As vaccines bring the promise of a return to normalcy, restaurants look ahead to what the future holds. Internationally renowned chef and restaurateur John Folse and Stan Harris, President and CEO of the Louisiana Restaurant Association, join Chris Kane for a discussion about how the restaurant industry is looking beyond COVID and how the $28.6 billion Restaurant Revitalization Fund will play a role in recovery efforts.
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Transcript and Show Notes
Christopher Kane: Welcome to season two of Boom! presented by Adams and Reese. I'm your host, Chris Kane. Today we're going to be talking all things restaurants and, obviously, discussing COVID and COVID response. Got two excellent guests with us today in two separate segments. First, we have Stan Harris, the president and CEO of the Louisiana Restaurant Association, and he's also a board member of the National Restaurant Association among a thousand other things that you do, Stan. We really do appreciate having you. In our second segment, we're going to have Chef John Folse.
Stan, tell us what the Louisiana Restaurant Association is doing and how you guys are playing such an instrumental, important role in the COVID-19 response.
Stan Harris: Thanks, Chris. Our role is really to protect and advocate on behalf of the restaurant and foodservice industry in Louisiana. That's what we do. That's our mission that we focus on every day. And as COVID became much more of a reality about a year ago, we had to decide how we were going to approach this. And we decided we would do two or three things very quickly. One is we would pivot all of our information to COVID. The second is that we would make it free to anybody. We want to expand the access to that information. And the third thing is we had to constantly find sources to update it because getting fresh information as this was developing was really important for people making decisions about their business.
Unfortunately, when we went through the safer-at-home part and businesses had to close dine-in and our bars had to close and the rest of it, we were fortunate enough that some of the regulatory things were set aside. So we could at least have a little revenue stream from alcohol service and things like that that weren't allowed typically before COVID hit. So we've had some relief, but at the same time, it hasn't been a recovery of any magnitude, especially in the full service.
Christopher Kane: Well, as we're sitting here today, we're basically one year removed from when the shutdowns began to happen. You know, the sense that I have – in this last week, I was able to travel to Phoenix for work and getting vaccinated tomorrow. Everybody you're talking to is – you know, you're hearing about them getting shots, and things feel like we're really getting to a point where we're opening.
Stan Harris: I think we're hitting an inflection point in COVID. You know, when we talked with the governor's team and LDH and the State Fire Marshal and all the folks that are part of the decision-making process—and it ultimately defaults to the governor—is our approach to this is our industry has historically done a real good job in food safety and sanitation and hygiene, so you should trust us to do a pretty good job in this as well. And, you know, when we're looking at capacity restrictions and things like to move from 50% to 75%, for some of our historic restaurants, especially in New Orleans, that have few more restrictions in how their building is designed, it might have been a difference of adding 10 seats. So it's not terribly significant yet. But what we're hoping to be able to do is add back bar seating and do some of the things that people are used to doing when they go out.
But the key with all of this is going to be rebuilding and restoring the guests’ confidence, because I can tell you we were doing really well in phase three, until November, when the governor made the announcement right before Thanksgiving that we're going to roll back into what they call modified phase two. And that took so many reservations off. I had one restaurant in New Orleans that had 2,100 reservations for Thanksgiving Day, and it went down to 300.
Christopher Kane: That's incredible. And that's – I mean, the concerning thing about COVID-19, it's – we trust the folks to run and operate their business, right? I mean, the virus doesn't know the difference between whether you're in a school or you're in a restaurant, but we all had to go about it and learn how to be safe. And we're kind of – we know everything there is to know about how to protect ourselves at this stage of the game.
Stan Harris: You know, we set out – just a minute ago, we had masks on. There's a huge jar of hand sanitizer here. It's all over our business. When you come into the building, we screen for temperature. It's those types of practices that we easily adapt to because we're used to working in a regulated environment. So what we want to do is have that guest feel positive about this.
Our concern, as we shared with the administration early on, is when you go to these restrictions on groups and things, they're just going to go to an unregulated environment. They're going to someone's house. They're going to someone who has the ability to host more folks. And in the case of New Orleans versus, say, Jefferson Parish, all of the large events that were canceled in New Orleans, many of them moved here to Jefferson Parish, where our office is located.
Christopher Kane: Yes. Well, unfortunately, here in Louisiana, we have too much experience when it comes to disasters and disaster response. But because of that and your role, Stan, at the national level and being involved with really trying to form and mature the policymakers’ decisions in terms of how and what your members need, but not just your members, restaurants throughout the country.
Just here recently, the American Rescue Plan Act passed with a very significant Restaurant Revitalization Fund. I know you guys worked tirelessly on this to try to get it passed. I know it wasn't as much money as we hoped it would have been, but it is a significant amount of money. Would you like to tell us a little bit about what you're doing there?
Stan Harris: Yes, when we go back to COVID, back in March of last year, we released something called the Blueprint for Restaurant Recovery—and we updated it again in July after we'd had the first round of PPP—because we were asking – when the CARES Act came through, we knew this wasn't going to be enough by the time the legislation passed and the money came out because the first round of PPP was only eight weeks before it was extended in the CARES Act Flexibility. So when we look at that, it took from April, when the CARES Act came out giving us PPP, until almost the end of December before we got another relief package there.
We didn't change. That's why we worked with the Independent Restaurant Coalition to talk about putting forth this unified restaurant act that now has come out that Senator Wicker and Senator Sinema are part of, and we're going to try to push that through after we get through this particular part. But what PPP did for us as an industry was give us about 20 weeks of relief for what now has been a 52-week crisis.
So when the American Rescue Plan was released by President Biden in late January, we knew that there was going to have to be some immediate focus on the industry because a lot of the ARP was focused on aid to cities and states, direct stimulus, extending unemployment benefits, all of those things which were probably necessary. But at the same time, there was really nothing to recognize what had happened to our industry.
If you notice the difference between PPP1 and PPP2, restaurants got to expand to 3.5 times their payroll when other businesses were at 2.5. So there was certainly a recognition that the impact on the industry was somewhat disparate, but at the same time, we're still looking for more dollars to be able to help them recover. Our bars, our venue operators, our caterers, our destination marketing company people that handle when a group gets here till they go home—all of those things are somewhat challenged right now.
Christopher Kane: Yes. And that – you know, PPP, when it was designed – and I really think it was an excellent program and was genius how it really came to be. Very frustrating after the fact that the guidance continued to change. And, you know, we went back in, and we fixed some things in the Flexibility Act. And then we’re at PPP2. And now this program, the Restaurant Revitalization Fund, the – this program’s different. It's different in a number of ways. It – primarily it’s you're looking at – specifically at pandemic-related revenue loss. So it's almost like an insurance program of sorts, right?
Stan Harris: Instead of a multiple of payroll, it's looking at your year over year, quarter over quarter revenue loss, and you can take that to generate up to $10 million for your enterprise. It's limited to businesses that have 20 restaurants or business locations or less, but it's capped at $10 million. So with the $10 million and reducing that PPP that you might have already received from there, there's a little bit of a gap that's going to be opening there.
But, again, probably the biggest thing that happened in the second round of stimulus that gave us the second PPP was defining in statute that the forgiveness wasn't going to create a taxable event. So, as you said, we have evolved in this thing. To use the words of Don Pearson, our LED secretary – he said, “During this crisis, we're flying the airplane while we're still building it.” And that's probably a pretty good description of where we are.
Christopher Kane: Yes. And then we need to continue that conversation as we go throughout the remainder of this year, towards the end of the year, because I think as we get to fall – at least all the indications seem to be that once we get to the fall, we really should be almost fully back, right?
Stan Harris: Well, there's certain parts of it. You know, when I – I spoke to the Republican Legislative Delegation last week, and one of the things I shared with them was our cruise lines are at zero, our airports at 40% of its prior lift from 2019. Our international flights are not happening into New Orleans. Our leisure travel – while we're seeing some pent-up demand, until we could get to more consistent small-group meetings, small association, small tradeshow language with the city and with the state, we weren't able to book any of that. We had hotels that that was 40% to 50% of their revenue. So all of a sudden, they've got a huge hole. Even though that we're starting to unwind some of the restaurant capacities, they weren't participating on an equal basis. So I feel like we're making some improvement.
I don't really believe that our travel-driven economy – because when people visit here, we're a live-to-eat economy, so people are thinking about where to eat at lunchtime, where they're going for dinner, or they make those plans in advance. We've got to get some more consistency and building that guest confidence that they can come back here, they can make their plans, and they don't see us backsliding.
Christopher Kane: And how do we do that? How – what's the magic trick to make that happen?
Stan Harris: Well, I think there's a couple of things that that we can do. Number one is continue to recognize that the mitigation is something that's necessary. You know, while some folks have had two vaccines or they've had the one-shot vaccine, I think we've got to be able to push vaccines out faster, broader, and to a broader part of the community as a whole. And I think when we see things like the governor expanding it to age 16 with some medical conditions—I think going to 16 without those conditions will probably happen in the next 30 to 45 days—that's going to help us with confidence.
We've also got to provide information to get people who are somewhat reluctant to use one of these vaccines to consider that it is safe and effective because that's going to help us especially with our industry workforce. You know, the one part of this that's been really concerning to us throughout the entire time of COVID is we don't want to put our team members at risk. We don't want to put our guests at risk. And I would tell you that if we were doing it regularly, they would blast us on social media for doing that. But at the same time, they're looking to get back to normal as well because some of these people – if we're seeing 60% revenue loss in a restaurant or the same in a hotel, they're probably feeling a 60% loss in their income if they have that job.
You know, as I shared with you when we were chatting before we began, we're down 20,000 jobs in leisure and hospitality employment in the New Orleans metro area according to Bureau of Labor Statistics. That's pretty significant. Statewide, it's only 26,000 jobs. So the bulk of those jobs hit the New Orleans marketplace, which is tourism and travel central for us.
Christopher Kane: Well, and you hit on something that I wanted to talk about. You know, one of the concerns that I know the restaurant industry has and the hotel industry has is at what level and strength will the business travel come back? A lot of folks have become electronic. They, you know, Zoom and Microsoft Teams. And, you know, we can go have a fly-in in D.C. with our delegation and do it in about, you know, three hours instead of three days. I don't like that. I'm a social person. I like to be out and about and get there, but you know, as people start pencil whipping and trying to figure out ways to save money, we've learned a way to communicate that concerns me the ancillary impact that's going to have on your industry.
Stan Harris: Yes. If you go back to 2009, that's when the last big round of stimulus came in to try to bolster the economy, the too big to fail banks, the too big to fail businesses and industries, the bailout for the automotive industry. All of those things were important to do. And of course, what we spent now in COVID relief is three and four and five times the amount of that.
But I go back to, you know, when a bank or lending institution was sponsoring a PGA Tour event, and they were shamed by why are you spending your money doing these things? Because it was really easy to come back and let the people in the financial side of the business look at it and say, “Well, we're operating fine remotely. We're doing all of these things,” but the one thing you can't recreate is the memory.
What the other thing you can't create is the experience. Those two things are elemental to coming to Louisiana and doing something. You've got to have that memory. You've got to have that experience because we want it to be a favorable one. But that's the only way that we're going to get people back in that habit of doing it. And it's why we're pushing so hard to build this small corporate meeting business back, because from the smaller meetings come the larger product launches, the larger sales meetings, the larger technical meetings from associations that are coming in doing certifications or doing trade shows. So getting that back is all part of this economy.
We also need our cruise ships to come back. We also need to rebuild our airline lift. I was happy to see that one of our discount airlines is now doing some nonstops to Florida that six weeks ago they had no flights a day into the Tampa and Orlando and Fort Lauderdale markets nonstop. So they're adding some of that back, which means that, you know, as we're flying more, we’re bringing more people here. At the same time, we've got to do it with good care. We've got to do it with good hygiene, good practices. And let people understand too that coming to New Orleans, coming to Bourbon Street, coming to the French Quarter, it's going to be a little bit different for a while longer, and we just need them to bear with us on that.
Christopher Kane: Well, during COVID, we've all learned – we've mentioned – talking about, you know, whether it be Zoom or – I was joking around about, you know, the older guys in our golf group. Now they all have some ability to do electronic transfer of money, so we can't – we go play golf, and I – you can't use the “Oh, I don’t have any cash” excuse anymore.
Stan Harris: Yes. We use the “Venmo it to me,” right?
Christopher Kane: Venmo. Right. But, you know, the – from the restaurant association standpoint – or your industry, excuse me, what have you guys learned? Or has there been anything in the industry that has come out in the last year, whether it be, you know, the to-go food industry? A lot of people eating at home. Is there anything that came out of COVID that you think's going to stay (inaudible)?
Stan Harris: I think you're going to see a lot of the quick service and fast casuals continue to shrink the size of their building footprint and reduce the amount of dine-in capacity. They'll probably create more outdoor space, which is not necessarily a bad thing, but at the same time, in Louisiana, it's kind of tough from June through September to eat outside. But some people like it. I think that we're going to see that type of transfer.
I also think that we're seeing much more innovation, I think we'll continue to see the ability to sit down at the table and use your phone to read a QR code and get a menu or a wine list to you. I think that the delivery platforms will eventually shake out as to how it works for not only the restaurant but the provider because we still haven't figured out a successful and sustainable economic model for delivery.
You know, we – right now we passed legislation a few years ago that allows with a restaurant meal, you can be able to get a bottle of wine or a beer. We're going to bring some legislation back that will allow cocktails that are ready to drink. Instead of being assembled at the restaurant, it's a pre-packaged item. It's hard to adulterate. It's easy to see if someone's opened it. And, again, you got to take those small steps before you walk.
This year, under COVID, the governor was lenient in allowing bars and restaurants to sell alcohol to go. There's no statute that provides for that. It was just done under the guise of an emergency order. It was very appreciative. It was something that was a lifeline for a lot of our businesses, and it kept some of our bars going when all they could do was sell alcohol to go. But I kind of feel as we come out of COVID, some of those old restrictions and those more local options will become part of what we do.
Christopher Kane: Well, you knew the world was kind of upside down when you could get a to-go drink in New York or Philadelphia or in Nashville, but you couldn't get a to-go drink on Bourbon Street, right?
Stan Harris: {Laughs}
Christopher Kane: We – you know, we just – things were a little…
Stan Harris: The world was a bit upside now.
Christopher Kane: Well, look, one last thing that I wanted to touch on. You mentioned Senator Wicker. I know there's some more legislation that is – maybe in the works and coming down the pipe. What are you seeing in terms of prospects for additional legislation and support for restaurants, and what can folks do to help push those along for you?
Stan Harris: Well, first is if we're able to get the Restaurants Act to be considered by Congress. Pushing that forward will be very, very important. The other thing that we want to do is take this Restaurant Revitalization Fund and make sure that it goes out as smoothly as PPP did. You know, this is a grant fund, and as we mentioned, it's revenue, of loss of revenue instead of a percentage of a multiple of cost. So we want to make sure that that's ready to go because we think there'll be a very quick run on the bank with that. There's not a whole lot of money in there. You and I sitting here, $28 billion is a whole lot of money, but to an industry that through January's lost over $250 billion, that's a big hole to fill.
So everything we can do, whether it's enhanced ERTC, changes in terms of economic injury disaster loans, anything that we can do to help the industry sustain itself until it can recover because our projections are we're going to see a recovery probably in – beginning more in 2022, 2023. And the large events that New Orleans relies on, even if we started booking them today, they're not going to be available until 2023 and beyond. So that's just kind of where we are.
Christopher Kane: Yes, and we touched on the Restaurant Revitalization Fund a few times. But since it's new, let's take one second before we wrap up today to talk about some of the mechanics of it. As I appreciate, it’s going to be House to the SBA. You're basically – you’re going to take your 2019 numbers, and you're going to compare them to your 2020 numbers. That's going to create a pandemic-related revenue loss calculation, and then you'll be allowed to receive that amount of money and spend it through the end of the year on eligible expenses.
Stan Harris: Yes. Less your PPP draws that you've had to date—that's going to be the difference. The challenge for us is the SBA is used to being part of a lending platform. So this isn't a loan; this is a grant. We're expecting that they'll move rather quickly on this. You know, the good part about PPP, it was only a two-page application. We're hoping they keep it as simple as that and that probably in the next 30 to 45 days, that money will be moving out there. At the same time, you know, they're still working on the Save Our Venues Act money that was approved in late December, and it hasn't happened yet. And here we are sitting in the middle of March, so, you know, that's part of this whole package of relief.
And, you know, we've got a lot of venue members and bar operators and music venues that our industry relies on for lift to be able to keep the restaurants full when activities are going on. So we've really seen the integration of all of these different things, from hotels and attractions to music venues to our bars and restaurants and our catering operations. Everybody's felt this. And while our quick service and I said our fast-casual people have pivoted more quickly because their business model typically might have had a drive-thru window, our full-service people have not. And they're still struggling, and we want to make sure we have all the relief options available to them to help them stay alive until we get real recovery.
Christopher Kane: Yes, the Save Our Venues has been a little frustrating on the speed of the guidance and getting the information together so we could start accessing that money. Hopefully, the RRF will go quicker. But both of those, unfortunately, are grant programs, and that's a little bit of the challenge that we're in. I know SBA is actively working on it. We're talking to them, like you are, every day to try to figure out when the timing is, so…
Stan Harris: Yes. When the SBA people know you by your first name or your phone number digits, you have a pretty good idea that you're calling pretty regularly. But, again, that's what we're supposed to do. We're the industry's advocate, and we're not advocating for one part or any specific part. We're looking to say we got to help as many of our businesses as possible, and we need them to help us because right now they're the gatekeeper.
Christopher Kane: Well, when folks think of Louisiana, they think about awesome food. And I really do appreciate all the hard work that you're doing and particularly in this time frame not just for Louisiana but really as it relates to all the restaurants. We're trying to – we're all in this together and getting through it.
Stan Harris: We have a bigger community today than we've ever had before. We've had people that have come together to do all kinds of mass feeding events, take care of community feeding. We've got restaurants that stayed alive during this period by doing feeding for school lunches or homebound or working with FEMA or any of these other programs, things that we probably wouldn't have thought about some time ago. But we're resilient. We’re innovative. And people want to help. They want to be part of that.
The one thing that we've seen in all the surveys we do is that restaurants are still telling us they're doing philanthropic things. They're staying connected to their community. And that's really part of who the fiber is of restauranteurs. They feel like they're part of that neighborhood, whether they're a local franchisee of a chain or whether an independent operator or a mom and pop. That's the kind of people that are there. They're always going to be in your community. They're always going to be contributing.
Christopher Kane: Well, thanks for joining us, Stan.
Stan Harris: Absolutely.
Christopher Kane: Now we'd like to welcome in Chef John Folse from Chef John Folse & Company. Chef, so glad to have you on. You are an internationally known, world-renowned chef, and we want to take some time this morning to hear from you. You know, we just talked to Stan Harris and really talked about the industry and the varying industry sectors. From your viewpoint, what we really want to hear is, number one, how are you doing as we sit here pretty much one year removed from when all of these shutdowns and the craziness began?
Chef John Folse: Well, being a multifaceted company as we are—catering, fine dining, airport feeding, just all the different – bakery division—you can imagine that when the pandemic hit and just lines of not only communication but business started to cease fairly quickly – we’re manufacturers, as you know, of foods from many different companies globally. So wow, you know, it was a – let me just say an atomic bomb that exploded on our board table one morning. And we just had to really grasp the pieces, get our team around the table, and just take a deep breath, say a prayer, and then proceed with a plan. And I think that's what just about everybody in America did.
And because of that and being really diligent, I think we've been able to at least come out of the other side of it in a fashion that I'm pretty proud of my team for accomplishing. As with everyone else, it's been tough. There's been a lot of losses, a lot of companies going out of business. But at the same time, due to our experiences and due to our team, due to people who really put their shoulder to the wheel, I think Chef John Folse & Company actually will be coming out of the other side of it a little bit better than we went in.
Christopher Kane: Well, that's great to hear. I think, unfortunately, for us Louisianians, we have all too much experience with disaster planning but also disaster recovery. I think that has helped us a lot in a lot of ways to really kind of figure out the best path forward. And, you know, we were talking – again, we were talking with Stan and his work that he's doing with the National Restaurant Association to try to provide policy and ideas on how to help really the backbone of the small businesses in the United States, which are restaurants.
Chef John Folse: Exactly. I mean, when I look back—and, of course, Stan and people who are really good close friends, other business leaders in the community—one of the things that I think really happened, just very good, new experiences with people coming together, people you've known all of your life, like – let's just say Stan and I are or other restauranteurs or other business people who didn't mind sitting around a table and discussing their challenges, their options, their directions, their changes. And all of a sudden, people that you may never have had a conversation with became part of an evaluation team that said, “This is what we're doing. This is what we're doing.”
And I think if nothing else, the pandemic really showed us just how important your partners are, just how important the people you work with daily are, those who you may know but don't have relationships with any more coming back to the table to say, “You know, how are you getting over this? How are you doing it?” Sometimes out of tragedy you see you your best chances for success.
And I think what I've seen, generally speaking, is that we've certainly rekindled old relationships. We've re-established connections that we've lost and certainly streamlined the company to a point where I think we're much more efficient and ready to do business globally as we do. We've just stayed connected in a big, big way. Communication was wide open, and it just taught us how to do business in a new world. And it was a new world that was going to be here for a while.
Christopher Kane: Well, it was a year ago around this time where we started to see what the federal government and what local governments were looking to do in order to try to get us to the next level. You know, we were talking about ways to slow the spread, and that was a thing, and then we had these phases. And all these different types of new lingo came our way, one of which was PPP, the Paycheck Protection Program. And here at the farm at Adams and Reese, we work with a number of restaurants. And there were challenges with the program and with how restaurants themselves operate, depending on what sector you're in. And I'm just curious if you guys were able to utilize it, and what's your sense how PPP was impactful or unimpactful for your industry?
Chef John Folse: Well, I think there were options in PPP, whether you went through, you know, SBA or your bank. I mean, one of the interesting things with PPP is that our bank started to call us immediately before we even had an opportunity to call them. Red River Bank is my bank. And I immediately got a call saying, “Chef, if you want to sit down and talk about these grant opportunities for restaurants or, you know, to just look at what's available to you, what's available now, we'd love to sit down and talk.”
Well, I have never seen that before, actually, you know, when our bankers started to pick up the phone and call like, “Hey, look, we want to get ahead of all of this. We want to get in immediately.” Of course, knowing that the National Restaurant Association was calling and other organizations were calling. But when my bank itself called immediately on that first week, to say, “Let's sit down right away and make sure you're going to be where you need to be financially and how you can – let's look at what your losses are going to be. Let's look at what –” you know? I mean, that was a new world to me right there.
And so my bankers came together and said, “Look, there's a lot of opportunities out there, but we want to be your partner in this.” And, of course, we said, “You've got it,” you know? So immediately we sat down and came up with a plan. We certainly went after the first PPP money that was available.
And, again, at my food plant where we immediately lost all of our business overnight – not only lost all of our businesses overnight but companies like Shake Shack out in New York and Cracker Barrel and Fridays and Zoës is and Mopho and – I mean, I could keep going. These are my customers. These are the people I'm cooking for. I'm the chef of these companies. They depend on me to have food ready for them to ship in.
The airport New Orleans where my restaurant was located plus other restaurants in the airport that we were assisting as well, but my national chains were calling, saying, “Hold all orders.” TGI Fridays, a brand-new rollout going out with a new product. We had almost $2 million of packaged food ready to put on containers to take off to Fridays around the country and the world. I get a message: “Shut it down. Put it in the freezer. Keep it until further notice.” I bought all the product. I paid all the labor. We boxed it up. A couple million dollars. And that's one company.
And all of a sudden, I'm sitting in front of my bank saying, “Can you help me here? Because I'm not shipping that food. They're not going to pay until it shipped.” And when is this pandemic going to be? Well, who knew it would be a year, a year and a half, almost two years. And my bank came in and said, “Don't worry about it. Let us know what you need. Let us know what you have to do because all of these customers, those freezers full of food that you have on these two-week inventory rollouts, we're going to go ahead and take care of that.”
We never lost a step. The relationship that we had built between not only our manufacturing partners, these national brands that we cook food for every day and ship globally, but the bank that’s watching the amount of money that we have in inventory – it just – the confidence that was given to me and my team to be able to sit at the table as the owner of the company and look across my guys who's wondering whether we're going to be in business, whether they can feed their families tomorrow, all of a sudden, I just laid it out. I said, “You know what? We're not going to be in trouble here. We're not going to have an any issue.” I said, “We're getting calls from our bank. We're getting calls from other companies, our manufacturing partners. We’re communicating well.”
And I don't know if everybody had the same experience I had, but my biggest single issue, which we'll talk about in a minute, is the labor issue that happened just about at that point. But all in all, I can say that financially, as much as we had in inventories, purchasing, food not being sold, we never had to worry about it because we were given that confidence by our lenders and our bank who said, “Don't worry about it, and PPP is going to be there to help you,” which they did. And here I am today feeling fantastic, actually, about the whole situation. The relationships kept us alive. Let me just put it that way.
Christopher Kane: Well, this broadcast today is not focused on the health care side of it. But when I look back retrospective now in a year, the lenders and the health care providers have been the beachfront to our American response to this. And we haven't done everything perfectly. There’s a lot of things that, you know, we wish we could do now. But if you go back in time, you know, March of 2020 and going into early April, you had to make decisions, very tough decisions. Do I let my labor force go? If I do, what does that mean for me? If I don't, how am I going to pay them and make it make sense?
To me, what you just said really resonates because that's the role that in large part the lenders gave in terms of confidence that here's what this program is intended to do, don't just let your workforce roll off, you know, and let's try to keep them intact. How did you approach your workforce, particularly right, you know, when we're talking March, April, May of 2020?
Chef John Folse: Well, my workforce in Donaldsonville, Louisiana, which is the largest part of my company, my food manufacturing division, is a USDA facility. We have almost 100,000 square feet on the roof. We have a couple hundred employees in that facility. Many mothers there. I'm going to say 50% to 60% of my team at that plant is African American women with children. It's a great position for them because Donaldsonville is a community of African Americans. There’s not – other than the chemical industry there, it's a farming community. And all of a sudden, I come in and build a USDA facility to produce food globally, and now I'm looking for labor. And the labor that's knocking at my door are African American women who's never been in this environment before, but thank God they were there.
And at that point, there was about a month or so, as with everyone else, that there was confusion. And there was just a realization of what's happening? What are we going to do with all of this? Staff decided certainly they weren't going to show up for work because COVID was hitting. And do we need to go get tested? What do we do? There was confusion all over the place. But we got everybody together and said, “Okay. All I need to know – we're shut down. There's nothing going on right now, but we still have to maintain the facility. So I'm looking for 20 people who can be here with me.”
Well, all of a sudden, the realization and the importance of that labor, which I had never considered before how critical those women—and, of course, there are men involved as well—how critical that local talent, that African American talent that was in Donaldsonville, that kind of took for granted almost that they were going to be able to work every day. Then all of a sudden realizing, you know what, we have to manage this opportunity for us, so we put schedules together. Women with children – how do we keep the flow going? Because we did have to keep the facility going.
And we did it. The staff started to stabilize. All of our employees were tested COVID every day. We actually went to our local hospital and had the doctors come over to the plant, check them all out with the swabs. These are the first early days, and we just hearing COVID for the first time. So we made decisions on the fly real early to make sure that our staff was taken care of.
PPP was certainly going to – we were hearing those letters for the first time, and now we knew we were going to be getting dollars to pay them. And it just gave us a level of comfort that we could not only preserve what we had to do daily in our facility but keep our staff working, at least a majority of them who wanted to work. So I think everything was put in place pretty fast, just the opportunities, the practices, everything that was available to keep our facility going, our labor being available to us. Certainly, I mean, it gave us comfort to say, “We're going to come through this. We're going to survive this.”
Christopher Kane: Well, I think you’ve once said it's – that culture is a cuisine of people. And here in Louisiana, the way that that's delivered is through restaurants, and you obviously have made a name for yourself in the restaurant industry specifically. And look, we're starting to hear a little bit of buzz or feeling a little bit of buzz. You know, I'm excited. I'm getting vaccinated this week. I know many friends and family who have done so. I don't want to use the word new normal because I hate that word, but…
Chef John Folse: {Laughs}
Christopher Kane: …you got to be forward thinking as a restauranteur as to what that means. And how are you reopening into the capacity you're allowed to? And where do you see us being in the next, say, you know, six months until we get to maybe the fall?
Chef John Folse: Well, I'm very hopeful. No doubt about that. We've been through the worst. No doubt. Things are opening up. My Restaurant R’evolution in New Orleans is open Wednesday through Sunday night only. But my God, we're doing 50% of the sales we did on our opening. And I'm sure the restaurants in New Orleans that – Commander’s and all of these restaurants that’s been around for a while are probably seeing the same thing. People do want to get out and do want to experience good food in the places they want to dine in. So R’evolution’s open, and to think that we're doing anywhere from 40% to 50% of what our normal revenue would be. And we're not open at night, so that kind of means that our customers are there waiting and coming in, which is great.
So I'm seeing in my manufacturing we're starting to open up. I'm getting calls from all of the national companies wanting to know how are we doing. I'm having companies actually call, saying, “Hey, look, we want to jump on board now to get some new product development going in your plant so that when we come out of it in the next couple of months, we think by the summer we're going to be rolling out new menus and some of our casual concepts.” And so I brought in my R&D team. In fact, after this conversation, I'm going to my plant Donaldsonville to do a new product for Shake Shack out in New York.
So they're calling, and they're saying, “John, we want to get ahead of the game. Let's get ahead of the game before everybody.” So I see companies moving in that direction as they’re looking to be ready. Companies are asking us about our emergency preparedness for the future. What did we learn from it all? How are we going to be better?
And, you know, I was telling my team the other day we know now we need to keep more inventory in our system. We need to make sure that even though it's going to cost us money, we never want to be the one being short on anything. The phones are ringing about White Oak Estate and Gardens in Baton Rouge. I mean, we lost almost $2 million in weddings this year. Two million dollars in weddings.
Christopher Kane: That’s incredible.
Chef John Folse: But we survived it. We used that year to redo so much of my White Oak Estate that needed to be done. I put a couple new buildings in there to kind of grow the facility a little bit. And we had three weddings this weekend. The largest wedding we've had this year we had this past weekend, 400 people, because our distancing ability at White Oak because of our 40 acres and lakes and everything else. We're taking advantage of what we have. We're looking at things in a different way.
I never even looked at the back lakes in the acreage at White Oak as potentials for opportunity for picnics and new menus that would – it made us start to think a little bit more outside of the box rather than saying, “You know what? We're going to do a wedding every Saturday. We're going to do this.” We just started to see that there's a lot of opportunities out there. There's new ways of doing things.
There's new ways to handle the staffing so we don't have to worry about that again. Making sure that when I'm looking at staffing, how much staffing do I want to have that has full families? How many staff members I want to have that may be single staff members, so I'm not worried about their families? I still have a huge amount of my staff that single. We're thinking that way.
Emergency preparedness. I want to keep some inventory now so if my customers do call an emergency, I don't have to worry about cooking it. I have some, especially for my better customers. It’s just made us better at what we do.
My bakery division here in Gonzales has been open. They're just on fire in there because we produce bakery goods for many of the restaurants and even some of the bakeries in New Orleans. We produce product for them, and they sell it under their – and that's up and running.
So I tell you – I know you can tell. I just couldn't be more excited. I think we did what we had to do. We treated our people right. We worked with our bankers. We took our 40 years of experience. We reached out to friends, and we reached out to our better customers to make sure that –
And one of the things I did that was really, I think, spectacular—it was just a thought—I set out 100 letters to 100 food companies that were under 50 units. So if it was a chain that was under 50 units, I said, “You know what? When they come back, they won't have labor. They'll need manufacturing.” So I sent letters out to 100 of those companies I chose and said, “Let me be your chef. When you come back out of the pandemic, let me be the one to cook your menu.” And we picked up – I think it was 40% of those restaurants just by…
Christopher Kane: Wow.
Chef John Folse: …doing that, because they knew they wouldn't have their labor when they came back in the casual business. So like I say, I know you can tell from my voice that I feel really good about it. We've had our issues, obviously. But we've looked at everything that we failed in, and we looked at how are we going to make sure that we are ready for this if it ever happens again? We don't want to ever be on the back side of it because chances are pretty good we will have these type of issues again. And we want to be ready at the moment because we can't let our customers down. And we are – as I say, food manufacturing is our biggest business, and we want to make sure that we're feeding the country based on the fact that we are their chefs. So I'm looking for a great year. That's all I can say. {Laughs}
Christopher Kane: Well, that’s – look, I love hearing your excitement. It's encouraging because, you know, a lot of conversations that we've had over the last year have been a bit on the negative side. It's awesome to hear how you have taken the information as it was coming in, developed a plan, and now you've implemented that plan. And on the outside of it, COVID-19 has changed your business for forever, and it sounds like for the better. And that's really – that's very warming to hear.
Chef John Folse: No. And that's exactly right. I mean, we had our failures, no doubt about it, like everybody else. We had our sleepless night like everybody else. We were concerned that staff wouldn't come back like everybody else. But what we did was take the proactive approach and got the key team in and said, “Let's get our people on the phone. Let's let them know we’re –” we did the things that good management normally should do but a lot of times we just forget about.
And I said, “Let's not leave a stone unturned because if we're going to come out of this with the number of employees we have, the amount of commitment we've made to companies all over the United States and abroad –” we ship to about eight countries every day as well, and we had to communicate with those countries too. So it kept us really on edge at all times to make sure we weren't missing anything.
Did we miss things? Heck yes, we missed a lot. But we were so entrenched in the building to say, “Let's make sure – let's look at every dot. Let's look at every t. Let's look at our list. Let's make sure we're not missing anything. And when we miss it, let's go back and find it.” And we're coming out of it really, really good. And our customers are appreciating what we did for them. Our staff is appreciating what we did for them during that time. We didn't lay anybody off. We paid them completely through. PPP saved us along the way naturally, and hopefully, there'll be more.
But with that being said, I think preparedness is everything. You can't always be 100% prepared. But the more we think about the challenges we're going to have, if there's an issue, we're ahead of the game. And that's what we're thinking about now as a company. What plans do we put in place now to always be ready to be able to serve our customer and get that food to where it needs to be? And what's the plan if something should happen that puts a stop in there? What do we do about it? And that's where we are today.
Christopher Kane: Well, hopefully, there's some more to come. Obviously, that would help your industry and your business segment, how you're diversified a number of ways. And we had spoken earlier with Stan on some of the details of the Restaurant Revitalization Fund. We hope to expect guidance out of the SBA as soon as possible. We know the poor folks at the SBA are a little overwhelmed when you consider…
Chef John Folse: {Laughs}
Christopher Kane: …you know, the next largest disaster they dealt with was Katrina. And when you look at the difference of the amount of money that is flowing through to small businesses, it's incredible. But – well, look, Chef, before we leave, two quick things. One, you know, I wanted to give you a plug for this. My wife and I went to Restaurant R’evolution several weeks ago, and we felt extremely safe. It was – of course, your staff was incredible over there, and the food is my favorite. It's incredible as well. But I can't wait to be back in the Chef's Table and have a good glass of Sea Smoke Ten preferably, something along those lines, and enjoy a good meal. We've had a couple back there, and it's a beautiful location. It's a neat spot. You guys obviously run a good operation.
Chef John Folse: Good. Thank you so much.
Christopher Kane: Well, we’ll chat – thank you for joining. And we really do appreciate your insight and amazing story candidly about how you have righted the ship through a very difficult time. So congratulations on that. And thank you for joining.
Chef John Folse: Well, you know, like everyone else, all I can say is that, you know, we certainly made our share mistakes. We – like everyone else, we had to learn through a process. We really kept our head on our shoulders. We really made sure that our staff was protected because they are the company, and at the same time, made sure that our customers were aware at all times about where we were because I didn't want them to think we weren't coming back.
And I didn't want to lose those national and international companies I cooked food for because I didn't communicate with them. So I encourage everybody who hears this, whoever your partners are, keep the phone lines open, let them know what you're doing. That gives them that extra ability to say, “Hey, they're going to take care of us when this thing's over with.” And I think that's really been a big plus for us.
Christopher Kane: Well, that’s a real good message to end on and part of the reason we here at Adams and Reese are doing the Boom! podcast. So, again, thanks for joining, and we look forward to the next episode of Boom!.
Chef John Folse: Thank you so much.