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[SpotOn Series] Secrets to Restaurant Vitality With David Steele of Flour + Water Hospitality Group

David SteeleDavid Steele is the Co-founder and Executive Chairman of Flour + Water Hospitality Group, the Co-founder and Managing Partner of Great Gold Hospitality Group, and the Founder and CEO of One Wealth Advisors. The Four + Water Hospitality Group’s restaurants have become a cornerstone of San Francisco’s culinary scene. FWHG brings a range of resources to its clients, from consulting to providing expertise in many aspects of development and operations to ensure clients reach their goals and vision. With a background in finance and entrepreneurship, David blends business acumen with creativity, leading multiple acclaimed restaurants, including Flour + Water, Flour + Water Pasta Shop, and Penny Roma.

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Here’s a Glimpse of What You’ll Hear:

  • [0:59] How a dishwasher job sparked David Steele’s passion for the restaurant industry
  • [2:08] David’s transition from finance to launching Flour + Water Hospitality Group
  • [5:28] Why understanding capital is a necessity in the restaurant business
  • [8:45] The integral role community plays in a restaurant’s success
  • [10:04] Fostering excellence by encouraging staff to feel valued and happy
  • [14:10] How Flour + Water Hospitality Group expanded into multiple successful ventures
  • [19:23] Trick Dog: A cocktail bar that combines financial savvy with creative flair
  • [22:24] The recipe for success behind the Great Gold Hospitality Group in Truckee

In this episode…

The restaurant industry often struggles with the balance between artistic culinary vision and sound financial management. How can restaurateurs effectively manage this balance to ensure both creative and economic success?

According to seasoned entrepreneur and restaurateur David Steele, the key to managing the balance between culinary artistry and financial stability lies in understanding its relationship to capital. David emphasizes the significance of effectively utilizing capital and the interdependence between outside investors and operators. He believes a healthy tension between business principles and artisanship is essential to ensure financial responsibility without sacrificing creativity. This approach has given his ventures a distinct advantage in the competitive restaurant industry.

On this episode of the Top Business Leaders Show, Rise25’s Chad Franzen welcomes David Steele, Co-founder and Executive Chairman of Flour + Water Hospitality Group, to discuss his journey from dishwasher to successful restaurateur. David shares insights on the importance of community, the evolution of his restaurant concepts, and the significance of treating team members with respect and dignity. He also touches on scaling restaurant operations while maintaining quality and customer satisfaction.

Resources mentioned in this episode:

Quotable Moments:

  • “Treat your team with love and respect and dignity. Care about them.”
  • “I’m going to spend the rest of my career trying to prove you wrong.”
  • “Restaurants are such a beautiful business in that they are completely dependent upon the community.”
  • “I think there’s a healthy tension between business principles and artisanship.”
  • “We’re empowering our culinary teams to be creative, and that then also shows up on the plate.”

Action Steps:

  1. Empower and respect your team members: Fostering a work environment based on mutual respect and care can dramatically improve employee satisfaction and performance.
  2. Understand and manage business finances wisely: David Steele’s success underlines the importance of comprehending the relationship between capital investment and business operations, particularly in the hospitality industry.
  3. Engage with and contribute to your local community: Community engagement not only wins customer loyalty but also reinforces a restaurant’s role as a cultural and social hub.
  4. Adapt your business to meet customer expectations: Responding to consumer feedback and adapting your offerings can elevate a business to new heights.
  5. Incorporate creativity and high standards into your products or services: Top-notch services and high-quality culinary products showcase integrity and creative freedom in your offerings and set your business apart from competitors.

Sponsor for this episode

SpotOn:

Today’s episode is brought to you by SpotOn. SpotOn has transformed the merchant service industry by providing the tools and support your business deserves at a price that puts money back into your pocket!

SpotOn’s team wants to empower all of their merchants by merging payment processing with simple customer engagement tools, all in one easy-to-use platform. As a business owner, you are focused on managing your daily operations and engaging your customers. You don’t have the time, energy, or excess funds to devote to multiple complicated platforms! That’s why SpotOn is focused on helping you build long-lasting customer loyalty while saving you time and money through our all in one system.

Whether you are a merchant or a consumer, SpotOn wants to be more than an average payment processor. SpotOn aims to exceed your expectations by valuing simplicity, maintaining flexibility, and celebrating innovative collaboration. Let SpotOn help you do business the right way.

Partner with SpotOn today! Visit spoton.com today to schedule your free demo or to view SpotOn’s products. You can also call SpotOn at 877.814.4102 at any time. Let SpotOn help you make the difference with your business!

Rise25:

At Rise25, we’re committed to helping you connect with your Dream 100 referral partners, clients, and strategic partners through our done-for-you podcast solution.

We’re a professional podcast production agency that makes creating a podcast effortless. Since 2009, our proven system has helped thousands of B2B businesses build strong relationships with referral partners, clients, and audiences without doing the hard work.

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The Rise25 podcasting solution is designed to help you build a profitable podcast. This requires a specific strategy, and we’ve got that down pat. We focus on making sure you have a direct path to ROI, which is the most important component. Plus, our podcast production company takes any heavy lifting of production and distribution off your plate.

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We’ll distribute each episode across more than 11 unique channels, including iTunes, Spotify, and Google Podcasts. We’ll also create copy for each episode and promote your show across social media.

Co-founders Dr. Jeremy Weisz and John Corcoran credit podcasting as being the best thing they have ever done for their businesses. Podcasting connected them with the founders/CEOs of P90x, Atari, Einstein Bagels, Mattel, Rx Bars,  YPO, EO, Lending Tree, Freshdesk, and many more.

The relationships you form through podcasting run deep. Jeremy and John became business partners through podcasting. They have even gone on family vacations and attended weddings of guests who have been on the podcast.

Podcast production has a lot of moving parts and is a big commitment on our end; we only want to work with people who are committed to their business and to cultivating amazing relationships.

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Contact us now at support@rise25.com or book a call at rise25.com/bookcall.

Rise25 Co-founders, Dr. Jeremy Weisz and John Corcoran, have been podcasting and advising about podcasting since 2008.

Episode Transcript

Intro 0:03

Welcome to the top business leaders show. Powered by Rise25 media, we featured top founders, executives and business leaders from all over the world.

Chad Franzen 0:19

Chad Franzen here, co-host for this show, where we feature top restaurateurs, investors, and business leaders. This is part of our SpotOn series. SpotOn has the best-in-class payment platform for retail, and they have a flagship solution called SpotOn Restaurant, where they combine marketing software and payments all in one. They have served everyone from larger chains like Dairy Queen and Subway to small mom-and-pop restaurants. To learn more, go to SpotOn.com. This episode is brought to you by Rise25. We help B2B businesses get ROI, clients, referrals, and strategic partnerships with a done-for-you podcast. If you have a B2B business and want to build great relationships with clients, referral partners, and thought leaders in your space, there’s no better way to do it than through podcasts and content marketing. To learn more, go to Rise25.com or email us at support@rise25.com. My guest today is David Steele, Executive Chairman of Flour + Water Hospitality Group and the managing partner of Great Gold Hospitality Group. He’s also Founder and Managing Partner of One Wealth Advisors. David is a multifaceted entrepreneur who seamlessly blends his financial acumen with his passion for the culinary world. He co-founded Flour + Water in 2009, and it has become a cornerstone of San Francisco’s culinary scene, celebrated for its handcrafted pasta and commitment to community impact. With a background in finance, David blends business acumen with creativity, leading multiple acclaimed restaurants, including Flour + Water, Flour + Water Pasta Shop, and Penny Roma. He’s also a supporter of local arts and cultural organizations, showcasing his diverse interests beyond the restaurant industry. David, thanks so much for joining me today. How are you?

David Steele 1:59

I’m great, and my pleasure. Happy to be here.

Chad Franzen 2:01

Hey, so tell me, how did you get started in the restaurant industry?

David Steele 2:08

Man, grew up poor, got the first job I could get the day they allowed me to get a job at 16 as a dishwasher. My family grew up in the Bronx. We’re Jewish, but they grew up in the Bronx amongst a lot of Italian Americans. I was raised in South Jersey, right outside of Philadelphia, with a bunch of Italian Americans. So I related way more to Italian American food, which is distinguished from Italian food, than I did, than I do Jewish food or anything of the like. My family was food-obsessed, and I was very excited to become a dishwasher. Quickly became a prep cook, and then saw the front-of-the-house people making more money and working half the hours, and moved to the front of the house. I worked my way up from busboy to server to captain in a fancy restaurant to ultimately General Manager, all through high school and college. Really wanted to open a restaurant, but saw a bunch of artists who I instinctively sensed didn’t really know how to run businesses. So I started a financial planning practice in 1991 out of college because I was confident that could give me some financial security. Did nothing but that for 15 years, built that up with my brother as my business partner. I went to my brother and said, “You know, Jonathan,” who, by the way, was a chef in college as well, “I gotta go part-time, man. I gotta go scratch this itch and open a restaurant.” I wrote the business plan for Flour + Water. I had to sell my apartment to come up with half the capital because I was raising money from investors in 2008, which was the middle of the credit crisis. Nobody would give a never-before restaurateur investment capital, so I had to put up most of it myself. The first restaurant we opened had lines around the block the day we opened. For some reason, I think we got lucky, but we’ve had lines around the block every day since, 16 years later. After that first restaurant succeeded, I went to my partners that I started the company with, who, by the way, I owe a lot more credit for our success than myself. But I went to them and said, “I think we have a chance to build a company here. I have a day job. I’m not going to start working full-time with this company, but I think I have ideas on how we can turn this into a company.” Fast forward, we have five restaurants, two more opening this year, and a consumer packaged goods business called Flour + Water Foods with dried pasta and frozen pizza coming. I’m Executive Chairman, my chef founding partner Tom McNaughton was 24 when I hired him, and he’s now the CEO at the ripe old age of 40. He’s crushing it at running that company. So yeah, that’s how I got to this place in time, not to mention Great Gold Hospitality Group, which we can talk about later.

Chad Franzen 5:17

Sure, yeah, that’s amazing. Do you think that your background in finance has given you an advantage in being successful in the restaurant industry?

David Steele 5:28

I don’t want to be critical of anybody in the restaurant industry. It’s the hardest-working group of people I’ve ever seen. But an observation I have is what I’ll call a relationship with capital, understanding how capital works, understanding the symbiosis between outside investors who have to put their capital somewhere, and operators who have ideas and operational capabilities. The importance of what you invest in CapEx and what you expect in return for cash flow from that investment. And always thinking that way is something I have rarely seen from restaurant people, and I do think it gives us an advantage. When we began the company, I said, “I think there ideally is a healthy tension between business principles, understanding how capital works, and artisanship.” Without artisanship, you’ve got Applebee’s—no offense to Applebee’s, but I don’t eat there, and they’re very fiscally responsible, I’m sure, but it’s not inspiring. On the other hand, you’ve got all these artistic endeavors, seemingly purely artistic endeavors, that are probably not all that healthy financially. So I think it really has given us a bit of an advantage.

Chad Franzen 6:47

How did you come up with your vision for—I’m sorry, I was calling it Flour Plus Water. How did you come up with your vision for Flour + Water?

David Steele 6:54

Yeah, the flour, the plus sign—nobody was doing that back then, except for architectural firms. Our graphic designer we worked with put it there, and we’re like, “Yes,” and we’ve totally leaned into that plus sign. So it’s a little bit confusing, but yeah, it’s Flour + Water. Could you ask that question again?

Chad Franzen 7:09

How did you come up with the vision for that? Was that through your experiences working at a restaurant when you were younger?

David Steele 7:16

Yeah, I mentioned the Italian American thing. When I originally wrote the business plan for Flour + Water, to be frank, I didn’t understand the extreme differences between Italian American food and food from Italy. I learned since then that the big difference is the ingredients. People coming off the boat from Italy had crappy ingredients compared to what they had access to in Italy. So they had to create this weird amalgam of the crappy ingredients with the techniques they learned over there, and that’s the birth of Italian American food. If anybody knows about red sauce, why are tomatoes stewed and sugar sometimes added? Well, because they had crappy tomatoes, and they had beautiful tomatoes in Italy. So when I originally wrote the business plan for Flour + Water and hired Tom, when we first opened, it was very much this sort of intersection of Italian American and food from Italy. Because Tom was—we forced him to cook to the business plan. And quickly, when we started getting James Beard nominations, little by little, he became more confident and decided he was going to cook the darn food he wanted to cook, rightfully. The Italian American stuff went away. So what we intended that restaurant to be is not what it has become now.

Chad Franzen 8:41

What role does community play in your business philosophy?

David Steele 8:45

Man, I just can’t understand a restaurant that doesn’t appreciate community. To me, restaurants are such a beautiful business in that they are completely dependent. They’re involved in the conversation of culture. They keep a physical space alive. If you have a restaurant go out of business and you ever see it sit there gone for a couple of years, it really does negatively impact not just aesthetically, but it negatively impacts the energy of the neighborhood. Not to mention the fact that ideally, a healthy restaurant is one where people in the community are coming and eating there and enjoying it. So to say it’s completely dependent upon community, I don’t think a single restaurant’s ever succeeded without somehow incorporating, ideally consciously, but if not by default, community.

Chad Franzen 10:01

There are a lot of elements, I’m sure, that make a restaurant successful beyond just the quality of the food. How do you define excellence in your restaurant operations?

David Steele 10:07

I greatly believe that the feeling somebody has when they come to a restaurant comes from the top. The first, most obvious, biggest influence somebody gets in terms of how they feel about their experience is the people they interact with: servers, people at the front when they are greeted. In our instance, we have people in the back of the house, often running food. You can feel if they’re unhappy; if they’re happy, you can feel that too. So we work our tails off as best we can with the reality of variables sometimes we can’t control or that are our fault to try to have people feel happy.

Chad Franzen 11:00

What do you do when you say it starts from the top? That’s where you are. What do you do?

David Steele 11:07

First of all, I’m going to get philosophical, but I think that what we seek in life is to be loved and valued. What we in the leadership team of my restaurant company do is the best we can to make the teams beneath us— I hate using the word “beneath” hierarchically—but beneath us, feel loved and valued, frankly. There’s so many things we do. I can go on and on and on, but we have one-on-ones with everybody in the management team consistently. We have education grants that people can apply for. We have art grants for artists who work, who are employees of the company. Every year, there’s serious money that goes towards these things, and there’s many other things like that. It’s the number one thing we think of every day: how can we make our team feel happy? By the way, the food—you would say, “Are you not listening to customers and what they order and what they eat?” Here’s what I would say: we’re empowering our culinary teams to feel valued by being creative, and that then also shows up on the plate to the customer as well. So it really is all about the team and their consciousness.

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