Russ: Welcome back to The BusinessMakers, brought to you by Comcast Business, built for business. Coming to you from Table – the restaurant – where my guest is Alex Gaudelet, the Founder and CEO of New York based Invest Hospitality; Alex, welcome to BusinessMakers.
Alex: Thank you, thank you for having me.
Russ: You bet. Tell us about Invest Hospitality.
Alex: So Invest Hospitality is a kind of a union company because it’s really two things; it’s an investment firm because we raise capital and invest capital in specific projects, but then we’re also a management company at the same time. So we typically manage the projects that we develop until the lease runs out or we decide to do something else.
Russ: Okay, okay, and when you’re talking about projects you’re talking about almost exclusively restaurants, right?
Alex: For now our company is focused on the restaurant business, so food and beverage for the most part. And anywhere really from the high end restaurants but also some fast casual projects and investments that we have going.
Alex: We do have an exclusive partnership with Chef Joel Robuchon where we already have plans to open in New York and Miami. These projects have actually been fully funded and we’re in the process of the design and construction at the moment. And then we have a very ambitious plan to actually grow the Joel Robuchon Bakery brand across the United States. And this is coffee, high end French pastries, a very interesting product. Joel Robuchon has 5 of them in Tokyo and 5 of them in Hong Kong and they’re extremely popular and so we’re going to start with New York and Miami and then we’ll see what other markets we want to enter in to.
Russ: Okay, real interesting. So and when you say manage, you come into some projects and you just sort of change and update the restaurant from everything from the menu to the décor and to the staff, to the whole culture; do I have that right?
Alex: That’s right. So we actually – really we’re a full service firm, so we do everything from lease negotiations, contract negotiations with vendors. We do accounting, human resources, payroll accounting; all the things that a lot of restaurateurs or chefs typically are not very good at we actually provide. And really if you want to run a good business the back office is as important as the front office because obviously the customer pays attention to the service, the food and we’re very focused on that, don’t get me wrong, but we’re equally as focused on the business side on making sure that we’re doing things within the law, especially with labor laws changing every day now you have to really be alert. You’ve seen a lot of restaurateurs in the last few years that have had a major class action law suit so we do everything we can to prevent that; that’s our job.
And ultimately it’s a business; you might have – you might be passionate about cooking, you might be passionate about hospitality, but it has to make money. And so Invest Hospitality is based on the principle that we really invest responsibly into businesses and that means that we’re going to pay as much attention to the bottom line as we do the quality of the steak that’s being served to our guests.
Russ: Okay, so when you talk about investing and you talk about management, I mean every restaurant or hospitality venue that you’re managing you aren’t necessarily investing in, is that correct?
Alex: That’s right. So because we have the flexibility of being an investor and also having a management company, you know, we take over projects where it’s pure management. But I want to point out that it’s not consulting because there’s a very big difference between managing an asset and consulting for an asset. You know a consultant walks in the door, gives a report and then walks out the door; there’s no accountability. We’re not in the business of consulting; we’re in the business of long-term management agreements. So typically at a minimum we look at a deal for a 10 year to all the way to 15 or 25 year period because we believe in the creation of shareholder value in a long term manner, especially in the restaurant business.
You know, you could go through a challenging cycle and then if you’re not patient enough to wait for the cycle to come back you might be losing a lot of money. And so when we look at an investment opportunity or we look at a management opportunity we look at it the same way because more than money, time is more valuable. So when we think about managing we say how do we look at our time because it’s going to take time to do a lot of different things. So we only invest ourselves in projects that we believe have very good, long term upside and we typically really want to be 100% accountable for the result.
Russ: Wow. Okay, so when you mentioned a while ago management includes the menu and the ambiance and the décor and the staff and everything, but do you also offer those services a la cart?
Alex: Currently we don’t.
Russ: Okay, so it’s all or none.
Alex: You know, because every once in a while someone might call and say can you take a look at this and actually for the most part I just do it; I’ll spend an hour and I’ll tell them look, here are the 5 things that I would look at, you know watch for and then if they go further in saying like can we just hire you as consultants we say you know, it’s just not our business model and we’re very disciplined about that. Because it’s always attractive to get a quick paycheck but it’s not how you build long term shareholder value.
Russ: Good point there; so here we are in what we call Table and this now is a client of your, correct?
Alex: That’s correct, yes.
Russ: Okay and you’re – I’ve already noticed, I haven’t been in here in probably 6 months or so but it looks completely different. But you’re essentially taking over and the company is going to be running Table, tell us what it’s going to look like, what it’s going to be like.
Alex: Yes. So we actually started managing the property on May 1st of 2015 and, you know, we lay out a plan for the owners to morph the restaurant from what it was to what it could be. And we’re sitting in the dining room here today that was actually in the first phase of our morphing program. And what we wanted to do, two really important things that were kind of on the table there is that first we want to build a very strong identity for the restaurant and then second we wanted to do it in a gradual way because we wanted to basically engage our team, our guests and then build up the business from within and that was really critical. So, you know, we didn’t change a single, physical item until September; so from May until September we not only planned for the physical changes, but we did all of the groundwork to set up a restaurant with the right foundations.
On the administrative side, on the management team we brought in 3 sous chefs to help us manage the kitchen because we didn’t go in a direction where this is a chef-focused restaurant – or chef-driven restaurant.
Russ: Well like it was probably a year ago when it was Philippe.
Alex: That’s right. So we went into more of a culinary and concept-driven restaurant; so we picked French as our concept and because the space is two levels we have 11,000sq ft to kind of merchandise and maximize. What we decided to do is under the over-arching brand of La Table – so it’s no longer Table, Table was American we go to La Table which is you know, it’s incredible what 2 letters in front of a word can do in terms of changing your perception. And under La Table what we thought of doing in the space is actually create different experiences. So when you walk through the space downstairs we thought that a bakery would be very interesting. So baking French driven pastries and breads and brioche and things like that opening in the morning because there’s actually a lack of coffee shops here in that very road so we thought that there was definitely an opportunity for people to come as early as 7:00 in the morning, have a cup of coffee and a breakfast item.
And then within that same space downstairs we felt that a casual restaurant with very attractive pricing and a lot of volume would be actually interesting.
Russ: Completely different menu than up here?
Alex: That’s right. Well it’s not different – the spirit is the same because it’s still French and a lot of it is traditional recipes; recipes that I’m fortunate enough – for this concept – that I was born in Paris and my dad’s a chef and I went to culinary school for 5 years in France so a lot of…
Russ: Kind of in your DNA there, right?
Alex: That’s right, it’s in my DNA. So part of picking this concept was something I was fully comfortable executing and doing that on a regular basis, but the restaurant downstairs will be called Marche – so Market.
Russ: And functional opening at what point?
Alex: Well we are doing our very best to open within the winter. So we’re working with the city right now in getting our permits approved but the design is fully done, everyone’s at the starting block waiting for the permit to be approved so we can go. But the Market, what’s going to be interesting about Le Marche is that when you come in you’ll have a bakery, a roll bar, a vegetable market and so we’ll have a lot of products that you would find in – if you went to Le Bon Marche in Paris. So we work very closely with some of the local producers because what we want to do also is not necessarily just import a lot of things from France, so cheeses, olive oils, jams and honey and pasta for example are all made here in Texas. And they’ll be displayed from – and I found all of those suppliers from the farmer’s market here in Houston. So we’re partnering with all of these people to showcase their product and then serve it with a French flair I guess in a way.
Russ: Real interesting. So I’m curious Alex, is this a typical project for the company?
Alex: No, it’s actually not a typical project but our owners asked us for two things, they said we want to have the very best restaurant possible in the Galleria area and then the second thing is we’d like to build a concept that could be duplicated elsewhere.
Russ: Okay, wow.
Alex: So when we thought of La Table, you know, today we have 11,000 sq feet and so we’re going to do Le Marche, the restaurant upstairs is going to be a fine dining restaurant – already is, you can look around and it’s been beautifully designed and the restaurant will be called Chateau so a reference to high end bordeauxs or other – a real French reference of elegance. We have a significant special event component with a brand that will be called Prive. So we have two private rooms, we have the Paris room here and the Champagne room on the other side as well as the main dining room that can be utilized for larger parties. We have a wedding for 120 people this weekend for example that will take up the entire second floor. And so you see, in the same building we’re creating all these different experiences so a lot of people can come at different times.
So you might come with – a young family might come in for an early dinner at the Marche and have fun, but when it’s times for date night a couple weeks later they might want to come to Chateau and have a good time without the children.
Russ: Oh yeah.
Alex: If you’re a business man and you want to close a deal you might take your guest to Chateau, if you’re hosting your aunt’s event you might book the Paris room for example and if you want to buy chocolates for your wife then on your way out you can pick it up from the bakery.
Russ: Well I know that you’ve been doing this – the business of fine dining – for I think I read 22 years on the website, what do you think of Houston? I mean this is your first project in Houston, right?
Alex: So it’s my first project in Houston and so one of the things that in the years of experience I was fortunate enough to live in Paris, London, Palm Beach, Las Vegas and New York and all of the different roles that I had actually took me travelling into a lot of different places. So I’ve been in a lot of markets in the U.S., I’ve been in several countries in Asia so I have a pretty good understanding globally. And then when it’s time to zoom in on a particular community then you just have to do your due diligence. So we signed the management agreement May 1st is when we took over, but I started doing due diligence in February of this year. So for almost a 90 day period I went to close to 50 restaurants in the city, some of them I went 2 or 3 times, some of them I went 7 times just because I needed to understand what it was like on a Monday night, what it was like on a Thursday evening or Monday morning to kind of understand how the business works.
Because before you can craft something and really say okay, I think this is going to be the right concept, you really have to understand the audience and that’s part of what we did; so understanding the audience for Le Marche, understanding the audience for – and who your concept is going to be. So if you’re doing a fine dining restaurant in the city you have to look at the iconic restaurants in the city like Tony’s and DeMarco’s and then some of the higher end steak houses so I spent a lot of time. And you know, when you go into a restaurant what are you looking for? You’re looking for the price point; you’re looking for portion sizes. What is the relation of value; what does a $40.00 steak look like, what does a $45.00 steak look like, what does a $25.00 chicken look like in the city and who’s eating it?
And who’s eating what? So if you walk through a restaurant that’s busy, literally in 30 seconds when you walk through a restaurant and you look around at what people are eating you’re actually going to see a lot. You know, you can pick up what are people having at lunch time; is it salads or proteins on top – people eating pizza – and the demographic of who is eating what.
Russ: So did you notice anything unique about this city compared to others you’ve been to?
Alex: So what was really interesting in Houston is that there is the 2 worlds that co-exist; there’s the new world and the old world of food and beverage. And so you have in the old world there’s the established restaurants that I mentioned earlier which are very popular.
Russ: Tony’s, DeMarco’s…
Alex: That’s right, Tony’s DeMarco’s, Pappas Steakhouse and Vic & Anthony’s, Mark’s; some of those iconic restaurants that have been here for a long time. And then you know you have the newcomers in the 4 or 5 years you know like Uchi and Underbelly and Oxheart, Pass & Provisions, where it’s a completely different energy. And so, you know, what was really interesting is that you have – obviously the demographic in Houston is changing every day because it’s a destination for a lot of people to move to; it’s a very attractive place for business, that’s why we’re here because we believe it’s one of the friendliest places to actually operate a restaurant. And so what we’ve noticed is that there was a real appetite for food that was simple and yet presented into a modern way. And again, I think that first and foremost the quality of all of the restaurants I’ve mentioned was very high so we knew we were walking into an audience that was kind of spoiled in a way.
Russ: Which surprises a lot of people from out of town when they come here; I mean not you.
Alex: Well when you analyze the fact that Houston is a business platform for the energy industry, some of the most affluent people are coming through Houston every day, so it has to have a food scene that is pushed to the limit. And what was really – again, what was really important for us is to know that you’re walking into a very serious food city. And also, one of the things that we really try and do is to kind of leave all of the New York or Vegas or any of the other experiences out the window because we’re starting new and we’re starting something here. Because the one thing that we’ve done is we haven’t hired anybody really on the culinary side from New York or we actually source people locally for the most part and what we believe in is we set up the standard and we show this is excellence and this is what we have to achieve every day and it’s very simple. So that’s kind of our philosophy.
Russ: Okay. Well it’s kind of interesting that you have this long term look at it – viewpoint – and kind of upper end dining, but from a business perspective, and this is a business show, the restaurant business seems very difficult just from those of us that have not run one before but can just sit back and managing the importance of the staff and people and getting here all the time with the right attitude and the inventory at the same time are two that just give me a headache trying to get my head around it.
Alex: Well it’s – I don’t necessarily see it as difficult; I think it’s a complex business. You know, you have – on any given day you have about 2,000 things that can go wrong and you have to actually build a structure that’s going to be able to sustain those 2,000 things and that’s why it’s really a long term game. You can’t be a flash in the pan in the restaurant business, it just doesn’t work. And this is why our company actually exists for that very reason, because it is a harder business than most. But that also means that it’s one of the businesses where you have the most opportunities when you’re a good operator because you can actually provide the backbone that a lot of people might not have access to. Actually, one of the things that we aspire to do is to have more independent operators on our platform.
So if you’re an independent operator and you cannot afford a CFO, you cannot afford a Chief Operating Officer or Chief Administrating Officer and you don’t really know which attorney to talk to and so on and so forth we welcome people to talk to us and say would you like to enter into a management agreement with us.
Alex: So we can provide long term services for some of the things that are harder for people to manage.
Russ: Great. Well it’s an interesting story and I would welcome you once again to Houston and Alex, thanks a lot for spending some time with us.
Alex: You’re welcome, thank you so much.
Russ: You bet, you bet.
Alex: Thank you.
Russ: You bet. And that wraps up my discussion with Alex Gaudelet, the Founder and CEO of Invest Hospitality. And this is The BusinessMakers, brought to you by Comcast Business, built for business.
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