June 19, 2020

It’s Time to Discuss Your Prices: Joelle Parenteau, founder of Wolf Down

It’s Time to Discuss Your Prices: Joelle Parenteau, founder of Wolf Down

Are you charging what your food is worth or are you charging what customers are willing to pay? What do we need to do to fix our broken system? We cover this and so much more with third-time entrepreneur, first-time restaurateur Joelle Parenteau whose fresh take on the industry will blow your mind.

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SHOW NOTES

  • Beginnings of Wolf Down
  • Lessons learned in the first year of business
  • Many in the supply chain have dated processes
  • Estimating food volume is very difficult to do
  • Put back up plans in place to have enough stock
  • Allocating staff hours is tough
  • Restaurant business is volatile
  • Coping with rushes in the restaurant
  • Increase efficiency
  • Time to get an order through
  • Time to make the doner sandwich
  • Time to get people through the door
  • Streamlined menu
  • Allocating sources accordingly
  • Labor
  • Having a delivery business
  • Wolf Down was always a delivery business
  • Was 50-50 delivery - dine-in
  • Now predominantly delivery
  • Covid happened 10 months into operation
  • Bakery who makes there bread shut down for many weeks
  • Foundational issues in the industry
  • Pricing in the restaurant business
  • Price wars have caused low prices
  • Will customers revolt?
  • Provide a unique, high-quality product to justify higher prices
  • Wolf Down increased pricing during Covid
  • No one noticed or cared
  • If the product is good, people will pay for it
  • Prove the value is there no matter what your price point is
  • Stand out and differentiate
  • Raising delivery pricing in line with commission costs
  • Third-party delivery apps take 25-30% commission
  • Customers wanted delivery
  • Offering delivery at a premium
  • Consumers are moving to the convenience model
  • We must adjust and adapt to our customers wants
  • Some issues with gratuities
  • Relying on customers to pay your people
  • Most people don’t vary the tip amount
  • Tipping is not motivating service
  • Doesn’t make sense for quick-serve establishments like Wolf Down
  • Creates discomfort for customers
  • How Wolf Down attempted to solve the tipping problem
  • Abolished gratuities
  • Raise pricing to pay staff
  • Staff don’t ask for tips
  • Tip jar for customers who insist on tipping
  • People were angry they couldn’t tip
  • Engrained in the culture
  • Benefits of a cashless system
  • Saves labor costs of staff counting tills
  • Safer - cashless restaurants less likely to be robbed
  • If someone comes in and they only have cash, staff find a way to make it work
  • The realities of restaurants post-covid
  • Pre-ordering
  • Delivery
  • QR Menus
  • Joelle’s aim is to build foundations this year for expansion in later years
  • Message to the industry
  • Raise your prices
Transcript

Josh Kopel:
Today's episode is brought to you by Yelp, whose mission is to connect people with great local businesses. They're also helping me connect with you, which is totally awesome. Now, here we go.

Joelle Parenteau:
Like it or not, consumers are moving to the convenience model, and so it's like adapt or don't. Why fight it? So, rather than sit there and complain about delivery this, delivery that, just find ways to adjust and to leverage it and take advantage of it.

Josh Kopel:
Welcome to Full Comp, a show offering insight into the future of the hospitality industry, featuring restaurateurs, thought leaders, and innovators, served up on the house.

Josh Kopel:
On today's show, we chat with Joelle Parenteau, owner operator of Wolf Down, who's making waves with her innovative yet common sense approach to hospitality.

Josh Kopel:
Are you charging what your food is worth or are you charging what customers are willing to pay? What if you baked in a healthy profit margin into your pricing? What do we need to do to fix our broken system? We cover these questions and so much more with third time entrepreneur, first time restaurateur, Joelle Parenteau, whose fresh take on the industry will blow your mind.

Joelle Parenteau:
We do German street food, and my fiance's German, I love him. That's a good start. But he's the one who introduced me to this street food that they have in Germany. And whenever we'd go visit his family, we'd eat it all the time, and it was like, "This is amazing. How do we not have this in Ottawa?" I mean, there's some small places that have it in the US, but it's not well known yet. So, to me, it just seemed like a crazy business opportunity, whether it's food or not, I just was like, "The world needs this." And of course, we became obsessed with it, so we're like, "We need this." So, it actually was, for a number of years, we would just be the ones saying like, "Someone needs to open this. Someone needs to open this." And then, finally, it's just like, "Well, no one's going to do it, so I guess we just go for it."

Joelle Parenteau:
He's been in Canada for over a decade, as well, and has always wanted it here. So, it was also like, "You know what? I'm going to do this for you. Let's go. You introduced me to this. I think I can make it happen." I don't know food business, but I know business, so I know how to put a team together and find the right people and make it all... find all the pieces." So, it started of just as a side project, kind of funny like, "Hey, let's just bring this German food to Ottawa and see what happens." And it's been awesome.

Josh Kopel:
What were some of the big lessons learned in the first six months?

Joelle Parenteau:
So many things. So, one of the things that makes, I think, this industry so difficult is that all the players that you're reliant upon, at least from my experience... I come from the tech startup world, mostly, and now we were dealing with suppliers and stuff that were just so tech backwards. It was so painful just getting the equipment, getting the food suppliers organized and stuff. And that's not usually where I thought the challenges would be, but just lining up all these people and their systems sometimes are so archaic. And you're like, "Seriously, this is how we're doing things?" And you just go, "Okay, well, I guess that's how this industry works." But even just buying, finding the right equipment, I was dealing with those suppliers. I'm like, "You don't have an online... Can I not look at this stuff?" They're like, they send me a model number. I'm like, "Okay," and what's this? Do you not have a store or something I can go look..." Everything seemed to be like this whole new dated way of doing things, and that certainly was a bit of an eye opener.

Joelle Parenteau:
And then, just the realities of, again, coming from the tech world and see like, "Hey, these things, they go bad. They literally rot really quickly," so it's really important that you gauge and estimate your volume and what you're going to need or there's going to be so much waste. At the same time, customers, like the volume changes so quickly from day to day, and there's no predicting it. And then it snows, so no one comes in. Or there's a parade on the streets, so 1,000 people more come in. It's just so volatile. That's kind of what I love about it, but that's also was a bit of an eye opener.

Josh Kopel:
Were you able to allocate infrastructure to account for those things? How did you work around that? How did you work through all that?

Joelle Parenteau:
So, when you put in place backup plans, I guess, in terms of making sure you always have as much stock as you need, and then being okay with realizing that sometimes it's just going to be impossible and you're just going to sell out and you just have to call it and say, "Okay, well we did our best." Allocating staff hours is always interesting, as well. Some days there's nothing you can do, and you have to find that balance between not having too many people sitting around and realizing that sometimes you're just going to get slammed and you're just going to have to bite the bullet and get through it and explain to everybody. And generally, people are really understanding. If you're there and you're just being honest with them, just say like, "Look, there was no way to predict this, and everybody just came in at once because it's a beautiful day. And we're doing the best we can."

Josh Kopel:
Are there inherent struggles within the industry that are just going to exist no matter what?

Joelle Parenteau:
To a certain degree. There's rushes, and it's designed to be like that people are pretty habitual. And there's dinner rushes and there's lunch rushes. But there are things you can do to try to temper that or stretch it. But mostly what we try to do is just allocate resources accordingly as much as we can. So, actually, probably the biggest thing that we've done to address that is up our efficiency so that we are actually able to handle and get that food out quicker. So, we have a super streamlined menu. The process is something we complete continuously hone. So, the amount of time it takes on the line or to get an order through or to get people in and out the door, those are the things that we constantly look to streamline. And therefore, what used to take us, if we used to be able to serve like 50 customers an hour, now we can do 80, so we're just trying to make our end of the bargain much more efficient.

Joelle Parenteau:
And that's been interesting because it's changed so much with COVID because we've gone from dealing with so many customers in store, we have to stop, take their order, talk to them, explain to them things, to doing predominantly orders coming in on a tablet. And that was actually really interesting because the first week we realized, we're like, "We just did massive numbers, but it didn't feel that crazy," and then we're like, "Oh, because no one was talking to us and distracting us, and we didn't have to take orders. They just showed up on the KDS. So, that's been interesting because we went from doing maybe 50/50 in store versus delivery, to now like predominantly delivery, and that's actually made us much more efficient and actually getting food out, which is kind of interesting. That actually reduces our labor needs, so it's actually a more efficient model. So, yeah, it's just always looking at what you got and what you need to optimize

Josh Kopel:
When you guys got hit with COVID, that was, what, eight months into operation?

Joelle Parenteau:
Just over. Yeah. I think nine or 10, give or take. Yeah.

Josh Kopel:
And then, what did business look like just before?

Joelle Parenteau:
Well, it was really starting to pick up because, I mean, our challenge up here is winter, and so January, February are really slow and then it starts to pick back up. So, we were just starting to see every week was incrementally growing and growing and growing, and then it was just like, "Oh, hard stop."

Josh Kopel:
Right. When did you guys reopen for operation?

Joelle Parenteau:
Just a few weeks ago. So, our biggest problem was that the supply chain failed us, and that's why we weren't able to... We were ready to stay open and just do take out because we already did a lot of delivery, we already worked with through Uber Eats, so that was like, "Okay, no problem. We'll just shift our focus more on that." But our key issue is that we do predominantly doner sandwiches, and those need bread, and the bakery that makes our very customized, specialized bread, they shut down. So, that forced our hand to go, "Okay, well, we can't stay open because 80% of sales are sandwiches, and we don't have bread."

Joelle Parenteau:
So, in the interim, we decided we would open just Saturdays to do just our bowls, so we start promoting, "Okay, we do also have salads and rice bowls." And that at least, kept our foot in the door, kept us in front of our customers, and they appreciate that. And then, just maybe three weeks ago, the bakery opened back up, so we were able to go back to... They're doing bread for us four days a week, so now we're back at it four days a week and those days are crazy. And people are right back in it, in terms of our customers are eager to support and to eat, so that's been a positive sign.

Josh Kopel:
Right on. You wrote an article back in April, and in that article, you detailed, fundamentally, the issues that you saw within the industry. And so, what I want to do is I want to talk about those issues that you brought up, and I want to talk about tech solutions, since you're a tech person, that we can use to fix those. So, to begin, what are the foundational issues within the industry?

Joelle Parenteau:
Number one most obvious is the margins. Everybody talks about that. And the irony is that... I mean, a lot of that was caused by the price wars and the downward pressure, but a lot of it also we did to ourselves. So, I mean, there's always been that fear that customers are going to revolt if you increase prices. But then, on the flip side as a business, you go, "Okay, well, we need to provide the value to justify those higher prices, of course." So, you need a really unique quality differentiated product if you're going to command higher prices, just like any other industry.

Joelle Parenteau:
So, that's been my focus, is saying, "Okay, well, how do we fix these margins?" And basically, we've already done everything we can to squeeze the cost efficiency out of things. Like rent is as low as it can, we optimize labor, our food costs are as low as we can get them without just massive economies of scale. So, we did everything we could on that side of the equation, and then all that was left was saying, "Okay, just the price level is just unreasonable. These things cost more, and we have to increase prices." And that's basically what I found out in my first year, also. I thought, "We'll be able to squeeze more margin out of this," and you go, "Okay, well, this is all I got and it's still not enough, so I have no choice."

Joelle Parenteau:
So, that's actually something we just did, and like you said, COVID just made it impossible to ignore the reality of that. And I went, "You know what? Fuck it. We have to do it. It's do or die right now." And the irony, of course, is we did it, and we're just like bracing for the response. And no one said anything. Either no one's noticed or they just were like, "Yeah, okay, I'll pay $12 for this." Why did we wait so long to do this?

Josh Kopel:
Right. Well, you also took the same strategy with delivery. You inflated your delivery prices by whatever the associated costs of the commission was, right?

Joelle Parenteau:
Yeah. And that was interesting because that was like a no-brainer out the gate for me. I knew our margins would be tight, so I was like, "Obviously, we don't have 30% here, so there's no way I'm going on this without compensating for it." And at the time that we were getting on Uber, it was a gray area whether that was legal or not or whatever, and finally, we just took the stance of like, "Well, fuck it, we'll just do it and see what they say, see if they even notice." Because at the end of the day, our customers were asking like, "Why aren't you on Uber? Why aren't you on Uber? I want this delivered to me." So, we went, "Okay, we'll do it, but this is under these conditions, because otherwise we're just going to be bleeding money," so, we did.

Joelle Parenteau:
It costs more on Uber, and basically, the way I look at it, and this is where I think some restaurant owners have it backwards, because I'm hearing this way too often right now. It's frustrated me. That they're saying, "Well, we're teaching our customers to order online and come to get it from us because that's better for us." I'm like, "When did this become about what's better for you? The customer wants it delivered to their home." So, the way we look at it is if we look at what does the customer want, they want it brought to their homes, so we will give them that option but we will adjust prices accordingly. So, we said, "Here, you want it at your house? That's fine. It costs, though. Are you still okay with that?" And they say, "Yes," by the thousands, and they pay a premium and they get it how they want it.

Josh Kopel:
And if they don't, then that's just not a [crosstalk 00:15:02]

Joelle Parenteau:
Like you want to save money, no problem. Walk down the street and come to see us. But if you can't get to us because you're busy or your kids or this or that or it's not convenient to come... We're downtown, center town. It's not necessarily convenient for people to get to us. We don't have parking, so we get that. That's what Uber's made for. I mean, I use it all the time for the same reasons.

Josh Kopel:
But you also offer a niche cuisine, and so my argument would be like the price wars exist between burger places, right? The price wars exist between more conventional cuisines. There, my big concern is that one person can fuck it up for everyone else, right? Like one guy can come in and underprice everyone, and then that one person has made it about price, which means it's about price for everyone again.

Joelle Parenteau:
Yeah. I agree with that to a certain degree. At the end of the day also, though, if you have a better, more differentiated burger, you should be able to justify your higher price if you can do it better at the end of the day. It sucks when people do that, but you'll have... It'll appeal to a different customer, so you have the people who literally just go for like dollar price value. You want the cheapest food, and then you'll have all the people who are happy to pay more for a quality product. And that was something that we thought about a lot because in Germany, doner is this very cheap street food, and we made a conscious decision to say, "We're going to make the premium version of that, and it's going to cost a little bit more." Also, it just has to cost more because we don't have the supply chain and the mass production that they have in Germany. We're the first one doing this here in Ottawa.

Joelle Parenteau:
So, we made that choice, and we said, "Okay, this is going to be a slightly higher end price point sandwich." But we made it so good, and it's a big portion, so it's good value. And people, where they might initially go like sticker shock like, "That seems like a lot for a sandwich," once they have it, they're like, "Totally worth it." So, you need to earn that. You need to prove the value is there no matter what your price point is, and then you've just got to make sure your quality matches. So, if you want to be cheap and just do the cheapest, quickest, fastest, totally. Then do that. If you want to do the best quality, the best taste, like good portion, the healthiest, whatever your thing is, find something and make sure you stand out. I mean, again, I just wouldn't open another burger shop if I don't have something... Like why open another burger shop? Think of something to make it unique. I don't know.

Josh Kopel:
Right. What are some other foundational issues?

Joelle Parenteau:
I mean, we touched a little bit on the resistance to deliberate and to moving forward and just going like, "Like it or not, consumers are moving to the convenience model," and so it's like adapt or don't. But why fight it? So, rather than sit there and complain about delivery this, delivery that, just find ways to adjust and to leverage it and take advantage of it. I don't like how much the industry seems to just be complaining about it right now instead of just going like, "All right, well, it is what it is. This is the real world, and if you want to capitalize on that or survive, then you have to adjust."

Joelle Parenteau:
So, it's more a question of how to adapt, and we've done that but we were also designed day one to leverage that some... I understand probably was easier for us because we did it that way from the start, so it's not like we're trying to change a long established model, but it's still just that's you have to wake up and go, "Well, this is the world we live in now, so how do we make the most of it?"

Josh Kopel:
You did start different, or you started with no gratuity, you started cashless. There were a bunch of things like that. Can you roll me through the ideas behind those choices, as well as the other innovative choices you made to go against the industry trend?

Joelle Parenteau:
I'll start with the gratuity thing. I'm in the middle of writing a post on that right now. Again, especially coming from other businesses and then coming into this model where you're just like, "This makes no sense. There's no logic behind this. It's just this historical thing that everybody keeps doing." And it creates so much inefficiency in the model, just in the sense that, "Okay, well now you can pay your labor less, and you're counting on your customers to pay your people properly instead of just pricing properly so that I can actually pay my people properly." There's so much wrong with it.

Joelle Parenteau:
And then, also, just the fact that I don't think it actually works because most people don't vary their tipping amount. They just have a set amount that they always tip, and they feel guilty if they don't. I'm probably one of the few that goes to the extreme where I'm like, "Okay, say my average is 20. If you're awesome, you get 30. If you suck and you don't make any effort, you get 10." That's how it works. If it's meant to be an incentive, that's how it's supposed to work. But everybody just does this, the average normal thing, so it actually doesn't incentivize anything. It's expected, so it's not really motivating service.

Joelle Parenteau:
And then, at the same time, on my end, I'm like, "Well, we're quick serve. You're just grab and going and some..." This isn't even traditionally a tipping industry, and yet it seems to be becoming so. And actually, I thought about myself as a consumer, and I go, "It bugged me when I'd go to coffee shop and they pour me a tea, and then they ask for a tip." And I'm like, "Well, what did you do?" So, I just saw this problem getting worse, and I didn't want to be part of that problem. But also, I didn't want to put that discomfort on my customers of like, I always find it awkward when you ask for a tip and you're like, "Oh, well, now, okay, social pressure. I have to tip," even though, whatever. So, I'm going to pay my people properly, I'm going to find a way to do that, and I'm not going to put that social pressure on my guests.

Joelle Parenteau:
Hilarious thing was that I didn't expect that our guests would revolt and be like, they come in and they're like angry that they couldn't tip. They're like, "We love you. We want to tip. And we want to show how much we love you and how great your people are." And I was like, "Look, I really appreciate that. That's awesome. That's what we're going for." So, finally, we just had to just put a tip jar just so the angry, very pushy people could tip. So, now, I don't even know what to do about that because it's so ingrained in our culture. I still disagree with it as a practice. Our staff knows we don't ask. We don't put you on the spot. If you ask us where you can tip, then you can go, "Well, there's a jar over there if you want to," but we don't put it in their face. So, that's on the typic side of things.

Joelle Parenteau:
Cashless, again, just coming from a tech world, it just made sense, but also, back in high school, I worked jobs with cash and counting your till and all this stuff. And if you just look at a business efficiency standpoint, you go like, "This is not an efficient system." And it puts pressure on your cashiers, your staff, to not screw up, to count money right, and then at the end... It adds so much process and overhead. And not only that, but we're in a rough street, like a rough area, so I'm like, "Well, there's also the fact that now you can get robbed." That's a real possibility where we are. But you can't get robbed if you don't have cash. So, it's actually safer, as well. If someone comes in, there's not much, you can take a couple of iPads. That's pretty much all we've got that's of use to anybody. Safety components and efficiency and-

Josh Kopel:
Any pushback?

Joelle Parenteau:
Oh yeah, but not as much as we expected, but there's always those people that are going to come in and say like, "Oh..." I mean, you've heard the argument now, it's like, "Oh, cashless means you hate the poor." And we're like, "We don't hate the poor," and actually, if anything, if someone comes in and they only have cash, we'll always make it work. So, we'll get one of the managers to go, "Okay, I'll take your cash, and I'll put it on my card. We make it work for people, we don't turn anybody away.

Joelle Parenteau:
But the way we look at it is that also because of all those process efficiencies and the reduced... but mostly how much time we save not counting cash and not having to deal with all of that, it's just cost savings. And those are things that go back into the product. We're just trying to run an efficient business so that we can keep our costs as reasonable as possible. Again, it's always in the interest of building the best business possible for us and for the customer.

Josh Kopel:
Well, and looking into the future in a post-COVID world, what do you think the restaurant experience looks like for restaurateurs and for patrons? Is it virtual menus, contact-less, this? Can you walk me through your ideas for the industry and also what you're doing in your own restaurant?

Joelle Parenteau:
Yeah. So, I think the pre-ordering, it's obviously going to pick up and going to maintain. We weren't taking orders in store, so everybody had to go online. And now that they know that they can just pre-order online or once they have the app on their phone, I think we'll continue to see that just rising, which is nice, because then the order just comes up on the tablet, we have it made by the time they get there. And of course, the shift to delivery, we're doing record-breaking delivery numbers every week, of course, with everything going on. That's just going to... I assume that will continue.

Joelle Parenteau:
Because we're predominantly takeout, I think that we won't be as impacted as, of course, the sit down, dine-in that have physical menus. I have seen that some of the places that are opening back up in Vegas, so they're doing like scan a QR code for the menu. So, you look at it on your phone instead of having physical menus. And all this stuff just make sense anyways. It's just accelerated where that world is going. I mean, I always just looked at menus on my phone before going to the restaurant to begin with. So, I think it's just accelerating the pace of change and the amount of technology that we're going to see. Now, of course, for certain generations, that'll be harder or easier to adapt to, but ultimately, I think they're all mostly positive changes. Change is hard, but these are good changes or changes for the better. So, I think that that's, at the end of the day, it's like, just go with it and adapt. It's the time.

Josh Kopel:
Is your goal as a business person to make money this year? Or are you guys just trying to stay afloat for the next 18 months? Where's your head at?

Joelle Parenteau:
My goal is actually to build foundations this year. We want to expand, and we're starting to look at... So, yeah, more like investing versus not looking to make a profit this year but to lay the groundwork, so that over the next few years, I think there'll be a lot of rebuilding and a lot of new growth. And we want to be there for that.

Josh Kopel:
There'll be plenty of cheap real estate out there.

Joelle Parenteau:
There you go.

Josh Kopel:
So, it's an industry podcast, and at the end of every episode, I like to give the guest an opportunity to speak directly to the industry. Is there anything you'd like to share?

Joelle Parenteau:
Increase your prices.

Josh Kopel:
That's Joelle Parenteau, founder of Wolf Down. For more on Joelle and her restaurant, go to wolfdown.com.

Josh Kopel:
If you want to tell us your story, hear previous episodes, check out our video content, or read our weekly blog, go to joshkopel.com. That's J-O-S-H-K-O-P-E-L.com. Thank you so much for listening to the show. You can subscribe wherever you get your podcasts. And while you're there, please leave us a review. A special thanks to Yelp for helping us spread the word to the whole hospitality community. I'm Josh Kopel. You've been listening to Full Comp.