A location-driven philosophy proves ideally suited for taking advantage of pandemic opportunities.
By Jason Berry as told to Chris Mohney
Zagat Stories presents Restaurants 21/22, a collection of interviews with leading voices in dining, hospitality, food, tech, politics and more. Each story takes the turning of the calendar as an inflection point to consider what happened in 2021, or what’s likely to happen in 2022, in the world of restaurants and food. See all stories here. And feel free to check out last year’s collection as well.
With his partner Michael Reginbogin, Jason Berry cofounded Knead Hospitality + Design in Washington DC in 2014. The group grew steadily since its founding, but also became an uncommon success story during the pandemic—doubling in size to a dozen locations since lockdown.
When the pandemic hit in March of 2020, we had four restaurants open. And we had Gatsby and Mah-Ze-Dahr, which are next door to each other, that were supposed to open in April. Given the fact that we all thought we were going to die and/or go bankrupt, we had to put a hold on Gatsby’s opening until it made sense to open. Clearly April of last year was the wrong time.
Mah-Ze-Dahr finally opened in September of last year. We worked out a deal with our landlord to open something, and it was probably better to split those two openings as opposed to have them at the same time next door to each other. And then, Gatsby’s opening in April 2021 was just a year delay. We figured it was baseball season, people were allowed to go outside and watch a game, and the Nats had won the World Series in 2019. So we decided to give it a shot.
We opened a freestanding Mah-Ze-Dahr bakery in the Amazon neighborhood of National Landing, which is their new East Coast headquarters. That was delayed for six months because of the pandemic, so that happened in June 2021.
And then there were three deals that happened during the pandemic that we really couldn’t say no to. And once we realized we were under 50 and in good health, and the vaccines were coming, we said, okay, do we take advantage of this terrible situation, or let opportunities pass us by? And I think some of the best decisions we could have made were taking advantage of the gray skies, so to speak.
We had two restaurants in the Wharf at the time—The Grill and Mi Vida, which are our two most successful restaurants from a revenue perspective. So you had two A-plus locations that were killing it, and then Dolcezza went out of business. They’re good guys, good people. great ice cream, but the wrong location for them. The economics of the pandemic gave them an out, and we took over the lease. The landlord already had two properties with us. Why not give us a third? How do we say no to as good of a location as our best revenue restaurants? So we grabbed it and negotiated it, and we opened two weeks ago with a little French bistro called Bistro Du Jour, and we put a Mah-Ze-Dahr bakery inside it.
One thing about Knead, which I think is different than a lot of these other restaurant groups, is that we’re all about location. We don’t let the fact that we don’t have a concept ready to go control whether an opportunity is worth it or not. We say, okay, this location is great. Do we have anything in our portfolio? Now we have 10 concepts and 13 locations. Do we have something that fits in a location?
Well, we didn’t then. We couldn’t do Mexican there because we were 11 feet from Mexican. We couldn’t do an American grill because we were 200 feet from that. Could we do Succotash? No, Succotash is too close. So we looked at, what does the Wharf need? It has a lot of stuff going on, a lot of ethnic food, but they didn’t have French.
And then Mah-Ze-Dahr is croissants and cheesecake and chocolate cake and donuts. It has a lot of French influence, just not French pastries. What better to wrap around that than a French bistro? Michael, my partner, designed the restaurants in collaboration with our architect, Studio 3877. We do the menus, we do the layout with them, then Michael does all the finishes and all the designs. And we figured out how to make it work.
Between reopenings, delayed openings, and new openings, we opened six properties in the last six months. I’ve never done that in my life, and I never want to do it again. Not because it didn’t go well, but because of the amount of stress it put on us. Our company doubled in size. It doesn’t matter how big you are—doubling in size exposes cracks in the armor and causes growing pains. We had to almost double our corporate team in order to maintain it. We brought on a corporate chef about seven minutes before we needed him. Luckily, I had really good relationships in the industry and was able to bring in people that I’ve known for a long time.
On the other hand, I also don’t want to create new concepts unless we have to. Now we have all these options—we have French, we have Mexican, we have Southern, we have steak. We have upscale diners, we have bakeries, we have QSRs. We don’t have Italian, and we don’t really have Asian per se, but we have checked a lot of the boxes in the American restaurant business. So let’s not do anything new for a while. Let’s do what we do well, because I would say it’s probably five times the amount of work to open something new concept-wise versus something that you’ve done before. And you don’t even know if you’re getting it right until it opens.
Bistro Du Jour is a 1,700-square-foot, 100-seat French restaurant. That’s two tons of baloney in a one-ton bag. That ain’t simple. I mean, we know that the croissants are going to sell great, and we know that coq au vin is going to sell well. But you don’t know what your best seller is. You don’t know that you picked the right kitchen equipment and the right layout. The same thing happened at Succotash when we first opened. We should have had a bigger chicken fryer because we knew chicken and waffles would be the best-seller, but we didn’t know what percentage of the sales it would be. You always have to give and take and figure that stuff out. It probably takes three to six months for a restaurant to settle into its groove.
Michael and I are in at least one or two restaurants every day. And we eat in our restaurants five or six times a week. We can see so much of what the guests see by sitting where the guest sits. We provide enormous amounts of feedback — mostly positive, some not so positive —on that experience.
When eating in their own restaurants, I think a lot of restaurateurs would say, “We just want to see the regular experience.” We say, “Give us your best experience. We want you to fuss over the food.” Not because it’s us. We don’t want you to kiss our ass. Our philosophy is if you can execute our meals perfectly or close to it for us, then we know that you can do that for the guest. We don’t want to see your average. We want to see your best. If we get an A, we hope the guest is getting something close to that. If we get a B or C, we’re terrified for the guest.
We actually score them every time we go out. We do a dining evaluation after every experience. It’s a pain in the butt, but it’s the price you pay for free food. We give them a 100-point review every time we visit. And I’d say that 90 percent of them are over 90 percent. But occasionally there’s a 60 or 70, and it’s a little bit of a kick in the pants for the team. It’s like, “Hey guys, you’re slipping in some areas here.” Their averages for the quarter are tied to their bonuses, so it’s important for them financially to nail it.
When it comes to hiring, how do you stand out in an industry where everybody has these buildings with four walls, plates, food, and employees? How do you stand out culturally? The culture of a restaurant group is something that the guest doesn’t feel as much as the team does. The guests are visitors. Their interaction is a couple of faces. They’re not going to get a lot of cultural data points.
When Michael and I went out on our own six years ago, we definitely wanted to create a company that is different from everybody else. I don’t think we knew exactly how we would get there. We didn’t know we’d have this many locations, or this many concepts, or where they’d be located. But we knew that Succotash National Harbor wasn’t intended to be our first location, because it’s actually incredibly hard to make enough money to support yourself as a restaurateur with one location. You have investors to pay back, you have loans to pay back.
The pandemic sent messages to us about what kind of restaurant group we wanted. Do you want to have the turnover that the rest of the industry has, or do you want to try to find a way to mitigate that? Do you want people to be excited to come to work, or do you want to squeeze as much as you can out of them, and then just replace them?
The pandemic burned people out very quickly because of the PTSD it caused in America. Everybody’s super sensitive. Everybody’s got a quick trigger. You see it on airplanes. Every week there’s somebody who’s getting duct-taped to their seat for acting like an asshole. We see it in restaurants, especially when restaurants reopened last year. Overall, there’s a higher percentage of guests that are belligerent, rude, and abusive. We have to have twice as much security than we used to in some restaurants.
That blended with long hours—50 to 60-hour work weeks, five days a week. You probably can’t do your job in less than 60 or 65 if you’re going to do it well. And not everybody wants to be a GM or an executive chef. They’re not all gunning for that pressure and salary. So then they’re saying, “Can I go do something else for maybe a little less money but with less stress?”—that’s what we’re competing with now. Very few people leave us to go work in another restaurant group. They’re leaving us because they want out of the industry.
So all these people are leaving. What do we do? We have to find a way to make them happy. How do we do that? Well, let’s figure out a way that they can do some of their work from home like all these other companies. We’re a professional industry. Why can’t some of the work be done at home? So four days at work is our intent, our idea. Work four 12-hour days in the restaurant, and then you’re going to have three days a week when you can do any admin work you couldn’t get done at the restaurant.
It doesn’t mean you have to do anything if you don’t need to. It’s all cloud-based, for the most part. You can check your email. And then with your three days off per week, back to back, you can go see your mother in Los Angeles or go take a quick trip to London. Just make sure that you’re responsible, and that you’re responsive. Then come back refreshed. And hopefully by having those three days wherever you want, you’re coming back happier or kinder or gentle,r and that you’re more ready for the job.
Our belief is that happy management equals happy staff equals happy guests. In a restaurant like Mi Vida, it’s going to cost about $200,000 a year more to staff a four-days-at-work program, versus a five-day work week in terms of adding managers and chefs. But we believe that money will be replaced by higher revenue, better check averages, and lower turnover.
If you’re nicer to the staff, they’re not going to leave as often. If you’re nicer to the staff, the guests are happier. Happier guests spend more money. We’re not going to be paying recruiters to replace managers and chefs. We’re not going to have that loss of institutional knowledge. And hopefully that $200,000 breaks even.
I won’t be able to prove that for a long time. But if we can grow this company and this culture, that’s an invaluable expense on moving our company to the front. All things being equal, would you rather work for this company where you have four days at work, or this company where you have the standard five-day work week? There’s no question where you’d rather work for the same money.
I don’t know that we’ll be successful, but we have to continue to try to evolve. That’s why we were the first in the area, I think, to pay people to get vaccinated. That’s why we went from a one-year waiting list to three months for medical insurance for our staff. It was never a big deal before. But now that the staff, especially young people, realize that they’re going to die someday, they’re a little more interested in medical insurance than they were pre-pandemic. Hourly employees between 20 to 25 years old never used to take it, even though it’s affordable. Roughly 10 percent of our hourly staff accepted insurance. Now it’s probably 20, 25, or 30 percent.
The positions where we’re hurting the most are servers, bartenders, and line cooks. I don’t know where all those people are. Everybody says they went to work at Amazon, but I don’t know that they all did. The industry is at the mercy of its employees right now. It’s very much a buyer’s market.
The good news is that our managers can borrow staff from each other now. The service is exactly the same in our restaurants. They won’t know the food and beverage as well, but they know the computer system, and they know the sequence of service. If you’re a good server, you can figure it out. It’s not rocket science. With line cooks, it’s not as easy. You can’t share line cooks that much because they’ve got to know the food, the plating, and the preparation, so that becomes a little harder. But we’re just trying to make do and get through the holidays.
We’ve tried hiring bonuses like everyone else. I don’t think that there’s an incentive that’s worked for hourly employees. If there is one, I’d love to hear it. I think the answer is to make sure you pay them, make sure you don’t abuse them, make sure that you feed them, make sure that you train them, and make sure that you’re nice to them. If you focus on those things, you’re probably a better employer than most.
For next year, I want to make sure my team doesn’t kill me. We are definitely doing less next year. We’re opening two more Mi Vidas in D.C. That’s an existing restaurant that we know very well. It’s Mexican. I know Mexican very well. I did it for 10 years before starting this company. Those are big restaurants. They’re each 10,000 square feet, so they’re not easy. But they were also pandemic-related deals that we couldn’t pass up that were moved to 2022.
Most of all, we’re going to focus on systems and structure and organization. We outgrew this back-office HR system and we need to find a new one. We outgrew this inventory system, and we need to get a new one. We have a lot of infrastructure-related things that we need to do now that we’ve doubled in size. It’s harder for us because we’re 10 concepts as opposed to one chain. We all don’t have the same menus, we all don’t have the same proteins. Even our light bulbs are different in every restaurant. There are a lot of challenges that our approach requires. We need to buckle down and get back to brass tacks and focus on our team, so that they can do what they do best.