Andrew Pudalov Of Rush Bowls (Ep 174)
Join Jaime Oikle of RunningRestaurants.com and Andrew Pudalov, the CEO of Rush Bowls, in a wide-ranging conversation about the restaurant business, including:
- The business origin story
- Pioneering a model
- Pandemic impacts and learnings
- The move to franchising
- Mentorship and leadership
- Fighting against the "perfect storm" challenging restaurants
- Finding, keeping, and rewarding great employees
- Marketing, loyalty, and data
- And a whole lot more...
For more, go to https://rushbowls.com.
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Origins, Franchising, And Overcoming Challenges With Andrew Pudalov Of Rush Bowls
We've got a great episode for you with Andrew Pudalov, CEO of Rush Bowls. Welcome, Andrew. I'm looking forward to our talk. How are you?
Great. Thank you so much for having me on your show.
Let's do a quick overview. Who are you guys? Where are your locations? What have you got?
The Origin Story
I started Rush Bowls basically in 2004, so we were way ahead of the ball curve. We started franchising in 2016. We have 37 locations throughout the US. We look at it as a national concept. We have stores from West Palm Beach to Portland and everywhere in between. We're growing extremely quickly. We're opening up another 10 to 12 to 15 stores in 2023, let alone in 2024. We have over 100 stores in some development stage.
What is the concept? The concept that we created a million years ago is bowls. Not just Acai bowls, which are blended fruit and vegetables, but a very unique flavor set from green tea and jungle, to a very tropical bowl to spicy to a million different flavor sets and we're agnostic to allergies. We can make anything vegan, gluten-free, dairy-free, whatever your heart desires.
What's unique about us, too, and I always felt very strongly about it, is that we don't upcharge for this. If you have an allergy or some food issue, we certainly are here to provide an incredible-tasting product for you and not have it cost more. We're also not preachy. You want to eat healthy, but you want Nutella in your bowl? God bless. Whatever people enjoy, we're here to serve.
We are extremely healthy, Ben. No sorbets or any junk that we put in any of your food. It's always blended fruit, vegetables, whatever it may be with assorted milk like oat milk. I guess you can't call it milk anymore, but oat beverage, coconut beverage, almond beverage, or any of that stuff, or 100% pure juices. Healthy without any of the fuss.
Great growth there. Great expansion. Great plan. That's super exciting. I wasn't sure. My youngest daughter wanted to quick snack. This is both a snack and a bowl. This is a meal, correct?
This is 100% of a meal. If you look at the data, lunch is our biggest time of day. Just to give you an idea, it's 16 ounces of a blended fruit mixture topped with organic hemp granola, honey, fresh fruit, or whatever that mix may be. People are eating them as meals. If you say, “Here's this sandwich and Rush Bowl. Our bowls have much lower caloric intake.” I would say an average of between 250 and 500 per bowl, and that's for a full bowl, which is 16 ounces, as opposed to a heavy, hefty sandwich or whatever else that may have a ton of junk in it. We focus on nutritious health products without being preachy.
Lunch is our biggest time of day.
I want to talk about a lot of stuff in your business specifically, but I want to get your opinion on where we are right now in the restaurant industry as a whole. It's not through COVID yet because it's still a challenge. I want to ask you about some of those challenges but the hiring thing, the cost thing, the inflation stuff. What are you seeing?
It's not funny. Honestly, my background, I was the global head of derivative trading in New York City and gave it up forever ago. I've always had an extremely educated and close eye on markets and what's going on. I think it's been a perfect storm to hurt restaurants in general, especially Mom and Pop setups, that don't have the flexibility or buying power of a franchise or multi-unit system.
The labor issues are easing up. I think more and more people are going back to work. I see inflation as somewhat of a mixed scenario. I see some inflation longer-term coming down, but inflation in general is still higher and higher. The cost of goods is still going higher and higher, but I do see it easing up by the end of the year and going into the 1st quarter of 2024. I do think prices will come down.
Rents, I have not seen ease up quite a bit, but I see a lot more empties. As a company in our position, we feel that there's a lot of opportunity to find spaces and feel that inflation and labor will ease, but demand may ease slightly too because when the Fed came in and raised 150 basis points relatively soon, that's going to have an impact on the market.
I want to go to the late to the labor piece because it's interesting. There are some silver linings, especially in your business, where locations are opening up. Maybe opportunities that weren't there five years ago in great locations that there are some good aspects but it has been a challenge to find people.
Correct me if I'm wrong, but you guys have a relatively small footprint and relatively low staff per footprint versus a restaurant that maybe needs to have 50 people. Is that fair? You still have to find good people. What's working for you? Is it incentives? Is it pay? Is it just training? What do you think?
I think it's a lot of things. Certainly, as I stated earlier, I do think it will ease up a little bit but for us specifically, obviously, pay is a big part of it. You can pay a lot of money to a lousy employee and they'll still be a lousy employee. You can pay not as much to a great employee and they generally will still be a great employee and you want to reward those people.
Our concept specifically is a lower labor count, so it's 2 to max 3 people per store at any one time. What we do is, first of all, they're interactive with the consumer. There's no back of the house in our stores. They're very much like the Starbucks barista. A) It's a wanted position. B) We try to have a good fun environment there and try to make them feel very at home.
You're a bartender serving healthy food. That type of feeling with the current employee generation, which is a younger generation, they like it. We struggle like everyone else, but a lot less than a lot of companies like McDonald's or Burger King that have 7 employees all on at once or 8 and there's a back of the house. They're not seeing the front.
Also, our employees get lots of money in tips. For instance, in my store alone, they could get $5 to $10 worth of tips per hour. That adds to the hourly wage. It is more of a wanted job. For me, I would say a more satisfying job because you're front and center with the consumer. You can see their excitement when they have the bowl or whatever else it may be.
You said a lot of things there I want to pick up for. The one a job is interesting. People have a choice. You want to be that place where the young folks want to work, or if they're older, there's some excitement there. I like what you said. I want to go back to the reward piece, the fun piece. What are some things you've done to bring rewards to the staff and bring fun to the culture? Is there anything unique or interesting you folks do?
A little bit of everything. We have events, and this is not just at the retail level. This is on a corporate level, too. Input, I think, is very important. A lot of our employees, if they want to give us input or give their manager input on a different bowl, different smoothie, or some other idea, we're excited about it. There's a way for them to do that.
They feel empowered, I would say. They have a voice within our organization. I always felt that way, no matter how large the organization is or what level of people are within the organization, we had better listen. That's always been my motive for operation. I think that goes a long way. Also, we're relatively busy. Our stores are busy. I will tell you in terms of employees, people want to be busy. We lose employees when we're slow, not when we're busy.
We lose employees when we're slow, not when we're busy.
I think keeping people busy, being task-oriented, having a voice, and encouraging people to be creative all help in that environment and then having fun events. Have them make TikToks. Have them do whatever they like within reason. Having them or the team engaged is opposed. In some stores, some people do a gift card based on how many things you sell or other items, but I do feel having people understand who they are and what the brand is and engaged is a very powerful tool.
Engaged, empowered, having input in the business, being listened to, feeling you're listened to, all those things make people want to stay in your jobs. I want to go back to tips. You talked about tips for a second. I have younger kids and they're starting to work and get tips. What's been fascinating is the classic tip bowl, whether it's a jar or not. You put money in.
I am guessing a lot of people have the screens. When you flip the screen around and it says, “Tip here,” hit the 15% button. It makes it easy. Are you finding digital tips happening? Are people still throwing money in? Are they more generous when it's digital? Have you seen any trends there? I just find that stuff a little interesting.
No, so do I on a financial level. I would say that, first of all, our demographic is skews younger. Most of our business is not cash at all. It's all cards, whatever those cards may be, but it's all cards. Yes, I do think it encourages tips in general and people generally would give more digitally because of the ease of this scenario.
I would also tell you that I feel that people, in general, are more aware of of what it takes to make something. I would say that in a broad sense, they're giving tips more generally, here in the US, and they understand the struggles that people have. They go out of their way to make your food and this and that.
It sounds like yours is more about producing a presentation. It's not a simple here's a bottle of water. I don't feel that I need to tip you a buck for handing me a bottle of water, but you're making something and putting it in front of me. It looks delicious. I'm excited. Here's a buck or 2.
A lot of our stuff is always pulled, so it's not, “This person's getting a tip for making it for that. It's all pulled to the team and that's helpful to create a team environment.
It does. Let me ask you real quick. I don't want to stay there too long, but on the people side, hiring and interviewing. Are there questions that you like? Is there is there a way that you quickly get this this person's going to be good in the service environment? What do you think?
Say that on so many levels. How do you know who's good and who isn't? It's always a challenge. What I generally do when I'm interviewing I'll ask them a question. It's something, maybe a little straight. What's your favorite book and why? Or what do you do in your free time that's somewhat unusual? Sometimes, it just calms people down. It gets them to be more real with you in terms of what they're feeling and what they look forward to doing.
You get to know them a little better as opposed to the canned answers that you generally would get from most interviews. Making the person being interviewed a little more comfortable. There's no right or wrong to these interviews either. I could tell who was good and who wasn't on the first day of work. In an interview, it's not as easy. We've made incredible hires and plenty of mistakes. I would give them a few questions that may be a little strange. Strange is the wrong word, but it is a little different.
Off the path. A different path. Get them comfortable. I like that as a technique to get to know the person because we can all go in with a little script. What are my strengths and what are my weaknesses and fooled you in 30 minutes. As you said, you're going to see who they are on that first day when the rubber hits the road.
I like that approach of finding out who they are. They're in there. You guys have obviously had challenges with COVID. Marketing stuff. It probably taught you a lot more about delivery, takeout, operations, QR codes and online menus. What did you learn there that had to happen probably pretty fast, I'm guessing?
During The Pandemic
The franchise system is a little different, but I have learned to communicate a lot. More than we were communicating. What works? What doesn't? We also put a lot of emphasis on delivery services, certainly during COVID and then made a big investment into a company called Olo, which is one of the leaders in the space for delivery.
We made sure that we had one of the best delivery systems out there and, generally, orders were taken in because more and more, 30% to 60% of our business is online ordering. That's one thing I do not feel is going to change significantly, if anything, and grow. It focused us in a lot of different ways and during the heart of COVID, we're figuring out.
In Boise, this is working well. In Connecticut, they started doing this, catering tons and tons to hospitals. That was an avenue we weren't doing much with, and we certainly decided that we had to focus more and more on catering. There were a lot of options and it opened our eyes. COVID, in general, was relatively tough and a horrific disease, but it helped our business in certain ways and fine-tuned the business. It made us a better business.
A lot of those silver-lining lessons got picked up. As you already pointed out, you have a younger audience, so they're already mobile-savvy. They're picking up their phone. They're making their order. You talked about delivery, but I'm sure a lot of people just hit their order beforehand. Come on in. It's ready for them or rapid pickup, that kind of thing.
You're set for that. Your audience is primed for it and then you just tweak it in between. That's been great. What about the marketing side, differentiation side and branding side? You already have that built into your model. You're this healthy bowl. You have a different mindset from someone else. You already set yourself apart. Is there other stuff that you do to bring differentiation?
It's funny because we were doing bowls in 2004, and now it's everywhere. It's important. We're one of the originators of the whole bowl concept. For us, I would tell you on a couple of fronts. First of all, we don't use sorbets or put junk in your bowls, which separates us from probably 99% of the other bowl concepts out there. They're all scoopables and we don't believe in that. Change the sugar content and other things.
Also, we don't just focus on acai, an extremely diverse flavor set. I felt that was always something, that we're unique flavors and combinations that unlike anyone else were doing out there. Beyond that, it has a lot of interesting toppings that allow a lot of flexibility with health with those three things and not being so esoteric into a million different things.
When I emulated and created Rush, I tried to emulate a lot of things Starbucks was doing. Whether you Starbucks or not, it's almost irrelevant, but they were very focused on being the best coffee in the US. Whether you agree with that, it's a moot point. We're the best bowl company in the US. No doubt. We score super high on any taste, off the charts. If we do what we do best, then focus on that, not get caught into doing a million different things poorly. I think that's always helped us.
Do you do anything on the loyalty side? Do you have an app? Do you have rewards? Do you have points? Is anything going on?
Loyalty
Yes, we do some loyalty stuff within our point of sale system and that's an area we're looking to improve upon, but we do have loyalty within our apps. I certainly think that's an area we can improve. We've been looking at different software out there that we think we can improve. Loyalty is interesting. When you look at the data and loyalty, it's not so clean-cut in terms of productivity.
Everyone’s loyalty, loyalty, but statistically, the data is not so clear on that. You give a consumer an incredible experience. They're going to come back, loyalty or not. Loyalty is crucial once you're big enough, like Starbucks or Chipotle, that you have your card. I think it's a bigger part of their business. I do feel, though, that the loyalty aspect of things is growing and it's something we've been looking at expanding on for Rush in general.
Just that idea of being front and center, popping a message, popping notifications, encouraging that one extra visit a month that may not have happened otherwise. That, as you know mathematically, as a finance guy, adds up dramatically throughout your business. Complicated over so many stores.
It does but if you look at the success of loyalty, we have loyalty. Trust me, we're investing a lot into it. It's not so cut and clear in terms of the return on it because I have gone through the numbers quite a bit. It's pretty interesting. It depends on the size and scope of the industry. Most people will never say this, quite frankly. I think loyalty is positive overall and will help any business, but in terms of size and scope, the help may be different.
I want to go back to this because it's important. You talked about finding a niche that was maybe not something you had in your mind but catering. You talked about hospitals for COVID. I can imagine, yes, showing up with twenty bowls, boom, or could be more, bringing them to health care and bringing them to the office.
That can be a gigantic part of anybody's business that people are leaving on the table thinking, “Let me open up a store.” “Everybody will come see me.” “I'll make all the money in the world.” Of course, as restaurant operators know, that's not true. It's not how it works. You have to have multiple revenue angles. You have to have a mindset to take advantage of opportunities that aren't there. You saw that piece, and I assume you're rolling with that and keeping it a constant part of what you do.
I don't want to make it more complex than it is. You have to reach out to your community. Hospitals is a is a great one. There are a lot of other options here. Hospitals are interesting because, a lot of times, the doctors, the nurses, or even the patients can't get out of the situation they're in. It's easier to have it accessible on multiple levels and have something healthy and nutritious to make them feel good and get through the day.
A huge positive airport may even need this. Sometimes, they even might have cafeterias in these places, but they're not focused on delivering healthy and healthy eating to the particular customers. That's something we are. We're also not judgmental. We want you to feel very comfortable with what you're getting and eat something delicious and healthy. Those are big opportunities not just within hospitals but in general. We're working hard to get into a lot more airports and stuff like that for a healthy, nutritious meal. Universities and campuses in their food halls.
What's in my head is that I want to bring you back in the future because there's a lot more I want to talk about, but I want to ask about the franchising piece, and we'll wrap it up in the next 5 minutes or so. As you're franchising, as you're growing, what do you look for in a franchise? What do you look for in locations? What do you think about that growth? You don't want to grow too fast, but you want to keep the momentum. What do you think about being a growing brand? You're talking about some very aggressive growth plans over the next year or so.
The Growth Plan
We're a little unique because I own the company. There's no private equity. No funds are supporting it. We're going to grow as we feel fit that we can certainly work and contribute to our franchisees. As a franchisor, grow the company appropriately. I'm not under someone's thumb for a particular growth or under the pressure that I have to get this to return.
That makes us a lot more flexible in our plans. A lot more franchisee or partner-focused because we're here to support them. They're our customers, too. It's important that they're happy and we're doing everything we can to help them. That doesn't mean we can't grow quickly and can't grow extremely well. We looked at all those things, and I think we have grown a lot.
A lot of the growth was pent-up, so a lot of our projects that we were supposed to open got pushed because of GC issues. We have 3 or 4 stores opening in the Florida area and a lot of those stores that were set to open in June, July and August 2023 are now opening in September, October and November 2023. That's just a shortage, particularly in Florida, of finding good GCs and finding ways to get open.
In terms of finding locations, we work with different companies and look at the data on those locations. Sometimes, it's hard to find locations that are 1,000 square feet or less and that's what we look for. We're looking for small locations, getting people in and out, that are in nice areas. We look all over. We just opened a store in Birmingham, Alabama, which is ill-served with healthy food and it's killing it. We opened in a food hall in Boise. We look at a lot of different venues and make sure that everyone's doing well and it makes sense economically speaking.
I love the food hall. I can see you guys working perfectly in a location like that. You're in a relatively small location. Is it a lot of times someone is taking multiple units or taking areas for you guys, or is it a lot of one unit, and where are they running it themselves to be profitable? Are people looking at an exit strategy? I'm going to run it for five years and sell it. What is your typical franchisee doing?
We have a lot of different types. Most are multiple unit owners. They're building 1 or 2 at a time and they're in different communities. The challenge for us sometimes is getting small square footage. It wasn't as readily the challenge, and now everyone's trying to get smaller, from your McDonald's to local Mom and Pop.
They're trying to get smaller, whereas my business model was always small and efficient and getting people in and out. That also helped during COVID when people weren't dining in. Our business model is very much focused on, certainly being a little more efficient, and that's probably based on my finance background.
Beyond that, coming to communities that are ill-served or communities that we feel that there's a little more focused on health orientation or going to be focused on health orientation, in terms of finding franchisees, in general, we look for people who have a strong business background. It doesn't have to be a food background, honestly. I came from a very extensive finance background and I had zero food experience.
Our process and how we train them, anyone who's good in business can succeed in that process and that's what we look for. Are they easy to work with? Are they going to follow the franchise rules and help grow the company? We look at it as if it's a marriage. No matter how anyone says it, it's a marriage. Our franchisees are our partners and it's important for the organization that you work well with your partners. We look for people who are easy to work with, that we can just give and take on both sides, and that's important for us.
It's important for the organization that you work well with your partners.
The small thing is interesting, by the way. I want to go back to that. It's interesting how things are shrinking. I talked to someone else about smaller footprints like Ghost Kitchen. It has changed the landscape dramatically from a real estate perspective, but let's go to parting thoughts. Since you mentioned what's your favorite book earlier. You can talk about a book, a book quote, a leadership mantra, or anything you have for a last piece of advice for folks.
There's an old-time book that’s always been one of my favorites called Undaunted Courage by Stephen Ambrose. It's about the Lewis and Clark expedition and how they got through everything without much harm to the crew. It explored a lot of incredible places in the US before it was explored for mapping and other reasons. That's an old-time book, one of my favorites. I read everything. Usually, I read nonfiction because sometimes that's more incredible than fiction.
In terms of Rush, in general, you can go to RushBowls.com. There's tons of information about it. If you're interested in franchising or anything that, we're here. We have a team to support you and we're excited to get more stores going and get healthy, nutritious food in lots of people's hands and have people own and run a relatively simple business.
It's empowering, in general, to own your own business. I always worked for big corporations. I've worked for Bear Stearns, Morgan Stanley and Andrew Irvine, who's the global head of National Australia Bank but to own my own business, it's wonderful. I encourage more people to do it no matter what that business may be.
I agree with that. Awesome stuff, Andrew. I appreciate you, folks. That was Andrew Pudalov of Rush Bowls. You can find them on the web at RushBowls.com. For more great restaurant marketing, operations, service people and tech tips, stay tuned to us here at RunningRestaurants.com. We'll see you next time. Thanks, Andrew.
Thank you.
Important Links
- Rush Bowls
- Undaunted Courage - Mentioned Book