STRATIS MORFOGEN on Improving Hospitality with New Technology (Restaurant Influencers - RI015)
Welcome to Restaurant Influencers, powered by Entreprenuer and Yelp. My name is Shawn Walchef, founder of Cali BB Media. In life and in the restaurant business, we learn through lessons and stories. Today, we are broadcasting live from the MURTEC Conference in Las Vegas.
Multi Unit Restaurant Technology Conference (www.murtec.com), where all the greatest thinkers, greatest minds have gathered at the Paris Hotel and Casino to talk about technology and to talk about influence. I have one of the most influential men on Earth in the hospitality space. I've been watching this man for the last two years do what we talk about every single week, which is Smartphone Storytelling.
If you own a restaurant business and you want to expand your business, you need to learn how to use the technology that is in your pocket. Today, we have the master himself, Stratis Morfogen again. Welcome to the show. Thank you. Thank you for having me. So for the people that do not know who you are, I want to start with the question Where in the world is your favorite stadium stage or venue? My favorite stadium stage or venue seeing a performance sure to me was Roger Waters at Radio City and then The Police at My Father's Place and U2 at Malibu Nightclub. Did that answer your question? That answered my question.
but you got to remember the police. I was 13 years old, but I mastered the art of sneaking through the delivery entrance and I got in. That's beautiful. The the first the first place.
Where was that for stadium, you mentioned? So My Father's Place was in Roslyn, Long Island. I was 13 years old. I heard about this group called the police. Yes, I was just starting to play drums, and I heard and I heard they were playing at my father's place, which is one hundred and fifty person capacity. And I, I got down to Roslyn. My mom thought I was basically sleeping, getting ready for like ninth grade, and I snuck in through the delivery entrance and I watched right behind Stewart Copeland playing drums, and I did the same thing with at Malibu nightclub.
There were about 300 and I wanted to hear about W. I always new like, you know, streamer of the week. Oh my god, how do I remember that screamer of the week? Nineteen eighty one w l i r was, you know, was I will follow OK. And I went to Malibu nightclub
because Malibu Sue actually does a great documentary in Showtime about this. OK, it's it's the story of W L I R Wow. And this was a radio station in Garden City where I grew up that had the best damn music that we never heard before, and this is where they were playing the police and, you know, the pretenders and U2 and the cure before they could ever make it to mainstream a love. That was really cool. So let's let's pretend that we are back at that place that one hundred and fifty c intimate venue and that we invite only the people that are the best of the best in the hospitality space, the best of the best. And for some reason, they don't know who you are and you have one hundred and twenty seconds to Mic Drop and let us know who stratus can you.
Pretty interesting. You know, as I went through the process of writing this book, I realized that I've disrupted everything in my life and it goes back from the age of six. You know, when my my parents were called into school, when I was about seven or eight? They said, we think he has learning disabilities. He's fidgeting, he's not focused. He's not interested in anything that's going on in the classroom. My father said, Really interesting.
Maybe you're not teaching things he's interested in. My father always had my back. So one day, he said after he heard it for about a year, he says, I want you to come to the Chelsea Chop House in Bellerose Queens, where he's working right now as a busboy on weekends. And I want you and I'm going to hold a table for all of you and I want you to come and see him on the floor. I want you to see him engaging with customers, telling him what they're going to eat tonight.
I want you to see him telling the managers how to manage. And the busboys had a bus and the waiters how to serve. And then you tell me if he's got a learning disability because there's not one kid in this classroom that can do what he does on a Friday night when these kids are tucked away watching their cartoons. So you just can't judge a kid because he may not be interested in your type of teaching, but he's interested in something else. And that was me. I was I was brought into the real world at a young age. I was at the Fulton Fish Market, at six years old, and I was there. I learned that, you
know, if you don't park your car the proper way, there's an ice pick in the back of your car, you know, in the back of your tire. I grew up that way. And to me, I wouldn't change a thing because it made me smarter.
And like I said, you know, universities fail students. Well, first of all, we're the only society that allows one hundred and fifty thousand dollars in debt. But there's not twenty five thousand dollars for a startup meaning student loans. Everything about universities is backwards. They teach you to be a VP in the status quo.
As soon as I understood that, and I understood that about 12 years old. I knew that was never going to be for me and playing beer pong at fraternities was not for me. I want it to be in business and I loved my dad's business. He had about nine restaurants at one time and then and that was it for me.
I've always disrupted everything I've done, they asked. I got in-school suspension. They asked me to.
At 11 years old, they asked me to explain the economy in two thousand words. I did it in 20. I said that there's a product that the consumer needs. There's a product and then the supply. And then there's demand sort of guy who wrote that at 11 years old and they suspended me for in-school suspension because I refused to give them two thousand words. Now there came my father
again. My father goes, Can I read what the other kids wrote, please? Are you guys joking me? This guy explained it to you in 20 words you should be getting a prize, not in-school suspension. Yes. And that was my upbringing. You refuse to answer my question.
I want to thank you. All of you got about 10 minutes. That's right. It goes right over my head. But that's the beauty of why we do this podcast. That's why I love what
we're doing. Having conversations like this with people that are really moving the needle for our industry give people a quick background of the breadth of projects that you're working on. From NFTs to publishing this book to running Brooklyn Dumpling Shop to the Automat to all of the things you have. Give us a synopsis. Well, you know, just well, it's we can talk about the last two years. You know, I had a $12 million year restaurant with Brooklyn Chophouse and that was January, February, 20, 20. And then in twenty two, I had nothing. I had a place to an eight
hundred thousand a year and deliveries. So I lost everything. I mean, to me, it was like I figured out this was going to be something I've never seen before. But what I did do, and this is probably the most exciting part that what I accomplished the last two years, as I said to my partner, is I want to I want to be able to tell my grandkids that during COVID 20 20, I did something. My capitalism will come later. But at first I started doing was feeding health care heroes.
New York Presbyterian was right next door. I started sending surf and turf lobsters and steaks and wine and cheesecakes and sending them there unannounced. Yeah, it said. Brooklyn chop house on the bag. And then all of a sudden, thank you. Brooklyn Chophouse, Brooklyn Chophouse. Thank you.
Hashtag started going viral because we added now three up three other hospitals. That's about what I could afford. I just got tanked. I lost everything. So at that, New York Post had said something like Hero of the Day, Blah blah blah, because this is March 27, 2020.
We were up to about a thousand miles a week. Eight hundred meals a week. And then with that article, which was, I don't believe in, you know, I don't believe in exposing charity, but it was great because Cisco called me genius cheesecake boss water four or five coffee.
They all started. Hey, how can we help? We read this article. We want to help. And people were calling me about Go Fund Me page that I don't want Go Fund. We're all hurting. I don't need go fund me. What I do need is when we do open, you come and visit our restaurants.
I can hire my staff back. But until then, we started doing meals. And within about five months, we were almost nine thousand meals complimentary to about 19 hospitals. And this is the same time that Mayor de Blasio and Comrade Cuomo were saying to us that guys like Danny Meyer should be the ones we should be looking at. And Daddy used to be a friend of mine until he got exposed.
He was the first to shut down the first two layoff and the first to basically say, Give me $10 million. I got one hundred and five million of cash on hand and I have a $2 billion market cap. And these are what the politicians are saying. Are our leaders. Well, I knew that there was a big void in leadership and hospitality, and I was going to step in because I knew that I could do a better job.
And hearing that these guys are our leaders kind of made my stomach turn. I read his book. His book was great. But when I found out he did that and boycott, Shake Shack went viral. And I'm not here to beat him down. But these are the things we need to learn from COVID that in times of need, hospitality hospitality stands up and forgets about capitalism for a moment and give and support the people that are these guys and women, from janitors to maids to doctors to nurses.
I saw what was going on there 18 20 hours a day in a war room where they catch this thing and bring it back to their family. It was like a death sentence to everyone. And they were out there keeping us safe. So that was the thing I did and I'm most proud of. To get back to your question regarding business because we're talking business now, landlords were calling me every week and they're saying, Hey, I've got an opportunity. Would you take the space? Would you take this space? And at that point, you know, this was probably about April 20 20, and like Times Square, twenty five thousand feet of Buffalo Wild Wings just handed him the keys.
I said, Mr. Friedman, I said, Listen, I have a lot of respect for you is by the. Biggest landlord on Madison and Fifth Avenue, I said, but that's not a deal for me because, well, how do we make this deal? Because I believe Buffalo Wild Wings could be a great Brooklyn chophouse. I said, I'm going to write down things because I want to go see it. It was magnificent.
50 foot ceilings, rooftop bar. Not for me. I'm the little guy that's for public companies like Buffalo Wild Wings. And they had just turned in the lease and they were paying $2 million a year rent.
Not for me. Not for me. And they had $5 million guarantee on the lease. Not for me. Way out of my league. So it goes right down what you want.
So Rick Freeland said, I always wanted to be in business with you since you're on Philly. I always wanted to do something with you. I'm glad you're out of that place. That place has crashed. Now with Brooklyn choppers, I want to do something with you. I said, Well, here's my deal.
Eight percent straight lease No base. Thirty five thousand dollars base after year three a Kobe clause for any reason that the government shuts any kind of government in the future. Any kind of shutdown in capacity and hours, and any any way that I'm somewhat stymied from running my business and business interruption insurance doesn't cover it.
We revert to eight percent straight lease, no base. So if I went from $12 million a year in sales and I go down to five hundred thousand in deliveries, it's eight percent of the five hundred grand. I want a 20 year lease and I'm only giving you a good guy guarantee for two months of the base rent, which equals seventy thousand dollars. He's like, Wow, I just cut it, and the cap is one million dollars on the rent. So now if I do 10 million, it's eight hundred thousand. Yes. If I do 15 million, it's one million. If I do 30 million, it's
one million. The million stays as a cap on the eight percent. I think it was going to say to me, Stratus, great seeing here. Have a good day. Bye bye. Stay safe. Wear your mask. Get out is
give me your lawyer's name. Let's do it. And then I got a million dollars in to be careful what you ask carefully.
I've said that term. No, no, no. I've said that term 100 times during Kyle Inserra. Be careful what you ask because literally you built the automat. You you built the antithesis.
Now you have two competing businesses. Well, kind of. Right? Well, listen, let's talk about it because it's so important to what we do, why we do the show. I mean, I'm going to have this Digital Hospitality. I just loved your speech about Digital Hospitality. It's the frustration.
It's the pain point with our industry understanding. We're not talking about losing jobs. We're talking about empowering the guest experience, using technology, using the thing that's in my pocket.
The thing that's in your pocket to empower people to give them back time to no longer discriminate how they eat their food. Why is this important? That's an incredible question, because that's where we're giving them back their time. We're letting people, especially the TikTok generation, don't want to be talking to me, and they want to order on their time. They want to say at 4:00 in the morning as I leave this bar.
I want to go pick up my dumplings and spring rolls. And basically, I want it waiting for me. And when I get that, I want to scan my phone, take it out and be in and out in 30 seconds. Remember, the benchmark was four to six minutes in hospitality.
You got a winner? Yeah, we're doing it in 30 seconds. Not because we're faster. We're just using technology.
Unbelievable. So I mean, so what happened here with the dumplings became such a big hit at Brooklyn Chophouse? I wanted to do a fast food version of it. And I wanted to study not just why the Automat by haunting hard had succeeded. I wanted to understand why it failed. And after doing about eight hundred thousand meals a day, they failed in the 70s because technology failed the automat.
There were not. There were not dollar bill receivers. There were not credit card processors. You had to wait on line and get nickels and quarters, wait on line, put them in the thing and basically get your food out of a little window, right? I love that model because I'm seeing that model. There's no cashiers, no cashiers to be found and no logistical personnel behind it. So I'm loving it.
But then why did it fail in the 70s is because there was no technology in. A couple of people tried to do it. And another reason like I didn't explain at my at my session is that they created wall to wall automat. Now that's a problem. People don't want to have a relationship with a tin can. What I've done is I've created half the room is an automat, which is about twenty four lockers and the other half is a glass kitchen.
So now you can actually see the product being made and that anxiety, especially now with COVID, the anxiety of the product being handled is gone. You know, now you're back to, hey, look at that, they're making dumplings. Look at that kitchen is active, people are cooking good at it. And my relationship with my phone. And that little cubby? Yeah, that's it. I don't need to see, speak or hear anyone.
Everything is now being done on my time. I'm the consumer, and that's the beauty of this model. And with that becomes economics. I don't need cashiers. Same way, we don't need toll booth clerks, you know, and I've been jumping up and down now for three years. Telling our industry,
why is there a god damn cashier in this restaurant? It doesn't make any sense. It makes no sense, makes no sense. And that alleviates two issues one, you can't find staff and two is seven out of 10 are going out of business because of excessive payroll. Now they're going out of business because they can't find payroll. Come down that compound that together and you've got a failure.
Why is being vocal? So one of the things that we're trying to teach restaurant owners and people in the hospitality businesses, entrepreneurship is so it's so fucking hard. It's so hard to open up a business. You do such a good job.
People do such a good job. If you open up a business telling their story in real life, in real life, you have to convince your significant others. You have to convince the bank, you've got to convince investors, you've got to convince employees.
You got to convince so many people that tell you you're crazy. You lost your mind. Yeah. But then when it comes to telling your story online, are using all these different social, these free gifts that we've been getting for you, building on the backs of giants? I don't have to go create TikTok.
I don't have to create Twitter. I don't have to create Instagram. They're already there for us. Very good point.
What did you do? When was your unlock with technology? Because we all have such complicated relationships with our phone, with technology, with the internet. When was your unlock that you needed to be a voice for the brand? I was talking about years ago or now, right now, OK? Because years ago I would say that I stole what I can't get out of the world. I've always had a voice. And I think for 1997 seven, please do.
I started buying keywords on Excite, Yahoo and AOL. One of the keywords was flower. So I'm building Fulton Street dot com, which is like an Omaha steaks fruit for seafood. And I get a call from Jim McCann from one 800 flowers. He goes, Fuck you. Can I say that the sorry is like, you're going to hear from my lawyers as well? Who's this? It's like, I'm Jim McCann. I'm the CEO founder of One
800 Flowers. And I just found out you that you took my word flower as a role. You said you own the word flower. Yeah, that's this to me is you own. And I just paid twenty four dollars for it. Where was your marketing
department on the on the floors of Westbury? So make a long story short, I go to his office because Mitchell, my model is my partner at Strategy Strategies. Why are you burning bridges, not burning bridges? I'm smarter than they are. I got the word. I've got a staff of three. He's got a staff of three hundred fifty and I got the word flower.
There's something wrong with that, correct? So he should reexamine his business. Stop calling me these words. So make a long story short, I said, How are you doing on Father's Day when we got to his office? He says, Look at this guy. Why is this, you know? You know, it's my worst holiday.
I got the solution. Lobster tails, lobster bisque, tiramisu cake, two filet mignon, steak knife, Peter Luger, steak sauce. And we make it as a Father's Day package with two big steak knives. But I want Fulton Street Gqom to have a home page right on your homepage. I want that to be the link to my site, to your offerings and then to my site. He brought in like three guys.
Make a long story short, I got eighteen thousand orders the first Father's Day viable eighteen thousand orders, and then after that I got another fifteen thousand for Christmas. That's because we did. We did a dads, a masculine gift instead of flowers. To make a long story short, that twenty four dollars was a pretty big investment because he grossed about $4 million in online sales in nineteen ninety seven to two thousand. So when you talk about that period and you see where we are now and you're about to launch this NFT project, what are the parallels the same? I'm back in ninety seven when I had conversations with traditional retailers, all they had was a static business card, and they called that their website.
And I'd say, no, I said, you had such a huge advantage. Like my story with modelos. I said, You have one hundred and twenty five stores. You can use these same day deliveries returns. I mean, you are way ahead of Amazon. You can like, really grab market share if you take this thing called the internet serious and they never did. And a lot of them are all
bankrupt today because they never took it serious and never thought this medium would work. I say the same thing about NFT in the Metaverse. If you don't, I just trademarked all my brands on the metaverse. If you don't take the metaverse and NFTs seriously, you're going to be left behind again. We never look.
We in hospitality, never learn from our mistakes. We never learn from history. And that's the unfortunate thing. But in return, it leaves big opportunities for the ones that do that. Do take it serious.
What's the difference between Greek hospitality, what you were raised on and Digital Hospitality? Well, you know, it's funny. So when I created Fulton Street com customers dot com rated as best in customer service with Southwest Airlines, Amazon and Wells Fargo. We had three employees working on an AOL server and we were up there with them. You know what my answer was? There's a computer screen. And our goal at Fulton Street. That's why I got Entrepreneur of the year and those crazy.
Three employees working on AOL were working on while server in the background you hear you hear the modem turning on and we're talking customer service, but I was doing it all with three people and and our mission was to break down that computer screen, put our hand through the screen and shake the customer's hand. How can we do that? We can do that with a nice, fluffy email as soon as they order and don't make it like a computer response, correct? Hi, my name is Stratas Moore. I'm here to help you, blah blah blah. Here is my cell phone number.
If you have any questions regarding your order, so there was no more screen. It was done and Patricia Sebald caught on that in nineteen ninety nine. And she blew my company up because she said, You guys are complaining because you don't have money like Amazon and Southwest and all these big companies, because you're blaming their wealth and their infrastructure on why they can give good service on this new medium called the internet. Well, there's Fulton Street run by this guy stratus. He's got three employees on an AOL server, and it was the best customer service I got on this thing called the web Yelp. And that's what it's about.
That is what it's about for us in the hospitality business, especially, you know, for our barbecue business, we became a digital first barbecue business. We've always believed we wouldn't be open. We opened in 2008. It literally we had to rely on the internet. When we were failing, we had to use every app possible to get people to care about our brand, to care about what we were doing. So people talk about pivoting during the pandemic, we didn't pivot.
We went all in correct. And in order to go all in, we needed technology partners and you and you needed to already have your foundation correct? That's correct. So you're not the norm. Correct. And Toast was able who is the title sponsor of this podcast. They were the title sponsor of ideas and years of miracle.
Well, there you go. You use Toast. Let's for the people that are listening. And I know because we have the same digital heartbeat explained to the restaurant owner who doesn't have a primary technology partner. Why there's literally if they if they get nothing else from this, they have to prioritize that. Well, we've got to move everything to mobile. I'm trying to make this
as basic as possible because to me, we did this years ago. Got to move everything to mobile. You got to take your social media serious and like. And one advice I give all restauratuers.
I usually fall asleep with my phone in my hand when I go to bed at night and it can be three or four in the morning, I'll sleep my five hours. I'm back on my phone, but I'm answering customers. I'm not on there like, Hey buddy, what's up? What are we doing? No. Jane Smith in Idaho just said, I'm interested in what this surf and turf lady means. I'm answering it at 3:00 in the morning because I refuse to outsource it to a third party company there.
And that which is really makes it very cost effective. But I'm doing it on my own. And now, because I am growing very large, I got two people helping me. But when it comes to actual, I mean, they try to get there before me. Now it's a competition and they can't win because I'm there at 3:00 in the morning.
And then one guy says the last week is funny. He goes, Wow, man, I just sent the thing 3:00 in the morning and you guys are answering, I'm going to tell Stratus. You guys are amazing.
I'm like this. This dress is like, what? I'm like, This is stratus is like, no way. Send me a picture right now that this is stratus done.
This is Stratus at 3:00 in the morning answering you. And if you don't have that kind of passion, and if you don't have that kind of determination and commitment, there's no reason to stick, stick with the fax machine. So there's something interesting that you said during your talk and a gentleman asked What kept you up at night? And I loved your answer.
But what? I'm more interested in, not what keeps you up at night, but what pulls you out of bed in the morning creating? I mean, I love to create. I mean, you know, I got to tell you, writing this book that I just finished finished a few days ago, I didn't realize how many parallel stories I have. And it didn't matter if I was six years old or fifty four years old.
They were all related with one type of mindset. I will not accept the status quo. I will not listen to you and I'm going to do things on my way. And if I fail, it's OK to fail. You know, this is what they teach in universities is that you can't fail. Mean, I'm telling you to fail in your 20s, even in your thirties? No. During COVID, I taught
at Lehigh University Zoom classes, and it's a great story. So this girl says to me, my dad is sixty four years old. He had an Italian restaurant for thirty five years, and he failed. So what do you mean? He felt so well covered. You know he had to shut down. I go, so he didn't fail. These idiot politicians that never ran a lemonade stand like de Blasio and Cuomo took it away from him.
But he didn't fail. They said, Well, I appreciate that, but he's in full depression, and I'm afraid I'm going to lose my dad. I said, Really, he doesn't get out of bed. He goes like. On the couch, he feels like his life is worthless at sixty four years old. I said interesting.
But he had a restaurant for thirty five years. Just like, yeah, it was Italian restaurant the Upper East Side. I know the name, but I'm not going to mention it. And I said, Listen, Linda, I think her name was. I said, Go tighten,
tighten your boot, sharpen the boot a little bit. Go there and kick him in the ass because I could tell him twenty five landlords that want to speak to him, and that will put up all the money to get his beloved business back on because your father is worthy, why he's got intellectual property and those politicians can't take that away if they can take away your restaurant. They can take away your livelihood. They could even take away your health, but they can't take away your intellectual property.
And that's what I told her. And then the conversation was done until three months later, I got an invite to go to his new restaurant and the landlord that I introduced him to put up four hundred thousand dollars for a second generation. Remember, landlords have empty restaurants, but you know what they want to speak to.
They want to speak to the one that has a thirty five year track record that is going to take that to the bank. And this guy thought his life was over at sixty four because he lost his beloved business. And these are stories that are important to get out of inspiration. And when you think your life is done because I've been there, I've been there. 2014 was a rough year for me.
I've been there and I always say, Sujit, you're about to give up is when the miracle happens. And you know what? I just happened to do a class that day at Lehigh. She asked me the question, and three months later, her father's back in a suit and tie and feels that the world is his. And that to me, that's why I keep doing universities, because the stuff you learn from students is incredible because they were pushed into universities.
My daughter is a senior at Um, I had nothing wrong with theory. Yeah, but she just told me now that she's graduating in may stick that I want to come work with you. Yeah, I get it. I get it. Because it's nothing like
being your own boss. Yeah, but you know, we have to we have to fail to succeed, and that's what they don't teach in universities. So if you guys want to reach out to me at any point, it's @shawnpwalchef on all the social handles.
You can email the show Shawn at Cali BBQ dot media. What your favorite digital playground. Where were you most? Where were you checking first? When, when you wake up, when you wake up and say, I'm still fifty four years old, he's going on Instagram Big four. Yeah, my my, my kids are all TikTok. They won't even let me have their accounts.
We're going to put links so you can purchase his book into the show notes links to all of his social handles for all of the businesses. Stratos, you, you truly are a gift. I hope you continue to be loud. I hope you continue to teach. I'll be continue to disrupt if you continue to give back to this industry, I'm grateful that you're playing the game within the game, but not only doing it selfishly, you're abundantly giving it by sharing spending time with us today.
So it's really nice. I appreciate you having me on. Thank you. Thank you.
Thanks. It was awesome. Thanks.