Building a Winning Team with Andrew Smith of Savory Fund

Speaker 1: 0:00

Welcome to another edition of Give an Ovation, the restaurant guest experience podcast, where I talk to industry experts to get their strategies and tactics you can use to create a five-star guest experience. This podcast is sponsored by Ovation, an operations and guest recovery platform for multi-unit restaurants that gives all the answers without annoying guests. With all the questions. Learn more at OvationUpcom. And today we have a man who is not just giving me life advice, not just giving me business advice, but he has given me hair advice, all of which has changed my day-to-day routine, has improved. Ovation has improved my life. Andrew freaking Smith. How are you, andrew?

Speaker 2: 0:41

Good, that's quite the intro brother. I mean, come on Life advice and hair advice. I don't think I've given hair advice to anybody. Andrew, that's quite the intro brother. I mean, come on Life advice and hair advice. I don't think I've given hair advice to anybody actually.

Speaker 1: 0:48

Oh, do you know what and actually I didn't even finish the intro You're the managing director and co-founder of the Savory Fund and just a consummate entrepreneur. But it surely was the first time that Andrew and I met. It was at Silicon Slopes, or what's that event called Silicon Sl called? Is that what it's called? Um, the big one that's in, like the conference center, and we were like, yeah, it's all like.

Speaker 1: 1:11

And so we were walking by each other and I'm like, andrew, and you're a hard guy to miss, you're like eight feet tall with like six feet long hair, and I'm like, and I had long hair at the time, that was like down to my, down to my collarbone, and I'm like, what do I do with my hair? And you're like, let me tell you, you got to invest in a good straightener, and I was like a hair straightener, and so, anyway, it it changed, uh, it changed the game, and I kept that hair for as long as I could stand it, and then one day I woke up and it was like all messy and a knot and I was like I can't do it anymore.

Speaker 2: 1:47

So but several times I've been close.

Speaker 1: 1:50

I couldn't even imagine you with short hair.

Speaker 2: 1:52

Oh no, I have to just keep it now. I'm sorry.

Speaker 1: 1:55

Yeah, no, don't apologize. I mean other than the fact that you know you got the best hair in the industry, and I wish I did.

Speaker 2: 2:01

but no such luck. We should talk to the people out there that do the 40 under 40 and top 100 restaurants, whatever, and just do the top 10 hair Top 10 hair.

Speaker 1: 2:09

Yeah, I mean, obviously Sterling Douglas would be on that list. Yeah, he does. Steve Simone used to be on that list. So you at the Savory Fund, I mean we've known each other for years and it's incredible to see what you and the team have done, because and I use the team with a capital T-E-A-M because you have put together such an incredible team, starting with your marriage. I mean, your wife, shauna, is just such an incredible, human, great business leader. Everyone that works with her loves her, and the people that you have Josh Alonzo, the leaders of the individual brands, like Rob at MoBetas, I mean, like everyone that we look at. Otto is just incredible brand ambassador and what he's able to do. And so, as you look across the brands and you look at the people that you've brought in, what attracts those people to Savory Fund? How have you brought them in to such an incredible team?

Speaker 2: 3:12

Yeah, it's a great question. I tell some of our LPs when they join our fund. We have fund one and fund two and we just launched fund three and one of the things that they like the most is just the fact that we've been together so long. And one of the things that they like the most is just the fact that we've been together so long. You know, I joined this industry after being in tech like you were in Zach, as you know from 11 years of building and selling three different tech companies, and when I joined the company, the company was already founded by Shana. She was already a restaurateur, she had her first restaurant.

Speaker 2: 3:39

I couldn't believe that at the bottom of a P&L, you could actually see profit and you're in the tech industry. I mean that is tough because you kind of tell you, yeah, profit, what is that? That's a novel idea. And so I joined her and we slowly assembled this team of experts and one of the things that I know that you need to do in business, you got to surround yourself with people that are experts in their disciplines. Right, I'm really good at something, but I'm not good at you know, expert at everything. And so I put around us the team of experts.

Speaker 2: 4:10

And the thing that's crazy about Savory is I think our average tenure right now is surpassing 11 or 12 years average tenure. Wow, and that's a long time. I mean a lot of people in this industry. You know. I really respect the old veterans that have been with businesses for you know, 15, 20, 30 years with some of these bigger businesses in the food and beverage industry. But for the most part people jump around every two or three years to different opportunities and for us we're just like a happy family. We've had zero attrition from director VP C-suite level and it's a testament to we enjoy what we do.

Speaker 1: 4:36

And one of the things that your teams have done is just create. Amidst a backdrop of uncertainty and financial turmoil and struggle in the restaurant industry, your brands are doing so well. What are things that successful restaurants are doing right now, that struggling restaurants are missing the boat on?

Speaker 2: 4:59

Yeah, listen, if you look over the last four years, it's probably some of the most tumultuous times for all of us in personal life, in business life, as entrepreneurs, restaurateurs, operators, executives and companies trying to perform. It's one of the hardest times and people have asked me what do you think is why? Has it made it so hard recently? And I don't know if you feel the same way, zach. I'm sure that those that are listening right now probably feel the same way. But when I lived through the dot-com bubble, it was like a bubble and it popped like overnight right, it just was immediate that it happened. And then the 2007 or 2008 crash, financial crash, recession it was like a bubble. Within like a month, pop everything. All the financial institutions were under pressure. This one has felt like an elongated pressure on all sides of that balloon, like everything's harder right, cost of this commodity, access to you know, supplies, construction, gouging like everything around the bubble or the balloon is being pressed and there's compression on all sides of it.

Speaker 2: 5:54

That's why I think it's the hardest right now, and so I just think that as you move forward, you know, with your brands, we've learned to have a superpower of decision-making. You have to decide things quickly. You got to keep momentum at all times because if you're not pivoting and you're not growing and you're not actually keeping momentum, the business is going to start slowly shrinking. That's just the bottom line. So I think our superpower is decisiveness Decision-making is a superpower and making sure that your teams are aligned with the long-term goal. You can't make decisions for the week or the day. You got to make decisions for the year or the next five years.

Speaker 1: 6:31

And I think that is so spot on because I actually just met up for we hung out for a couple hours the former president of R&R and we were sitting down at a restaurant and talking about those early days of COVID and how everything kind of shut down on a Friday and on Monday. On Monday there was an entirely new process for setting things up. There was a new system for getting drinks, there was a new menu items. You created family packs, had photos taken and up on the website ready to sell literally that Monday, like that type of decisive action. How do you inspire that with your team without them going too far? Fringe Cause? I think there's the other side to that. Stick right Is like, hey, let's make quick decisions, but on the other side it's that okay, well, somebody can go like totally off the you know out in left field and make decisions that quickly that are really bad. So how do you make sure that they're sticking to the right brand?

Speaker 2: 7:34

Yeah, it's a, it's a great question because you can let it get a little bit. You know, I would say wild, wild west, right, Everybody having ideas and kind of running for different hills. And I think that with our team, the one thing that we have had as a constant is that the best idea wins, Doesn't have to come out of my mouth, Doesn't have to come out of Shauna's mouth or any of our senior leaders. It doesn't matter who has the idea. If it's the best idea and we all feel like wait a second, that's the idea, then we do it. All feel like wait a second, that's the idea, Then we do it. But we all kind of keep each other in check that it's like whoa, that's a little too far out there, Come back to the table. But we're going to make the best decisions here collectively. So again, decisiveness, but also best idea wins at all times.

Speaker 1: 8:14

Yeah, and I love that not pushing it off to, hey, let's meet next week to discuss the ideas, to put something together for next month to launch. But it was like boom, let's do it.

Speaker 2: 8:23

Well, the crazy thing during that time and I hate to live in the past, but we learned a ton from that is things were different at 7 am in the morning and then they were different at 2 o'clock in the afternoon and at 6 o'clock that night, because things were being learned throughout the day. Cdc would come out with this and that, but that muscle that we exercised exercise Zach was decisiveness, pivoting, pivoting quickly and then testing like A-B testing Is that working better than this? No, okay, get rid of this. Do this one because it's working better. So a lot of A-B testing quickly and then making decisions rapidly.

Speaker 1: 8:53

Yeah, and you guys are actually in a really unique spot because, typically, when you look at, you know, when I talked to a lot of restaurant investors or I talked to a lot of investors, when you look at, you know, when I talk to a lot of restaurant investors or I talk to a lot of investors, because you know I've talked to with Ovation, I'm approaching like 800 investors that I've met with talking about Ovation and sometimes they'll say, hey, we love the horse, we love the jockey, we hate the race, right, meaning that they like the team, they like the product, but they don't like restaurants. And you are not just, you're not going in for restaurant techs, you're actually working with the restaurants, right, why are restaurants ever going to be sexy and mainstream investment? And why aren't they sexy and mainstream investments right now?

Speaker 2: 9:36

It's the same thing, I think, with the new era of AI. So you have a lot of AI opportunities that people are coming to the market with to invest, you know, to raise money, and investors are looking at it. People just don't understand it, so they're scared of it. They know they have to be in it, they know it's probably the future, but they don't invest into it because they just don't have knowledge.

Speaker 1: 9:55

They know their brother-in-law that they gave 10K to to open up a restaurant. Shut it down in three months, right.

Speaker 2: 10:01

The problem with restaurants is there's just a lot of fallacies and misconceptions and misperceptions. To be honest with you, I had them. When Shauna approached me when I was this high and mighty tech guy because I was and venture and private equity backed and she says, hey, I want to open a restaurant I thought, oh, that's the stupidest idea and they're going to go out of business and they all fail. And it's the dumbest concept that people have in their minds and the way that we've been able to surpass that is to say, opening up a brand new restaurant. The first one to five years is always going to be the riskiest for any business, including restaurants. But after you're open for seven to 10 years, there's proof to say that you're no more risky than any other investment Like the risk of failure is less than 10%, and so because of that reason, we are able to get most investors over the hurdle, or most people that look at the restaurant industry like, oh, we don't go into that. It's like, well, you probably entered it the wrong way, you probably invested the wrong way by giving it to your brother to open up a hot dog stand that had no proof.

Speaker 2: 10:53

Those people that invest early, early, early on God. Love them because that's the riskiest money. But that's the riskiest money in any business, right? The people that put in money into ovation at the very, very, very first month, year, whatever. That's the riskiest money. Less risky now than then. And it's the same thing with restaurants. Are we ever going to surpass the whole? Oh, restaurants are just not sexy. I'll tell you this right now. Everybody thinks restaurants are sexy. They just don't want to give money to them because they hear everybody loses money on them and that's just not true. You know, we've generated several billion dollars in sales and hundreds of millions of dollars of profit. That is a better business structure than a lot of tech businesses raising money or CPG businesses or clothing company businesses with a lot of inventory, raising money and then losing money every month, saying someday it's going to catch up. I think there's other business models that are more risky.

Speaker 1: 11:45

Interesting. Well, now that you've said it on this podcast, it'll be just our little secret. So that way other investors don't have as much not as much competition for safer I invest into tech right, and I invest into all different categories.

Speaker 2: 11:58

I'm just saying, restaurants are no different than, I think, any other business or business segment. There's risk in all of them, but the longer that those businesses go, the less risk there is, and so that's how we've been able to, you know, surmount that barrier that we have ahead of us.

Speaker 1: 12:13

Now, last conversation topic is what advice would you give to restaurants as they are going through this pressure cooker of our current economy and not knowing when the lid's going to get released. I mean, it just feels like things are getting tighter and tighter and tighter, but is it going to get tighter? Is it going to let up? I think. What advice would you have, as we're running, you know, for restaurant operators right now?

Speaker 2: 12:33

Yeah, we have a unique lens, zach, because we talk to new restaurateurs and founders every single week, if you can believe that, like we're doing hundreds and hundreds of conversations with brands across America, and there's thousands and thousands of more concepts out there that we would like to talk to over the years. And one thing I would say first and foremost just slow the hell down. Everybody wants to grow and be the next 2000 unit company that's a billion dollars and go in public tomorrow. It takes time. This is a long-term race, it's a marathon, not a sprint. But I would just tell everybody and I do tell a lot of founders this slow down, perfect your business. In fact, I was just at lunch today with well, you know him because he's a friend of yours too, but Wade Allen, he's over at Costa Vida and we were talking and ran into a restaurateur that I know and he's got four units and I said how are your businesses doing? Your business is doing? He says they're doing so great. I've got a lease here, sign a lease there, sign. I said just pause and perfect what you have. Make sure that they're all profitable, make sure that you're running a great organization and then add another one.

Speaker 2: 13:37

Stop just adding, adding, adding, just to add. I remember there was years when we were doing meters big grand cafe where people say, how many are you doing this year, or how many are you doing next year? It was always like this number competition, and I'm like that is the dumbest thing that we, as an industry, focus on. We should stop talking about our numbers of units and how much we're growing. We should be talking about how healthy are the businesses that we have. And so I would just tell everybody slow down and make what you have great, and when it's great, then start adding and add it. Add it a pace that you can control great. And when it's great, then start adding and add it. Add at a pace that you can control. We at savory are totally fine to have our foot on the brake pedal and the gas, and so we go okay, gas, okay, nope, we're breaking, we're breaking, we're going to slow down, perfect. Okay, we're ready more gas and we do that. And others are like gas, we're going to figure it out along the way, and I'm like this is the dumbest model and I wish everybody listened to this. If we would stop doing that, we would not be giving this industry a bad rap. Just slow down and let's perfect our businesses, because there's not.

Speaker 2: 14:37

This industry is not going to go anywhere. Zach Like. It's the one of the largest TAMs in the world, next to medical right. It's $1.1 trillion going through this whole industry. There's enough to go around and we're going to be here forever. Food and beverage will be here forever as long as there's humans on earth. So slow down. You think that there's going to be now, 1 billion of people tomorrow, and there's 8 billion last year? No, we're going to continue to grow and there's going to be opportunity always. So just slow down. That's some great advice Now, andrew.

Speaker 1: 15:05

where can people go if they're interested in learning more with the Savory Fund or they want to get in touch with your team about their restaurant?

Speaker 2: 15:12

Yeah, it's really hard, savoryfundcom. You can go there and you can contact us. I mean, it's really easy. Rob Gardner handles all of our originations and we look at every single brand on the planet of Earth and we want to have a relationship with everybody. So just reach out to us via the web, because there's an info button there too, and make sure you register for Restaurantology this year. You're going to come to this year, aren't you Dude?

Speaker 1: 15:34

love. It is such a fun event. There's so much learning there and it's just a wonderful place to be in anyway. So thank you for what you're doing for the industry and what you've done for me and Ovation, and I think it's just it's awesome to have someone like you who's got the energy and passion and vision to bring to the hospitality industry. So it's awesome.

Speaker 1: 15:57

So, Andrew, for giving us some of your sweet wisdom gained from the Savory Fund. Today's Ovation goes to you. Thank you for joining us on Give an Ovation. Thank you, thanks for joining us today. If you liked this episode, leave us a review on Apple Podcasts or your favorite place to listen. We're all about feedback here. Again, this episode was sponsored by Ovation, a two-question, sms-based actionable guest feedback platform built for multi-unit restaurants. If you'd like to learn how we can help you measure and create a better guest experience, visit us at OvationUpcom.