The Economic Club has, invited economists, policy people, CEOs and CFOs of major industry and now, as a sure sign of the apocalypse. a restauranteur. I hope that this doesn’t mean that its’ standards are falling. I’ve been asked to talk about whatever is relevant in the restaurant world today and to give a bit of a forecast if possible so, forgive me, if this is lighter fare than you’re used to. I have actually been on the road a bit over the past several weeks speaking about Patachou and learning more about the restaurant world; two weeks ago, at RESTAURANT HIGH, the restaurant industry’s version of the G8 Summit; two weeks before in New York at a conference on workplace culture. I am more honored to be here today and I am also more nervous- after all, whether in NYC or DC, I was speaking to people about a company they had no personal experience with so they had to take my words at face value; here…well, it is all remarkably verifiable. Clearly, it is flattering to get this this amount of attention. Thank you, Claire, for those lovely opening remarks.
There is a quote on The Economic Club’s home page by Teddy Roosevelt, and, although, we are as nation re-examining the men that we have memorialized through a modern less paternalistic and colonistic lens, his policies and outsized personality still impact our country’s collective thinking. His quote states that “Indianapolis is America’s most representative city”. That statement made in the early 1900s resonates still today. I propose that if our city is truly representative, then the restaurant industry is its most representative industry: one which, employs people from all walks of life, all religions, all nationalities, all ethnicities, all backgrounds and all educational levels. Restaurants are truly reflections of their communities and act as a lens into a city’s true acceptance of all.
As I prepared my thoughts for today, I realized that I was actually writing three love letters:
The first to the community, Roosevelt’s representative city, for supporting me and my restaurants even before it was chic to be into food.
The second letter is to the extremely addictive restaurant industry itself.
And, the third letter to the people who work in restaurants. Not the owners, chefs, managers and investors-you likely know those names already-those people, including myself, get plenty of recognition. My letter goes to the people who chop and prep and serve and clean, waking up before the crack of dawn and who stay up hours past anyone’s normal bedtime so that the rest of us can eat out. After all, these are the people, themselves with aspirations and dreams for their own lives and the lives of their children, who daily help me make my dreams a reality.
I am often reminded of the Yeats poem, HE WISHES FOR THE CLOTHS OF HEAVEN, which ends by stating:
I have spread my dreams under your feet; Tread softly because you tread on my dreams. I hope to honor them today.
I opened my first Café Patachou in 1989, having never worked in a restaurant. I was not a trained chef; I had no formal business training and I had never supervised any staff. I opened my first café not knowing that I was pregnant with my third child. What should have been a complete recipe for disaster, 28 years and 12 restaurants later, is a formula that seems to have worked. And, because it’s Patachou, where we go through nearly 25,000 farm fresh, free range mostly organic eggs a week, everything is referenced by “eggs”-we don’t have a lot of balls in the air, we have a lot of “eggs “in the air. For a little over 28 years, I have spent my days making sure that all of the eggs stay up there and figuring out what to do when an egg or two falls on the floor.
But, really my primary focus over the last 15 years has been on how to scale a people-focused company. Patachou started small, grew slowly and strategically with an emphasis on being a bar setting organization and the brand Patachou cannot be separated from its internal culture. Bloomberg held their Global Business Forum a few weeks ago and one of the speakers was Tim Cook, CEO of Apple. He stated: PEOPLE SHOULD HAVE VALUES. COMPANIES ARE NOTHING MORE THAN A COLLECTION OF PEOPLE, SO BY EXTENSION, ALL COMPANIES SHOULD HAVE VALUES. AS CEO, ONE OF YOUR PRIMARY RESPONSIBILTITES IS TO DECIDE WHAT THE VALUES OF YOUR COMPANIES ARE” I don’t delude myself at all: Patachou and Apple are light years apart and the distance between myself and Tim Cook is great, but my main responsibility, as founder and president of Patachou, has always been to set Patachou’s company values.
Our culture was built on the premise of being a radically different and radically better company. We work daily under the guiding principles of being a bar setting company that values quality of product, quality of customer experience, quality of employee experience, with a critical eye toward sustainability and commitment to community. We have been committed to those values since the day Patachou opened its door at 49th and Penn. Scaling a people centric culture that happens to serve damn good food has been my paradoxically simple and complex over-arching goal.
Patachou restaurant number 12, Crispy Bird, is opening on December 7th. We soon start construction for two satellite locations of Public Greens: one at the Fashion Mall and the other in the Cummins headquarter building downtown. Several additional locations of the mothership brand are in the works, along with our own bakery, Flour Market. And, I am working on my pet project, a shared feminist work space, yes, deliberately named The Box Office, and I say deliberately bc every time I mention the name, there is one man pulls me aside to ask me if I understand what the name refers to.
Currently, with nearly 400 employees, an intact company culture and an industry defying lack of turn-over, I am often asked: how I got the soufflé to rise in the first place but I think the real question should be how, after over 28 years, we keep the soufflé from falling. As all of you cooks in the audience know, a soufflé may be mostly egg whites, but it takes as much magic as it does science to pull one off.
I came to the industry with totally fresh and naive eyes. I possessed an unwillingness to believe that failure was a real potential despite all the evidence to the contrary. Having a keenly defined vision for the company I wanted to create was critical and, of course, having a supportive partner, my husband, along with a not-too -chaotic personal life were significant factors contributing to my ability to work.
But there were critical differences in the world of 1989 from the world today that weighed in heavily – after all the impact of timing, place and luck cannot be ignored by anyone ever.
There was no honor, zero cache and even fewer rewards in being in farming, food or restaurants. Charcuterie, craft beer, third wave coffee and artisanal breads were literally unheard of. Opening Café Patachou in 1989, with its focus on farm fresh food, prepared from scratch using high quality ingredients, many of which were purchased directly from family farms, and served in an environment similar to a student union in a neighborhood, might have been my original act of rebellion. If you don’t believe me, just ask my parents: first generation Americans who thought that my working in a service industry was an embarrassing step backward.
In spite of being the first new tenant since 1942 at 49th and Penn, it took the Indianapolis Star nearly three years to notice that Patachou had opened. The Indy Monthly did not write about us until 1994-and at that time they reported on the fact that we used real turkey in our sandwiches because that was the story-someone serving real food that they actually made. Patachou opened quietly in a total vacuum at a time when chain restaurants and regional shopping centers were where we ate and how we shopped.
The internet would not be available to the public for three years after Patachou opened its doors. Home computers, let alone laptops, did not exist; there were no smart phones; no social media-no Instagram, no Facebook, no yelp. Farm to table as a phrase would not be uttered for nearly 20 years. Starbucks did not yet have one Indianapolis location and Whole foods had not begun expanding out of their home market. Modern globalization as we know it had not begun.
No one knows which came first, the chicken or the egg: but, certainly, but it would be hard to deny that the new digital world of technology ushered in globalization and urbanization. And, at some point, digitalization also impacted today’s hyper acceptance of, focus on and interest in food. In an urbanized America, people dine more outside the home then at home. In a digitized America, people crave the social experience of dining and of connecting over food. In a globalized world people want both burgers and ramen-in the same block, close to where they live.
And, as a result, today, Food is cultural currency. Accumulation of cultural currency translates: the more you have, the more aware, in-tuned, urban and urbane you are. Restaurants open today with unprecedented attention including social media followers in the thousands. Restaurants are praised months before their doors are unlocked, their dangling Edison bulbs are turned on and one plate of food is served, let alone eaten. Chefs have taken on celebrity status. Openings create newspaper headlines. While my parents were mortified when I opened my first Patachou, now, in 2017, when our daughters and sons pass up traditional four-year colleges for culinary schools; when they become chefs and decide to open restaurants, well, parents today get the kind of bragging rights that make high school athletic team pride pale by comparison.
Stories of people who have made their fortunes expanding their restaurants and their personal food brands across the globe and into our living rooms are well known. Who doesn’t know who Bobby Flay or Mario Batali are? Martha Stewart went from caterer to life style mogul. Danny Meyers made a reputed 600 million dollars by taking his burger place, Shake Shack, public; David Chang does Buick commercials and has his own line of shoes for Nike. An entire industry of food publicists, food journalists, food bloggers and food influencers has come into existence all chasing food currency. Millionaire and billionaire investors fund private equity firms to invest in the most emerging of emerging restaurants.
It’s like cutting a tough steak with a dull butter knife. The pressure that is on new restaurants today is extreme -everyone is a food expert with the ability to also be an on-line critic, there are universal expectations re plating and decor and I pity the poorly trained barista unable to draw a perfect heart in the foam of a cappuccino. While digital pressure creates business buzz and is great for the immediate bottom line, it also places serious limits on creativity. I am fortunate. I had total freedom to be unique and original, free from the expectations of Instagram-able moments. I was able to make mistakes and given the chance to recover.
If culturally, food is currency, then restaurants are the new banks.
Cities everywhere are vying to be the next food capital. We all know about the local independent restaurant explosion that has occurred in Indianapolis over the last three or so years. Visit Indy is our local organization whose self-described mission it is to “make Indy a must-see destination”. In 2016, VI hosted 102 journalists in its effort to promote the city. Journalists are brought in, they are wined and dined, they are entertained all in the hope that they will return to their desks and write positive reports about how wonderful our city is. Visit Indy’s recent focus: to promote Indianapolis as a food destination. This year alone VI has brought in 71 journalists, 40 of whom are food journalists. And, even though their emphasis has been on downtown neighborhoods, I firmly believe that a rising tide lifts all boats. We are gleeful to be accidently or intentionally part of the story: Patachou was just recently written about in Fortune and Food and Wine magazines, Bar 114 was covered in Food and Wine, Patachou has been featured on Eater, Cool Hunting and the Heritage Radio Network. Zagat named Petite Chou to its list of top ten French restaurants in the nation and Crispy Bird’s opening has been covered several national publications including Departures magazine. Just yesterday we opened our Sunday paper to see that we were included in the Parade magazine supplement. It would have been impossible for a small independent restaurant in the middle of the heartland to have received national exposure in 1989 regardless of its uniqueness, quality of food served, attention to company culture, customer service or commitment to place.
We are witnessing unprecedented national competition for cities to be seen as a food destinations supported by hyper local restaurant explosions. Food legends have been made for sure, and many soufflés have risen. Ask any city planner, any mayor, any developer or any economist: a robust restaurant scene is a prime indicator of a community’s health and vitality. So much so, I will go so far as to say that: “the restaurant industry might be the most important industry in today’s America”.
A restaurant can change a neighborhood, provide jobs to those without skills, become a third place and a community anchor. When Patachou started calling itself a “student union for adults” some 28 years ago, I had no idea how true that would be. Restaurants have, since their inception, always played an essential role in the life of cities. “Restaurants today lie at the heart of 21st-century American life. for the foreseeable future, millions of Americans will wait tables, cook food, or wash dishes for their livelihoods”. (Boston Globe)
So, if you think that restaurants are merely places to get meals, I hope I can challenge you. Restaurants are much more than that. Restaurants are where world changing ideas and revolutions have been sketched. And, in case you think I am referring to prerevolutionary France, think about this: nearly 60 years ago on on September 17th a group of students in New Orleans sat down at McCory’s whites-only lunch counter, refusing to leave until they were served. The students’ subsequent arrests would be over turned by our US Supreme Court in the landmark decision Lombard vs Louisiana. But, as if that luncheon counter meal wasn’t historic enough, the students organized over spicy gumbo at Dooky Chase’s Restaurant. “Elvis’ first Las Vegas contract was written on a restaurant tablecloth.” We’ve seen house plans and business plans hatched on our napkins. There is a rumor, which I will continue to perpetuate now, that Peyton Manning had lunch at Patachou after signing his original contract with the Colts there. Coach Brad Stevens came into the café the morning after Butler’s NCAA loss to a standing ovation. People gathered in disbelief the morning of 9/11. Sure, restaurants are places where poets, writers and would be revolutionaries hang out but they are also places for first dates, post-funeral lunches, marriage proposals, major life cycle events and daily cups of coffee with slices of cinnamon toast. Since fire was discovered, people have gathered around food. There is nothing new in this, regardless of the year or the moment or the technological cycle we are in.
But, there are challenges to the restaurant world equilibrium. Many, including industry stars such as Danny Meyers and David Chang, believe that the business model that restaurants are based on itself is broken. High rents are not sustainable, gentrification is a collateral yet serious issue; the need for constant newness to appease customer demand is terrifying. The tipping system is flawed as is reflected by the great inequity between front of house and back of house workers and menu prices are too low to support a new business model; there is rapid staff turnover; profit margins are at historic lows-there is more glitter than gold in the restaurant world as most operators struggle to achieve true profitability.
Third party delivery companies, grocery stores with prepared foods and eat in sections and now even Amazon all pose serious threats to an already fragile balance. High powered investor groups hiding behind charismatic founders and chefs, now control much of restaurant world development. Soon, there will be more restaurants, owned by fewer people. Restaurant saturation may not be sustainable and the potential for a restaurant bubble exists. And, there is also a continued threat to creativity and originality. What is original today in city A, is subject to immediate duplication tomorrow in cities XY&Z. This great derivativeness in restaurants translates to great derivativeness in cities so much so that, Kevin Alexander, the James Beard award winning journalist ends his eye-opening article entitled WHY THE NEW FOOD TOWN MUST DIE by stating “does anyone even know what city we’re in and does it matter”
Well, I say it matters a lot. Nearly 50% of all adults have at some point in their lives, at least once, worked in a restaurant and over 25 % of adults worked their first job in a restaurant. Nine out of ten restaurant managers started out in entry level positions; 80% of restaurants are owned by people who started out in bottom rung restaurant jobs. Ninety percent of restaurants have fewer than 50 employees; and seventy percent are single unit operations; and according to the NRA, 4 out of ten restaurants in the United States are owned by minorities and half of all restaurants have women as owners or co-owners. Although there is an impression that restaurant work is transitional and temporary, the truth is that for most of its employees, the bulk of their career years are spent in the industry. And, while restaurants do provide spring boards for those entering the work force, 58 percent of all workers in the industry are over 25, with 12 % being over 55.
This year alone, national restaurant industry sales are expected to reach close to 800 billion dollars. Ten percent of the American workforce, that means 15 million people-work in the restaurant industry with the labor department estimating that an additional 1.7 million jobs will be created by the industry over the next ten years. (NRA and ASPEN INSTITUTE)
But ask anyone in the industry what their most pressing challenge is and they will tell you: yes, rents are high; yes, there is unprecedented competition; yes, there is little originality; yes, there is an ever-present quest for the “new”; yes, investment groups and third- party delivery companies are muddying the already cloudy waters. BUT, the number one answer to the question will be: that there is a lack of bodies, skilled or unskilled, to fill the hiring gaps.
I think that it is time to peel back the curtain on this issue: Let’s pretend for a moment that there are enough bodies to fill the hiring gaps. Too many of the jobs offered are low paying with very little opportunity for growth; the hours are grueling; life work balance is hard to obtain. Many workers are forced to work two and three jobs to make ends meet. And, that is the easy stuff. Critically important to the industry: There are significant and historic gender and race gaps that are just now being acknowledged but not yet being seriously addressed. To me, this is my industry’s major challenge. Women, people of color and immigrants occupy the bottom rungs of the industry in far greater numbers than their white, male counter parts. Fortune Magazine cites that women and minorities get the worst jobs in this industry and according to a report from the Restaurant Opportunities Center United, a labor advocacy group:
“Women and workers of color are often pushed into the lowest-paying jobs in the food service industry,
Workers of color earn 56% less than equally qualified white workers, controlling for language proficiency and education.
White male food industry workers are often channeled toward the highest-pay management, bartender and server jobs in fine-dining establishments. Women are pushed toward lower-paying jobs at more casual restaurants, and people of color are channeled toward even lower-paying jobs such as bussing and kitchen positions.” 81% of managers are white and male.
Gender bias literally bleeds over to other areas including banking and media. In 2015, a mere 12% of venture capital went to support women founded businesses-and the percentages since then have not improved That percentage decreased by half to 6% in 2016. This year it is projected that 4 percent of VC money will go to a female founded business, 4% will go to male founders of color meaning that, in total, 96% of all VC funds get funneled to male founded businesses. And while Venture capital is not the sole way to raise funds, it is a barometer of how our society values and supports women entrepreneurs.
Food journalists, award organizations and publications disproportionally reward and report on white male members of the industry over women, people of color and immigrants. The New York Times published an article nearly five years ago that is still being discussed by the industry. The article was on top chefs in the US and the growing food scene. It failed to mention one female or one person of color. The James Beard Awards only recently began to include women and people of color as nominees in any noticeable manner. Immediately after the 2016 top 50 restaurants in the world list was released, Eater, the most prominent food culture blog, asked this question:
What’s wrong with the World’s best 50 List? Their sarcastic answer: Nothing for a guide that almost entirely overlooks an entire gender
And, in the wake of Harvey Weinstein scandal, comes the ugly realization that predatory sexual businesses practices are not just limited to the film industry. Several days after the Weinstein scandal broke, it was announced that Jon Besh, the James beard award winning New Orleans chef with over 12 award winning restaurants, was forced out of the company he founded after being accused of sexual harassment by 25 female employees. Several days later, the award-winning Chicago restaurant Publican announced that both its executive chef and its general manager, both males, were being fired for inappropriate sexual behavior. These are not isolated instances. Bro kitchen culture has not just ruled the restaurant industry, these norms have captured the imagination of and been rewarded by print media, by award agencies, and by customers. Bad boy chef behavior encourages bad boy chef culture. Hasn’t the expiration date passed on condoning such behavior?
And, as bad as these predatory sexual practices are, we are still only talking in terms of the binary-male vs female harassment. We haven’t even begun to openly acknowledge, let alone solve the homophobic and transphobic behavior endemic in our industry.
Patachou is not immune from the outside challenges of high rents or the mind-bending levels of competition. We too operate with the same pressures of our local market especially the difficulty of attracting and retaining talent. There are lots of factors outside of our four walls that we just cannot control. But, it’s what we can control that has allowed Patachou to differentiate itself and to grow and prosper. From day one, we refused to adopt industry norms: we made food differently, we treated people differently, and we treated our community differently. Patachou’s norm busting values not only defined our company culture early but it did so without sacrificing quality of food, quality of staff opportunity, quality of our customer experience. Our norm busting values strengthened our commitment to place leading up to our creation of The Patachou Foundation approximately four years ago. And, addressing the industry’s main challenge: Patachou has attracted and retained staff. While we too have turnover, we have defied the revolving door so known in the restaurant industry. AND, if I’m doing my job correctly, Patachou will remain a disruptive force by continuing to create leadership opportunities for those on all rungs of the ladder. Today, we have an executive team that is 90% female, a leadership team at the café level that is 50% female. Our Director of Operations is female. We have managers who started off as bussers, lead concept people who started off as servers. The Patachou Foundation’s Executive Director was just recently recognized as 30 under 30 in Philanthropy by Forbes Magazine; last month he met with members of United States Congress re farm and school food policy. He started off as a part-time host. Our production kitchen employs 6 cooks, two bakers and two delivery drivers. It is operation 7 days a week, nearly 20 hours a day. It is co-directed by a woman, who started off as a receptionist and a Hispanic man who started off doing prep work. And, critically important, the men in our organization add to, benefit from and participate in the Patachou culture as much as the women do. I knew that my daughters would likely be feminists: to paraphrase poet and author Maya Angelou: they are females, they’d be stupid to not be on their own side. But, I made sure that my son understood his responsibility and role, too, to be a champion for gender equality. I would be a hypocrite to not ask that of all the men in my personal and professional life including those who are part of the Patachou team. And, I owe a debt of gratitude to those men who, especially in the wake of bro restaurant norm, choose to actively swim upstream and promote Patachou values.
There is tremendous organizational buzz today about employee engagement with the idea that the more engaged employees are, the happier they will be. I imagine most of your companies talk about how to engage staff better. And, I get that engagement is important-after all people should be focused and understand their jobs. But, I don’t believe that its engagement is what makes employees happy. I don’t believe that engagement is what creates healthy company cultures. We may all be fooling ourselves. Engagement benefits the business way more than it benefits the worker after all, the purpose of engagement is to get greater buy-in and thereby greater production out of employees. The Patachou method since day one has always been engagement as part of job training, coupled with employee enrichment as part of being in the Patachou family. Enrichment is the true path to establishing trust, creating loyalty and building a company culture. So how do we enrich employees’ lives? We focus on providing livable wages, we offer opportunities to build wealth; we offer subsidized health care benefits, we have a company matched 401K and conduct regularly scheduled financial literacy workshops; we have a company seeded emergency assistance plan (PEER fund) administered by staff. This plan is open for all regardless of tenure or position with the goal of helping staff in times of their need when normal safety nets such as family or insurance fail. Our Patachou staff assistance plan offers free legal advice and psychological counseling-24 hours a day, 365 days a year. We offer continuing education and training. Our leadership pipeline offers opportunities for career growth including a clearly defined career path. There is an open door to my office that has existed since day one. But we are not just stopping there. I will be announcing at our early 2018 off site retreat, some new benefits to working with Patachou. Starting in 2018 we will be offering financial and administrative support for culinary team members to further their professional education and skills by helping them to secure stage opportunities in best of class restaurants in other areas of the country; and we will offer full time employees, credit and reimbursement for taking approved classes. And, we will improve on our maternity leave and limited support-care leave for full time members of our team. A workplace should add value in addition to a paycheck.
The restaurant industry is as ripe for disruption and innovation as it was in 1989 when Patachou first opened its doors. Disruption then came in the form of serving real turkey on homemade bread. Today we need to be more and do more. It is not disruptive to simply open new restaurants in old buildings in transitioning neighborhoods or in new developments off of highways; And, likewise, disruption has to be more than then lobbying to be the next great food city. Growth for the sake of growth borders on pure vanity that ignores purpose and makes only short term changes in lives. Patachou has lived a reality that profitability can exist without exploitation of the people who make success possible while giving back to the community that has supported it. If we can achieve this for 28 years, I think that others can too.
I have spread my dreams under your feet;
Tread softly because you tread on my dreams.
Shouldn’t we also tread softly on other people’s dreams?
I’ve been remarkably fortunate. Every day I wake up knowing that I won the job lottery. And, every night I go to sleep thankful for the abundance that the restaurant industry has brought to my life.
Restaurants do change neighborhoods and neighborhoods do change cities- isn’t it time for this most representative industry in Teddy Roosevelt’s most representative city to truly become representative after all, creating Opportunity for everyone just might be the tide that lifts all boats.