Building a $3,500,000 Business for Two Strangers in 52 Minutes

This is Calvin and Air, a husband and wife duo that run a Thai restaurant that does $3.5 million a year and has lines out the door. But they're opening up their second location next month and they're not ready. If they mess this up, they could lose their savings and the reputation they spent years building. I'm Alex Hormozi. I own Acquisition.com, a portfolio of companies that generate hundreds of millions of dollars a year. Earlier in my career, I sold a service business for $46.2 million that helped brick and mortar businesses like theirs to scale. So I'm excited to help Calvin and Air open their second location, get one-time customers back more frequently, supercharge the reviews, and a whole lot more.

Hi Alex, how you doing? My name is Calvin and this is my wife Air.

Hi, welcome.

We're the owners of Basil and Co Thai Cuisine and Diamond Bar. 2024, our revenue was $3.5 million, gross profit was $670,000, our net margins was 19%, and served over 100,000 guests last year.

First impressions, restaurants have the highest failure rate of all businesses, so the fact that they're at, you know, 19% margins, I would say that's Good. I would love to see if we expand it. Now, some people might hear that and be like, I thought the average restaurant margins are smaller. Yeah, they sure are. And that also doesn't mean that we need to be constrained by that. So what is the goal?

So our goal is to open 20 restaurant locations in the next 5 to 10 years. And we want to bring in over $80 million in revenues.

All right.

And we want to get there by providing nice and comfortable space for friends and family to gather over a delicious meal. Another mission that we have personally is really is to create environments for staff to showcase their talent and and also receive competitive pay.

How'd you start the business?

Maybe 15 years ago. And that is when Calvin and I met in a Thai restaurant in Santa Monica. He was a busser and I was a server. So naturally, you know, we talk, right? And then we talk about our big goal, wanting to become an entrepreneur and own a restaurant in the future. Well, that plan goes so well that I end up marrying him. In 2019, we opened our first restaurant, Baesu Co., in Diamond Bar, California. Within the first 3 years, we maxed out our capacity. We actually leased the next unit and we're able to meet the demands, but we are starting to max out again. So sneak peek is our Ari Thai Eatery in Isuzu, California coming up soon.

Okay. So who do you serve?

So we serve our local communities, businesses, and families in Diamond Bar. Now, people who walk into the door, we see an age range between 25 to maybe 60, and we're in a very situated mid to high income neighborhood.

Awesome. Well, how do you make money? Let's go through the numbers.

So our average food item is $16.

Okay.

Our most expensive one is $68, the crying tiger. Average ticket size is $60 to $80, $80 on the weekends. Takeout is 30%, dine-in is 70%. And our most popular dishes would be the pad thai, pad see ew, and drunken noodles. And we also do beer and wine, but it's only 1% of our sales.

Ding-a-ling-a-ling here. So right off the bat, they have beer and wine. And the fact that they have 1% of sales from arguably the highest margin item that they sell, there's probably more we can find out and some, uh, big opportunities there. How do you get customers? How do they find out about you?

So we have organic page, it's about 50% of our business, we think. 1,300 reviews, 4.6 stars. Google is 460 reviews at 4.7 stars. Instagram, Facebook, word of mouth— our customers like to spread the word of mouth a lot. Paid ads, we do Yelp, uh, $1,200 a month. We do affiliates, foodie collaborations on Instagram.

But word of mouth is really through our server talking to our customer. And when we are at the restaurant, we talk to our customer.

Right. And you'd say about half of them come from, they saw, hey, I saw you on TV.

Yeah, my mom was here yesterday. She said I need to come try and they come try. And then they say, I'm going to go tell my friend to come try.

Got it.

That's why I think word of mouth, it's a big thing for us as well.

I would say almost for food more than almost any other business, word of mouth is just huge.

I really believe that the food sells itself.

Yeah.

Yeah.

No, that's great. On a long enough time horizon, the product of the business is the only thing that matters. Marketing just pulls up your timeline for it. It gets more people introduced to your product faster. And so marketing can accelerate growth, but it cannot create a good business. And so I think this is one of the big things that a lot of marketers don't understand. And this is something it took me years to figure out, which is that being good at marketing and sales can absolutely make you money, but it just accelerates how quickly you decline if you don't actually have a good product. But if you take it the other natural extreme, which is that even if you had zero marketing and one person eats, but it's so good, they tell 5 people And then those 5 people come and it's so good, they tell 5 people. You can quickly get to capacity if the product is good. And that works for services, that works for SaaS, works for anything. Okay, so how many customers do you help? What's the sales velocity of the business?

Average day we do 340 guests, 2 to 3 on the weekdays and 4 to 500 on the weekends.

Okay, so weekends are significantly bigger. When you said the average order was $80 on the weekend, $60 during the week.

Yes.

Is that off the same menu? Just people are ordering more?

We only have one menu.

Right.

Got it.

I would think that maybe the weekday because a lot of business. So like when they come in, they just order one plate of pad thai, right? That's $16. But during the weekend, it's more like a family. So it's like a bigger ticket.

What's holding you back?

So we actually have a few problems that we want to talk about. Like the first one first is to increase the sales during a non-peak hour. During the peak hour, we're good. We actually have line out the door. But during a non-peak hour, we would still find a way to better fill the house. We also want to improve on the takeout sales and also alcohol sales. Because we are opening our second restaurant, we really want to get Alex's help and also guidance because we opened our first restaurant and we kind of like just roll with it, right? And we're just like, oh, it turned out great, perfect. But now that we're thinking about scaling, we don't want to just roll with it anymore, right? The stake is higher. We're not opening up with a small hole in the wall. We want to make it right at like the get-go. So having Alex on board or guidance us, that's tremendously helpful. And then also the other reason why this is so important to me, especially with our like second venture, is because I just quit my full-time job and I am going to be committed and fully focused on this restaurant.

So increase alcohol sales, increase takeout sales, attribution for sure. I think with this business particularly, it'll be more difficult to do attribution than maybe a traditional business. That's okay. I'm not, I'm not as concerned about that. I'll introduce a couple of things that I think might be able to help us out. So looking at the problems that they presented, I think number one, we can increase sales during non-peak hours by actually changing pricing during peak hours. Second, how can we increase alcohol sales? Well, that's going to be through recruiting, hiring, and training staff. I would say takeout sales and attribution I would put as kind of like the third priority for me going into this. What kind of promotional offers do you run to kind of attract customers?

We like to give free items instead of giving percentages off.

Big fan. So real quick, one of my big beliefs in business in general is not to give discounts. Basically, it's either full price or it's free. I'm a big fan of that, especially for food establishments. Like, you don't want to have people who become like discount seekers. Like, that's not good. Which I do want to be clear, I separate from, you know, if you have a prepayment discount for services or you have some sort of incentive for someone to buy like on a sales call or within 24 hours, that I see is different than like running a promotion that's like 20% off. Not a huge fan of that. I'd rather give a free item and then have a clear ascension path to how I'm gonna get that person to become a full paying customer.

We especially like to do that on the big holidays, Mother's Day, Valentine's Day, Christmas.

So mostly seasonal, nothing that's standing or rotating. Do you have a process in place right now for basically what recommendations your servers recommend, number one, and then number two, what things they can add on to their orders?

No, we do not have that yet.

Okay. There's gonna be a really big opportunity there. Okay, and then in terms of encouraging people to come for that second visit, is there anything that you do special for first-time customers?

I think we just treat everyone the same.

Yeah, no, that's okay. There's— I have ideas. I have ideas.

Yeah, no, we don't. We don't do anything special.

No, you're good. You're totally fine. I know you want to increase your weekday volume, right? What have you done or tried so far?

We're thinking about doing a happy hour on the weekday.

Okay. And you haven't done that yet? You just— it's an idea that you have?

No, I think currently what we do is for the weekend, like our entree, for example, like the stir-fry, you have to order rice on the side. But For the weekday, it actually comes as a set. Right? So you order a stir-fry, let's say you order hot basil, it already comes with the rice.

Okay. So it's a surcharge of rice on the weekend. Is that what you're saying?

On a normal basis, yes. Except for lunch. Lunch, we do that together.

Okay. So tell me about this new store that you guys are thinking about opening.

Okay. Ari's is in Azusa. It's actually a little bit bigger. This time, we actually have a bigger bar with bar seats. We wanted to put bar seats in this time to make sure that when the guests are waiting outside, sometimes up to an hour, that we have something to sell them at the bar. And also it's, it's a bit bigger. So it's about 100-seater going from a 72-seater to 100-seater.

Yeah, I was curious about that because, you know, one of our big things is nail it, then scale it. Right. And so I know that you guys are trying to, from obviously trying to hit $80 million. So if you're going to try and do multiple locations, we have to make sure that the model is super dominant.

Exactly. Yeah. So I feel like on the paper, it seems like we're doing good. I mean, like I have no complaint about it, but, but I know in terms of like operational, there are lots of things that we can still tweak and do more. And that is why we want to do this between the two concepts as a test drive. And then we'll take the winning model and then we'll just go from there.

Got it. Well, do you want to improve this location though? The main location for now?

Of course, yes.

And what's the plan for the grand opening for the next one?

Grand opening we actually will not want to do until like 6 months later. I just want to make sure that we have 100% operating smoothly.

You mean you're soft opening?

We soft open. Yes. So we for sure will soft open. But in terms of grand opening, we haven't really put any package together because we think it's going to be 3 to 6 months down the line.

So one of our internal mottos is nail it, then scale it. And the reason for that is that a lot of times small business owners will get really aggressive and really excited and want to expand faster before they've really solidified their core model. Basically, it's like it might take you less time to get your second location, but it'll take you more time to get your 10th location. And so I want to make sure that those fundamental unit economics are right. How much does it cost to open? How quickly can we get to be profitable? How long does it take for that location to pay for itself entirely? What does our grand opening promotion look like? How do we recruit, hire, and staff a new place and get the culture to be what it needs to be? And so these are a lot of the questions that happen, especially in a heavy staff business like restaurants, where there's a lot of people that work under one establishment. Okay, well, I have buckets and buckets and buckets of notes. So I have, I have lots of stuff for you guys that I think we'll be able to help with. I'm going to focus primarily on this location and then I'll talk kind of at the end about kind of what we can do to hopefully set up the second location to succeed. Cool.

Cool.

All right, awesome.

And we also bring a special gift for you, Alex.

But wait, there's more?

Yeah, yeah. Before we get into business, we gotta feed ourselves first, right?

It's customary. Yeah, I rushed into the business too fast.

We spend lots of time thinking about what we're going to serve Alex because we want to make sure he loves the food, right? So, well, he's, you know, like the fitness guy. He's like the training. So we thought, okay, maybe meat, it's a good choice, like packed with protein. So Crying Tiger happened to be our bestseller, and it's something that we're really proud of. So that is definitely a no-brainer. The pineapple curry prawn, it's a little bit of a risk we want to take because it's not on the menu. It's something I, I tried making at home. I loved it, and I just want to see, like, if other people will like it. So he is my guinea pig. And last but not least is the mango sticky rice. I think that is a Thai staple, and We just have to showcase who we are, Thai person, and that's what we want to bring to the table.

So I'm going to eat all of this and then we'll start.

No, I'm just kidding.

Thank you. Mm, that is great. Okay, so what is this?

River prawns, fresh river prawns.

River prawns? I don't even know what that is. Really good.

Thank you.

Really good.

Special dish.

All right, I have to try this. All right, you won't be insulted if I just don't finish everything, right? No, no, no. Okay. But I am gonna try all this. I can see why it's doing so well. That was delicious. That was unbelievable. Obviously everything was good. That was exceptional.

Seeing Alex finish that red curry in 2 bites is like, oh yeah, we might need to put that on the menu. That's why we do this.

Fill my heart. Fill my heart.

Oh, the river prawns were fire. Really, really good. I mean, it was obvious why the restaurant's done well 'cause the food is good. And this is just like the simplest thing in the entire world. And I use restaurants as a simple analogy because everybody gets it. It's like a lot of people obsess about all the marketing and all the sales hacks. At the end of the day, if you have good food, people will come back and tell their friends. Like, that's really what it comes down to. And they focused on the thing that mattered most. I'm happy to help with all these kind of little things that can maybe improve the business model, but they had the thing that matters because if they had bad food, it didn't matter how many taxes I was going to give them. They were just going to get people in the door and they were gonna leave and never come back. And so they'd have to become a marketing business in order to stay alive because their product was inferior. They don't have that problem. And so I'm stoked to see what happens. The kind of 4 categories, actually I'm gonna split it into 5. So we've got pricing, we'll talk about. Number 2 is the actual menu itself. So I'm gonna ask you a bunch of questions about the menu 'cause I think this is gonna dramatically affect average order value. Number 3 is gonna be training. So this is kind of the staff stuff that we're talking about. Number 4 is gonna be alcohol. So I'm gonna split this out. Specifically, and then 5 will go next location. Okay, so those are kind of going to be the big overarching topics. So what I want to do is kind of like, are there ways that we can immediately potentially increase the profit of the location without dramatically changing the operations? And so there's 2 things that we could do. One thing that you can do, and I remember seeing this at a restaurant, is that you can just add your processing fee and you just put that on your menu, which says plus 3% processing fee for credit cards. Right. You can do 2.9, 3.9, whatever you want. And then that way when they get the bill, it'll just say processing fee, whatever. And it doesn't usually affect anyone's take rate from, from like what they choose to order and whatnot. But for you guys, with a 3% increase would be like a 15% increase in profit from one thing. So we don't need to do that. I'm just like, that's, that's one consideration you can do. The second thing that you can do is I noticed that you were at $0.00 in terms of your pricing. Was there a reason for that versus doing like $16.99?

I felt like the $16.99 or $16.95 thing was kind of old school. I just want to make it simple and clean.

Well, I'll briefly push back just because the— where you're at pricing-wise, if you were, you know, I would say higher end— I think you guys are upper middle, right? You're not like here, right?

Yeah.

I would say yes, if you're serving, you know, $29 to $50 entrees as the primary, then I think having $0.00 could make sense. Typically with luxury brands, they don't have $0.99. But I think that you're in a spot where I don't think it would detract from your brand to have $16.99. And the reason for this, like most people make their judgment off of that, that character in terms of pricing, right? And so this, though it may seem really small, if your average ticket is $16, this is 6% absolute, which for you guys is plus 30% in profit margin for the business. So like if you went from 19% currently, because that's a 6% increase in total in average revenue, that would take you to 25% margins from that, which is a 30% increase in profit. So that $600,000 and whatever it was, $670,000 in profit would be an extra $100,000, $200,000-ish, $220,000 a year from one move. I don't, I don't think it's going to affect your sales. That's just me personally, because it's like we're not even changing any of the characters. You're already kind of like paying the fee of being at $16. I don't think anyone buys $16, doesn't buy $16.99. That's just my opinion. Yeah. So this is a monster moment. It's like, yeah, one change that probably has no effect on your sales velocity could have a dramatic effect on your profitability as a business. When we're talking $20, $10, like this is a high volume business. Those tiny little dimes and nickels and pennies, they add up in a huge way. And like I said at the beginning, restaurants are notorious for having small margins. If we can have a 30% lift from one tiny change in terms of reprinting the menu, we should do that. Let's just use simple math. If every person who walked into their restaurant last year only bought 2 items, that would be $2 extra per person. They served 100,000 customers last year. That would be $200,000 dropped to the bottom line.

I've never thought about, okay, if I just add $0.99, how much would it translate into? Like the percentage of sales increase? It's just like a light bulb. It's just like pop. And I was just like, We're doing it.

The next one is because you have— you're turning people away on weekends, right?

Yeah.

Have you considered having weekend pricing Saturdays and Sundays or Fridays and Saturdays? The menu that you hand them is different. So you've got weekend menus and then you've got weekday menus. And so then the weekend menu can add $2 per dish. It's this surge pricing fundamentally. It's just like Uber. Like if it's really busy, they charge more. If it's less busy, they charge less. And so I'd rather you just add it on the days that you have it. And they won't even feel like it's being added. You're just, you're just giving them the weekend menu.

Right.

Right. It's just like different places have like a lunch menu and a dinner menu. The dinner menu is more expensive than lunch menu. No one's offended by that. It's just kind of a standard practice. How does that feel?

Worth considering.

Okay.

But, you know, be scary to do all three at the same time.

No, no, I don't think you necessarily should.

I particularly like this one the most. I've thought about it, but I think it just, we never actually have that percentage breakdown on how much is going to increase. So what we didn't see like the whole picture and how it would impact profitability. I think this one actually resonated with me the most in terms of processing. Yeah, I—

if you don't like it, don't worry about it. This is why I leave these out. And it's a lot about you and how you feel about your business, right? And so if this feels light to you, you're like, I think we could just, you know, we— literally the cost of this is reprinting the menu. That's it, right? So check this out. So this is the $100 million scaling roadmap and they are at stage 5 productized. So they've got probably 20-ish people who work for them. And if we look at the constraints of the business for them, let's look at the things that I'm talking about them with. Most of the scaling roadmap I tailor more to service-based businesses. And the reason for that is because 78% of businesses are services. And so I tend to skew in my language about that, but the actual things that are happening are the same, right? And so a CS playbook to onboard, all of that is going to be around how are we getting customers this consistent experience? We talk heavily about training, right? Connecting CS to product, that's getting feedback loops based on what people are eating and what they want. Like, spinning that, make something new to sell them. I mean, they functionally had alcohol, but they weren't selling it. So now we're pushing that a little bit stronger. And from a finance perspective, like, we need to get better at their finances, which is why a lot of the improvements that I had were very pricing-centric, probably because they didn't have good enough financials to be able to see, oh wow, when we sell this, you know, this product, we're almost breaking even. But when we sell these ones, we make a ton. They didn't have that kind of information, which would have to help them reconfigure their menu to be the most profitable menu possible that also brings customers back. And if you're like, man, that would be useful to know what stage of scaling I'm at, all I have to do is go to acquisition.com/roadmap, put in your business information, and we have this little automated thingy that'll tell you what stage you're at, what problems you're facing, and most importantly, how to solve them. And if you want my team to take a look at the business and, you know, reaffirm those things, or you'd like to come out to our headquarters in Vegas, and potentially be on the Cash Cash Show. On the thank you page, you can schedule a call and we'd love to help you out. So the next thing that, that we'll go over is the actual menu itself. So with the menu, how do you think about laying out what they get when, you know, when they open up the menu at your, at your establishment?

The way I thought of the design of the menu is the way the customers think when they sit down.

Sure.

Okay. Which is order a drink or an appetizer and then afterwards focus on like the big piece and then the small complementary piece to go with it. So like I would like Drinks, appetizers, specials, like the big entrees, and then carbs at the end.

Okay. Okay. So on the menu, do you have highlighted boxes for the key, the key items?

I think we have a section for the specials. Yes. And then a special section for our dessert, I believe.

Yes. Yeah. We have special, like special section highlighted.

Yeah.

We are working on an updated menu right now. And what we did is like when we laid it out, let's say fried rice, we will highlight what we want to sell.

Yeah. Yeah. So there's two components to it. So let's say you've got your sides, you've got your, your appetizers, you got your carbs, whatever. Within each of those boxes, number one is I would rate, I would rank them from gross profit top to bottom. So which of these is the most profitable? We'll put that first because that's the first thing people are going to consider. And then the second thing is I would have your highlight box, which is the, and I put at the bottom of the menu, like if this is your first time visiting, this is the one you can't miss. Right. That way it's like that way people, because no one wants to make the decisions. Fundamentally, what's good?

What's good? Yeah, exactly.

So that way, if you have each of the highest gross profit ones margin things that also happen to be the things that most people love. And those should be the same, ideally, that we want to make sure that it's really clear and it's prominent on the, on the menu per box that they're kind of working through. So any kind of business that has a menu and the term having a menu comes from restaurants because many people have eaten at restaurants, but you go to a mechanic shop, there's a menu, right? And so in general, I like having a couple things to be true about my menus. One is that I prefer to start at the highest prices. And the reason for that is anchors. And they've done research studies on this in terms of how they lay out like wine menus. If you put the most expensive on the top, it anchors the remaining prices underneath of it. And so number one, I like having higher prices higher. Number two, I like higher gross profit margins because two things could be $16, but one of them might cost the restaurant $6, one might cost them $1. And remember that $0.99 that we added added 30% to the profit of the business if executed, no sales velocity drops. And so us having just get more people to buy a thing that has $2 or $3 more of profit could make an enormous difference to this business. The third piece that I, that I want to hit on is what's the stuff that brings people back? Like, what's the stuff that's so good that they're like, God, I have this again. And so balancing those three priorities is how I think through laying out a menu, whether it's a services business or it's a restaurant. So the next thing that I have for you, this is just menu. We're going to get into training stuff in a second with like how do we increase alcohol sales and things like that. But what I want to do is increase the likelihood that people are already thinking about it. Right. And so there's two things that I want to, I want to think about. Number one is with each of the dishes you could put underneath of it pairs well with what drink this would go well with. And if they're reading it, they're, they're going to be thinking, oh, well, they're saying it goes well with this. You will get more than 1% of people to buy alcohol just from just adding the word pairs.

And if they just look at the menus.

Yes. Yeah.

I love that idea. I love that.

Yeah. And this is all profit, right?

Yep.

Pairs with. Does that make sense?

Yeah.

Okay. So this may be a wink wink from my next book that's coming out, but there are a number of ways that you can make a customer more valuable. There are 8 of them. One of them is a cross-sell, which is, do you want fries with that? For them, it's going to be, do you want an alcoholic beverage with that? And so what I want to do is make it as easy as possible for the customer to say yes, and I want to make it as easy as possible for the staff to not forget. And so both of the tactics that I'm going to lay out for them are going to mirror those things. How to make it easy for the customer, remind them. To do this thing. And the thing is, is they're getting 1% of their sales from alcohol, which is super high margin, right? So if we can get that from like 1% to 6%, so just adding 5% to the business in terms of total revenue from this very high gross profit product line, then again, we have another 25% increase in profitability. And that's just going from 1% to 6%. If you flip the table from no one's getting an alcoholic beverage to every person buys one, the profit of that table jumps through the roof. And so we only need like 1 out of 10 tables to do that.

We always thought that the alcohol should be better than it is and would be a huge opportunity if we could improve it. And I mean, we see industry standards being like 5 to 15%, maybe even 20, right? And we're at less than 1. So that's a really big weak point right there.

Do you have specials in terms of drinks?

No.

Okay, so I would recommend having one special that's a drink. So just say like, hey, we also just freshly made a Thai mint My time, whatever, you know, whatever, whatever cocktail you want. It's made fresh here on staff. It's super refreshing for the summer or whatever months, you know, make it seasonal for, you know, whatever, whatever time it is. And that way some people were coming back. It's like, oh, that sounds good. Like all we want is like, that sounds good. And then it's like, great, we have the purchase. So I would include that as the first thing. So basically there's have, hey, before we get into drinks, can I say the drink special? We make one every week and we spend a lot of time. We taste test a bunch in the back and we come up with the best one. And it's freshly made here, blah, blah, blah, blah, blah. And I think people would really like that. So rotating one drink special. There we go. So tell me about the actual tabletop. Do you have anything on the table at all? Do you have like one of those little A-frames or one of those spread open? You know what I'm talking about? Like where the table— Yeah, you don't do that.

Okay.

Okay. Is that too below where you want to be in terms of vibe of the dining?

I'm okay with putting it. Okay. Especially if it's like, you know, a special.

Yeah. Yeah. Like something that we want to introduce.

So I would probably do that because people like the visual. So I probably would.

So is there a difference right now? Right. Customers sit down, we bring our menu. So we have like a menu and like a special menu. So the special menu have like all the picture and the recommendation. Our menu is just, you know, like the list of item with ingredients, but it's not left on the table. So when you're saying like having like a little kind of like a placement or it's kind of like there in their face.

Well, cause also I'm thinking about the servers, right? Like how can we to help them do their job easier. And so if they can just point and then the visual's right there and they can see it, I think that's pretty compelling. And I think the way that you make that look is what will determine whether it looks cheap or whether it looks nice. Obviously, I wouldn't go lots of neon colors with the tropical background. That would probably not be that, right? So, you know, keep the look and feel of it upscale, but we still want to have the really nice, elegant descriptor underneath of, you know, once a week the entire team tries, you know, 5 different drinks. We pick the best one, and then that's what we decide as a team to offer for the week. Because if we can get the team bought in on it, they're like, oh my God, it was so good. Like, you guys should, you guys should try it.

At first we're like, huh, we don't— should we do it? Should we not do it? Don't we don't want to be like kind of like a fast food joint? That's why that's deter us. But then the fact that he said, well, it depends, you can design it in a way that is nice, presentable, and high class. Like, yes, we can do it. How come I don't think about that before?

We really are doing something very similar. We have like wine or specials menu. That we give out with the menus. But the table tent, it stays on the table, so no one's ever going to forget. It's always there.

Are you talking about like maybe just one item, special one item, or is it like maybe like a few items on the—

me personally, one, just one. Yeah, exactly. For me, this is me as a consumer now talking, when I see like 10 things, it just is like another menu, right? I want to draw attention to one specific thing, really clear image, you know, the benefit is underneath, and then they draw my attention to it. And to me, that's Really good. Now the back of it, we're going to save for some review stuff, so I'll get to that in a second. On table, one item special. Okay. We good on this so far? All right, good. So let's talk about getting people to come back, right? So we want to have a way to identify who the new customers are. Like, hey, it's your first time dining with us, right? Is there something that we can do to identify to everybody else that, like, if someone says yes to that, can we put like just, you know, a drink coaster on their table that's a certain color or a napkin that's a certain color, whatever. But the reason it's so important is because then the whole staff knows, hey, these are first-timers, right? And so obviously you want to give everyone a great experience, but just knowing it's someone's first time helps. Yes. Right. And so one is identify first-timers and B, I would give them some sort of surprise-free thing. At the end since it's their first time. So that's if they have a dessert or something like that, whatever the, you know, whatever the cheapest dessert is. Yeah, something that would be— but people remember things, something called peak-end bias. And so people remember things, two key moments of every experience. They remember the peak emotional experience and they remember how things ended.

Yeah.

And so if we can just really make that ending really nice, I think that would be something like surprise. Dessert for first-timers. And what I would want to do is then give coupon of some sort. And the way that you can do this, you want to do it classy, is that you have the manager put their card and, and then write free dessert on the back and then hand it to them. Okay, it's way better than a coupon, right? Because then it feels like it's a personalized gift, right? And so you say, hey, next time you come in, just bring this And I'll have another dessert for you in the house. And so now it's like we're creating that loop. We want to bring them back in. Does that make sense? Does that feel okay? All right. So these are— this is for first timers. Okay. For existing customers, I think you can offer the free dessert in exchange for reviews. Now, I know you guys do something like that now, correct? Sometimes.

Yeah, we have done it.

We've done it before.

I'm a huge fan of free drinks, free dessert for, for review. And the time that I found it to be most effective is really at point of sale. So basically when they get the check. Now I have a couple of ways of doing this. So I want you to tell me which one feels just kind of like I said, the pricing thing earlier. I'm going to give you 2 or 3 different ways of doing this and you tell me the one that feels better for you. Okay. So the first way is, hey, if you guys want, I can take care of one of the drinks. If you're just willing to leave us a review, it would mean— it would mean the world to us. We're a small family-owned business. And if they do that, then you say, cool, let me take the check back, I'll take it off and I'll come back with it. And so then it's like, great, every one of these. And it's at the point of sale. So you want to give the discount now. The whole idea of like, your next— if you leave a review, next time you'll get— it's like, no one cares, right? They'll just pay. So it's like, it has to be immediate. So that's, that's the, that's the first version. So free for review is thing one. Okay, that's the first version. The second version of this is when the check gets delivered, the manager comes after when it's sitting there, whatever, before it gets scooped up and says, hey, by the way, Hey, you know, your server's name was Judy. And just, you know, Judy gets a small bonus if she gets over, you know, 10, 10 5-star reviews in a month. That way it's like we're doing it for Judy, not doing it. So then you don't have to give anything away for free, but then you kind of just have the reciprocity of if Judy did a good job, you know, you can give her a $50, you know, thing. So this is the manager ask. Those are probably my two favorite ways of doing it. So either the immediate one in exchange for something or Hey, can you do it because of my— because of the staff that you like?

Right.

Either one of those feel better to you?

The first one.

You like the first better?

Yeah. Okay. That's what we kind of do from time to time, but we're not consistent.

Yeah. So that'll get into training, which we'll get into in a second. But because of the business that you're in, more than anything else, it's so reviews driven, like online reviews. You know, if you took your reviews from, you know, 1,300 reviews to 13,000 reviews, the amount of, you know, people that are coming through the door and like all we have to do— you serve 100,000 people this last year total.

Just last year.

Yeah. So if we got 10% of people to leave a review, it would— I mean, it would change things for the business. It would be— and so it's like, do we think— and the thing is, is you have multiple people at the table.

Yeah.

And so where this gets kind of interesting, hear me out, is that you could say, hey, if you each leave a review, then I can get all your drinks. And in one table, we can get 5 reviews. Right. And so, mind you, you don't have to do this forever. It's just— and this is obviously thinking about the next location too.

Yes.

Would I be willing to give up the cost of a drink in order to get a review? For sure. Not even— wouldn't even think about it. Nope. Right. And so, right. And so that's, that's— you're willing to make the trade. And the thing is, it's because it's on the check right now. They're like, sure, I like this place, this was great, I'll save $5, whatever. I would have, I would have done it for free, except they wouldn't have. But right, but like that little incentive helps out. So for brick-and-mortar services or restaurants, just local Main Street businesses, the vast majority of people make their decisions by searching online before they go. I mean, when you're about to go to a restaurant, what do you look at? You, you just look on Yelp, you look on Grubhub, whatever, and you see the reviews. And so I don't know about you, if I'm like looking at a dessert place and it's got 3.5 stars, I'm not going. I'm not going to go. I'll just go to one that has 4.5 stars. Like, why would I risk it? People only go out a certain amount of times per month and they're not going to blow their one time out on a 3.5-star place. They're just not going to do it. And so we need to boost the hell out of that so that not only do we have good reviews, but we have a ton of them. And so let me give you a different example. So let's say that you've got one place that has 50 5-star reviews and it's a 5.0, and there's another restaurant that's 13,000 and it's a 4.7. Where are you going? 4.7, 13,000, no question. Because, you know, this is a business like 13,000 reviews are like, holy cow, like this place must— this is probably iconic. This is probably a destination, which if you're a small business owner, what higher praise could you want?

So when I read the review, It's really— it gives us just not comfort, but also encouragement. Right. And if I feel it, I am sure anyone who comes on our Yelp page, read that review, will feel the same way. So to me, that, that is important is how we communicate with our guests.

I was thinking about a way to increase the average order value. Right. And so in the e-commerce world, it's like you get free gifts over a certain amount of spend or you get free shipping. I'm trying to think of a way that we could tastefully do that within this business, which is like it'd probably be better for takeout. Than I think in dining, which is like at $50 or $100, wherever, you know, if the vast majority sit at $60, right? $60 or whatever it is, it's like then we want to put the free gift at like $75 or $80. And so maybe on weekends you make it $100, on the weekdays you make it, you make it $80. So you just push that extra $20. It's like, hey, just so you know, you get an extra full whatever I just had for orders over $80. And I think that'll nudge a decent amount of people. Just put it right above where they're currently at. And it's like you get a full another order on top. And you guys have good gross margins on the food because I just want to, I just want to bump it up. And you saw with the 99-cent thing.

Yeah.

A dollar or two in this business makes all the difference in the world. And so this is basically an AOV, so average order value increase with breakpoints above current average threshold.

And for this, like this particular one, do you foresee it doing as like part of our business going forward or is it supposed to be kind of like tied to special event or like certain time of the year.

So the reason I said takeout is because if you're on the phone or something like that, or if it's on an order page online, it doesn't feel weird to me. Like, because we have to think about the— obviously the servers, right? Like, they can only remember so many things.

Yeah.

Yeah.

This is actually a lot of information too.

Oh, sure. Yeah. But because— but because what we're going to think about this is from the— from the experience of the guest, right? So they're going to come in. Are you new? Yes. Great. Great, cool. So they know if they're new or not. Yeah. Then they're going to say, you know, can I tell you about the drink special? Yes. Then they walk them through the drink special and then we get way more people to do it. People are also going to ask questions because it says pairs well with.

You're right.

Right. And so a lot of people ask questions about that and then you're going to get more upsells, which they're going to want because their tips are going to go up. So they're going to want to sell the alcohol. Right. So they have an incentive to learn that stuff. And then basically from that point, there's really nothing different except at the very end they're going to do this. So there's not a huge amount that we're really— we just have to know, are they first-time customer? We're going to make sure we do the drink special. And then at the end, we're doing this. 3 things.

Yep.

That's it. So as much— I know we talked about a lot, but in terms of what they have to do, it's not too much.

We will worry about adding more work to our worker. Right. But then the way that Alex showed us today is not adding more work. It's just adding pure profit.

So simple solution.

Simple solution. And we were complicating the whole thing and not able to get past our own thoughts.

So 1 out of 3 strategies actually succeed in a business. And that's a McKinsey study that they did. Succeed. And some businesses have 2 out of 3 strategies succeed. And the big difference is culture, which is the reward and punishment that exists within a business, which is fundamentally like, how do people behave? How do people do stuff? And so this is a people-heavy business. And so I wanted to not just give them a bunch of, you know, here's all the stuff that you can do, but I wanted to translate that into real world. How are you going to get your staff to do it? Right? Because if they don't ask people what beverage they want or ask them if they want to get dessert, very simple lines, but if they don't do it, it's a huge cost to the business. And so we had to make sure that they went home with clear items of like, this is how I'm going to train the staff and make sure that they do this every time. Otherwise, this is just a lot of fun entertainment, but nothing's going to happen to the business.

You think we could change this coupon card to sign up for our loyalty program? You get a few free mango sticky rice on your next visit. But you said you like the physical card.

I like the physical card a ton. And if you're like, hey, if you're worried about losing this, just take a picture of it and just show it to me on your phone when you come back. That way the people can bring it up. And what if, what if they, they share it and people who came got the picture of the back of the card? Like, so they brought new customers in. Oh no, right? So it's okay. So you can have them take the picture of it and be like, hey, if you don't, if you feel like you're gonna wash your jeans and it's gonna get, you know, torn to shreds, you can take a picture of it too. And that way you have it. Okay, it's a little thing. The only reason I hesitate with the loyalty thing is just like How many people are actually part of loyalty programs for restaurants?

Restaurants, I'm not sure, but cafes is normal, right?

Yeah. No, no. Oh, so they have like the punch card and they have all that stuff. Because you said you wanted to be more on the upscale side, I have a whole thing on loyalty programs. I didn't get into it because I didn't know— I didn't feel like it was necessarily the best feel. I can talk about it and then you guys can decide. So I know you guys right now, you do 3. If they on their 3rd one, they get they get free sticky rice, right? When they come back, they do that on their birthdays.

They get free sticky rice. Yeah, probably every $200 spend they get a free Thai tea. But we can bump that up.

So I think you'd have to sell me on the, the benefit of the loyalty program. And I would— I probably would even— I just hate that. Like, I— all I think of when I think loyalty program is somebody's just going to spam text me all the time. And so I never want to, right? And so for me, the loyalty program would be like, you get 3 things. Is it on your birthdays? We're going to send you free stuff. We're just going to give you a coupon for coming in. When you're here, you get your first alcoholic drinks free or something like that, you know, because if it has one, sometimes they're more likely to have a second, right? One per table or per party. And then number 3, when we have a wait, which you do on weekends, we prioritize you. Right now, for me, that third one alone would be enough. So I like that. I mean, I think a lot of people would join for that, for that benefit alone. So I'll put F I'll let you guys work the specific details of what you want in there because also when they fill that out, you can also get what their lead source was like. How'd you hear about us? So big picture, I am split on loyalty programs in general. Main reason the food is the loyalty program. Your food's good, they're going to come back, right? They're going to tell their friends. And so other businesses, I think loyalty programs can make a much bigger difference. Like if you have a med spa or something like loyalty program is like the business, right? But for them, I was just thinking through, okay, well, if this clearly meant a lot to them because they brought it up a couple of times. And so I wanted to give them something. If I were to do it, this is how I'd approach it. And these are just based on things that I've seen work across industries. So running starts, which is where you have— let's say you have 10 punches. If you give people 2 or 3 punches on their first go, they're like, they feel like they got free stuff. But it's really like you just make the amount of punches that you need to do free and you just give them that start ahead of time. They've already proven this from, from a bunch of studies. Studies that running starts are like 2 or 3 times more likely to actually finish out their punches than people who had the same amount of punches remaining on a shorter punch card. And so it's like, well, if you're going to do it, do that, obviously. But beyond that, I think through the same value drivers that I mentioned in the Offers book over and over and over again. So this is page 56 of the Offers book. Check this out. So whenever I'm trying to improve any product or service, I always think through the same value vectors, which is what do I want to have happen? How do I make it less risky? How do I make it faster? How do I make it easier? Those are the value vectors. And so I'm thinking as a restaurant, I'm like, how do I make it faster? And as soon as I was thinking through it, I was like, okay, well, you know, trying to say that they're going to get their food first when they walk in, like when they walk in the door, that's probably not going to be realistic. Like the cook takes a certain amount of time and some people don't want to be rushed at dinner. So like in that instance, speed is probably not the right variable, right? But waiting in line and being able to have first access. Okay, well, we can make that part faster given the fact that they already have more demand. So I'm like, okay, well, that, that's a good one. The decreasing the perceived likelihood, the risk factor, that's what all the reviews are for, right? You know, how do we, you know, decrease effort and sacrifice? Well, we're going to make it really easy for them to buy the alcohol because it's going to be right in front of them and we're going to pair it with the food that we think would pair best with those specific drinks. They don't have to think, I'm not sure, like again, this friction, I'm not sure which beverage to have. Boom, it's already solved, right? I'm just trying to remove friction from a lot of the parts of the process. And if someone's willing to pay more or get some sort of benefit for giving us their information, then we'll happily pass those things on as a reason to do it. Good on this. Don't worry, I know you'll be able to watch this. You'll have it.

Okay. That paper bag as a souvenir.

Yeah, of course. So now we're talking about— we're going to talk about Team and operations. Okay. Okay. So this is the training. What we really need to train them on is kind of the upsell process. Number one, they have the greeting. And so when I think about training people, you want to think about it as almost like skits. Because whenever you teach something, you have a condition, you have something that happens, and then you have a behavior. So when this, then that, right? So it's a rule. If this happens, then you do this. And so each of these are basically behavior rules. And so it's like, we're only going to teach you 4 rules. And the first one is that when someone comes in, you ask if it's their first time. If they say yes, you take this thing out of your pocket, you put it on the table. Now everybody knows. That's thing one. Let's practice. You sit down at the table and you go back and forth and the next person comes up and you drill it with them. Next person goes up, you drill with them and you just keep going through, do it for an hour. They'll have 20 reps in an hour of just doing skip one. Tomorrow we'll do skip two. And that training just gets so ingrained. If you do that on a regular basis for the— I'm sure before the shift starts, they have a 30-minute little powwow or 20-minute powwow. You just do this. And so you have the greeting for first-time customers. The second is going to be the beverage, which is we're going to be practicing getting the alcohol upsell. So let me tell you about our one beverage of the week. So in the back, we, you know, try out every week, we get together and we try out 5 different cocktails. And the one that we say is our favorite is what we make for the week. And so it's made fresh home here. We did it just a couple of hours ago. It's, you know, it's freshly squeezed mint, blah, blah, blah. And a lot of people love it. Would you like one of those? That's it. That's all we do. And then the next person goes up and you say, do it again. And so you want them to get 5, 10 repetitions per practice session. And so it's, it's that way you can hold them accountable because if you do this on a regular basis, they'll do it. Then we have the pairings, which is when people are ordering their mains, just reminding them that it goes, that goes really well with, would you like, a lot of people like it with, and just doing that little reminder. So it's going to be sides. Plus alcohol. So with every one of these dishes, I mean, there's a reason McDonald's says, do you want fries with that? Do you want to supersize your meal? Do you like each one of the— like, it's 2, 3 questions after every time somebody says they want this thing. So yes, I want, I want the pad thai. Awesome. Do you want to have extra noodles on the side? A lot of people do. No. Okay. It pairs really well with this. Do you want to go ahead and take one of those? And even the way I'm saying it, like, do you want to go ahead and take one of those? I'm telling them to say yes by how I'm asking the question. A lot of people do that. You want to go ahead and do one of those? They're like, uh, okay, you know, I'll do it. And so we just want to practice that. So the, the practice piece would be I order, and then you ask me question 1, question 2. An experienced salesperson will know those tiny little nudges. And in a rapid sales conversation, which is what a waiter or waitress has to have— let's say you have a table of 5 people you're going to have 5 sales interactions. And so we're talking like 1 sentence or 1 phrase that we're adding on per kind of exchange back and forth. And so we just have to get the team to practice those little nudges, which is like, would you rather have chocolate or vanilla? I like chocolate, right? Or most people like chocolate, or that's what a lot of people do here. And this matters more, especially with first-time customers, because they're like, I don't know how it works here. And so then you're like, well, this is how it works is what most people do. This is, this is what maximizes your experience while you're while you're here at this restaurant. And so what we're doing functionally from a value perspective is we're paying down risk, we're increasing the perceived life of achievement. We're saying, you want to have this amazing experience? I'm going to help you have the best experience by just helping you navigate this menu and ordering process to get the best stuff. And I'm incentivized to do that because I want you to have a good experience so you tip me well. For every alcoholic beverage, what would you charge for the drinks right now?

Uh, it's pretty affordable. I think we're at like $6 or $7.

Super affordable. So they're going to get about a dollar at it. So it's like when you're looking at the table, just think every question you ask, you have a dollar just sitting there and you have 5 people at the table and you've got $2 each one of them. It's just right there.

Yeah.

And so, okay, you get 3 of them. Great. You just got $3 from, from just taking orders. I would translate it into what it means for them. Does that make sense?

Yeah. Yeah.

Okay. From a team perspective, I would put a little, a little leaderboard in the back for the server that had got the most alcoholic beverage sales, and then you can give them $50 or $100, whatever. Or maybe they just get priority to pick what schedule they want for the next month.

Okay.

Just little things like that, I think, work really, really well. So the last step is review slash comeback offer. So if it's a first-time customer, they're going to get the comeback offer. If it's any other customer, it's going to be the review offer.

Gotcha.

Slash loyalty. If you want to, if you want to do your loyalty offer. And that's why we set this up so that we can do this. And if they forget, they can look down at the table and remember what napkin they put there. Right? That's why we do this, right? This is how we make a little system out of it.

Yeah. Yeah.

Does that make sense? Do you feel like they could do this?

Yes. Yes.

Great.

I want to do it.

So I think if we just do these things that we just outlined, there's a lot of points, but not— I think it's doable is kind of my point, right? Like we just kind of went through almost most of the things that they have to handle. The rest of it is menu, you know, moving the menu stuff around. Adding the $0.99 to the price, like very small things that could be big differences to the business. So the last thing we'll do is I'll cover the next location and then we'll wrap it up as one list and we'll prioritize it. Cool.

Cool.

Yeah.

Okay. I think when you do your pre-opening, what I would do is I would do an influencer night.

Okay.

And so you make it a VIP event. They can videotape it and they could share it to their stories and that you can give them the promotional offer of the free dessert, the free sticky rice or free drink, whatever. That you can trace back to them. And I think that would be a great first launch. And then you can also use all of their creative. That's the deal for getting the VIP experience. So it's like you get all these influencers and they make these little videos about your, about your restaurant, and then you can basically run an ad after the fact and people recognize them because they're influencers, but they're talking about your restaurant. All right. So check this out. So what I'm talking about is affiliates and partners. All right. And so the big key here is an affiliate is a lead getter. They're an independent business that tells their your audience to buy your stuff. And so if we're going to have a full night, right, we don't just want any kind of customer in the door. We want customers that can bring us boatloads of customers. Like, their normal business is one customer tells 2 or 3 people, and then those people come in. But the value of an influencer, or somebody who's a local celebrity, or local influencer who, who runs a forum or whatever it is locally, or they're just another local business owner that has exposure to many other people who are walking into their shop, their auto shop, every single day then you invite them out and they can then tell 100 people on your behalf. And so it's simply that it just gives you a lot more leverage and you're willing to make a little bit of a trade. And so you might do it for free or might do it at cost, might give them half off because it's pre-opening in exchange for them, you know, videotaping it or making a post or something like that. Those types of things are great ways to kind of launch the word of mouth from the people who have the biggest megaphones. So number one thing we're going to do is we're going to do +99. On entrees. Number 2 is we're going to reorder menu in order of profit. 3, we're going to add pairings, alcohol with entree. Okay, number 4, drink special with tabletop pick. All right, so we're gonna do first-timers training, which is napkin plus comeback offer. And then for returning customers, we're going to do manager card for VIP treatment. And then 7, you're going to have daily training on 5 scenarios. Doable?

Yes.

Okay, so let me show you how this actually adds up, though. So if we see no change in sales just by adding the $0.99, we get +30% of profit from this. Now, reordering the menu could actually have a really dramatic effect because if we just got a higher percentage of people to just buy the things that have the highest margin, that can have a really big effect on the bottom line because they're buying the stuff that costs the least, right? That has the most markup. And so this, I would estimate, might be somewhere in the neighborhood of like 10 to 20% if this succeeds. This one I feel really good about. This obviously is going to be huge for you.

Yes.

I mean, this could be somewhere in the neighborhood of like 40% plus increases. Like, this is really big. Both of these together. First time we're training, I think this is going to be more important for the second location because you need— you're already, you're already at relatively full right now. So getting people to come back, I think, is going to be really important for the, for the second location. But this might also help with some of the weekday, right? Because if you just get more people to come back, especially if they come during the weekdays, then those are the ones we really want to incentivize because it's like, well, come back again during Tuesday, right? So this might be some— I would probably estimate this might give you like— and again, 10 doesn't sound like a lot, but it's $300,000, $400,000 a year.

Yeah.

You know what I mean? Given your revenue. So it's not, it's not nothing, right? Manager card. This is going to be reviews. You know, I would bet this is probably a 20% lift somewhere in that neighborhood. And then this is just going to be overall the execution. But These are the 3 that I think will really move the needle the most, and you don't have to do a lot to implement them.

Yeah, I can do it over the weekend.

Perfect. That's my favorite kind of implementation. Yeah, fast and easy is one thing. Slow and hard.

No, this is easy. I can just crank it out tonight and print it out tomorrow.

Good. How do you feel about this whole plan? Great.

Doable. And it's going to make a big difference.

Yeah, very.

Great.

Okay, well, you know what we have to do now? We have to hug and then I have to finish your food.

I never thought I would do something like this. Super nervous when he's like, "Are you gonna go on the filming?" I'm like, "Nope, not doing it." Scared to death. But I'm glad that I actually get out of that mindset and choose to do it because I found a lot of not just helpful tips, but also I felt like I received support and guidance. Which is really important. And I'm so glad that I made decision to be here.

Really happy to be here. Made me feel a lot more comfortable with learning how to scale better and trying to do it the right way the first time.

So Calvin and Ayer seem like amazing people, incredibly humble, very hardworking. I love the immigrant story, obviously. And it seems like they actually have a very good restaurant. And so I'm very excited to see them implement some of these changes and potentially dramatically enhance the profitability the business to hopefully set up their expansion strategy so that they can go on and dominate and the entire world can have lots of amazing Thai food. And speaking of alcohol stuff, since that's what this restaurant was all about, we actually have a bar consultant that we had a B2B business and services that we did a full breakdown on. So if you like this, you'll love that.