#383 - Hunter Pond - Founder @ Vandelay Hospitality Group - The Hottest Restaurateur in America

Chris Powers: Hunter, welcome to the show. 

Hunter Pond: So glad to be here. 

Chris Powers: I am so glad you're here. 

Hunter Pond: I have a voice for radio. 

Chris Powers: You do. You have a voice for radio and an eye for good restaurants. 

Hunter Pond: I try. 

Chris Powers: I was an East Hampton number one investor, which was how long ago? 10 years ago? 

Hunter Pond: 12. 

Chris Powers: 12 years ago. 

Hunter Pond: That's right, you were. 

Chris Powers: So, we'll start there. You were on track to be a lawyer. 

Hunter Pond: Fact. 

Chris Powers: And then you're like, I'm going to make expensive sandwiches in Dallas, Texas.

Hunter Pond: Fact. 

Chris Powers: How did you go from I'm going to be a lawyer to I'm going to make premium sandwiches? 

Hunter Pond: Well, you've never been to law school. It sucks pretty bad. And so, you graduated ’08 or ’09?

Chris Powers: I graduated high school early, so I'm 38. I should be class of ’09, but because I graduated high school early, I graduated ’08. We're the same age. 

Hunter Pond: Yeah. So, as you know, the economy was terrible getting out when we did. And my dad's in the used car business, so there was no going and working for dad. I had average grades at Tech, and so I thought, okay, let's go back to school. Let's stall out getting into the real world. And everyone always told me growing up that they thought I would be a good lawyer cause I'm very argumentative, opinionated, loud mouthed sometimes, et cetera. And so, I took the LSAT, did pretty well, but I had to pay for law school. So when I applied to the schools, I went to the one that gave me the most financial aid, which was St. Mary's, San Antonio. Living in San Antonio compounded with law school was an interesting experience for me. I had a great roommate, but it was just really tough. And so I'd be locked in the law library, daydreaming what I really wanted to do. And just kind of through that process, I realized restaurants, like passionate about food. And then my college roommate's dad was the chairman CEO of Brinker International at the time. So, I had a bit of a good view into big business hospitality, a pretty unique view. And then literally in the middle of my tort final, I think I had three finals in one day, and then middle of tort, I just stopped taking the test. No bullshit, for real. Just said, F this, picked up, turned in the test, went to the registrar's office, dropped out, went to U-Haul, rented a U-Haul. I mean, I only had my bedroom full of stuff, packed my dog, my stuff. And it was a bad move, too. I think I even texted my roommate like before he got home from work. I was like, dude, I'm out. I was so done with the whole thing. And drove back to Dallas. And I remember I did all of that before telling my parents, before telling my girlfriend. And on the way home, U-Haul packed, driving, told my parents, I'm coming home, I want to get in the restaurant business. They said, okay, well, you're an idiot. And what a giant waste of time. Good thing you're paying for it and we didn't. And you better find a place to live and you better go get a job working in a restaurant. Lauren, now wife, broke up with me over the phone on the way back. And so, I mean, it was a wild drive home, get back, and then started looking for jobs in restaurants. 

Chris Powers: Wait, so when you woke up that morning, you didn't know you were dropping out of law school? 

Hunter Pond: I mean, I had a gut feeling that I wanted to get the hell out of here. 

Chris Powers: But not like mid-test that day? 

Hunter Pond: No, it was as impulsive as it gets. 

Chris Powers: What about the restaurant business did you like? Because most people- is it fair to say like you probably went to a lot of people and they're like, don't get into the restaurant business, or were most people...

Hunter Pond: Damn near everybody.

Chris Powers: For some reason, the restaurant, it's hard. You either do really well in that business or it's a hard business. 

Hunter Pond: Well, I mean, it's a hard business even if you do well. 

Chris Powers: Correct. But everybody told you no. So, what about it did you actually want to get into, like designing all the different concepts and menus and how you made people feel, or are you just like, this could be super profitable, it seems like a good thing, I just want to do that? 

Hunter Pond: It was kind of a balance of the two. Being in such a hell hole of law school law library that... 

Chris Powers: Anything sounds good. 

Hunter Pond: Like anything sounds better than that. I don't care how hard it is, I don't care what the failure rate is, like anything's better than this. And if you're going to try something so difficult, try it when you're young. So there's that and then coupled with just being passionate about food. So my dad is awesome. He's one of the most popular people you'll ever meet. But growing up, he hated taking us out to dinner. So, he was a traveling salesman in his twenties and early thirties, I believe, my math might be wrong, but at least for 10 years, and he had to always take clients out to dinner. So later in life, when he had his own company, mom cooked every meal, birthdays, Christmases, whatever. So, I think that was kind of- there was some like deep-rooted love for dining out because I never got- I did it very rarely growing up. So, I think that was kind of the subliminal wind behind the sails pushing me towards it, I think. 

Chris Powers: Got it. Okay. So, you get back, you get to Dallas. Do you go take a job in the restaurant industry? 

Hunter Pond: Yeah. So, I move in with two buddies and I get a job at Eno's Pizza. 

Chris Powers: So, this was 2000 and what, ’12 maybe? 

Hunter Pond: This would have been 2011. Yeah. Get a job, day shift, washing dishes and salad station after two months at Eno's Pizza, Bishop Art's District. Meanwhile- and then at night, I'd work on my business plan. The idea came quick. It was, cause I would- my mom would take me to lunch occasionally at R&D Kitchen, a Hillstone Group Restaurant. And I would always get these big, beautiful sandwiches. I just thought there should be a place where you can order at the counter and get this quality of a sandwich. Well, that's pretty much impossible, but I did my best trying to execute on that. And that was the original thesis behind East Hampton. I mean, it was filling the gap between Jersey Mike's, Jimmy John's, Potbelly's, and going to R&D hosted by your mother because you can't afford the $22 sandwich. There was nothing really in between. There was Mendocino Farms in California and then East Hampton really were the first people attempting to do it at a larger scale. And then I was 24 years old trying to compete in that realm. It was interesting. 

Chris Powers: Okay. A buddy of mine owns a restaurant in Alabama, and the last few weeks as they've been ramping up this new one, just to like fill roles, he's been working the dishes. And he's like, it's been the greatest thing. He's owned restaurants for 20 years, but he goes, you learn a lot doing the dishes. You see what people are eating and not eating, the amount of portions that are left behind. Like you just, like every dish comes in, you can just kind of see what people liked and didn't like, and he's like, I've learned more doing the dishes than I have owning. So my question for you is are there things that you learned doing the job you did there that gave you a lens into the restaurant industry that, like looking back, you're like, I'm glad I did those two jobs, I wouldn't have known X, or was it just a shitty job that paid the bills? 

Hunter Pond: Well, it didn't really pay the bills. I mean, it was like 10 bucks an hour, I think. There's a guy named Matt Spillers, man, I have not thought of his name in a long time, who gave me the job because he was friends with or the landlord, do you know Scott Lake or Jim Lake? 

Chris Powers: Yeah, I know Scott Lake with Davidson Bogle. Yeah, I know Scott.

Hunter Pond: Scott Lake, grew up with him. His dad, Jim Lake, owned the building. Therefore, that's how I got the job washing dishes. And I mean, yeah, paid 10 bucks an hour. But so, when I was back there, I guess I was only back there for four months, or maybe five, as long as I needed to justify on the business plan, of which you received way back in the day, experienced restauranteur Hunter Pond. But looking back on it, really, I would say how to converse with back house employees because that is still to this day something that is an ever evolving education. I mean, they're the hardest working people in the business by a mile. And I don't speak Spanish, which predominantly Spanish speaking culture in the back of house. So, I guess learning how to communicate properly with them and their value structure I think helped when opening East Hampton. 

Chris Powers: Okay. So, you're going home at night. You're like, there's a gap in the market. I want to sell premium sandwiches. One, how did you come up with the name East Hampton? It just sounded like… 

Hunter Pond: Sounded waspy as hell. That's truly how I came up with it. I thought that if I tied the name to a geographic location that dictated a fluency, people's expectations would be elevated. And if you can meet those expectations, then you'd have yourself a loyal customer. It's what it boiled down to. And wrote down South Hampton, West Hampton, North Hampton, East Hampton. 

Chris Powers: Southwest Hampton, Northeast. 

Hunter Pond: Exactly. And luckily, I picked East Hampton because there's a few of the names I wrote down that didn't even exist. I still have that original notebook. And I looked back, my business partner and I were looking back on it the other day, and I was like, man, what if you tried to pull off some dumb ass North Hampton sandwich company? It would have been real embarrassing. But that was pretty much it. 

Chris Powers: All right. So, the business plan's done. What was the business plan? 

Hunter Pond: I looked for it. I wanted to bring it. 

Chris Powers: Really? 

Hunter Pond: Yeah, but I couldn't find it. 

Chris Powers: Like, I actually want to go through like the day by day of like, what did the days look like from the day that you decided you're going to do it? You've never opened up a restaurant. You've never built a menu. You've never sourced food. You've never leased a- like you've never done anything. And to be clear, you had only worked at a restaurant for four months and grew up not being able to go to restaurants. 

Hunter Pond: Correct. 

Chris Powers: So, we'll title this part of the conversation like what did you do right, and what did you do wrong? But like, what did those days look like? So the day you gave yourself the green light, like I'm doing this, I got to raise money, come up with this whole thing and make it happen. What did you do? 

Hunter Pond: I called one of my lifelong best friends, Will Grewey, and explained to him what I wanted to do. And he gave me 20 grand, and I had no money, like zero. And not only does he deserve that shout out, but it is an integral part of the story because like without that, I wouldn't have been able to take that next step. I remember my parents were real pissed at me, and they ended up actually participating, and I think they invested 50,000 in the first one. But that was down- I think I at least had a hundred, 150 already raised. But so yeah, old Will Grewey gave me 20 grand, and that allowed me to pay for a branding firm because in order to take, like to raise even more money, I needed to look super professional. I mean, it's kind of a classic fake it till you make it story. So, there was a group called Switch out of Dallas. I think I paid- I stretched that 20 grand so far. I got them to do a professional logo. And then I just, out of a pen and paper, wrote the menu, handed it to them. They designed a menu. And then kind of the original business plan was like a financial model that was such bullshit. I mean, not even close to how it ended up operating. But it was a good guess, how to start a restaurant for dummies, based on that kind of stuff. And then put the business plan together with that 20 grand, which then I felt confident enough in sending out to my parents and to you and other friends that we grew up with and friends' parents. And I think the total cost of the first one was around 300,000 bucks, maybe 350. Yeah. I mean, talk about bootstrap, old Chinese restaurant in Snider Plaza, petrified rats in the walls when we were demoing it, it was disgusting. 

Chris Powers: And that was- I mean, Snider Plaza was obviously a thing at that time, but to get into Snider Plaza today as like a brand new restaurant that has never done anything in the business would be damn near impossible, wouldn't it? 

Hunter Pond: Yeah, it would not be possible. 

Chris Powers: So, it was like, we're going to put that in the like good timing bucket? Like it was a good time in the market to be at an affluent- 

Hunter Pond: There are- I'm sure we'll get to different times along the way where timing was everything. Getting started in 2012 fresh out of a terrible recession, downtime in the market. Texas had not exploded yet. Really the culinary scene had been dormant. Austin had not been, but outside of Austin, the culinary scene had been really dormant in this state for over a decade. And so yeah, the timing was impeccable. But even then, I couldn't get the lease in Snider Plaza. My very first business, this is an interesting anecdote that we can come back to throughout the conversation, but I gave away 30% of the entire business day one because I didn't have any money to guarantee a lease. And you’d like that as a real estate guy. 

Chris Powers: Yeah. Take notes on that one. 

Hunter Pond: So, I had to go to one of my investors, a kid I grew up going to church with, he was blessed and came from a wealthy family. And I just said, hey, I didn't even know what a lease guarantee was. I mean, that's next level ignorance, trying to sign a lease and not knowing a lease guarantee. And so actually, it boiled down to East Hampton and a Capriati sandwich shop out of the Northeast. I remember this like it was yesterday. And Bob Teeter, who owns the piece of property in Snider Plaza said, okay, we're going to choose between the two of you. We need to see your financials. I'm like, what? Financials? I have like two grand in my bank account, dude. No trust fund. Sorry. And I remember asking my dad, and I was like, hey dad, can you all guarantee this lease for me? 

Chris Powers: Like it was no thing. 

Hunter Pond: Like, yeah. I mean, I had no frame of reference. And he was like, buddy, no. I think they wanted a five year guarantee. And yeah, I mean, I would tell my son no too. And he's like, buddy, no. And so I went to this investor of mine and I said, hey, will you guarantee the lease for me? I know you got the cash. And he said, I'll do it in exchange for 30% of the class A shares. And I had no choice. And so, I did it. 

Chris Powers: It's easy to give 30% of zero away. All right. Did you even look at anywhere else, or was Snider Plaza always the one? 

Hunter Pond: I looked around, but it was the number one choice by far. Yeah. I mean, it's stone's throw from where I grew up. 

Chris Powers: You said you wrote the menu. When you were writing the menu, were you thinking like at that point, like what is this sandwich going to cost? Like what's my margin going to be on a lobster roll or a turkey avocado? 

Hunter Pond: Not really. When I wrote the menu, it was more, not from a chef's perspective, but just from like a customer's perspective. If I wanted to come to the- still to this day, I love sandwiches. If I wanted to go to this place three times a week, I'm not going to get turkey every single time. Just wrote the menu from my perspective on what would bring me back over and over again. And that was not some sort of contrived approach. It was just straight from the gut. I guess ignorance is bliss when you're trying to be creative sometimes. And then I figured out what food cost was. 

Chris Powers: Okay. Well wait. So then how did you source your vendor that was going to sell you food? Cause I'm imagining like same thing, they’re like, yeah, you're going to need to put some money down. Like you've never bought food before. 

Hunter Pond: It gets even better. So, once I write the menu, I get the business plan done. I think I've raised almost all of the money. And then, so I hit Craigslist, I need a chef. And I didn't know where to find a chef. So, Craigslist, did a job ad, and this guy named Ozzy Simoneau answered the- I mean, I think I interviewed like four people. All of them were sketchy. I mean, you can imagine chefs off of Craigslist and meeting me at Starbucks, 24 years old. I'm sure they thought I was as big of a joke as I thought some of them were. And this one guy, Ozzy, had been a chef at Bob's Steak and Chop House up in Plano for a few years and Bob's Dallas Institution. It was the closest thing to legit that I could get. So I hired him, and it was pretty much that simple. I was like, all right, so what do we do now? And he's looking at me like, you don't know? I'm like, no. We gotta open this thing. So, he handled all the relationships with the vendors. He knew exactly who to call. And so, him and I just got in the lab and started getting after it. 

Chris Powers: Is the lab like a metaphorical lab or is it like you went to some place where there's food production and they put you in a room with, it's like a lab? 

Hunter Pond: There was- No. And then, the next part is, after Ozzy and I had been working for a while, I hired a consultant named Roger Kaplan. Man, this is memory lane. 

Chris Powers: Let's go, baby. We're titling this thing memory lane. 

Hunter Pond: Yeah, shit. Roger Kaplan, he let us use his test kitchen at his house because he was a chef consultant, and that's where we built the menu. And just got in there, and I mean, I didn't know what I was doing. I let them do most of the stuff, but I was paying the bills, so I would just tweak it. And it's honestly how I still do the menus today. So I write every menu we do. I conceptualize I would say 95% of the dishes at all the restaurants across our whole portfolio. That's the operative word. I conceptualize them. And then our chef teams will, just like back then, do the heavy lifting, put the recipes together, and then I'll just tweak. So, like I'm a constant flavor tweaker until it tastes the way I want it and looks the way I want it to look and go from there. 

Chris Powers: The menus of all the concepts you own pass the like Hunter likes to eat it test. That's like the ultimate test?

Hunter Pond: For sure. 

Chris Powers: It's not- okay. So we would say like you've got a good flavor profile, obviously. Like, what things-

Hunter Pond: I think so. I think I just- I think the approach is just kind of unique. Most restaurateurs are former chefs or former general managers, where they've cut their teeth in the industry for a while. And me not having done that, I think, gave me just kind of a unique lens to look at menu curation through and dish curation, honestly. 

Chris Powers: If you were like giving people advice on how to build a menu, no matter what genre of food, like what are the to-dos and not-to-dos? Like, when I say Cheesecake Factory, does that menu like freak you out? Or are you like, no, I get that, I understand why it's nine pages and spans the whole globe of types of food? Or would you say like that's a disaster, it should all fit on one page? And how do you build a menu? Because it can't just be like what Hunter likes to eat because that still might not be the right thing. 

Hunter Pond: Yeah. So as far as Cheesecake Factory goes, I mean, they're a beast and they're a multi-billion dollar company. So I have mad respect for them. I would never suggest opening up a new restaurant as a new restaurateur with a nine page menu. That's silly. 

Chris Powers: Why? Because you have to hold too much food? 

Hunter Pond: Yeah. Way too many SKUs, dependency on labor. I mean, nine page menu, it'd be impossible to hit optimal labor numbers. From a business perspective, it's just not smart. You won't make any money. For us, I like to have small menus because- 

Chris Powers: What's small? 

Hunter Pond: One page. 

Chris Powers: Okay. One page just as you're starting- 

Hunter Pond: Yeah. Food on the front, drinks on the back. That's what I like. It keeps operations simple. We're in the people business obviously. And so turnover can make or break a restaurant success. The more simple you can keep your operations, the less negative effect turnover can have on you. And so, especially since I started with no experience, I had to minimize my risk at all times. And I went through, I mean, back to Ozzy, the day we opened East Hampton, he got in a car crash. I don't know if I'm allowed to, well, it doesn't matter. I don't care. He got in a car- he got in a DWI car crash on the way to work, day one of opening East Hampton. I didn't even have the chef the first day we opened. Me and Will, my first business partner, were delivering food, and we looked like you. We're in dress pants and button-down shirts, delivering plates of sandwiches with a line wrapped around the block. It was a wild time. But yeah, the turnover is really, if you can minimize turnover, then you have a chance of making good money in the business. 

Chris Powers: Okay, we're going to talk about turnover in a second. I want to go real quick back to the menu. So small menu, do you want, if you were to say like at the end of the week, do you want there to have been equal sales amongst everything on the menu, or is it always going to be the 80-20 rule where like 80% of the menu’s coming from the lobster roll that everybody loves? Or do you want to build a menu where there's not like a clear loser on there that nobody ever orders? Like you want everybody to kind of be ordering everything? Does that make sense? 

Hunter Pond: Yeah, of course. Ideally you want there to be a balanced product mix. That's because you can cross utilize ingredients. I can nerd out on you and explain why. I mean, you maximize profitability by cross utilizing ingredients. That's when you minimize your SKUs. 

Chris Powers: It'd be like grilled chicken, however many things you can put- 

Hunter Pond: That’s why Tex Mex restaurants are notoriously profitable. 

Chris Powers: Yeah. Cause it's all meat, cheese and tortilla, how you cook the tortilla. 

Hunter Pond: Chicken and beef, rice and beans. Then just a couple of sauces, you make the mixed combo plates and really minimal amount of SKUs. 

Chris Powers: And so, if you're looking at sales and you're like this sandwich… 

Hunter Pond: That’s why the gourmet sandwich business was actually in hindsight a bad business. I mean, it was a really strong brand, and I did, I think, as well as anyone could have done with it with minimal experience. Obviously, I had some major hiccups along the way. But the brand was strong, the product was great, but because every sandwich had a unique set of ingredients, for a fast casual, fine fast casual brand, I think we were at 140 SKUs at one point, which you're not going to make much money doing that. 

Chris Powers: What would be an optimal number? Like 70? Like half that or like even less? 

Hunter Pond: For fast casual? Oh gosh, yeah. Half that, less than half that. 

Chris Powers: How many SKUs does like Raising Cane's have? Like they have sauce, bread, fries, and chicken strips. Is it-? 

Hunter Pond: I don't know. AJ's a good buddy of mine. I'll ask him. I bet you that it's less than 30. Raw ingredients, I bet it's less than 30. 

Chris Powers: And you put them in like the, okay, low SKU end of the spectrum. Is there anybody that has less SKUs than Raising Canes? 

Hunter Pond: Dude, I don't know. 

Chris Powers: Like what's the least SKUs you've ever run across? And I only ask about Raising Canes because my buddy that runs Founders Podcast just did one on the founder of Raising Canes... and he's like, they're always trying to be like you should do a chicken sandwich. He's like, I just put chicken strips on a bun, like I'm not making a chicken breast. I'm just going to make chicken strips, fries, Raising Canes sauce and bread.

Hunter Pond: Yeah, they're probably the lowest SKUed fast casual I can think of. I'm just wondering if there's a smash burger place, no, Canes is it. 

Chris Powers: When you were building the East Hampton menu, were people telling you along the way like this is too many SKUs and you were like, I don't care?

Hunter Pond: That consultant I hired, Roger Kaplan, was telling me that. 

Chris Powers: But you were kind of like, I don't care. 

Hunter Pond: Yeah. I was taking the artistic approach. I just wanted to make sure that we made a large enough splash on the culinary scene to garner enough attention so that we can have momentum, and then I'd figure out the math later.

Chris Powers: How much does like restaurant design matter, just the layout of the restaurant on a scale of one to ten? 

Hunter Pond: Ten. Yeah, seat count is ten. 

Chris Powers: Okay. Explain that. So you want to maximize seats without making it feel crammed. 

Hunter Pond: Correct. So I always say our business is half art, half science. So now we're getting into the science part of it. Seat count, and I never realized how important it was until Rick came along and his scientific brain exposed this to me. And it was- 

Chris Powers: Shout out to Rick. 

Hunter Pond: Oh, he's going to get lots of shout outs. It is wild how predictable, if you have an existing brand and you kind of understand within a 20% margin of what your sales could be, seat count’s everything. It really is. And it's about throughput, obviously, and a lot of other variables. But if you don't have the seats to maximize your space with, you're leaving money on the table. And a lot of times, it can be hundreds of thousands to millions of dollars. It's crazy. That's the number one most important thing in our business in our opinion, is seat count. 

Chris Powers: Okay. Wait, I would have never thought that because my next question-

Hunter Pond: Because there's an optimal seat count, like optimal size. I'm not saying-

Chris Powers: What do you mean optimal seat count? 

Hunter Pond: Maximization of space. So I'm not saying that you need to go maximize the square footage so you can have the most seats. It's going to drive the most sales. That's not it. 

Chris Powers: You want max seats per square foot. 

Hunter Pond: And that's where the half artistic side comes from. So, like you want to maximize the seat count within a space that was artistically designed to give customers the emotional experience that they're wanting. 

Chris Powers: So, is there like a number, is it by market? Is it literally just based on the space available, or you would say, we need at least 50 seats? Like we can't have 40. 

Hunter Pond: It's all depending on square footage and brand. 

Chris Powers: But then I guess my point is, would you not take a space at a square footage that only yields you 40 square feet, I mean, 40 seats? Like, do you ever go into it going, we can't build this concept unless we have 60 seats, I don't care how big or small? So if it can't have 60 seats, we can't even look at it. 

Hunter Pond: Absolutely. Yes. 

Chris Powers: Okay, what's like- is that art or science? Is it by genre or by types of restaurants or food? Or what's the line in the sand of like you always have to have this many seats? 

Hunter Pond: So, let's just say Hudson House. So, we have now nine Hudson Houses. We have the ideal square footage, the footprint. We know exactly within 5,000 to 8,000 square feet, we'll know exactly how many seats we need within that threshold to maximize our dollars. That's what it boils down to. And that is science. And then once we know that seat- once we know that math, then it gets handed over to me, and I design the space with a group of other really smart people now, so it doesn't feel cookie cutter. It doesn't feel like we're just stamping them out. Does that answer your question? 

Chris Powers: Yeah, I mean, kind of, but it's- okay. But maybe you don't want to say the amount of seats cause that's your secret sauce, but it's like how... 

Hunter Pond: No, not really. I mean-

Chris Powers: Like if you took an East Hampton, like what's the minimum amount of seats that East Hampton would have needed, and what's the minimum amount of seats that a Hudson House, which is more of a family restaurant that you go spend a longer time in? East Hampton you're more kind of in and out, at least that’s how I thought about it. 

Hunter Pond: Well, East Hampton was tough because from when I first started it, Uber Eats, Favor, all that stuff, the third-party delivery services didn't exist. So the business model completely changed. I mean, you saw that firsthand as one of our investors. Practically overnight, we had 8% to 10% of our EBITDA just evaporate when it first came online because they weren't regulated and everybody- and it was everyone switched over to those services and it really screwed our margins up. But when we first started building, we needed dine-in seating because people were still eating at fast casual restaurants. Now, no one eats at fast casual restaurants, very few. I think, when I first opened, we were doing 70-30 dine-in to to-go, and then we'll probably get to it, but when we sold East Hampton, we were at the exact opposite. I think 30% dine-in, maybe 25%. It completely changed the game, and it changed the business model. So, it's a long-winded answer, but as you're asking with fast casual, seat counts stopped mattering. But we had, I think we had eight or nine locations that were all built for dine-in. And then over the course of six months, we didn't need almost any of that square footage. 

Chris Powers: So, I know it's probably- I'm not, if it's tied to East Hampton, you might say we don't like them, but like net-net, is the food delivery or all these apps, like do you love them? It's just somebody you have to deal with, they're like, we're just going to learn to deal with them, or they are net positive to the industry now they've been around for ten years?

Hunter Pond: I think it's a net positive to the industry. 

Chris Powers: Okay. Why? 

Hunter Pond: I mean, they cost me a lot of money. And so, I'm a little bitter about that, but what are you going to do? I mean, it's not like… 

Chris Powers: You still make some money though. 

Hunter Pond: Yeah, I still made some money. 

Chris Powers: They don't take it all. 

Hunter Pond: Yeah, right. They don't take it all. I just think it's a necessary evil. And I think that for full service, and now that it's regulated, I think that it drives brand awareness to the groups that really put an emphasis on packaging, delivery, and providing a higher-end experience. 

Chris Powers: And on that note, do you have any control over like, like if I go order Hudson House from DoorDash, and let's just say DoorDash, he decides to go drop off a few other meals before he gets to my house, and the food comes and maybe it's not as hot as you would have- you would have thought it would have arrived in better condition. 

Hunter Pond: Yeah. That's why Hillstone doesn't do it. 

Chris Powers: I was going to say, so traditionally, is it still like Hudson House takes the brand hit if it's not good, or does DoorDash take the brand hit for it not being delivered properly? 

Hunter Pond: I think that the narrative has changed dramatically. I think at the beginning, before the customers were knowledgeable how the whole system was going to work in the long run, the restaurants would take the blame. And I think by now, everyone has used the services enough, and they, for the most part, know that if something's really messed up with their order, it's going to be the driver's fault. 

Chris Powers: Yeah. Gotcha. Going back real quick, you said seat count is the most important. What would survive longer, a restaurant with mediocre food and incredible service, or a restaurant with incredible food and mediocre service? 

Hunter Pond: Incredible food, mediocre service. 

Chris Powers: Really? 

Hunter Pond: Yeah, without a doubt. 

Chris Powers: So, food is food over service? 

Hunter Pond: Real estate, food, service. 

Chris Powers: Really? I was actually not expecting that.

Hunter Pond: Yeah. For sure, because I just I think that- I mean, I'll get deep with it. People are becoming less, I'm not saying that there is not a level of importance placed on service. It, of course, is integral to our business. But to answer your question directly, I do think that food quality and food consistency matters more than service if you're going head to head. 

Chris Powers: Has that always been the case or is that more of a recent phenomenon? 

Hunter Pond: I think it's a recent phenomenon because people are so engaged with their phones. I'm going to oversimplify the answer, but they're so engaged with their phones. Everybody is engaged with each other when they're dining out, but they're mentally elsewhere a lot as well, because I think of technology, because of people's overbearing access to social media and everything else that's pulling on their attention, that they're not as engaged with the human element that service provides. Food, I mean, I don't care what's on your Instagram or TikTok, whatever, you're going to know it's bad. So that's why I believe that. 

Chris Powers: That's more of just a view into society now. We're just so scrambled up that... 

Hunter Pond: 100%. 

Chris Powers: On the concept of service, there's some places I go to and I'm like, man, I'm so glad we had that waiter, they just made the whole experience. And then there's some places I go to, I'm like, why can I not just order my food from an iPad at the table, have it just brought to me, pay on the iPad, I have one interaction with the server when they deliver it, they refill my drink, and it's very simple. I'm sure you've heard that a lot, but it really hasn't caught on. Like we're really technologically advanced and very few places do you go... 

Hunter Pond: It's coming. 

Chris Powers: Is it? 

Hunter Pond: Yeah. Not as intense- 

Chris Powers: I figured it'd be here by now. 

Hunter Pond: Yeah. Not as intensely as you're suggesting it could be in terms of the lack of human element with ordering. But we just started using this new technology out of Europe at I think three of our brands now where it's contactless payment. And so, everyone- that's been a concept for a while. And the big boys have used the kiosks at the table and whatnot, but this is literally just a tiny QR code that you scan with your phone, pops up, click your percentage, pay with Apple pay and get up. 

Chris Powers: I did that in HG Supply the other day. It was the first time I've ever done it. 

Hunter Pond: Was it called Sunday? 

Chris Powers: I don't know. It was a QR code on a little- 

Hunter Pond: It's called Sunday. It's the one that I'm referencing. 

Chris Powers: Okay. It's the first time I've ever done it. It was literally yesterday actually. 

Hunter Pond: Did you like it? 

Chris Powers: Yeah, it was awesome. But I interacted with the waitress the entire way until the very end. And she's like, you can pay right there. I was like yes.

Hunter Pond: I’m a huge fan of this from a customer standpoint because I hate waiting for my check. Like how many times I'm just so obnoxious, but I still like engaging with a waiter or waitress when I'm trying to decide on what I want to order, get recommendations. And also, I don't want to dehumanize the art of eating out. I hope that never goes away. 

Chris Powers: I agree. 

Hunter Pond: But there is no art to paying a check. 

Chris Powers: There's no art to paying a check. 

Hunter Pond: So, pay, get out, and also it helps throughput. So if you're lucky enough to own a busy restaurant, you want to turn those tables. There's no reason that technology shouldn't explode in my opinion. 

Chris Powers: Okay, turning tables. If somebody's like they're done, but they're like we just want to sit and chat... I did this the other day at Hudson House with my buddy Chris Huckabee. We sat there for three hours. 

Hunter Pond: Well, we have enough seats. The seat count there is real prime. 

Chris Powers: But you technically can't go to people and be like you've overstayed your welcome. It's time to go. 

Hunter Pond: I mean, you can. So, we just opened a little French bistro in Dallas, and it only has 40 seats, terrible seat count, but it's really hard to get a reservation. And we let people know whenever they make the reservation, you have the table for an hour and a half. After an hour and a half, at our discretion, we are able to ask you to move along. And 99 times out of a hundred, if we have to do that with people, we'll just buy them a drink at the bar. It's worth it. 

Chris Powers: Okay. So, it's food over service any day. Okay. I want to go back real quick and I want to close the loop on East Hampton. So you designed the menu, you hired the chef, you did all the things. Opening day was a disaster because chef didn't show up. Like how, I don't know how to ask it, like how long into being open did you finally wake up one day and go, okay, I kind of understand the restaurant industry at least a little bit now? Like, was it almost immediate? Was it like years into it that you kept picking up all these lessons? Or do you kind of pick it up pretty quickly? 

Hunter Pond: Two part answer because I think it was pretty quick with fast casual. Just because it's just a lot of blocking and tackling. Like I got the artistic side done, and then I was immersed because, I mean, I was running payroll, the lab, HR, sure. I mean, I was fielding the text messages of complaints. But it's a pretty easy business if you nail the art. And so luckily the food was really good and people loved it. Full service, I'm still learning. It is the most complicated industry. I don't want to offend other industries, but maybe the engineering world would crush me, but it is so complicated because of the amount of moving parts and then the amount of people you have to deal with. It is intense. I mean, I'm part psychologist. 

Chris Powers: What's so hard about it? 

Hunter Pond: Back to the art and science, balancing both. You have to maintain the artistic side of the business in order to draw in the customers, but you have to respect the scientific side of the business in order for enough money to flow to the bottom to stay alive. 

Chris Powers: Okay. So where do most people... I'm sure you've seen restaurants that you're like, if I owned that, it would have made it and it would have been profitable. Where do folks that have great art, but no science, like where do they end up losing it all? Like, where's all the money flowing to that takes them down? 

Hunter Pond: Lack of systems, 

Chris Powers: Technology or just-?

Hunter Pond: Poor accounting. 

Chris Powers: Meaning?

Hunter Pond: Like, they don't have proper inventory management software. Maybe they can't afford it, but there's rudimentary versions that are available and aren't that expensive. You have to understand both front of house and back of house. It's like so many chefs open restaurants and don't succeed because they understand the art half of the business at an elite level but have no idea how to run the scientific side of the business. Now some figure it out, but that's- most of the failure that I see with great food is just lack of attention to detail on the scientific side of the business. It's as simple as that. Or they won't invest properly in good accountants. Like okay fine, if you want to be a chef and open your dream restaurant, make sure you budget for $2 to 3,000 for someone who can keep your books. 

Chris Powers: Okay. So, who, if let's say you are that chef and you're only, you don't have an operation like you do where you now have like a corporate office. You've got like people that can do this. But a lot of people, they got one restaurant. They don't have a big- they can't afford a corporate team. So, if somebody's listening to this that's either opening up their first, or they're a chef, and they are not getting the science right, it's like, who is the person that you hire to get the science right? Because is the answer just like, I know you're an artist, but you kind of got to learn how to become a scientist? Or is there a certain hire or type of person they could go hire in the marketplace that could kind of help them out, a consultant? 

Hunter Pond: Yeah. I really think that if you're going to open your first full-service restaurant, forget it, any restaurant, you've got to have a decent accounting team behind you because there's just so many moving parts and so many ways to steal in that business. I don't want to paint a negative picture about humanity, but especially with AI coming on and taking on a lot of people's jobs, they really get desperate and people are desperate. And leakage and theft is just a major problem in this industry. And if you don't have the proper systems in place, if you at least you don't have somebody on the bookkeeping side making sure the Xs and Os match up, I mean, you're just a sinking ship. 

Chris Powers: Where does the theft usually come from? 

Hunter Pond: Back of house, like the kitchen. 

Chris Powers: They're selling inventory, like on the black market, they're taking steak that's in the freezer and going- 

Hunter Pond: Well, they're not selling it. No. 

Chris Powers: They're just taking it. 

Hunter Pond: They're just taking it home. 

Chris Powers: Yeah. Okay. So they're just taking the food? 

Hunter Pond: Mm-hmm. Lobster, shrimp, steak, the expensive stuff. 

Chris Powers: How do you stop that? 

Hunter Pond: Bottles of wine if you're not doing inventory properly. 

Chris Powers: So, do you guys do inventory every day at every restaurant? 

Hunter Pond: Once a week. But even that is, in my opinion, best in class. Most groups don’t do once a week inventory. They'll do bi-weekly or monthly.

Chris Powers: How would you know if something- so you would just know we had a hundred lobsters, it's showing that we only sold 20, so we should have 80 in there and there's only 75, so five are missing? 

Hunter Pond: Right. 

Chris Powers: Okay. What system is in place? 

Hunter Pond: So there's an actual versus theoretical that we track in our own system. And at the end of the week when you do inventory, it's impossible for it to not be accounted for. The only way it would be you could finagle the system is if the general- like the entire management team was in on it, but they're so well compensated, it doesn't make sense for them to be in on the scam. 

Chris Powers: So just doing inventory is like, it gets rid of 90% of your problems? Cause if it did happen... even in one of your restaurants that you're doing inventory once a week, you go alright, there’s five missing. It’s one of the three of you. Or would you also see it on camera, or is there one other check along the way? 

Hunter Pond: Well, I mean, you don't go- you go check the cameras long after you see it. I mean, that's probably like step three. But for us, at this point, we have an army of accountants that would come and swarm. I mean, that's the Rick side of the business now. 

Chris Powers: So, scale helps you prevent fraud or prevent stealing. 

Hunter Pond: Oh, without a doubt... That's why, like again, like if you're opening your first restaurant, at the very least, budget for a legitimate restaurant bookkeeping system or bookkeeper. 

Chris Powers: So, what about tips? Do you make everybody pool their tips, or does everybody keep their tips? That seems like a place where theft could happen. 

Hunter Pond: No, we pool. 

Chris Powers: And is it just on the honor system that if I tip somebody a $20 bill or a $100 bill, they're going to put that in the pool, and it's not going to slide into the back pocket? 

Hunter Pond: Well, that would be the case if we took cash. 

Chris Powers: You don't take cash? 

Hunter Pond: No cash. 

Chris Powers: Not even for tips? 

Hunter Pond: Nope. 

Chris Powers: When did you stop doing that? 

Hunter Pond: I believe we stopped taking cash at full-service restaurants like over five years ago. 

Chris Powers: So even if I pay with card but leave like a $20 bill in the fold, you would say please take that back and write your tip in? 

Hunter Pond: No, I mean, we would, yeah, that's the system. I mean, it's impossible to police that a hundred percent. But we do. I mean, we do a pretty good job of that. 

Chris Powers: Yeah. Okay. Cause I feel like that's where you could game it a little easier is like write me a little less credit card tip. 

Hunter Pond: Yeah. It's frustrating for the older demographic. They love paying with cash. 

Chris Powers: At what point did- you sold East Hampton. It was your first baby, you expanded. Was the reason you sold more around what you said, which was people weren't dining in like they used to, or had tastes changed and people moved in a different direction of how they wanted to be sold? Or was it just more like we've been a good run, we're going to move on to other things? 

Hunter Pond: A lot of different reasons for selling. The main one is that we got a great offer, and we took it to market, and the best offer we received was from the guy who was managing the business for us. So, it was the director of operations for East Hampton asked us if he could participate in the bid process. We said, sure. And Rick and I were kind of confused, like I don't know why he wants- he managed the business for us but also played a significant role in the corporate accounting team as well. The guy's the hardest worker. He's a machine. But he came in with the best offer. And so we sat down and said, okay, well, if you want to pay that price, then we'll go through the process and sell you my baby. Another reason why I wanted to do it is because, as we're evolving, we're getting into the acquisitions business. And I wanted to really, as you're getting into acquisitions, you need to be able to balance that out and also understand the mechanics of selling a business as well. So that was one of our main goals for the past year, sell a business and also buy a new business. So not only do we get a good offer from him, we can sell it to somebody that we trusted, provide a little bit of seller financing as well, so we could still- we still have our claws in a little bit. And then also acquired a new business as well, because that's how we really want to continue to scale. Because creating new concepts all the time is a workout. 

Chris Powers: How many restaurants do you need to kind of start building a corporate team? 

Hunter Pond: I wouldn't say number of locations. I think it's revenue driven. I would say probably corporate team as in anyone besides yourself? 

Chris Powers: Yeah, I mean, well, now you've got a CFO and you've got Rick. 

Hunter Pond: Yeah, sure, but just like anyone besides yourself... 

Chris Powers: Where you basically have people on staff that aren't working at the restaurant day to day.

Hunter Pond: If you are at- if you're doing fast casual and you have more than four locations, I would say that's one of the thresholds. But the averaging volume of fast casual is much lower than full service if you have good restaurants. And so, let's just say on the flip side of full service, if you have, I don't know, more than four, three locations doing over 15 million, I would say would justify hiring a couple of people. 

Chris Powers: Okay. And then real quick, total sidebar, we don't have to spend a lot of time on it, did cloud kitchens like ever take off where if I order a Chipotle burrito, there's a chance that it's coming from some warehouse that I don't really know? Because when I go to Chipotle, there is 15 people in the front waiting to pick up food. So, I'm always like, maybe it just worked out better for them to come to this location and get the burrito. Or are cloud kitchens actually a real thing that are happening? 

Hunter Pond: How many times did you get approached to invest in cloud kitchens? Did you? 

Chris Powers: Never. 

Hunter Pond: Oh, I got- we got approached all the time. 

Chris Powers: Upfront?

Hunter Pond: Yes. 

Chris Powers: Yes, a lot. But then I never heard about it again. 

Hunter Pond: Right, because I don’t think it worked. 

Chris Powers: Okay. So you guys aren't using cloud kitchens. 

Hunter Pond: No, and I don't know anybody who is. 

Chris Powers: Okay, fair enough. 

Hunter Pond: Do you lease any of your industrial space to cloud kitchens? 

Chris Powers: No, we used to own- the one thing that I did get a good peek inside the food world was we owned a cold storage building on 23rd Street. And it was like a, it was almost like a three PL. So there's lots of small businesses that would each take, I guess it's cubic feet in that world, but you might have 20 local Fort Worth businesses that are each taking up their section of the cold storage building. And what you realize is most cold storage developers want one huge tenant in there, like the risk of having lots of small tenants, but there's a huge demand for them. So, there's an imbalance of how much space is available for a smaller business that only needs a few pallets worth of space. And if you're going to go build a new building, most people want you to build it knowing you've got Campbell's soup taking the whole damn thing, not 50 small DFW businesses. But no, never. We've never done a cloud kitchen. At what point, like I think now, like when I think about your world, you get to stay focused on restaurants, but you also kind of have the dream of shiny object syndrome where you can kind of open up new concepts and it keeps you kind of- What was the next concept? Was it Hudson House? 

Hunter Pond: Yeah. Hudson House was just a pet project. It started out like it was so random. A piece of real estate in Park Cities came available. 

Chris Powers: Which did?

Hunter Pond: And piece of real estate in Parks Cities. It was on the corner. Lomo Alto dead ends into it. It's on Lovers Lane. And it was an old Mexican food, fast casual place, a Chipotle knockoff enchiladas and then a ravioli shop called Holy Ravioli. And they both went out the same time. And this was, again, back to the timing thing we brought up earlier, Dallas had been real dormant on exciting openings for at least six, seven years. There might be one or two that I'm forgetting about, but not to my knowledge. And so I just saw it. And at this time, I had a CIC private equity shop come and back East Hampton. And so, I had- obviously, I couldn't just go peel off and go do another project. But we were first hitting the headwinds from third party. And so I went to the managing partner of the firm, it was an awesome guy, Fouad Bashour, and I went to him and said, Fouad, I have got this idea to do Hudson House concept in Park Cities, and so we did a little carve out for that outside of, what was it, East Hampton Holdings at the time. And he’s like, all right, just don’t let that be a distraction. We're still going to be growing this thing. And we opened it and exploded day one, just like when East Hampton opened in Snider Plaza. And it was, again, it was like starting all over again. I had no idea how to manage a bar. I never managed a bar. I never sold a mixed drink in my life. 

Chris Powers: ...I have experience on the other side. 

Hunter Pond: But yeah, I mean, it was start- it was like starting a master's program all over again. 

Chris Powers: Were you naive? Did you think it would be easier because of the success of East Hampton or did you know it would be-? 

Hunter Pond: Yeah, totally. I thought because East Hampton was a success that, and I was pretty confident in my abilities to create the menu, the aesthetic, the design. But in terms of managing the business, grossly underestimated how tough that would be. I even hired one of my good friends I graduated high school with to be the opening general manager. Yeah, that was funny. I mean, I did a lot of things wrong, but luckily again, just like East Hampton, the artistic side of the business was ahead. The menu was really unique. The design of the space was cool. I had no idea the seat count ratio was one of the best, even to this day, it's one of the best in the whole company. 

Chris Powers: Really? 

Hunter Pond: So lucky. Yeah. 

Chris Powers: Who determines the seat count ratio? The architect or you? Or like, I would imagine there's these architect firms that are like, you need 75 seats. 

Hunter Pond: Well, architects are a fickle bunch because they're always covering their own ass. And like, they want it to look beautiful so they can put it on their page, and they want to- they don't want to get in trouble with the city. They don't want to cause any delays if there's any sort of like- they want to do everything that's in their best interest, which I understand, but we have a mathematical equation that we must hit for seat count ratio. And if they're not going to play ball with us, then we'll go somewhere who will. 

Chris Powers: What's the hardest part about selling alcohol? And do people care about the personality of the bartender? 

Hunter Pond: Yes. 

Chris Powers: So, you got to have a lively bartender. 

Hunter Pond: Lively bartenders matter. I don't know, the hardest thing about selling alcohol would be, I don't think customers would notice this most of the time, but I don't think there's a lot of great sommeliers out there. 

Chris Powers: Yeah. So, on wine. 

Hunter Pond: Yeah, wine. I think there's a lot of great salesmen and a lot of great servers who can act like they’re somms, but there's so few truly knowledgeable ones. So wine is a tough one. For us though, it's always been honestly kind of easy because we were the first to really popularize the half off martini thing. And that's, to be honest, that's what put Hudson House on the map was our happy hour. And it was such a foreign concept to do half off martinis, half off oysters, half off cheeseburgers. That's the very first one. It's evolved since then. But yeah, selling vodka for us has been- we've been blessed. 

Chris Powers: Vodka's- is vodka the number one seller? 

Hunter Pond: At Hudson? 

Chris Powers: In general? 

Hunter Pond: In general, yeah, it is. Tequila has made a huge run, but the Vandele portfolio, vodka's king. 

Chris Powers: And how much, even with wine, like how much of this is- because you talk to people, they think they are these great wine-os that have these great palettes, and then you blindfold them and put it in different cups, and like nine times out of ten, they're always wrong about which is the nicest one. It's the same thing with- 

Hunter Pond: I would fail at that too.

Chris Powers: Correct. Everybody would. So, a lot of the alcohol market is just a big marketing play. 

Hunter Pond: A hundred percent. Yeah. A hundred percent. I think to keep in my opinion, I think wine is the easiest to differentiate quality within broad categories. I think tequila is the second. Vodka, I don't know how anyone can taste the difference in most of this stuff. It's marketing. I'm a Chopin drinker. Why? I think that's how my mom takes it. She always drank Chopin martinis, so I drink Chopin martinis. 

Chris Powers: What did private equity teach you? Do you still have private equity in your business? Did that go away when you sold East Hampton? 

Hunter Pond: No, before then. I bought CIC out like two and a half years ago. 

Chris Powers: But if you had to say, I'm glad I did it because I learned X, which might be what to do, not to do, but like, what'd you get from it? And would you ever go back to private equity? 

Hunter Pond: The two people I've learned the most from in my career have been, and Rick, who's my business partner who I brought on, and then right behind him would be a Fouad who was the CIC managing partner, him and his right-hand man, Baird Friedman. You know Baird. 

Chris Powers: Yeah. Chaney’s older brother.

Hunter Pond: That’s right. They're so smart. 

Chris Powers: Smart about what?

Hunter Pond: Well, they taught me a lot about the analytics of the business, so about the science. If I had to describe myself, if I'm more of the art side or the science side, I'd say I'm 70% art, 30% science. And before I got with CIC, I was probably 90% art, 10% science. And they're the ones who really helped educate me and get me- I probably got all the way up to 50, but then I've offloaded so much on Rick that I've gotten to be able to get back on the artistic side, and like, oh, just take care of that, please, for the love of God. Yeah, I mean, just simple, learning how to manage P&Ls, the importance of, I mean, the stuff that I mentioned earlier, the importance of inventory management software, maintaining consistency, hiring practices, the importance of training, like all that stuff I didn't really have until I paired up with them. They have great history with F&B investments. And so it was probably a total of four years we were together. And I mean, I didn't have a board before them. If they ever watch this, they'll probably laugh because even with them, our board meetings were quite funny. There were only like four of us sitting around the table, but still it was a good education on how serious business is run. Because it's one thing to raise money and pass the hat. When you have private equity dollars, I mean, that shit's serious. And I think we did our deal at, I was 31 years old and closed a private equity deal, or no, I was, yeah, around 31. And yeah, with starting out opening a little sandwich shop to raising money from, and not only that, they were like some of the most respected old school- and it's Rusty Rose’s original shop. So like, talk about the OGs of private equity in Dallas. So, it was a badge of honor and a lot, a great sense of responsibility. 

Chris Powers: Why'd you go to them? You just wanted to scale and you needed more money?

Hunter Pond: No, they came to me. So, I was being- we won some award at National Restaurant News. I think it was like top 50 hottest, fastest new concept, one of those bullshit awards. And Roark Capital reached out. I mean, this is a long time ago, but like the big boys in the industry put their hound dogs on me. And so, I went through the process with them and one other group I took kind of seriously out of Connecticut, and the whole process turned me off to private equity. I mean, the guys I dealt with were... 

Chris Powers: Sharks.

Hunter Pond: Yeah, not optimal. I could smell the sharkiness on them. So, I just kind of killed it. And raising money wasn't that difficult. And then I got connected to Baird somehow, or Baird got connected to me somehow, reached out, and it was bizarre. I think it all, from my first meeting with Baird to my last meeting with Mike Rawlings was like two months, and then we had a deal done and closed and went and did the thing. 

Chris Powers: That's awesome. Real quick, going back when we were talking about simplifying the menu, you had just said it creates less turnover. Like what is the number one source of like turnover in the restaurants where employees start, like you can't kind of keep the machine going? Is it just too complex of a menu? Too many things going on? Like how do you...

Hunter Pond: Stress.

Chris Powers: Yeah. And what causes the most stress? 

Hunter Pond: Complexity. I would say number one is poor leadership. Number two would be complexity. 

Chris Powers: So, like that would be a poor GM? The person that's, yeah.

Hunter Pond: Or whoever your direct report is. So back of house, a poor kitchen manager; front of house, poor floor manager, assistant GM, GM, one of those. 

Chris Powers: So what are your- what's kind of your lens for hiring people? Like, how have you gotten better at hiring? And it can't be we now have the ability to offer more money. That's obviously a great thing. 

Hunter Pond: Well, that is obviously part of it. 

Chris Powers: That's huge. You got to get to scale to do that. But is there something else you learned that you could tell us something...? 

Hunter Pond: We do personality tests. That's one of the big YPO things I learned. 

Chris Powers: Yep. Culture Index or?

Hunter Pond: Yeah, we use Culture Index. 

Chris Powers: So, you know this- if it's this type of profile, it's a socializer, we're putting them at the front. We want them- Yeah, I got you. 

Hunter Pond: You can guess exactly how it works, and it is remarkable how well it works. 

Chris Powers: For sure. Why do some concepts work really well in one city and they don't travel to the next city? And like, is that something you've learned? Like, can you say without a doubt, I know this works in Dallas, it will work in Houston or it won't work in Houston? Or sometimes, have you been wrong where you thought something would really work in a city and it just didn't?

Hunter Pond: Absolutely. 

Chris Powers: And why is that? Is it people's taste buds? Is it literally just nostalgia and what people are used to? 

Hunter Pond: I don't know. I can't speak from experience on conceptually if one would work. All my bad decisions, where I've drilled dry wells is bad real estate decisions. 

Chris Powers: Really? 

Hunter Pond: Yeah. Real estate is such an important element of this business. 

Chris Powers: Okay. Well, you said it's number one. 

Hunter Pond: Yeah. Don't geek out on me, real estate bro. 

Chris Powers: I know. We're working on something, to be TBD. Stay tuned people. 

Hunter Pond: That's right. Because there's just the way people spend their dollars and the optionality these days, it's getting harder and harder to attract that credit card swipe. And so, it's looking back on the failures I've made, I would say, I don't mean, I don't think I've opened an ill-conceived concept yet. But the ones that haven't worked have been either we misjudged the parking, we misjudged the way that the traffic was going to work, the egress, ingress, decisions like that. I mean, most of our concepts are pretty, I would say, outside of Bar Sardine and then Tei-An that we just bought, pretty American. So I can't imagine that's, it's the concept that doesn't resonate with people. 

Chris Powers: So what did you- is this just kind of what happened, and there was no grand strategy? I think you have, what, nine concepts now or seven. 

Hunter Pond: Yeah. Nine brands. 

Chris Powers: Okay. Is that just because you're a freak and like lots of concepts, or did you think this is a better way to build the business as opposed to like Hudson House was working, I'm going to spend all my time to build a hundred Hudson Houses? And you might say, we're still going to do that. We're going to do all these other things, like what... 

Hunter Pond: We are still going to do that. That's our number one goal. 

Chris Powers: With every concept or just with like one or two of the horses?

Hunter Pond: No. Again, you're going to love this answer being Dr. Real Estate. 

Chris Powers: Come on, baby. 

Hunter Pond: It was real estate dependent. So, coming out of COVID, there were so many class A locations that became available because the evil landlords would kick out tenants before their leases were over because they owed back rent from COVID. I say that facetiously because we were there to swoop up a lot of great real estate. I can't put a Hudson House on every corner. And so it's truly a by-product. A lot of our brands are a by-product of the available real estate. So Preston Hollow, Park Cities, Lakewood, there was a huge gold rush in real estate for great locations. And so I mean, it almost killed me. It almost bankrupted the company. 

Chris Powers: COVID? 

Hunter Pond: No, taking on so much at once, signing so many different leases, starting so many different brands all at the same time. And it was just pure ignorance, honestly, I didn't realize, I had no clue how hard it was going to be, and I didn't realize how expensive it was going to all be. But that's how we kind of wound up in the position of having so many different brands. 

Chris Powers: So, you will scale to the extent that the real estate is available? It's not capital constraints, it's not a lack of ideas, it's a lack of good real estate. 

Hunter Pond: Correct. 

Chris Powers: And I'm assuming you're now in a point where you're getting the call going, Hey, we got this space opening up, we really want you here. Or is it still a dogfight for every space? 

Hunter Pond: We get called constantly. I mean, one of our partners, a guy named Matt, he runs all the real estate, and I think his phone is the busiest phone I've ever seen in person. 

Chris Powers: Really?

Hunter Pond: Yeah. I mean, we have a great balance sheet. So obviously, guys like you want great credit tenants. We now fit that category. And then obviously, we're considered one of the most creative groups within the region. So if you couple great credit, high levels of credit with creativity, and I think we're also known for being consistent operators. It's kind of like the trifecta. And so, we're us, Fox Restaurant Group is up there; there's a handful of groups that are probably on a very short list of first calls. 

Chris Powers: So, when you wake up in the morning, are you still thinking about the tenth concept, or like will come a day where you're not thinking about the next concept but you're thinking about... 

Hunter Pond: The day’s here. Yeah, I mentioned it earlier. I'm worn out from creating.

Chris Powers: We're going to stick with nine for now?

Hunter Pond: Well, no, because we're getting into the acquisitions business. But creating from scratch, I'm taking a breather. You have it on record. Do you hear that, Rick? Do you hear that, Rick? 

Chris Powers: Rick, this is on notice. You play this for him anytime. 

Hunter Pond: There's a few. 

Chris Powers: Anytime he comes up with a... replay this. And that's more just cause it's hard?

Hunter Pond: It's so hard... It's emotionally draining. And not just for me, because I lean on- because the organization is so big now, I lean on a lot of people to help me create. And we've got a great arsenal of brands right now, almost all of which I think are scalable, a few exceptions not, that I'm just not being the best steward of everyone else's career that's dependent on me if I'm not driving the bus down the fastest lane towards success. And it used to be creating was the fastest lane, and now it's scaling. And so, that's why. 

Chris Powers: Okay. Let's talk about acquisitions. Are you looking to buy one-off like diamonds, or are you looking for chains that you could still put them in the diamond category? But you bought the Tei-An. But that's a... That is premium, creme de la creme, Japanese food. It's one restaurant that's beloved by many. Or are you looking for like the next Hudson House that might already have ten locations and you're going to come in and grow it to 100 or both? 

Hunter Pond: I would say we're looking for mid-size to, I would say mid-size groups to buy. I have seen it, I've experienced it, growing from five locations to ten is so hard.

Chris Powers: Really? Harder than one to five?

Hunter Pond: Yes.

Chris Powers: Why?

Hunter Pond: I'll rank them. One to five, if you're capable of the art and science piece, you can grind. And I've got some friends in Dallas who own between one and five restaurants and they run a tight operation. It's them, they might have like an assistant or one or two people working for them. And you can make a lot of money doing that. You cannot run that type of operation without proper infrastructure to get to ten locations if they're busy restaurants, can't do it. I've experienced this. One to five is hard. Five to ten is really hard. Ten to twenty is effing impossible. I mentioned this earlier, it almost killed me and my partners. We grinded. I always say, I always compare it to, you've seen Shawshank Redemption, and Andy Dufresne's crawling through that human waste and comes out at the end and does that. That's what it felt like to finally get to the scale of 20. It was so hard. And I don't think a lot of people are cut out for it. And it's not me like patting my own back. It's just we worked so hard to get there, that now if someone's at that three to ten range and doesn't, and maybe it's age dependent, maybe they're in their fifties or sixties, have a great brand, just don't have the fortitude or the desire to really grind to get it to twenty, then we'd like to be one of the groups called to submit a bid to take it from, cause we've done it before and have the experience, six to twenty locations or beyond. So that's it. And then if- Tei-An was a special deal because it's my favorite restaurant in the United States. 

Chris Powers: So that was more of like... just going to have some fun and obviously want to do really well, but yeah, it's close. I'm a member. Okay. How do you value a restaurant? Just multiple of EBITDA, or is there any other factors that come in?

Hunter Pond: Multiple of EBITDA. 

Chris Powers: And going back to real estate, and this was a big thing during COVID, and I think it's just a big thing in general, a great restaurant, especially one that's not at a, even if it's in a single location, but if it's in a strip center and it's crushing it and bringing in a ton of traffic, that landlord's waiting for that lease renewal and they're going to just eat that margin up come lease renewal. 

Hunter Pond: You guys are the best. 

Chris Powers: We're the best. But I imagine you want to own some stuff or have- how do you de-risk not creating the greatest location and then being a victim of your own success where they take all your margin at renewal? Or is there no answer? You just got to- cause they don't want to lose you either. 

Hunter Pond: I would love to be buying the real estate. One of the problems with class A real estate is that a majority of them are owned by legacy holders or REITs. So you can't buy, it doesn't matter. You just can't. 

Chris Powers: So, you just have to sign like a ten year lease?

Hunter Pond: Ten year lease with two five year options, and options are usually the first- 

Chris Powers: Tapped to some degree.

Hunter Pond: The first five is usually tapped. The last five is at market and that's when we'll get you. If we're doing our job appropriately, then it is a partnership. I don't care. I mean, the only way it goes from partnership to them wanting you out is if you're not doing your job properly. So, there's a balance there. I mean, we're so young and early in our careers, we don't have an immense amount of experience with renegotiating existing locations that are crushing it and being squeezed hard, but I do know from my experienced older friends that it does happen. I mean, it happens to Hillstone all the time. And it's crazy. I've seen landlords try to get snarky with them and they'll just pick up their bag and leave. And they're the best, I mean, they're the preeminent operator in the entire country. 

Chris Powers: Why? 

Hunter Pond: Consistency, their dedication to maintaining their spaces, their eye for talent, their obsession with aesthetics, their training systems. 

Chris Powers: So, are they kind of your North star? 

Hunter Pond: They are my North star. 

Chris Powers: Really? 

Hunter Pond: Oh yeah. I mean, I have a lot- 

Chris Powers: I was going to ask you that question. Who do you admire the most in the industry? Is it Hillstone? 

Hunter Pond: They're kind of mad at me, so it's hard to say yes, but yeah. I mean, I just hired a lot of former Hillstone people. But Hillstone is, it's weird. You have the exact same experience at all their restaurants across the country. That is so hard to do. In my opinion, they're the Michael Jordan. So yeah. You don't know- you probably aren't going to be able to be them, but it's a great North star. It's a good way of putting it. 

Chris Powers: It's one of those things like you know it when you see it, even if you, like you can see it, you can walk into one, but to replicate it is like a lifelong journey.

Hunter Pond: You can't replicate it. Yeah, there's been a lot of groups try to replicate what Hillstone does. And I make, I don't try to hide it at all, there's a lot of elements of their program, systems, even on some of the food items that we've replicated or tried to use as our basis for things. But our business model is different in that we use them as a North star on some things and then try to, we put our own creative spin and narrative on it. There's some groups out there, the J. Alexanders of the world, the Doc Bs, and they're just trying to like literally replicate it. 

Chris Powers: Charleston.

Hunter Pond: Yeah, it's impossible. You can't do it. There's just, sometimes there's magic. It sounds cheesy, but there's just magic to the artistic side of the business. That's just, you can't replicate. 

Chris Powers: All right, dude, this has been awesome. You're the GOAT. 

Hunter Pond: This was great. 

Chris Powers: It's been awesome to watch you grow this thing. 

Hunter Pond: Appreciate it, dog. 

Chris Powers: Thanks for spilling the beans today.