The Secret to Hiring Great People
What is the best way to attract and hire the very best people in your business? That was the challenge facing restaurateur Cameron Mitchell, founder and CEO of Cameron Mitchell Restaurants (CMR). While many restaurants chase after star chefs and expensive talent, Mitchell found that was not the path to acquire industry rock stars.
“We get the same people everybody else gets,” he says. “We don’t hire great people, we hire people and allow them to become great.”
His approach is to hire entry-level employees, and then teach them the company’s culture and philosophy. CMR prefers to promote from within, with each new server or bartender looked at as a potential supervisor, manager, and VP. This is a different premise than most restaurants. The secret, according to Mitchell, is to “just treat people great and inspire them to grow and learn.” Employees are excited about the company, and “it’s such a positive momentum that it permeates the entire organization” he says.
Mitchell, a Culinary Institute of America graduate, just celebrated his 25th year running the firm. CMR now generates $300 million in revenue, with 3,000 employees in 60 different locations across 15 different restaurant themes. He is also the author Yes is the Answer! What is the Question?: How Faith In People and a Culture Of Hospitality Built A Modern American Restaurant Company.
The Transcript between Bloomberg contributer Barry Ritholtz and Cameron Mitchell can be found below. Additionally, you can stream/download the full conversation, including the podcast extras on iTunes, Bloomberg, Overcast, and Stitcher.
This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have a special guest. His name is Cameron Mitchell, he is the author of a new book about his career in the restaurant industry and he also happens to be the founder and CEO and soon to be Chairman of Cameron Mitchell Restaurant Group.
I found our conversation quite fascinating. If you are interested in the restaurant industry and what it’s like to develop a restaurant concept and expand it from one restaurant to many across the country. They have 5000 employees and restaurants of a variety of different names probably best known is Ocean Prime, generate over $300 million a year in revenue, you’ll find this to be a fascinating conversation.
So with no further ado, my conversation with Cameron Mitchell.
My special guest today is Cameron Mitchell, he is the founder of the Cameron Mitchell Restaurant Group, now 25 years old and employing 5,000 people in 60 restaurants across the country, Cameron Mitchell Restaurant Group generates over $300 million in annual sales. Mr. Mitchell was named entrepreneur of the year by Ernst & Young as well as small business person of the year by the US SBA. He was also named to 50 New Tastemakers by the “Nation’s Restaurant News” magazine and he is the author most recently of “Yes is the Answer, How Faith In People and a Culture of Hospitality Built a Modern American Restaurant Company”, Cameron Mitchell, welcome to Bloomberg.
CAMERON MITCHELL, FOUNDER, CAMERON MITCHELL RESTAURANT GROUP: Thank you, Barry, it’s a pleasure to be here.
RITHOLTZ: So let’s discuss a little bit about your background. You didn’t seem when you were growing up like somebody who is going to find his way into a chef’s toque. How did you get interested in restaurants and cooking? It doesn’t appear this is something you are very passionate about as a child.
MITCHELL: No, it depends on how far back you want to go but I had a troubled childhood and troubled youth, and struggled in high school and ran away from home and dropped out of high school when I was 15. My folks were divorced and my mom didn’t have any money. And so when I came back in my junior year, I didn’t have any money for lunch money, she couldn’t give me lunch money, and I needed to work, I need to get a job and so I got a job in 1980 in a local steakhouse washing dishes for 2.65 an hour and did and bus tables and prepped a little bit through my junior and senior year in high school and that’s how I found my entrée into the restaurant business.
RITHOLTZ: So let’s talk about that, because you described in your book sort of being a terrible employee constantly being laid, you were suspended, you were put on 30 days’ notice, and you described an epiphany where you realized “hey this restaurant thing is really interesting.” What – explain what that moment was like and how it changed your whole life?
MITCHELL: Well I was – I just turned 19 at the time, I’ve been out of high school for about a year and I was living at home with mom working for beer money, working for the man, not a boy but not yet a man and just really squandering, and I was working two jobs in the restaurant business and I had trouble getting to work on time in the morning and I got from for a three-day suspension and 30 days probation.
So midway through that probationary period, and I’m just trying to figure out what I want to do in my life and I just have been struggling. And so I didn’t want to go right off to college because I don’t want to go to college not knowing what I wanted to do.
So I was suspended for three days, put on 30 days probation and during the middle of that probationary period, it was a Friday afternoon and it was during shift change, I was working as an am cook that day and a pm host at the same restaurant.
RITHOLTZ: Double shift?
MITCHELL: Yes, and that restaurant was a very busy restaurant, probably do a thousand people that day between lunch and dinner and 4 o’clock in the afternoon, shift change, the restaurant is half full, the bar is packed with happy hour, the am shift is trying to leave, the pm shift is trying to come on, the managers are barking orders and it’s kind of pandemonium in the kitchen, and time froze, I looked across the line in the kitchen and I said “I absolutely love this, this is what I’m going to do the rest of my life, I want to be in the restaurant business.”
So I worked my double shift and I went home that night and I wrote up my goals, I said I was going to go to the Culinary Institute of America in Hyde Park, New York, I heard about that, I’m 19 years old, and I was going to graduate, I was going to become an executive chef by the time I was 23, general manager at 24, regional manager at 26, vice president of operations at 30 and president of a restaurant company by the time I was 35.
RITHOLTZ: Those are ambitious.
MITCHELL: Yes, and I woke my mom up at one in the morning, said “I know what I want to do with myself the rest of my life.” and she was quite relieved needless to say and I got up the next morning and now I was working for my – did a complete 180 degree turn, I was working for myself, for my future, for my career, I have the best attitude in the kitchen, I was the hardest working guy in the kitchen, and the day before, I was the laziest guy in the kitchen, lousy attitude and working for the man and working for beer money.
RITHOLTZ: Now, you’re…
MITCHELL: 180 degree change, yes I guess so.
RITHOLTZ: So for people who may not have ever worked in the kitchen and I was a waiter and a short order cook in college, there’s really especially during a rush, there’s a tremendous amount of energy and sort of a controlled chaos, is that a good way to describe it?
MITCHELL: Exactly, that’s a great way to describe it.
RITHOLTZ: And for people who haven’t experienced it, I could see how there’s a tremendous lure there because it’s always different every day and there is so much stuff going on…
RITHOLTZ: What was it about that moment in time that had you flip from being the bum in the kitchen to the hardest working guy in the building?
MITCHELL: Well I just needed to find my way, I need to have my goal…
RITHOLTZ: That was a key difference.
MITCHELL: That was totally the key difference and once — you know, I’ve been goal oriented ever since, I still have on my desk today my fourth quarter goals for my career for the next 15 years. So I’ve been a goal setter since day one and it’s worked well for me and I’m still doing it today.
RITHOLTZ: So at the culinary Institute of America has been described as the Harvard of food prep, you had written “There are three kinds of CIA students, those who are going to be chefs, those who want to be in the restaurant business, and those who were lost.”
How did you know that you didn’t want to be a chef but wanted to actually be in the restaurant business?
MITCHELL: Well, it goes back to my goals, I knew I want to be president of a restaurant company and I said to myself…
RITHOLTZ: At 19.
MITCHELL: Yes, so I said if I’m going to be president of a restaurant company, I better know about food and I was already working in the kitchen but I didn’t know anything about food, so I said I’m going to go to the CIA and lean about food.
RITHOLTZ: And you – they turn you into a chef even if you don’t want to be a chef.
MITCHELL: Yes, yes.
RITHOLTZ: And if you want to be in the management side, they still teach you how to cook?
MITCHELL: Exactly, exactly, those fundamentals, and those basics I still work with today and have been formed the base for my knowledge to build my career from.
RITHOLTZ: Let’s discuss a little bit the process you go through in “Finding great people” a lot of executives say that’s the most challenging thing they do is hiring and sometimes you never know who is going to turn out to be great or not, you think you came up with a solution, tell us about it.
MITCHELL: The two questions I get asked thousands of times is where do you get such great people and how do you deliver such great service? And I tell people the answer is the same to essentially both questions, we get the same people everybody else gets.
I actually don’t think it’s that hard to get great people because I think everybody – we’re on a premise almost everybody’s great, we just treat people great and we inspire people to grow and learn and we care about them tremendously and they in turn care about us and they want to deliver great service and they get excited about our company, they want to build their career and it’s such a positive momentum that permeates the entire organization.
RITHOLTZ: So you don’t hire great people, you hire people and allow them to become great.
MITCHELL: Correct, that is exactly right.
RITHOLTZ: That seems like that’s a challenge to do. How do you take a regular person in jobs that could be long, tiring, stressful, and make sure that those folks always have a good attitude and always are striving for the sort of greatness you described?
MITCHELL: Well, I think those long hard hours, and having a great attitude is a standard image of the restaurant business if you will. But in our company, it’s not quite the same, our company, our number one value is “Our associates come first.”
I tell people that our company is built by its people for its people, we are not built for investors, we are not built for me, we are built for our people.
RITHOLTZ: You described in your book, a book that you found very influential which was “The Customer Comes Second” which is somewhat counterintuitive and very much not how the usual management books discuss treating customers, explain what “The Customer Comes Second” actually means to your corporate culture?
MITCHELL: Well, we’ve all heard “The customer comes first” that is preached almost everywhere and here I am, a CEO of a restaurant company, I would say our customers do not come first, our associates come first, I’m even brazen enough to say we don’t even have a direct relationship with our customers.
We have a direct relationship with the people we work with day in and day out, our customers who I call guests come to see us once a week, once a month, once a year, sometimes once in never god forbid, but we have a direct relationship with our people. So I look, I describe it as a triangular relationship. We take care of our people, our people take care of our guests and our guests take care of our company. So that’s how we do it.
RITHOLTZ: So obviously corporate culture is a big part of that, how do you go about building a corporate culture that encourages staff members to try to get to yes? How do you ingrain that into the philosophy of a restaurant company?
MITCHELL: Well, it starts with us, you know, we say yes to our people all the time, and they know that and so yes is the answer once the question permeates every single corner of our organization.
And it might be as simple as a manager talking with some friends and hey, we are going out of town in three weeks for a long weekend, do you want to go?
And he doesn’t say or she does not say “I have to ask my boss.” They say “Yes, I can go, no problem” and they go tell their boss they are going to be away for a weekend coming up here.
And so that freedom and that belief that it’s good for me, it’s good for you, and so our whole team operates on that.
RITHOLTZ: So my office, we don’t have a vacation schedule, we don’t have fixed hours, we initially when it was just a handful of us called the big boy rules, hey you know what your work is, come in do your work, if you’re done at three and you want to go home at three, who cares? And we assume you’re nothing to be abusive on vacations. But one can imagine when – we’re 25 people, you’re thousands of people, how do you make sure that people aren’t taking advantage or being abusive of that?
MITCHELL: Well, our culture in many ways deals with that but in particular, I’ve always led the organization believe he we leave the organization for 98%, 99% of the people that are good, not the 1% or 2% of people that are bad.
MITCHELL: So yes, do we have people that take advantage of us sometimes? Yes, we do.
But we don’t let that affect the positive work environment that we have and the great company culture that we have for the other 99% of our people to enjoy.
RITHOLTZ: And you are one of the executives who feels that your job is to help everybody else…
RITHOLTZ: Do their jobs and I’m going to throw another quote at you. “Instead of worrying so much about how I did my job, I switch my energy to helping other people do their jobs.” This was another epiphany moment you described. Tell us about what triggered that reversal and how has it helped you in business since then?
MITCHELL: Well, it changed my life. One day as a younger general manager, I was working my tail off 80, 90 hours a week and I thought how successful a restaurant would be was how well I did my job and how hard I worked and my boss called me into his office and said he just had to clandestine me with eight servers who were going to Mutiny on the Bounty and either I go or they go, and he said, listen, he’s going to stay but I want you to stay, and let me talk to him.
And so he told me about this meeting and I was shocked, I thought I was doing a great job but I wasn’t even focused on the people, I wasn’t even worried about the people, I was running around following around the restaurant making sure they were doing their job right, et cetera, et cetera, with a fine tooth comb and driving them buts basically.
So I said to them, I said I will change my attitude, I will change my way and read several books and I thought and I reflected and I created this leadership style of working through the people. We here support our people and then what I realized is not how well I do my job, it’s how well everybody else does their job is what’s important, I — and all my focus was on supporting all of my fellow associates that worked in that restaurant and the whole thing changed on a dime.
RITHOLTZ: So how do you spot talent? When you’re when you’re looking to bring on a executive chef or even a sous chef or someone at the front of the restaurant, host or hostess or a manager, what are you looking for in that process or do you think you could just pretty much take anybody and mold them into that role?
MITCHELL: We pretty much believe we can take about anybody.
So we don’t really do much outside hiring, 90% of our people come in from the hourly associate ranks, improved themselves at that point and get promoted and grow with our company, not to say we don’t do outside hire but very rarely. I don’t want people who worked and build their careers with the company and have us outside hire someone on top of them after they’ve worked for the company for years.
So talent really identifies itself through their job performance as we move along.
RITHOLTZ: Let’s talk a little bit about the book you wrote “Yes is the Answer” and I have to start with the milkshake story because it’s got a little bit of “Five Easy Pieces” to it, a little Jack Nicholson and then a little twist ending. You and your wife are out with the family at a restaurant and you obviously can look at all the items on the menu and if they have bread and they have cheese, you should be able to get a grilled cheese except some places say no.
RITHOLTZ: Tell us about that that moment which I found amusing.
MITCHELL: While, we’re dating ourselves and we know Jack Nicholson in “Five Easy Pieces.”
RITHOLTZ: Right, it’s the film buffs who are younger will certainly know of the movie and the famous chicken salad scene, you can find that on YouTube if you’re not familiar with the movie but you’re at the restaurant, what happened?
MITCHELL: So I wanted a grilled cheese sandwich, I have my four year old and my two year old with me and my wife and my mother and father-in-law, and so I want to get grilled cheese for my four year old son and the galley says “we don’t have grilled cheese” I said Okay, so I end up ordering a club sandwich, hold the turkey, ham, lettuce, tomato, bacon…”
RITHOLTZ: So they had the bread, they had the cheese, and they had the grill…
RITHOLTZ: How hard it’s…
MITCHELL: And I said if you can sauté this on both sides, that’d we fabulous.
So I get that time…
RITHOLTZ: And it’s a grilled cheese and turkey club.
MITCHELL: Right, right.
And so then I asked her for a chocolate milkshake for my son. And she’s “Well, all we have is a Haagen-Dazs milkshake, it’s like a quart of soft whipped ice cream, it’s huge, it’s way too big for your son, we just can’t do it.”
And I said Okay, can I — “will you ask your manager”? So she goes ask her manager, I see the manager shake her head no.
She comes back and says “we can’t do it.” I said Okay, well, can you have your manager come over and see me, and my wife starts to kick me under the table, don’t do this, and I said “I just want to know why.”
RITHOLTZ: Can I assume your wife has seen this movie before?
MITCHELL: Yes. Yes.
RITHOLTZ: I mean this is not the first time…
RITHOLTZ: What should be a yes be a not and you are just miffed by the whole process.
MITCHELL: Exactly and I want to know why.
So she comes over and she says well, the thing is we pre-portion our ice cream, when we give your son a little bit of ice cream, what are we going to do with the rest? Now, I’m in the restaurant business at this point in time, 20 plus years, I know no one is the back pre-portioning the ice cream and I said, “Okay, so can you make a chocolate milk for me?” And now, she’s great hospitality, “absolutely, I will get you a chocolate milk,” and starts to turn away. And I said, “Hold on a second.” she had two hot desserts on the menu, it said one carrot cake and chocolate brownie dessert, it said “Ala Mode 2.95.” I said “What does ala mode mean?”
She says, “Well, that’s a scoop of ice cream.” I said “perfect, can I get an order of ala mode to go with my chocolate milk?” and she said yes but she chastised me, “Okay, sir, but it will be expensive” she was visibly upset, and my wife…
RITHOLTZ: By the way, while you are ala moding this, hey, run the whole thing through the blender and now it’s that milkshake I wanted in the first place.
MITCHELL: Exactly, exactly.
So I get the milkshake and a couple of weeks later, I’m a keynote speaker at a 500 person luncheon for a local business magazine I’m telling the story how the answer is yes, what’s the question or yes is the answer, what’s the question, however way you want to phrase it, and I tell the story. And so about two weeks later, a gal comes up to me on the street, she said “My husband saw you speak at the Hyatt, thought you did a great job and wanted to take you up on your milkshake story and so he went to one of your restaurants to the bar and tried to order chocolate milkshake and they said no.”
MITCHELL: And it’s like she punched me right in the stomach right there in the street, and I went to our Monday morning executive committee meeting, fired it up and said, “You know, yes is the answer, what’s the question is not permeating in our organization well enough, we need to correct this” and so we started to brainstorm and we said, well, let’s tell that story, let’s make a video of that story, and let’s do milkshake — let’s make milkshake the icon of hospitality and seeing all of our great stuff and finally…
RITHOLTZ: And people have little milkshake pins…
MITCHELL: Yes, going on right now.
RITHOLTZ: And basically it says if someone asked for something a milkshake or otherwise, if you could deliver it, why wouldn’t you?
MITCHELL: Yes, exactly, so I every new associate who starts at the company goes through a four hour orientation into the company culture and philosophy and values and so forth and we make every new associate who starts at the company a chocolate milkshake that day, and we take it a lot further than that, we make thousands of chocolate milkshakes every year, we start every major meeting, every staff meeting with a milkshake toast, everybody celebrating great people delivering genuine hospitality and “Yes Is The Answer, What’s The Question?”
RITHOLTZ: So how do you make sure that the customer experience is consistent across all of those different locations? Different suppliers, different regions, different managers, different staff members? If I walk into Cameron Mitchell restaurant here there or elsewhere, am I going to get the same hospitality and the same meal or is it going to vary widely?
MITCHELL: Barry, you get the same, we are in coast-to-coast, we are as far west as Beverly Hills to New York and everywhere in between and we are talking about our culture and values, we have the same training programs across the company we have the same standards et cetera, but our culture and values is the backbone of what we do and I look at it this way. We teach our people our culture and our values, we teach them how to think and if they know how to think, they will know what to do.
And so early – in our earlier years, our culture and values as we spread out of town did not resonate as well as it did out-of-town as it does in town.
RITHOLTZ: Why do you think that is?
MITCHELL: Because we opened our restaurants with out-of-town people and so forth and we didn’t really know how to transfer the culture and we brought people in and we thought if we hired outside managers, they come in for 8 to 12 weeks in training and train and learn and it’s just not that way.
RITHOLTZ: Can you change 20 years of experience in 10 weeks?
MITCHELL: No, no, it usually takes six months to a year for an outside hire to really adapt and learn to our culture. So today, we won’t open a restaurant without a homegrown management team in that restaurant and it’s very important to inculcate that culture into that new property no matter where it is.
RITHOLTZ: So restaurants are notorious for having a very high failure rate, you described the second restaurant you opens as you are prepping, you’re in the empty building, a police officer commissions in…
MITCHELL: Right, right.
RITHOLTZ: And he’s just checking on the building, “what are you doing here”?
“Oh, we’re opening a new restaurant here,” and at that point after you’re already committed on the lease and you have already raised all the money…
MITCHELL: Yes, and we’re under construction.
RITHOLTZ: Yes, and “hey, what’s this neighborhood like? Is it safe?” And he kind of surprised you with his answer, didn’t he?
RITHOLTZ: There has been some trouble, wasn’t there a —
MITCHELL: Yes, so it was 7 o’clock, the construction team’s gone and it’s a beautiful clear night and I’m talking to this police office, I look across, a couple blocks down the way I see a lady dressed provocatively walking down the street and I said to him…
RITHOLTZ: A lady in the evening.
MITCHELL: Yes, in the evening, early evening. And I said, “Is she a prostitute?” And he goes “Oh yes, there’s a bunch of them down there by – there are hotels down there.”
And I said, “well, is this a safe area?” And he says “Yes, it is, but you know, we have someone got killed, I was just in a scene two nights ago across the street here, there’s blood everywhere.”
And I’m like “Oh my goodness, what have I done?”
RITHOLTZ: So – but meanwhile, the restaurant was around for what? Seven years?
MITCHELL: Yes, yes.
RITHOLTZ: But generally speaking, when a new restaurant launches, that’s a triumph of optimism over rationality, isn’t it? Most restaurants don’t even last two years, do they?
MITCHELL: Right, right.
RITHOLTZ: So how do you manage those challenging odds and continue to open restaurant after restaurant?
MITCHELL: Well that particular restaurant made enough to feed a cat for seven years, but anyway, and that was a mistake, and we made mistakes, and makes lots of mistakes, and I look at it as a batting average.
MITCHELL: I look at every five restaurants I open, one is not going to do very well or it might even close, the other three are what I call single, doubles, or triples, and the other one, the fifth one is a home run, out of the park.
MITCHELL: And so you average them all together, I get five good ones. So we know we’re going to get mistakes but we we’ve gotten better at our craft along the way and you know, I go back to when the high failure rate in the restaurant business to me is a little bit of a misnomer. Simply put, a lot of people want to be in the restaurant business and they – it’s kind of a very relatively low barrier to entry as far as cash goes.
RITHOLTZ: Still a couple hundred grand to open any restaurant.
MITCHELL: For your first one, maybe you can get away with that, you know, we spend millions of dollars today to open a restaurant, but certainly my first one was 400,000 to put it that way, but I would say people don’t walk around a grocery store pushing a grocery cart saying I want to be a grocer…
MITCHELL: But they do go to restaurants and say I want to be in the restaurant business.
RITHOLTZ: I could do this, how hard is this?
MITCHELL: And so if you take out the people that maybe really shouldn’t be in the restaurant business out of that equation, the success rate is a little bit higher but because of that, it creates a lot of failure rate.
RITHOLTZ: So assume you have access to plentiful capital especially your shop, you have a good track record for 25 years, what’s the most challenging thing about launching a new restaurant, is it the location? Is it the theme? Is it the food? What’s the biggest challenge?
MITCHELL: Well, you already took my first challenge out of the picture, that’s capital – access to plenty – more capital, that’s never been the case, it’s a lot of capital…
RITHOLTZ: And you write in the book how challenging it was to constantly come up with every restaurant is 400, 500, 600 25 years ago, not now, that’s — today that’s $2 million.
MITCHELL: Right, right, exactly, so…
RITHOLTZ: And if you’re New York it’s $5 million.
MITCHELL: We spent 11 million to open in New York.
RITHOLTZ: Really? That’s a lot of money. Was it worth it?
MITCHELL: Very much so.
RITHOLTZ: And I’m assuming Beverly Hills isn’t cheap either.
MITCHELL: That’s our second most expensive.
RITHOLTZ: Where – so that raises the question, you have a lot of restaurants in Ohio and Columbus, I would imagine that’s much less expensive and if you could attract as much of a crowd, are more those restaurants more profitable or are they not capable of doing the volume of a New York or L.A.?
MITCHELL: Both, both, I mean it’s – we’re talking about return on investment, it’s about volume and capital invested so yes there’s less capital invested but lower the volume so you might have the same return on investment as we have somewhere else.
So what are the other mistakes that restaurateurs make? I have to assume being undercapitalized?
RITHOLTZ: We will take a break for dinner and we’ll finish by midnight, undercapitalization I’ve heard from other restaurateurs…
RITHOLTZ: What else is an issue?
MITCHELL: Well obviously by the book, “Yes is the Answer, What’s the Question?” is all about your values and your beliefs, your philosophies, I think they are very important, a lot of people start out and don’t even have any values written down or any mission or anything, don’t even understand that. So that’s first and foremost in my book. Understanding the brand, brand development, restaurant brand development, you know, I’m going to have a barbecue restaurant that’s super healthy also …
RITHOLTZ: Which is it?
MITCHELL: Right, you can’t have –everything has to be congruent all the way across the brand, so and even restaurant branding itself has taken me years to really understand and maybe get a little good at.
RITHOLTZ: Now, here’s my naïveté as a foodie here in New York. If the food is really good, you really have to go out of your way to mess that up. Am I wrong? Once you get to wow his food is great, is that sufficient or does that not get it done?
MITCHELL: Well that’s just, I think, one leg of the stool, you know…
RITHOLTZ: What are the other legs?
MITCHELL: Well, certainly service. And you could debate whether food or service is more important or there’s different studies on both, I think they are about equal…
I’m surprised to hear that.
RITHOLTZ: You remember bad service but you don’t – you know I can I could tell you about a million spectacular meals but I don’t recall ever saying this waiter was — usually, they are unobtrusive, and when the service is really, really good you almost don’t notice it…
RITHOLTZ: Unless you’re in the industry, you can’t help but notice it.
MITCHELL: You’re not going to go to a place that’s got great food even though the service is low, sometimes you have a bad experience….
RITHOLTZ: Probably right, like also you’re not going to go to a place with great service and lousy food.
MITCHELL: Correct, correct, so that’s why I say hence I think they’re both equally important. Then comes the ambiance which is a lot of that is the unobtrusive things that you may not even necessarily realize whether you like it or don’t like, you know…
MITCHELL: Right, you might sit in a restaurant and say “I don’t really like this place” but you may not know why exactly but maybe light is not right or the music is not right, all those intangibles to a certain extent, and then marketing you know, you can’t really have a successful restaurant unless you also know how to market yourself, because if you’re not in a great location, and people need to find you so you have to spend a lot of time and energy and tooting your horn to a certain extent to market yourself.
So it’s really – those are the four legs of the stool of my book.
RITHOLTZ: So let’s talk about another intangible. You mentioned the music and the lighting, I have some favorite places my wife refuses to go to on weekends because it’s so crowded and so loud, it’s not relaxing, you want to go on a Thursday or Sunday, I’m happy to, but Friday and Saturday night, it’s a zoo, is that an issue you have to deal with or is that just my…
MITCHELL: Certainly is you know, noise and sound is certainly an issue we’ve had to add soundproofing to restaurants along the way, but you know first of all…
RITHOLTZ: A little energy’s got to be good…
MITCHELL: Right. I say people go out to be stimulated not to be sedated…
MITCHELL: So and a restaurateur’s nightmare is an empty quiet dining room, so we don’t want those. So think about where we’re coming from. We want loud, we want that energy, energy breeds energy, the staff is happier, the guest are happier, everybody’s excited, but you have to be able to talk at the same time, you have to be able to converse and enjoy yourself.
RITHOLTZ: That’s pretty reasonable.
We have been speaking to Cameron Mitchell, he is the founder and CEO of the Cameron Mitchell Restaurant Group.
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Welcome to the podcast. Cameron, thank you so much for doing this. I am a foodie and I’ve gone out to Michelin star restaurants all over the world. I’m very happy trolling my way through Chinatown finding random Malaysian restaurants or Shanghai soupy buns or someone on — Linette Lopez from Business Insider on Twitter mentions that there is this restaurant in Flushing called Galaxy Dumpling House, she goes, “Oh, they’re opening a new location, they’re testing out a franchise concept” and I said to her we – you know some people do a pub crawl, we’ll do a bunch of bars? We did a dumpling crawl through my birthday a year ago through Flushing, Queens, we went to like a dozen…
MITCHELL: Sounds like a great time to me.
RITHOLTZ: I got home, I didn’t eat for two days, it was just — that’s a lot of dumpling. Galaxy Dumpling has like a hundred different dumplings on the menu, it’s just – -and they are all, you know individual, homemade. So I was intrigued when I saw your book and I saw your history, I was kind of intrigued by it. I’m fascinated by the idea of taking a successful restaurant concept and expanding it elsewhere be it franchise or your own approach, and every now and then, I’ll see a little restaurant and say, there’s this little place not too far from where I live called Cactus Café, it’s just really good simple Mexican food and grilled Peruvian chicken in a room smaller than where we’re in right now. And every time I see this play, I’m, they can open a hundred of these if they wanted to.
The stuff is – it’s not, there’s a million of these little places like that, this is different, it’s unique, I’m shocked nobody ever did that so I have to ask you when you come up with a concept that’s successful, are some of the successfuls just not translatable? It’s just lightning in a bottle and it’s that one location and are you ever surprised when something that you thought “Oh this is pretty good but not spectacular” and then it has legs in it, it keeps going.
How does that process go from “Hey, this a pretty good restaurant idea, now there are a hundred of them.”
MITCHELL: Well, it’s kind of multipronged question, I think, you know, not every restaurant operator wants to build multiple restaurants, not you know, not every restaurant operator wants to live on an airplane and travel all the time like we do.
MITCHELL: So I personally want to build national brand, I wanted to do that so we kind of looked for it and we worked on it, building a national restaurant brand takes a lot of time and effort, years and years of time and refinement of that brand.
So it’s not as simple as just replicating it, you’re right, there are certain regionalities for the country, barbecue doesn’t necessarily travel all over the country, it’s a different specialty, different types of barbecue so there’s a lot that goes into it. And I think just having a individual successful one restaurant doesn’t always mean it’s noise me is translatable to all across the country or across the town.
RITHOLTZ: So now, what is the Rusty Bucket? What it’s that?
MITCHELL: It’s a corner — 4,500 square foot, 140 seat corner neighborhood tavern concept. It’s a – we put it in affluent suburbs, it’s a great place, we really say it kind of is the default vote, you got kids, you want to go out to dinner, you don’t – where would the kids be happy, where would mom and dad be happy, and that’s where – so we’re basically…
RITHOLTZ: So burger, chicken wings…
MITCHELL: Yes, pastas, pizzas, that sort of thing.
But good food from scratch, great environment, the bar is right in the middle of it, you are going to have people drinking at the bars and still walking with your kids and feel very comfortable and it’s that kind of place, so it’s really in those affluent suburbs, we’re in six states right now around the country.
RITHOLTZ: So a chain like that, 23 – 20, how large can that get? Is that something you would want to expand to 200 restaurants or is it you just have to find the right place where it’s a good fit?
MITCHELL: Well, we’re still working on that, you know casual dining itself is probably one of the more challenging parts the restaurant business, so fine dining, where Ocean Prime brand lies is doing very well, we all know go fast casual is doing very well…
RITHOLTZ: It’s so competitive…
MITCHELL: Yes, that’s the thing, it’s saturated, and I’ve never wanted to get into that fast casual business because of that.
RITHOLTZ: Where do you draw the line on fast casual above like…
MITCHELL: Well, you know, Chipotle…
MITCHELL: Everybody wanted to do Chipotle delivery model and everybody wanted the success of Chipotle and you know, you have a lot of fares long way with that too but you have everybody and their brother throwing money at it and trying to get into it.
MITCHELL: And I just tried not to do that, didn’t want to do that.
RITHOLTZ: What about all the burger chains that are…
RITHOLTZ: Coming out to challenge McDonalds, some of which have really taken off very quickly?
MITCHELL: Sure, how many — Shake Shack is obviously a good example…
MITCHELL: Five Guys burger is another good example, and at one point, I had – our vice president of operations leave us because he wanted to do a burger joint and start a burger craze and I didn’t want to get involved with it.
RITHOLTZ: That’s a very competitive space.
RITHOLTZ: And you have all the legacy McDonald’s, Burger King, Wendy’s, go down the list, RBs…
MITCHELL: Yes, slimmer margins…
RITHOLTZ: So that’s a tough business I would imagine.
MITCHELL: Yes, it’s something I prefer not to get into.
RITHOLTZ: So fast casual is Chipotle and higher.
RITHOLTZ: You’re not in the fast casual space.
MITCHELL: Yes, I would call that as limited service, or counter service, et cetera, we’re in the full service space and the full service space is the casual brands like the Rusty Bucket, you know, put Applebee’s and Chili’s in there if you want, and there’s others, and then there’s upscale casual, and then there’s the fine dining.
So we play in all three of those segments.
RITHOLTZ: Are there any upscale casual restaurants that have managed to build more than just a local footprint?
MITCHELL: Well, sure, the national standard bearer, called Standard of Houston’s.
RITHOLTZ: Oh sure, very good.
MITCHELL: Instead of polished casual segment…
MITCHELL: You know, those are who really the rest of us aspire to be, Cheesecake Factory is in that genre, not as good as (Houston’s) but on that genre.
RITHOLTZ: (Inaudible) is respectable.
MITCHELL: Yes, yes. Absolutely.
MITCHELL: It’s a different approach…
MITCHELL: Along those lines and those are the – and then there’s the fine dining brands like Ocean Prime that is in major markets across the country.
RITHOLTZ: So New York has some rule — New York City about if you have more than five restaurants with the same name in New York, there were certain disclosure requirements, and so the Houston’s and some other similar chains in New York, basically, well, we will just change a couple of names…
RITHOLTZ: And thank the silly rule.
MITCHELL: And there’s the national rule to that over 20 units, you have to label your menu items with a calorie count and all that.
I think that’s what the New York…
MITCHELL: Yes, and you know, that’s – the jury is still out on really how that’s affecting the restaurants, I was talking to a CEO of another restaurant company that has done and it just shifted the way people order, it hasn’t really affected their business volume…
RITHOLTZ: So what does it do? It affects the dessert order?
MITCHELL: Yes, when they see lobster, mashed potato or at 2,100 calories, they are ordering something else but they are still ordering. So it hasn’t really…
MITCHELL: And you know,, whether you believe – I believe in freedom of choice and you know, people can do what they want but…
RITHOLTZ: The problem is once you put the calories down, you are nudging people in one direction or another.
MITCHELL: Correct, and that’s what the law is for.
RITHOLTZ: I guess. Let’s talk about tipping. That’s a big issue, some people — I was just in Iceland where there is no tipping on the entire island, and when they told us that, I was kind of shocked, although everything is kind of expensive there so it’s obviously no free lunch, it’s built-in. That said, it was kind of nice not having to worry about it and think about it. Where do you land on the should we have tipped servers or should we just pay them a salary and build that into the price?
MITCHELL: Well I definitely differ on that, and a friend, Danny Meyer who is leading the charge on the no tipping program, and I understand what he’s trying to do, he’s trying to bridge that gap in the disparity between front of the house associates and back of the house associates.
People in the — the dishwashers, the bus, people in the back, they are not making a whole lot of money compared to the bartenders, waiters, host and hostesses.
MITCHELL: Correct, and I understand that. But and again, the jury is still out on whether that is really working or taking hold and in his company, he is doing it, and he’s making that decision and trying to change the way we do business and there’s a lot of pushback. You know, I’m trying to reserve judgment on that, I’m trying to keep an open mind ay but I don’t really like that personally, I like to tip, I like gratuity, I like great servers make more money than not so great servers…
MITCHELL: Now, we on the other hand, as a tip of the hat to Denny, I mean, we’re trying to take care of our back of the house associates more and still able to do that and giving them raises and paying them more along the way, but, you know, not everybody is cut out to be in the front of the house, not everybody is cut out to be in the back of the house, and not everybody makes the same amount of money across America.
So it is what it is to a certain extent and I do personally like to tip and I think it’s – one of the great hallmarks of hospitality.
RITHOLTZ: So one of the questions we didn’t get to during the broadcast portion was the different regions in the country. You mentioned Beverly Hills, what about further up the West Coast, San Francisco, Portland, Seattle, are you in those locales or are you interested in going there?
MITCHELL: Well, there are tougher markets to do business because of the regulatory requirements and so forth but we had a deal and actually Seattle and we passed on that deal because of that.
MITCHELL: However, we’re working our project currently in San Diego and we’re currently looking up in Northern California, and so there’s lots of great successful restaurants in California.
RITHOLTZ: Portland is a fantastic food city.
MITCHELL: Yes, yes.
RITHOLTZ: Really good food city. Although people have told me that it’s very difficult to move the needle if you need any sort of local government waiver or approval, it’s a challenge to get that done.
MITCHELL: And there’s a lot of independents, there’s a huge independent dining scene in (Seattle) too.
MITCHELL: So that’s probably, might not be top of our list in terms of national development.
RITHOLTZ: So you started in Ohio, what about places like Chicago and Indianapolis and other major cities and in the industrial Midwest?
MITCHELL: Yes, sure, we are in – you know, we started building outside of Columbus in the Midwest, so we’re in Chicago, we’re in Detroit, and Indianapolis, Columbus, natural movement from there is Florida, you know, a lot of those…
RITHOLTZ: Right, are you in Florida yet?
MITCHELL: Yes, we’re in Naples, Tampa, and Orlando, and we’re looking now on the East Coast to (Nwabuco), North Miami, Palm Beach area, and…
RITHOLTZ: Which concepts do you want to bring?
MITCHELL: Ocean Prime.
RITHOLTZ: Really? So you want to go high up – high end, in all those places?
MITCHELL: Correct, correct.
RITHOLTZ: Very, very interesting.
MITCHELL: Yes, Ocean Prime is a brand we are building for the time being, you know, we may build more Rusty Buckets, like I said, we have two concepts within our independent group that we’re looking to maybe take outside.
RITHOLTZ: So I have to ask you a naming question, a branding question…
RITHOLTZ: Ocean Prime, it sounds very high end, fresh seafood, prime steak, sounds great.
Rusty Bucket isn’t a name that comes to mind about a restaurant, what’s the concept or like the branding concept, I mean.
MITCHELL: Yes, its casual dining, and that name kind of came out as a fluke and…
RITHOLTZ: And it has legs.
MITCHELL: It took off and it has legs, but yes when we go to new markets, people are like what is that? And we have to explain a little bit more. And restaurant naming itself is a very challenging because that name you want to reflect on what that brand is.
RITHOLTZ: You would think, right?
MITCHELL: Just like Ocean Prime, exactly.
RITHOLTZ: So how does Rusty…
MITCHELL: But there are, yes, there are examples to that broke that mold to a certain extent…
RITHOLTZ: So to me…
MITCHELL: It’s easier or not…
RITHOLTZ: To me, I hear Rusty Bucket, I’m like, do I want a rusty bucket of food? It’s so counterintuitive. But I know that’s been a very successful chain for you guys.
MITCHELL: Yes, yes, yes.
RITHOLTZ: So whatever that quirkiness is, it seems the catch…
MITCHELL: Takes a little more work, and there’s other examples out there.
RITHOLTZ: But once people, once it’s in the neighborhood, people kind of — it stays with them and it’s like, “Oh, the Rusty Bucket” it’s a very different, it’s not McDonald’s, clearly and it’s not Ocean Prime but it seems to have found a sweet spot right in the middle.
MITCHELL: Well what you get is people say, “Let’s just go to the Bucket” good and short…
RITHOLTZ: Just “The Bucket.”
MITCHELL: Yes, “We’re going to The Bucket.”
RITHOLTZ: That’s really interesting. So we went over tips and we went over branding, I have to just a little bit, just put a toe into the kinds restaurant concepts creation because you described — in the book, you described the process but it’s very generic you don’t get into the specifics.
So I — for my own curiosity, how do you come up with a brand-new concept that is different from – are you going to other restaurants, is it brainstorming? How do you come up with oh, this is a new idea, let’s test it out and now it’s in 50 cities, how does that happen?
MITCHELL: Well, I’m not sure there’s really a lot of new ideas out there, it’s just your version, your artistic impression of someone else’s new idea, and …
RITHOLTZ: The 20 people painting, the feels out the window.
MITCHELL: Exactly, so I think, you know, and every restaurant we’ve done has a story to it, you know, we have a restaurant called The Barn at Rocky Fork Creek and it’s a little barbecue restaurant, and our guy said, you know, they called us and say hey, we’ve gone out of business but we’d like to put a restaurant there. And I said no, we don’t want – this s barbecue place, bar, no, we don’t want to do it and I remembered as I was saying that the — one of the top grossing restaurants in the country is called The Angus Bar in North Carolina and it’s the top restaurant in North Carolina, and I said, boy, this bar is perfect for that concept, it could be perfect…
RITHOLTZ: And what is the concept of The Angus?
MITCHELL: It’s a…
MITCHELL: Upscale casual steakhouse kind of a little bit of a Ralph Lauren feel, it’s not fine dining, it’s not white tablecloth but it’s approachable and…
RITHOLTZ: Somewhere between fast casual and fine dining?
MITCHELL: Well somewhere between fine dining and upscale casual.
MITCHELL: It’s a little bit up there but – and we did it, we had another restaurant site in a short north of Columbus that this location became available and this was back when the gastropub craze was going across the country…
MITCHELL: And so we said, you know, I called the landlord up, he said, “what are you going to put there?” I said “I don’t know but I like the site.”
RITHOLTZ: There will be fried chicken with Sriracha sauce on it and you’re set.
MITCHELL: Exactly, in fact, I was just there last night.
So you know, it just depends, now Ocean Prime, you know, we wanted to build a high end steak and seafood restaurant and we didn’t want to necessarily (inaudible) steakhouses, so that’s how that – it’s original name was Mitchell’s Ocean Club, and we sold to Ruth Chris, I sold the name Mitchell specifically, so it was Cameron Mitchell’s restaurants, but it was Mitchell’s Fish Market and I couldn’t call it Mitchell’s Ocean Club, so that’s when we rebranded and came up with Ocean Prime and we fit the concept perfectly.
RITHOLTZ: I know I only have you for a certain amount of time, so let’s jump to some of our favorite questions that we ask all of our guests. Nobody’s gesturing at me yet but sometimes they will wave and say we have a – I get the bring the plane into the carrier.
Tell us the most important thing people don’t know about your background although after the book, I don’t know if there’s a whole lot of stuff…
MITCHELL: Yes, that’s a tough question because I am an open book…
MITCHELL: And talks about that, and “Yes, is the Answer, What is the Question?” I would say if what people really don’t know about me I’m still an entrepreneur, I’m still Chicken Little, I’m still scared every day and even with the national success we’ve had, I still wake up every morning, check our numbers and see how we are doing and nervous all the time.
RITHOLTZ: So that’s a surprising answer. You mentioned the fourth quarter for Cameron Mitchell, really at this point I should ask you, what are your plans for the fourth quarter?
MITCHELL: Well, two things, one and I’m working on is currently is to move to truly a chairman’s role within the company which is chief strategy officer if you will, and then really chief steward of the company and legacy and stewardship of the organization, and really about the part and parcel why we wrote the book, “Yes is the Answer, What’s the Question ” is to share that knowledge and to tell that story, we were the lead donor, I’m opening a charity and fundraising for us to build a new 80, 000 square-foot hospitality management school in Columbus State College. We are opening the Budd Dairy Food Hall which is — takes 10 restaurateurs, young buddy restaurateurs will be in this space and our goal is to help them, we run the bars and we run the food hall, we curate these restaurants and our goal is to help take these restaurant first to bricks and mortar, restaurants along the way, just all about the young leaders in our company working with them and helping them build their careers, et cetera.
RITHOLTZ: Tell us about some of your early mentors, who helped guide your career?
MITCHELL: Yeah and I didn’t have really a lot of early mentors and who I talked with, I believe people that have mentors that they don’t even necessarily know. Rich Melman out of Chicago, (inaudible) of restaurants but certainly one of mine, Norman Brinker from Chili’s, his book and he’s been inspirational to me.
Dave Thomas from Wendy’s, his story, there’s lots of – Herb Keller, CEO of Southwest Airlines and I think their story and how he ran a business is incredible, so those are some of the people I looked up to as I was coming up the ladder.
RITHOLTZ: You mentioned a few books, what are some of your favorite books?
MITCHELL: My all time great favorite book is “Good to Great,” Jim Collins, I’m a Jim Collins disciple, I think he was instrumental and that book was instrumental in helping turn our company around and ultimately resulted in the sale of the Fish Market, it’s been instrumental in the building of the Ocean Prime brand itself and so I love all the mantra books, (Patlens), (Young), I’ve read every single Spencer – “Who Moved my Cheese?” “One Minute Manager” all those leadership books I read too, I find is very valuable.
RITHOLTZ: And you mentioned in your book “The Customer Comes Second” any other books from your book you want to bring up or reference?
MITCHELL: Well “The Customer Comes Second” was Hal Rosenbluth…
MITCHELL: That was inspirational in helping me write the company culture and values, I think “Yes is the Answer, What’s the Question” I think will be hopefully, people will find a lot of value…
RITHOLTZ: Tell us about a time you failed and what you learned from the experience.
MITCHELL: I like to think I’ve never totally failed, I’ve been knocked down many, many, many times and the biggest but I would think failure in my experience was we’ve had restaurants fail, et cetera, made some mistakes there but really after 2008, we just sold you know, two thirds of our business for $92 million and I — in my hubris and my ego, I ran out and signed a bunch more leases, I was going to – another 20+ million dollars in development, I was going to rebuild the EBITDA that we sold and it took 10 years to build, I was going to rebuild it in three years and then the great crash happened in ’08, and these restaurants didn’t perform well and I almost ran the company off a cliff in 2009, I took some really lousy entrepreneuring to get us into mess and it took some really hard work and great entrepreneuring to get us out of that mess.
RITHOLTZ: So if a young millennial or a college grad came to you and said they were interested in going into the restaurant business, what sort of advice would you give them?
MITCHELL: First and foremost, anybody starting a business I would say, get some experience, you know, we have a lot of these young, 18, 19, 20 year olds, 21,22, one that just graduated from college, start their business and make that bazillion dollars and I think people need to get experience first, first and foremost, and work for some successful companies and understand what it takes to be successful.
Secondly, they better think about their values and their culture and what they stand for and get those identified right away.
And thirdly, you have to be willing to work your tail off and be knocked down and get right back up, entrepreneuring has been one of the toughest things I have ever done in my life if not the toughest thing.
RITHOLTZ: And our final question, what do you know about the restaurant industry today you wish you knew 25 years ago when you were first launching?
MITCHELL: Sure, the biggest thing I’ve learned really is the power of branding and how to develop restaurant brands and how important it is that the brand — all the brand touch points and the brand DNA is going to – runs with everything across that brand.
So that took us a long time to learn and it takes years to really refine a brand and really to create a successful brand, it doesn’t happen overnight.
RITHOLTZ: Quite interesting. We have been speaking with Cameron Mitchell, he is the founder and chairman of the Cameron Mitchell Restaurant Group. If you enjoyed this time conversation, well, be sure and look up an inch or down an inch on Apple iTunes, Stitcher, Bloomberg.com, wherever finer podcasts are sold, and you can find any of our other 227 prior podcasts over the past four years.