How Benjamin Berg Built Houston’s $17M Steakhouse and a 14-Restaurant Empire

Alan Li (00:01)
That and thanks so much for joining the opening soon podcast.

Benjamin Berg (00:04)
Thank you. Happy to be here.

Alan Li (00:06)
Awesome. Well, I'm really excited to dive into all your restaurants ⁓ and what you've done in the hospitality business. Before we do that, could you give the audience a quick background on yourself?

Benjamin Berg (00:18)
I'm Benjamin Berg, I'm founder and CEO of Berg House Motility Group. We operate, we started our first restaurant 10 years ago, but we operate 14, 15 different concepts that we wholly own. Three managed, two licensed and one JV. So in 10 years though, we've opened upwards of 24 restaurants, entrepreneurship you do. We have closed some of them. Not everything works out, but.

We've been very busy the past 10 years.

Alan Li (00:49)
Okay, ⁓ what were you doing before you started your first restaurant?

Benjamin Berg (00:54)
So I've been in the hospitality business my whole life. Well, I guess legally working age, right? ⁓ But in college, I was working in bars and got out of college and my dad was questioning me on what I wanted to do. And I was like, I don't know, I'll take the LSAT. I mean, I was an art history major and a Latin minor. So I don't know where you go with that, right? But he's like, you always talked about how much you enjoyed working in the restaurant and I'd moved up.

Alan Li (01:17)
Yeah.

Benjamin Berg (01:24)
and the bars in college and he said, I have a friend in hospitality, why don't you explore that? And I went up to Lake Placid, New York. At the time it was number one small hotel in the US called the Lake Placid Lodge in the point and started off as a bellman and kind of worked every position and really just kept on.

Alan Li (01:42)
And what age was

this? How old were you?

Benjamin Berg (01:45)
I was 22, graduated college, 2000, and ⁓ moved around, fell in love with the dining room aspect of the business. And honestly, it's one of the most important things, I think. The guy who really pushed me to learn more and inspire me, he's still my mentor today.

Alan Li (01:47)
Okay, this was right post college, okay.

Benjamin Berg (02:12)
Every step of the way, I've always been asking him, but I got really lucky. He took me under his arms and kind of showed me the way. But anything you want to better yourself. I knew, you know, I knew I wanted to do my own thing since like the beginning of working in restaurants and working for other people. And I took a leap in 2004 or five, and I had applied and got into the hospitality school for the graduate program at Cornell.

and went back to school. And I would say, you know, they don't teach you, again, art history and major, Latin minor. I didn't have like the best Excel skills and spread sheeting and probably knowing a balance sheet. But going back to Cornell was, ⁓

Just when you really dive into it, like I was like, this is my business. I want to know everything. I'm going to do everything that makes me uncomfortable, like real estate finance, finance classes, business school classes, statistics, revenue management, everything that was in hospitality. Because to be honest, knew hospitality comes from within you, You either love making people happy or you don't. But the numbers have to pencil. And if you don't know how to do that stuff.

Alan Li (03:13)
Yeah.

Benjamin Berg (03:32)
It gets very hard. I think ⁓ I give Cornell a lot of credit for, you know, giving me those skills that even when I, after Cornell went back to work, worked in Vegas at one of the most successful restaurants, got some experience in Mexico City, which learning Spanish in my business has been very, very helpful. ⁓ And then back in New York and running some of the top ⁓ steak houses. ⁓

Alan Li (03:52)
Yeah.

Benjamin Berg (04:00)
But when you can excel, when you understand the numbers and also analyzing and seeing where you've got to look when there's problems, how do you get in the black? Yeah.

Alan Li (04:10)
Was that what Cornell was mostly helpful for in terms of running the P &L and understanding the numbers better, or was it something else?

Benjamin Berg (04:14)
I would.

No, I think, or there's two things, right? One, the networking and the, you know, what you're exposed to. And like, I was just up there three, four weeks ago teaching and speaking at, to some classes. And you know, when you're in the everyday, you don't have the luxury sometimes of having these great theories of, if I do this and this and Cornell like fosters that in the hospitality world where like, we're very.

Restaurant tours I'd say especially were very inside our own four walls we call it and we don't get out much. We're really concerned about our own businesses. But Cornell gives you that, for me, that ability to analyze on a bigger scale and see things I think that I wouldn't see before. I mean, just learning how to negotiate a lease, Like little stuff. But when I went there, it was the height of ⁓ Expedia.

So everything was revenue management, the right person at the right price at the right time. But that's a great, even in my business today, we're probably the most archaic. Hotels, airlines, they use it very well. Except for like happy hour and the five o'clock special. We still can't figure out how to like dynamic ⁓ pricing, right? Or if people even go for it. But I love the idea.

Alan Li (05:41)
Okay. Okay. No,

I'm excited to dive into those different aspects. ⁓ When was the time or when did you feel ready it was time to open your business in 2015? You know, after training in New York and Vegas, like when was it for you?

Benjamin Berg (06:00)
You know, I think it's a hard one. I was trying to look for spaces and, you know, I'd been in Houston for two and a half years. I think, you know, originally I was like, oh, I'm a New Yorker. I've been working all over the country in Vegas and some top places, but really learning the culture and the people and what drives people in Houston was probably the best experience I had. But then it was kind of, you know, hitting that

moment and I'll be honest, I took a store that was in the red, put it in the black, it kind of the shining light for the company and nobody ever gave me a raise. I didn't get a bonus. mean, it sucks to do stuff like that for other people. And I found a built, it was actually a company in New York. I'll tell you, listen, they've taught me the best of everything. I worked for the Smith and Walensky Group for a long

Alan Li (06:42)
There you go.

Yeah. And you did this for a restaurant in Houston.

I see.

Benjamin Berg (06:59)
And ⁓ I actually think I worked for all three different companies because they've been sold and bought. But ⁓ great experience. mean, Alan Stillman is probably one of the best marketers, most brilliant restaurant guys there is. And his son is doing an awesome job too. But at that time, I was working for the company that got bought by the private equity firm and working for private equities. Probably taught me a lesson for one day in the future.

Alan Li (07:27)
Yeah. Having,

having worked in private equity myself, ⁓ I don't envy the position of being an operating company or portfolio company for a private equity firm. Yeah. Yeah. ⁓ okay. So I mean, you, you turned around, ⁓ a company in the red to being in the black. You have that confidence, but you know, you also weren't compensated well for it. So you're like, I needed, I need to do my own thing. So, so what brings you to Houston and what brings you to start, you know, your first restaurant?

Benjamin Berg (07:38)
Now it's tough.

Well, mean, Houston, was in New York at the time and it was purely really family and my dad giving me great advice saying, I know you live in New York right now and I was born and raised there, but my ex-wife wanted a house, third child was born, moving to the suburbs wasn't really something I wanted to do, especially in the restaurant business where the hours are so arbitrary.

My dad was like, go to Texas or go to Florida. I know you want to do your own thing one day. Those are the two places I'd go. And my ex-wife was from Exocity and knew Houston very well. So, you know, moved to Houston and they had a store, Smith & Lenski asked me if I'd take over that one. I said, yes. I mean, listen, I had three of my initial original investors came from meeting people at that store. So that's Smith & Lenski in Houston. Yeah.

Alan Li (08:51)
That's Smith and Melonci's? Wow.

Okay.

Benjamin Berg (08:56)
⁓ But you know, Houston's a city that I think really

It really cherishes and values people that want to come in, start businesses, but add something, you know.

value to the city and they celebrate that and I think I was really really lucky at the time I went to Houston. Honestly was it 2013, 2014 I think oil was at like a hundred and fifteen dollars a barrel so the city's going off. When I opened my first restaurant everything had crashed and it was at like fifty five dollars a barrel so you know but yes this is B &B Butchers.

Alan Li (09:37)
Was this B &B Butchers, the first one that you opened? Okay.

Benjamin Berg (09:42)
You know, I found, I wanted a building with character. found a hundred year old building that everybody said was crazy. There's trees going through the side of the walls. It had been abandoned for almost 40 years, but it had character and it had something built in. And I thought where it was located, you know, access to downtown, easy to get through from highways. you've never, you know, I know you've been to Houston, but Houston is a big time traffic city and access is very important.

⁓ But I was in no man's land. mean, the only people that walked down the street came out of the city jail. So, but, you know, it was also a city that was covered in steak houses. And at that time, I think even in the US, probably not in New York or LA, but for the most part, every city had very corporate steak houses, right? Like your grandfather's steak house. think STK had just kind of started with like, you know,

focusing on the sexier atmosphere and focusing on women. But steak houses were still, you know, it's your old school Smith and Walensky, Palm, Capital Grill, Del Frisco's. And ⁓ I was looking at menus and they started like the steak was getting smaller and it was just big leather chairs. So we built it and made it, I would say like tons of meat, made it about the meat, butcher shop.

but also gave it that New York, more rustic, urban vibe, not your grandfather's steakhouse, right? ⁓ I wrote a business plan that I could survive and live if I did four, I think it was like 4.7 million, pay myself a salary, get a little distribution, pay my investors back in three years. And that was fine. And our first year we did 9 million.

Alan Li (11:39)
Wow.

Benjamin Berg (11:41)
And every year after that, except for last year, we increased sales. But I mean, I think we've topped off at around 17, which is incredible for one restaurant. And when you hit, especially in the steakhouse business, we call it the waterfall effect. You can't add more labor. can't add anything into it. And that's when the waterfall happens. And we've been very lucky. And that restaurant basically spurred.

Alan Li (11:46)
Yeah, what was the...

17 million off of a single restaurant.

Benjamin Berg (12:09)
everything else. So there wouldn't be bird hostility.

Alan Li (12:10)
That's exciting. So

for BME Butchers, I know you said you took on some investors. How much investment did you take on? How much did it cost to open up the restaurant?

Benjamin Berg (12:23)
So B &B butchers, I mean, I'm still like I want to hit myself every day. ⁓ But obviously, listen, you don't know I had no track record except for a lot of good working experience, but never done my own thing. And restaurants are usually a terrible investment. ⁓ It cost obviously, most profitable restaurant is also the cheapest to build because when you have no money and everyone knows you have no money, they don't charge you a lot of money.

I think we raised around 1.7 million. I did not take tenant improvement or TI from my landlord because I was so nervous about making rent that I traded the tenant improvement for, which was probably a mistake looking back, but I traded it for ⁓ credit towards rent. So I also didn't pay rent for almost 15, 16 months, which was nice, but

Alan Li (13:12)
Mm.

Okay. Yeah.

Benjamin Berg (13:20)
At the time, which I can say too, my rent is less than 1%. So the rent was so cheap, I probably should have taken the cash upfront and not given away more equity to investors. But I was stressed. You're making decisions that you haven't been through yet. So like I said, my investors at the original B &B butchers have made a

Alan Li (13:36)
Yeah.

Yeah.

Benjamin Berg (13:50)
almost a 4,000 % return on their money. I paid back their original capital and plus I think around...

50 % return within 14 months. So that's, now that doesn't happen anymore, you know, like we would set it up, the 70 % goes to them, 30 to me, and then it flips once they get a 50 % return on their money. I don't do 50 % return anymore.

Alan Li (14:23)
Hmm. I see.

Yeah. So I mean, less than 1 % of rent is your top line and you're doing call it 15. So 150 K you're doing like 10, 10 K rent on the space ish.

Benjamin Berg (14:33)
Yep.

No, no,

right. No, like 20, I think all in like 22. Yeah.

Alan Li (14:42)
22k, okay.

What do you think allowed you to just crush it with this concept? You mentioned restaurants are notoriously difficult, which they are. Why did this succeed so much?

Benjamin Berg (14:56)
I think it was good timing. Houston, you know, Houston was in this like transition phase where, you know, it was still they had, you know, very diverse city, great food, lots of options, but it was a really corporate kind of development atmosphere. And all the restaurants, you know,

developers or landlords, they'd go for the easy national ⁓ big brands and they weren't open yet. What's made other cities great with food is when developers give opportunities to startups, like local guys that really want to have great concepts, and that's risky for them and probably going to their banks and getting money from not AAA tenants ⁓ is a risk, but I also think...

Alan Li (15:53)
Yeah.

Benjamin Berg (15:56)
The reward is what Houston is today, ⁓ where now it's considered one of the best food cities in the US. But when I was there, and this is not a knock on Houston, very good food, but not great restaurants. And what I mean by that is the total package, The atmosphere, the service, the environment, caring about, if I'm going to charge you $100 for a steak, my bathroom's better be beautiful, right? The chairs better be perfect. The music needs to be right. The AC, every part.

the experience needs to make you escape for a couple hours. And at that time, I don't think Houston had that. Some great restaurants, food, but not that. And other people tell me, it's hard to compliment yourself, I think. ⁓ But you look back, and I think we're one of the ones that really starts starting, OK, let's create experiences. Let's give, know, Houston's the.

huge city, people travel all over, it's amazing, the sophistication with wine and everything here. And the reaction was, man, you're giving us what we could when we go to New York. I don't have to go to New York anymore. And I think there was a, they were starving for that. And then, you know, it started rolling and then developers are getting, okay, you know what? The people want local people. They want, you know, they don't want.

something from California or Arizona. They want here. And even working at Smith and Walensky, I saw Smith and Walensky, mean, one of the greatest New York style steak houses, but they would go into a city and be, we're New York, this is how we do it. Not, we're happy to be in Houston and let's change things for Houston. And I think anywhere you go into, understanding the community and what the, you know,

Alan Li (17:44)
I see.

Benjamin Berg (17:52)
what they want. You don't force yourself onto them. You try to ingratiate yourself with the community. that's what we did.

Alan Li (18:02)
Cool. And I know with restaurants, especially full service restaurants, margins can be tough. You some restaurants can have great top line, but you know, some are unprofitable. What can one expect from, you know, a well-run steakhouse? Like what type of margins actually fall to the bottom line?

Benjamin Berg (18:21)
mean, steakhouse is a volume. Obviously any business, but steakhouse, since our proteins, our margins kind of suck, right? So like, I always give the analogy, we have a creme brulee on the menu for maybe $12 and that creme brulee maybe now because I actually want to show you, don't know, cost me 15 cents. But I have to sell a lot of creme brulees to pay the rent, right?

My, we dry age, so my ribeye, we sell 22 ounce bone-in ribeye that's prime. We dry age it for 28 days. By the time it's dry age, we've already, and we butcher and it goes on the plate. Forget about electricity, gas, labor, any of those other costs. I've lost 45 % of my purchase weight. Um, so we call it yield, but I'll yield around.

45, 46 % on a ribeye. However, I'm selling that ribeye now for maybe 89, 96, probably 89, I think we're at. I'm probably making, what, like around $50, and we're selling 300 of those a night. That's real money. But from a percentage standpoint, I think a steakhouse with great private events.

Because private events is something we love, right? Like I would never open a restaurant if you don't have private events space because that's where you bring your costs that way down. So because you know what the people are ordering, they choose a menu. You purchase just for that. Where so I said my total cogs and that's how we look at it, right? Food, liquor, beer, wine for a la carte. And this is good because we use a lot of fillet. We have a very good lunch. We have a very good brunch. So we can use a lot of a.

product and it doesn't go to waste. But we're still running total probably around 32 % in COGS. Your average private party were around 25%. So that's where you can really start making them.

Alan Li (20:36)
Yeah, but what falls down to the bottom line? So off of $15 million, how much can you bring home, you know, end of the day?

Benjamin Berg (20:46)
much do we or can somebody? mean, like rent and everything is important. Yeah, I can tell you, we drop around 28 to 30%, which is incredible. And yeah, but not really pop like I don't have another restaurant that does that. Right. I'm very happy right now if I can get between 12 and 14%. Yeah, I mean, it used to be

Alan Li (20:49)
How, yeah, if you're comfortable sharing, much can you bring, how much will you bring home on 15?

Net profit margin, wow.

That's incredible.

on other restaurants.

Benjamin Berg (21:13)
Pre-COVID, we wanted to hit 18 to 20, and that's really good management, really good watching your numbers, inventory controls. ⁓ Now the cost of everything is so much higher. The competition is so much greater. ⁓ And just the habits of the guests and the customers change so much that we wanted a three-year return on our money. I can't really pencil a project right now.

where I'm being realistic that it's not five years, which is tough. But I really think like being really conservative and realistic, even though I think I have a great team, one of the best teams, really knowledgeable people, if you're doing 12 to 14%, you're doing a good job.

Alan Li (22:02)
Yeah. And you're, doing double, triple that. That's, that's awesome. ⁓ ha just to give a sense of scale for people listening, how many, how many people are you managing at one time in just BNB butchers? None of your other restaurants.

Benjamin Berg (22:16)
Just B &B Butchers, think, has less... Well, we opened, I know this number, we opened with 62 employees. ⁓ I think right now they're probably between management and hourly right around 100. But the company has grown to almost 1,400.

Alan Li (22:38)
Wow. So B &B Butchers is your Berkshire Hathaway. It's this cash cow that you're using to then fund other restaurants. And you've done 13, 14, well, you've done 20 others, but right now there's 13, 14 still around. We're not gonna be able to go through all of them, obviously, but each of these restaurants are also different concepts. I think you have two B &B Butchers, but most of the other ones are... Okay.

Benjamin Berg (22:51)
Yeah.

We have two and we're building one in Denver. And

the one in Fort Worth, though, is great. It's actually probably the best-run restaurant I have right now. know, Fort Worth is a smaller city. like another thing, right, like if you look at steak houses, you shouldn't open a high-end steak house in a city that has less than a million people in population. Like, it just won't work, right? Like, Fort Worth is on that precipice, but Fort Worth is a special place. And I would say...

I'll give you numbers. Houston is city of approximately 4 million, round number. And Fort Worth is 1 million. And Fort Worth is 9.5 million in sales. So it's doing really good for the size. ⁓

Alan Li (23:47)
Yeah, that's no. Yeah.

Wow. ⁓

for each of the other subsequent restaurants that you open with different concepts. ⁓

How are you creating all these concepts? Are these just you or is it your team or you know, how are you spotting all these opportunities?

Benjamin Berg (24:11)
Well, initially it was just me. know, the hardest part of scaling and growing, especially growing a team and letting go of stuff. But in the beginning, I love this business and I think growing up in New York City really, know, motivated, inspired me. Like you see so many different concepts, so many different cuisines. And I feel, especially being an entrepreneur in any business, but my curiosity.

And I see something somewhere else and I'm like, you know what? I could do that. I love that. Let me learn about that. And I have a passion for like Italian food growing up in New York. And there's so many different ways you could do Italian. You just start going down the damn rabbit hole and then you get stuck in it and you kind of morph it to like what I think I've been very successful with is that

take something I love and then morph it to let's make it perfect for the Houston market. Right. And ⁓ now I think I've added a lot of value in a way to our company and to maybe the fabric of the hospitality restaurant scene in Houston by doing different concepts. But I think I've also kind of maybe hurt, you know, the company in a sense of where we are now.

Alan Li (25:14)
Mm-hmm.

Benjamin Berg (25:38)
Because it's very difficult now to manage three different kinds of Italians, French, three different steak houses, where every branding, marketing, PR, everything, menus, everything has to be different and super specific to that. Where if I just stuck with one concept, that's much smarter than me, like Cain's Fried Chicken, chicken tenders and Texas toast, that's it. Open a lot of them.

Alan Li (25:43)
Yeah.

Benjamin Berg (26:08)
But it was my passion.

Alan Li (26:09)
But why not open, yeah,

why not open B &B butchers, why not try to be the Smith and Malensky?

Benjamin Berg (26:16)
So no, that's our plan for the future. We have a couple horses that we feel will translate very well in multiple markets. And B &B Butchers is one. I have a French Brasserie that's a female forward friendly. We think that one can ⁓ translate in a lot of markets. Another steakhouse that's all wood fire called Prime 131. But the number one is B &B Butchers.

And, but the main part is every community we go into, I want to keep that part that we're going to, they'll change a little bit to make sure that they make sense in that community.

Alan Li (26:56)
match.

Yeah.

Why, like for an aspiring, you know, restaurateur that wants to open a steakhouse in their city that has a million people, tell them why they should do it or why not.

Benjamin Berg (27:16)
You shouldn't do it if you don't have a lot of money behind you. Number one is being well capitalized, right? You need to know that it's a brutal business. Today, I don't know, I think we're actually in a recession right now and nobody's saying it. ⁓

I would never actually tell anybody unless they love it to open a restaurant. I think I get asked by more people, why would you? Because you want to, I think the one thing that I, you want to add to the story of your city or of the restaurant business or the food world or hospitality. And if you can bring something that makes it better, improves it, pushes it.

to force other people to get better too, then you have something. But I mean, I don't know. Buying a plumbing company might be better. But restaurant people, think, are a little different that we. We're a little sick, a little sadomasochist. We like the pain. I tell people I probably lose two years of my life opening every restaurant. It's painful.

You know, we're the people that I never want to know about HVAC. I know way more about AC than I ever want to know. Plumbing, electricity, Like hoods, grout colors. What's the best substance to clean pee off a floor, right? Like, I mean, it's just so much. You're dealing with so, so labor intensive and you can't do it without labor. And then you're dealing with the public and you're...

always, know, social media, listen, social media is great for us from a marketing standpoint, but at the same time it can be, people can go off on us, right? Everyone has an opinion. And that gets tough sometimes.

Alan Li (29:12)
Yeah. No, I mean, I think just being an entrepreneur, you have to be a bit of a masochist and okay with eating pain, but I think opening restaurants, especially full service restaurants, I couldn't even imagine opening it because as you mentioned, you're dealing with 60 people in just a single restaurant. Your margins generally aren't that great. I mean, I know you're crushing it, but that's not the norm.

Benjamin Berg (29:30)
No. Yeah, no, no. That's

not the norm.

Alan Li (29:36)
But yeah, it's interesting because from the outside looking in, 17 million spitting off 30%, that's an incredible business. Why wouldn't anyone just, everyone just do this? know? Exactly.

Benjamin Berg (29:45)
But that's a golden goose, right? That's lucky. ⁓

That's not normal. I haven't had one other restaurant have that success since, right? Now, they're successful and they're making money, but not like that. But that, think, is also something.

There's a lot of, I think you're set up a little better when your first one really hits. I mean, because everything after that.

kind of starts falling into place. People want you, your cost of capital comes down, a lot of your opportunities are even, I mean, flat out the level of talent and employees, they want to come to you. Like success will bring better things to you. mean, I just hired a president a year ago and she came from

MGM she like number two three of food and beverage in MGM. She oversaw over 400 outlets corporate for them. So that's You know she would B &B never happened in that success We didn't roll out an interesting company because we have so many different concepts Now I also think part of it she likes Texas and wanted to get out of Las Vegas I don't think so. I lived in Vegas for three years

It's a tough city to stay forever. But I would never have that ability to even enter somebody like her to entertain coming to work with me without that success and reputation.

Alan Li (31:29)
Yeah. Yeah. Okay.

So where are you going from here? I know you mentioned that potentially B &B you're trying to expand there. I know you have 13 other restaurants. Are you trying to open up more concepts or are you just trying to focus on the B &B now? Like what's the goal for the next five, 10 years?

Benjamin Berg (31:42)
Yep.

So,

okay, five years, is like this year, we're kind of just waiting and seeing. It's a weird market out there right now. I mean, we see it softening. I think, you know, what's that term? Vegas is kind of the canary in the coal mine. ⁓ They're kind of soft. Yeah, so that's usually will translate to our world pretty quickly. ⁓

Alan Li (32:03)
Yeah, Vegas is very soft.

Benjamin Berg (32:14)
So I'd say for the next year, year and a half or kind of like, okay, if there's a great opportunity, we'll take it. But now we have to be really strategic and no more Ben saying, oh, hey, I was in New York and I went like, I love this restaurant, Like a coat. I want to open up my own version of that. There's no more of that, right? Like we're going to take these concepts. We're going to be strategic. We're going to be really financially.

Alan Li (32:32)
⁓ I love coat too. Yeah.

Benjamin Berg (32:43)
intelligent about it, guess, create models and then go to cities where we think we can make an impact right away. ⁓ But the other unfortunate thing, mean, after COVID, my first restaurant from the day I signed the lease to opening the doors, and this was a building with no plumbing, no electric, the city forgot the address. ⁓ I think it took around 12 months to get open.

I don't think that's possible in most places anymore. That's the other thing, right? So it's almost a two-year process for negotiating, getting permits, planning, and then construction. So I would say in five years, the goal would to have at least three to four more butchers open, maybe one to two Annabelles. And I really would love to get some primes going. But at the other time, too, it's like,

Alan Li (33:20)
Hmm.

I see. Yeah.

Benjamin Berg (33:42)
By the meeting today, we're talking, okay, what's other avenues of revenue we can bring in? Like, do we want to start having kind of a consulting side because it's getting harder and harder and want to get ahead. It's like when COVID hit, okay, you're going to deliver alcohol. Well, what else can we do right now? Where's our value?

Alan Li (34:01)
Yeah.

Yeah. Ben, can you talk to us about maybe one of your failed restaurants? Because I think the audience is hearing a lot of success, but I know some of them have failed too. So describe one of them.

Benjamin Berg (34:10)
Yeah.

Hi.

Okay, I've closed, let's see, one, two, four restaurants. ⁓ would say the one restaurant, I mean, one closed over COVID and I reopened it. But yeah, the one restaurant where I knew my ego got in the way, 100%. I'd had too much success and it was, you know, coming from New York, Chinese food was like,

Alan Li (34:26)
No, ignore the COVID one. That's just an anomaly.

Benjamin Berg (34:43)
our Sunday dinner, my comfort food, It's like pizza or Chinese. And I love Cantonese style, New York style. And I really, really want to bring it to Houston because Houston has great Vietnamese, great Thai. My opinion of the Chinese is not as forward. And, ⁓ you know, so many North Easterners moving down. I thought I could do something great. You know, I actually had a chef from New York.

consult a lot of good things, but where I missed it, and I know I missed it, my location. I completely thought I could open up somewhere where there were so many, you know, signs that I broke my rules on because I thought I was going to create something that could break those rules. Or I wasn't even thinking maybe. But...

Alan Li (35:23)
Hmm.

Benjamin Berg (35:42)
I went forward and timing was horrible after COVID, delays, money just started piling up. And some of the best decisions you make are the decisions that are the hardest, right? But you can't give up on your children. And I would say my restaurants are like my kids. yeah, if it's not, if it's pulling the rest of the company down and I don't sleep at night over payroll.

right, like any entrepreneur, any business owner, payroll is number one. If something's dragging that down and threatening everything else, it's time to go. ⁓ But I would tell you 100 % people tell me food was great, atmosphere. I broke all my own rules and I know it was probably ego that I could do it so good that it wouldn't matter. And that one really stinks, you know?

Alan Li (36:35)
Yeah, I guess

two questions. One, what was the magnitude of this loss? And two, what are your rules?

Benjamin Berg (36:46)
So that restaurant went unbelievably over budget ego. I think we spent close to $5.5 million. We were a year late in opening, now not our fault, but the world. ⁓

Alan Li (37:00)
WAH

Benjamin Berg (37:08)
had to make a terrible deal with doubling up rent, with a 7-8 % interest, amortized over just my first year of opening, so paying almost $100,000 a month in rent, and probably losing close to $100,000 after your initial six months opening when everything's going great, and then all the things you knew weren't right. The customer, the guest, also knows.

Alan Li (37:20)
Wow.

Benjamin Berg (37:38)
And then it just started dwindling down, right? And we're probably losing close to 120 to 130,000 a month. And we kept it open for, I want to say, 14, 16 months. So maybe probably six months too long. But it also coming at it for a weird time, right? When 23 was booming so much.

And then 24 started hitting our industry kind of hard. But I take 100 % responsibility. My rules, there's no good entrance. Houston's a driving city. I know this, right? Terrible parking, horrible parking, no access from the street. I actually had, we had great logos, great design, great everything. You could not.

The way the building was, you couldn't even see my sign on one of the busiest streets in Houston. So no access for guests, extreme confusion. Guests just didn't know.

Alan Li (38:54)
Hey, can you hear me,

Benjamin Berg (38:56)
place for, yeah. ⁓

Alan Li (39:01)
I can hear you again. Yeah, you're good now. So there's no sign, there's no entrance. Or a difficult entrance.

Benjamin Berg (39:02)
Hello? Okay. I thought it'd be a great play. Yeah. And,

⁓ and horrible parking. Horrible. And in Houston, that's a major, that's a major, ⁓ that's an issue, right? I mean, I think in most cities that aren't like a New York, maybe, I don't know, boss, like driving cities, parking is really important and access and getting there.

Yeah, the other rule would be probably no second for restaurants even though I have one. But this one...

Alan Li (39:40)
What does that

mean? You don't want a restaurant that has a second floor?

Benjamin Berg (39:43)
No, that is on the second floor. You have to go up one store that's not street entrance.

Alan Li (39:50)
so this restaurant, the first floor you didn't own, the first floor.

Benjamin Berg (39:53)
No, no, we were on the first floor. I have a different one that is on the second floor. I did break that rule. It's worked out okay. But like in New York City, it's very difficult for a restaurant to have to enter, take an elevator or take stairs. And they're actually on the second floor. There was a great, I remember there was one that was really successful. It was like when the Korean fried chicken really started taking off like 15 years ago.

Alan Li (40:10)
Yeah. Yeah.

Benjamin Berg (40:23)
in New York and there's an awesome place but they were on a second floor. But I think because their food was so good and so original and people hadn't really experienced it, it worked for a bit but they're not open today.

Alan Li (40:39)
Hmm.

It's tough. It's tough. can think of a few that are, that are still doing okay, but they've been around a long time. ⁓ Okay. ⁓ Ben, given your sort of expertise and pulse on industry, and I'm sure you travel a lot across the U S like what are the most exciting things in restaurants or hospitality right now? Like if you were to start right now, what would you be doing?

Benjamin Berg (41:06)
I was gonna start right now. That's a tough one, because I'm always trying to start something. ⁓

Alan Li (41:13)
And if you were

to start something without BNB butchers, without a cash cow, say you're just starting out. This is your first one.

Benjamin Berg (41:23)
So like things that get me excited right now, there's been two restaurants that I've experienced. Now people are great things with vibe and atmosphere and there's that whole experience. But it's the core, right?

service, but food that connects with people. like I mentioned, CoCo is from restaurants that just blew me away. Like they created something different. That wasn't really different, but they did it. They took an idea. They did an extremely high level. Like I remember my first ⁓ server. I mean, they wouldn't even talk. They wouldn't even interview a server in New York unless they had Michelin experience, right?

So now you're taking something to the next level and they have an idea and they're not gonna, they're not gonna like go away from that. The other, which I love in Houston, ⁓ find something that is so unique to the dining scene.

But it has to be, like I tell everybody, we have the number, we're the last city to produce a food or a cuisine, I guess, ⁓ that's strictly American, which I think is one of the greatest kind of new foods in the US right now, which is the Viet Cajun. ⁓ Like we have a restaurant here called Crawfish and Noodles and they're awesome guys. But they created a whole new style of cuisine and that's.

you find something like that and you find people that you can work with or you know help them grow that's what I would do and also listen I'm in

You want to get people excited. You have them for two hours. Not only are competing with other restaurateurs and restaurants, drive-through, everything. You're competing with the phone. You're competing with social media. You're competing with all these stimulants. And you need to create something where people can connect and enjoy and get away. ⁓

Alan Li (43:29)
Yeah.

⁓ I mean, would you even enter the hospitality business? Would you not enter like a quick service restaurant or fast casual or like some of these other, like what do think about those?

Benjamin Berg (43:43)
I think they're awesome. We opened our first, I like to call it casual, not fast casual. So like I would say Shake Shack is a cool casual, right? Called buttermilk baby and I brought Carbohydrate ice cream down to Texas, which growing up I thought, know, it's the best self-serve, burgers, chicken tenders, fried chicken sandwiches. Big lessons already, right?

spent way too much and didn't have a drive-through. Most cities, right, unless you're in New York, you need a drive-through. Like Shake Shack is opening, you know, is there opening anything in Texas or probably any of these kind of cities? They're only doing drive-throughs now. It's the only way you can really compete, right? I because I feel I compete with Chick-fil-A. Chick-fil-A has a four lane drive-through lane, so it's incredible. They're really good at it, right?

Alan Li (44:36)
Yeah.

Benjamin Berg (44:39)
But I mean, look at the models. mean, was like a Taco Bell costs, I don't know, $700, $750,000 total investment to build it out or something, Probably without land acquisition. Really, really cheap food costs.

great company, it's one of the best fast food ones. Chick-fil-A is different, but I think when you can find something where you can really control your cogs, your cost of goods. And there's one thing about fast casual or fast food, they have a system where those are very controlled. mean, right now, probably hear the new beef prices skyrocketing. That affects me, whereas those larger groups, they can maintain that a lot better.

So I mean, listen, Ray Kroc was not a dummy, right? He invented McDonald's basically and created the franchise, all of that. ⁓ more reach you have, the better. mean, Cheesecake Factory is an anomaly, right? So Cheesecake Factory, one of the biggest menus you've ever seen in your life. It's a book, right? And every restaurant is like,

Alan Li (45:51)
Yeah. Yes.

Benjamin Berg (45:56)
bringing their menus down because of inventory costs and everything associated with that. But somehow they touch a market and they stay true to it. mean, one of the guys I think is the number one, he's sold most of his stuff now, but Sam Fox, Sam Fox who created North Italia, Blanco, Culinary Dropout. Yeah, yeah, yeah.

Alan Li (46:22)
he did culinary dropout. That's a great one. I

like that.

Benjamin Berg (46:26)
Yeah, you know, he sold a bunch of concepts, but he's very ⁓ structured. He stays with his plan. create great, they invest and they create great concepts. And I think he sold North Italia, the cheesecake factory for 150 million after only having eight stores open.

Right? mean, Sand Fox understands what I would say, you know, Ray Kroc had this saying, you know, feed the masses, eat with the classes. Sand Fox understands America or the dining of America, and he can create a concept that will work in New York City, Atlanta, Boise, Idaho. Right? Like, that's a brilliance, which I know I'm not at that, but like.

I respect that tremendously and to understand the little things that connects with everybody and not just a certain market, I think you you're special.

Alan Li (47:30)
Yeah. Um, Ben, you know, looking back on your 10 plus year journey, having started your own restaurants and, know, with all the knowledge that you've accumulated now, going back to 2015, is there anything you would have done differently?

Benjamin Berg (47:45)
I would not have given my investors 50 % return on their money and not have any buyout clause and keep them in. No, I would have slowed down a little bit. I would have taken stock and what BNB was and probably capitalized on that and built that out more instead of building 15 other restaurants.

stick with it, know, go with it. Not what I've had as much fun. I don't know because I love experiencing everything, but I think that was my biggest mistake and also

Not getting serious enough right when the company starts scaling the hardest things when you start you're just growing and not getting structure in place and not realizing right away that I wasn't the structure person and I wish I brought in people that I have now earlier that helped me structure and scale in a don't know honestly a smarter way right with experience.

Alan Li (49:00)
When you say structure, you mean a team structure? Like a human capital, like a personnel? Okay.

Benjamin Berg (49:00)
off.

Team structure, human capital,

right. And actually understanding my weaknesses and my strengths and handing off all my weaknesses to people that's their strengths. If I did that sooner, I think, you know, it would be a different story. But when you're an entrepreneur,

It's hard to take a pause, right? like, listen, but the other side is I've done it now, right? I have an amazing team. have great structure and it's changed a lot, but maybe everything happens at times.

Alan Li (49:49)
Yeah. Well, Ben, ⁓ really appreciate you jumping on today. This is a fascinating conversation and I'm definitely going to stop by B &B next time we're back in Houston.

Benjamin Berg (50:00)
You gotta let me know.

Alan Li (50:02)
I will. I will. Awesome. All right. Well, if people want to get in touch or follow along, reach out, what's the best way for them to do so?

Benjamin Berg (50:03)
Thank you.

Beberg at Berghospitality.com.

Alan Li (50:15)
Okay, awesome. Perfect. All right, thank you, Ben. I appreciate it.

Benjamin Berg (50:16)
That's about it, right? That's it. All right, man.

Thank you all. Bye.

Alan Li (50:25)
Nice. That was great. Yeah, that was good. I mean, I think people are gonna love it. I just think people don't realize how crazy some restaurants can be.

Benjamin Berg (50:26)
That's it? Yes. Cool.

No, they don't get like this. It's just shit we deal with.

Alan Li (50:38)
Yeah.

Benjamin Berg (50:40)
But it's like any other business, I just think we just have too many people. There's too many moving parts. Yeah, I think right now. No, no, no, no. Yeah, but no, you never remember. have like our employees under managed restaurants or our employees. Everybody's our employees.

Alan Li (50:46)
I mean, you said you had 1400 across 14 restaurants. That means you have a hundred per.

Wait, say that again? What? Every what?

⁓