Arizona: How Delivering an "I Love it Here" Experience Can Quintuple Revenue with The Melt CEO, Ralph Bower

Nick Portillo: 00:00:02

There are a million ways to make money in the food service industry.

Nick Portillo: 00:00:05

You just have to find one on the Titans of Food Service podcast.

Nick Portillo: 00:00:09

I interview real life movers and shakers in the food game who cut through all the noise to get to the top.

Nick Portillo: 00:00:15

My name is Nick Portillo and welcome to the Titans of Food Service podcast.

Nick Portillo: 00:00:19

Let's jump right into it.

Nick Portillo: 00:00:26

Welcome back to season three of Titans of Food Service.

Nick Portillo: 00:00:29

I'm your host, Nick Portillo and today we continue my journey across the entire country where I'm visiting each state and showcasing the very best in the food service industry with my across America in 50 weeks tour.

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On this week's episode, I'm going to be stopping in Arizona where I'm thrilled to introduce my guest, Ralph Bauer, who's the CEO of the Melt.

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Ralph brings over 25 years of executive leadership in the fast casual and quick service restaurant industries.

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He steered some of the biggest names in the business.

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Okay, get this, he worked for a hometown favorite for him.

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He grew up in Louisiana and he was the President of Popeyes.

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He's been the CEO of Payway and he's also held top positions at Yum Brands as well as Domino's.

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So he has an incredible career in the food service industry.

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So he's known for his customer focused leadership.

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He has an impressive track record of driving revenue and profitability.

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When he was the CEO of Payway, Ralph doubled the company's EBITDA by developing a fresh approach to growth.

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versaw operations for get the: 1700

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Now, before I dive into my conversation with Ralph, I wanted to so what I do every episode is I give a little background on the food service scene or industry there in that state.

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So this case, it's Arizona.

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Now, what makes Arizona's food landscape unique is it really is a culinary haven for it's known for its fusion of Southwestern and Mexican flavors and has local gems like Phoenix's Pizzeria Bianco or Tucson's El Charro Cafe, which is one of the oldest Mexican restaurants in the US Fry Bread House, known for its iconic Native American fried bread and among others.

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So it's a really, really great state for the food service industry.

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Food is a huge cultural draw for visitors here and Arizona's culinary scene reflects a blend of flavors and history that is truly unique to the state.

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In recent years, Arizona has also gained recognition for its emerging farm to table movement and innovative Chefs who are putting local ingredients in the spotlight.

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Before we jump into the conversation, I wanted to give you a little background.

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So we're going to talk today in our conversation, me and Ralph, and he's going to share some really good insights on how he took, when he moved over to the melt, his per unit.

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They were making about $700,000 in revenue per unit, and he transformed the company.

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And now, on average, he's doing about three and a half million dollars per unit, which is a massive.

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He quintupled the growth per units in per unit stores.

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So really impressive.

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He kind of.

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He's going to dive into the details of how he did it along with his team.

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And without further ado, let's go ahead and welcome Ralph.

Nick Portillo: 00:03:24

All right, Ralph, welcome to the Titans of Food Service podcast.

Nick Portillo: 00:03:27

I appreciate you taking time to come visit with me and share a little bit about yourself and the melt.

Ralph Bauer: 00:03:32

Yeah, my pleasure.

Ralph Bauer: 00:03:33

Glad to be here.

Nick Portillo: 00:03:34

I always like to start with my guests.

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A little background on themselves, how they got into the food business.

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So everybody has such a unique and interesting journey on how they got into this industry.

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Some people, I say a lot of people, it happened by almost accident or they kind of fell into it.

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But there are some people that have familial ties or always wanted to be in hospitality or food service or the restaurant business or something like that.

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That's always been their goal.

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But what about for you?

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How'd you get into the.

Nick Portillo: 00:04:05

Into this industry?

Ralph Bauer: 00:04:06

Yeah, I really came into the restaurant industry from a pretty unusual standpoint.

Ralph Bauer: 00:04:13

I went to Annapolis and was in the Navy.

Ralph Bauer: 00:04:16

I was on a chief engineer on a destroyer.

Ralph Bauer: 00:04:19

And then I was stationed in the Pentagon.

Ralph Bauer: 00:04:21

And around the time I was getting ready to go back to sea from the Pentagon, I saw an ad in the newspaper and.

Ralph Bauer: 00:04:28

And the Domino's Pizza store managers in Washington, D.C.

Ralph Bauer: 00:04:32

were making more than the admiral that I was working for.

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And I said, huh, I wonder maybe I ought to see if I can be an average Domino's Pizza store manager.

Ralph Bauer: 00:04:41

And so I went from being an admiral's aide to one of the most senior admirals in the Navy to making 475 an hour as a manager and training at Domino's.

Ralph Bauer: 00:04:51

And my family was apoplectic.

Ralph Bauer: 00:04:54

They thought that I had lost my mind.

Ralph Bauer: 00:04:56

I had a one year old.

Ralph Bauer: 00:04:57

I had a one year old at the time, but it ended up being a fantastic thing.

Ralph Bauer: 00:05:04

I joined the Domino's franchise in Washington, D.C.

Ralph Bauer: 00:05:08

which was a very storied franchise.

Ralph Bauer: 00:05:10

I think we had nine of the top 10 highest volume restaurants in the world at the time.

Ralph Bauer: 00:05:16

And I worked my way up through the Domino system.

Ralph Bauer: 00:05:20

Started off as a manager in training and worked my way up to area manager.

Ralph Bauer: 00:05:25

And then I went on to, to be operating partner with a large Domino's franchisee.

Ralph Bauer: 00:05:33

And from there I kind of went on, spent some time with Yum.

Ralph Bauer: 00:05:40

And then as somebody who grew up in New Orleans, I got the opportunity to be chief operating officer and later president of Popeyes and so forth.

Ralph Bauer: 00:05:50

For somebody from New Orleans, Popeyes is the pinnacle of the restaurant business.

Ralph Bauer: 00:05:55

So that was a fantastic period in my career.

Ralph Bauer: 00:06:00

Cheryl Batchelder, who was somebody I knew from Domino's and from kfc, was CEO at Popeyes and just did a fantastic job.

Ralph Bauer: 00:06:11

And we really grew that brand while we were there.

Ralph Bauer: 00:06:15

And then I went on to be CEO of Payway, which is about a 200 store chain spin off of PF Chang's, fast casual version of PF Chang's.

Ralph Bauer: 00:06:25

And then today I'm 20.

Ralph Bauer: 00:06:27

In: 2016

Nick Portillo: 00:06:35

Wow, what a journey you've had in the restaurant space.

Nick Portillo: 00:06:39

I mean, that's incredible.

Nick Portillo: 00:06:41

When you were going to Annapolis, did you expect to have a career in the Navy?

Ralph Bauer: 00:06:46

You know, I went to Annapolis wanting to fly in my senior year.

Ralph Bauer: 00:06:51

Like, like a lot of people who go to the service academies want to fly.

Ralph Bauer: 00:06:55

But my senior year, one of my eyes was 20, 25, so I ended up going to sea.

Ralph Bauer: 00:07:00

And that was a fantastic experience.

Ralph Bauer: 00:07:02

I wouldn't trade it for anything, but in those days you spent about 50% of your time at sea.

Ralph Bauer: 00:07:09

And there was no Internet back there back then.

Ralph Bauer: 00:07:12

So when you were, you were gone, you were gone.

Ralph Bauer: 00:07:15

And I just decided that with a, with a new son, I wanted to look for something different than going to sea with the Navy.

Ralph Bauer: 00:07:24

But I highly recommend it to anybody.

Ralph Bauer: 00:07:28

It was a fantastic time in my life.

Ralph Bauer: 00:07:31

And you really learn a lot as a 20 something year old person on how to lead a team.

Ralph Bauer: 00:07:39

And honestly, running a restaurant and leading a team on a ship is extraordinarily similar.

Ralph Bauer: 00:07:45

You know, you have, you have a group of, you know, 20 or 30 people, you know, in your division on the ship, you know, in a restaurant.

Ralph Bauer: 00:07:55

And they come from a wide variety of backgrounds, a wide variety of experiences.

Ralph Bauer: 00:08:02

You have some that are super hard workers and others that are not.

Ralph Bauer: 00:08:05

And, and you got to figure out how to bring everybody together, you know, for a common goal.

Ralph Bauer: 00:08:13

So yeah, I think that the military is definitely, I think definitely can do A great job in getting you ready for a career in the restaurant business.

Nick Portillo: 00:08:23

Yeah, absolutely.

Nick Portillo: 00:08:25

I've actually had other service men and women veterans on this podcast who got into the restaurant business and talk about that.

Nick Portillo: 00:08:34

Right.

Nick Portillo: 00:08:34

The kind of the leadership, the teamwork, you know, working within a team as well, like, all of those types of things definitely seem to be transferable skills into what we do.

Nick Portillo: 00:08:46

And so you go from Annapolis, time in the Navy, and then you move over to Domino's.

Nick Portillo: 00:08:53

What are some of the things?

Nick Portillo: 00:08:54

Like when you got into Domino's.

Nick Portillo: 00:08:55

Right.

Nick Portillo: 00:08:56

Kind of your first dive into the restaurant pool.

Nick Portillo: 00:08:59

What are some of the things that you learned in your time there?

Ralph Bauer: 00:09:02

Yeah, so a lot of those leadership skills absolutely do translate.

Ralph Bauer: 00:09:08

One of the things I learned when I was in the military is that you need to take care of your people, and if you take care of them, they'll take care of you.

Ralph Bauer: 00:09:16

And the same thing goes in the restaurant business.

Ralph Bauer: 00:09:19

I think sometimes, you know, we're perceived as having, you know, maybe Gordon Ramsay type leadership in restaurants.

Ralph Bauer: 00:09:27

And honestly, in restaurants, just like in.

Ralph Bauer: 00:09:31

In the military, really, the best leaders and the most successful leaders are the ones who can build and align a team.

Ralph Bauer: 00:09:38

And that means, you know, treating everybody with courtesy and respect, no matter.

Ralph Bauer: 00:09:43

No matter where they come from.

Ralph Bauer: 00:09:46

You know, I can remember early on in my restaurant career, people saying, boy, the restaurant business must be way harder for you.

Ralph Bauer: 00:09:54

People don't have to do what you tell them to do in restaurant business.

Ralph Bauer: 00:09:58

And quite honestly, it's not any different than military.

Ralph Bauer: 00:10:03

If you don't treat your people right and you don't talk to them the right way, you're not going to get the results, the same kind of results as people who do.

Nick Portillo: 00:10:10

Yeah, that makes sense.

Nick Portillo: 00:10:12

So during your time at Domino's, right, you jump in and you move.

Nick Portillo: 00:10:17

At one point, you're staying up to an area manager.

Nick Portillo: 00:10:19

You end up working for one of the largest franchisees of Domino's.

Nick Portillo: 00:10:24

How do.

Nick Portillo: 00:10:24

How were you able to move up within that organization, you know, to kind of continue your career path upward?

Ralph Bauer: 00:10:30

Yeah.

Ralph Bauer: 00:10:31

So I think that the number one most important attribute, really, in any business, it's true in the military, it's true in the restaurant business, but really, it's true everywhere.

Ralph Bauer: 00:10:48

And the number one attribute I look for people when I'm doing interviews is what they call the military commitment to excellence.

Ralph Bauer: 00:10:56

And what can be easier explained as just always giving your best effort and being compelled to always give it your best shot, even when things are going tough.

Ralph Bauer: 00:11:13

And I think that you look at people that are successful in the restaurant business.

Ralph Bauer: 00:11:19

Those are the ones who really have the passion for getting up and every day just being.

Ralph Bauer: 00:11:26

Being the best version of themselves that they can be.

Ralph Bauer: 00:11:29

And I find a lot of times sports people learn that in sports growing up and that you do every little thing that you can do to be great.

Ralph Bauer: 00:11:40

And the same goes for the restaurant business.

Ralph Bauer: 00:11:43

You know, I often find people with a sports background get that you have to do lots of little things right every single day to be great.

Ralph Bauer: 00:11:53

And I think that's.

Ralph Bauer: 00:11:55

I think that's the way it is in the restaurant business, too.

Ralph Bauer: 00:11:57

I mean, it.

Ralph Bauer: 00:11:58

It melts.

Ralph Bauer: 00:12:00

We've had incredible success.

Ralph Bauer: 00:12:02

When I came in: 2016

Ralph Bauer: 00:12:09

Wow.

Ralph Bauer: 00:12:09

And.

Ralph Bauer: 00:12:11

And people ask me, how did you do that?

Ralph Bauer: 00:12:14

And the number one way, and this was true in the military, and it's been true every step in my career is you listen to your people, and they're the ones that are on the ground, and if you listen to them, they have the solutions for any business problem you might have.

Ralph Bauer: 00:12:34

When I came to melt, I sent a letter to every customer in our database, and I asked them two questions.

Ralph Bauer: 00:12:43

What do you.

Ralph Bauer: 00:12:44

What do you hope I change?

Ralph Bauer: 00:12:45

And what do you hope I don't change?

Ralph Bauer: 00:12:47

And then I met with every manager in all of our restaurants.

Ralph Bauer: 00:12:54

I had three round tables, and I asked them the same two questions.

Ralph Bauer: 00:12:57

Hey, I'm the new guy.

Ralph Bauer: 00:12:59

What do you hope I change?

Ralph Bauer: 00:13:00

And what do you hope I don't change?

Ralph Bauer: 00:13:02

And then we put.

Ralph Bauer: 00:13:03

We got about: 1100

Ralph Bauer: 00:13:16

And the rest has kind of been.

Ralph Bauer: 00:13:18

The rest has kind of been history.

Ralph Bauer: 00:13:20

There's all kinds of examples in our.

Ralph Bauer: 00:13:24

In our melt trajectory where I did things that I didn't really think were a good idea because my team recommended them, and they almost always turned out to be right, and I was wrong.

Ralph Bauer: 00:13:37

A great example would be in: 2018

Ralph Bauer: 00:13:41

My IT folks came to me and said, hey, you know, we have these new people, Uber Eats and Doordash, and we really want to think it's a good idea for us to start delivering food.

Ralph Bauer: 00:13:54

And I said, look, there's no way I'm doing that.

Ralph Bauer: 00:13:58

I'm not going to make any money at it.

Ralph Bauer: 00:14:01

And I'm going to be.

Ralph Bauer: 00:14:02

What I care about is serving great food, and I'm going to be serving old cold food and not.

Ralph Bauer: 00:14:07

And not making any money.

Ralph Bauer: 00:14:09

At it, they said, well, we really think we got to do this.

Ralph Bauer: 00:14:12

And I said, okay, I'll test it in a couple restaurants.

Ralph Bauer: 00:14:16

And I tested it in a couple restaurants, and I was just using one partner at the time.

Ralph Bauer: 00:14:21

I think it was probably doordash.

Ralph Bauer: 00:14:25

And pretty quickly I was doing about, pretty much overnight, about 5% of sales and delivery.

Ralph Bauer: 00:14:35

And then it grew to 10%.

Ralph Bauer: 00:14:37

And so pretty rapidly I expanded that to all my restaurants.

Ralph Bauer: 00:14:42

And pre Covid, we went from 5% to 10% and 10% to between 15 and 20% going into Covid.

Ralph Bauer: 00:14:53

But then when Covid hit, we had all of the processes in place.

Ralph Bauer: 00:15:00

And so when everybody pivoted to third party delivery, we were already there.

Ralph Bauer: 00:15:06

And so right away, during COVID our business went to about 80% third party.

Ralph Bauer: 00:15:11

Since COVID our sales have doubled.

Ralph Bauer: 00:15:15

And a good portion of that is third party delivery.

Ralph Bauer: 00:15:19

40, 46% of our sales today come from third party delivery.

Ralph Bauer: 00:15:25

And if I had gone with my instincts, we would have never done it.

Ralph Bauer: 00:15:30

And there's a lot of examples.

Ralph Bauer: 00:15:33

I saw that at my time in Popeyes when, you know, the same thing applies to franchisees.

Ralph Bauer: 00:15:39

If you listen to your franchisees, they will tell you what you need to make your business better.

Ralph Bauer: 00:15:46

And so I learned that in the Navy, I was fortunate to have great chief petty officers who knew a lot more than I did, and if I just leaned into them, we'd be successful.

Ralph Bauer: 00:16:00

And we were.

Ralph Bauer: 00:16:02

And I've learned that every step of my way in the restaurant business, that if you believe in your team, if you listen to what they have to say, they're usually going to be more right than you are.

Ralph Bauer: 00:16:13

I have a couple of menus.

Ralph Bauer: 00:16:14

On our menu now.

Ralph Bauer: 00:16:16

I remember strawberry lemonade.

Ralph Bauer: 00:16:17

I had a store manager who really wanted to do strawberry lemonade, and she was one of my.

Ralph Bauer: 00:16:24

One of my best store managers.

Ralph Bauer: 00:16:25

And I thought it was ridiculous.

Ralph Bauer: 00:16:28

I'm like, who cares about strawberry lemonade?

Ralph Bauer: 00:16:30

And today it's our number one selling item.

Ralph Bauer: 00:16:34

Same manager said, I think we need to deliver milkshakes.

Ralph Bauer: 00:16:38

And I said, deliver milkshakes?

Ralph Bauer: 00:16:40

That's ridiculous.

Ralph Bauer: 00:16:42

Who's going to get a milkshake for delivery?

Ralph Bauer: 00:16:44

And we deliver milkshakes with about 20% of our orders today.

Ralph Bauer: 00:16:51

It's one of the biggest items that we sell.

Ralph Bauer: 00:16:54

So I haven't really gotten any smarter in my career in the restaurant business.

Ralph Bauer: 00:17:00

I just have listened to the people around me, and I'm obsessive about listening to guest feedback also.

Ralph Bauer: 00:17:06

And that really makes a difference.

Nick Portillo: 00:17:10

That's incredible.

Nick Portillo: 00:17:11

I mean, what a great Nugget that you just gave right there.

Nick Portillo: 00:17:13

You know, what do you hope to change and what do you hope not to change?

Nick Portillo: 00:17:16

Asking your own team that and the different.

Nick Portillo: 00:17:19

To go from $700,000 and what top line revenue up to 3.5 million per unit is incredible.

Nick Portillo: 00:17:25

That's a massive increase.

Nick Portillo: 00:17:28

And you know, and then to do an organizational assessment or a survey if you will, of getting.

Nick Portillo: 00:17:35

And I'm sure you had.

Nick Portillo: 00:17:35

Plus it sounds like you had tons of different responses and maybe some themes across different ones that popped up.

Nick Portillo: 00:17:42

And then also having trust in the right people.

Nick Portillo: 00:17:44

You mentioned the one team member with the, with the pink lemonade and then the milkshakes and then the one team member with getting into third party delivery, which yeah, you were pretty ahead of the curve especially.

Nick Portillo: 00:17:57

And I know Covid really exploded that and really got people into that game, but having that infrastructure in place was truly, I mean, I think you look back and probably like, man, that person had very good foresight into the future and into your business at that time as well.

Nick Portillo: 00:18:12

So that's really impressive.

Ralph Bauer: 00:18:14

You know, it's kind of funny going into co.

Ralph Bauer: 00:18:17

th of: 2020

Ralph Bauer: 00:18:25

And then two days later, on either the 16th or the 18th, they declared a shelter in place in San Francisco.

Ralph Bauer: 00:18:33

And we went from double digit positive to negative 80% overnight.

Ralph Bauer: 00:18:38

And so that, that brings up another saying that I'd like to talk about is that when things are good, they're never as good as they seem.

Ralph Bauer: 00:18:48

And so overnight we went from, you know, 100, really two days after our celebration of a hundred consecutive positive weeks, we were negative 80.

Ralph Bauer: 00:18:58

But I made the decision early on.

Ralph Bauer: 00:19:00

I said, I'm sure this shelter in place thing is not going to last longer than two or three weeks.

Ralph Bauer: 00:19:05

There's no way it's going to be, you know, we'll be out of shelter in place, worst case scenario by the end of April.

Ralph Bauer: 00:19:14

And so I told all my team members, look, I'm going to pay you whether you come to work or not, because when this is over, I want to make sure that you're there.

Ralph Bauer: 00:19:24

And so I, even though our sales were negative 80, I was still paying people even if they were afraid to come to work.

Ralph Bauer: 00:19:34

Well, then I was at our, at my office and we have a store on the ground floor right on Market street in San Francisco.

Ralph Bauer: 00:19:41

And I was looking over the railing and I saw all these people, all these team members down there, but really no guests.

Ralph Bauer: 00:19:49

The only guests in line were first Responders from a local hospital.

Ralph Bauer: 00:19:53

And I yelled down to the folks on the front counter, I said, don't charge them for their lunch.

Ralph Bauer: 00:20:00

And I started to think about it, and I had all these people working, and they weren't really doing anything, and I wanted them to feel like they were making a difference.

Ralph Bauer: 00:20:09

So pretty much within about 24 hours, I made the decision, let's give free meals to first responders in all of our restaurants, and that'll make our people feel like they're doing something meaningful.

Ralph Bauer: 00:20:21

And that went viral pretty much overnight.

Ralph Bauer: 00:20:27

At my Stanford restaurants, where I have hospitals within walking distance, I had people lined up for a block from opening until close every day.

Ralph Bauer: 00:20:37

I was doing about $14,000 a day, and 13 of it was free.

Ralph Bauer: 00:20:44

And so.

Ralph Bauer: 00:20:46

And right about the time we were.

Ralph Bauer: 00:20:50

We were a very small company at the time.

Ralph Bauer: 00:20:52

We had seven or eight restaurants given all our food away for free.

Ralph Bauer: 00:20:57

And then it was started to look like, oh, no, maybe this shelter in place is going to last longer than three weeks.

Ralph Bauer: 00:21:03

This might actually go eight weeks.

Ralph Bauer: 00:21:05

You know, how am I going to give away all this free food for eight weeks?

Ralph Bauer: 00:21:10

And about that time, all of a sudden, our sales started to pick up.

Ralph Bauer: 00:21:14

And in April, we were probably.

Ralph Bauer: 00:21:17

We went from being down 80 the last couple weeks in March to by the end of April, we were maybe only down 50, and then maybe 25.

Ralph Bauer: 00:21:28

And by June or by May, we were back to our pre Covid now numbers.

Ralph Bauer: 00:21:37

And then June was a record period.

Ralph Bauer: 00:21:42

And then July, we were positive 20, and then in August, we were positive 40.

Ralph Bauer: 00:21:51

La Jolla which had opened in: 2018

Ralph Bauer: 00:22:09

And then.

Ralph Bauer: 00:22:10

But they also had hospitals close by, and things started to get a little out of hand at that restaurant.

Ralph Bauer: 00:22:18

But an amazing thing happened.

Ralph Bauer: 00:22:22

By July in that restaurant, I was having record weeks.

Ralph Bauer: 00:22:25

I went from doing 20,000 record to doing.

Ralph Bauer: 00:22:29

I was doing 30,000 every week in July.

Ralph Bauer: 00:22:33

And then in August, all of a sudden I did 40.

Ralph Bauer: 00:22:36

And by the end of August, I was doing 50.

Ralph Bauer: 00:22:39

And I was doing 20,000 a week before COVID started.

Ralph Bauer: 00:22:43

And then I remember my manager there said, my goal is to do 60.

Ralph Bauer: 00:22:49

And I kind of thought, you know, my highest volume stores were doing that at the time.

Ralph Bauer: 00:22:53

And I said, I had a smile on my face, and I said, yeah, that would be great.

Ralph Bauer: 00:22:57

Wouldn't it be great to do 60?

Ralph Bauer: 00:23:00

And in September, we did 60 a week.

Ralph Bauer: 00:23:03

In October we did 70 a week.

Nick Portillo: 00:23:05

Oh my gosh.

Ralph Bauer: 00:23:06

And by the end of the week, we were doing 80 or 90,000 a week.

Ralph Bauer: 00:23:10

So this is a store pre Covid in March of 20 was doing 20,000 a week and by December of 20 was doing 80,000 a week.

Ralph Bauer: 00:23:20

And today it does 80 to $90,000 a week.

Ralph Bauer: 00:23:25

So when Covid came.

Ralph Bauer: 00:23:28

See, the other lesson that you learned there is that.

Ralph Bauer: 00:23:32

So I mentioned, when things are good, they're never as good as they seem.

Ralph Bauer: 00:23:35

But when things are bad, they're never as bad as they seem either.

Ralph Bauer: 00:23:39

Because we went from negative 80 to negative 50 to negative 20 to positive to record weeks.

Ralph Bauer: 00:23:47

And then, and then in 21 we were up 54 in comp sales for the year.

Ralph Bauer: 00:23:53

In 21 over 20, which had been a record year then.

Ralph Bauer: 00:23:57

We've been double digit positive every year since then.

Ralph Bauer: 00:24:00

And the thing, so the thing is, the other lesson to learn there is really, I'm not very smart.

Ralph Bauer: 00:24:05

I was sure that that Covid thing would only last, you know, three to five weeks.

Ralph Bauer: 00:24:10

Worst case scenario, eight weeks.

Ralph Bauer: 00:24:13

And it ended up lasting for over a year.

Ralph Bauer: 00:24:16

And sometimes if you make decisions, I made a snap decision on paying team members whether they came to work or not, and given first responders free meals.

Ralph Bauer: 00:24:27

And it ended up changing the trajectory of our brand.

Ralph Bauer: 00:24:31

And so we had had some pretty good success pre Covid, but then during COVID our sales doubled and since COVID they've doubled again.

Ralph Bauer: 00:24:38

So today we do quadruple the average unit volumes that we were doing going into Covid.

Ralph Bauer: 00:24:45

And but it was all because, you know, I listened to my team.

Ralph Bauer: 00:24:49

I had, you know, I, if I hadn't listened to my team and had those, you know, that third party delivery processes in place.

Ralph Bauer: 00:24:56

And the other thing is, is that what's super important is you gotta be just like in the military.

Ralph Bauer: 00:25:01

You gotta be fanatical about operations.

Ralph Bauer: 00:25:03

You need to have flawless execution and the military lives are on the line.

Ralph Bauer: 00:25:08

And.

Ralph Bauer: 00:25:09

But in the restaurant business, if, if you can be fanatical about operations and especially in the restaurant business, and you're going to be successful.

Ralph Bauer: 00:25:19

I have some other very complicated point of views that are like, if you want to be a great restaurant company, you need to run great restaurants.

Ralph Bauer: 00:25:28

And that seems pretty obvious, but sometimes people don't get it.

Ralph Bauer: 00:25:34

And you got to be, when, when people ask me today, what did you do to, you know, Quintel, Quintuple your average unit?

Ralph Bauer: 00:25:46

I go, well, we really focus on making really great food and giving really great service.

Ralph Bauer: 00:25:50

And we're fanatical about it.

Ralph Bauer: 00:25:52

And in the restaurant business, I really do think that that's all there is to it.

Ralph Bauer: 00:25:57

If you're going to be a great restaurant company, you need to have great food.

Ralph Bauer: 00:26:00

And if you're going to be a great restaurant company, you need to run great restaurants.

Ralph Bauer: 00:26:04

If you do nothing else other than those two things, you're, you're going to be successful.

Ralph Bauer: 00:26:09

But that's not very sexy, right?

Ralph Bauer: 00:26:11

Is that people go, wait, everybody, everybody tries to have great food and everybody tries to run great restaurants, but you just have to have uncompromising, high standards around those things.

Ralph Bauer: 00:26:25

Despite the fact that I came from big companies like, you know, I had the western half of the country for KFC and I had, you know, the whole country for Popeyes and, you know, a couple thousand, a couple thousand units we make.

Ralph Bauer: 00:26:42

If I see something today that I don't like, we'll make a change by tomorrow, sometimes to a fault, but we're always, we're always trying to do what I, what I call deliver, and I love it here, experience to every guest.

Ralph Bauer: 00:26:58

And one of the other things that we did that was very, very powerful is, you know, I mentioned we got all that feedback from the guests and they told us what we needed to do and we redesigned.

Ralph Bauer: 00:27:09

In August of 17, we relaunched the brand and every single item on our menu was changed and every, every recipe by taking the advice of what guests and team members had told us, what folks were looking for.

Ralph Bauer: 00:27:27

And so people point to that as a point in time where we changed.

Ralph Bauer: 00:27:33

And we did.

Ralph Bauer: 00:27:33

ogle went from the low threes: 3132

Ralph Bauer: 00:27:45

Literally overnight, the week we launched the new menu, and we had to increase our prices by 30% in order to cover the extra food.

Ralph Bauer: 00:27:55

And so here we are, not making money, struggling really to survive, and we made the decision to change our menu and increase prices by 30%.

Ralph Bauer: 00:28:07

And that was, that was a point in time where things really changed for us as well, because actually, after we increased prices by 30%, improved our food quality, we reduced our price complaints by 90%.

Ralph Bauer: 00:28:23

So overnight, we divided price complaints down to 10%, even though the food was 30% more expensive because the guests were so happy with what they were getting.

Ralph Bauer: 00:28:35

But the other thing we launched at the same time as improvement in food was the idea of delivering an I love it here experience.

Ralph Bauer: 00:28:42

And where that came from is a guest.

Ralph Bauer: 00:28:45

A guest wrote a review at our highest Volume restaurant in Stanford and said they started off with the review and that said I love it here.

Ralph Bauer: 00:28:52

And they talked about why they.

Ralph Bauer: 00:28:54

Why they loved it there.

Ralph Bauer: 00:28:56

And I said to my team, you know, what would happen if every single guest who visited our restaurant would, when they left, would say, I love it here?

Ralph Bauer: 00:29:05

And within a week, we had torn up every mission and vision statement in the company, and we became obsessed with delivering an I love it here experience, you know, and our number one goal is to deliver and I love it here experience to every guest.

Ralph Bauer: 00:29:22

And that means food is so good that when the guest walks out the door, they say, I love it here and an experience so good.

Ralph Bauer: 00:29:29

So I'm in most of my restaurants today.

Ralph Bauer: 00:29:32

I encourage my team members to get out into the lobbies and give warm up cookies in the oven and give free cookies in the lobby.

Ralph Bauer: 00:29:40

And that's something that you wouldn't get at any other restaurant.

Ralph Bauer: 00:29:44

But in, in our restaurants, we try to be obsessive about delivering that I love it here experience.

Ralph Bauer: 00:29:51

And I don't tell people how to do that.

Ralph Bauer: 00:29:54

I ask in your mind, when you take your family to dinner, what does an I love it here experience look like to you?

Ralph Bauer: 00:30:02

What does it take for you to say I love it here?

Ralph Bauer: 00:30:04

And then that's all I ask is that they do their best to deliver what they think is an I love it here experience.

Ralph Bauer: 00:30:12

And you can ask any team member at any time what our number one goal is.

Ralph Bauer: 00:30:17

And everyone will say, deliver an I love it here experience to every guest.

Ralph Bauer: 00:30:21

And that's super powerful.

Ralph Bauer: 00:30:23

I learned this in the Navy, and I've learned it at every place in my restaurant career.

Ralph Bauer: 00:30:27

If everybody on the team is aligned with what you're trying to do, if they're all driving towards a common vision which for us has delivered that I love it here experience that's incredibly powerful.

Ralph Bauer: 00:30:39

I worked for some really big brands that had the most beautiful vision, vision, mission, and culture statements you've ever seen in your life.

Ralph Bauer: 00:30:49

But the, the folks in the restaurants had no idea what those were.

Ralph Bauer: 00:30:54

What I'm really proud of is at the melt, everybody knows that we're trying to deliver and I love it here experience.

Ralph Bauer: 00:31:02

And that's even more important than the fantastic food.

Ralph Bauer: 00:31:06

Yeah.

Ralph Bauer: 00:31:07

So you got to have.

Ralph Bauer: 00:31:09

Aligning your team around a common goal is extraordinarily important, whether it's the military, whether it's Domino's, Popeyes, Payway, or the Mount Incredible story.

Nick Portillo: 00:31:20

I mean, I feel like you could have, like, professional case studies about what you and your team and have been able to accomplish.

Nick Portillo: 00:31:28

I mean, to go from.

Nick Portillo: 00:31:29

You mentioned that one unit doing 20,000 a week up to 80, $90,000 a week.

Nick Portillo: 00:31:34

I mean, that's a massive transformation, especially in how fast you, you did or taking the risk that you took to, to redo the menu, to give away free cookies to, you know, to feed first responders and take on the debt and the cost that it took to be able to do that.

Nick Portillo: 00:31:50

I mean, just kudos to you and what you and your team have been able to build.

Nick Portillo: 00:31:54

That's truly impressive.

Nick Portillo: 00:31:57

What about looking into the future?

Nick Portillo: 00:31:59

You know, what are some things.

Nick Portillo: 00:32:00

Also, I love what you said too about trying to build.

Nick Portillo: 00:32:03

I love it here experience.

Nick Portillo: 00:32:05

I think a lot of times, like when I, when I talk to like my wife, right, when we go out to dinner, we go out to lunch or whatever, there are certain places that we go to more frequently than others.

Nick Portillo: 00:32:16

And I said, I tell her, like, what makes this place unique to us is like, it feels like it's our restaurant.

Nick Portillo: 00:32:23

And we do love coming here.

Nick Portillo: 00:32:25

We take like ownership in it.

Nick Portillo: 00:32:26

You know, we don't make any money.

Nick Portillo: 00:32:28

If anything, we're just giving them money to buy their food.

Nick Portillo: 00:32:30

But because they've curated such an experience that speaks to us as a patron, we continue to come back.

Nick Portillo: 00:32:38

I think too, going above and beyond.

Nick Portillo: 00:32:40

We had a not so good experience recently at a restaurant and, you know, the conversation, you know, she's like, should we write a review on Yelp?

Nick Portillo: 00:32:48

I said, no, no, you don't write a review on Yelp.

Nick Portillo: 00:32:50

Especially being in the industry, I'm not ever going to do that.

Nick Portillo: 00:32:52

But I said one thing that's a killer for restaurants is a lot of times people when they have a poor experience, they don't tell anybody about it.

Nick Portillo: 00:33:00

They just don't come back, you know, so creating an experience that's above and beyond that where they want to come back, they want to tell their friends, you know, it really does.

Nick Portillo: 00:33:08

I mean, you are proof of it in what you've just said over the last, you know, 30 minutes.

Ralph Bauer: 00:33:13

I think what's interesting is that when you look at I'm my first big job at Yum was I was in charge of consumer metrics at kfc.

Ralph Bauer: 00:33:25

And so I kind of have a background in consumer metrics and I'm really pretty OCD about reading guest feedback.

Ralph Bauer: 00:33:34

I get every, every Yelp Google review within a minute and I read every single one every day.

Ralph Bauer: 00:33:45

I have a call every morning at 9am with my district managers and we review our guest feedback from the previous day.

Ralph Bauer: 00:33:53

But you really, you really gotta be obsessed with that feedback.

Ralph Bauer: 00:34:01

Make corrections when you need to, but make sure that you celebrate those successes with your teams as well.

Ralph Bauer: 00:34:10

A lot of times in the restaurant business, we get excited about comp sales and profits and, but I focus on sales and profits.

Ralph Bauer: 00:34:22

One day, a period when the PNLs come out, I look at sales and profits.

Ralph Bauer: 00:34:28

That's what you did.

Ralph Bauer: 00:34:29

That's history.

Ralph Bauer: 00:34:30

That's what you did yesterday.

Ralph Bauer: 00:34:33

The best predictor of what you're going to do tomorrow is guest feedback.

Ralph Bauer: 00:34:39

So all of our bonus, the majority of our bonus is based around guest feedback.

Ralph Bauer: 00:34:45

Because I think that that's the best predictor.

Ralph Bauer: 00:34:48

A lot of times I'll have folks say to me, hey, my sales are great.

Ralph Bauer: 00:34:53

Why are we talking about speed of service and guest feedback?

Ralph Bauer: 00:34:57

I said, look, I'm happy that your sales and profits are great.

Ralph Bauer: 00:35:01

We're in business to make a profit and that's great.

Ralph Bauer: 00:35:04

But the best predictor of what you're going to do tomorrow is your guest feedback today.

Ralph Bauer: 00:35:08

And so the best, the, my best general managers are the ones that are the most obsessive about trying to think of new and innovative ways to deliver an I Love it here experience.

Ralph Bauer: 00:35:21

I give every single team member up to $100 to deliver an I Love it here experience to any guest.

Ralph Bauer: 00:35:29

So, and when I first did that, my, my managers were in a state of panic.

Ralph Bauer: 00:35:34

What, they can spend $100 without even talking to us.

Ralph Bauer: 00:35:37

I said, yes, any team member has up to $100 to spend to make any guest happy.

Ralph Bauer: 00:35:44

And we've had some really cool stories like we've, we've forgotten menu items and we put menu items, you know, in a new, like we'll put a milkshake in an Uber and send it out by itself.

Ralph Bauer: 00:36:00

And do you make any money on that?

Ralph Bauer: 00:36:01

No, you're, you're sending a six dollar milkshake on a $25 Uber.

Ralph Bauer: 00:36:06

But those are the kind of things where if, if all people care about is delivering I love it here, and they're not looking at trying to figure out profitability in the bottom line.

Ralph Bauer: 00:36:18

The profitability will come if you deliver that I love it here experience.

Ralph Bauer: 00:36:23

You know, our, our margins are fantastic, but our margins are fantastic because we're obsessed with deliver and I love it here.

Nick Portillo: 00:36:30

That's right.

Nick Portillo: 00:36:31

Yeah, you take care of the guests first and then they take care of your business.

Nick Portillo: 00:36:34

What about looking into the future, you know, for yourself there at the melt?

Nick Portillo: 00:36:38

What is something that you want to accomplish that you've not yet accomplished.

Ralph Bauer: 00:36:42

Yeah, I think that Today we're a 15 restaurant brand and only in the state of California.

Ralph Bauer: 00:36:51

We'll open two restaurants in Arizona in the next few months.

Ralph Bauer: 00:36:58

Paradise Valley will open in, in November, and then we'll open a restaurant in Tempe in January or February.

Ralph Bauer: 00:37:08

I, so I'd like to, I'd like to grow our brand.

Ralph Bauer: 00:37:11

I'd like to deliver, I love it here, to, you know, a lot more places in California and now kind of expanding other places in the West.

Ralph Bauer: 00:37:21

I'd really, you know, in the next five years, I'd like to get to 70 restaurants.

Ralph Bauer: 00:37:25

And we got a, we have a plan to get there.

Ralph Bauer: 00:37:28

I think that our number one challenge and the number one thing we talk about is how do we make sure that, that I love it here.

Ralph Bauer: 00:37:34

Culture is ingrained in these new restaurants because that's what's going to determine our success.

Ralph Bauer: 00:37:42

So you can't grow.

Ralph Bauer: 00:37:43

We've all seen the lots of brands that are super successful when they have lots of more than or less than 20 restaurants.

Ralph Bauer: 00:37:51

And then when they start growing, they lose that special something.

Ralph Bauer: 00:37:56

And so while I'd like to be at 70 restaurants in the next five years, we're only going to grow as fast as I'm confident we can deliver.

Ralph Bauer: 00:38:04

I love it here.

Ralph Bauer: 00:38:05

If we start growing faster than what we can deliver, I love it here, then we, we won't be successful.

Ralph Bauer: 00:38:12

So, you know, I just, I'd love to build, build this brand.

Ralph Bauer: 00:38:17

And if you told me five years ago that we'd have average unit volumes of 3.5 in a very scholarly way, I would have told you that that's just not possible.

Ralph Bauer: 00:38:28

That our facilities can't do that much, our equipment can't do that much.

Ralph Bauer: 00:38:32

Our point of sale would never be able to do that much.

Ralph Bauer: 00:38:35

That, that's just not a reasonable expectation.

Ralph Bauer: 00:38:38

And I was wrong about that too.

Ralph Bauer: 00:38:42

You know, I have, I remember.

Ralph Bauer: 00:38:44

So my highest, my highest volume restaurant will do 6 million this year.

Ralph Bauer: 00:38:49

They just crossed the $5 million threshold and five years ago they hit 2 million and today they're going to do 6.

Ralph Bauer: 00:38:59

So if you believe in your team and then you're focused on delivering, I love it here.

Ralph Bauer: 00:39:04

You can do things that you might think are impossible.

Nick Portillo: 00:39:08

Yeah.

Nick Portillo: 00:39:09

Well, Ralph, this has been incredible.

Nick Portillo: 00:39:12

I mean, you left so many great nuggets and learnings.

Nick Portillo: 00:39:15

So thank you for sharing those and really excited for what you and your team have and are continuing to build and, you know, just excited for you.

Nick Portillo: 00:39:24

And again, thank you so much for sharing and being very open about, you know, how you got here, you know, with kind of the inputs and what it took and all of those different things, like, you were really open and shared.

Nick Portillo: 00:39:35

So I.

Nick Portillo: 00:39:36

I think, one, I say thank you.

Nick Portillo: 00:39:38

And those listening along, I'm sure, are very thankful as well.

Nick Portillo: 00:39:41

So thank you, Ralph.

Ralph Bauer: 00:39:42

Yep.

Ralph Bauer: 00:39:43

You're welcome.

Ralph Bauer: 00:39:43

It's been fun.