Andrew Pudalov - Founder & CEO at Rush Bowls

Welcome to another CEO Wisdom pod. We have Andrew Pulilov with us today. He's the founder and CEO at Rush Bowls. He's a former Wall Street derivative executive turned wellness entrepreneur. So 20+ years at scaling one of the original bowl brands. I had another bowl guy on my pod about a year ago. I think it was Jeff Fencer from Everbowl. So I'm eager to hear about Rush Bowls as well. So Andrew, welcome to the podcast. Tell us a bit more about yourself and what you're building.

Well, thanks for having me on today. It's a great pleasure to be on here. Uh, yeah, I have a little bit of a unique background. I was global head of derivative trading in New York City and gave it all up after 9/11, moved to Boulder, Colorado, and I wanted to do something that I had no experience in and kind of rethink the way people have QSR, quick serve food, and, um, and I came up with the bowl idea. And then basically in 2004, we learned— launched the first real bowl store in the country. And, uh, we were serving acai bowls along with many other bowls. What makes Rush Bowls unique is the fact that unlike most of the competitors out there, we don't do sorbets, we don't do anything that's not clean nutrition. So all our products are pure IQF flash frozen fruit and vegetables blended with 100% pure bases. Well, pure guava juice, you know, organic soy milks, organic coconut milks, almond milks, oat milks, whatever you would like, and topped with our organic granola and fruit. So we've really been doing this for a long, long time, and we only started franchising in 2017. And from 2004, we did a lot of different cool things. So that's what makes Rush Bowls a little bit unique and what we would say much better for you.

And why did you start franchising that late in the game?

So franchising, that's a great question. Thanks. Uh, what franchising, you want to— a, I am a huge huge believer in building an incredibly strong infrastructure, right? Most of these companies that go out there, they don't have the depth of, of kind of software and knowledge to really make sure that the franchisees are on task, organized, and knowledgeable about everything. So when I build something, especially in my background, it's built to last, you know, 100 years, right? So we have training guides on everything, visual guides, every aspect, every open forum we've ever done with any franchises. Everyone can access any marketing at any time that's been done over, you know, over, you know, it's almost 10 years, right? So it's really building that foundation, and it takes time to do that properly. I wasn't rushed here. You know, we only have roughly around 55 stores. We'll have 65, you know, the end of the year or so. But I own everything, so I'm not building it on, you know, to build it to sell it every 2 years, you know, like private equity would be. I own it. So that's unusual in this kind of stage that someone owns it and really cares, quite frankly, from what we see of most private equity.

And even before we start talking about Rush, tell me about your pivot from Wall Street to wellness business. I've seen it a couple of times, uh, you know, we've talked about Joe Disena that, uh, have pivoted to something healthy, uh, but most bankers stay in banking, right? And I think it's like the slow death of them. So tell us a bit more about your pivot.

Yeah, you know In the trading world, and I was global head of derivative trading, I'm making bets on behalf of the banks for the position I think would be beneficial for the bank. Um, so I've been betting on myself for a long time. I'm not brokering. A lot of people get confused with broker and actually trading. Um, I'm taking at the actual position on behalf of the bank. So I've been betting on myself for 20 years prior, right? So why not do it in something that I believe in and really want to focus on. So after 9/11, I kind of, you know, it was kind of a rough story. I was living in New York City during that time. My wife was in the tower in '93, the first time they bombed it. 9/11 was her first day back from, um, from maternity. She literally saw the plane crash in, and we're, like I said earlier, living in Manhattan. And one of my close friends ends up jumping. So right there, I'm like, I, I'm done. I want to move with my two children and go somewhere else and bring them up. And then I looked at myself and I'm like, what would I like to do? And I, I'm a builder, I like building things, and, and I want to focus on health and wellness and bringing nutrition into communities. And Boulder is obviously— Boulder, Colorado is where we're born— it's obviously focused on health and nutrition. But where we started was in college towns. So we're in a college town in Boulder, and where I went to college, you know, you— there was no health food. There was really nothing. And one of the things that I always thought was, wow, maybe we can get college kids eating a little healthier than a lot of the junk they're eating today. And that's one of the reasons, you know, that gave birth to the whole concept. And I wanted to go meal focus opposed to a drink. It bothered me, you know, companies that were just drinks. I wanted to really be everything. I wanted to be a full meal.

That's—

our bowls are 16 ounces, you know, it's, it's a, it's a meal. Our biggest time of day is noon. Um, so like I said, and we don't cheat, you know. I view sorbets and stuff like that, if I'm not going to eat it, you're not going to eat it, right? So that's why I only believe in pure nutrition.. And fortuitously, you know, we get tons of Olympic athletes, tons of athletes in general that know the difference and are really conscious of what they're eating, uh, opposed to, you know, sorbets and stuff like that, right?

Um, I didn't know that bowls could actually be meals. Like, why did that never enter my conception in nutrition as an ultra athlete?

Yeah, it, it's It's, you know, because some of the bowls, you know, it depends which bowls are more, but we grind our own peanut butter and store it, right? So we also add protein if you want. So there's 16 ounces with granola. It's a lot of food to consume, except it's, you know, you're not going to get that sugar high and low because we're not pumping it with sugar. So a lot of, like I said earlier, tons of Olympic athletes have even worked for me, um, because they love bowls so much, probably. But, you know, they, they don't get that sugar high and then low. They get a steady increase. And, you know, they're really conscious of what we eat. Same thing with professional teams. We get tons and tons of catering with professional teams, from the Nuggets in Denver, but across the nation we get that. And, um, because if you're really looking at nutrition, and a lot of these professional teams are focused on health and wellness, as ultramarathon and ultra athletes like yourself, you don't want sorbet. You don't want food that's not going to be good for you. You want, you want to get every ounce of nutrition out of that food to keep you going and sustained. And that was really your focus, is really for everybody, but also for the elite few. Um, if you're eating it and doing well on it, I want everyone to eat it. Now listen, if someone wants Nutella on top, hey, you can have Nutella on top. We're not preachy about these things. You can have whatever you want on top. We have it, but the base and the core of the product is, is pure nutrition and tastes awesome, right?

Yeah, I'm seeing the nutritional content here. Um, I didn't know that sorbets were like artificial and stuff for some reason. That never registered in my brain. Um, me as an ultra athlete, I don't really check the sugar content, right? I see some of your bowls here is like 50 grams of sugar. Yesterday I was drinking a pineapple and something else juice that was fully organic and it had that 50 grams of sugars as well. I know that naturally, sugar naturally occurs in stuff and stevia gives me headache, right? And yeah, I'm gonna burn like that full sugar in, in minutes like while running, right? So So, but I'm more like cautious about like the macros and the minerals in some of these. They look delicious. And I think I started being hooked to bowls like probably a year or two ago. It's somewhat recent, right? And precisely was with acai. And there's one clear reason for that is that I went to Brazil and acai is like one of their national fruits, and that's where like the acai bowls emerged from. And I learned that was a superfood, plus it's delicious, plus it's cold, right? So it's like it checks a bunch of boxes. Um, 20 years ago, did people even know what was— what the bowl was, uh, about?

Well, yeah, that's a funny story until itself. Uh, so we were one of the first with, you know, doing açaí in our stores, uh, açaí bowls. And just to digress for a second, and I'll talk about that. The thing with, you know, we have fructose, which is natural fruit sugars, which behave differently in the body. I'm too, I can't do stevia. It's like, gives me a headache. I don't do anything, any artificial sugars at all. So, you know, a lot of these sorbets, they don't list the ingredients because they put flour in it. 'Cause you can have something scoopable when the water content's so high, it'd be a block of ice. So they put all sorts of stabilizers, flour, almond flour, all sorts of junk in there, sugars to make it scoopable. We believe—

What about gelatos? Quick, quick digression. What about gelatos?

Well, they probably— depends on the company. I don't know. I can't speak about gelatos, but they won't have the same chemicals in there. They'll have some stabilizers and stuff, but it's not going to be— because if, if you have the water content, it's going to be lower on a lot of gelatos than you would on fruit. Fruit has a high water content. So it's a little different. But, you know, again, I'm not an expert in gelato. So, but I am an expert in bowls. But, you know, early on in my career, I was really in the education business, which is, as most people know, you don't want to be in the education business. So when we launched Açaí Bowls, it was a lot of time explaining it to people. For me, our bowls were about texture just as, just as importantly. So having a light, airy granola that was super nutritious with a touch of honey on top, with unique mixtures like green tea and, you know, tropical fruits and pitaya and all these different mixtures, and a power, you know, high protein bowls was really having a diverse flavor palette. A very narrow field of bowls and smoothies. We don't really get into salads, paninis, or any other thing. We focus on being the best at bowls and smoothies and serving the best nutrition. But early on, I was in 40 states with Whole Foods and Costco regions, HEB, and other supermarkets with frozen bowls that I made, um, at a co-packer. And we flew around the country in these stores and Part of it was really education, like what is a bowl? What is açaí? What's the benefits of it? Why is there granola on this thing? So, you know, it was, it was very fun and interesting but difficult to really get the word out. Um, I was really way early when we launched our wholesale division, and we did that from 2009, basically 2016.

What's the ICP of bulls? Who's the buyer? Is it like a woman? Uh, rings to my mind for some reason.

Yeah, it's almost evenly split between men and women. It's maybe like 48-52, 48% men, 52% women.

Okay.

Um, there, you know, for sure, right? Like, it's like conscious kids, you know, the biggest time of day is noon, right? So people are having it instead of Subway or instead of a big heavy meal that they, you know, that they're not going to feel great about probably after. They can have something just as filling because they're big, they're filling, um, and feel really good about it and feel good about what they're eating. And they're not caloric, and we're not pumping sugar in it. I mean, it's fruit. But it's eating like 4 fruits and vegetables in one bowl with granola, with fiber.

And does that necessitate a mental shift? Because to me, it's like dessert, right? I wouldn't have a meal that is like one big dessert. Uh, even when I buy my bowls nowadays, I buy them with, like you said, a panini, and my bowl is like my dessert. So does it necessitate some education or some consciousness shift? Like, do you feel that has occurred?

Well, you know, definitely it's occurred for us, um, because all along, like I said earlier, our big— we're open to 9 o'clock at night. Our biggest hour of the day is midday, and people are having it as their meal.

They have it for breakfast too.

Yeah, well, they have it once or twice a day, but generally for, for lunch would be the biggest time of day for them. Sometimes instead of dinner, after a workout, they have it. So it is a meal. We're not a dessert. That's where you go into a lot of those sorbets and this and that. Our product, we grind our own peanut butter. It's not as sweet as all those others because we're not pumping it with sugar. So people are— you're tasting the fruit, you're tasting the blend. It's very fibrous also. So texturally, the bowl doesn't decay right away. If you're dealing with scoopables, it will decay right away because it's mostly water and sugar, right? Ours is all mango blended and banana blended and raspberries blended. So these fruit, real fruit, and even kale is very fibrous, so it holds together for a longer period of time, right?

And somewhat easy on the digestion, right? Like, yeah, definitely a lot of fiber. You don't get clogged or down like you said when we started. Um, what are the margins on that? Looks like, uh, I mean, fruits aren't inexpensive, generally speaking, right? But is it like, uh, I don't know, if you compare it with a Subway, right, or McDonald's, is it similar margins?

Um, well, you know, everyone's different on how their margin— I negotiate directly with the manufacturer and have some of the other pass-throughs, and we very particular which manufacturers. So I do pretty well, I would say. Uh, COGS for us with paper is generally around 25%. Skew different areas of the country a little bit, but we have national distribution. Um, you know, so that's really low for even, even, um, you know, other companies out there. I also do not make money on the food, right? So most franchisors sell the franchisees the food. I think that's really unfair and not appropriate for a franchisor to do that. So most of them will buy the food or sell the franchise food and, and typically take 10-15%, and that's just taking out of the franchisee's pocket. I'm not private equity, like I said earlier, so I'm not looking to steal from my— the hand that feeds me.

But it's all frozen fruits, right? So there's no dependency on, uh, like fresh fruits that decay.

Well, it's, it's, it's the base is all blended fruits, IQF fruit, but the toppings are all strawberries, raspberries, you know, it's blueberries, banana is all fresh.

Okay.

So you have a mix. Now how we do it is kind of the, they say that the IQF fruit is healthier than, than, than certainly fresh fruit because it's flash frozen at like -40, whatever temperature, I don't know off the top of my head, but around there, um, at its peak efficiency, at its peak pureness, basically. So you don't decay. If you buy blueberries on a shelf, they're already out there for a while and they're decaying, or— and the nutritional value of them is decaying. So eating flash-frozen fruit is healthier for you. And there's a lot of studies—

the counter-argument would be to buy the same day, right? But it's not possible with all the fruits or vegetables, uh, and it's costly. Right? It's like almost— it's a logistical nightmare, uh, plus a lot of it might actually decay, right? Um, what, what are the main costs for franchisee? Is it, uh, electricity, like all the, the fridges, uh, employees? What are the main costs for them?

Well, we run a— like, I'm a math geek, really, you know, kind of from my finance days. So we have hard percentages. So generally, you know, We're talking around 22% for labor, um, 25% for COGS. Um, electricity is not going to be— COGS, uh, cost of goods sold. Okay, so okay, put some paper, and then, uh, electricity obviously is a cost, but it's not going to be top line, you know, it's not going to be one of your major costs. But basically labor and, and food is your major costs, and rent would be, you know, the third probably cost, and that could be 8 to 15% or so.

So if I open up a central location in Austin, for example, what, uh, what could I expect in terms of profits as a franchisor on a monthly basis?

Well, what we shoot for is between 15 and 20% of profit for franchisee, um, based on their sales. But obviously there's a million of variabilities, what they're putting into the business, or is it paying for a car? Is it paying for this? Is it paying for that? Um, but that's what the goal is, which would be higher, because again, we're not making money on the food than a lot of the competitors out there.

And what monthly revenue can I expect? Is it $100K? Is it $5K per day? Uh, what's, what's the numbers?

We can't really discuss that, you know, it's so variable on location. We have stores that do amazing, stores that don't do as well. Like, it It's all over the board, and I— it's, you know, it's, it's not, it's not meant to be a mystery, but it's really so variable based on who's running it, how they run it. And a lot of that information, look at the franchise agreement.

Okay, okay. Hmm, I'm just trying to compare as a franchiser, like if I start with your franchise, I have so many options, right? Of course I can be health conscious, I can love the product, but ultimately people want to make money with these franchises. So how do you pitch them on opening their own?

Well, like, you know, you know, first of all, it's— there's no food waste, right? So it's a very efficient business model, and we're in basically sub-1,000 square feet. Like, we have stores that are 1,600, but most of the stores are 1,000 square feet or less. So it's really efficient business model to maximize people coming in and out of the store, number one. But number two is getting the biggest return on your money. So the business model is highly efficient. So, you know, again, you know, you can have one of them, you can have 10 of them. It's, it's, it's really going to be, you know, we're going to hold your hand and guide you how to maximize it. But we've been in business for a long time and Hell, I've been doing this for almost 25 years, so, you know, that's really unusual. And, uh, I put my money where my mouth is. I operate my own stores too, so, um, you know, I understand what every franchisee is, not some big corporation that doesn't really care, right?

Talking about the online facet, if I would open a restaurant, I think I would start, uh, on Uber Eats and platforms, and then I would market the clients so that they buy directly from me after that. So I would use Uber Eats as top of funnel. Uh, do you think that makes sense? Is that what you advise with your franchisees?

Well, we have a very hefty tech stack. So we have a point-of-sale system, and then there's a company called Olo who handles the consolidation of all these different delivery services like Uber, DoorDash, Grubhub. Into an online menu. And then on top of that, and they're also branching out to their own version, say, handle, you know, 50,000 restaurants, their own version of Uber without charging the customers nearly as much. And then on top of that, we have a loyalty program that tracks everything, makes sure that we use AI to get back at that customer that may have not come in for a month. And we want to say, hey, you haven't come in for a month, maybe we can incentivize you with our delicious Rush Bites, which are fresh ground peanut butter health balls, basically. Um, so, you know, the— there's a lot of avenues, but we went heavy into tech because 30 to 60% of our business is takeout or delivery. So it's already hefty for us.

Interesting. What, um, are the top locations that you're eyeing right Is Austin like one of the top ones? Like, what cities have you seen in the US that is like, oh yeah, that would be a good location?

Well, you know, for me it's really about the operator. So they make— we, we're in locations all over, we're in 25 states, and it always boils it down as who's a good operator and making sure you have good operators. Um, certainly it's funny that you said Austin because I was yesterday I was in San— well, this morning actually in San Antonio, Texas, because we're opening a store this Saturday. And then I believe August 1st, we're opening a store in Round Rock, Texas, which is right next to Austin. So, um, both stores opening in Texas, um, within 30 days basically, one this Saturday. Um, and then we're opening, uh, we have a huge. We have a lot of stores in California, but we're opening a lot more there. Um, we're opening a ton in Chicago area, Illinois. So we have 4 stores opening up there within the next few months. So, you know, we're growing rapidly but smartly. You know, I'm not under the gun. I don't have to open a certain number of stores in a certain time frame. I just want really good operators and smart people explaining who we are and what we are.

Location has always been important, right? Like, what about, uh, I don't know, the hotness factor? Was really hot a couple of days ago, people might, uh, jump to your product because it's cold, it's refreshing, right? Like, where is there like a specific location playbook for, uh, Rush?

So it's really interesting on that. I, I was unsure about, because we have stores in Florida, I would say Not really. I would say it's the operator that makes the difference. Again, this is a meal-based, it's lunch. So when it's cold, people are ordering it for their offices and ordering it in a lot more. We don't have that incredible seasonal effect that we're dropping off 50, 60%. In winter, we shorten our hours, but we're dropping maybe 20%. So we're not dropping off like a lot of companies would. Um, so So, you know, the seasonal impact is less than you would think. And also, it boils down to the operator, no matter the location. Location is important, but it's not— for me, at least, in what we see, it's not the end-all be-all.

Why not go fully ghost kitchen then?

Well, ghost kitchens haven't really fully proved themselves. Honestly, well, I haven't opened a ghost kitchen, but the business model hasn't proven itself. They've had a ton of failures doing ghost kitchens. I'm not sure. A lot of people have tried it. A lot of big companies have tried it. I don't know if they, they need the interpersonal connections. I'm not sure.

I can't tell you, especially post-COVID, right? Like, people want to walk through places, change environments, meet people. Yeah, I can, I can definitely see that. Your franchisees, do you look for a specific ICP demographic personality to run your location? Have you seen a pattern?

You know, I, you know, I think the best franchisees, and I'll state it like that, are the ones that are self-motivated go-getters. I know this is easy to say, but people that want to be involved in the community. If you don't want to be involved in the community, it's more difficult because you got to reach out to the community. So, you know, people that are more— that want to interact, you know, there's a certain amount of people that don't, and I get that too, you know, but, but, you know, it's really finding those people that want to be active and asking a lot of questions. We love questions because we, first of all, been doing this for so long with a lot of success, we have the answers, and we're learning stuff every day too. So we want those type of franchisees, um, and partners, and we view them as partners, which is a lot different than being dictated to by private equity.

Last question: you've scaled to so many locations, right? That's a an anomaly in the field. There's so many franchises that fail and go down to the ground. To what do you attribute that? Like, I guess me, if you ask me, you were— it seems you were set when you started that as a Wall Street trader. You already had like funds, you had connections, but you're also like a mathematical guy, right? Vs. like your competitors are not that, and they don't have much funds, they don't have the connections, they're not math-oriented? Is that the main reason why you're still alive and thriving?

Well, you certainly tapped on something, is really understand the mathematics of the business model, right? And not trying to— you know, we want cohesion, we want success of our partners. So a lot of times, if I'm picking on private equity today, but they're very important and A lot aren't like this and some are, but in our area there's more that aren't. But what they're trying to do is they're trying to beef up the numbers to sell it in 2 years, to rotate it. Like, one of our big competitors has been sold like 4 times already, right? So by private equity, it's hot potato, you know. So what that is, is maximizing the franchisor's profit on the backs of the franchisees. That's not how I run the business, right? It's a partnership. They benefit, we all benefit. Um, and that I think is the reason why we thrive more and more successful.

Thank you for being on, Andrew. Where can people find out more about you in the business?

Sure. Well, first of all, thank you so much for having me on. Uh, rushbowls.com, that's R-U-S-H-B-O-W-L-S.com. Shbowls.com. I'm on LinkedIn, Andrew Padalov, P-U-D-A-L-O-V. Love to hear from anybody on this if they have any questions. I'm as direct— I'm a pure New Yorker, so even though I live in Boulder, um, I'll give you honest answer. May not what you want to hear, but I'm honest and straight, so