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The Whole Story with Anderson Cooper
Restaurant Nation, What's Changed? Aired 8-9p ET
Aired August 13, 2023 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
BOBBY FLAY, CELEBRITY CHEF: And that it's going to be -- you know, it's going to be tough. You can definitely make it happen. There's plenty of really good stories of people, you know, running restaurants and making a really big profit, but, you know, it's gotten tougher.
(END VIDEO CLIP)
JESSICA DEAN, CNN HOST: Don't miss Bobby Flay's new episode of "THE WHOLE STORY WITH ANDERSON COOPER." It is next right here on CNN.
Thanks so much for joining me this evening. I'm Jessica Dean. Jim Acosta's back next weekend. Have a great night.
ANDERSON COOPER, CNN HOST: Welcome to THE WHOLE STORY. I'm Anderson Cooper.
You may have noticed that dining out right now is a little different than it was before the pandemic. For one, there are fewer restaurants. An estimated 70,000 fewer in the U.S. than before COVID-19 according to restaurant researchers. And dining out seems more costly than ever with higher prices and sometimes added service charges that many restaurants say are vital to keep them running.
More restaurants are now offering takeout and delivery services. They're booming. In short restaurants have had to adapt and evolve in order to survive. One of the establishments that didn't survive is Bobby Flay's longtime New York City restaurant Gato. Bobby Flay is a well-known chef and host of the "Food Network" which is owned by CNN's parent company. He close the doors of Gato just days after lockdown began and that experience led him to think about who made it through the pandemic and why.
Over the next hour Bobby Flay takes us to restaurants around the country from Oregon to Kentucky to New York, and introduces us to some of the leading chefs and experts in the food world who say that dining out has changed for good.
BOBBY FLAY, CELEBRITY CHEF (voice-over): March 2020.
UNIDENTIFIED FEMALE: States are shutting down restaurants. UNIDENTIFIED FEMALE: That's an industry sector that's literally
switched off overnight.
FLAY: Like so many in the restaurant industry --
CHRIS BIANCO, CHEF, OWNER, PIZZERIA BIANCO: We lose thousands of dollars a day.
FLAY: Chris Bianco was blindsided by the totality of the pandemic.
BIANCO: Many of our restaurants around the country are closed and many of us may not reopen.
FLAY (on-camera): When you look at big moments like that, how do you face it? What do you do?
BIANCO: It was so not in our playbook.
FLAY (voice-over): The guy who had started his pizza joint in the back of a grocery store in 1988 had by now expanded to four restaurant in Phoenix, Arizona.
BIANCO: There we go. We can get the goods out there. (INAUDIBLE) to bring it out, but there it is.
FLAY (on-camera): The first time I showed up at your place, the maitre d was telling people like showed up, it's four hours. Now I know you're used to this, but that's a remarkable thing to have in a constant basis. People have been waiting on line for four hours for years and years and years eating your pizza. All of a sudden pandemic hits, what do you guys do?
BIANCO: It was like a movie that we never could imagine in this country. It was something that I didn't have a strategy. We weren't able to go to work or order food. No food in the grocery stores, while my (INAUDIBLE) is saying, all of a sudden his business wiped out. Now big box stores are frantically trying to make deals with these guys.
FLAY (voice-over): By the end of March 2020, financial losses and employee burnout had taken a toll.
BIANCO: Well, today will be the last day of very limited seating in our restaurants.
FLAY (on-camera): Did you close?
BIANCO: We never close.
BIANCO: Which in retrospect probably would have been the smarter move for everybody.
FLAY: Because nobody knew what to do?
BIANCO: Nobody knew what to do. I think our business was already on a lot of ropes. My purview showed me that we were running on a very archaic system.
FLAY (voice-over): In New York City, Chef Esther Choi was equally shaken when the bottom fell out.
ESTHER CHOI, CHEF, OWNER, MOKBAR: We had shut our doors and then I had to quickly think of ways to recover.
FLAY: Business had been booming at Choi's Koren hotspot Mokbar in the city's meatpacking neighborhood.
(On-camera): We're here on a weekday at Chelsea Market and the place is packed, right? It's crazy.
CHOI: It's packed. Always.
CHOI: Always. Can't wait to show you some tricks.
FLAY: Yes. I want to see some of my favorite dishes.
CHOI: So this is where our noodles are made, our rice bowls. We have a rice cooker here. All of these, our kimchi are toppings for everything. And then our broth we make here.
FLAY: Oh, my god.
CHOI: And this goes for 16 to 18 hours. We were doing our all-time highest sales ever. I planned to open like three more shops. We were ecstatic, our business was like booming, killing it. The pandemic hits, within a week it drops to 50 percent of sales and then to almost zero. My heart sank.
FLAY (voice-over): According to the National Restaurant Association, 110,000 restaurants closed by the end of 2020. Many of them permanently.
(On-camera): What about staffing?
CHOI: It was extremely difficult. I have my core team. When the pandemic hit, we were the ones working. We cooked every single day. We were the ones running everything with no hourly staff.
FLAY (voice-over): Back in Phoenix the staffing shortage forced Chris Bianco to cut the hours at his four restaurants.
BIANCO: For me to write, like, hey, we're closing early tonight or we're closed today, you know, because we don't have staff.
FLAY (on-camera): Less days a week. Right.
BIANCO: It doesn't make economic sense. We can't pay everybody and be viable for them and for us. FLAY (voice-over): More than three decades of restaurant jobs were
lost over March and April of 2020 according to analysis. That's around six million jobs.
CHOI: We had two locations, this one in Brooklyn. We were used to only the retail model but then I realized like we had to quickly change that to something more digital. More online. And so we partnered up with a company called Cook Unity and basically we were making meals that people can reheat at home. A subscription service where people order five to 10 meals and it gets delivered.
So we were getting a check every single week. And it really helped us get through the pandemic. We had to change our entire business model to make that work. Now we are doing over 15,000 meals a week on that platform today.
FLAY (on-camera): What?
CHOI: It's now such a big part of my business and what I realized was Mokbar is not a restaurant, it's a brand. Not only are we selling on Cook Unity, we're selling meals to Gold Belly, we're selling kimchi online, so that's how I revisited the whole model of the business.
So, Chef, can you grab the noodles? And you want to give that a little mix.
FLAY (voice-over): Choi was able to reopen Mokbar after two months but it's not the restaurant it was before the pandemic.
(On-camera): You don't even have counter seats anymore.
CHOI: We have full service here, 20 seats.
FLAY: Bar stools, right.
CHOI: After the pandemic is when I decided we're just going to do quick service and our sales have gone up.
FLAY: What do you pickle those in?
CHOI: Soy sauce and rice vinegar.
FLAY: Do you ever think about having a full-service restaurants?
CHOI: It is my dream to one day do that. I have over 100 employees. Right now the focus is making sure everyone's mouths are fed.
FLAY (voice-over): Chef Bianco struggled with the changing times.
BIANCO: Like what do we do? We just stay home and you're still hungry, and we've got to figure it out. Like we're matching cocktails. We're doing sauce packets. We need to do takeout for Pizzeria. Now we're takeout restaurant.
FLAY (on-camera): Takeout only.
BIANCO: Takeout only. It's all we could do. It was busy. But I think busy, you know, is such not the barometer for wellness.
FLAY (voice-over): With his restaurant operating at half capacity, Bianco had no choice but to pivot. He focused on other parts of his business.
BIANCO: Malcolm makes a beautiful durum bread, local durum. If you can create things that have some stability in your life like, you know, luckily I have a little tomato business.
FLAY (on-camera): Yes, talk to me about that. How old is that?
BIANCO: I think we've been on shelves for about 12 years. It's our little diner room.
BIANCO: Some paintings of my dad's up on the wall.
FLAY: That's cool. I love that.
(Voice-over): And then he took a huge risk.
BIANCO: We opened up here in Los Angeles in the middle of the pandemic. We've got good people and we use good things, and pretty simple stuff.
FLAY (on-camera): I've got to eat a pizza before I go.
BIANCO: Yes, come on, man. Let's go.
FLAY: All right.
How has it been in L.A.? Like the Row is kind of like a new development, right?
BIANCO: It's about 6 years old, yes, I mean it's brand-new but it's supposedly taken like almost three years out for the pandemic.
BIANCO: People show up here every day. It's crazy because in the middle of the pandemic when I said, we're going to do something in downtown L.A. Like who's smart, they'll be like, that's stupid when you live in downtown Phoenix, you know, back in, you know, whatever.
FLAY: You definitely picked the challenge.
BIANCO: I did. But good restaurants go anywhere. You know?
FLAY: They'll find you.
BIANCO: Yes. Totally, yes.
FLAY: All right, what's the story?
BIANCO: OK. OK. FLAY: Swim in garlic?
BIANCO: This is the story. I don't tell nobody but now they know, but we don't charge any extra for it but you can do half and half.
BIANCO: You get like half rosa and half marinara. That's nice.
FLAY (voice-over): The pizza legend says he's uncertain about the future. Hey, but that's the business.
BIANCO: I think we're adjusting to it, still.
FLAY (on-camera): You think the business is more challenging post- pandemic than it was prior to the pandemic?
BIANCO: We're more aware of it now. Thank you.
UNIDENTIFIED FEMALE: Thank you so much.
BIANCO: We appreciate it. Thanks.
FLAY: What's your future?
BIANCO: My future is presumptuous. I prepare myself for tomorrow every day. And I saw a duct tape in the yesterdays together.
FLAY (voice-over): When we come back --
ISRAEL MORALES, CO-OWNER, KACHKA: People across the country have reached out like what are you doing? How did you do that?
FLAY (on-camera): All right. How are you guy's doing?
BONNIE MORALES, CHEF, CO-OWNER, KACHKA: Hi.
FLAY: Bonnie, right?
B. MORALES: Yes.
FLAY: Bobby. Hi, how are you?
(Voice-over): It's a Tuesday afternoon at Kachka, an acclaimed Russian-inspired restaurant in Portland, Oregon. Before the dinner rush, the staff gathers in one of Kachka's dining rooms.
B. MORALES: So this is quarter one, first three months of 2023 that we're looking at.
FLAY: But they're not going over the dinner specials.
I. MORALES: What's really meaningful is when you look at the percentage of sales comparative to last year, that's a huge jump.
FLAY: They're in a meeting with Kachka owners Bonnie and Israel Morales who are discussing the restaurant's finances.
(On-camera): One of the things that you guys do that I haven't really seen a lot of is that you share your P and L statements, your profit and loss statements with your employees. Why?
I. MORALES: When you're faced with something really catastrophic and it turns your whole house upside down, like you can't go back to old practices sometimes. You can't really put the house back together.
B. MORALES: We've retained I think eight employees and had to terminate --
I. MORALES: Forty-eight?
B. MORALES: Forty-eight others.
FLAY (voice-over): As staff shortages escalated during the pandemic, the husband-and-wife team reimagined their business model to address employee and equity.
I. MORALES: We were looking at the humanity of what we are doing and what our employees are facing. They all lived with each other. The dining room managers and the general managers are making less than the servers and bartenders. When you go back and you like reenter this atmosphere again, you realize, we have an opportunity to change things.
FLAY: In 2022 the Moraleses did away with tips, instead charging a service fee. They added health insurance and a profit-sharing program. Three times a year, they open their books to the staff.
B. MORALES: We are looking at all of the sources of sales and how we break them up. We want to make sure that there is that transparency, like there's no way that we're like walking away benefiting from this change.
I. MORALES: Main courses are here. This is your (INAUDIBLE) in claypot.
FLAY (on-camera): So you guy's charge 22 percent service charge. How do you utilize it? You use it to pay your employees, is that it?
B. MORALES: We have a fixed starting wage. Our lowest hourly rate is $25 an hour.
FLAY: No matter where you work in the restaurant.
B. MORALES: No matter where you work in the restaurant, and it goes up from there. And we use the 22 percent service fee to help offset those costs because our total labor costs are far more than the 22 percent service fees.
FLAY: Right. I mean, I've been in this business for a long time. I mean, we have occupancy costs, you have labor costs, and you have cost of goods, right.
B. MORALES: Yes.
FLAY: I mean, those are the three big buckets, but basically what you're saying is, you probably have a 20 percent to 25 percent shortfall when it gets right down to it, and you need the consumer to pay for the shortfall because that's just the way the business is, is that fair?
B. MORALES: That's absolutely fair. In fact, another way you can think about it is places that rely on tips are basically just subsidizing the wages. Just like you're saying, they're just buckets of money coming in, money going out, and you can rearrange it anyway you want.
FLAY: In some ways you are asking the customer to subsidize the rate?
B. MORALES: So we could say, let's just fold it in.
FLAY: Yes. So I'm going to ask you the obvious question which I'm sure some of your customers have asked you. Why don't you just raise the prices?
I. MORALES: Right. Well, that's because since we are an outlier, people, you know, at the end of the day, people price shop, you know, and --
FLAY: So you think perception?
I. MORALES: Yes. Absolutely. It's all about optics.
FLAY: Any pushback from your customers about this?
I. MORALES: So minimal it's not even worth counting. Honestly it's positive.
FLAY (voice-over): For even more clarity, the owners include a link on their menu that provides guests with more information about their new business model.
(On-camera): Obviously there's two sides of the coin. Some customers think that they should not be charging the service charge. Some other restaurants say it's 22 percent because otherwise I'm going to close and also please tip. So it's --
B. MORALES: Right.
I. MORALES: Right.
FLAY: It runs all over the place. So the bottom line is, there's probably no definitive right way to do this. And I believe, this is just my personal opinion, is that we are literally half a generation away from people paying what restaurants need to cost.
Somebody who's 16 or 17 who hasn't started paying their own prices yet, I believe when they get to the age of when they're going to start paying their own bills, the sticker shock is not going to be sticker shock. It's going to be the norm.
B. MORALES: Right.
I. MORALES: It'll be the norm. Yes.
FLAY: But we have to get to that point.
B. MORALES: Right. Absolutely.
FLAY: So this is -- because everything just cost so much more and you want to stay in business, you want your employees to do well, and also you'd like to make a living yourself. Basically, the restaurant business as we know it is fractured in many ways. It's unfortunate.
B. MORALES: Yes, I mean the thing is that if places like ours don't do this, we are going to see a huge regression in the kind of food that we are able to provide for people.
FLAY: Is this working for you guys from the financial standpoint?
I. MORALES: Yes. We're doing it more than a year, and we have felt really great about how this is going. We're still profitable. We're still, you know, busy.
You folks have everything you need?
FLAY: Are your employees happy? I mean --
B. MORALES: We have great retention.
Hey, everyone, it's Bobby.
GLAY: How are you guys doing?
What are you making?
UNIDENTIFIED MALE: It's a Herring Under a Fur Coat?
FLAY: Wait. "Herring Under a Fur Coat"?
UNIDENTIFIED FEMALE: Yes.
FLAY: I'm guessing you sell a lot of these every night.
B. MORALES: We have single-handedly increased the herring consumption in Portland by like threefold. We do want to share more of the culture and the cuisine with people.
FLAY: It's so good.
B. MORALES: So we have the vodka that we just launched a few years ago, and so we're trying to build that up. FLAY: This is the place to be for some vodka, right?
I. MORALES: Yes. We do pour a lot of vodka here. Our most popular infusion, you should taste this actually, is our horseradish vodka.
FLAY: Oh, is this your own brand?
I. MORALES: This is our own brand.
They're both topped with (INAUDIBLE) so I would encourage you to kind of mix that in, let it melt and create its own sauce.
B. MORALES: We also sell our dumplings frozen for retail.
FLAY: Oh, really?
B. MORALES: Yes, we have a small but mighty little dumpling production space upstairs. So right now we're just in the Portland metro area. We're looking to expand that.
FLAY: But is that since the pandemic?
B. MORALES: You have to find new revenue streams. And you're thinking what else can we do?
B. MORALES: This is all under the same business model and the same structure. So everyone who works at Kachka whether it'd be in dumpling production or in vodka, it's all the same pay structure.
FLAY: Got it. So when you see the P and L, you also see how many bottles of vodka you sold.
B. MORALES: Yes. Yes. That's all part of it.
FLAY: OK. Cool.
B. MORALES: It isn't just lip service. This is something we feel really passionate about.
I. MORALES: And that's been one of the most encouraging things is people across the country have reached out like what are you doing? How did you do that? How did you make that jump?
FLAY: Do you think this is just a natural evolution?
B. MORALES: I feel like this is a sea change in the restaurant industry.
I. MORALES: Hello. Welcome back.
B. MORALES: We're just running a restaurant.
FLAY (voice-over): Coming up.
(On-camera): All of a sudden you guys have this demand that comes out of nowhere. What do you do?
FLAY (on-camera): OK, so during the pandemic as restaurants were closing all over the country, online delivery services were skyrocketing. I'm about to take a drive with one of them. I want to see how they get it done. So let's go.
KOFI AMOO-GOTTFRIED, CHIEF MARKETING OFFICER, DOORDASH: Let's go?
FLAY: Let's do it.
(Voice-over): Kofi Amoo-Gottfried is the chief marketing officer for DoorDash.
(On-camera): The pandemic hits, nobody knows what's going on. I'm in the restaurant business. We're panicking like everybody else. We don't know what to do. You start getting a lot of phone calls is my guess.
AMOO-GOTTFRIED: Correct. Those first three weeks were super chaotic. It wasn't clear if food delivery was even allowed by the regulations so one of the things that we knew right away was that restaurants were going to need platforms like ours to be able to stay open.
We've channeled all of our marketing dollars at the time into building a campaign called Open for Delivery. We're up on air six days after the stay-at-home orders were in place.
FLAY: When the pandemic hit, I had one high-end restaurant in New York, Gato.
FLAY: And we decided to close almost immediately.
FLAY: Because we didn't know what was going to happen.
FLAY: I didn't go down the road that most of my contemporaries did.
FLAY: Which was be in business with a company like yours.
AMOO-GOTTFRIED: Yes. Yes.
FLAY: A lot of my contemporaries did say to me, I'm doing a ton of business on delivery but I can't make any money because of the commission rates.
AMOO-GOTTFRIED: Right. That's right. And during the pandemic we heard that a lot. So we cut commissions for our local restaurants around the country by 50 percent.
FLAY: By 50 percent.
AMOO-GOTTFRIED: We built a product called Instant Pay. That allowed restaurants to get paid out the next day rather than waiting a week or waiting a month.
FLAY: Because they needed the funds immediately.
AMOO-GOTTFRIED: Because cash flow is super critical.
(Voice-over): Critical for the survival of their restaurant partners.
(On-camera): This is the line to pick up.
(Voice-over): Like the Millburn Deli, a family-owned sandwich shop that's been a New Jersey staple since the 1940s.
ANDREW MORGAN, CO-OWNER, MILLBURN DELI: Taking away that commission rate suddenly allows us to maintain our margins at a time when all of our other avenues, walk-in guests and things like that, are shut off. We closed for 17 days initially.
MORGAN: When we reopened, you get delivery only. It was a lifeline.
FLAY: How much more delivery or DoorDash business are you doing versus what you were doing prior?
MORGAN: It's around double.
FLAY: So it's continued.
MORGAN: So we actually had to do a small remodel to accommodate the number of orders we were getting on DoorDash. We needed more space so we took away some of the seating that guests had.
AMOO-GOTTFRIED: Thank you so much.
MORGAN: All right, you got two.
MORGAN: Enjoy, thanks for stopping by.
FLAY: Thanks a lot. Wow, these are heavy.
FLAY: Good luck, you guys. Go get them.
So you are the chief marketing officer of DoorDash. But you still go on these runs sometimes?
FLAY: What is that about?
AMOO-GOTTFRIED: That allows you to understand what's going on at the customer drop-off point, what's happening at the restaurant, wherever you might be picking up from, so this is part of our culture.
FLAY: It reminds me of one of the things my father said to me early on. He said if you want to be the boss, you have to know everybody's job.
AMOO-GOTTFRIED: Hundred percent.
FLAY: Pick up. Burgers for everybody.
Talk a little about how the dashers get paid. Because I think that people are concerned about making sure that they get their tips, and that they're getting paid enough. How does that work?
(Voice-over): DoorDash and other third-party apps have faced years of scrutiny from labor activists over the compensation and treatment of delivery workers. And drivers have filed lawsuits over unfair pay.
AMOO-GOTTFRIED: It's really straightforward. So we went on a dash today. Basically the way it works is as a dasher I open the app.
FLAY: Did you get a tip?
AMOO-GOTTFRIED: I got a tip. I'm good. I did get a good tip. As a dasher, I open the app, I get an offer. So it says, hey, there's an order, I choose whether to accept that order or decline based on what it's showing to me, right? So in the accept mode it tells me this is the minimum I'm going to make. That accounts for what DoorDash is going to pay and it may account for tip. Do I want this order, yes or no, I choose that order yes, if a customer tips, 100 percent of the tips go to me.
AMOO-GOTTFRIED: As a dasher, exactly. All that goes to my account.
FLAY (voice-over): Some cities have enacted minimum pay standards for delivery drivers. In places where such laws aren't in place, DoorDash recently said drivers will now have the option to earn a prorated hourly minimum rate in addition to tips. But DoorDash and others recently sued New York City over its minimum pay for delivery drivers. So the battle for fair pay for drivers continues.
(On-camera): You're telling me before that you guys are up year over year over year, even though the pandemic has subsided.
FLAY: Obviously tons of people see that, they want to get in your business, too. How do you differentiate yourself?
AMOO-GOTTFRIED: We try to do a good job of covering most of the country. So I think in some 90 percent of the country, DoorDash is available, which is nuts.
FLAY: Wow. That's a lot.
AMOO-GOTTFRIED: We have, you know, more than half a million restaurants on the platform.
FLAY (voice-over): Despite the enormous growth of DoorDash and other food delivery giants, many investors are concerned about long-term profitability. DoorDash is still tweaking their business model.
AMOO-GOTTFRIED: We're finding that more and more restaurants are really interested in building their own first party platforms. And so what we've done is built a product called Storefront that allows you to like basically plug and play online ordering for your own Web site with zero commission.
FLAY (on-camera): I've been in the restaurant business for 30 years. Longer. I started out as a line cook for years. You learn how to adapt every 10 seconds.
AMOO-GOTTFRIED: Right. That is the job. The job is actually agility.
FLAY: Didn't even like rattle us. You're just like, OK, left, no good, we've got to go right. You know? It's crazy.
How have you seen restaurants change permanently, you know, from the pandemic?
AMOO-GOTTFRIED: Today what we see, which is quite different than before, is that most restaurants understand that they need to have a digital solution.
FLAY (voice-over): Restaurants like Chipotle, the popular fast casual chain. In 2020, their digital sales skyrocketed by 174 percent year- over-year.
KURT GARDNER, CHIEF TECHNOLOGY OFFICER, CHIPOTLE: The big transition for us was that new customers started experiencing Chipotle for the first time, through the digital channel. The team member knows, hey, I've got some digital orders coming in.
FLAY: Kurt Gardner is the chief technology officer at Chipotle. GARDNER: Digital is about 20 percent of our sales coming into the
pandemic and that rose to 80 percent of our sales during the pandemic.
FLAY: The brand's mobile app has driven digital sales.
GARDNER: Just select in menu, we can go right to an entree. Hit, so I'm going to drive through our Chipotle. We just saw good news. Your order is ready.
FLAY: The company built out drive-through lanes, so-called Chipotlanes. Exclusively for digital ordering.
GARDNER: In the traditional drive-through experience, you're in the lane for four or five minutes. The average window time in a Chipotlane is 15 seconds.
Hi, I have an order for Kurt.
UNIDENTIFIED FEMALE: Burger, chicken burrito, chips and guac, and a small drink?
GARDNER: I think the advantage that Chipotle had going into the pandemic was really the superpower of our dedicated digital kitchens. We were prepared for the volume.
Oh, there we go. Our ordering system here.
FLAY: And what's a digital kitchen without some AI? Chipotle is testing out a robot dubbed Chippy that helps prepare their famous chips.
GARDNER: Talking to our restaurant teams, well, it's one of the areas they said that they could use the most help. We're really excited about where we are right now.
FLAY: Ahead --
(On-camera): This is not the food that I think of when I think about Louisville cuisine.
(Voice-over): Switching things up in Derby City.
FLAY (on-camera): We're here in Louisville, Kentucky, in an area called Butcher Town. It's actually where all the slaughterhouses used to be. Interestingly, restauranteur Cat MacDowell decided to open up a vegetable forward restaurant to go against the grain, so to speak.
I'm so excited to come to Naive.
CAT MACDOWELL, CHEF, OWNER, NAIVE: We just renovated.
FLAY: The place is beautiful. You looked at a map of America and you said Louisville.
MACDOWELL: Right there. Yes. I was like, where do I find a good salad? Where do I find like a good vegetable entree.
FLAY: Not easy.
MACDOWELL: Not easy. I think I needed to bring agriculture, local agriculture to an affordable price point. I ordered a 10 by 10 tent with a custom logo on it off of some Web site. I met a couple of farmers, pitched them my idea at a farmer's market, and set up shop.
FLAY: So that's really the beginning of Naive.
MACDOWELL: Beginning. And I was only doing marketing on social media. Within a month I had a line wrapped around the block at the farmer's market.
FLAY: You also had outside seating?
MACDOWELL: We also had outside.
FLAY: This is beautiful.
MACDOWELL: And we just finished this renovation about two years ago. It seats an additional 100 people.
FLAY (voice-over): In the summer of 2020, cities like Louisville waived fees and shortened the processing time for outdoor dining applications.
This helped restaurants get back on their feet.
MACDOWELL: Quick pivot, let's buy some picnic tables at Home Depot and serve food outside.
FLAY (on-camera): Right.
MACDOWELL: And everyone loved it.
FLAY: I think we see a lot of that has happened to lots of restaurant owners. Once they saw that people really wanted to sit outside. And the pandemic started breaking a little bit, they didn't go backwards, they went forward, you know?
MACDOWELL: Yes. And that's exactly what we did.
FLAY: Did it change the way you looked at business?
MACDOWELL: I'm a first-time business owner. I truly don't know what I'm doing and I'm trying to navigate this new world of not eating in a restaurant but owning a restaurant, and keeping people employed. I applied to take this business course and I'm like how can I increase my top line and reduce my bottom line. What does this word mean on the spreadsheet? Education is the most powerful thing you can have. FLAY: All right, cool. This is like a New York City kitchen.
MACDOWELL: Yes. This is our executive chef, Drew.
FLAY: How you doing, man? Good to see you, Chef.
UNIDENTIFIED MALE: Pleasure is mine.
FLAY: What are you making?
UNIDENTIFIED MALE: I'm making Ramen Siciliano.
FLAY: Now since the pandemic, how is getting staff? How has it been for you guys down here?
MACDOWELL: I think we retained a really good staff. Pretty much every single one of our staff members have grown within the company and they are now working at manager positions.
FLAY: I think the pandemic has been a wake-up call for everybody, whether how you schedule staff, how you hire staff.
MACDOWELL: A hundred percent. We're learning how to do more with less and that is the key.
FLAY: Chef, that smells really good.
UNIDENTIFIED MALE: Thanks.
FLAY: Yes. I'm very -- I'm really looking forward to this.
All right, is it cocktail time?
MACDOWELL: Yes. You want to grab a drink?
FLAY: Yes. I would love it.
MACDOWELL: This is our Okinawa One Way. It's a riff on a paper plane. We do ours with Japanese whiskey and Yuzu and blood orange.
FLAY: You're in the town of bourbon and you're going away from the bourbon.
MACDOWELL: I am. But what separates us is that I think we do something different.
FLAY: I love that.
FLAY: This looks very refreshing, Cat. You don't consider this fine dining?
MACDOWELL: I really wanted to make a space that anyone could come in any time of day, let's put produce at the front of every single plate. And I think it's really resonated within the community. FLAY: Speaking of the community, so I read that during the pandemic
you really turned your place into a market almost. I mean, like a corner market.
MACDOWELL: I did. We transformed the entire restaurant into a bodega and takeout and delivery within 24 hours. There's no other grocery store within this area of downtown. Something that like Kentuckians don't really hear of. They're like, what's a bodega?
FLAY: So when people when walking, what would they see?
MACDOWELL: They would see tortilla chips. We were doing frozen burritos. Just anything that you can imagine to generate some amount of revenue to keep the ship afloat. We were partnering with nonprofits every single week. We were doing lunch specials. We were going live on social media.
All of our specials are going to be centered around slightly healthier eating habits.
We were teaming our drinks around pop culture, doing buy one get one free to-go cocktails.
FLAY (voice-over): In 2020, 39 states allowed cocktails to-go on a short-term basis. Today, 22 states plus D.C. have legalized to-go cocktails permanently.
(On-camera): What about the delivery costs? Did that become an issue for you at all?
MACDOWELL: We were doing delivery in-house which meant myself.
FLAY: You were running to people at home with bags of food.
MACDOWELL: And people were like, aren't you the business owner, and I'm like the delivery driver today. But, you know, that's what it takes to succeed in a small business.
FLAY: Why do you think that you've been able to survive all this?
MACDOWELL: I just thought I can pivot, and, I don't know, I guess other restaurants pivot, too. Isn't that what you are supposed to do?
FLAY: You decided to open another restaurant after all this. How is it different than Naive?
MACDOWELL: During the pandemic, it is a great time because there's a bunch of opportunities. The space had not been touched for over probably 50 years, again, built out another kitchen. The new restaurant seats about 200 people. There's three dining rooms. Two bars.
Is this your first time in?
FLAY: Things are just changing so much for the better in terms of our food. A town like this to sort of just rounding the whole thing out. It's so beautiful and unexpected.
MACDOWELL: I'm starving.
FLAY: Wow. This looks great.
MACDOWELL: This is our Ramen Siciliano that Drew prepared. Our snap peas have white chocolate and brown butter on them.
FLAY: I have to admit, if somebody, you know, who comes from New York, this is not the Louisville cuisine that I think of, but much-needed.
MACDOWELL: Yes. I think we fill a really big void in the market.
FLAY: Whoa. That's a killer.
(Voice-over): Up next.
(On-camera): 092, enter.
JASON JOHNSON, OPERATOR, RDU GETREEF VIRTUAL FOOD HALL: And just pops open.
FLAY: Just pops open like that.
(Voice-over): The future of ghost kitchens.
(On-camera): Eight-hundred-degree pizza. Let's go eat.
FLAY (on-camera): I just landed in Raleigh-Durham in North Carolina, in the airport. Definitely a little hungry. So I'm going to make my way over to the getREEF virtual food hall. Let's see how these ghost kitchens are working in airports.
It seems like a good idea. If I was just walking by here, I'm not sure I would know that this was going to be about food. You know? It's kind of got that sleek look, it says locker number one, locker number two.
JOHNSON: This is the first ever multi-concept ghost kitchen in the airport.
FLAY (voice-over): The phrase ghost kitchen entered the public lexicon at the height of the pandemic. These kitchens with no store front or dining areas were lifelines for the restaurant industry.
JOHNSON: I'm Jason.
FLAY: Jason Johnson, an entrepreneur and sort of ghost kitchen guru, runs the RDU Airport Food Hall, which opened in 2022.
(On-camera): So we're here at getREEF. I'm going to order some lunch. So you have 800-degrees pizza. I know this pizza concept, very thin crust.
FLAY: We have a margarita pizza. Peppers. You do peppers.
FLAY: You don't see that in airports very much. That's cool. Years ago in New York City, there was a place called Horn & Hardart which was -- you've heard of this, the automat?
FLAY: You put the money in and you'd open the thing and then you'd take out your sandwich.
UNIDENTIFIED FEMALE: Hi. You know you're the first face that smiled at me today.
JOHNSON: This is a scratch kitchen. We cut produce fresh. We make pico. We fry chips. We make wings. There's actually real humans back there doing the same thing that happens in normal restaurants all around the world. But we can actually operate almost 40 percent less staff.
FLAY: How many different food concepts are in this getREEF?
JOHNSON: In this Raleigh location, we have 12. So they're all listed right here. We have national brands like Pei Wei, Zen Burger, 800- degree pizza. But we also brought in local brands. Normally 20 percent to 30 percent of the ghost kitchen menu is local operations.
FLAY: You are a chef by trade.
FLAY: I looked at your resume, I did my research. How did you like transition from running the line of like these high-end restaurants to being in the ghost kitchen airport business?
JOHNSON: I wanted to give back to entrepreneurs so I started a company called Hub Kitchens, helping underserved beginning kitchens and pretty much created a culinary business incubator for entrepreneurs to come and rent the space by the hour.
FLAY (voice-over): That ingenuity caught the attention of RDU Airport senior vice president, David Freeman.
DAVID FRIEDMAN, RALEIGH DURHAM INTERNATIONAL AIRPORT, SVP: As we were coming out of COVID, we were trying to reimagine our entire program. Most of the restaurants were closed, similar to streetside at the ghost kitchen. We really allowed that because we didn't need any front-of-the-house people.
JOHNSON: He called me up and said, hey, do you think you can take multiple concepts and shove it into one box? I said, sure, why not? Let's do this, and in the process REEF Technology, REEF kitchens also learned about the opportunity and they are the largest ghost kitchen operator in the world, with vessels all around the world. So we partnered up.
FLAY (voice-over): The vessels he's talking about are essentially food trailers powered by REEF Technology, the company based out of Miami, Florida. By 2021, REEF had expanded to 5,000 parking sites worldwide, where they install trailers where cooks prepare restaurant delivery orders. There are many still around, but post-pandemic, as restaurants reopen, REEF was forced to share their now unprofitable food vessels and change course.
They developed a new business model, licensing its ghost kitchen technology for third party companies like stadiums and airports, such as RDU.
(On-camera): Now that the pandemic has subsided, how do you feel about it now?
FRIEDMAN: They've been very strong.
FLAY: Lots of good five-star reviews?
FRIEDMAN: A lot of good reviews, a lot of repeat customers. They can order when they're in the TSA security line, up in front, and have it ready for them. If we ever have a flight delay, it's great. If you're a pilot coming in when your plane lands, you can order and get your food as you're leaving.
FLAY: All right. This is where all the magic happens.
JOHNSON: Yes. So this is pretty much the central station right here. This is our expo station. All 12 brands are being produced by our staff down there. She is collectively pulling everything required for that check to go out. So we do branded products. So this is DU Cafe. So they have a branded cup.
FLAY: Right. Is that ours?
UNIDENTIFIED FEMALE: Yes, it is.
JOHNSON: So you'll see, as she places it in, it'll change colors. That's the locker acknowledging that it shows, hey, we know you put something in here.
FLAY: Wow, that's amazing.
JOHNSON: And then she's going to punch in your specific code.
FLAY: OK. 339092, enter. Just pops open.
JOHNSON: Just pops open like that.
FLAY: I can smell my grilled cheese. I got my dirty chi. I got my 800- degree pizza. All right. This is the grilled cheese. What's the name of the place?
JOHNSON: American Meltdown.
FLAY: American Meltdown, right. This is my kind of sandwich. I'm from New York. So, bacon, egg, and cheese is like -- that's our go-to thing. This is good. I like the crusty bread. It's really well- toasted. Bacon is crispy. The egg is cooked nicely. Who's training everybody to do this stuff?
JOHNSON: Each one of the brands we license, they supply us with their recipes, their techniques, and we get trained.
FLAY (voice-over): And if you don't have time to order food at the REEF kiosk, don't worry.
(On-camera): I can actually order some dessert right at my gate. So I'm going to order a couple of cheesecakes from Cheesecake Factory, a cookie from Milk Bar. Good way to wait for your plane. Delivery type. Gate delivery? Yes.
When the pandemic hit, all us in the food service industry were trying to reinvent ourselves every hour. I got phone calls, dozens a week. I'm opening this ghost kitchen, do you want to be a part of it, do you want to invest in a ghost kitchen? Like everything else that was good business in the pandemic, ghost kitchens have also lost their edge.
What do you think the future of ghost kitchens are going forward?
JOHNSON: Ghost kitchens are definitely here to stay. I think the biggest thing is where they're being utilized. Here is something living and breathing that cuts down on your time waiting in line inside the airports. So I definitely think as long as we're solving that problem for travelers, airport ghost kitchens are here to stay for a very long time.
FLAY: So you think this is sort of like the food court of now and the future?
JOHNSON: Yes. Order for Bobby Flay.
FLAY: Thanks a lot.
JOHNSON: OK. Have a safe flight.
FLAY: Thanks, man.
JOHNSON: Thank you very much. FLAY (voice-over): REEF virtual food hauls are slated to open in
Cincinnati and northern Kentucky airports this year, with Johnson at the helm.
JOHNSON: This is their order. Everybody wants to be a chef. Everybody wants to sell mom's cookies. I tell people I'm giving them a place to fail successfully.
FLAY (on-camera): That's the restaurant business. I would do it to you right there. Exactly.
JOHNSON: Yes. I mean, come in, learn the bumps and bruises, making mistakes, you know, don't lose your house, don't lose your car, fix it, turn it around, and keep going.
FLAY: Well, here we are back in New York City, my hometown, in a place called the meat packing district, home to lots of fun, hip, and thankfully busy restaurants. Now, you've heard over the last hour how COVID just threw the restaurant business into a tail spin.
Definitely there was challenges ahead, higher food costs, higher labor costs, inflation in general. But you've also heard about the passion and the determination from many restaurateurs to make it work. Do I think they can make it? I'm betting they can.
(Voice-over): Chefs like Esther Choi who's planning to open her fifth restaurant this year.
CHOI: I'm extremely excited, Bobby, like I have worked so hard, pivoting all the time. And it's the mentality and the grit and the work ethic that really makes it count.
FLAY: Back in Louisville, Kentucky, Cat MacDowell opened her second restaurant this year.
MACDOWELL: At least I knew what I was doing this time and I knew what didn't work and what could work.
I. MORALES: Sharing everything. OK. Thank you.
FLAY: Bonnie and Israel Morales in Portland, Oregon, still sees staff morale as the key to success in the restaurant biz.
B. MORALES: Couple weeks ago we took some of our management team to (INAUDIBLE), Georgia, on a research trip to help share what we know from growing up eating that food.
FLAY (on-camera): Oh, I love that. Yes.
B. MORALES: I want everyone here to be passionate about what they're doing with us.
BIANCO: It's been fun. It's been a really special place. This is an old (INAUDIBLE) oven.
FLAY (voice-over): And Phoenix pizza king Chris Bianco is finding his way at his newest location in Los Angeles.
(On-camera): I talked to a lot of our friends in the business, and I feel like the sentiment lately has been even more so than the last even five years. It's almost impossible to make a profit in this business. Do you feel that way?
BIANCO: I do feel that way.
FLAY: Yes. Cost just went up. They didn't go down.
BIANCO: Yes. So I think it's just getting new questions, searching for new answers.
FLAY: You're just going to keep making food?
BIANCO: Just keep making food, man. You know what? I still love it.
COOPER: Chef Chris Bianco who you just saw appears to be holding his own and just opened a stand-alone pizza spot just steps away from his restaurant in downtown Los Angeles. He and the other restaurant owners featured in this hour say they're continuing to adapt their business models to keep their establishments running.
Thanks for watching. I'll see you next Sunday.