Morgan Stanley
  • Now, What's Next?
  • Jan 5, 2021

Recipes for Restaurant Resilience

Hosted by Sonari Glinton

Transcript

Sonari Glinton:

Let's begin our story by setting the scene. Now, we need a little bit of atmosphere. I like our sound designer, Shaun, to play some tinkly piano music right about here. Yeah. Jazzy a bit like piano bar style. Yep. Perfect. Okay, remember just sitting at your favorite restaurant with a drink? Bartender, I'll have a Gibson martini. That's a gin martini with an onion.

Sonari Glinton:

Now, let me ask you, have you ever witnessed something become a hit up close? One of the most amazing things I witnessed in my life is a neighborhood restaurant become a Chicago institution. The kind of place where you go to get full, but also to have a night out to remember. It's the kind of place that Michael Jordan, all the Bulls would head to after workouts and home games.

Steve Lombardo:

So, my name is Steve Lombardo. I am the chairman of the Gibsons Restaurant Group, one of the larger, independent restaurant groups in the Chicago area.

Sonari Glinton:

Steve, or at Lombardo as I call him, we've been friends since long before his dad opened Gibsons more than 30 years ago. And, in recent years, I've watched him slowly take over his dad's line of restaurants. And I wanted to know how he was doing.

Sonari Glinton:

So, you took your dad's business. You've been the chairman for about five years or so. You've been in charge of things. And the calamity of calamities happens. I've never asked you, how has that felt?

Steve Lombardo:

I mean, obviously, like you've gotten hit by a ton of bricks and kicked in the groin all at once. It is brutal.

Sonari Glinton:

Lombardo tells me that when the quarantines began, Gibsons was barely doing 15% of regular business.

Sonari Glinton:

Now, it's times like these, when you start thinking the unthinkable. And, in Lombardo's case, that meant delivery.

Steve Lombardo:

It was taking every menu item at every restaurant and putting it in a container, and letting it sit there for 30 minutes, and then tasting it. And saying, "Okay, is that acceptable or not?" The things that did not taste well after 30 minutes of sitting in a container, you said, "You know what? That doesn't belong on the menu.

Sonari Glinton:

For a Chicago steak house or an institution like Gibsons, pivoting to delivery is a huge deal. This is the kind of place that brings the raw cuts of steak to your table, so you can pick out which one you want cook. I mean, what app has that setting. But can a dry-aged prime Chicago cut steak in a paper bag, save the restaurant business? Well, it might have to.

Sonari Glinton:

I'm Sonari Glinton and this is Now, What's Next? An original podcast from Morgan Stanley.

Sonari Glinton:

Before the outbreak, nearly half of us went out to eat at least twice a week. Half the money we spent on food went to restaurants. But here's the thing, restaurants typically operate on razor thin margins. Now, corner taverns, greasy spoons, neighborhood institutions, even national chains, they're going out of business. By September 2020, over 100,000 eating establishments in America closed forever.

Sonari Glinton:

Things do not look good for our favorite places. So many are adopting new ways of doing things. And along the way, they're rethinking what it really means to be a restaurant. But will it be enough?

Sonari Glinton:

This season on Now, What's Next?, a podcast from Morgan Stanley, we're trying to figure out what life after a global pandemic looks like, or can look like. We're exploring how the world continues to evolve in the face of a global crisis. And the rare chance it's given us to rethink our assumptions. This may be a once in a lifetime challenge, but it's also an opportunity to learn from this moment and create real and lasting change.

Sonari Glinton:

In this episode, if we won't go to restaurants for that dine-in experience, then restaurants are going to have to come to us. That's Now, What's Next?

Sonari Glinton:

When Gibsons sales nose dive the impact that went beyond just their bottom line. They were forced to cut their staff by 40%. And with a operation that big, it means a lot of people lost their jobs.

Steve Lombardo:

People who've worked with us for 30 years and then some who've only worked with us for a year, but 800 of those people aren't with us anymore. Guys, who I knew from when I was a kid, when I bused tables, we had to lay them off. They're part of the family, that was the toughest thing. We did everything we could but, at some point, it's survival.

Sonari Glinton:

They are not alone. The pandemic has been devastating to restaurants and a lot of people rely on them, not only for a meal, but to make a living.

Colleen Vincent:

There's not just a person that cooks the food. There's a person that serves the food. There's a person that washes the dishes. There's a person that preps the food. There are a lot of hands and those people are just like the rest of us, and deserve to be cared for just like the rest of us. They deserve the opportunity to be safe. They deserve the opportunity to do the job that they love, and be able to care for their family.

Sonari Glinton:

Colleen Vincent is the Vice President of Community at the James Beard Foundation.

Colleen Vincent:

If the majority of the restaurants don't survive this moment, it means transformation and a devastation, unlike much of what we've ever seen in our lifetime.

Sonari Glinton:

Colleen can't say exactly how many restaurant workers face unemployment in the US this year, but the foundation is alarmed by the size of this crisis.

Colleen Vincent:

I think that the closest that we get to understanding that number is anecdotally without an intervention we can lose up to 85% of this industry. So, what are your options, if you lose your job in the restaurant industry? To be very frank, not very many.

Sonari Glinton:

In the face of potential ruin, restaurants everywhere trying any number of things to innovate their way through this crisis, or at the very least keep the lights on. Delivery and takeout is huge. So, is retail. Everything from t-shirts to homemade spice rubs. And some places are going much further. And here's one example, it starts with burnt bacon.

Shaun Garcia:

So, I'm going to just use an induction burner, whether using any burner in your house. I'm going to kind of get the pan kind of a medium heat. And we've already got our bacon cooked off.

Sonari Glinton:

While you're doing that, I've gathered the ingredients in my kitchen as well. So, I burned my bacon, but I still have the bacon fat.

Sonari Glinton:

Five minutes into my online cooking class with Shaun Garcia. And I've already burned...

Shaun Garcia:

Well, if you still got...

Sonari Glinton:

And eaten the bacon.

Shaun Garcia:

If you still got the bacon fat use that. It's going to give you those flavors in there, like you had the bacon in there.

Sonari Glinton:

Shaun is the executive chef at Soby's, where they cook up new South cuisine. It's a classy place that's been around more than 20 years. You'll find it in Greenville, South Carolina. And, today, from 2300 miles away from my kitchen in West Hollywood, he's teaching me how to make shrimp and grits.

Shaun Garcia:

So, what, essentially, we're going to make first is we're going to make a bacon tomato gravy.

Sonari Glinton:

Like so many restaurants, Soby's also needed to find a way to make ends meet that didn't involve packing their dining rooms with customers. That's where the virtual shrimp and grits lesson comes in. The idea is, very simple. Swing by the restaurant, pick up the ingredients, what they call a virtual cooking box, and that night you take part in a Zoom cooking class with the head chef himself. Or, if you're like me, and you live thousands of miles from Greenville, you can make do with what you can get at your local grocery store.

Sonari Glinton:

Now, help me understand why you decided to make this offer.

Shaun Garcia:

Well, one, is to make that connection. To be able to give our customers something that they could have when we were closed. But also to still support the staff that was still coming in everyday.

Sonari Glinton:

Shaun knows he's in the business of creating and fostering links between you, the meal, the person who served it, and the person who cooked it. With the Zoom cooking classes, you get a shortcut. And that interactivity makes it even more intimate than it was before the pandemic.

Shaun Garcia:

So, something that we wanted to be still viable, still being in the community, still be there for our community.

Sonari Glinton:

And people are, well, eating this up. Some nights, they have more than 3500 people following along on a Zoom call, cooking their grits and, hopefully, not burning their bacon.

Shaun Garcia:

No matter what's going on around you and how things in life seems hectic when you bite into that shrimp and grits, that fish and grits for a small time period there, everything kind of stops. And you're consumed with that emotions of enjoying that food, and the people that you love, and the people in your family.

Sonari Glinton:

During a time when many restaurants are navigating openings and closings, and reopenings and re-closings, Shaun hangs onto these cooking classes. So, like me, you don't even need to live in Greenville to enjoy his Southern cuisine, even if what you're cooking. Doesn't quite match what served in his restaurant.

Sonari Glinton:

Shaun Garcia, and Steve Lombardo, they're engineering creative ways to extend their restaurant's story into our homes. But what happens when you're a chef who doesn't have a restaurant, but still hopes to create that connection, and share another story through food? It's simple, you fake it so you can make it.

Sonari Glinton:

Before the pandemic, a restaurant trend emerged called ghost kitchens. Essentially, these are restaurants that aren't restaurants. They exist exclusively in food delivery apps. There's a kitchen, sure, somewhere, but that's it. In 2015, one study found that 10% of all restaurants listed on food delivery apps in New York, apps like Grubhub or Seamless, they were ghost kitchens. And that number has only grown.

Sonari Glinton:

In mid 2020, a mysterious Pasqually's Pizza & Wings was showing up in cities where nobody had ever heard of a pizzeria by that name. Pasqually's pies, it turns out, were made in the kitchens of dormant Chuck E. Cheeses closed during the pandemic. It was, in fact, Chuck E. Cheese by any other name.

Ed Hardy:

Ghost kitchens definitely got a bad rap. And some of it's deserved because, from what I understand, some of the delivery companies are taking their data, setting up their own kitchens based on that data, so they can target hamburgers sell the best in this area of Westchester, New York.

Sonari Glinton:

This is Edward Hardy. He's a chef from Northern Virginia. He's talking about how delivery services are eating their way into the restaurant business. They're launching their own ghost kitchens, and competing directly with actual restaurants. And people don't like that.

Ed Hardy:

So, they set up a hamburger restaurant, and they name it Bill's Hamburger Restaurant. They're able to beat them on price. They have preferred delivery on their own website. And once you really go down that rabbit hole, you can imagine the advantages that a ghost kitchen restaurant set up by the delivery company would have.

Sonari Glinton:

And so, from the if you can't beat them, join them school of entrepreneurship, Ed decided to not let the virtual restaurants get the jump on him. He went out and started a ghost kitchen of his own.

Sonari Glinton:

For the pandemic, Ed was among the millions of hardworking people hustling their way in the food industry. One of the millions Coleen Vincent at the James Beard Foundation thinks a lot about. Ed cooked in a nightclub restaurant, and he was a teacher at a culinary school. The virus cost him both those jobs, as both businesses closed up shop. Suddenly, without work, Ed found himself kind of at a loss.

Ed Hardy:

And my day would consist of getting up, making myself a gourmet omelet for breakfast, and playing video games. And then, eventually, going to bed about 16 hours later,

Sonari Glinton:

He drifted around like that for a few weeks. And his friend, Nate, a former partner at the nightclub was also without a job.

Ed Hardy:

And he invited me over for a socially distanced barbecue. And he was looking for some comfort food. And he said, "Hey, Chef Ed make some perogies.

Sonari Glinton:

It sounded like Ed was a perogie pro, but he took it on as a challenge. One that didn't involve the video game console.

Ed Hardy:

I made some beet perogies. I made a blueberry lemon thyme perogie.

Sonari Glinton:

Ed's perogies were so good he and Nate realized that there might just be demand for their starchy nourishing comfort food. What, with everyone mostly stuck at home.

Ed Hardy:

Because we're internet savvy, the ghost kitchen phenomenon presented itself. We said, "What's the best place to set up a ghost kitchen?" Well, what was being unused in my life, it was the recreational culinary school, which had plenty of equipment.

Sonari Glinton:

And so, that's what they did. They set up in the gourmet culinary school. They called their perogie place, Zofia's Kitchen. It's named after who else? But Ed's completely fictional Polish grandmother. This is how you tell a story about food, right? They built the menu of perogies that only a make-believe bubby could cook. Loaded baked potato perogie, spinach and feta perogies, pastrami perogies. There's even something called The Fat Elvis, a dessert perogie with bacon banana and Nutella. Oh, saints preserve us. The idea took off immediately. Really. They hadn't even cooked anything yet, but they were a hit the moment they first tested their online ordering system.

Ed Hardy:

We didn't realize we actually turned it on, like it was live for real. And within about 10, 20 minutes, somebody placed an order, which shocked us and surprised us. But also was really encouraging. I mean, somebody noticed this thing that had been out in the ether for 10 minutes, and said, "I would love to have some perogies." We we managed to be able to call him back and refund his money, but he was shoving his money at us.

Sonari Glinton:

The new business model, the virtual restaurant, let's Ed connect with a hungry customer base. Ed has learned not to be afraid of ghosts.

Ed Hardy:

Nate and I should have had a lot of fear in mind, opening during the pandemic when restaurants are closing. But just a little belief, and just a little creativity, and just a little smart look at the market around you is allowing us to succeed.

Sonari Glinton:

Bringing you comfort food in a time of anxiety, isn't that what the best chefs and grandmas do all the time?

Sonari Glinton:

The COVID crisis confirms what restaurants and chefs know about success, it's not only what's on your plate that matters. It's connecting that meal to the place that makes it. Even better, connecting with the person who cooks it. In normal times, this is what helps get people out of the house and off the delivery apps. But in a pandemic year, sometimes you just have to bring the chef, quite literally, to them. And there's nowhere that that's more clear than a crazy experiment that took place in Florida.

Sonari Glinton:

In March 2020, an NBA player tested positive for COVID. Not long after, the entire basketball season was suspended, at least until early June. That's when the league made a surprising announcement, they would finish out the season, but all players and support staff would live together in Florida with no contact with the outside world. They called it the NBA Bubble. In other words, the biggest shelter-in-place order was about to play out in basketball. It was great news for fans, but not for Chef Lex.

Chef Lex:

I was very upset. I was like, "Damn, how am I going to get a piece of this? You're literally taking all my clients, all my money. Not only am I about to suffer for this, all the chefs that I've been keeping employed during this time was about to suffer this."

Sonari Glinton:

That is chef Alexia Grant. She got her start working in restaurant kitchens. But, eventually, she grew a business providing private chefs to wealthy customers. Customers like NBA athletes. But if all those athletes were going to be walled up in that bubble, that would be a problem for her and her business. Lucky for her, and maybe unlucky for the NBA players, the food in the bubble, well, let's just say, it became an issue. Montrezl Harrell posted a picture of a nasty looking chicken dish to his Instagram with the caption, "Yeah., I'm about to starve here in the bubble." Joel Embiid posted that he was, "Definitely losing 50 pounds." This was Chef Lex's chance. She sent a detailed proposal to the NBA.

Chef Lex:

And when they found out how many clients I had and what my plan was, they offered me a space in their executive chef kitchen to run my business. And I was floored. I was like, "What? Really? I get to go in the Bubble?" I was just so excited. I jumped right at the opportunity. It was a no brainer for me, at that point.

Sonari Glinton:

Who better to get the call, really? Chef Lex had been helping to feed athletes for years. And she knew what they like and how they need to eat.

Chef Lex:

I made, for the NBA Bubble, a comfort food menu of soul food and Caribbean infusion. My genre that all my clients call for is healthy comfort food in totality. So, I am half Indian and half Jamaican, Caribbean. I wanted to create a menu and just let everybody, who was able to try my food, feel like home because no one was able to have that.

Sonari Glinton:

Chef Lex found success, huge success in the Bubble. She's a mini celebrity now featured on NBC, Sports Illustrated, and NPR. Now, business is booming. The folks with money were desperate for a private chef to help them weather the pandemic.

Chef Lex:

So, my phone started blowing up and I didn't have enough people, at the time. And it was also, I mean, COVID, they need a chef, but everybody wanted their own chef.

Sonari Glinton:

And, before the pandemic, she was at the whim of fickle customers. Some of them would make ridiculous demands. Not the NBA players, but other wealthy clients, who weren't afraid to air their prejudices.

Chef Lex:

"I don't want minorities. I don't want a woman. I don't want someone who looks like this." A lot of these issues would come up in the interview process of accepting a new client. I'm walking into a situation thinking that it's going to be about food and allergies. And it's more about someone's gender and someone's nationality. I mean, it sucks.

Sonari Glinton:

But as demand for in-home chefs outstripped supply, a lot of that prejudice disappeared. This in a crisis where Black-owned businesses, be it food based or otherwise, close at twice the rate of their white counterparts. From Chef Lex's view, there were opportunities to be found.

Chef Lex:

The level of success that I reached feels surreal. It's the thing that I've been praying for so long, so long. Screaming it onto the universe that I want it. And it's happening.

Sonari Glinton:

Both Chef Lex and Ed Hardy have found ways to navigate this downturn. And both are surprised by their sudden good fortune. There are many other examples like this out there. There are also countless stories of tragedy. That's why Colleen Vincent and her team at the James Beard Foundation have refocused their mission this year to support survival and rebuild efforts across the industry. They're raising and distributing funds to those in need. And they've joined efforts to pressure governments to support the industry. And they're thinking about how restaurants can come back better.

Colleen Vincent:

The first thing that people have been thinking about is how to have a restaurant. That revenue is not an up and down thing. Certainly, like an industry wide consult on the true cost of operating a restaurant. On a true cost of labor, and how to support not only the owner, but the staff.

Sonari Glinton:

But it's not just about the money. It's about people as well.

Colleen Vincent:

Wanting to have a restaurant, wanting to be employed by a restaurant is as much of an American dream as any other. And is as valid of an American dream as any other.

Sonari Glinton:

Restaurants offer more than just a place to grab a meal. There's a story to every single place we love. And it's been hard to be a part of that story lately, but it doesn't go away. My buddy Lombardo at Gibsons in Chicago, he knows this all too well.

Steve Lombardo:

Why do people go to restaurants? We're social animals. We eat together, whether it's a birthday, or an anniversary, or just hanging out with a bunch of friends. And they can say, "Hey, I went to your place." They have memories that they've created that we helped them create. And there's something beautiful about that.

Sonari Glinton:

So, Gibsons does delivery, but ensures the food you bring home reminds you why you love them. Your favorite chef teaches you to cook for yourself until he can cook for you again. And another gives you a taste of home when you're trapped in the basketball bubble. And grandma [Zo-fia 00:22:36] shows up from nowhere to fill your belly and keep your cozy during a quarantine. That was a need that proved so pronounced, actually, that Ed Hardy's ghost kitchen is becoming something real. Ed is opening a lunch counter where you can eat hot meals and get perogies to go.

Sonari Glinton:

A good restaurant tells a great story. Coleen Vincent agrees.

Colleen Vincent:

Yeah. The secret ingredient is the restaurant story. And so, the way it's being told it is has changed, but the story is still there.

Sonari Glinton:

The restaurants with the best chances of surviving are the ones that recognize the value of building, and fostering connection. Of helping create memories, that keep people anchored to physical places. That alone is why restaurants need to be saved. When this crisis is over your favorite restaurant, if it's still around, will be jammed packed. I can't wait to have a real martini with a friend telling a bar story, being together, communing. I know you can't wait either.

Sonari Glinton:

The virus might go away, but that need, that desire to connect, never. I'm Sonari Glinton. And this is Now, What's Next? An original podcast from Morgan Stanley. Cheers.

In the wake of the pandemic hundreds of thousands of restaurants have gone bankrupt. For those holding on, radical new ideas are key for survival.

Before the pandemic, about half of all Americans dined out at least twice a week. The pandemic has pushed hundreds of thousands of restaurants into bankruptcy—and the rest are struggling to stay afloat. In order to keep the lights one, many have shifted their businesses models, and are embracing innovations and experimentation.

Host Sonari Glinton checks in with his friend Steve Lombardo, who manages Gibsons, a popular chain of steakhouses in Chicago. They’ve been hit hard by the pandemic. Colleen Vincent of the James Beard Foundation gives us a reality check on the restaurant industry at large—and explains why the stakes are so high. Executive Chef Shaun Garcia, from Soby’s in South Carolina, is teaching would-be diners how to cook his menu in their own homes. Chef Ed Hardy embraces the ghost kitchen model to cook his way out of trouble. And Chef Lex tells us what it was like to cook inside the NBA Bubble.