[SpotOn Series] Secrets to Restaurant Vitality With David Steele of Flour + Water Hospitality Group
Chad Franzen 12:30
Would you say that kind of philosophy, that core value of caring for people, for lack of a better way of putting it, has been essential to your success?
David Steele 12:38
Absolutely essential. We were nominated for a James Beard award our first year in business. Flour + Water was a finalist for one of the top, I think, five best new restaurants in the country. Really cool. We showed up; we were in black ties. Our partners, you know, me and my founding partners, and we just felt totally out of place, like, “What the heck are we doing here?” Anyway, we went to an after-party. One was at Eleven Madison Park, where Daniel Hume won for best chef in the country that year. I’m pretty shy. I’m a bit of an introvert when it comes to parties, so I was up in a corner, and some woman who was a pastry chef at a local restaurant that actually won the award that year came up to me and said, “Hey, oh, you’re the Flour + Water guy. My brother’s opening a spot like yours in London. I don’t have a lot of time, but what’s the one thing you would say is key to your success?” I’m like, “I can’t give you an answer, but if you force me, I’d say treat your team with love and respect and dignity. Care about them.” She goes, “Oh no, I’m serious.” I said, “I’m serious too.” She goes, “No, no, no, you have to run a kitchen like the military. That’s not how you do things in restaurants.” I said, “Ma’am, I’m going to spend the rest of my career trying to prove you wrong.”
Chad Franzen 13:53
Nice. Well, so far, so good, I would say. So let’s talk about the restaurants underneath the Flour + Water umbrella. Which was the first one, and what was it called?
David Steele 14:10
Yeah, Flour + Water was the first one. One at 20th and Harrison. We opened that, I think, 16 years ago.
Chad Franzen 14:16
Take me through the.. Or tell me about the feeling that somebody gets when you walk in there.
David Steele 14:21
Well, what’s interesting is, when we first opened, it was very kind of hip and cool and loud punk rock music playing and servers, you know, full of earrings and covered in tattoos, wearing whatever they wanted. It was very 2009 all the design was reclaimed wood, and which, you know, honestly very dated. We didn’t have a tasting menu at the time, but we got all these accolades and James Beard nominations, and all of a sudden, we found a certain demographic was coming and trying to project a particular experience into what they were having when they were there. So we added a pasta tasting menu, and we found that people ordered it. Every time we raised the price, a higher percentage of people ordered it. We kept raising the price, a higher percentage of people ordered it. And we realized. Uh oh, we’re a destination restaurant. Oops. How’d that happen? So we, unlike a lot of our peers, when we got some government support during covid, we took that capital and renovated the restaurant and got rid of the reclaimed wood and made it a much more of an upscale experience. To be frank, it’s because our customer told us who they were, what they wanted. So the restaurant you come to now is, I wouldn’t call it elevated, and that it’s deserving of three Michelin stars, but I do think it’s, it’s, it’s, it’s competing with the one Michelin star restaurants now, which is very different than we first opened. Servers still wear whatever they want. It’s important to us. We we create this tension between servers, the team, feeling like they’re not subservient to customers, that their their peers, their equals, to them, that doesn’t distract, hopefully, from hospitality. And that’s something that we brought from day one to the experience they’ve studied their wine the wine list more now that when we’re elevated, they know where every ingredient for every dish comes from, and so that’s a bit of a change from when we first opened. So the point I’m making is it’s a more refined experience today than it was when we opened. Now we took a restaurant called central kitchen that we had opened 10 years ago that was doing okay, and during covid, we took that capital that we got from government support, etc, and we were able to pivot that concept to a restaurant called pennyroma, which is part of our portfolio, and that very much feels like Flour + Water when we first opened. And so we were able to still have it both ways, if you will.
Chad Franzen 17:03
So you have was that the second one as part of the group?
David Steele 17:07
Yeah, well, the second one was Central Kitchen, okay, which, again, did, okay. It was, I was to this date is probably still my favorite restaurant we’ve ever opened. But consumers told us that they liked it, didn’t love it, and they love Penny Roma. Penny Roma actually, out produces Flour + Water, now, sort of surprisingly.
Chad Franzen 17:28
yeah, is Flour + Water pasta shop, then, is that a different one?
David Steele 17:32
Flour + Water Pasta Shop is connected to Penny Roma. It’s a Penny Roma. It’s a deli by day where we do sandwiches. And frankly, it’s not a super successful business. From that perspective. We really keep it open. You mentioned before about community. We have it as a daytime operation, open with with, like a deli, like an Italian deli, for the purpose of having life in the neighborhood. On that corner, it’s vibrant. But really what that physical space does is it’s where we make our house made pasta. We have three full time pasta makers making pasta for both Flour + Water and Penny Roma all day and all night. And at night, we see in that space Penny Roma customers are able to face the pasta making while, while they’re dining. So that space, Flour + Water pasta shop, sort of serves a couple of purposes. By day, an Italian deli and a pasta factory by night, a pasta factory and seating for Penny Roma,
Chad Franzen 18:21
Very nice. What about Flour + Water Pizzeria?
David Steele 18:25
Yeah, that’s the concept we’re attempting to scale. It’s the first one. Is in North Beach. We took over an iconic space, a restaurant that was there for, I think, 25 years, called Rose pistola, which is, in my opinion, one of the best restaurants that’s ever existed in San Francisco. It was there for 25 years. We were honored to be able to take over that space and put flour water pizzeria there as our flagship. And our plan is to open, I had mentioned earlier, we’re opening two more restaurants this year, and those are flour pizza shops that are an offshoot of this pizzeria in North Beach, which is where we make all the dough for what’s going to be a bunch of pizza shops around the Bay Area. And if the concept, if this hub and spoke model works, we’re going to take that model to other geographic areas with a hub and spoke model with a big sort of commissary, like location for pizzerias and then a bunch of pizza shops that surround it. Then
Chad Franzen 19:21
Then I think you have one more called Trick Dog.
David Steele 19:23
Trick Dog is a bar we we really wanted a bar in the neighborhood where Penny Roma and Flour + Water are, but we don’t, we know we’re not bar people, and so we partnered with an amazing team called the Bon vivants, led by a guy named Josh Harris, and we’re partners in that project. But if you see you Google it, you won’t see the Flour + Water team’s name very often. You’ll see the Bon vivants connect with trick dog, because they they really do do all the creativity, and we’re behind the scenes doing sort of HR and the bookkeeping and it, and all the kind of boring stuff for them.
Chad Franzen 19:55
What are you most proud of regarding the Flour + Water brand?
David Steele 20:01
What it stands for in terms of how it treats people. I mean, my partner often talks about integrity. It, you know, we launched four, four SKUs of dried pasta as our first consumer packaged goods product. Product. It took us forever to get this out because my partners, my chef partners, are their standards are so ridiculously high. Just took forever to find a co Packer that was going to make the pasta door standards. We are launching frozen pizzas, our second consumer packaged goods product. We couldn’t find a single co Packer in the United States that could make the frozen pizza to our standards. So we built a mini manufacturing facility in the basement of our North Beach pizza relocation. And that’s all about integrity. We probably could have sold lots of dried pasta and frozen pizza in a more efficient way, but we just it’s, you know, it’s how we treat people and the integrity of our product. That’s what I’m most proud of.
Chad Franzen 20:58
Was there ever a time with Flour + Water where you thought maybe this, this may not work out, like you were facing tremendous challenges, or because of your background in finance and in your earlier restaurant experience, that you just kind of had a good feel for everything
David Steele 21:12
we’ve had, we’ve had, we’ve had one restaurant fail, a Spanish restaurant we opened. That was a failure and but it didn’t, importantly, it didn’t fail before Flour + Water was radically successful, and Flour + Water gave us a foundation financially to open central kitchen and trick dog. Trick dog was a wild success. Central Kitchen was a moderate success. But these are this created a foundation of team members of capital to then have a failure. I will tell you if flow and water was the first one and it failed, I’m not sure I would have had the confidence to stick it out, to do a second one, whereas having the first one succeed radically, and then trick dogs succeed, and then central kitchen at least survive and do okay, all of a sudden, we now had a portfolio of things that we could have a failure and it be okay. So I just think we got lucky that the first one, one so big.
Chad Franzen 22:28
So how did your affiliation with great gold Hospitality Group come about?
David Steele 22:34
Thank you for asking. I really, I wanted I live in the Lake Tahoe area, part time a town called Truckee, and I really wanted to improve the what? Uh, the dining scene. I’m talking carefully here, because I don’t want people to be offended in Truckee, but I don’t love the dining scene here. So I’m one of those people that complains about stuff, but then does something about it. And so I went to, I’m I’m for efficiency in this story. I’m missing, I’m going to leave some parts out, but I went to a chef of ours at Flour + Water, and we were working on another project together, but I struck this deal to open great gold up in Truckee. He agreed to move up, and we opened it. I had offered that restaurant to be part of Flour + Water on starting group to my team members there, but chef Tom, who’s now the CEO of Flour + Water, said, You know what? Go do that with Brandon. With chef Brandon as a side project, we really want to focus on the Flour + Water brand thank you for offering it. But have it be like a side, side hustle, because, remember, I have my financial planning practice system, and so I opened that with Brandon, and it’s, it was radically successful. I mean, it’s been just a wild, wild success. And so he and I then opened a second restaurant up here called tangerine Bistro. And those two restaurants are part of great cold Hospitality Group. They’re both in Truckee, California, and my guess is we’re going to probably open more together as well in the future.
Chad Franzen 23:55
What made that first one so successful?
David Steele 23:58
My take is the food for San Francisco is probably somewhere between an a and an A minus. New York, it’s somewhere between an a and an A minus. In Truckee, I think it’s an A plus plus plus plus. It’s just there’s, you know, the thing about Truckee is, my assessment is that the majority of people that work in restaurants up here, food is not food and wine is not the primary passion. When you go to mountain towns, it’s living in a mountain that is your primary passion. Food and Wine is a distant second, if not fifth, and hiring people that are passionate about food and wine is absolutely critical to having greatness, and so I mentioned we’re an A to a minus in San Francisco or New York. We’d be an A plus in San Francisco New York, if we had, frankly, teams that were maybe a little bit more passionate about food and wine. So we have to make sure, we have to keep what our teams are capable of in mind when we when we conceptualize and curate the offerings at these restaurants up here. And I think that because we brought bluntly a couple of I brought chef Brandon up, and then we brought chef Timmy up to be our executive chef to at the on the team. Also we brought them from San. Francisco, where they had world class training. So they have the passion, but they get frustrated often with a team that works for them that doesn’t have the passion. So I it’s a long answer, they’re successful because I think that, frankly, they’re better than most everything else, but they’re still not even as good as we would like them to be, if we can get them there.
Chad Franzen 25:36
Do you take a different approach in a place like Truckee for when creating a vibe than you might in New York or in San Francisco? Or do you know that those vibes work there so Truckee, it’ll work in Truckee as well.
David Steele 25:47
Well, I like the question vibe. No, I think they’re different vibes. There’s a lot of families in Truckee. And so you you have to have, you have to have spaces that feel appropriate in San Francisco. We can have light, dark lights, lots of candles, very loud music, maybe up here, it’s in Truckee. It’s and I’m here right now, by the way, Wes up here. I’m in Truckee as we speak. I think it’s a little bit you have to make sure you thread the needle between what kind of hip, cool people maybe we think they want, and also families.
Chad Franzen 26:27
I know that local arts and cultural organizations are important to you. How do you go about supporting those types of things?
David Steele 26:36
Well, I’ve been on three arts organizations over the last 20 something years. I give a decent percentage of my salary each year towards arts nonprofit organizations. So by being on the board and by, frankly, given money his house, yeah, I was on the board of a group called Arts band for 10 years, or maybe more, and they created the concept of artists Open Studios. I was on the board of of the New York foundation for artists, which creates business plan curriculums for artists who don’t understand how to turn their careers into like a business. And I just left the board of a playwright incubator called playground, which I was on the board of for 10 years as well.
Chad Franzen 27:29
I have one more question for you, but first, just tell me how people can find out more information about everything that you have going on, whether it’s with Flour + Water or anything else.
David Steele 27:36
You know, I have a little silly website I did for myself. It’s DavidSteele.xyz, D, A, V, I, D, S, T, E, L, E, dot, x, y, z, and I often update that with my the new stuff I’m working on. And so that’s probably the best way to to at least initially check out what I’m doing.
Chad Franzen 27:55
Okay, great. So my last question I normally I ask, like, if you were at your restaurant as a customer, what would your go to item be? But since you have you’re affiliated with so many restaurants, let’s say they were all lined up next door to each other, and you were out for a bite to eat, what would your go to place/item be?
David Steele 28:14
My go to place would be Penny Roma. If I had to pick one restaurant, it’d be Penny Roma in San Francisco. And chefs Tom and Ryan and my partners in that company, they really gave me a gift. When we conceptualized that restaurant, I was very involved in structuring that menu, and I’m very grateful for them allowing me to have a have a say in that. And there are, there’s a albacore tuna tartare on that menu that that menu, the menus at our restaurants change daily, like all the time. There’s a couple things that never leave the menus of certain restaurants. And that’s one that I think will never leave the menu Penny Road, though. So if you made me choose, you forced me to answer. That’s my answer.
Chad Franzen 28:56
Okay, very nice. Hey, David, it’s been really great to talk to you. I really appreciate your time and all your insights and you sharing your stories with us. Thanks so much. Thank you. My pleasure. So long, everybody.
Outro 29:10
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