Episode summary
How a Chicago Restaurant Has Stayed Open For Nearly Three Decades | Odd Lots
Odd Lots
· · Hosts: Joe Weisenthal, Tracy Alloway · Guests: Richard Mott
Summary
Richard Mott traces a restaurant career that began with a student-run coffee shop at the University of Chicago and grew into a portfolio that included campus coffee shops, concessions, catering, and North Pond, the Chicago fine-dining restaurant he opened in 1997. He argues that restaurant economics are brutally competitive, with little moat, heavy labor dependence, and a constant need to adapt to shifting tastes, costs, and regulations.
Mott says North Pond survived by evolving from a more casual, park-based concept into a farm-to-table restaurant built around local farmers and a chef-driven identity. He describes how wine sales and special-occasion dining help support the business, but says the post-pandemic period has been especially difficult as labor costs rose about 30% for starting cooks and food inflation forced four price increases in two years.
He also makes the case that shared kitchens can lower the barrier to entry for food entrepreneurs. Spark Shared Kitchen lets caterers and small producers rent licensed kitchen space by the hour or by the day, avoiding the expense and delay of building a full facility. In Mott’s view, that model helps the city’s economy by letting chefs and makers focus on product, not permits and real estate.
Key takeaways
- Mott says independent fine-dining restaurants face a negative-return industry structure because there are no barriers to entry and no real moat.
- He says North Pond’s wine sales fell from just over 33% of revenue for years to 24% in the last 18 months, hurting margins.
- Mott says labor costs for starting cooks are about 30% higher than 3 to 4 years ago, while food costs have surged as well.
- He argues that restaurants are increasingly event-driven, with more guests coming for birthdays and anniversaries than for casual weeknight dinners.
- Mott says shared kitchens can let food entrepreneurs launch quickly without the months of delay and capital needed for a standalone facility.
Notable quotes
“the restaurant business is one of the worst businesses to ever get in”
“you never want to be in a business for economic reasons when you are competing with people who are in there for non-economic reasons”
“For the first 28 years, our liquor wine sales, and we're almost exclusively wine. Our wine sales were just a hair over 33%”
“In the last 18 months, that has dropped to 24%. That is a huge deal because that that 8% was the most profitable sales that we did”
“The great thing about shared kitchens is you can come in and you can open basically for the price of your ingredients and the license”
How the episode opens
Bloomberg Audio Studios. Podcasts, radio, news. — Hello and welcome to another episode of the All Thoughts podcast. I'm Tracy Alloway. — And I'm Joe Weisenthal. — Joe, we are back in Chicago. — I love Chicago. — It's a beautiful city. I used to live here. It's always kind of surreal coming back cuz it reminds me of middle school, basically. We're actually here for a live show. But, I thought we would squeeze in one additional episode. It's one of the kind of favorite types of episodes that we like to do.
Totally. It's a food service episode, one of our favorite genres of episode. One of our favorite episodes we ever did was a Chicago-based food service entity, The Baker. Remember him?
Absolutely. And one of the reasons these episodes are so interesting to do is, you know, we have a lot of economists on the show. We have a lot of investors, whoever.
And they kind of talk about business in this conceptual way, but it's always interesting talking to actual practitioners in the space. And the thing about food is it touches on so many different aspects of the macroeconomy. You know, you have labor, you have supply chain issues, you have general, I guess, entrepreneurial issues as well.
And so, I thought we would talk to someone a little bit different to the Chicago-based baker. We would talk to someone who not only comes from, I guess, sort of a finance background, but someone who actually left finance at an undergraduate level in order he made the conscious decision to become a practitioner in the restaurant and catering space.
You know the Big Mac index, right? The Economist's. The reason why that works as a concept is because embedded within the Big Mac is labor, commodity costs, and rent.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- restaurant economics
- food and labor prices
- restaurant failures
- consumer demand
- hospitality labor costs
Companies and tickers mentioned
- Spark Shared Kitchen
Watch the episode
Watch “How a Chicago Restaurant Has Stayed Open For Nearly Three Decades | Odd Lots” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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