Salsa Fresca in Bedford Hills, NY with Seth Hirschel

Guest: Seth Hirschel
Topics: Salsa Fresca, QSR brands

Transcript:

Chris Ressa 0:08
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC match
Happy New Year, everyone. It’s December 30 2019, two days before January 120 20. And we will embark on the New Year in the office today working on some of our strategic plans, buttoning up some things and just brainstorming some ideas working with the team today and excited to get the new year rolling. On today’s podcast I have for you Seth Herschel. Seth is the Chief Development Officer for salsa fresca salsa. fresca is a tenant of ours in beach shopping center in Peekskill, New York. And I think you’re going to learn a lot of interesting tidbits on this episode about how a QSR brand got started, how it ended up turning into a dominant regional player and their plans for the future of how to grow this nationally. So we’re going to talk about the story of their location in Bedford Hills, New York. But I think you’re gonna get an overall high level perspective on a growing QSR chain that is about to push the pedal to the metal to go national. So looking forward to it, everyone have a great New Year and enjoy the episode. Thanks. Set said you’re the founder, correct.

Seth Hirschel 1:51
I’m one of the founders, I’m not the CEO, I’m really the development officer. Okay, the

Ressa 1:56
development officer, and one of the founders. And so how many founders are there?

Hirschel 2:02
There’s three. So it’s myself, Mark Miles, who I believe you’ve met and John Tucker. And Mark is effectively see, oh, he’s really running the day to day operations. You know, the district managers report to him, the general manager reports to district managers and down the line. And John Tucker is really the chief marketing officer, he really maintains the brand, the vision, the standards, the look, the feel, website, you know, social media, etc. And I’m really chief development. And as a group, we act as a board. So we don’t have a named CEO. But we work together to make decisions that a CEO would make. And then we have a fourth partner who’s really an equity arm, who has helped extend debt and equity to the business, really, from the beginning from our second store. The first store, the three of us, as founders bootstrapped and built together, we learned a lot. And then starting with the second store, we brought on this this equity partner who has been with us since and has helped us get to 10. Stores

Ressa 3:01
and or all the 10 stores today. Corporate. Yes. And so you guys have 10 stores through you, what’s your background that you decided to get in the QSR? Business?

Hirschel 3:11
My background is really in management consulting. So you know, before salsa, fresca was, I had a software company. Before that I worked in a management consulting company in the city called sapient. And it was funny, I was just thinking, as we’re rolling into 2020, and another decade, I was reflecting on a lot of my initial work at a school doing y2k work, you know, and that’s when I was in management consulting, working at sapient. And we were trying to solve all the world’s problems as the millennium was rolling over. And everybody thought their systems were to come screeching to a halt. So we did a lot of testing around that. All that really translates to is a background in understanding systems and analysis. And I did that for almost 10 years between management consulting and having my own software company. And I started to invest in operating businesses in the form of health clubs, initially. And then a friend presented me with this idea of salsa fresca is John Tucker, he had just come back from San Diego. He had spent six years living out there and enjoying the regional cuisine. He’s a Westchester guy originally, and came back and said, you know, something big is missing here and looks like a burrito or a taco. And everyone here is still eating deli sandwiches and Chinese food and pizza, and we need another food group. And so he saw that I had the software company and some health clubs, and said, Why don’t we try? Why don’t we try this? I have an idea. And he had the name salsa fresca, he had the initial menu. And he had some pictures of some storefronts and some things he liked from San Diego. And at the time, Chipotle really wasn’t here. You know, the Nationals really hadn’t made it to the northeast, you know, they might have had a store or to an outpost in Manhattan, and that’s about it. You know, I really had no business being in the QSR In a world, and neither did John, other than he had a passion for it, you know, he had worked in a restaurant or two as a kid. But we didn’t have the specific background. We understood what it took to build a business. I certainly did. I had done it a few times. And we sat down and we said, let’s give it a shot. Let’s build a store. Let’s bring in the expertise we need. So we interviewed and hired someone from the Culinary Institute of America up in Hyde Park. And he had spent years in Mexico and had the the San Diego kind of Mexicali vision we were looking for, and helped us put John’s ideas to recipes and paper. And we opened up our first store in Dutchess County, in Miller to New York in 2009, about 10 years ago now. So we learned a lot from that store. And we knew that we were opening it in a pretty small town. And we all happen to live near there at the time. So we were able to kind of have eyes and ears on the store and make changes that were unnecessary as we watched customers experience the product. And we learned a lot. And about two years later, we felt like we were ready to open a more mainstream location. And that’s when we started focusing on Westchester County. And our first store in Westchester was in Bedford Hills, New York, and that continues to be one of our top performing stores. That’s where I live. So that store is in my main shopping district. And I actually grew up around here. So I feel like I really knew the lay of the land. And where we should be or shouldn’t be, and helped define that initial site. And it was important to us because that store had to outperform our original store, it had to show that the concept had real legs, and it was kind of make it or break it for us. You know, the original store did fine. But it was in a small town in Dutchess County. So it was really just carrying itself. And we called it a proof of concept and basically said, you know, if salsa fresca can make it in this small town with a population of 3000 people, it can make it anywhere. And we’ll learn our lessons and, and sharpen our teeth on this store. And then when we’re ready, we’ll go a little more big time. And big time for us, you know, at the time was something like Westchester County, even Northern Westchester County, so that Bedford Hills store was important to us. And basically, I thought that and I still think now that food attracts food, and being near other popular food businesses is a good place to be. So I identified the shopping plaza in our town that had the go to pizza parlor and the go to bagel shop. And that’s ultimately where we chose to locate salsa fresca non anchored Plaza, but across the street from the best price supermarket in the area, which really acted as our virtual anchor. That was the first I’d say real store the first store beyond a proof of concept. And that acts as our oldest store. Now, when the lease renewal came up for our Dutchess County, original proof of concept store, we did not renew, we effectively moved that store to another location, it had lived out its initial five year cycle. And that was good for us. You know, we didn’t we didn’t really need, we had proven the concept at that point and didn’t need that store.

Ressa 8:04
So you went to Bedford Hills, you said food attracts food. And over the last decade, the restaurant industry has been on fire in particular QSR there’s a huge competitive landscape. Are we getting to a point where there’s too much?

Hirschel 8:20
I think, certainly some segments are oversaturated. And you’re starting to see some consolidation, or kind of a, you know, a race, race to the bottom Race to the Top, whatever you want to call it. I think that sometimes it depends on the food type. It depends how much demand there is for the food type. I see a lot of niche e food these days, you know, starting to see like Mediterranean QSR and I happen to love Mediterranean food, but I’m not sure how often people eat Mediterranean food. You know, I’m not sure if it has the popularity to have longevity. And it’s exciting. It’s different people think oh, could this be the next big thing? Is this the next Chipotle? Is this the next Jersey mics and my thinking on that is it’s probably not it’s too much of a niche. It’s interesting might work in urban centers, metro areas, but it’s not going to work everywhere. But pizza works everywhere. Mexican food works everywhere, sandwiches work everywhere. And then it’s just a question of saturation. So as we see the retail landscape shifting, and as we see less retail and more food and more service. That’s certainly a thought and a concern that we have. It seems like every time retailer closes, more food services coming in. But as a general rule, we still believe food attracts food. And if you have more food in one Plaza or more food in one outbuilding more customers come to that building. There’s more stomachs to feed, and it works. rising tide lifts all boats. Exactly. So we’re actually developing a small parcel for one of our upcoming stores in 2020 and we need a co tenant and And we’re actually targeting a food business as a co tenant, which seems somewhat counterintuitive, because you say, Oh, gee, why you bring in a competitor right next door. But we’re obviously not bringing a Mexican food business next door, we’re bringing a sandwich shop. And to us, it makes sense. Because now, when a few kids get in the car, leaving high school, you know, they say, where should we go? Well, they’re going to come to our plaza, because half of them can get Mexican food, and half of them can get sandwiches, and they can all go to one destination. You know, it’s kind of what the mall used to be, oh, let’s all go to the mall, because we can all get what we want there. So we’d like being near food businesses, and it’s worked for us. So we continue to keep that, you know, as one of our imperatives, you know, we need parking. We need traffic generators, we need visibility. We love outdoor seating, if we can get it. And guess what we’d like being in your other good food. You know, we still like being near Panera. If I can be in a plaza with Panera I’m happy. It’s my customer base. Somehow, whatever research they’ve done, wherever they found locations, I look at my best performing stores. And I can see a Panera from them.

Ressa 11:06
So when did you open the Bedford Hills location?

Hirschel 11:10
That was 2012.

Ressa 11:13
So that was your, your second location, you had proof of concept? And how did you decide on Bedford Hills or is it just you wanted to go somewhere that you can touch and feel that was close to your home, had to sign up for hills?

Hirschel 11:26
Yes, that was part of it wanted to be able to have insight and operational control over to the store, but also really wanted to know that we understood the market was a big commitment and investment for us at the time. And we didn’t want to mess it up. So having it in my backyard, me being the real estate development guy. You know, I said to my partners, look, there’s a gap in this market, this happens to be a good piece of real estate that opened up despite what it looks like. And it’s going to work. And the guys looked at me and everyone kind of felt like they were rolling the dice. And I said I have confidence in it, because I know it, I’m comfortable with it. And we still have those discussions depending on different markets we look at but as we’re growing out of our home base, those discussions, getting a little, you know, fuzzier and fuzzier, which is why we’re trying to take the next step with our site Analytics as well. So this happened to be my backyard, I knew where we should be. And I knew the CO tenants, I wanted to be near as well. And I knew the visibility I needed on the road that we were locating on, you know, it’s a relatively busy road where it’s easy to get lost if you’re in a bigger Plaza. So we chose a smaller plaza where we could be closer to the road, we chose a business that happened to have some existing non conforming signage that we’d be able to benefit from, you know, so our sign is bigger than everyone else’s sign and bigger than you can get today. And we knew as a as a new business in this market, we would need a lot of visibility, there was also some benefit to me being in the community in the market, I’d be able to promote and advertise the benefit of this new local business more so than if it wasn’t in my town. So there were there were several benefits, they all kind of stacked up. And we looked at each other and said, Okay, well, let’s make Bedford Hills, our first location beyond the proof of concept.

Ressa 13:14
Wow. So there’s a lot of takeaways there from you. So one, you know, clearly the local expertise being you live there is was paramount in the decision. Right. And, and knowing the community and having the support of the community because you’re a local entrepreneur, that always bodes well for businesses to really deciding that you wanted to be big fish small pond instead of caught in a large center, and benefiting off the cold traffic to that you wanted to be in a small center where you were visible high traffic. And then you said something that was you know, fascinating, which was, you actually sought out a location that had a grandfathered, non conforming sign. And so we have shopping centers all the time that if we were to build a new sign, it would be much smaller as municipal codes have changed. But the sign you have is grandfathered in. And so that actually played a part in the process of choosing a location.

Hirschel 14:08
Yes. And it still does, you know, we talked about visibility, and visibility is key. So we talked about the signage, we make signage, part of our lease negotiation, we rule out locations, because they don’t have good visibility, either because they’re buried in a center, or they’re buried in a corner of a center or because their signage is just substandard to what else is in the center, or because there’s no more pylon signage available at that center. So we’re not going to get it if we you know, we’re going to get on a list and we say, well, that’s not good enough for us guess what we need? We need the pylon sign even though we’re only taking 2000 or 2500 feet. So signage is important that actually goes back to John Tucker, my partner, he had own design company prior to founding salsa fresca and actually met him through owning my health club. ops, he was my sign guy, he was the guy who would come out and replace the signs, put the pylon signs in the ground, do the in store, signage, etc. And he’s really has a artistic and marketing background. And he said, it’s funny, you know, he said, I put signs up all day. And he said, When I’m put the sign up for a new business, I can tell you on that day, whether the business will succeed or fail. And obviously, there’s a lot that goes into that, whether it’s where the business chose to locate what the sign looks like, what the logo looks like, what colors they’re using his brief interaction with the business owner or manager, but he felt like he had a knack for that. And so he’s always been a integral part of that process defining whether our visibility is sufficient. And what will salsa fresca look like to salsa fresca fit in this location. You know, we always do a series of comps to help visualize what stores will look like in specific locations. And he spent a lot of energy developing those comps and circulating them to our group. And that that becomes part of our decision making process whether we want to proceed with a potential location.

Ressa 16:09
And so how big was this location?

Hirschel 16:10
1600 feet.

Ressa 16:12
And so I guess things have changed a little bit, right? Because we, we did a deal, and you’re in our beach shopping center in Peekskill. And that’s a little bigger. That was your seventh location. When you decided, you know, what were some of the learnings you took from the Dutchess County location that you brought to Bedford Hills, what were some big takeaways that led to choosing the location that you chose in Bedford Hills,

Hirschel 16:38
we had good visibility, that just County and that helped us even though we were in a tiny town, we were on a main thoroughfare at a stoplight, and we got a lot of traffic. You know, a lot of people who weren’t even where that town wasn’t even their destination who were driving through the town ended up becoming customers of ours. So we learned that location was key, and visibility was key. It was a new development that we moved into. It was at basically the corner of Maine and Maine in this town on the main state thoroughfare that went through the town that acted as a north south segue to other areas. So that’s something we definitely learned with the first location. And John had spent extra time and energy on signage, we replaced additional storefront glass to get real visibility right into the store, we convinced the landlord to build a beautiful stone wall right in front of the building to really create this kind of gateway effect, you know, to the property that made the whole property feel attractive, that all contributed to our success in that original proof of concept location, we learned a lot of things operationally inside the building in terms of how we serve the food menu, adjustments seating, how many seats, we needed, the flow of the interior space, and that helped us define what size box we were looking for. So the Bedford Hills store is actually smaller than we would have liked. But the location was so good, that we were willing to make some compromises in terms of the store footprint. And what that resulted in is having less seats than we would ultimately like to have in our stores. So the Bedford location has 20 seats, and our current standard is 40 seats, and Bedford gets jammed up, you know, there’s times where there’s not enough seats in the lobby. And people get their food to go, you know, I think people are flexible, especially in the QSR world, it’s not like we have to seat them for them to buy our food. But it does, it does have an impact. And that’s probably one shortcoming of the Bedford stores that’s too small. And what we learned from Bedford is that we need more seats, guess what guys, we need 40 seats come hell or high water. That’s, that’s a rule now.

Ressa 18:41
So what percentage in general avoider stores is is come in, sit down, eat it versus take out.

Hirschel 18:48
It varies based on the market. But generally speaking, we call it 5050. Our breakdown between lunch service and dinner service is generally 5050. And our breakdown between dine in and take out is generally 5050. And the next, the next element of that is how much of our business is delivery and out the back door, you know, through various services like Uber DoorDash, you name it, there’s a bunch of services out there. They’re all different in different markets as well, or customers using our own app or online menu services. So we see what the what our competitors and the the bigger players are reporting and targeting. And it sounds like overall, everyone’s working towards this 10% threshold that 10% of the business will be online in one way or another. And so we’re we’re seeing five or 6% At this point, but it’s funny, it used to be basically 0% You know, it was 59 in 50 dineout. And now we’re seeing 50 dine in maybe 45 dine out and five or 6% order out using third party services or online services.

Ressa 19:57
That’s fascinating. 10 years Go probably wouldn’t have thought that. So that’s really interesting. And this was, you know, you were in a small town in Dutchess County. Now you moved to Bedford Hills, obviously dominant location. Really good Smartgate in Westchester County. Was there anything about this lease negotiation that were some lessons learned for you? Because really your second, retail lease negotiation, you know, you guys have done now 10, you’re you guys were pros when we dealt with you in Peekskill on your seventh, but that being like, your second, but in a major market, one of your first was there anything unique about the lease negotiation that happened when you you know, you said this is the one we want to be?

Hirschel 20:39
I think we did a pretty good job negotiating, we probably now we’d be asking for more TI and more free rent, you know, below, we’d be looking for more handouts than we were then. And I don’t think we knew that we could ask those questions at the time. And we also didn’t really have the leverage to ask the questions, you know, now that we’re more of a regional player or multi unit operator, we can ask for more than we could then. So part of that was because we didn’t know and part of it was because we probably weren’t entitled to much of that, you know, we were really seen as a startup by that landlord. And working late that Leonard is local to the market. And they were excited about having a new food product in town. You know, sometimes landlords play a part in defining the landscape and a fabric of the community. And depending on how big or small the landlord is, they may or may not have an emotional stake in what they want to see in their properties. And this particular landlord really liked the idea of the product, and said, Hey, I’m gonna work with you, you know, you’re a local guy. I like this idea. Let’s get it done.

Ressa 21:35
Awesome. So it’s 1600 square feet, what is your prototypical size today? For 40 seats to get what do you need to be to get 40 seats

Hirschel 21:44
1600 to 2000 is really are what we’re looking for. And sometimes we’ll go a little bit above 2000.

Ressa 21:52
And this was your first location, it’s your hometown. How does it do compared to the others?

Hirschel 21:57
It does? Well, it’s in our, our top quadrant stores, depending on the year, it’s right there in the top one, two or three units, you know, the store closing out 2019 Looks like it’s going to do about 1.3 out of you know, 1600 feet. So it’s like $800 a foot, it’s pretty good, pretty good math. And the store turns good margins as a result, you know, our cost of occupancy is something like 6%, you know, which is a number we like, is that your target where you tried to be like 6%, technically eight will go up to eight is $800 a foot is that is that the average today? No, I’d say six to 800 is a good number for us. You know, 800 800 is is towards the higher end, you know, Bedford is a is one of our top performing stores. And it’s a smaller store. So that kind of helps juice that, you know, sales per metric.

Ressa 22:49
Yeah, totally. What other metrics? Are you guys in the new world today? You mentioned you’re trying to get to 10, you’re at five to 6%, you know, online, and you’re trying to get to 10%? What other metrics or are you focused on today,

Hirschel 23:05
we’re pushing catering. We put a food truck on the road last year, and that’s part of our catering initiative. You know, it helps us market the catering, it also helps us pilot new markets. If we think we should be in a market, we might send the food truck to that market as an advance, basically assessment, trying to understand how excited people get about seeing a food truck in the market. So we push catering, and that’s another type of sales that can contribute beyond the store level, you know, that’s not taking from our existing sales, it’s adding, it’s adding sales to the store. So we hired a catering manager, who was a GM and another QSR has really got a head on his shoulders, we we basically put him in charge of growing catering across the network, and also developing and growing a food truck concept. So now we have a food truck on. You know, on the road, we’re talking about adding a second food truck, or at least a food trailer this coming year. And we’ve been growing our catering at a rate of about 40% per year, you know of the catering sales with the ultimate goal of getting catering to represent 10% of our overall sales, which is a it’s a lofty goal. I’m not sure we’ll get to 10. But we’re over five now. So it’s a good number.

Ressa 24:16
But you guys do a good job. We just we catered lunch with you guys here when we had everyone in for our Christmas party. So you guys did a good job. It was great.

Hirschel 24:24
I’m happy to hear that and thank you for supporting us. And so

Ressa 24:28
interesting perspective and story how you chose to go to Bedford Hills over the last 10 years you got up to 10 locations. And now you’re I guess you’re making a pivot you want to start to become franchise?

Hirschel 24:43
Yes, we want to continue to grow corporate stores. Our next goal is to get from 10 stores to 20 stores that we own and at the same time we want to start selling franchise units. So it took us about a year and a half and for close to a quarter million dollars of investment to be ready to franchise, and that’s from defining and locking up the intellectual property, which is part of the franchise process to defining franchise agreements, franchise rules, modeling the franchising development process and what that would look like defining how we would grow in different stages, developing operational manuals and protocols that we could actually hand to franchisees, you know, hand them 1000 Page binder and say, This is how you open and operate a salsa fresca restaurant, and defining all the supporting roles that we play in that process. And then papering all that over submitting to the Attorney General’s of different states, there’s a lot, it’s a big process. And so we invested in that. And we went through all that. And we hired an in house franchise sales, basically manager, and that ended up not being the best fit for us. So there’s a lot of different ways to franchise and there’s different models on how to franchise and some of those models contemplate that other people are selling your franchise and for you, some models contemplate that you’re selling it in house, sometimes there’s a hybrid. So in this case, we got all our ducks in a row, we hired someone to help us that ended up not being the best approach for us. We’ve done some internal prospecting, you know, we have signs in our stores, and I get phone calls. And I talked to people and we know who we’re looking for, we’re ultimately looking for multi unit operators who already are in the QSR business, we’re not looking for mom and pops, you know, we’re not, we’re not tooled to help somebody in Western New York, open up one store in Syracuse, we’re looking for somebody who already has a network of 20 Wendy’s 30 Pizza Huts, where they have infrastructure, boots on the ground experience, resources capacity, and they’re really just looking to diversify their portfolio of food businesses, because to a lot of those guys, these are just widgets, you know, they have an infrastructure, and they’re looking for diversification. That’s it, that’s a big theme, with multi unit operators today. And they’re looking for new, they’re looking for different, and they’re basically looking to leverage their platform and diversify at the same time. So that’s the franchisee that we’re looking for. And so we’ve actually just contracted with a sales agent who has experience with those particular multi unit operators, they have a basket of goods, they’ve been selling some brands into an established network of multi unit operators for years, they’ve been in and out of that network and those brands themselves, and they believe in our brand. And they think that they can basically help us establish a footprint within some of these other multi unit operators. So starting January 1, we’ll have this new sales agent representing us to help deploy a salsa fresca franchise network.

Ressa 27:58
Interesting. Is that to scale faster, is that why you do that? And instead of only doing corporate stores?

Hirschel 28:06
Yeah, listen, you know that what we say internally, is, it’s the best way to multiply salsa fresca by America. You know, we can’t be everywhere. We can’t be everything to everyone. We have local knowledge, which is great, we get our market. But other people get their markets better than we get their markets. We get our food, we have established a brand, a process, and a product. And we know our home market. Those are the things we’re good at. We don’t know the South Florida market, like someone who’s operating 50 units in South Florida, but we know our food and they can taste our food and say, Gee, I really liked this. I’d love to bring it to South Florida and we say okay, well, let’s, let’s do it together, let’s collaborate. And we think that’s the best way to do it. It might take us 50 years to get to South Florida otherwise growing organically. You know, I mean, like In and Out Burger hasn’t made it to the East Coast yet. Right? They’re entering their third generation of operations.

Ressa 29:03
Make sense? Pivoting a bit, though. If you’re a multi unit operator, this could be a plug or a tough question. You know, there’s tons of competitors in your space. But there’s, I guess there’s three large national ones that are everywhere. There’s more than three but there’s, you know, the ones people think of a lot or Chipotle Mo’s and KHUDOBIN Mo’s and Qdoba have franchise as well, why salsa fresco? We’re going from one of those two.

Hirschel 29:31
Right? Good question. And it’s one we’re prepared to answer. So every business, every product has differences, right? And if the product stands, there’s always room for more brands, more competition in a space. And I think a good example of that is hamburgers, right? We’ve had McDonald’s and Burger King, and a few others for years and years and years and years. And all of a sudden, you know, there’s room for five guys. There’s room for Shake Shack. There’s always room for a better product. With salsa fresca, our product is fresh our product is made in our stores every day, our sauces are made in our stores, our braised beef is being cooked in our stores, from chopping the meat to taking the braised pork and beef off the bones by hand. And we say it really starts and ends with the food, our food product is excellent. Our freshness is paramount to our brand. And we’ve developed our process in a way that dictates that all food is made fresh in store at the local level, there is no commissary model, there is no part cooking, there’s no there’s no pre cooking elsewhere. And that comes through in the food. And I dine at other fast casual Mexican restaurants. I like some more than others. But I’m confident that our food rises above. And I think that that’s what wins at the end of the day. You know, our store design is nice. We have a commitment to the environment, which I think is it’s it’s certainly important to us. And I think it’s important to our consumers as well, you know, and we round out the brand with some other nice look and feel and nice things that we do. But it really is all about the food. And if our food is good and our food wins, then we don’t have to worry about the competitors, whether they’re major or minor competitors.

Ressa 31:19
Well, one of the things that kind of came to my mind is you were talking about that, and you mentioned the commissary. So I imagine you guys aren’t going to ghost kitchens anytime soon, given the the fresh that you’re talking about in your food.

Hirschel 31:34
You know, it’s interesting, we talk about it, just conceptually. But we like having customers, we like having presents, it contributes to our brand. We don’t want to hide. We don’t want to be in a warehouse setting pumping food out some back door that goes into a car. You know, we want customers coming in the door, seeing our food being cooked, enjoying the experience and participating in that. So we certainly participate in the online food services. And we’re subscribed to the various apps to help benefit our customers who aren’t able to cover or prefer to have delivery. But that’s not a direction that we plan on taking in terms of our primary focus.

Ressa 32:17
Got it? Well, listen, Seth, it’s been great. The last part of this podcast is called retail wisdom. So three questions, and they’re fun questions. So one, the layup. Best piece of commercial real estate advice you can give anyone who’s listening.

Hirschel 32:38
All right. There’s a lot that goes into defining commercial real estate, but I think it all it’s really the old adage, location, location, location, it’s that simple. It’s worth spending the time spending the money to be in the right location. Otherwise you’re wasting your time.

Ressa 32:54
Yeah, you definitely articulated that with Bedford Hills and why you chose that location so clearly has led to your success and choosing the right locations for salsa fresca. Next question. Extinct retailer, you would love to see come back from the dead.

Hirschel 33:12
For my kids, I would love to see Chucky Cheese come back because it’s something I remember from my childhood as a fun place to go. I found myself trying to describe it to my kids at times, and they just don’t exist anymore.

Ressa 33:24
Have you been with Chucky Cheese recently? Have you seen him? No, I

Hirschel 33:27
can’t. I can’t find one.

Ressa 33:29
They are still around. They’re tentative ours. We love them.

Hirschel 33:32
Send me the location.

Ressa 33:34
I will send you the location you gotta go. But you know, I don’t know if they’ve opened a ton of new stores. But they are they’re still rounding in a lot of our centers. They’re doing well but I will send you our location. There’s one in orange Connecticut that we have that is not too far from you guys. And we’ll have to get you and your family there.

Hirschel 33:50
Okay, maybe that’s a funny one to mention, but it is what comes to mind.

Ressa 33:54
Understood. Last question. So I’m going to give a product and you’re going to tell me what the you think the retail price of that product is? Oh, cool. So one of the top gifts for 2019 Christmas season was a picture of the Washington DC Skyline found on art of words.com What was the retail price

Hirschel 34:21
2995 $50 But

Ressa 34:24
thank you for playing

Hirschel 34:27
I always joke with my wife whether she knows like what the cost of a gallon of milk is or a dozen eggs because it doesn’t you know in this modern world where everybody has shops with a credit card it doesn’t seem like anybody knows what anything costs.

Ressa 34:39
Yeah, I see less and less people you know, there was there was a time in history and potentially a lot of people still do where people would go to certain gas stations based on the based on you know what, it was a gallon and I see less of that today. I’m sure it still goes around but definitely see less of that today. So

Hirschel 34:55
yeah, and actually that that plays into you know, we see that at the store level Every time we talk about raising prices, we all freak out, we think that all our customers are going to leave and never come back. But we say, gee, you know, inflation cost, the labor is rising, minimum wages are rising in every state every year, you know, we need to keep up, our rents keep going up. And we agonize over pricing and a price increase. And invariably, we decide that, gee, we just have to do it. And we’ll raise our prices by 40 cents, 50 cents, waiting for, you know, the wheels to come off the bus. And we never hear a word about it. We raise prices, we change all our menus out overnight. And we’re waiting for all the negative feedback. And nobody says a word. It’s amazing. So now, you know, we’ve done that enough times where we basically have confidence that we’re priced, right, the consumer expects price increases, or they don’t notice it. And it’s as simple.

Ressa 35:54
The only thing I’ll tell you on that is, and then I see, as you start to really expand and have consistency. There are definitely markets that are more price sensitive than others. And you’re in Westchester County, and Fairfield County, which are some of the wealthier markets in the country. And people are less price sensitive. I think as you get into, you start to really explore this and your expansion happens, you might see some more price sensitivity. So just keep that in mind. Yeah, I

Hirschel 36:21
think you’re right, we actually had a franchisee looking to develop a small pot of stores in Tennessee. And he said, Well, what’s your regional pricing in my area? And we looked at each other like, what? What regional pricing? And he said, Well, he said our labor is $7.50 an hour, and the rent is nothing, you know, the rent is two grand a month. So he goes things cost less down here. And you guys have to consider that you’d be open to changing the pricing. And we said Of course we’ll be open to it. But it was an interesting question. And we hadn’t really considered that. And maybe that that’s because we have this, you know, our markets are not as price sensitive. Like you said,

Ressa 36:57
Well listen, Seth, it’s been great. Thanks for playing my game with me. And hopefully you guys blow it off the cover off the ball this year. And you open a bunch of stores and hopefully slept continued success in Peekskill, New York, Where were your landlord, and listen, have a great New Year, man.

Hirschel 37:13
Thank you, Chris. You too. It’s really been a pleasure speaking and I look forward to staying in touch. Sounds good. Thanks. All right, have a good new year.

Ressa 37:21
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