroit style,
(53:18):
and it just never measures up tothe product that you serve.
Speaker 2 (53:22):
That means more than you know.
You know, cause we do work very, very hard at trying to
accomplish that goal.
Um, you know our dough processfor our Detroit style pizza is
very long.
It's very labor intensive, um,and it's pro our process is
probably why most I don't knowif anybody else in Denver that
that does the same process we do, um, so you know there is a lot
(53:45):
of love, care and energy putinto every single pizza, um, and
all this love care and energyin the process.
You know, when everything'ssynced, our quality is, is is
acceptable.
Um, you know, and if it's not,we got to fix it.
You know, um got to fix itright away and make sure the
guest is taken care of.
Speaker 1 (54:03):
I love it.
Speaker 2 (54:04):
So you know, and like , you'll never hear us say we're
the best, but that's, that'sanother important thing.
Um, you know it's part ofactually our culture.
You know we don't go aroundtown saying we are the best, we
are the best at actually.
I actually tell my social mediaguy like I don't even want to
use those hashtags, right, andthat's probably a stupid
decision.
(54:24):
That's pizza Denver, I mean,that's a great hashtag, right,
but part of our core beliefs hasto do with humility, and you
will not see us running aroundtown saying we're the best ever
and if we are, we need to besmacked because it's all.
Customers are the only people,in my opinion, who are qualified
(54:46):
to make that judgment.
Speaker 1 (54:48):
Yeah, it's interesting, I think sometimes
people position themselves asthe best or they kind of enter
that mindset and then they stopgrowing from there.
They think they've got it allfigured out.
And I love your humilitybecause, just because you're all
you know, just knowing you,you're always learning, you're
so curious, you're involved,you're committed and you're
always you're just verythoughtful and intentional about
everything that you do and youworry about it in a really good
(55:11):
way, in a healthy way, which isjust you know.
Those are just incrediblecharacteristics of ownership.
So you bet.
Speaker 2 (55:18):
And, and you know, that kind of ties back to risk,
right, we're managing risk andhow do we manage it, whether
it's financial or reputational,and what you just said and how
we think and how we believe andhow we act and the decisions we
make about blue pan, um, youknow, hopefully you know.
You know um help us address therisk of you know, of not doing
well.
Hopefully we do better becauseof all those things.
Speaker 1 (55:41):
Yeah, absolutely.
Well, really appreciate theconversation and the time and I
can't wait.
Can't wait to get back thereand get some Brooklyn Bridge.
Hopefully it's still in thevenue.
Speaker 2 (55:50):
It's my favorite.
We are here for you.
We'd love to see you, as always.
Speaker 1 (55:55):
Anybody, for if you're listening, please go to
any of the Blue Pan locations,check out their product.
Go back once or twice a week.
It's just incredible stuff.
Giles and the team havesomething really special, so
that's going to do it for usthis week, you bet.
Thank you, and please sharethis episode with anyone in the
industry that you think couldbenefit.
We all need to stick together,share ideas, share stories, gain
(56:17):
insights from each other andbuild this community.
So we will talk to you.
Thank you, we'll talk to youall next week.
Speaker 2 (56:25):
Thank you so much for having me.
I appreciate you.
Speaker 1 (56:27):
Thank you, bye-bye.
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