Investing in Hospitality - Nate Edgerly and Tom Donaldson - Defining Hospitality - Episode #199

Today’s episode pivots into restaurant investing. Joining Dan is two experts of hospitality financing and investments, Nate Edgerly and Tom Donaldson, the CEO and Chairman of Enzo Group Inc. The discussion goes into the motivations behind investing in hospitality, the critical role of strong management teams, and the unique challenges and opportunities in scaling restaurant businesses. They explore the financial metrics used to evaluate investments, the impact of macroeconomic factors on the industry, and the potential for growth in fast-casual dining. This conversation provides valuable insights for investors, restaurateurs, and industry professionals looking to understand the complexities of hospitality investments.

Takeaways: 

• When considering an investment or running a restaurant, focus on delivering a strong perceived value to customers. Make sure the food quality, service, and overall experience justify the price they pay.
• Before expanding, ensure you have replicable systems and processes in place. Detailed documentation and standard operating procedures can help new locations maintain consistency and operational efficiency.
• Keep an eye on essential financial metrics. Aim for high unit volumes and substantial store-level EBITDA margins, while managing build-out costs effectively.
• Recognize the critical role of a general manager in each unit. Investing in their development can create a significant positive impact on operational performance. Make the GM role a career-worthy position.
• Weigh the risks and benefits of lease commitments. Striking the right balance between prime locations and manageable lease liability can be crucial for long-term sustainability.
• Stay informed about macroeconomic trends and consumer behavior, as these can significantly impact the restaurant industry. Adjust strategies accordingly to maintain a competitive edge.

Quote of the Show:

“What I love most about hospitality is the human connection.” - Nate Edgerly

Links:

• LinkedIn: https://www.linkedin.com/in/tom-donaldson-8468a54/ 
• LinkedIn: https://www.linkedin.com/in/nathan-edgerly-00084b3/ 
• Website: https://www.enzogroupinc.com/

Shout Outs:

• 15:53 - Outback Steakhouse https://www.outback.com/ 
• 17:10 - Taco Bamba https://www.tacobamba.com/ 
• 29:25 - Bojangles https://www.bojangles.com/ 
• 43:24 - Setting the Table https://www.amazon.com/Setting-Table-Transforming-Hospitality-Business/dp/0060742763 
• 46:03 - Carbone https://carboneofficial.com/ 
• 47:01 - Sweetgreen https://www.sweetgreen.com/ 
• 47:35 - Chopt Creative Salad https://www.choptsalad.com/ 
• 48:11 - Chipotle https://www.chipotle.com/ 
• 48:13 - Panera https://www.panerabread.com/en-us/home.html 
• 50:15 - Investors Business Daily https://www.investors.com/ 
• 50:17 - Wall Street Journal https://www.wsj.com/ 
• 50:32 - Tiffany’s https://www.tiffany.com/ 
• 50:49 - Kohl’s https://www.kohls.com/ 
• 50:52 - Walmart https://www.walmart.com/ 
• 51:01 - Apple https://www.apple.com/ 
• 5