May 22, 2020

This is Your Plan to THRIVE: Elizabeth Tilton, founder of Oyster Sunday

This is Your Plan to THRIVE: Elizabeth Tilton, founder of Oyster Sunday

Didn't go to business school? We've got you covered. 

On today's show, we chat with Elizabeth Tilton, founder of Oyster Sunday, a hospitality services company making waves by supplying us with tools we need to reopen, at no cost

As a child, I dreamed of being an astronaut. Elizabeth Tilton dreamed of being a doctor. But somehow, some way the hospitality industry sucked us in. The love of serving others is overwhelming and fires us off in different directions. I became a restaurateur. Elizabeth has dedicated her life to helping restaurateurs succeed. 

Today we run through the plans and tools Oyster Sunday has created to make sure we don't just survive, we actually thrive. 

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SHOW NOTES

  • What does Oyster Sunday do?
  • Corporate office for independent restaurants
  • Creating infrastructure of operating systems for restaurants
  • Reopening resources
  • Offers free consultations for operators
  • Created the reopening critical path
  • How to treat your team
  • How to stop hemorrhaging money
  • PPL, national and localized financial stability
  • Step by step guide to reopening
  • Managing your team
  • Not disqualifying team members for unemployment
  • Restructuring business operations
  • How do we find alternative revenue streams?
  • Going back to cash in hand
  • What is the break-even point at our lowest moments?
  • How can we reorganize P&L?
  • Data-driven decision making
  • Focus on core competency
  • What dishes or services make us who we are as a restaurant?
  • Opportunity to reflect and rebuild
  • Pivoting to a product industry over a service industry
  • Covid 19 exposed issues, not create them
  • Brick & mortar
  • In-person model only
  • Slim margins
  • High labor costs
  • High food costs
  • Margins
  • Industry average is 6% profit margin
  • Preux & Proper 10%
  • High margin businesses have high volume
  • Restaurant businesses must work a lot for small profits
  • With 15-20% profit, we can make broader decisions for our businesses
  • Team salaries
  • Communicating with consumers
  • Consumers will dictate what they need
  • Sharing the operations side with customers
  • Telling them delivery commissions are high
  • Telling them the complications of tipping
  • This is a time of innovation in the industry
  • Minimal innovation has happened in 50 years
  • OpenTable for reservations
  • Cloud-based computing for payments etc
  • Cyclical view to restructuring the business model
  • Recovery from Covid 19 won’t be linear
  • Restructuring tool on the Oyster Sunday website (linked above)
  • % delivery
  • % catering
  • Other digital revenue streams
  • Planning for 12weeks
  • Things change very quickly


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.

Elizabeth Tilton:
When Hurricane Katrina happened the one thing that was very palpable really quickly is that if all of us sacrificed a little bit, none of us have to sacrifice it all. And we are here, and no question is too big or too small. We will find an answer to the best of our ability.

Josh Kopel:
Welcome to Full Comp, the 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 Elizabeth Tilton, founder of Oyster Sunday, a hospitality services company making waves by supplying us with the tools that we need to reopen at no cost.

Josh Kopel:
As a child, I dreamed of being an astronaut. Elizabeth Tilton dreamed of being a doctor, but somehow, some way the hospitality industry sucked us in. The love of serving others is overwhelming, and it fires us off in different directions. I became a restaurateur. Elizabeth has dedicated her life to helping restaurateurs succeed. Today, we began with her explaining exactly what it is that Oyster Sunday does and why that work is so important today. So to begin, talk to me a little bit about Oyster Sunday. What do you guys do?

Elizabeth Tilton:
Sure. So Oyster Sunday stands for operating system, and we are a corporate office for independent restaurants. So that means that we're providing services from point of sale, through payroll, finance, accounting, HR, branding, to give independent restaurants a seat at the table in an economy of scale otherwise unattainable.

Josh Kopel:
Right. Well, I mean, we spent years developing that in my own restaurant, so I know how important it is. And it's also prohibitively expensive when you do it on your own.

Elizabeth Tilton:
Definitely. And I think there's been some great operators who've done portions of that, like for great HR and great accounting. But if you don't have the 360 foot view and really looking at holistic, the kind of the amoebic structure of a restaurant, I think that things are missed and there's a lot of redundancy.

Josh Kopel:
Well, and there's also the idea between your company and your business, right? Because a restaurant's business is food and beverage, but there's this entire company that stands behind it. That if that's unhealthy, it doesn't matter how successful the business is, right?

Elizabeth Tilton:
Absolutely. And I think you have to start on the right foot. And I think when operators like yourself or chefs kind of step up into these roles, they become the CFO, CMO, head of HR overnight. And that, although they may have the capacity or the competency to execute all those tasks, it really deteriorates and takes away from what we do best in this industry, which is to care for others, and it's a huge burden to take on yourself. And so we basically provide that stability and infrastructure to allow operators to really manage the customer experience in their own restaurant.

Josh Kopel:
Well, and you guys got national attention. The way I found you was through the support material that you put out for reopening post-pandemic. What was the idea behind creating that, and what was the rollout like?

Elizabeth Tilton:
Yeah, I actually was in New York City... I live in New Orleans, but I travel to New York because part of my team is there once a month, and I was there for meetings. And on the 11th, I was in a meeting in the city, and the WHO came out, announced there was a pandemic. And I remember closing my laptop, packing my bag, and saying, "I have to go to the airport now." And really kind of feeling the pressure of New York, I think it was palpable.

Elizabeth Tilton:
Before I got up there, I was like, "Oh, we should keep an eye out for this. We're not sure what's going to happen." And when I left on the 11th, I was like, "We need to figure out today what we're going to move forward with." And immediately kind of turn to the team, particularly the head of projects Jessica Abel, and we sat down and said, "We're going to do a website. We're going to put out resources to help operators, not only to arm them with information, to make informed decisions, and then we're going to pivot and provide all of our complete free consultations for any operator."

Elizabeth Tilton:
Because it became really, really palpable that this was real, and this was going to change the course of restaurants nationwide and worldwide in the matter of days. So by that Monday, so that was on a Wednesday, and by that Monday, we had rolled out the complete plan to take on that responsibility. And we were hearing a lot of like people talking about who was closing and what they were offering and pivoting to delivery, but we didn't feel that that did enough to tell operators how to move forward and to make informed decisions.

Josh Kopel:
Have you guys updated that material as things have changed on the ground level?

Elizabeth Tilton:
Drastically, yeah. So immediately we kind of did this brain dump and said, "If we were to break down a restaurant into their departments, let's go ahead and identify things that we need from finance and operations and HR... " And then started to really talk to thought leaders in the industry in addition to our team, calling lawyers and calling insurance and risk management brokers and saying, "What do we need to know right now?" And to put that on paper. So that was the first step, and that was out by that Monday.

Elizabeth Tilton:
And then we kept adding. We were hearing that James Beard came out with stuff and the RWCF came out with initiative of grants. And so we were constantly adding to it. And in advance, we put out a really big kind of what you alluded to earlier, our critical path, which a reopening critical path.

Elizabeth Tilton:
So the first two weeks were really spent helping operators think through how do you treat and manage your team responsibly and with the most amount of grace possible to close your doors? And then the second phase was cash. How do you stop hemorrhaging? How do you stop any sort of fixed costs? How do you reduce those as low as possible, just to kind of come into this really small hibernation period, as long as you could. And then the next phase was really dealing with PPPL and thinking about EIDL grants and national and localized financial stability and being able to get resources. Because in that point then we finally could make a decision about was your business health enough to open your doors and could you?

Elizabeth Tilton:
And then as soon as we identified that in the first two-and-a-half weeks, we then immediately turned our attention very early by the end of March to reopening. And we knew at the time that there was so many variables we did not know. We knew that it's going to be state by state. There was not going to be federal mandated. We didn't know where this was going to end. But we did know if you could kind of strip down a restaurant to their fundamentals and really look at infrastructure, we could start talking about topics that help restaurants think about what alternative revenue sources look like. What does compensation look like? So we could identify that. And that eventually translated into what we rolled out actually in mid-April with the James Beard Foundation, which was our reopening critical path.

Josh Kopel:
Well, and I'm sure a lot of people took you up on the free consultation offer. What's the word on the street? What are people concerned about? What are they asking about specifically?

Elizabeth Tilton:
Yeah, so we definitely have received a lot. And the beauty of it is, although we're based in New Orleans and New York as kind of like our hubs, we are nationwide as a team, and we're totally remote. So we're able to really hear things on the ground. And talking to operators from Phoenix and Detroit and San Francisco and the Bay Area and the East Coast, we were able to kind of find these commonalities of questions. And in that we started putting out more resources that address them.

Elizabeth Tilton:
So some of the ones we're about to put out are about unemployment, and at what point does an operator... How do you approach one of your team members to not disqualify them from unemployment, but to make sure you're building out your team with certain amount of... Just to make sure it's best for your business health. And then things like that to really thinking through how can we restructure business operations? So how can we think through things like can we do a co-op model? Can we do an ESOP? Can we do profit share? So we're really addressing all of those questions.

Elizabeth Tilton:
And in terms of what we're hearing, kind of like initially, again, the initially was kind of triaging and figuring out, just answering every kind of departmental question we could. And we had amazing people from all over the country offer their services like pro bono legal counsel from Jasmine Moy in New York and Drew Macklin with Kluk Farber and just things like that.

Elizabeth Tilton:
And what we're hearing most tangibly right now is... I think things we're hearing the most about are how do we find alternative revenue sources and completely change our business model? Because the ones you had before, honestly, don't exist. You should kind of disregard them. And even if you may have received the PPL and you have the inclination to rehire your entire team back, but the reality is that you have to kind of go back to your cash on hand and really what you can offer as a revenue source to figure out on your lowest moments, what is break even? And build from there. And it sounds dire and drastic, but I think that it's really kind of helping operators think through those processes right now.

Josh Kopel:
Well, and if I could be frank, that's something we all should have done before we opened our restaurants initially as well. So the work that we're doing now is also the work that so many of us, myself included, didn't do when we initially opened our restaurants. You know what I'm saying?

Elizabeth Tilton:
Yeah.

Josh Kopel:
We could frame this conversation as looking at the tragic elements, or we could see this for what it is, which is an opportunity to pause and reset an industry that was struggling and an industry that was foundationally fractured to the point where most of us that had reached the highest levels of success in this industry weren't making real money.

Elizabeth Tilton:
Absolutely. I mean, even pre-COVID, I mean, the reason why Oyster Sunday even began to be was that I was looking at... I mean, having so much exposure to a bunch of P&Ls and seeing, if you could actually look at a P&L, consolidate these resources, and not pay a premium on a consulting based outside, but actually bring someone in that would... Like the benefit of a restaurant group, and sit there and say, "Can we reorg these line items in your P&L and consolidate them that your margins are better?" And then use data and use data-driven decision making, looking at your menu mix.

Elizabeth Tilton:
And these kind of questions are still popping up now as you're pivoting towards the delivery. I was talking to an operator, and they were talking about like keeping lamb on the dish and doing it as delivery, and that's not viable.

Josh Kopel:
Right.

Elizabeth Tilton:
No consumer is expecting that lamb dish to arrive in their house until you open your doors again and you can serve them. And then there's kind of multiple questions, there's the integrity of the dish. And one thing we kind of go back to operators, it's like, if you're going back to thinking about what makes you you, and what is your point of view using food as your medium, excluding that dish, does it really make you not that person or make you not have that voice? And I think that operators have to kind of really figure out right now. And to your point, it's like not only do we need to think about business health and how do we find your core competency and how do you make that best for your team, your vendors, your guests? But on the flip side is in that conversation is what of those dishes and what all of that personality make you who you are?

Elizabeth Tilton:
Because what we need to do right now is we're pivoting from a service industry that's based in brick and mortar, and we're pivoting to a product industry very quickly, and that removes hospitality, if you think about it. But I think that the beauty of it is that there's going to be ways in which operators are able to figure out how to translate that service element into a product that in the intermediate, until we find a vaccine, because this is going to continue to be cyclical, and we have to recognize that.

Josh Kopel:
I agree.

Elizabeth Tilton:
Yeah. And I think this has only exposed issues of the industry. It has not created them in the same way. We are in person, we have slim margins, and we're contingent on labor, high labor and high food costs, and we have to figure out a way to like mitigate some of that. And the way forward is going to take a lot of creativity, and I think really kind of reevaluating where those business models were. Again, they don't matter, in my opinion. You need to burn them, take them out, use them for other purposes because you got to start over.

Josh Kopel:
Well, and there in lies the opportunity, right?

Elizabeth Tilton:
Yeah.

Josh Kopel:
So my ultimate concern is we weren't making a lot of money when we were making $3.1 million a year top line, not that much drops to the bottom line. And typically, what you see in a low margin business is very high volume, 10 million, 20 million, 30 million. That way they might make three, four, five, 6%, but it's a lot because the top line is a lot. Whereas in the restaurant industry, you see low margins and a low top line.

Elizabeth Tilton:
Absolutely.

Josh Kopel:
And so when you're looking at an industry average of about 6% for full service restaurants, and let's say my restaurant is doing $3.2 million a year, and it's netting out at 10%, 50% more than the industry average. That is $300,000 worth of revenue. For the effort that it took over the course of a year to generate $3.2 million, there's got to be a better model, right?

Elizabeth Tilton:
And there's also, I mean, on top of that... So even understanding you're netting that, at the end of the year, and you're looking at those margins of 10% of any sort of profit, and then you start dwindling from there. But the question for me is can we think about if labor's 30%, how do we restructure labor? Because at the end of the day, the hard thing we have to manage is that... There's two sides. One is at the end of the day, the consumer is going to indicate to us what they need. We can have a vision of what we want them to want, but they're going to dictate for us. And before, they have dictated that the previous restaurant model of a certain type of service, the certain type of kind of structure of that hospitality, it was very specific. And you worked for one chef, you took their P&L, you built your own, you kind of mutated these kinds of iterations off of that.

Elizabeth Tilton:
And I think there's certain operators like Camilla Marcus in New York who is doing West~Bourne, and thinking about back of house and front of house are fluid, thinking about the West Coast, can we include service included? Can we now dictate and inform the consumer that commissions on delivery are too high? Let's figure out other alternatives. Because now we have their attention that curbside pick-up is viable, and they don't need to use legacy apps anymore because they now have more visibility into those margins than ever because it's on the table, everything's on the table right now.

Elizabeth Tilton:
And if we don't use this moment to really kind of shift our point of view and shift our perspective of how these P&Ls are built and how these models are built, we're going to fall into similar routines and sort of repetitive behavior that won't lead any of us to progress in the future. And I think it's right now, we're at a crossroads. And I'm an optimist in my core, and I'm a huge believer that when you come through these really drastic pivots and these funnels that a lot of creativity happens at these kinds of junctures.

Elizabeth Tilton:
And I think about supply chain, and I think about technology, and I'm thinking about even corporate structures, how all these things kind of intersect that it's all happening right now. And I think being part of the conversation and advocating for it, and people like the Independent Restaurant Coalition has killed it for at least providing a voice in a national level that gives all these independents a centralized network that previously, in my opinion, didn't exist.

Josh Kopel:
It was always such a closed community. Everybody's doing well until the day they go out of business, and nobody's really airing out their issues. It's also so interesting to me that, and probably one of, if not the oldest, industry in mankind, I would say in the last 50 years, there's been almost no innovation. The most disruptive thing to happen to the industry in the last 50 years, is probably like the advent of Open Table, which was just digitizing a reservation book.

Elizabeth Tilton:
Right. And on the backend, it was making things cloud-based.

Josh Kopel:
Right.

Elizabeth Tilton:
[inaudible 00:16:56] have to be like hardwired, and when your POS went down, you didn't have to get the knuckle busters out to process credit cards. That's progress in our industry. But people are still calling in POs, calling in and leaving voicemails. And I think that in terms of just you think about the amount of, even if you just think about the amount of time that we spend trying to wrangle all the access points into everything that's coming in and everything that is coming out of restaurants, if we don't figure out a way to optimize that, to reduce redundancy, and then also using that as an opportunity to progress everyone forward, to make sure that you can have access to the local farmers, and you are purchasing things that are on board with your mission and your core values.

Elizabeth Tilton:
I mean, I think that we have a moment now that we can, as things are shaken up... And just reading about supply chain, it's bonkers when you're... And then there's a lot of feedback from that. People like Tyson's versus local producers and the CSAs that are now re-surging. And I think that we have to kind of keep a holistic mindset. And I always come, again, I come back from the perspective of the customer because until they feel safe, they're going to find ways to feed themselves wherever they can, and they're going to do it where they feel that they have transparency and safety. And right now that's grocery stores and liquor stores for many people and wine stores.

Elizabeth Tilton:
But I just think that we're going to have to keep real close tabs and hear from them and listen to them. And not from Yelp, and not from their Google reviews, it's going to be hearing from your customer base and really asking them on a marketing level of saying, "What do you want? How can we feed you right now?" And keep that because that's all we want to do. We want to open doors and we want to feed people.

Josh Kopel:
Those lines of communication between us and our customer base, I think is going to be huge moving forward. Because I think that if they're part of the conversation, they'll be pliable. They'll help us reopen in a way that makes sense for us because I turned to my partners and I said, "I don't want to do this unless we can net out 15 to 20%."

Elizabeth Tilton:
Right.

Josh Kopel:
I don't know how to do that, but I just don't want to do this anymore if it's going to be a game of pennies because it's too hard. It's too stressful. There's too much liability. There are too many variables. The flip side of that, every day is different. I feel fulfilled in serving other people. The people that I work with create such a joyous environment. We're building and we're creating in such a dynamic environment, but the juice has to be worth the squeeze.

Elizabeth Tilton:
And I do think backing out from understanding where your goal is, and then backing into your backing into your COGS and backing into that, I think is smart because at least you know... If you were to do 15 to 20% profit, then at least you can figure out and you can make decisions on your company. And maybe it's with profit share, so then you can figure out if we have this, then we can allocate X amount to our employees, we can give them a better quality of life. And I think it's not only just thinking about what you're serving, how you're serving it, because we're... I don't think just delivery is going to change anything right now. But I do think that we have an opportunity to think about does salary look like for employees? What are these bigger benefits that we can, as a network and as a group, really think through and kind of push forward? And also ask for help when we need it and pulling on resources.

Elizabeth Tilton:
And I think that the resources that have been built either at a state level or at a federal level that are coming to the forefront between mental health and even just going back to the benefits section of it, I think we're going to continue to see progress on that front, which I'm very excited about.

Elizabeth Tilton:
And I mean, to your point about serving and feeding people, I mean, I was med school bound in college. And the decision to go to go into culinary was in my fourth year at UVA. And I was like, you know what? I'm just going to try this out for a year. But the empathy... And I think we're feeding the desire to feed one another, and that sense of empathy and to really care is innate and is why we're in this business. And it's so difficult because in these moments like right now where we are a barrier to one another, all we want to do is feed each other and that kind of empathy to do so, and it's hard when we're watching... where there's barriers in that when that's just such an innate thing that we want to do.

Josh Kopel:
I want to go back to something you had said earlier because I think that there's a lot of truth to it. You had talked about that until there's a vaccine, this is going to be cyclical. So I would assume in the modeling that you're creating, it's a model that works both with dine-in and without dine-in because we're going to be allowed to do it, and then potentially not, and then we're allowed to do it again, and then we're not.

Elizabeth Tilton:
Absolutely.

Josh Kopel:
That's my daughter.

Elizabeth Tilton:
I know, so cute. Yes, 100%. We actually just recently yesterday published a calculator on our website in collaboration with one of our advisors, [Bontan and London 00:22:20]. And it's basically meant to say, "What is your model now, and what is your future model?" And then do variants of what percentage it goes to, so if you can do any in-house or no in-house, or you shut down. But I think the one... Yes, we're talking about and we're working with operators, we're talking about what percentage is going to be to delivery? Can you think about catering? Can you think about other digital ways of supporting your staff and your team and putting out content that can be a revenue source into your company?

Elizabeth Tilton:
And on the flip side too, we're thinking in 12 week scenarios. We're thinking in the immediate 12 weeks, 12 weeks from there because I don't think you can think further. And it's going to be cyclical until we have found a vaccine, and we're planning for 18 months out for a vaccine at this point. And also thinking about this is probably not the last time we'll have a pandemic just because we are so global you need to prepare as things are pivoting and who you're serving, it's all questioned right now.

Josh Kopel:
If you had a one piece of really actionable advice for the people listening, these independent restaurant owners, what would it be?

Elizabeth Tilton:
I would say there's kind of two sides. One is the immediate. And the two things that we continue to go back to our, one, is identify your cash on hand. You need to know what you have available to you. And then from there it's identifying, understanding this is going to be cyclical, and some operators have one time to get out the gate, right? At what point do you stay dormant and you don't open until it's the right time, and you figure what this first wave is going to do?

Elizabeth Tilton:
And I think some operators are making the decision to sit still. And I know there's inclination to want to come out the gate and be one of the first ones open, but also considering supply chain, considering labor, and what your team needs from you right now, it's maybe they are better off at home and receiving unemployment for the time being, and then reminder too, that again, you may have one chance to get out of the gate and is this the right time for you, if you can sit still and you've gotten [inaudible 00:24:25] and you've gotten your costs down? At what point does that hibernation come out of place?

Elizabeth Tilton:
And the second one is, I mean, safety. We don't even know state by state how it's going to be mandated, but we do know that there's going to be safety is number one for your team, your vendors, and your guests. And I think right now, it's really thinking through what are your standard operating procedures and clearly communicating that to your team, so they feel armed that then when they do come back, you're protecting them?

Elizabeth Tilton:
And that also includes your team's interaction with your guests and understanding your rights as an operator, that if someone is not conducting themselves in your space, to respect your standard operating procedures, what your rights are to not serve them, the same way in which we think about if someone's over-consumed on alcohol or not being respectful of the space. And then also of your vendors, and just making sure that every touch point into your castle and you're protecting that, and just making sure that you're clearly communicating that because your intention is to keep everyone safe that's interacting with it. That's your number one priority.

Josh Kopel:
And this is a big platform, and you have the opportunity to speak to the entire industry, is there anything you would like to say?

Elizabeth Tilton:
I think first off is that we're here to help. Oyster Sunday, we are continuing to do free consultations because I'm born and raised in New Orleans, and when Hurricane Katrina happened, the one thing that was very palpable really quickly is that if all of us sacrificed a little bit, none of us have to sacrifice it all. And we are here, and no question is too big or too small, we will find an answer to the best of our ability. So contact us.

Elizabeth Tilton:
In terms of, again, I'm a bleeding optimist, I'm a rational one, but I think that there will be operators who shutter, but I think that we as an entire industry, we're going to come out on the other end of this. And I think this is the opportunity for us to grab the bull by the horns and wrangle it down and figure out as a community how to move forward because I think it can't be done isolated anymore. It's going to take a real collaborative voice to figure out how to get forward.

Josh Kopel:
That's Elizabeth Tilton, founder of Oyster Sunday. To get access to the tools discussed on the show, go to oystersunday.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.