Ashish Tulsian: Hi, welcome to Restrocast. Today my guest is David Bloom. He’s the chief development and operating officer at Capriotti and Wing Zone. David is a 40 years of experience and wisdom rolling live. This conversation, apart from all the integrities and mechanics of the restaurant space is going to be more about importance of working with people that inspire you, The importance of doing good work that compounds importance of mentors and how to get mentored in life. I came out of this conversation much richer, and I’m sure you will do. David, welcome to Restrocast. Thanks for. Thanks for doing this. 

David Bloom: Thanks for having me. I appreciate it. This is a lot of fun. 

Ashish Tulsian: David, you know, the kind of rich journey that you have had so far and going. There are there are too many things. I have a list of things that I want to know and talk about in detail. But we would like to start from the start where it all started and especially the fact that you are from hospitality or restaurant industry, from your education as well. So. 

David Bloom: Yeah, I kind of grow up in the business, started in New York, New York City, and my brother is still an executive chef today and my sister was a pastry chef and we all kind of grew up in the restaurant business. And why I like it was because. One of my sisters got a job and then we all kind of followed and it happened to be a really successful chain of, you know, well-known restaurants in that area, high end. And candidly, I came from, you know, very, very kind of blue collar background and just really early on discovered an opportunity where I could excel, I could work hard. And I was always really fortunate to work around work for people that were just that they were just great, you know, an outstanding and taught me how to work hard, you know, and really just gave me opportunities and have spent the last 40 or 50 years trying to take advantage of those opportunities. But I would say along the way, it’s always involved somebody or some group of people that believed in me, gave me a chance, taught me, mentored me, coached me. And that really has that’s continued on through today. That’s probably the the common thread, I think throughout my career is having the opportunity to be around, work with, work for whatever you want to call it as great people and learning and growing and getting challenged and hopefully, you know, doing some things right along the way and kind of going from there.

Ashish Tulsian: So what was the education?

David Bloom: So I, I will say I really spent the first probably five or six years of my life trying to get out of the restaurant industry. I was like working 100 hours a week, you know, that kind of thing in high school, even just working, you know, nonstop. And I just thought, this is too hard. And so I went and got an associates degree in marketing in New York and couldn’t really figure out what I wanted to do. And then turned around and said, you know, I’m actually good at this, what I’m doing. I’m actually pretty good at. So I came out to Vegas. You and Ivy had never really, ever been outside in New York. So I drove across the country and arrived in Vegas. And this is 35, 40 years ago. And it was kind of a dust bowl and pretty ugly. And I was like, this is the ugliest place I’ve ever seen. But I figured I could pay cash for college. I could make enough money working and pay for school.

Ashish Tulsian: Why would you crossing over from New York to here?

David Bloom: I actually applied to Cornell, which had the best hospitality program in the country, but didn’t get in. And Vegas, I got in and again, I figured I could make enough money. And that turned out to be true. I was able to work in the industry and pay cash for college. And, you know, it turned out to be a great education. You know, I thought New York was fast. And people always say, you know, it’s the city that never sleeps. Vegas is really the city that never sleeps. And so I got as much of an education probably on the strip, working in, you know, the hotels and nightclubs and as I did in the classroom. It’s interesting because today we live in Vegas. We’re based here in Vegas. And I speak to you and every once in a while and we teach some classes and do like a shark tank thing over there. So it’s fun. Fun to go back. 

Ashish Tulsian: Yeah, I’m actually visiting tomorrow. 

David Bloom: Oh cool. Have a great hospitality school over there. And they’ve got a great program. I think it’s one of the best.

Ashish Tulsian: Yeah, one of the professors, you know, called us to. To visit also, you know, to look at students for, you know, hiring next year. Yeah, they’re excited. 

David Bloom: They’re great. They have a really good innovation school for their technology. And we’re starting to do some things with them a little deeper. And it’s a great resource. But Vegas is a very small town. You know, it’s billions of dollars floating around, but everybody kind of knows each other. And so, you know, by living here, we’re the only national brands that I know of in the restaurant space that are based here. So we have a unique position here. 

Ashish Tulsian: So. So after your education here.

David Bloom: I went to work for Brinker when he was starting Steak and Al and Bennigan’s, and I was just trying to get as much responsibility and as much authority and what an opportunity as I could, you know, early on. And Brinker put me through their management training program and really taught me how to run restaurants, how to run a panel and how to, you know, kind of it was during the sort of the early days of national brands expanding. So I got to run restaurants, you know, multi-day million dollar operations.

Ashish Tulsian: So that was the first job.

David Bloom: That was my first job out of college. And, you know, just gave me a tremendous amount of learning and growth. And that, again, I got to work for Norman Brinker 

I was like, literally, I think if you look at one point in time, even today, a high percentage of the restaurant industry is run by ex Brinker Guys. He was just an incredible guy, an incredible mentor. So I worked for them for a while and then I went to the hotel side of food and beverage for a company based out of London called the rank Organization. They owned Hard Rock and Universal Studios and some. So I got to do my own concepts for a while, which I always wanted to, you know, just do my own thing, you know? So I got to do that. Moved around the country.

My wife and I were always the guy. Like wherever the opportunity is, we’re there. So we moved like 18 times or something like,, So my wife’s a saint. And, you know, she put up with ridiculous amounts of things. And then I moved to Denver to take over a hotel with this company, and I got introduced to a company called Quiznos Subs and Quiznos was 18 restaurants in Denver, Colorado. That was it. And some partners.

Ashish Tulsian: All of Quiznos or.

David Bloom: That was it. Yeah, there were only 18 restaurants in Denver. That was it. And so my partners and I opened the first restaurants outside of Denver and outside of Colorado and became big directors, and opened a few hundred stores and.

Ashish Tulsian: Sorry you took the franchise or. 

David Bloom: While we were franchisees. So that’s how I started in franchising. And then we became area directors where we own the development rights for Southern Colorado, North Texas and Louisiana and did a few hundred restaurants and then went out, bought a fast casual Asian concept ourselves. We bought the company, spent a couple of years doing that, and it failed. Lost a couple of million bucks, which hurt. But about that time. But we still, you know, owned and operated our Quiznos business. And Quiznos thought there was another level to their growth. So they put together a few guys like myself, and we built this accelerated development program. And we got to the point where we were opening just about 1000 restaurants a year until we got to 5000 restaurants and 20.

Ashish Tulsian: Straight for five years. You were doing it.

David Bloom:  I did that for 18 years. Oh, from the start the franchisee to the time the company sold in 2006 to Jp morgan. It was an 18 year run. So that’s really where I learned how to scale brands and an accelerated pace. That’s really where I learned what strategy meant, like how to be strategic, made lots of mistakes and you know, how to really crazy learning curve. But that’s really where I and I work with incredible people, work for incredible people. Many I’m still friends with today.

Ashish Tulsian: So what does that 18 year journey like? You know, what were you doing and what you know, what kind of growth Quiznos were going through? What was going through?

David Bloom: Yeah, you know, I was. And I. Would say that, you know, it’s interesting.

Very few people make that ride to go from, you know, basically 18 restaurants to 5000 restaurants where there’s not a lot of people that just take that journey. Right? Like people are there for different early phase, mid phase, you know, corporate phase. But, you know, so I was really fortunate to be able to stay there that whole time and be a part of that and get to work for

some just really smart people and get exposed to private equity world, you know, and get exposed to people, you know, the brightest MBAs that we bring in to try and crack the code, you know, build algorithms and crack, you know, site dynamic or predictive indexing today, you know, things that are common today we were trying to do earlier on, it was just an incredible experience. But I would also say I don’t want to. I would not want to do that again. Again, we moved many times and we moved up to Canada to run development in Canada. We built 500 restaurants up there. It was just a great opportunity and I’m very thankful for the…

Ashish Tulsian: I think, part of my ignorance. I always thought that Quiznos was Canadian. 

David Bloom: No, no.

Ashish Tulsian: I mean, it was yeah, I was I was I was dreading asking that question because I’m supposed to be, you know, I should know about restaurant Industrial a little better because I need to sell to them. But then. You know, 

David Bloom: I was based in Denver. We had an office in Toronto. Our Canadian office was in Toronto. So my wife and I again moved up there to take over development and run things up there for a couple of years and had a great experience. We did, and we took Quiznos into Quebec, so it was one of the first non-English speaking markets Quiznos had gone into.

So I got to learn how to do that and it became the number one market in North America, which was great, and again worked with some great people who I’m still friends with today.

Ashish Tulsian: So these 5000 restaurants were in North America or they.

David Bloom: They were in 28 countries. The majority were here in North America. But I mean, I wasn’t really early on that involved the international side of things because there were more master development partners So I wasn’t all that involved in that growing international market. I really was deep into Canada. Yeah. But again, it was just a you know, I’d say again, another common thread for me is always kind of being over my head a little bit.

You know, when I first went and opened my own concept so that I had never done that before,

I moved to a resort in South Carolina, and within a year we were building what it has today is a 1400 room resort property with, you know, professional sports and tennis. I had never even I had never even been around a pool before. And I was designing pool bars and entertainment centers and nightclubs and, you know, a huge catering operation. And I just: you know, I kind of always had enough ego, frankly, to say, oh, I can do that. I know how to do that. Even though I really didn’t know how to do that, I would just figure it out.

Ashish Tulsian: I heard somebody said, with God’s grace and my mother’s overconfidence, I can do this.

David Bloom: That is really good. But I never I never actually was self-aware enough to realize that. I just yeah, I could do that. I’ll go figure that out. And then a lot of sleepless, sweating, waking up in the middle of the night, sweating, you know, like, just scared to death, you know, a lot of those nights. And I continue to have those, frankly.

Ashish Tulsian: Yeah, I think that that’s your that’s your growth.

David Bloom: But yeah, I mean, I just you know, so I did that with Quiznos and then I started my own companies a couple of times and more. What consulting business is helping other people grow and partnering and, you know, forming subsidiaries and sometimes it worked and sometimes it didn’t. And I got to spend some time outside of the restaurant industry. I grew I worked with a company called Clockwork Home Services. There were a couple of billion dollars and, you know, heating and air conditioning, plumbing, electric brands. And so that was really interesting.

Ashish Tulsian: Facility management management or 

David Bloom: No all residential services. That company got sold to Direct Energy of Canada. So that was just a really interesting time to learn that industry. I moved to Kenya to take over an education company that became the fastest growing education company. In the world. 

Ashish Tulsian: I saw that and that was a that is a for profit social enterprise.

David Bloom:  Yeah, exactly. My wife and I have always been, you know, pretty invested in missions, work in ministry, building orphanages  and schools and things like that around the world, especially for kids. That’s kind of where my heart’s out. And so this was an opportunity to mix my passion with my really, you know, my skill set and help a company scale using a franchise model. They’re all company owned and operated. But, you know, doing work over in Kenya, you know, initially just in Africa, today, it’s that kind of global. And then big investors coming on Gates and Zuckerberg and all those guys kind of came on and made investments. So I was only there for a little while. But that was a huge learning curve.

Ashish Tulsian: Of what kind? Like what? What, why, why do you take that up? Like, was it the social work piece or was it the opportunity to scale, you know, something? And Africa is wild, figuratively and literally. So… 

David Bloom: Yes,I again, I’ve always been drawn to opportunities and challenges that I think are really interesting where I think I can make a significant difference. I want to be I want to be part of a team. I’ve learned that being on a team is really important for me. I’m not the visionary CEO kind of guy. I’m more the, you know, I’m more a team member that just wants to contribute in a really substantial way. And so I kind of found that, you know, I’m I gravitate towards the group as the people as much as the challenge, the business. And that’s one thing

I’ve definitely learned, like who you work with is more important than what you do. And Yeah, I’ve learned that lesson the hard way a few times.

Ashish Tulsian: I honestly I carry that lesson, you know, almost for all stakeholders in the business. I include my customers in that. I mean, I learned the hard way that, like, you don’t want to work with, you know, partners, colleagues who don’t. I’m not at your frequency, but you don’t want to deal with vendors as well as customers. So because you you know, it’s not going to be prosperous at the end of the day for anyone in the equation.

David Bloom: We call it today, we call it values alignment, where I like to work with people whose values align with yours. That’s, I think, the fancy way of saying it. But the reality is this work with people that you know what I think of it when the phone rings, if I see your name, I want to answer it. That’s good. If the phone rings, I see your name like, Oh, can I don’t want to have to talk to this guy. That’s not good. Yeah. So that’s a good test. That’s my litmus test for are we aligned. Right. So I got to do that. Came back to the States. I worked with a couple of different companies, ran some companies and again some different verticals.

I was in the shared office space for a little while back when we work was growing. This was a franchise model of how we work and. That, you know, it’s alright.

Ashish Tulsian: You work with a company.

David Bloom: I was, I was see our president, I don’t remember what I was. I might have been president of our company. This one called Office Evolution. Office Evolution.

If I, if I was CEO or not. President Forgive me, I have trouble remembering. Yeah. So my titles.

But a good friend of mine, David Barr, who I had worked with back at Famous Brands International, he was chairman of the board and famous brands on Tubi and Mrs. Fields had about 900 locations in about 33 countries. I’d work for him there. He invested in Capri Ortiz, and that’s kind of how I ended up at Capri Ortiz about six years ago. And then we acquired Wings Down about two and a half years ago. I’ve kind of been working on that ever since.

Ashish Tulsian: So what happened between Quiznos and Capriati is why did you like your staying away from anything, restaurant or anything? Food service?

David Bloom: Again, I’ve always been more drawn to like a really interesting, maybe some entrepreneurial challenge versus, Hey, I know how to do this. I can just do this and make money at it. You know, financial rewards are important to me, but the opportunity to grow and really maximize what I believe to be my potential, like in my own head, doesn’t matter what anybody else things. Like, that’s my goal in life. I want to finish life saying I did the best with what I what I had I what I knew I was capable of certain things and I went for it versus looking back and saying, you know, I played it safe. I retired early and I went fishing. That’s just not interesting to me. So I think probably a function of being a little late, you know, maybe added a little bit. You know, I really like the entrepreneurial side of things. I really like collaborating as part of the team. I really like doing things that other people may be can’t do Find difficult, or, you know, again, I won’t tell you that I’ve managed my career particularly well because I don’t actually think I have. But I’m glad I took on those challenges. I’m glad I look back and go, Yeah, I did that. I was able to, you know, experience in that be a part of that and work for some people that are just, you know, were incredible. You know some of the smartest people I’ve ever worked with and some great mentors and you know, that’s so looking back on the journey, I’m really thankful for it. And as I look forward to where we’re going and again, the people I work with and for, I’m really appreciative of that too.

Ashish Tulsian: So what’s up with capabilities and and brings on what you’re doing here?

David Bloom: So Capriati is today we’ve got about 175 open, 180 with about 300 and development out and just starting international for the first time going into India and then wings on we acquired two and a half years ago. There were 70 restaurants, half domestic and half International, and then it was during COVID. So the international business was completely shut down. And we. Are 20 of them are in Dubai. And not none in Dubai, you know, just Asia going into India. Wind Zone So we’ve added almost 200 stores to the development pipeline and will open about 25 domestically and about 20 internationally this year. So it’s kind of off to the races as well. And so both brands are at that inflection point, you know, where we’re really starting to grow exponentially, which is a really fun time. And, you know, we’re just working on our chief technology officer about to bring on the chief restaurant officer. So kind of leveling up our executive team and bringing out some new advertising agencies, really top notch agencies. So that’s a really fun period to me where.

Ashish Tulsian: I think you were you were mentioning this unlimited out of DC that that couple of you know. Yeah. Four hires are, you know, joining.

David Bloom: Our chief technology guy I actually was the CIO for MGM International so he’s you know worked globally and for 30 years or. Yeah he’s here you know he’s at the conference. That I ahead of the government guy named Scott and he’s awesome and I’m so really excited to work with him and our chief restaurant officer. We haven’t announced publicly yet, so I’ll wait but he’s.

Ashish Tulsian: What is a Chief Restaurant Officer?

David Bloom: It’s interesting. So a few years ago I was at restaurant leadership in Scottsdale and I got to play golf with a guy named Scott. Can’t remember his last name, but he was the chief restaurant officer for triple-A Scott Bowl. Right. And first of all, I think up over it’s an incredibly talented guy. You ever have a chance to talk to him? Super smart. But I had never heard of a chief restaurant officer before. So after 18 holes of golf, I’m like, That’s what we need. We need a guy just like that, somebody that just wakes up every day and is incredibly strategic, but also just deep into running great restaurants, great operations, great training, just as hands on. Today I serve still today. I’m the chief development and chief operating officer for both brands. And frankly, I do a pretty weak job on the operations side in particular.So I’m really excited to be getting a chief restaurant officer that’s going to come in and have a huge impact on our franchise partners, our company operations And really just. 

Ashish Tulsian: So he’s the chief restaurant officer, are you replacing that CEO or with that? Yeah, CEOs often oversee things like supply chain and other, you know, sort of peripheral. Chief restaurant officer tends to just focus on operations and training. That’s it be really kind of hyper focused on that, which obviously is very collaborative with marketing and I.T and everything else. Supply chain 

Ashish Tulsian: So you are saying the CEO still remains.

David Bloom: I will no longer be the CEO.That’s okay. But the role remains. No, no, we will not have a CEO and will only have a CRO, CDO and CTO. So it’s, it’s just probably a little more focused than a CEO. 

Ashish Tulsian: So who’s who looks at supply chain though.

David Bloom: The President. Yeah. We have a president and CEO, so very kind of split things between them in terms of finance and supply chain and marketing. Mm hmm. Yeah. So I’m excited. I think it’s going to be really impactful for the brands. 

Ashish Tulsian:    You know, priorities, given that international development is something that you’re seeing 300 and development a gap to the right.

David Bloom: And I don’t I actually don’t include international pipeline.  And when I say 300, that’s just domestic. Above that, we have probably another 100 international in development. 

Ashish Tulsian: Right. Okay. And this is about international development is really about finding the right partners in different countries or 

David Bloom: 100%. 100%. Because really, you know, like, you know, you know quite well operating in India or any place China, Southeast Asia, Malaysia, Latin America is completely different. Right. Aside from the local flavors and tastes, the supply chain, the IT and the marketing and really the companies we work with have to be connected from a political standpoint. They have to be certainly financially strong. So my philosophy on international development is don’t go anywhere until you have the right partner like people always say, where, where do you want to go? I’m like, I want to go where we can go when we have the right partner. And I think of the states the same way, but internationally it’s even more important. So we’re fortunate to get a great group come along from India that’s doing both enterprise and wings on there. Outstanding. Otherwise I wouldn’t be going there. 

Ashish Tulsian: But you know, I mean, getting the right partners is a great point.I think that that makes all the difference. But going international also means that you need to, you know, figure out if your food palate, you know, if there’s already a created built market, you know, in that region. And I see brands failing in foreign lands all the time, not because the product was bad either.They did not really, you know, go and customize it to the palate or even for the worse, for example, because you’re talking about India. None of the Mexican brands have done well in India. And Taco Bell, they, you know, accelerated last couple of years. That had fabulous last year. But then they also are running into problems with Tier two cities where they felt that they will pick as they like sales would pick up. But the problem is not with the taco Problems. People don’t know what to taco. Right. Right. It’s not on the list of the menu items that they think about having for lunch or dinner. Right. So what about that? 

David Bloom: Yeah, there are definitely like when I think about it, there are companies where sandwiches are common and people are used to eating sandwiches. They might call them tortas or bond me or something else, but they’re sandwiches. And there are,there are countries that don’t eat sandwiches, right. Or don’t eat cold food. Yep. Right. And there are countries where chicken is really big in demand. So, number one, I think you know, there’s just a clear Capriati that is where the largest restaurant buyer in the world of Butterball turkeys. We roast whole turkeys in- house every night so we’re known for our turkey sandwiches. We also have great cheesesteaks and other stuff. But our roast beef is Snake River farms, American Wagyu roast beef. It’s the best beef you can buy. But for instance, when you go to India, right, you’re not going to beef on the menu. Right. But Turkey is going to be a product that is really thought of as a premium product in India. So where, you know, when you look at like consumption of certain products by country, you know, firsthand like Turkey and, you know, Mexico, Canada, different countries consume a lot of Turkey already. So if that’s the case, then getting adoption there is going to be a whole lot easier than trying to teach people to eat something else. And chickens, you know, I would say probably the easiest one on a global basis. But then you also start to customize for the flavor profiles, right? Like, yeah, so it’s a lot of work and I think people think it’s just an easy way to, you know, to expand their, their footprint then it’s just the opposite. So it is a lot of work and it does take, you know, the right partners. And I think we’re really we’re fortunate to have some great people to work with. 

Ashish Tulsian: On the brands. And I think there’s another aspect of this expansion through franchising international domestic doesn’t matter, which is I mean, this is an area of interest for me. Given that at Restroworks, we look at brands all the time and we see that some of the brands are extremely franchisable if that’s even a word, or and have done extremely well in franchising, in recruiting partners and in building business, which is, you know, which is which is actually meaningful for everyone. And then there are so many brands which are great food, great concepts done to perfection at a store level. And fail miserably as soon as they even, like, step out for franchising. What’s that? 

David Bloom: There’s a couple of reasons. I think. First of all, running restaurants or running any business is a very different skill set than franchising and growing your business they are totally different. So I see franchisees all the time that I’d be like have been a franchisee of whatever brand. I owned 50 of them. So now I’m going to get I’m going to become a franchise or I’m going to go out and buy this company and try and grow it. And they very rarely do they succeed because there’s a completely different skill set on how to grow and scale a business than it is how to operate that business day in and day out and be great at it. So I think number one, skill sets differ. Number two, there’s just some kind of rules of the road you got to follow. And if those things are if those parameters are not in place, then franchising. You may have a great business that people love. But it may not be scalable. In our franchise, you got to have really good unit economics. There’s kind of some ratios you want to stay within the 2 to 1 or 3 to 1 CapEx to, you know, to revenue. 

Ashish Tulsian:    Can you talk about that a little more? 

David Bloom: Yeah. You always want to be as close to 3 to 1 as you can. So if your cost is 500 grand to open, that starts to do a million and a half. And if all the other expenses within the restaurant industry are kind of within norms, then you’re probably going to get a good return on that investment. Call it 30%. 

Ashish Tulsian: So you’re saying that if if you if it takes 500 grands to open, you should be doing a million and a half annually.

David Bloom: Yeah, that’s the sweet spot. Right. 

Ashish Tulsian: So, so what’s the payback period? 

David Bloom: So if you figure out a million and a half, you’ve got maybe a 20% profit margin. You’re going to get paid back in about two and a half to three years and that.. That’s why you’ve just figured 30, 33% ROI. That’s very attractive. You know, I say the threshold is like 2 to 1. The closer you are to two and a half to one, the better. And if you ever get to 3 to 1, that’s sort of nirvana. So we call that box unit economics or box economics. And that rule of thumb when I see it broken kills chance though, like we’ve got to build these flagship restaurants and they’re beautiful. I’m like, Yeah, but you know, at the end of the day it’s a business, right? And if you don’t have good returns on investment in that business, you’re on shaky ground. 

Ashish Tulsian: But, you know, I mean, today that’s our industry is, I don’t know, I should say, struggling. Yeah, I use the word struggling with having the 20% margin as well because there are too many people biting into that percentage. What’s the rule now that?

David Bloom: Rules haven’t changed? Rules probably not going to change. So when you have to do what you have to do today is create margin and figure out how to create margin and that actually benefits larger operators. So if you’re a mom and pop and you go to GrubHub or DoorDash or Ubereats or any of these guys, your rate might be 25, 30%. Whereas if we got to them, we’re going to negotiate a much more aggressive rate or we’re going to get a lot of marketing, you know, cooperative type of things. And so I would say particularly for the smaller mom and pop operators, it’s becoming much more difficult to maintain margin. It’s becoming technically really complex, like, you know, how to integrate with all these delivery aggregators and all these third parties and like how to get all your technologies to speak to each other. It’s just becoming is, you know, I’d say a restaurant company today is probably 30 or 40% a technology company. And so yeah, the demands and the skill sets have really changed. But if you can crack the code and if you have a great team and a great brand, there’s you know. 

Ashish Tulsian: I think in the franchising business, I will still, you know, fully back to that. I don’t really see and, you know, help me in case I’m seeing it wrong. I don’t really see that 20% net return given that there is a DSP, there’s delivery fee, there’s kind of this packaging fee and you know, and then a lot of other other things. I mean. 

David Bloom: Let’s take, let’s pass that a little bit. So like the DSP fee we learned or so we adopted the delivery aggregators very early on, we started virtual brands where we did national deals with all the major ghost kitchen providers. And so we were in that space really, really early and figured out how to make the right money in that space ourselves first before we shared it with the franchisees. And whether that means pricing differently on the platforms or adding technology fees or cutting national deals and renegotiating those deals every year, I mean, it’s kind of a combination of things. So you’re right in terms of the pressures that have continued, but for people that are smart, that are growing because those are the people that those guys want to work with, right? That’s where their future lies in growth there. There’s a strategic advantage. And just like COVID, I would say, you know, killed a lot of businesses that actually advantaged some businesses. We, you know, throughout COVID had record revenues, record growth and profitability because we were advantaged, whereas, you know, certainly other restaurant companies in particular, I’d say more like full service companies especially, you know, they were hurt. Yeah, they were hurt substantially. Or companies that had no knowledge on how to integrate. Everybody is using the word pivot, you know. And I was like, if you have to pivot in the midst of a pandemic, that’s going to be tough, right? And so by investing in innovation early on and maybe not being on the bleeding edge, but always being on the forward edge of this and learning early, we always learn again in our and our company’s own shops first. That’s actually one point. You know, I have this argument sometimes franchisors will say we only franchised that’s it. We don’t own and operate and we believe we have to own and operate enough of our own concepts to be really good at it, to understand how to do it, to feel the same things. So if margins is deteriorating a little bit, we want to feel it first. We feel it may be the most. By being owning enough, we’re going to it’s going to hurt us first, but it’s also where we test all of our innovation, our technology, our products, training programs, our platform. 

Ashish Tulsian: How do you stay ahead of that, that piece? Does it mean that in every region and know I’m just stretching this a little bit in every region you’re going to have in store?

David Bloom: No, no, no. We so what we do is we test them in our stores, which we tend to keep them close to home because we want to be around them. So we’re always going to do it close to home. And then we have a really active franchise advisory council that often wants to kind of be the next in line on those tests. And a lot of those guys are multi-unit operators of multiple brands. They might own campuses and Taco Bell’s and Capriati is or where you zone or haircutting places or whatever, they own a bunch of stuff. And so they also bring technology and learnings from their other brands to us and say, hey, you know, we’re doing this over here. You guys might want to take a look at it. So, you know, coming from a technology company, you know, you guys that fail forward fast, you know, paradigm is really kind of reality in the restaurant space today. And I think companies that are agile and good at it are probably going to be advantage number two because we’re really deep in it and we understand it. We’re really good partners for the technology companies because they need operators like ourselves to help figure it out. Right? So when it comes to all the beta testing and early on we were there it was all we did a lot of the baby testing for Rails. You know, we’re good partners with technology companies. And then lastly, I’d say picking the right partner for us, picking the right people to work with over time is absolutely critical because we’re not we’re not inventing robotics, right? We’re not in the back of the house, you know, figuring out how to, you know, how to automate, you know, cooking your chicken, but cooking a chicken can definitely be automated, right? So like figuring out who to partner with to get that robotic system. And, you know, we’ve been in the robotics space for years now and we’re still, kindly, a ways away from it. So again, being early on, learning, understanding you’re going to fail. And as long as you, you know, just keep moving forward and learning by the time it becomes the norm and we can take advantage of the opportunities to bring more margin back in. Like when robots hit, right, there’s going to be probably 8 to 10 points that are added to the bottom line of every restaurant operator if they know how to do it. But it’s not just understanding how to work the robot or the automation. All of your supply chain may have to be adjusted to work in this new environment. Right? So you’re designing construction footprint, everything, every part of your operation you’re training, everything has to be, you know, kind of built around. This is where we’re heading and this is what our road map looks like. And I just think that’s that’s not not everybody is able to do that. 

Ashish Tulsian: How do you look at I mean, you’re talking about improving the margins. I agree with you, you know, all the places where as a brand when you’re negotiating, you know, margins, when you’re looking at margin profile at each you know, each spot in the in the chain, you know, you can probably add a few more points for everyone. Now, there is this ghost kitchen model, which is and you talked about being formless in a way that it’s not only stores, it’s a ghost kitchen, it’s, you know, kitchen and kitchen and and so on. I see that more and more number of players are getting added to this chain where somebody saying, first there’s the first, there’s the brand, then then there is a franchisee and then there is a kitchen operator and then there is a franchisee inside of kitchen. And then there is there’s somebody who is saying, Oh, I’m going to also market you because I’m a ghost kitchen operator, or somebody saying, Well, I’m just going to rent out the kitchen for you. I’m a vehicle kitchen. And how many people are going to bite into this by? And I at times fail to even understand. And then, you know, with due respect, there are times when, you know, some of these cloud kitchen operators, etc. They come to us for technology and I keep scratching my head that, you know, I understand what you’re trying to do, but I don’t know how long will it sustain and who will die first. Is it the brand, the franchisee you, the space kitchen space person? How are you looking at this and what’s happening? 

David Bloom: Here again, we were earlier on in that space and tested with all the major players cloud, kitchen, kitchen and reef have, you know, had at one point probably had 40 or 50 of them open and candidly, some did well, but a lot of them struggled and it depended upon who the host was. It depended upon the location, you know, early on, some of the ghost kitchens said it doesn’t matter where we are, we can be in some warehouse district and, you know, cheap rent and but I think, you know, ghost kitchen operators learn that location does matter. They needed a consumer facing piece so started opening up inside of grocery stores or Wal-Marts or places like that. So there be some built in traffic and and I think it’s still evolving, frankly. I think that there are players and there are places where it works and there’s places it doesn’t work. Right. So it’s one of those evolving deals. And for us, there’s the added piece of, well, if that’s a market where we really want to be, are we better having a brick and more mortar type location that’s going to do, you know, two or three times more revenue than a ghost kitchen? Or are we better off going in with a ghost kitchens kind of, you know, maybe lower occupancy costs or get us into the market faster or penetrate the market. It’s a balancing act and it’s still kind of working through. And then as you go to different countries, the dynamics change a lot. You know, we’re in countries where we have a lower labor model. The delivery fees are much lower. It seems to work a lot better. So I’m not sure the jury is, you know, fully, you know, in on this one. 

Ashish Tulsian: Mm hmm. But on the Ghost Kitchen piece, are you franchising over that or are you doing only company? You know, we franchised them again. We had some successes and some failures, some are related to the operator themselves, who the operators were, people that were really great at it and did a great job. They were incredibly successful people that were maybe more hands off or what have you. They were not as successful. So, you know, a lot of the same dynamics we see in any location, right? Like at the end of the day, the operator matters, the business owner matters, their franchisee matters. But I think it’s still early, frankly. I think it’s still evolving. And I have a number of friends that are CEOs of those companies and they’re really smart and they have they have some great partners that, you know, they brought along some not just capital partners, but huge partners that they brought along in the last few years. And so they’re figuring it out. And so I think it’s a piece it’s not going to you know, it’s not going to take over the restaurant industry, but it’s probably a piece going forward. And especially when you look at non-traditional locations like airports and universities and stadiums and hospitals and what have you, to have a ghost kitchen where you just, you know, order your food and have the food brought to the gate or to your seat or to your office, or you can go and pick it up out of order and just pull it out of a a cabinet, you know, a heated cabinet that in your and your daughter’s wedding and you can grab it while you’re running from gate to gate or from class to class and we’ve had robots delivering for us on campuses, you know. 

Ashish Tulsian: So did you try that a bit. What kind of robots are these little delivery robots?

David Bloom: We had yeah, yeah. We had robots in Georgia. Yeah. Which to me is not all that interesting. You know, I can. Right. But if you’re, you know, you test these things early to see where it’s going to go and figure it out. And that’s always the balancing act for us is how much how much of that testing do we take on at any given point? And if we’re going to do test drone deliveries or who to do it with and how to do it, and we’re in the middle of all of it. 

Ashish Tulsian: Technology, you’re a lot more tech. This question has less to do with more tech. This podcast is has nothing to do with more tech.But the fact that we are here one why are you here? What are you looking for? Like what? What is your expectation of more tech? And second part of this question: What do you see at least in the last 24 hours? That’s interesting. 

David Bloom: We’re here to have conversations and talk to people and try and figure out who’s the right group for us to partner with. Does anybody have the sort of the end all be all solution that we’re looking for for our particular needs? So again, it’s really about finding the right partners, number one. Number two, I think, you know, people like to attend these types of events or anything in the industry that figure, but very transactionally. They don’t walk away with what they’re looking for. Right? If you’re coming here to do deals, you know, you’re it’s probably a waste of time. I like to be really involved in the industry and get to know people over time and kind of figure out, well, who the winners are going to be. Right? There’s always going to be, you know, two or three people at the top, right? Like, who are they? And that you can usually tell over time, Right. I like the people, the companies that come and go from these types of conferences, any conference, and they’re there for a year or two and, you know, they go away or they get bought out or whatever, like it takes a little bit of time and right. So for me, it’s kind of more of an ongoing conversation than it is one. Hey, I’m going to go to there, find a solution to want, you know, I’m just going to, you know. A little bit problem today. I’m not going to solve problem today. I’m going to have more conversations, going to meet more people,see what’s going on, and talk to other people, see what they’re doing, what their solutions are. And we’re going to figure it out over time.And then eventually we’ll find the right partners and hopefully, you know, we’ll get where we want to go. But it’s never fast, never as fast as people think it is. And it’s like international development. If you just what you think is going to grow and pop up in a country, it’s going to solve all your problems. It’s not going to happen. It takes a long term investment of time and resources. So and what’s been interesting, did you see something that you that got your attention this time? Yeah, I think I think yeah. You know, the players that we think are going to be the winners are starting to emerge a little bit. We definitely are focused on operations, training, communications, you know, just streamlining all that as a franchise company to make it easier and more efficient to operate our restaurants, more, more dependable, more consistent, more scalable. So the players that are to do that and kind of bring all those skill sets together, whether through acquisition or development, are starting to emerge. So we’re starting to see some of that. But then again, there’s always people popping up, you know, especially in the technology space. You know, there’s a lot of young, smart people, right? 

Ashish Tulsian: What’s the cringe tech that you’re really tired of out there?  Like, don’t talk about that. What’s that? 

David Bloom: You know, that it’s not so much cringe that we’re in the fast casual space. Right? So there’s technology that just is not really game changing for us. Like robots delivering food to tables means nothing to me. Right? Like, that’s not meaningful to our guests. The one thing we have definitely discovered through all of our, you know, analytics and surveys, etc., is there’s things that customers like and they’re embracing and there’s things that they don’t like. And we’re finding that they’re very comfortable with technology that enhances their experience or streamlines that makes it easier to get online and order and or pay and do all that kind of stuff, track loyalty or whatever. But they still want to talk to somebody. Like if they walk into the restaurant and there’s just a bunch of kiosks sitting there, that’s not a great experience, right? Like it might be fine when they’re ordering online or they’re ordering them to go pick it up, but when they walk in the door, they want to talk to somebody so that you know how to or incorporate that human touch, whether it’s around apps or kiosks or robotics. Right. 

Ashish Tulsian: But but I see that, you know, you made a very important point, but I see that continuously, like the conversations are and I you know, that conversations are only about kiosks and we are a tech company, right? So it kind of honestly, I’ve been a restaurateur and I was a restaurateur before I was a restaurant tech company. And I actually still feel bad about QR code menus. My company also does that solution. But we don’t want to if I, if it was for me I would actually customers guys. 

David Bloom: Yeah. I think our approach is number one when it comes to all of this, whether it’s ghost kitchens or whatever, we have to be where the consumer wants us to be. We have to be omni channel, we have to be convenient. So sometimes I walk in and I want to talk to somebody and I want to ask, Hey, what can you tell me about this? What’s that flavor like? Whatever. Right? And sometimes I don’t want to talk to anybody. Sometimes I want to order and send my, you know, somebody in my family to go pick up. And sometimes I just want to brought to my door. Right. So giving the consumer the choice and it might even be the same consumer, just different occasions. Right. Like, so I think being omnichannel, being really convenient and making sure we’re attentive, whether we’re talking to them or if they’re on a kiosk or they’re ordering or, you know, on our app or, you know, one of the one of the aggregator apps, it doesn’t matter. It’s easy, it’s seamless, it’s convenient. It feels good. Right? Like, that’s why. But integrating all that is, you know, is that’s where the you know, that’s the tricky part. 

Ashish Tulsian: So that means voice AI is it something that you’re like you feel the same same. 

David Bloom: Yeah voice AI is an interesting one. So we’ve been testing voice AI particularly for phone ordering and what have you. It seems to work well when there’s somebody behind it, like listening to the conversation. And jumping in where they need to but just pure voice AI as is not there yet. 

Ashish Tulsian: So is it really saving time And I’m and I’m asking this both I think I think I have my you know greed here that as a tech company I keep wondering that is it a solution? We power a lot of voice AI companies with our menu and auto injection and etc.. And you know we don’t even want to jump in that. That’s especially field. But I do wonder what is the ROI of this assisted voice AI? Because everybody keeps telling me, oh, it’s 50% accurate. I’m like, That’s not quite accurate. 50% is not accurate. 

David Bloom: It’s got to get much more accurate. Number one, which I think, again, over time, over the next 3 to 5 years. But what’s the ROI today? Why is if. You’re operating a restaurant and it’s Friday night at 6:00, you and you’re in a fast casual space that’s heavy delivery. You can’t even have enough phone lines, you know, never mind, answer all those phones, never mind spend enough time with that customer. 

Ashish Tulsian: It’s just. Increasing the bandwidth of one bandwidth. 

David Bloom: And also all the official opportunities that come. If you’re if you can take your time and say, hey, would you like a drink or a soda, you know, cookies or chips or whatever with that, you know, get that extra $2 that the employee’s picking up the phone like, Hey, can you hold on for a minute? You know, hey, can you hold on for a minute? Bobby? So during peak periods in particular. What about the the error rate is still too high. 

Ashish Tulsian: Nobody has it increased the throughput for, you know, even by 5%? 

David Bloom: Yes, it definitely we again we you know, like on one place you can not have enough phone lines for a Friday night. But you know, that’s fair. That’s right. But but conversely, people are calling less and just using their, you know, their phone to directly place the order more. So, you know, I think voice has worked really well, particularly for drive throughs as well. 

Ashish Tulsian: Have you seen that? I don’t I don’t remember the name of the company. These guys have humanized kiosks. Have you seen that? That I you know what I mean? First time I heard about it. So hopefully we’re talking about the same company. Right. Which they have they have work from home staff on the kiosk. Right. 

David Bloom: So out of Toronto actually, 

Ashish Tulsian: I think. Yeah I think it’s because they have a call center in Pakistan and where you go to the kiosk and a guy on screen appears who’s sitting in a call center in Pakistan and who takes your order as a human while you’re still talking with the kiosk. 

David Bloom: Yeah. There’s a guy here in Vegas that has put them into his operation. 

Ashish Tulsian: Oh, wow. The first time I heard about it, I found it almost funny. I thought it was a joke. And then I was like, You know what? It’s not that bad idea. You just humanize the kiosk at one or one fifth. The cost, probably. 

David Bloom: Yeah. You know, And eventually holograms are going to be there, right? They’ll actually be somebody that looks like somebody. But isn’t somebody standing in front of you, you know? So I think that like with all these technologies, those early adopters, that that’s great. We tend to be an early adopter, but there is a difference in being on the bleeding edge versus the forward edge where we’re careful to try and stay on the forward edge and realizing that a lot of times, you know, the first to the door takes the arrows kind of speak. And so I don’t know, I think it’s super interesting, but I think like drones and everything else, it’s still a ways down the road. 

Ashish Tulsian: Mm hmm. Mm. Yeah, I was just talking to the CTO for a brand when I asked him about robots. You know, he was trying to probably just be nice and he said, Yeah, I mean, kids love it. So I was like, oh, that’s, that’s, that’s the that tells me more about how, you know, how far behind an evolution robots are, right? Doing the right thing. Yeah. Anything else? 

David Bloom: I don’t know. We’re pretty close to that too. I think leading players in the robotics space and have, you know, deals in place with both of them. 

Ashish Tulsian: And I think cooking robots are different. Okay, Yeah, I’m talking about cooking robots. I think robotics is doing phenomenal stuff. 

David Bloom: And miso is doing some really great stuff. Yeah, yeah, yeah. So those are but they’re still a ways away before they’re like, you know, some I think White Castle, believe it or not, is kind of been one of the pioneers in implementing robotics into their operations. And so there are some companies that are starting to scale it. We’re not quite there yet. We think it’s still got a long ways to go. But we also think like everything else, when the switch flips, it’s going to it’s going to flip fast. So if you haven’t been working on getting all your operations and supply chain and everything else you know in place and learned how to do it and adopt it and build it in or convert or retrofit, we haven’t figured all that out. There’s a chance you get left behind, right? So you’ve got to put in the work in advance so you don’t get left behind. Hmm. But I don’t know when that switch is going to flip, you know, whether it could be two years or three or five. 

Ashish Tulsian: One question that is bugging me and it was bugging me in between as well, and it’s just like hopping back. You you you’re consciously talking about choosing the right people, working with the right people personally or choosing the right partners. You know, in franchising how often and I’m assuming that that you end up you cannot choose the best always. Right. So how many times do you also have to, you know, fire partners if that’s that’s too harsh a word or you have to take a step back and say, hey, you know what, This is not working. What what’s that process like? 

David Bloom: Yeah, We find that when values misaligned, one of the two of us is going to self-select out pretty quickly, like somebody is going to raise their hand and say, I don’t like this. This doesn’t feel good, or I don’t like the way you guys first optically. Once that happens, make it quick. Like once you realize you’re misaligned, the biggest mistake you can make in business is not recognizing that and just cutting it off right there. And so I’ve learned how to just recognize that early on and be just clear about it and say, Hey, look, we’re not aligning like we’re heading in different places. I don’t think you’re happy. We’re not happy. 

Ashish Tulsian: Let’s look at the contracts and players doing that work. Somebody as an investor, it’s not that easy. Always How do you mean, I’m sure there are albatross around your neck on both sides, but like franchisees can feel that franchisees are going to feel that. How do you deal with that? 

David Bloom: A long time ago, if you have or if you have an issue you have an emergency you have a problem that you can solve by writing a check, then you don’t actually have a problem. You just have an expense. Yeah. So you’re better off. You know, it doesn’t get better over time. Gets worse. Yeah, right. So better off recognizing early on, you know, having candid, frank, genuine conversation. And usually if you approach it that way, generally speaking, you know, I think it goes pretty well. I think if you let it linger and you let it get worse and worse and worse, then you end up with this huge, you know, the big ball of, you know, that’s hard to unwind. So recognize it early, whether it’s an employee or a vendor or a franchise partner or what not, it doesn’t matter. I recognize it early and just address it and take care of it. And, you know, as long as you do so in a way that’s, you know, as win-win as you can be in that conversation right then it’s probably going to get resolved. Once it goes beyond that and the lawyers are involved, it’s too late. Yeah. 

Ashish Tulsian: The short term fix to the long term. 

David Bloom: Right. I pick up the property, like just pick up the phone and talk to somebody. Right. Like, I think that’s what people underestimate. If you just talk to somebody, a lot of times it’s easier to resolve versus shooting off a, you know, three page email with all the documentation. 

Ashish Tulsian: Oh, text is the worst way to fight. I was talking to somebody yesterday and somebody asked me this question like, and it is funny because, you know, the person also has me that do you always call or meet people when there’s a conflict? And said no whatsApp or text said absolutely not. And she asked me why. It’s not like I’m like, no, if there’s a conflict, you talk. Yeah. You know, face to face at or at least a call like there’s no other way. 

David Bloom: Yeah and and thankfully I think because of doing it that way we’ve had very, very few legal issues and it’s not that you know one of our board members, chairman of the board or the former attorney general state of Nevada. So it’s not like we don’t have good legal counsel. Our franchise attorneys, I think, are the best in the world. And so if it comes to that, fine. But it just has very rarely gone that far because you can usually talk through things and work through things. And as long as you’re willing to, you know, work it out in a way that’s reasonable, I find. 

Ashish Tulsian: It was a great one. David last but you know most important, you have been talking about mentors in your journey and you talked about that even to this day. Know the same the same journey continues where, you know, you have people who are these mentors and what has been your you know, what’s the what’s the mantra to get mentors? Because I think getting mentored is a skill itself. It is a skill in itself. And it’s not easy to get a mentor or take mentorship or, you know, have somebody to help you. Yeah. How did you navigate that? 

David Bloom: Our CEO, Ashley Morris, is actually substantially younger than me, but he’s a super bright guy, particularly in the areas of finance and real estate and entrepreneurialism is a real visionary. So I learned a lot from Ashley. Jason, our president is more of a data guy, has a degree in computer science and mathematics and MBA. So I tend to learn organization, you know, how to kind of think put things into, you know, a context understandable way and think through them. So those are two people on our board. David Bar is a prolific franchisee, one of the premier guys in the industry, past chairman of the RFA and involved with more companies and boards that I can name. David really leaned into. I mentioned Georgetown as chairman of the board where the legal mind, I think, and frankly the list could go on and on. I think the way you get great people to want to mentor you is you work really hard and you perform and you’re loyal to those people. And that makes people want to lean in to you, right? They’re like, Hey, I want you to be part of my ego system and I want to maximize your capabilities and your performance. And I know you’re everything I put into you. I’m going to get paid back, you know, maybe and tangibly. But so I think by you performing, you’re working hard, you committing. 

Ashish Tulsian: You being the giver on the table.

David Bloom: Just like somebody said to me as a compliment, kind of offhanded, I guess. But they said, David’s the guy you want to have in the foxhole with you,  like he’s the one. If you had to pick one guy to be in your foxhole, you want to him. And I, I think of that as kind of that’s how I approach business. I’m never the smartest guy in the room, Right? Like, I’m never the most, you know, strategic. I’m never the most technology oriented. But I will dig in. And when things get tough, I’m going to get gritty and I’m going to make sure we come out. We come out ahead. I’m never going to give up. And that’s a skill set, that intangible. I think that everybody wants to be part of their organization right. And really great people, you know, people that I got to work for, they can’t get enough of people like that. Right. But that’s what they always want more of. So by positioning yourself that way, you’re I think you maybe can set yourself up for that. Those mentorships and that coaching, what have you. Just making people want to invest more now. 

Ashish Tulsian: That last one is phenomenal because it might take away from that. I think I learned a lot of things about it. And one thing that I would like to mention is how I love that. How in your current mentors you actually talk about all the people who are who you’re working with and that ties back into your opening statement that you want to work with great people. So that is like a beautiful, you know, circle back, you know, to this conversation.

David Bloom: Yeah, I consider myself very fortunate to have the opportunity to have these conversations as I consider myself really fortunate and very thankful for them. And it’s the great part of what we do, right. Like we all work hard, but being able to meet and get to know and work with great people, that collaboration is really where the fun comes in. 

Ashish Tulsian: I can tell you, we, you know, I started a restaurant last because, you know, our team runs a podcast called FNB Talks, which is like, you know, a podcast where somebody will call you and ask you straight questions. What are you doing? What’s what’s what, what things are and when are you opening the next door? What’s it like? And it was a good question I mean, these are great interviews that the place you right and for me it was it was literally the definition was hey can I get what what is the best way to spend one and a half 2 hours with smart people or people who you know, who, you know, we look up to who have done stuff that we are, you know, trying to get ourselves exposed to in that setting. But they’re not looking at their phones. How can I bring that down and say, hey, talk to me, look at me. So, I’m glad I’m, you know, mission accomplished. 

David Bloom: Thank you. Appreciate it. 

Ashish Tulsian: Thank you, David. 

David Bloom: Thank you. Sir. 

Ashish Tulsian: It was great having you on Restrocast. 

David Bloom: Thank you. I appreciate it.