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How Both Alinea and Tock Are Thriving Through the Pandemic

Nick Kokonas explains his businesses’ pivots on Eater’s Digest

Tribeca Tune In: Chef’s Table Photo by Ben Gabbe/Getty Images for Tribeca Film Festival

As restaurants around the country furlough or lay off their workers or permanently close, Chicago’s high-end tasting menu destination Alinea is bringing in record revenue and has brought back its staff. Meanwhile Tock, a reservations platform that should be in deep trouble as bookings for dine-in experiences go to zero, just raised $10 million.

Nick Kokonas is an owner of both operations. He explains on the latest episode of Eater’s Digest how deep and fast pivots helped to save both businesses and, hopefully, set them up for success in the uncertain future.

Listen and subscribe to Eater’s Digest on Apple Podcasts and read the full transcript of our conversation below.

Daniel Geneen:

Nick Kokonas, thank you for coming on the show.

Nick Kokonas:

Great to be here.

Amanda Kludt:

For people who don’t know, can you outline how many restaurants are in your group?

NK:

Yeah. Depends how you count, I guess, but we have Alinea, which is the flagship, and we opened that in 2005. In 2010, we opened Next, and The Aviary. Aviary is a high end lounge, and Next is like a morphing restaurant. Then we opened Roister a few years after that, and then St. Clair Supper Club.

DG:

I was hoping first, you could talk us through what happened, just a quick overview of the Alinea timeline, and then I think we’ll get into Tock a little bit.

NK:

Well, in late February, we have clients for Tock in Hong Kong. I saw their reservations go from 96% occupancy to zero. Then, very early March, I saw what was going on in Seattle, which was the early canary in the coal mine in the US. In talking to some restaurant owners there who are on Tock and who were looking to try to figure out what to do, even before any cases were really happening in Seattle that were public, their reservations were down 20% or 30%. As a former trader, as someone who follows markets and who looks at statistics and enjoys that aspect of the hospitality business in order to provide better hospitality to optimize operations and all those things, I very quickly extrapolated it to my own restaurants, to the Alinea group. I said we need to put safety precautions in place. We weren’t in the mindset of we’re going to close.

It’s like, how do we operate safely right now? That was before really anything had happened in the Chicago area, or even in New York. It was just before that. I think it was on March 6th or 8th or something like that, I tweeted, the hospitality industry is about to be decimated, it’s 4% of GDP. That’s because I was basically convinced that we weren’t going to avoid all of this and that there was no way to operate a restaurant amidst it. I talked to some doctors who I know very well here in Chicago and said, “What do I need to do to protect our team?” I brought in, we have about 22 front of house and back of house managers across the group in Chicago. I had a very serious talk, and I said it was not normal business operations. It was not a pleasant talk. It was like the shit’s about to hit the fan. Am I allowed to swear on the show?

DG:

Oh yeah.

NK:

I was like, this shit’s about to hit the fan and we’re going to put together these protocols starting tomorrow. Everyone has call times now. When people arrive at a restaurant they’re five minutes long. Everyone has to be there exactly at noon or exactly at 11:50 or whatever you say, everyone’s getting temperature checked. We’re going to log that. We’re going to do hourly hand washing. We’re going to monitor that. We’re going to log that. We’re going to do that all through service. You can just see on everyone’s face that I’m the owner who doesn’t really know how to run a restaurant. Because it’s like, how the hell are we going to wash our hands every hour? That’s not possible. We have a busy service to do and stuff. Even Grant and Steve Bernacki, one of our partners, had not really seen me go militant, belligerent.

I was very serious, like deathly serious. I think by the end of that meeting, everyone had that idea that this is serious. We have to do it. Then, I reiterated to a couple of the heads of each place like, I swear to God, if anyone doesn’t do this protocol, I’m just going to fire them on the spot, and they won’t have a job for two years. Because this is where we’re going. I wasn’t trying to be mean, I was trying to be loving. That’s the part that it’s hard to do as an owner or manager, is that I wasn’t trying to be a jerk. I was working proactively to save the company. When we were finally ordered to shelter in place, we had four contingency plans, and put together on what we could do. What is the best way to provide benefits?

How much money can we afford out of our capital fund to give to our employees, to bridge them to the point where they get unemployment? We gave a thousand dollars every full-time employee, furloughed everybody, paid 49% of their benefits and their health care. We save for a rainy day. We don’t distribute all of our money. We don’t send it all to me and the other investors and owners. Nonetheless, I cried when I wrote that email because I didn’t think everybody would contextualize all that. They wouldn’t know all of these employees, these 300 people and their families wouldn’t know what was at stake or indeed that we had planned phase two of the plan to get them all back as soon as possible and all of that. We tried to communicate all of that as effectively as possible, and things you’re supposed to do.

You’re supposed to, when you furlough people, they’re supposed to not have access to their email because if they have access to their email, then they’re working. These are things that don’t work in a true crisis. I see some restaurants and restaurant groups that played by the letter of that law. We did two for about two hours. Then I called our HR team, I said, “Why can’t I email the whole company?” It’s like, well, if you furlough people, they’re not working, and if they get into working, now you have to pay them. I was like, I will break the law on that because this is a pandemic. We were nimble, and then we said, we got to do carry out. In Chicago, very different than New York. We have cars, people can pick up food. It’s safe to do that.

We already had these protocols in place for a week and a half. So, we knew how to do the cleaning and the distancing of the kitchen and all of that.

DG:

I’ve heard you talk about the contingency plans a little bit, but which plan did you follow? Was there one that was planning for a more severe situation?

NK:

Yeah, there was one where like, it’s this full zombie apocalypse and we can’t leave our homes at all, which seemed plausible by the way, because in Italy, they did a lockdown of the type where you can only exit for medical or groceries. That was certainly possible on the spectrum. That one, we would not have been able to do food service. We did not do that one. We considered not reopening for carry out too. It was only because I spoke to two doctors who I knew and trusted that I felt comfortable to do that. Also, by the way, we invited people back to work. We did not require people to come back to work, which are two very different things.

DG:

Could you just talk us from the first delivery, or the first takeout day to what’s going on now?

NK:

Yeah, so the first takeout day was I think the 16th of March or so 16th, 17th, something like that. We were going to do it at Alinea first because we have confidence in the ability there. We’ve done popups around the world and crazy private events and stuff. We’re pretty resilient. We basically just said, I want to do $35 comfort food.

DG:

And the normal price?

NK:

Normal price for Alinea is 350 bucks or so when you’re all in going there. Again, this was one of those discussions where I was ... We’re very collaborative, and I stay out of Grant’s kitchen. Do I have input in the food? Yes. Is it fair to ignore my input? Absolutely. Most of the time it’s ignored, in a good way. This time I was like, uh-uh, you get $35 to sell this, and we’re going to have to do a lot of them to have it matter. If we do 100 of them, that’s 3,500 bucks, I ain’t keeping the lights on and getting people back to work on ... We have 80 employees there from 5:00 AM, till 3:00 AM every day. It’s 128 people at night, seven nights a week. The lights never go off. They were never locked. I knew what I thought was possible. First of all, I did not know if people would order food in the midst of this.

I did not know if people would go, “Oh, $35 Alinea food. That’s cool or that stupid.” Either one was equally likely. People think that I’m sitting there going like, oh, this will work, for sure. I’m just like, I have no idea if this will work. I don’t even know if people want it. I don’t even know if I want it, but I do know that if we do nothing, the outcome is absolutely certain, it will be really bad.

AK:

Right. Might as well try.

NK:

Might as well try. I will say this, our entire team, the one thing, everyone always says to me, I hear this a lot, and it really gets me angry. Well, you guys can do that because you’re Alinea. What I always say is, no, we’re Alinea because we do that. We mop the floors, we vacuum, we polish, we do all the bullshit stuff that you have to do to get things right. The first day we did 500 short rib beef Wellingtons. Two days earlier, Grant was like, there’s no way we can do 500 of these. We only have one here. We can’t do enough of the puff pastry blah, blah. Then he’s like, how do we make it have an Alinea touch? He was like, I need a little star cookie cutters to make like a joke with the three stars. Like, this is three star food, but not really.

How are we going to do this with masks on and kitchen gloves for everybody, and how we get the cars through? It was all of that. By the third day, he was like, “This is easy, man. This is way easier than regular service. Let’s do a thousand on Friday.”

AK:

Then how did the menu evolve from there?

NK:

Well, we then did coq au vin, then cassoulet. We started out early on when it was a scarier time, I think. We went, let’s do French comfort food. Who doesn’t want to have a cassoulet or something? It’s also things people couldn’t really eat at their home. You’re not going to get duck legs delivered to your house in the middle of a pandemic.

DG:

But it seems it’s gotten more Alinea as it’s progressed. There’s more and more Tupperware.

NK:

Grant wins out in the long run, for sure. For our 50th anniversary, he was like, I think we need to do something where we engage people more, some assembly required. We sold 120050 six course meals for 10 days straight. That’s 7,000 packaged items per day. Grant posted a time Lapse today of what that looks like. Our dining rooms are production facilities. We have a minute and 22nd wait times of the cars outside, two way text messaging built into Tock. We ask the car, make and model. We greet you by name. Three people with iPads are up front. Hospitality be extended to the curb essentially.

DG:

What’s the most now that you’ve done in a day?

NK:

We did just under 3000 meals on Easter.

AK:

It’s not 35 for that.

NK:

A 49.95. Under 50 bucks.

AK:

Wow.

NK:

It’s a six person meal.

AK:

That’s crazy.

NK:

We are hitting a market. There’s this video that I posted up yesterday on Twitter. These two guys, student, who are just basically like, hey, if Alinea’s 40 bucks, 50 bucks, that’s my only shot of ever eating it. It sounds like, they get ripped and drunk. It looks like they’re high as a kite. I immediately tweeted them that it was my favorite video in the 15 year history of Alinea, because they were basically like, I hate peas. This piece soup is going to be terrible. Then like five seconds later, they’re literally leaking the bowl, going, this is the best soup I’ve ever had in my life.

AK:

Wow.

NK:

We’re engaging a whole new audience. We’ve served 32,000 people in the last 30 days in Chicago. There’s no way we would have hit that ever. Certain people, it feels in the midst of something that’s chaotic and awful, it feels really joyful in a way.

AK:

Did you bring back all of your employees, or how many people are back?

NK:

May 1st, we brought everybody back across the entire group for Next, Roister, Aviary as well. On May 1st, at 80% of pay so long as that 80% was over the legal threshold. No one’s under $15 an hour. For managers, if they were making $80,000, they’re not making 80% of that, they’re making 64,000. We’re doing that with the transparency to them that we will make money in May and June, and we will utilize that money to extend our runway to keep them on longer. I think the thing that I’ve heard a lot of people talking about on shows like this and people in the industry are saying, this is the worst it’ll be. What’s really weird, from my perspective, is that actually, this is the most clarity we will have. You cannot open your dining room. You can do takeout. You can’t hire people back utilizing the PPP.

If you do that agilely and quickly and successfully, your margins will be the best they’ve ever been. Do not send that money out and put it in your bank account, your personal bank account, keep it in the business. Keep those people hired on after we have to reopen at 25% occupancy or 50% occupancy. Because I think the carry out business world decline a little bit as the dining business goes up, but neither one of them will be anywhere near normal. That’s when things get hairy, I think. Difficult.

DG:

You’re saying we’re living in a bit of a honeymoon phase right now where people are paying restaurant prices for the food they’re used to eating in the restaurants and the restaurants aren’t paying the overhead of their staff and keeping them alive.

NK:

I think that’s fair. More concise version of what I was trying to say. No, it really is.

DG:

It’s been swirling that you had Alinea had it’s highest revenue day ever.

NK:

We did.

DG:

Is that ...

NK:

Yeah. I say that, again, I’m aware, I’m self aware enough to say that that could be perceived terribly. I am not trying to take advantage of the pandemic. I am not trying to make money on this. I’m trying to build a bridge for our company and our employees to October, November, December, where, hey, we might be asked to shut down again. We don’t know. I think that the difficult thing, and super important to caveat. New York is very different than the rest of the country. I think that the problems for New York restaurants are different and unique to New York, as opposed to LA or Miami or Cleveland or Chicago or San Francisco, mostly just around transportation and density, and getting employees safely to work. That’s an important caveat that I want to emphasize because I think that a lot of what you hear on CNN and whatnot, on New York restaurants that have uniquely difficult problems right now.

DG:

But for you specifically, you don’t see a world in which you’re actually more successful going forward, as you’ve figured out this new line of business, and you would start to forge it with the old line of business or?

NK:

That’s the goal. Right?

DG:

Right.

NK:

Whether that happens or not. I think it’s going to get harder before it gets easier. I am one of those people who thinks that ... David Chang is a friend and a great dude all around. I listen to him, and I just can’t because we’re permanently damaged and everything’s going to hell in a hand basket forever. I love the man, but I don’t believe that. I don’t believe that because we got to 2019 a hundred years after 1919. This happened a hundred years ago, and yet the world did exist as it did before four months ago. So we will get back to that through something, either horrors or wonders of science or something like that.

DG:

But that’s interesting. I’m sure you have a lot of respect for what he does at his group, and I’m sure, and just as you said, you’ve heard him talking about how it’s never coming back. Whatever it was, March 24th was the last day ever of that kind. What are the conversations that you got? How do you possibly bridge your philosophies of what’s going on? I can’t imagine you’re the person who is risking the health and safety of your employees. If he’s saying, I don’t feel comfortable putting my people back to work, I’m sure your answer is not, well, you should be.

NK:

Yeah. Look, we’ve gotten temperature tests twice a day for five venues now. In that period of time, we’ve had one person have a temperature, we got them, tested negative. We still gave them PTO and a week off. We’re being very, very, very, very, very cautious about this since right at the beginning of March. We are using science and doctors to do that. We’re not just making it up out of whole cloth. We’re taking the advice of professionals. That said, there are no right answers here. What I did know that if we don’t take measured risk in doing this, first of, if I thought that, for a millisecond, that we could endanger our employees or the people who purchase our food, more so than say a grocery store, and this is where the argument, I think, breaks down.

We need to eat. If you only have grocery stores open, you have fewer nodes of food service. If one of them has an outbreak, it’s going to affect way more people than if you have 4,000 restaurants open in New York city with really high stringent health code. Because you want like a system network to have a lot of these nodes. Even if it were more risky, you would still want them open as a means of mitigating aggregate risks. Any individual might say, I don’t want to do it, but that’s different.

AK:

What is the world of 50% occupancy capacity look like for you guys? Do you think it’s workable?

NK:

Defined workable. Can you make money on that? No. I don’t know that a restaurant can make money on that because then you’re operating normal business hours, you have smaller labor hours, all that stuff. That said, will we do it? Of course, we’ll do it because that’s a step to getting back to operations and normalcy. We are mapping out outdoor spaces now with six feet apart. We had gone through a year and a half of planning to put awnings around our whole building. We didn’t know right moment to do it. We did it two weeks ago, figuring that outdoor space was going to be very important. Aviary, Next, Roister could open tomorrow.

AK:

In terms of the takeout success, are there lessons that other restaurant tours can take from you, or do you think it’s unique to a high end restaurant offering more affordable food?

NK:

Absolutely not. It is completely doable and not unique at all. We’ve put almost 1600, 1700 restaurants on Tock to go literally around the world. Every level, from QSR, fast food, pizza places, all the way up to other Michelin starred restaurant.

DG:

Quickly, that before six weeks ago was a reservations platform where people could pay in advance for a spot to eat at your restaurant or any restaurant.

NK:

80% of them were actually free reservations. We sat 8 million people a month or something like that, walk-in’s free and all that. The critical differentiator, and the thing I’ve been trying to preach to the industry is that, the way that you slot your time slots to seek people can be done either flexibly, whereas if you say, Amanda, I want to come in at 7:30, the system with OpenTable or Resy would then block two hours on either side because it’s the average turning time, and it would offer 5:00 PM and 9:00 PM. That’s great when demand is lower than supply. It’s fine. When supply is greater than demand, whether it be a pizza place or Alinea, you want to do a slot based system because you can pace out your kitchen better and all that.

We took that data structure and said, if you’re a normal restaurant, not a quick service restaurant that you want to do take out, not only does it cost you 20% to 30% of the third party delivery apps, but they have no notion of kitchen pacing or hospitality tools. It’s just putting a burger in a box and sending it with a guy on a scooter, right? We built the data structure with a slot based system and said, hey, it’s really important to elevate the quality of the carry out food during this time and the safety of the delivery or pickup by slotting it in these increments.

NK:

What happened is when we showed that to restaurants that normally didn’t do carry out, they were like, oh, that’s why we never did carry out. We can now pace our kitchens and pick ups and all that sort of stuff. We had about 30 people work for seven days, six days. When I say around the clock, it was like a movie. We got canlis up and running and we got a couple of the restaurants on the West coast, and then we got the Alinea group up and running. Now what I see is that the restaurants that do a very narrow thing well, there’s a win. They’re doing great. If you take your entirety of your menu and you just slap it up online, and all of a sudden, you have a normal kitchen operation, anyone can order anything.

Not everything works well for carry out. Your price points can get out of whack if people can build up their own menus and whatnot. Do something narrow and really well, and then change it up because we give people the tools to know who they’re actually selling to. You’re not using a third party app. You’re utilizing Tock as a platform, but you know who all your customers are, and you can say, “Hey, two weeks ago, you ordered the coq au vin, hey, now we’re doing cassoulet. You know what? They come back again, and again, and again. Tons of success stories with small restaurants out of the way places. We have one in upstate New York, used to do $3,000 on a busy Saturday with four employees, and they’re doing about $20,000 a day now, and they’ve hired 10 people.

AK:

Wow.

NK:

I think you’re going to see, on a permanent basis ... I gave Eater some grief because, I think five days in the pandemic, someone wrote an article saying, the carry out business is already done, and it’s not sustainable. It’s like, well, we’re five days into it. Let’s see how it goes. I can say for certain that, just the explosion, even with the third party delivery apps, you can see that it’s exploding. Now, the question is, can you do this elevated version, which is more like assembly required, and people still will like that? I think so. When we send out a chicken parm, it’s fried on the outside, raw in the middle. Requires 15 minutes at 400 degrees. The instructions are in there. You get a bunch of better product than if we just took it out of the box, put it on a plate and ate it.

It just wouldn’t travel as well. So we get it to the point where you don’t really have to cook. You have to just do a little bit of heating and assembly. Now, someone did eat that raw, even though we have giant things all over it saying, do not eat this. There is that. But aside from that, I think that’ll stick around, but is that enough? No one knows.

DG:

We all know the difficulties that the industry has had margin-wise going into this. Are there situations where you’re saying, I don’t see a way out for you, you should take this opportunity to close?

NK:

Well, I don’t know everyone’s cost structures. I do talk all day every day to restaurants. I’ve got a call after this with a restaurant group. To the extent that I can offer best practices, I offer best practices. I say what worked for me, I say what I’ve seen working for other restaurants. Whether people want to heed that advice or not, is entirely up to them. I don’t know their business, I don’t know their market. I try to stay really out of that, to some extent. I will say that a lot of the prescriptive things I’ve seen in the press and whatnot, I completely disagree with. Because they are short-term solutions for longterm problems. I’ve been an advocate of the removal of tipping for a long time, because I want restaurant workers to be treated as the professionals they are. I use the word professional in the fair Labor Standards act way.

I have sent long, long, long private articles I’ve written to people in the press, the New York Times or whatever. I read something about tipping in the New York Times and it’s maybe 800 words or something. I send a 7,000 word email.

AK:

I’m sure they love that.

NK:

Well, they don’t dislike it. It’s just a really, really difficult problem to solve. At the beginning of this whole thing, I talked to some congressional offices and said, “Look, if you want to create a longterm better structure for the people who work, the 11 million people who work in this industry, there are some fundamental things working against them that have to do with legislation. Am I optimistic that that’s going to change quickly? No, but it’s changing already because when you have municipalities like San Francisco or Portland or Seattle, Mundy, a $15 minimum wage with no tip to wage credit, guess what? I’m going to get rid of tipping at that point because you can’t make money as a restaurant doing both.

Those are the kinds of long-term solutions I’m looking for, but also when I hear someone say, well, this is a really razor thin business. I had $10,000 in my checking account when this happened. For every $100 I bring in, $98 goes out the door, respectfully, you’re not running it. If that was in 2019, you were making 4% margins, that’s no good. But you can’t then say like, Oh, but I do everything on pen and paper and I make everyone call us. Or I have a giant line out the door, which is, in my opinion, bad hospitality. A lot of the things that some people wear as a badge of honor in the industry as being highly personal or whatever, that was great in 1998. It’s 2020. People live on their phones now. You’re going to have to do a digital version of something.

I had people in my own business in my own company tell me like, you’ll never get rid of the phone to Alinea. There’s no way you can be a Michelin three star restaurant and do that. Yet, I’m still reading in the New York times articles that are very heartfelt saying, yeah, I don’t know if we’re going to make it or not because XYZ, and we made 3% margins last year. It’s like, eh, you need to address that last year. Addressing now it’s really hard.

DG:

Yeah.

AK:

Can you ...

NK:

Which sucks. I hate to sound like that guy. I’m saying all this, because I love these people and their passion and their industry, but it’s a hard business if you make it hard.

DG:

I’m sure the shit you’re catching, if any, right now is a lot of people being, as you said, oh, they’re Alinea, but it’s really, it’s like, no, it’s because of the way we were running before. We were set up to at least experiment in this time. It’s lucky you’re not in New York because if your kitchen was tiny, I’m sure it wouldn’t ...

NK:

I swear to God, if I was in New York, we would have figured out a way to pick up food. Day two. It may not have been as much or as good or whatever, but we would not have done nothing. I don’t know what it is I would have done, but we would have done something.

AK:

Is there anything interesting you’re seeing in the data across Tock for maybe regions that are doing better or types of restaurants that are doing better?

NK:

Yeah. I think the most interesting thing is how much and how fast things sell when someone puts up something new. For a while, Japanese food was just, for whatever reason, I’m not sure why. Not a lot of Japanese places put their stuff up. Yes, you got the crazy $800 bento box or whatever, but there wasn’t sort of that middle ground Japanese. There was like the super fast food Japanese, and then there was like Masa doing the $800 bento box. All of a sudden, we started getting all these Japanese restaurants doing just normal sashimi and sushi plates, all that. As soon as they put them up, gone, sold out. People love Japanese food in America. It doesn’t where it is.

AK:

And they’re not cooking it.

NK:

Right. it just instantly sells out. If you could open 10 Japanese restaurants right now, you should.

AK:

Can you talk also about how Tock is growing and changing? I know you just raised a bunch of money to expand what you guys are doing.

NK:

Yeah. So we were in a fortunate position last year where we grew 300%. We were in 28 countries and we were continually adding 200 to 300 new restaurants per month. In February, we were set to do a funding round, basically the same round when this started. We were just negotiating over the valuation and price of the company, frankly. I was an optimist about what we were doing because we ran very lean, whereas others raised tens and tens and tens of millions of dollars and then sold for a few hundred million. We were like, we want to get to the point where we were actually profitable. We want to do this with as few employees as we can working as hard as we can, and we want to make meaningful ROI for our customers.

Which meant that there was some things I wouldn’t ... like the flex table thing, we have flex and slot, and I would tell some restaurants, “I’m not letting you come on if you do flex because it won’t make a meaningful difference. You should just stay on open table and do the same stupid shit you’re doing.” That’s not VC friendly and all of that. But I felt like in the long run, not only would we be better off, that restaurant would come back in four six months and go, you know what? You were right. Now we have them as a customer that’s really valued because they’re going to be in it for the long haul, and they understand what we’re doing. When this hit March, I was like, we have money in the bank. We’re okay. I’m not going to cut my price in half or the valuation of the company in half because this hit.

NK:

Our revenue went to zero, meaningfully zero, because we were giving away the product for free, from a SaaS perspective, and we weren’t processing any payments. Tock processed about $350, $400 million of payments last year. That’s actually how we make money as opposed to open table charging a dollar for cover or whatnot. All the events and prefixed stuff goes to zero, popups don’t exist. We had talked to go built in like a week, and we went from zero back up to, now we’re doing ... we’re at almost a billion dollar run rate, almost $3 million a day some days. Jon Shulkin from Valor Siren Ventures called me back about seven days in. I was expecting to get the call of like ...

DG:

Sorry buddy.

NK:

Yeah, sorry. Because a couple of other VCs that are very prominent that were interested just vaporized. So, I figured he was going to give me the, well, stick it out, cut half your head count and we’ll see you in six months because that’s what everybody else did. Yelp laid off thousands of people, OpenTable laid off thousands of people. He was like, “What’s your plan?” And I was like, “Yeah, we’re good. We’re back already.” By the end of the call, he was like, we invested in Tesla in 2008 when no one wanted to. This is the time to invest. He didn’t call me to say no. He called me to say, we love the fact that you guys are scrappy and you’re working 24 hours a day, and now finally we think that the industry is going to understand the value proposition of what you’ve been doing, what you’ve been saying for 10 years.

NK:

It was like the shortest negotiation involved, because he said, we’ll just take your terms of four weeks ago. We were just negotiating that.

AK:

Wow.

NK:

And we love you guys. I was like, first of all, how great of a call is that? That’s a true partner. No bullshit. Straight to the point. Since then, we’ve added, what? Since that phone call, probably 2,000 restaurants. It’s meaningfully great to be doing work that ... What we were doing before was a business operations thing that felt good to me personally, because it was like a fun jigsaw puzzle. Now, what we’re doing is actually important.

AK:

Are these customers leaving the other third party apps to come to you guys, or are they brand new to take out and delivery or both?

NK:

All of the above. We had had about 3000 restaurants and wineries on Tock when this all started. Some percentage of those are now up and running with the to go and whatnot. A lot of the wineries in Napa, we had about 500 wineries. We’ve probably added another 200 since. Some of those are doing carry out and pick up, but a lot of them are considering like in the summer, they’ll be able to do their tasting rooms as picnics and whatnot. They have a lot of land, a lot of space out there so that’s not a problem for them. A ton of new restaurant groups, a ton of people leaving the third party delivery apps because when it was supplemental income, they didn’t really bother to do the math and go, hey, this is costing 20% and it’s a lot, but we don’t really want to figure out our logistics.

DG:

Yeah, or like we just turn it on when it’s slow.

NK:

Right. But now it’s like, oh, that’s all of my income, and so I don’t want 20% to go out the door. We charge a flat 3% of the total sale, and it’s totally transparent. It’s always what we’ve done. We didn’t change it. We didn’t make it up when we were doing this. That’s what we did for events two years ago.

AK:

They supply their own delivery person and insurance and all that.

NK:

Yeah. We’re working out ways for those folks that don’t want to do that. In about a week, we will have delivery through other channels that they can pay for. But we’re negotiating a flat rate on that. One of my things is, you don’t want to be penalized for your success ever as a business owner. We’re growing fast enough that the folks who have fleets of cars now care about us. So, we can say, yeah, we’re not going to ... you can’t charge that much. We need to charge less. I’m a restaurant owner too. I always ask myself, would I feel good about that, not today in the time of panic, but would I feel good about that in six months, and if the answer is yes, then we’ll roll it out.

DG:

For restaurants that are just a typical a la carte restaurant, how does it work with the slotted delivery time?

NK:

If you want to do your own menu on Tock, you can. You can put up the whole a la carte cart menu. People can drop it in their shopping cart and click that. They pick a time when they want to pick it up or have it delivered.

DG:

Not all times would be available if other people had already selected them.

NK:

Yeah. That’s really critical because like an example is, we had a top client who went on to Toast, and they’re a Mexican restaurant. On Cinco de Mayo 290 orders came in all at once.

AK:

Oh my God.

NK:

You now have 250 really pissed off people and a staff trying to look for the off button on the thing. You go like, “Oh, that’s great. You got 290 orders.” Well, it’s actually useless. It’s worse than bad because you not only have to cancel most of those, you have to upset a lot of people who think they’re going to get a meal, and now they’re not, and you have to figure out what to do in the restaurant. How many can we do? So, by ...

AK:

And the cops come and break up the crowd outside your restaurant and people take pictures.

NK:

I love Carbone. That’s the scene that happened at the beginning of the pandemic, where there was no sense of pacing there. That sense of kitchen pacing and expediting delivery is incredibly important. No one else does it. That’s the data structure that we had that no one else does.

AK:

Well, we want to let you have time to get to your next meeting, but do you have any parting words of wisdom for small business owners who are listening to this right now?

NK:

The best time to start with six weeks ago, the next best time is tomorrow. Figure out how to do it safely. People want to have that emotional connection with your restaurant. I think that this is not going away soon. Even as we reopen slowly we’re going to have to come up with innovative, cool, new things to do. Just start doing it. People are there. Think about the amount of support that people have shown the industry, but ultimately, the only way to really show support is to buy food. People are in the business of providing hospitality and food. The faster we can do that, no matter how we accomplish that, the better.

DG:

Yeah. Just from a personal perspective, I can’t tell you how cool it’s been to see restaurants even open up, like once a week with something tiny on Tock. Even one dish that they’re doing once a week just to dip their toe in the water, it’s. I think maybe sometimes they think we’re not really restaurant unless we have our whole offering available, but it is cool to see just a little something.

NK:

I know amongst our staff, when we first started doing this, there was a lot of, Nick’s lost his mind. Two weeks later, I started getting emails going, “Thank you. I thought you lost your mind, but really you were just two weeks ahead.” Our whole staff feels incredibly great about what we’re doing. We’re getting emails every single day with people around their kitchen table, having their kids do the Alinea dessert course. It’s just so cool. Someone did Bart Simpson out of the food yesterday. We’re doing just wacky stuff. So, it’s a connection that’s the same, but different. I’m telling you, I’ve never been happier with anything that Alinea has ever done than what we’re doing right now. No word, no business, nothing. This is the coolest feelgood moment we’ve ever had.

DG:

Well, I look forward to the awards trying to come up with some at home stars.

NK:

I love the community of that, but I genuinely do not care. I just want as many restaurants as possible to survive into the future.

AK:

Well, it’s nice to see people actually surviving through this and thriving through this. So it’s great that you’re setting that example.

NK:

Thank you, and thanks for having me on.

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