When a Restaurant Is a Great Business to Buy | Jarett Berke Interview

Jarrett Burke welcome to acquiring minds thanks great to be here Jarrett you bought a restaurant gasp you had even told intermediaries during during your search no restaurants in yet here you sit so let's get right into it Jared how about some some background on you first please yeah yeah sure and if you look closely at my shirt you may see like little specks of uh pancake mix and stuff like that cuz uh we I was I was at it this morning um not usually like that but it's been it's been quite the morning with a little snowstorm here and some employees that couldn't make it to work and you know running a small business um and and for those who are not watching the video you are what in the back room or the the downstairs room of the restaurant yeah we got a little little office in the basement um certainly not very glamorous in here but you know I'm going to put my money into the into the kitchen in the dining room not into my office so uh that's just how it is yeah no nobody's expecting glamour these are small businesses J we're good on that exactly yeah so um so my background grew up in newers Shell New York just outside New York City um I guess pretty typical kind of middle class upbringing um you know played hockey and Lacrosse and went to public school and I graduate from Newell High School um and you know growing up I would say I was I was pretty well exposed to entrepreneurship um my grandfather uh immigrated to the US from from Poland in the 1930s uh to escape the Holocaust essentially uh and did and you know much of my my extended family unfortunately perished in the Holocaust um but he grew up um U with a single mom um and three siblings and really you know again had had this uh kind of a tough go at it growing up in the New York area uh as immigrants and so uh he started when he was young when he was still you know a teenager working with his uncle and selling garments out of the back of a a car the trunk of a car um uh joined the army and my other grandfather joined the Navy so they fought in World War II and then um on my dad's side when when he came back he started a business uh in the Garment industry in New York so pretty typical for for like you know Eastern European Jews um uh in the New York area and so he built this pretty pretty uh great manufacturing business um they actually did women's under garments off brand so like a Walmart brand uh Walmart Kmart things like that and um you know put whatever label was was required on it and my dad worked for him one of my uncles worked for him my second Uncle I also have an aunt was in the restaurant industry so uh he opened and ran several bars and restaurants in New York City my father uh was one of his partners and one of his investors and so uh again I was kind of exposed to entrepreneurship from a from a young age um you know again in and around the New York City area saw what restaurants were all about and was uh fairly uh put off by it uh you know I don't want to I don't want to put it down too much but it's it's hard work right restaurants are tough and um and many of the restaurants that my uncle opened and my dad was a part of uh failed and you know and closed uh some of them were great and are still in operation today uh but it's a tough business it really is um you know there's there's there's a lot that open and close I don't think it's too much different from many other startups I think I think that's a bit bit of a misnomer that restaurants are you know have a higher failure rate than other startups most most startups fail in the first five years about 90% of them right and restaurants are probably right in that same um right in that same interesting yeah I mean it and and that's the thing is like restaurants are very visible right you you feel it you go to that restaurant you sit there it's like part of your community and so when it closes it feels like you know terrible but the reality is that most most startups fail and uh and i' never I'd never heard that said that's that's a really interesting point probably also restaurants get a bad rep because they are so hard they're they're I mean all business is hard particularly small business but restaurants seem like hard business on hard mode definitely yeah hard to scale um yeah not not a whole lot of growth in most businesses in most restaurants and uh yeah they are tough growing up um at some point in my like high school years I I became somewhat enamor with the service cies so you know Annapolis the Naval Academy West Point uh Colorado Springs Air Force so I went to Annapolis um and yeah I mean I I distinctly remember like you know walking up the stairs of alumni hall on induction day and kind of looking you know turning back waving my parents and and having this like oh crap moment where I'm like what what am I getting myself into uh so graduated in 2004 with a an aviation contract and and a commission in the Marine Corps and uh did about six months of kind of basic officer training and then flight school and so um you know the thing that I was always attracted to as I was going through flight school and everything else was was really the leadership aspect and so the way the the Marine Corps Works in aviation is you know you do this time in the fleet and then you go you do something else and then you go back uh usually as like a major and then you go do something else and then you go back as like a lieutenant colonel so I was a captain now did my first tour it's time for me to go do something else I kind of felt like um I was really on the fence to be honest um and you know I felt like I'd peaked in a way like they call it the iron Captain right I was really on the fence about going and doing something else and coming back as a major and being a staff officer and um you know being a staff officer means kind of desk desk ridden yeah exactly yeah a lot more political you know uh writing orders and uh you know working for some you know general or or Colonel or something um again and kind of doing these like really functional things right being the operations person again and not getting to fly and do a lot of that stuff that I really enjoyed doing um certainly a lot of leadership potential but different right it was yeah it was not as much you know hanging out with the Marines it was it was a lot more um kind of higher level leadership and I I didn't know if I wanted to do that right I so so I was on the fence for a while and then ended up kind of making the decision that I was going to go do something else not sure what I wanted to do um I took a job as a in the Acquisitions Workforce so these are the people that kind of buy and sell and do the life cycle management of aircraft and systems and things like that and uh decided I was going to put in my resignation uh go to business school so I did that uh went up to to tuck to Dartmouth um that was you know an awesome experience I had asked a friend who had gone through talk and was also he he was in the in my company at the Naval Academy so he' kind of been through all this I'm like hey you know what can I read how can I get ahead and and he recommended this book the 10day NBA and uh and I remember reading it and I'm like I'm like okay revenue is like money that comes in and then profit is like what you get after like I I literally you know I could have told you all the pieces to a Russian surface air missile but like the difference between profit and revenue it was like lost on me um so so it was very much an intro into into business I fortunately stay in the ringor long enough that I was eligible for the full GI Bill and then Dartmouth does this thing called the yellow ribbon and they Max it out so um I went to darmouth for free so I have never paid a dime for like any of my education um and and that that also helped me in terms of you know this saving saving money for an acquisition of a business too because I was able to squirrel some money away uh through this whole thing and uh you know I wasn't in a bunch of debt when I graduated you know I through the course of my time in the Marine Corps bought a house my dad passed away and so um he left me a little bit not a lot of money you know uh just just a little bit um to again you know kind of down payment on on a house roughly in in North Carolina which isn't very much um and and that gave me a head start in terms of my ability to go out and and acquire business I ended up doing an internship at New Balance which um great company really cool they're Boston based you know they're small for an apparel company they they do I think maybe four or five billion now um but you know competing against Nike and but still making a great product and great culture uh so I did an internship there and while I was there I realized that um I didn't want to work in a big business right you know I I remember coming into work one morning and I'm like working on this PowerPoint for some data analytics project that I'm working on and it was a cool project and and it was you know really interesting but I I just had this realization like I don't want to make PowerPoints for some other person to make a decision on um I want to lead I I really want to be in charge again and I missed that right I missed having um having that that leadership being in charge um you know in our preall I talked about this book by Daniel pink called drive and uh I I read that at some point and and Daniel pink talks about three things uh for fulfillment he talks about autonomy which is you know making uh making decisions being able to um make those decisions not report to you know somebody and have them do it right you have you have the autonomy to to make decisions uh he talks about Mastery which is knowing your craft becoming a master in your Craft um you know knowing everything or having a path to becoming a pro and then he talks about purpose so autonomy Mastery and purpose and purpose is not necessarily you know working for a nonprofit or you know the military or something like that it's whatever purpose is for you you know what makes you want to go to work in the morning what makes you tick and um and and makes you get out of bed when you don't feel like it and it's rainy and cold and snowy outside and um for me I just realized that going to work at a big company going to be a consultant or a banker I was not going to have any of those things I was not going to have autonomy I was not going to have Mastery and I wasn't going to have purpose and so coming back in my second year at tuck I said I want to lead a company um and this was kind of before or early early search fund right search funds like I had never even heard of it up to that point I didn't even hear hear about it until probably halfway through my second year when somebody mentioned it to me and said hey there's this thing called a search fund you should look into it um but I kind of set on this path going into my second year of like I'm gonna find a business to buy and I'm gonna buy it and I don't know how totally totally your your own idea you later a few months later you heard about that there was a search fund thing but that that didn't plant the seed this was your own seed totally yeah and and the only the only other thing that I would say had an impact was I had a buddy who was a year ahead of me at tuck uh I played hockey with his wife at at tuck um and he bought a company while he was at tuck it was um the guy's name is Jay Boren he bought this company called lock and lube and lock and Lube sold grease couplings so it was like literally the thing on the trctor that like attaches your grease g to the bearing and it was like the best gree coupling out there it was manufactured in South Africa he bought the company that somehow ended up having the rights to to sell these things and he bought it from a a farmer and this farmer was like literally getting letters in the mail of other Farmers like hey I saw this thing can you send me one here is a check for $30 or whatever and this guy's like running this business off his kitchen table my friend Jay goes in and like helps him kind of establish the business and then he ends up buying the business from him and so Jay had done this right he similar type of story small business you know I don't know what they did in Revenue but it wasn't much maybe couple hundred thousand in Revenue and he was like building this company up he created a website it was like making an e-commerce presence starting to sell on Amazon um and uh and so he had kind of walked this path and I'm like that's what I want to do this is this is really cool uh and so yeah I started I started searching so I started looking at business brokers um quickly found so this is my second year you know I knew I had to get a job so I ended up like towards the end of my second year I got a job at a local company it was a software company uh I was kind of running marketing and sales I had met the owner uh the CEO through he was he was a guest speaker in one of my classes you know approached him afterwards and said hey you know I'm looking to stay in the area um do you have any openings and kind of explain my background and he said yeah actually you know my sales guy just left would you be willing to do Marketing sales like sure I'll figure it out uh so I went to went to work for him it was actually kind of an acquisition Target too to be totally honest you know I was a small company about 19 people couple million in Revenue I'm like maybe I could roll in here and and and take this over um I ended up deciding against that once I once I started working for the company but I got a job and I did I guess what what now is called a self funded search um you know kept my eyes open was talking to business brokers um I got a uh I got kind of a lucky break when I was at a it was a tuck event actually it was like uh something on campus where's a bunch of alumni just hanging out and my friend Jay was there uh who I mentioned that bought this grease coupling company and we were talking to another friend who um about our age this guy was an accountant and I was saying like yeah I'm looking for businesses I'd really like to buy something and this friend that's an accountant says you know are you talking to any accountants and I'm like talking to accountants like I don't I don't have any money like I I do my own taxes why would I talk to an accountant and um he's like no no no like like accountants know what's going on you know they like know every business like there's only really two kind of small medium business accounting firms in our region here you should talk to somebody at my firm and I was like man that's freaking brilliant so he set me up with a meeting uh with one of the partners met with this guy named Mark and gave my resume said hey I'm looking for a small business in the area if possible I'm willing to move but I'd really like to stay around here um and uh you know these are the criteria I'm looking for it was like you know I want something that's you know a strong business not a keyman type of business something that I could come into and take over uh and you know the the business will keep on going uh recurring Revenue good history things like that he's like no yeah you know I've heard this pitch before so um so yeah he comes back to me like I don't know a week or two later and says hey you know why don't you come down to my office and I got a couple ideas and we'll sit down and talk so uh went and met with him he had like a couple businesses actually in mind and um he said you know one of them was like a snow plowing business pretty small kind of keyman like that's not really what I'm looking for um I can't remember a lot of them were kind of small service businesses but but really small you know a couple hundred thousand in revenue and and you know I explained Hey listen I gotta I need something a little bigger and he's like okay well you know I know you said no restaurants but there's one that I want you to take a look at and so he's like I'm not going to tell you the name I'm not going to tell you what it is but um here's a p&l and I'm GNA tell you that they don't serve alcohol and they close at 3 P.M every day and I'm like H okay you know the two worst things about restaurants is booze and nights right being there you know missing all of your kids everything because you go to work in the afternoon and you get home at 1 in the morning and uh so you're sleeping when they go to school and then you're you're at work when they come home and I'm like all right like this is kind of interesting the booze why is that a bad thing H it's a pain in the butt man it's just just just the trouble the trouble that booze causes generally yeah well I I shouldn't say categorically booze is bad uh in restaurants because actually we're we're starting to do uh mimosas and things like that here but bar type of restaurants especially some of the ones that my uncle ran it just brings a ton of headaches you know people um drinking too much or your servers you know your bartenders over serving which can come back to you it's a huge liability uh you know people get into fights people fall down the stairs people like uh people do stupid things when they're drunk and uh when it's in your business that's bad um tons of great money great margins on on alcohol and uh and there's certainly a reason why a lot of people do it but um it's yeah it's it's one of the harder things I think about running a business is just dealing with that you know employees taking stuff and uh so tough and I was gonna to your other point I was going to say that I thought that's where all the profit was in in restaurants it's it is a very profitable side of the business yeah yeah um and and that's that's true so I'm I'm losing that but again the the downsides of it I think outweigh the money yeah so um cool yeah so okay so look at this p&l you know revenue is like super solid right goes up two or three% every year um profitability really good like super profitable for a restaurant especially like a breakfast and lunch place um you know the typically if you look at a restaurant panl they all kind of look very similar right so uh for every dollar that comes in about 30 cents is paying for the food about 30 cents is paying for the people um about 30 cents is paying for everything else Insurance occupancy you know uh repairs and maintenance things like that and then 10% is left for profit right and that's like very standard okay poor uh poorly performing restaurants you're going to be closer to0 perc or maybe negative percent in terms of profit um really good restaurants you're going to be in the High Teens maybe even that the low 20s terms of profitability and it's all about being able to move those levers right where are you saving money do you have you know Pizza is a great business in terms of food cost right pizza is dough people make their own dough it's super cheap cheese is expensive that's the expensive thing on a piece of pizza or pepperoni but usually in a pizza business your food cost is like 20% right low 20s um finer dining you're going to have a much higher food cost and a lower labor cost so again you know dancing around this 303 30 is is pretty typical um the thing that really stood out to me here was they were all in the kind of mid to high 20s so food cost was in the mid high 20s labor cost was in the mid high 20s and fixed cost was also in the mid high 20s so this business was kicking off you know 17 19% profit margin year over year over year and um when I asked about the owners what they did because because I didn't want this to be something where the owners are like slaving every day um I'd found out that you know one of the owners had had an this a couple years back and was kind of still recovering from this and really wasn't involved in the business at all uh it was husband and wife obviously um the other owner was an engineer by by training um but loved baking and he spent most of his time in the bakery and he literally just baked like he was just a baker and um you know he obviously oversaw everything but it had the business had a general manager it had an office manager that did all the you know back off his stuff uh pastry chef in the bakery that was running running the bakery um um and so this business was just kind of going and it was still really aren't bakeries also really difficult businesses I mean yes you don't the the typical restaurant where you have to have a night owl Lifestyle bakeries have in the opposite direction you're you're up at one or two am or whatever or at least the person in the bakery doing the baking is yeah it kind of depends so wholesale Bakery very slim margins right they wholesale bakeries work on volume um so you know they're only making a couple percent um in in margin but they're they're pushing a ton of product right um the nighttime piece is definitely a factor we do more sweets so the only thing that we do that requires that nighttime stuff is we make donuts and we want those donuts to be fresh in the morning um so we have somebody that comes in uh usually he comes in at 4 or 5 o'clock in the afternoon and then he works till about 1 in the morning U but we don't have anybody there between about 1 a.m and about 5 6 a.m. so um okay yeah and and again because of those hours because we start at you know 5 six 7 o'clock in the morning most most of our employees come in around that time we tend to attract like adults like more people that are more mature yeah um you know a lot of restaurants you have people who really like that night lifestyle right they they come in work at five o'clock they work uh they make a bunch of money everyone goes to the bar they party um and then you know they're they're kind of up all night and that's a different lifestyle most of our people like the fact that they leave at 3 p.m. right because they have kids and they get to be home and all the same reasons why I like this business were things that were attractive that are attractive to our employees and and it's a it's a real uh benefit for us and a you know competitive Advantage when it comes to employment because we're able to attract people who are a little more mature and appreciate that kind of Lifestyle yeah and what was the so tell us I know there's more to say about this business I I believe like the history the location tell us more about you know all of these um surprise features that actually started to paint a really Rosy picture of business you'd want to own sure yeah so so right off the bat you know I I said after I saw this panel I said hey I'd really like to meet the owners um I met the owners at this office the accountant's office and immediately felt comfortable right they the the gentleman totally reminded me of one of my uncles who lived right next door to me growing up they just had the same mannerisms and um immediately trustworthy um I remember we we we're planning on an hour meeting we ended up staying there for like two and a half hours just talking about all kinds of stuff and um and the woman um the the the wife um uh she she like when we got done you know she gave me a big hug and like it was just like a great it like felt really good so immediately I I trusted them because I didn't feel like they were trying to you know put a big valuation on this business and like hide things it they they just seem like great people U you know raised kids in the community were part of the community and and that felt great um the business itself when I bought it it was 73 years old um so it was opened in 1947 by a former Marine uh a guy named Lou brassette Who who went fought in World War II um valiantly was was decorated came back to hover and um and with a little bit of startup Capital uh that he that he borrowed he was able to open up this breakfast place right on Main Street in Handover and uh he ran it for 37 years he was a you know a key person in the community he helps start this uh you know Improvement society that kind of helps with a lot of stuff down downtown he helped start a bank which is right next door which happens to be our bank which happens to be the SBA lender uh that that lent me the money to to uh to take over this business um and and you know it's just one of these places that if you go to Dartmouth or if you've been to Handover like it's just where people go um you know we do most of our stuff from scratch right we it's not like right off the Cisco truck and into the fryer like we we make a lot of our stuff from scratch there's some some stuff we bring in but like the the vast majority of we do here um great food the bakery is awesome you know people uh Rave about our cakes and pies and things like that again you know all that stuff is scratch made and um so it's just it's called lose for yeah it's called lose Y and so anybody who's passed through Handover or certainly anybody who's been to Dartmouth but maybe who spent at all any time and Handover probably will have come across it heard about it maybe even eaten there so it's kind of the Main Street what's the name of the main drag in Handover Main Street Main Street okay so it's it's kind of an anchor on Main Street a neighborhood institution totally yeah yeah and and then um in terms of some of the nuts and bolts you know one of the things that makes this a really strong business is the restaurant only accounts for about 60% of our total revenue so um it's % restaurant about 30% Bakery and about 10% catering and those numbers shift throughout the year and and year to year but um that's one of the things that makes this place really successful is if we were only a restaurant you know only doing 60% of the revenue that we do it would be significantly less profitable right because my fixed costs are fixed they would stay the same and they would eat up a greater percentage of our of our profitability um but the fact that we have these kind of add-on businesses that are really successful and stable um makes it makes it really interesting and makes it really fun and again you know a much better business than than your typical restaurant so other than the food costs which are variable y that the other costs of doing business that go into the catering and into the bakery would be there anyway right ex so you're just you're just basically getting more productivity out of these assets exactly by having those two lines of business great y precisely I wonder why more restaurants haven't keyed into that possibility yeah I don't know I mean it takes a lot right it's and and that's the thing is like this stuff didn't just happen right this is I take credit for none of it right I bought this business it was it had evolved over decades and decades to be what it is today and again I just stumbled upon it and I got super lucky but um you know my goal from the start was just keep keep on doing what it's doing right growth is not an objective here um sure love we're we're going to get to that because I want to spend a minute on that but another feature of the the profitability of the business um another way of capturing that measuring that was Revenue per square foot you've talked about margins and how it compares to margins in the restaurant industry basically double the average or almost double the average talk to us about Revenue per square foot what is that metric all about um so so another metric that that a lot of restaurant actually in retail that's that's used a lot more um than in than in restaurants but but restaurants too um you know it's I I couldn't tell you what the number is could probably do the math on it but um again just just the fact that our fixed costs and and actually we we did expand when I bought the business the bakery was in the kitchen um the kitchen was super tight it was incredibly tight you were always bumping into people you know we had stuff stored in every possible place you could store it um I was I was lucky about a year ago one of the tenants next store moved out it's a basement space not a great space for anything other than essentially manufa facturing I took over that space got it really really cheap I was able to move the bakery down there so now my Revenue per square foot isn't as great as when I took it over U but it's really cheap space so um it it works out really well um but but yeah I mean again to to the previous point of the fact that it's more than a restaurant we've got these other lines of business that's the thing that makes it um a great great little business great so you once you basically looked at this kind of objectively you were you said this is a great business I'm not going to think I'm going to I'm going to put aside my anti- restaurant bias and just look at the kind of analyze this objectively as a business and this is a great business absolutely yeah yeah okay you were about to tell us about the plan or the kind of thesis as in maybe growth is not is not the plan how did you now tell us kind of what the approach was sure so so again you know when I looked at at the business it was pretty clear that growth was you know there sure I can grow catering um I really wasn't interested and I'm still am not interested in opening other locations I think they would do fine but I just don't think I would I would get anywhere near the profitability you know the level of profitability that that I have here in terms of percentage of Revenue and things like that um and plus opening up multiple locations is a bit of a death zone for restaurants like you see this a lot um that space between between one and like I'll say 10 there's a lot of small chains that don't make it right because now you don't you're not quite big enough to have this full management team and yeah and the scale so you as the owner are like all over the place you're running yourself ragged and the reality is a lot of times you know you open up that third maybe fourth restaurant it doesn't do well it can bring down the whole Enterprise um and and again you see this a lot in restaurants and I I just didn't want to have anything to do with it I still don't you know I think it's uh is a great spot people love it I don't want to screw it up and so um you know growing it I I'm I'm not going to do that I'm not going to dump a bunch of money into a new location I'm just gonna just going to let this thing cash flow pay off my debt I guess we'll get to the debt and stuff here in a little bit but um you know pay off all my loans and just and just let this thing let this thing roll um you know there certainly are opportunities and Catering right catering is one of those businesses that you can grow it's not going to take a lot of uh investment you know really no increase in fixed costs or anything like that um and we are trying to grow that but it's slow and and it's one of those things that I don't have to do there's there's not a lot of like pressure on me to do that it's just something that I would love to to take more of a you know a share of the pie of um and the bakery side you know we're looking at doing some stuff uh in in retail being able to sell some of our mixes and things like that and grocery stores and stuff like that but again uh this is something I'm not in a huge rush to do it's something that I would like to do eventually great and the now let's Circle back to what we talked about your military experience of your experiences going from what was it Squadron to Squadron where you're the new guy but also their leader and having the humility you know having humility but also commanding respect that that needle that all Searchers and all business buyers need to thread what did you perhaps you could you could um frame this in terms of what did your day one speech look like yeah so I I didn't make a day one speech I you know they they introduced me they said hey this is a new owner I said hey I'm you know basically hey I'm really excited to be here I'm really excited to work with you guys um I look forward to working with you hand inand but um I felt like it was not appropriate for me to get up there and give my philosophy on anything because I was new to the business I was new to the industry um and you know I I wanted I I didn't want to be that guy um and I've seen that in changes changes of command where the new Commander gets up and gives whole philosophy it's like shut up dude like like this is not your time you know put your head down learn um be you know be observant be a sponge and and learn the place first and then you can talk about what your philosophy is going to be but you got to you got to figure it out first and um but jar let me just interject though the and and maybe speeches um sounds too lofty but some sort of introduction like I hi I'm I'm Jared this is my background no I mean that webly want to do that right right the previous owners did that for me they they introduced me they told everybody who I was they stayed in the business right they they uh when I when we did the deal um they had a contract to to stay on for three months with an option to stay on for an additional three so so six months and they were going to continue running the business additionally we went a full day with me as the owner of the business before um anybody knew about it so we we transacted on I think it was on a Saturday night Sunday went and it was great good day everything was normal uh I came in in the afternoon and you know it was like Hey the the owners gave a speech and said you know this is Jarrett and we've got to know him and they gave my background and they they actually uh the the uh the owner Toby um he actually made this big crawler like a big doughnut fried it it was like massive and painted it gold and he like you know had this passing of the golden crawler to me it was it was it was pretty cool okay so there there was some ceremony then yeah there there was there was but tongue and Chic ceremony yes yes for sure um and and and Jared you the business was what did you say 73 years old 1947 it was founded these owners were related to the original l or they they bought the business themselves they bought the business themselves they had owned it for 27 years um so so I was the fourth I am the fourth owner they were the third um so 37 for Lou 10 for um a guy and a guy named Bob Watson who was kind of in the middle there and then and then uh 27 for for uh Toby and Patty uh always nice too that a business can demonstrate its ability to to transition granted they' hold it held it for so long that whatever was true of the business when they bought it 27 years prior probably wasn't true when you bought it but still ex shows a little bit of robustness there suggests robustness go ahead yeah so then so then I you know again I I said hey you know I'm really excited to be here um and I'm I'm looking forward to learning from you guys um didn't make a big speech uh showed up the next morning at 6:00 a.m. and bust tables yeah yeah so I spent the first month uh I was here every single day for the first month and I did every job so I started busing I did that for a couple days and then I went to the dish bit and I did dishes for a couple days and I went into prep and I did prep I baked at night I did I did everything and I just got to know all the people and I got to and basic you know when I approached them and said Hey listen I just want to learn from you I just want to see how you do this um and um and you know tell me everything and and so that's what I that's how I spent my first month was you know I'm not going to change anything I'm just here to learn the business and uh spent a ton of time with the owners uh you know listening to stories and getting the background and all that kind of stuff but um you know really worked myself into the business slowly from the bottom up and I I felt like that was the best way for me to come in and show the people that you know I wasn't going to come in and change the menu on day one or you know open us up for dinner or do anything like that I was like I just want to learn about the business I'm not going to change anything tell me about you tell me about your family tell me about your job um you know why do you like that's awesome you know why why'd you do it that way that's I never would have thought of that and you know everything I could just to make sure that the people in the business understood that I was humble and wanted to learn and I I wanted to be a part of this thing this organism that that was you know that existed and and um you know I I wasn't there to you know come in and make a bunch of changes and so um yeah it was it was I would say it was like a slow transition where you know I I kind of took over the business and you know with the old owners still in the business that was sometimes a little tricky but I I didn't you know I never like took offense to that uh when when people would go to the Old owner and ask questions and I just uh again tried to be as humble as I could took some time to takes time for people to direct their energy toward you and see you as the as the boss totally totally yeah um but really there there was a g there were GMS right or AGM I think that's an important thing that I skipped over yeah when when looking at any business really but particularly a restaurant if you're actually going to consider buying a restaurant you say that this is really important it is probably self-evident but give us more to why so you know in terms of scale um this business is kind of special because it's big enough that we are able to afford to have a GM uh a lot of restaurants are not so we had we we have a GM same person gentleman named Craig who's awesome he's great he's been in the industry like you know his whole life uh he was actually a regional manager for one of the big chains ton ton of experience U and you know his kids live here and and he wanted something that was a little kind of slower Pace than the the real corporate stuff and so he came in as the GM about two years before I took over and um you know was pretty clear with the previous owners and with me that you know he's here to stay and and he likes it here and he he um he's not looking to do something else and so that gave me a lot of confidence that he was here you know for the long term I'm pretty sure right off the bat I you know I gave him a bump in pay and you know we we we talked right away about compensation and like you know uh some sort of a bonus plan and things like that not to push him but just to make sure that you know he knew that he was really valued and that I I needed him um to to stick around I still do you know I I I think in order for for me to be able to do the things I do on a daily basis and just live the life I want to live like I need a person like that in this business otherwise I would just drive myself nuts I'd be here all the time um so so yeah it was really important for me to have him stick around the chef too the you know the kitchen manager um I I made sure he knew that I I was never going to come in and take over his role or try and push him out or anything like that like he was an experienced guy he was really creative he he ran you know a tight ship in the kitchen and and you know made him understand that I appreciated him and I and his experience and his knowledge and and I was going to I was going to you know really looking forward to working with him um and and really you know the it was kind of this slow buildup over the course of the first I'll say 18 months um where you know I was more and more involved I had more knowledge that Mastery was was building and building to where I could make decisions and then um you know I bought this business in the summer of 2018 and if you recall in the winter of uh 19 and 20 we had a major event that really affected restaurants uh So Co covid happened about a year and a half after I took over and you know I like to say and and I really do feel this way like the business never felt like it was mine until Co like I kind of felt like an impostor the entire time um you know even though I'm looking at the books and I'm writing the checks and signing them and everything and people call me boss um I just never felt like I was the boss I always felt like I was The New Guy and um I always again had that kind of impostor syndrome and then Co happened and I really had to like step up and Lead uh you know in a in a contingency and fortunately I'd had some uh experience doing this type of stuff obviously never in a pandemic but you know flying flying aircraft Crisis crisis response is uh is is what you get paid paid for when it comes to being a pilot right you know when everything works it's great but then when when things start going wrong that's why you get you make good money and you know that's what you get trained for you spend a lot of time dealing with and um I really felt comfortable when Co happened as strange as that sounds but you know there's all this pressure they're like holy crap you know we are in this unknown territory I got to figure out a lot of stuff I have 50 people on my staff um you know not all full-time full-time equivalents were probably in the you know 30 range but all these people rely on this business for their Lively Ood um Labor's tough up here you know it is in a lot of places in the US but in the Upper Valley where where I live in Handover it's really hard uh for a number of reasons but it's tough to find good employees and so I was worried about that too like if I close if I lay people off am I ever going to get people back and so you know I made a promise to the crew that I was going to do everything I can to keep everyone employed full-time and you know keep the business going and we're going to be agile and you got to roll with it and and stick with me because we're going to try some stuff but um but we're going to do everything we can to to keep this business going and that's exactly what we did we didn't close we never closed for a day um wow our yeah our servers close even right in the the month after the it hit the fan yeah so so fortunately we the one major change I did make in that in those first 18 months is we changed our point of sale so we had this really Legacy Point of Sale this is where people put their orders in and where you you know swipe your credit card we changed our point of sale to more modern point of sale called toast um and uh and I love I see it everywhere yeah you see it everywhere I'm actually you posted about toast on LinkedIn recently yeah yeah so I was on their customer Advisory board for for a while I actually know a bunch of people at the company so um you know when I was making this decision obviously I was looking at all the options but I had a really good feeling about this company best move I could have made because we went from no online ordering you know really Legacy system with a server big ass server in the basement to this cloudbased system online ordering all this other stuff well when Co happened doors closed I went to my servers I said hey guys like I I need you to become delivery drivers this is the only way we could do this and they were like all right cool we'll do it and so all my servers became delivery drivers and we started doing delivery on day one and we we didn't do delivery in the past um I was I I hate the thirdparty delivery companies GrubHub and Uber and that's a whole another story but um they're kind of predatory especially towards small business small independent restaurants like like mine so um we started doing delivery and we started doing family style meals because people were stuck in their house we're like hey why don't we make you know dinners for a family of five with salad and a dessert you know we're known for our desserts and um package it up and you know make make this really easy process for them to pick it up and not have to cook um and we were just like super entrepreneurial and I I say that but I don't know nothing was sound like yeah I mean we were just doing what we had to right we were like figuring out ways to make money and and we did it and it was just a slow rise back up you know we Revenue fell off you know on average we're doing 810,000 a day in Revenue it went to like a thousand you know and then like we have this uh 21-day trailing average chart that we that we you know keep an eye on and it was like it just kept going up and up and up slowly over time and you know until we built the business back up we we did outdoor dining as soon as the weather got nice and um again that was kind of a turning point for me in terms of being you know the the boss because at that point you know I'm like making these decisions and bringing back all these entrepreneurship classes that I took at tuck and figuring out ways to uh you know get the team on board and come up with minimum viable products and uh use the lean canvas for for coming up with different ideas and um and we did that you know I like sat with my managers and said all right like we broke out the lean canvas and we're like you know filling out all the boxes for the dinners to go and for just different different things that we did and um and it worked out so heard that phrase lean canvas since my tech days sorry you I was just going to say of course we leaned on like every stimulus anything out there too like the bank was awesome uh super supportive we were the first PPP loan that they wrote and potentially like one of the first PPP loans that went out in the US like they were right on top of it as soon as it opened up they were there um I worked really closely with the bank to to get that PPP loan so uh and of course that was forgiven and there was other stimulus packages that we were able to take advantage of employee retention credits um I was all over that stuff and and that's they were lifelines they truly were and but Jared Revenue did Decline markedly and then you clawed your way back with these with this Innovation but when Revenue declined and yet you kept everybody employed so did you kind of just personally absorb the Lost profit there no I mean we had we had a cushion right we I was you know we don't we don't run a super conservative balance sheet in terms of like our cash cushion but we had plenty uh to to last us a couple weeks right we we were we were going to be able to make payroll for a couple weeks and again our fix cost went down um I went to the bank and said hey I'd like to stop making my my payments on my SBA loan because that'll help me a lot uh and on my mortgage and all the other stuff because I at that point I own the building and the bank was great and they said sure we'll just pause payments so I was able to take away some of those uh kind of recurring payments that um that end up you know building up and and being really scary again we're you know a big part of our business was cost of goods and so we trimmed labor a little bit where we could you know the people that kind of use this as a part-time gig and you know students and things like that like sorry guys you know we just don't have the hours for you but but we didn't we didn't lay off any full-time people or anything like that and we just kind of trimmed as much as we could and I said hey when we get to this point that's when we have to start laying people off or whatever and fortunately we never got to that point right we were able to just like create new lines business uh again that PPP loan coming in really timely was super important and um and we just were able to just kind of keep on trucking through so worked out well well I I think your experience of only feeling like truly the owner on the other side of this experience while many business buyers aren't going to go through a pandemic in their the business that they just bought a year and a half earlier let's hope that the kind of only once the business has their fing fingerprints on it do they feel truly like the owner as opposed to just owner in name so I think I think that that kind of is a natural a natural way kind of progression that you experienced or just more accelerated you probably would have eventually gotten there but you know after six months you got there because Co kind of kind of yeah forced you to really make some strategic decisions that affected everybody within the within the organization yeah totally agree yeah well congratulations on the way you managed that Jared sounds like it quite uccessful thanks let's get into a little bit about um what the the deal actually your transaction here actually looked like um and let's start with whatever you can share on the business the numbers behind the business itself yeah sure so um you know as I mentioned I do I am still under an NDA so I can't get into too many details but I'm I'm happy to kind of give some big picture numbers so um you know right now we're doing um in terms of Revenue or or when I bought the business in the millions so so um single- digit Millions but uh but somewhere in the middle there um in terms of you know profitability again High Teens um so you know the owners had a good life right they were making in the hundreds of thousands uh kind of mid hundreds of thousands in terms of SD and um the way we valued the business was uh we took we did like an interest rate buildup method so instead of it's there's no comps for this type of business right um you know if you look at McDonald's or something a publicly traded company they're trading at like 9x um earnings and this is not like that so um you know we didn't really have and before you get into this because I I I want to hear you break this down Jared y but why sure you want to compare apples to apples so industry business to Industry business restaurant to restaurant however on the other hand there is kind of a pretty tight band in small businesses or businesses of a certain size that is call it two and a half to four and a half that's you know so so why wouldn't you just anchor to kind of to kind of that as opposed to a more this more sophisticated method you're about to explain to be honest I I don't have a good I don't have a good reason I when okay the the accountant that we this guy Mark who was kind of the intermediary for this whole deal when he presented the business to me this was the method that he used and and I took that to a couple friends that I have who had worked in investment banging private equity and said hey does this make sense and they said yeah absolutely and they pointed to this book called do and Phelps um which is a valuation guide uh that a lot of kind of small smaller business PE type of firms use in order to come up with a value of the business and duin Phelps had essentially a formula and then kind of a guide for what the the um the values of these different parts of the formula was so you know the easy way to think about it is some multiple of earnings the other the opposite way is you know instead of multiplying is through division right so you take U sde or noi or what ebit or whatever you want to call it and you divide it by some number some risk premium and so you know in real estate this is what we do with a cap rate right and so uh for a business you can do the same thing and so the way we did it was I think there were four different components there is a risk-free rate plus an equity risk premium plus a size premium plus a industry premium I can't remember I don't think I said that U no yeah industry size and then company so five different five different parts of it so you take the risk-free rate which at the time was we'll say two and a half three% you know whatever the 10e treasury is you take the equity risk premium so if you look at the S&P 500 over the course of the last however many years you know it's averaging you know the average returns are we'll say 7 eight% so you add that to your 3% so now you're at 11 you have some kind of uh you know industry premium we'll call that 5 to 10% you have a size premium maybe that's another two or 3% then you have a size because it's a small business it deserves small need to take that into account right the smaller the business the kind of more that percentage is going to be and then um a company risk premium that is kind of made up right and so yeah this is what you negotiate on like what is that number if that number is bigger right you're dividing by a bigger number then you get a smaller number for what the value of the company is if that number total number is smaller you get you know um you get a bigger number so so this is almost like if if we you'll sometimes hear people refer to the multiple that we buy businesses based upon converting that to kind of a cap rate to think about things in real estate that's basically what this conver I mean you could just divide by 100 and flip it sort of thing yeah yeah yeah so how you broke this down these five how you kind of add these five um risk percentages up you you total them is pretty interesting so this is well know so private private Equity experienced listeners will know what this is I have never heard of this I have some studying to do I guess this is a well-known method I guess among business brokers and I don't know Bankers valuation experts okay yeah and and actually the on kind of on my side there was somebody at the bank who was kind of you know in my corner um he he had done a similar type of valuation so you know the sellers had had their valuation we had ours you know of course their premium is like 177% or something right so so it'd be like a a 5x multiple more than that five5 you know and I come in and I mine's like 30 something percent you know so mine's like a 3X multiple and then you know we said okay well why' you use that number for the industry RIS premium well because you know restaurants blah blah blah um or this size and again Duff and Phelps has some um kind of numbers for what those should be so you know if a business is less than $5 million then you should use this number if it's and so we were like really on the micro side of this and so a lot of this was really up for negotiation um we ended up in the vicinity of you know three 3.5 something like that 3.7 x multiple so so that number was you know up into the up into the um 30s and or high 20s low 30s and and then there were a couple other levers that we had right so um one was working with the bank and figuring out how much the bank is willing to lend um two it was the sellers and how much they were willing to take back uh in you know as a as a seller note and then how we were going to treat that in terms of escrow or anything like that so um and then and then the last is like how much money I had which wasn't a lot and I ended up like basically clearing out whatever Investments I had and then I went to some family and said hey I just need a little bit to get me over the line and I was able to borrow U you know just again a family type of loan in order to get me over the line there um and then can can you tell us what that sum cash was that you brought to this transaction um it was 200 and something thousand total it was 200 something thousand total yeah and you basically liquidated all of your assets your financial assets and done a little bit of f friends and family money yeah and you're in your mid-30s with a family of with three children and a wife yep super risky it was super RIS just just making sure that because you because now it looks I mean things are going well so we're it's like no big deal but did it feel like you were going all in like you were pushing all your chips on the table it did but also I'm like what do I have to lose like I you know I I had I had this great education um it looked like a great business and it turned out to be a great business um and you know if it didn't work out then I'll go get a job right like you know I I I knew that I could get a job and yeah it would suck and you know maybe I'd have to go crawl back to somebody and ask for money you know a family member or something and hey can you help me out here but um yeah it was super risky and and I realized that and I know it I knew it at the time but um this was what I wanted to do I just didn't I didn't want to be miserable in in some job that I hated and and um and so I took the risk and it worked out so yeah um well I and I interrupted you about so where so where did SBA Deb arrive that I think I you were gonna finish the terms yeah SBA was uh almost 80% just shy of 80% um the sellers were couple hundred thousand in terms of the what they were able to lend me that couple hundred thousand uh acted as escrow so um uh basically we had this we it was a stock deal too this is another kind of interesting point but we did a stock deal and I can talk about that here in a minute but we had this list of things that the escrow was going to kind of cover uh so you know one of them was working capital so we had a net working capital number that we had to be at and I think it was plus 50,000 and obviously you know this list of things that are considered in working capital so if that wasn't there that was going to come out of this escrow and come out of this money that I was going to have to owe them um if anything broke big big things you know if the freezer break if the some you know we have some issue that was going to come out of the es and there were things when we looked at the building that were like uh you know freezer was super old the dish area was like a mess there was water leaking through the floor um so there were a couple of those items that I knew I might have to fix and we had this money that was kind of this escrow that if any of those things came up within this time period it was going to come out of that money that I owed to the sellers um what else did we have um that's a great protection by the way I'm sure many of my my guests have had that but I I don't I'm not super um so familiar with that technique that I ask about it does that have a a name I mean that's that's kind of like a forgivable seller note but it but it's more like money allocated should something very specific Co covered I assume in your in your APA in your purchase agreement should one of these things occur like you know some asset worth over $1,000 breaks then this money goes toward that um great technique yeah yeah yeah and that worked out really well I can't remember who told me to do that but somebody gave me that advice and it was Sage advice really really good um the other thing is um the real estate so the sellers owned this it's a condo association this building so they own the condo and that was really really important to me most most restaurants are asset light um and that's one of the dangers right they don't own a lot of their stuff so rent goes up every year and they never able to kind of get over the hump whatever profit margin you make in the B is going to be the margin you make forever well they own the building which is awesome right 30 South Main Street in Handover Great Piece of real estate and um that was really important to me so we were able to um kind of allocate value to different things and basically you know we kind of we going back and forth on what the value of the restaurant was and finally I said Hey listen um I will pay more for the real estate because I'm able to get cheaper debt for a longer term um and it's you know secured but I'll pay less for the restaurant because this is shorter debt you know more expensive more risky and we that's that was the ultimate agreement we came to so I bought an option to purchase the real estate I had a three-year option at a fixed price and then I had a write a first refusal that uh resorted to you know we we basically said we would have it appraised by two appraisers and we would you know mix the two together and that's what I would pay for the building so uh I was pretty lucky and it happened to be right before covid which kind of sucked but also worked out fine um but there was some really really cheap debt that came from the federal Home Loan Bank of Boston that my bank found Ledger bank and uh it was 0% interest for them it was it was the jobs for America app so as long as I was you know employing people and and had uh any kind of growth aspiration which you know of course I I could I could say I have you know lots of growth aspiration because I want to grow catering and and you know grow grow Bakery uh they they were able to give this money at 0% to the bank they put their carry on it which was like 2% but I got super cheap debt 25 years uh on the building uh I had some money that I had been saving up to buy this this building but then I went to one of the um community development loan funds in in New Hampshire and said hey I'm looking to borrow an additional 100,000 as mezzanine debt and they were able to do that and uh so I was able to buy the building about 18 months 16 months after I bought the business um all SBA so that's a SBA 504 because I own the business in the building um and then SBA 7A 10-y year term 1010 on the uh on the 7A to uh to buy the business and then what else that's pretty much Jared why did you not buy the real estate when you bought the business why did you just buy the option I didn't have the option I didn't have the money for it uh as I said I cleared out my you know basically cleared out my savings so I was like uh yeah I just didn't have the cash yep yep but that just worked out phenomenally so well before I kind of close out what what you're sitting on today I just want to revisit the multiple that you ultimately paid or excuse me that we can call it either the multiple or we can call it the the what was the the language for the way you did it the uh theultimate risk premium yeah the ultimate risk premium but you said the multiple was in the mid Theses which you know feels like what what we often hear on this podcast um how does that compare to other small businesses that you're aware of I if we do kind of force ourselves to do a bit of an Apples to Apples yeah is that where a business of this size typically Falls anyway you know I think so I think for restaurants you're going to find it's going to be much lower um especially smaller ones so much you know if I were to look at the pizza place down the street like I I would probably expect to pay in in the vicinity of like one to two um but oh so so you paid a premium but you also I mean you're buying a much more premium business exactly I mean again the profitability and the stability were the things that were that really stood out and then the fact that there's kind of all these other pieces to it you know it's this Community Asset the real estate made it more valuable to me and I don't know maybe I overpaid I sometimes I think I did but you can't things are going so well and we're highlight exactly exactly how and why here as we as we start to wrap up but um but also Jared one thing I should have asked you at the outset is when learning about L what's the vibe so as a as a as I Diner I come in is it this kind of big bustling place or is it what's the vibe uh small bustling small bustling Place diner is it a diner it's dinish uh Lou is pretty specific that diners were like fast food and cheap and so we're a restaurant and I a diner um okay but but it has that it has that 50s diner feel you know it's got like the checkerboard on the floor and you know on the walls um the booths uh a counter with like the boomerang pattern on the counter so so that's very 70s um and yeah Bakery kind of counter in the front as well when you first walk in the door but it's small the booths are tight it's packed most of the time especially if you come here on the weekend there's a line that goes down the wall uh for people waiting we don't take reservations or anything you just come and and you wait um the great menu you know we've got kind of a bigger menu uh Diner style but um but a little bit more refined we've got some some stuff on there that's just you know not your typical Diner Fair um and and it's a little uh the menu I would say is cleaner too like you know we we have a lot more greens and a lot less fried food and sure there's heavy stuff you know and pancakes and things like that but there's also some options that are that are lighter and cleaner and healthier and you know with that with the student population here I think that's really appreciated and we saw a ton well I was going to say you know being in a college town for an ivy league university something tells me that there's a a little bit of that uh that's needed uh on a menu totally the stock deal so so what did you want to say about that just um that was that was a big conversation that I had with my attorney and with uh with the you know with the sellers and and a bunch of people uh that was that was a touchy one super happy I did a stock deal though and this and this is why um you know there's risk right when you do a stock deal and as I mentioned I I did really trust the sellers and I I didn't get this feeling like there was going to be something that was going to get uncovered they'd been cheating on their taxes or whatever um but when I you know when I took over the business first of all we we agreed on this working capital number so there was money in the checking account you know payroll was going to happen on schedule a week after I took over we we pay every two weeks weeks um everything was set the terms I had with my vendors was set most of the time when you open a new restaurant especially a new new restaurant it's cash on delivery like the like Cisco comes and they want a check um so I had 30-day terms with most of my vendors uh nothing changed and I think a lot of this rigall like I I've I've only listened to a handful of your shows but I've heard of some of the people who didn't do stock deals who did asset deals and like lost these big contracts and you know it was really upsetting for them for their business not you know emotionally but like it upset the business because you know their rent changed and all this other stuff well none of that stuff happened um you know I remember I got a health inspection pretty soon after I took over and the health inspector looked at me he's like you're not Toby and I'm like no I'm not but you know I I took I bought the business it was a stock deal so it's the same Corporation you know I looked into this I did research and made sure that we didn't need another health inspection new one from the state or whatever and he's like that's not true and I'm like no no it's it's true trust me like I I checked into this and soed my attorney and he's like no you know you got to kick everybody out and shut the doors and I'm like like listen sir you know respectfully if you close my doors and kick everybody out and give me a bad name and you're wrong I'm gonna sue you I'm gonna sue the state for lost revenue and you know damage to reputation because I know I'm right and he's like uh hold on so he goes makes a couple phone calls and he's like you're right um and so you know the inspection went fine I was again super respectful and learned a lot and all this other stuff but uh the fact that well handled jar that was a that was a yeah that was like Razor's Edge moment there it was it was scary but um but yeah super risky too right if I just said okay sure like that would have been very damaging um but yeah it it ended up working out really well and I took a hit on depreciation right there was Goodwill that I can't depreciate because it's already fully depreciated um but you you know worked out really well for the sellers because now they're paying long-term capital gains tax instead of short-term capital gains so which is why sellers typically want it exactly right so their tax rate on the deal you know if it was an asset sale would have been into the what 20 30% range but as a stock deal long-term capital gains you know um much much lower tax rate uh so and the the price adjusted too so we lowered the price a little bit because the sellers were getting the advantage I was taking the risk um but um you know I think I think there's a lot of people out there especially attorneys they'll tell you right off the bat never do a stock deal um and there's a lot of great reasons not to but there's also a lot of reasons why it could work out and um again I was lucky and I trusted the owners and and it worked out really well for me uh it could have gone different ways but um it was it was the right decision I'm glad I made that decision well I feel like doing a stock deal is akin to buying a restaurant the default is you don't do it the default is the asset asset purchase but but don't be so narrow-minded that you don't consider uh the the alternative if it looks like it could make sense go for it so Jarett you mentioned that you basically were able to buy the real estate a year and a half later M you had been saving you you didn't have the capital to do that at the moment of the when you bought the business but a year and a half later you did so that tells me that things were going well it was earning nice nicely enough that you had the the the deposit necessary to buy the building correct me if I'm wrong but and you've told us about covid but give us a bigger picture now of like how has it gone how are things going today um I would say really really well I I think um I think I've been super fortunate in a lot of ways I found a great business uh it's worked out the way I kind of expected it to um you know we're not as profitable as we were when the sellers sold it uh but only buy a little bit and and I'm okay with that because I'm reinvesting in the business I'm reinvesting in the people you know we're we're paying people more there have been some economic changes too um you know again Labor's been tough uh food costs went way up during Co has come back down but uh ultimately it's going really well and you know again in terms of that profitability I I the way I think about it is the first we'll say five or seven years um it's reinvesting in the business it's paying down debt it's getting rid of debt it's you know I'm not looking to make a ton of money in the in those first five to seven years um once we get past that then I'm going to start thinking about like okay now we start kind of leaning things out getting it getting it on a more stable path we just you know we did a big kitchen renovation as I mentioned we took over the space next door and we invested money to build out the bakery there so it's been a lot of reinvestment again a lot of paying down debt and not taking a ton out of the business you know we take a salary and and we take distributions but we're we're putting a lot more back into the business than uh than the sellers were and then I don't know what my timeline is I I I I don't you know I think I don't I don't have any thoughts of selling the business anytime soon but I think you know eventually I'll get to the point where I'm going to start to make the business look good again and on paper and you know not reinvest as much if I don't have to and be a little tighter on payroll and stuff like that and and make the business look good but yeah it's been going great um you know I love living here it's an awesome place to live there's tons of outdoor stuff Great Schools uh really good hospital system I I um I won I I I feel like I'm I am so fortunate and it worked out really well and uh yeah I'm I'm in a pretty good spot that's amazing Jared and how old are you I am 42 42 so summer 2028 2018 we're approaching summer 2024 so we're six years into a 10year SBA note so you're in the back half that's when uh a lot of you I mean you're you're really paying generating a lot of equity for yourself every month yeah um and you paid off the seller note yes quickly quickly yeah because because we did take a bunch out of out of that escrow um as it turned out just the way that payroll fell um because it was like towards the end of a pay period and inventory was a little less than they thought and um so actually that that note like a huge chunk of that note got taken away as soon as we figured out some of those networking Capital calculations and then there were some repairs and things that we took out of that so that note shrunk a lot and um and yeah sorry that note was there at transaction so this was not you you brought that cash to the table and it was sitting in escrow it wasn't no financing oh it was it was it was it was financing and you were reducing what you had to pay them in financing exactly exactly sorry yep yep Jared let me ask because you mentioned you know being a tuck prestigious business school Goldman Sachs and McKenzie come recruit there um surely some of your classmates went that path can I ask on your personal take home what that looks like compared to if you'd gone into industry yeah I mean I think I think cash right like and cash is certainly less like I I look at what my friends are making and they're definitely making more money than me but um when it comes to equity I think I'm doing a lot better because um you know I'm I'm building up the value of this business or or you're know paying down what the bank owed me uh same with the real estate you know the value of the real estate just keeps going up uh as as it's more and more scarce and um and I'm making the business more profitable uh again as a percentage of Revenue even though our our take home number is is about the same as as the sellers uh or a little less so yeah I think you know strictly on a cash basis certainly less than what my what my uh classmates are taking home but from an equity standpoint I think I'm probably in a better spot uh but to to be honest well like that's not why I did it um sure you know the money is fine like it like but that's not that's not the driver what about from quality of life standpoint I should that's that's what I should be asking honestly way better like I yeah are there times like I told you this morning you know we had a snowstorm bunch of people called out like I was up there doing dishes you know that's just how it goes sometimes and but that's rare you know that does not happen a lot and uh certainly there are times when it's a Sunday morning and something happens and I got to wake up and come in and and you know do dishes or whatever and and that's fine that's part of being a small business owner but the reality is that you know we close at three which is great right I I'm I'm always around for my kids um I go to their sporting events I'm like I'm really active in the community I'm on the planning board I'm like you know I do a lot of stuff with the town um I volunteer uh I have hobbies I fly Still I Fly Cessnas and you know little little airplanes and and uh do a little bit of instructing too so um yeah I think it's I think it's working out really well and you know again that the thing that I have that I was afraid that I wouldn't have is that autonomy that Mastery and that sense of purpose and um and those are the things that are really important to me and and sure the money is good and I'm living very you know comfortable life certainly um nowhere you know not not near what some of my other classmates are making you know who went into private Equity or whatever but that's that's not the that's not the driver for me yeah and those that that wouldn't make me happy yep yep and the business has actually has grown even though growth wasn't something that you were going to pursue aggressively in fact it's it's grown by what percentage would you say in in the six years we're up um probably 60% so I don't know what that is compound annual growth weight but um but you know we had some big years of big inflation um we we had some headwinds as the result as a result of covid we outdoor dining wasn't a thing and we gained like 11 extra tables we only have 16 tables inside so we gained 11 massive increase um this is why we did this big kitchen renovation because I wanted to increase our ability to serve all those tables um we used to be really Limited in capacity because the kitchen just wasn't big enough uh we didn't have enough cook space flat you know Grill space and whatever so we increased that um and and yeah the business is definitely grown um and and some of that is for me but a lot of that is just you know Co and kind of other things that have happened the extra tables it sounds like a lot of that is so so I I guess in in restaurants all these tables on the Cur curbside tables postco is really a boon to restaurants I mean that's just that's just because that's the that's the one thing where there's a ceiling is the number of tables you have there's a tight ceiling on a restaurant it's basically number of tables times whatever number of meals per day and and that's it um number of table turns I guess and so the only thing that you can really change there is the number of tables which which postco a lot of restaurants were able to increase right right yeah I mean you know in terms of guess count like we we were we were pretty limited uh we were limited to about 500 a day uh 500 guests and then that doesn't include the bakery and takeout and catering and stuff like that but just sit down guess um we were you know if we hit 500 that was a great day and now we're doing you know we'll do 650 660 pretty easy and that was in the old kitchen with the new kitchen I'm hoping to hit 700 here pretty soon um so yeah I mean good good outcome of course during covid that was like our only income so we were significantly less than what we were able to do but then once things open back up um and people love it you know it's yeah it sucks it takes up some parking spaces but um the town is just so much more vibrant you know you walk around there's people sitting there it's it's awesome to totally I I love it uh I mean as a citizen of a town with outdoor seating it just gives it much more of that Continental uh flavor right yeah the um going again on this point about growth and the fact that you had a general manager in place you know one of the reasons that we like having operators or or general managers in place as business buyers is so that we can then work on the business not in the business and usually working on the business means sure improving the business but beyond that strategic projects I.E growth yeah and if you weren't super growth focused what the heck are you doing all no no but but actually seriously jar like if you have a manager and you're not like you know how am I going to open location two and three um what what does your day-to-day look like yeah so so one of the things we did early on was my office manager you know found another job she she gave us plenty of notice and said hey I just want to go do something else I'm like great and we didn't hire uh somebody to take her place uh I automated all that and I took over a lot of it so I do the books I'm the HR Manager do a lot of that kind of back office stuff and um you know one I like doing it I like looking at the numbers and and kind of doing QuickBooks and stuff like that it's just uh soothing I guess but also it's nice to not have somebody else that's dealing with your money uh in a small business there's so many stories of people uh you know stealing from you know the bookkeeper stealing and so I I I like that um so we've kind of reduced some payroll there we um Co took a big chunk of my my growth and uh you know the the um the energy that I had for that right is like just figuring out how to keep things going and you know as I mentioned we were able to do a lot of different things some of those things stuck a lot of them we did during Co and then we stopped doing um at this point now the things I'm work I'm focusing on so as I mentioned we moved the bakery so that was kind of big that's expanding capacity we renovated the kitchen this year that was like we actually did it in six weeks but it was months and months of prep and planning and all that um so that was kind of you know this past six eight months was was really heavily focused on that uh I did a lot of the work myself uh just you know being kind of the general contractor and and chipping in and and being here every day literally with a hammer and and helping the contractors do do their stuff um at this point I'm looking at a couple things so as I mentioned we you know we're looking at bringing in uh mimosas and things like that so raising the check average just another kind of benefit for customers we had we had a competitor move in across the street that's more fast casual they do like bagels and you know quick service type of stuff so uh we're trying to move the business higher in the experience level so instead of focusing on that quick stuff you know they're going to take they have taken some of those customers we felt it a little bit we you know it it hasn't had too much of an impact but you know our strategy is to make the experience a little bit nicer uh catering is again something that we've we've always tried to grow and and it's constantly up and down you know we we'll grow it I'll bring somebody in we we had a couple great employees that did a good job and then you know they left and things kind of fell fell off and then hired somebody new and it took them a little while to pull back up so there's some opportunities there and then lastly I think we have a great brand that a lot of people know especially Dartmouth people uh and we have some great products and so I'm looking at ways to expand outside of the store so potentially in retail yeah um potentially in E e-commerce you know selling mixes and stuff like that yeah those are the things I'm going to be focused on this year that could be a really interesting uh business you know it reminds me going back to I'm GNA I'm GNA riff here and I may not know I don't know what I'm talking about um but it reminds me of when you were talking about like expanding locations and how how perilous that can be for a restaurant and I was just thinking like also there's something as a consumer selfishly now as as a diner there's something special about there being but a single location for a place like it's it's like going to the one and only it's that much more of an experience if there's just the one place where I can go have this meal I you know I went to lose uh not lose two or lose three or lose four lose five I went to the one and only lose and I feel like if you leverage that brand into like you said mixes or something the brand that brand value is tighter stronger more special uh if there if there still is just a single location on Main Street in small Handover New Hampshire yeah absolutely and you know the back to your original question will is like you know what do I do every day um there's something fun and like really natural and human about hosting people and like serving people and um I enjoy that a lot and I spend time doing that right I I spend a lot of time in the dining room talking to people and being present and you know I remember I remember somebody you know an officer uh that I served under talking about leadership by walking around and you know that that like struck a chord to me it's like just be present like talk to people walk around you know ask people how they're doing uh it's so important and it's so fun uh it's it's it really is a pleasure that I that I have in this business of like standing at the counter and talking to people and serving people and you know asking people how their meal was and figuring out ways that we can constantly be improving uh so so I enjoy that and and that that brings me a lot of uh fulfillment well you took the last my last question out of my mouth Jared is that is that you also bought a what you characterized as a fun business buiness you know um sweaty boring businesses are great in in many ways and and people can have fun in them but there is definitely a certain sex appeal if you will to to you know having your own restaurant being in a restaurant environment your customers are basically there to have a good time and enjoy each other and enjoy a good meal and you know you're giving them that experience and being kind of along for their ride or or talking to them as they check out you also said that you like shooting the with with the staff say a little bit about that yeah I mean it uh you know restaurant staff are um uh they're a fun group of people there's um you know definitely some some partying and some stories and you know we've we've got our fair share of people who've who've had trouble in the past um I don't shy away from that I'm I'm okay with it sometimes it bites me but most of the time not you know if you uh if you treat people well and and treat them with respect you know even if they've had a trouble troubled history um they're going to they're going to be grateful for it um and uh and they're going to appreciate you and and I appreciate them you know to to for coming in and and and giving it their all and those hard days when I need them to show up or I you know I need a little extra out of them or I need them to put in some overtime um it it it all comes around so so yeah it's definitely an interesting crew a lot like Marines to be H especially in the back of the house especially in in the kitchen um you know lots of uh do how is that how how how are Marines just oh man I mean Young Marines just do stupid stuff you know get in trouble and you know buy you know you see a lance corporal young Marine pull into the parking lot with this like you know couple year old Mustang you're like dude how'd you how'd you afford that like I know how much money you made oh they gave me a great loan like can I can I look at the loan like oh yeah yeah you know it's like 19% interest and whatever you're like dude do you know how much you're actually pay paying for this um so there's there's some of that uh but but again it's they're great people and and I think people who work in this industry you know it's it's a it's a certain group of people a certain special group of people who enjoy cooking and they enjoy serving people and they enjoy being part of that atmosphere and the atmosphere in the kitchen is um is fun and it's you know everyone's always joking around and having a good time you have to if you're gonna if you're going to survive it so um yeah did did you watch the bear yeah yeah I loved it I thought how close to your dayto day is is that is that show obviously dramatized but uh but but they didn't make that stuff up like like there we've been in those like the the the episode where the tickets are coming in from GrubHub I'm like I have been there like not from GrubHub snack bass and online ordering and like holy you know dining room is full there's people hanging out the door and all these orders are coming in and like everyone's freaking out or you know things break all the time and figuring out how you're going to make it through the day it's like they got a lot of stuff right in there again it's a little uh dramatic at times but yeah pretty pretty accurate and maybe maybe my history as a as a pilot and you know having having served in combat and you know lent well to to being able to handle stress and I kind of I kind of need some of that in order to make it through the day well it's funny jar you say that because I I've had more than one guest Best Vet veteran say you know I've been shot at I've seen combat and running this business that I bought is still the hardest thing I've ever done um it sounds like maybe in your case it it's not uh you probably had some some deeper crises in on the battlefield but it's a different type of stress you know like you like a lot of times people talk about flying it's like 99% boring and routine and that 1% of like sheer Terror you don't experience that as much here like I I I feel like the stress is more of a slow burn um you know we the college goes home and before Thanksgiving the students you know they do the quarter system so all of December there's no students here and then January February March is like dreary and slow and you know our business is way down and then we have tax season in April and it's like a scary couple months and even having done this for six years it's like every year January February I'm like you know waking up in the middle of the night like are we going to have enough money and those are stresses those are different types of stresses but yeah it's tough and I mean some of that planning the the scariest part about it is that like this is all on me and I know I'm not super smart and super experienced or anything like that and like I could really screw this up bad uh and that's a little terrifying um fortunately I haven't yet too bad but um it can happen what a great story what a neat business if people want to reach out with questions how do you like them to do that sure uh so I'm on LinkedIn uh I did join search funer but I'm not Super Active there um so LinkedIn Jarrett Burke uh j a r t b r ke if you want to email me you can email me um Jarrett J A RL restaurant.com um yeah Reach Out happy to talk okay put that all in the show notes cool jar Burk thank you very much thank you well great talking to you I hope you enjoy that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business