Restaurant Leadership Podcast: Overcome Burnout, Embrace Freedom, and Drive Growth

64: Sustainable Restaurant Growth with Justin Cucci

• Christin Marvin

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This is what happens when a visionary restaurateur decides to reshape the dining landscape through sustainability and employee empowerment.

Justin Cucci, the mastermind behind Denver's Edible Beats, shares his inspiring journey from a single venue to five unique culinary hotspots. Raised amidst the iconic ambiance of New York's Waverly Inn, Justin brings lessons of authentic hospitality and historic preservation to the forefront, transforming unlikely spaces, like brothels and mortuaries, into thriving dining experiences. Join us as we explore Justin's creative process, which embraces sustainability by repurposing materials and crafting environments that strike an emotional chord with diners.

Chapters:
00:00:08 - Success in the Restaurant Industry

00:11:19 - Sustainable Design and Storytelling in Restaurants

00:18:17 - Building a Collaborative Restaurant Culture

00:28:01 - Employee Stock Ownership Plan Implementation

00:37:10 - ESOP Impact on Leadership and Staff

00:43:13 - Evolving and Adapting in Restaurants


Listen in as we uncover the magic of intentional design, where vintage and eclectic elements coalesce to tell a story that resonates with history and character. Justin's commitment to sustainability extends beyond decor, encompassing a philosophy of finding rather than buying, and creating spaces that feel as personal as a beloved song. His approach not only revolutionizes restaurant aesthetics but also fosters a genuine connection with guests, reflecting the synergistic potential of design, hospitality, and sustainability.

Discover the power of an Employee Stock Ownership Plan (ESOP) in transforming business culture. Justin explains how this model aligns the success of Edible Beats with its employees, cultivating a sense of shared ownership and accountability. As we navigate the challenges of the evolving restaurant industry, from technological advancements to rising minimum wages, Justin's insights reveal the perseverance and vision needed to maintain integrity and success. This episode offers a deep dive into a restaurateur's dream of creating meaningful experiences while nurturing a devoted team in a dynamic industry landscape.

Resources:
Waverly Inn-New York
Edible Beats
Linger

More from Christin:

Grab your free copy of my audiobook, The Hospitality Leader's Roadmap: Move from Ordinary to Extraordinary at christinmarvin.com/audio

Curious about one-on-one coaching or leadership workshops? Click this link to schedule a 15 minute strategy session.

Podcast Production: https://www.lconnorvoice.com/

Christin Marvin:

I'm so excited today to share this episode with you. I had the opportunity to talk to Justin Cucci, who's one of the most successful restaurateurs in the Denver area. For over 15 years he's been operating some killer restaurants all completely different concepts, 100% employee-owned company and today we're going to talk about his story and his journey of how he went from operating one location to putting a management structure in place, to go from one to five. We're going to talk about sustainability and how it showed up in his business about 15 or 10 years ago and how it's showing up for him today and some of the challenges around that. And then we're also going to talk about his ESOP his employee stock ownership plan 10 years ago and how it's showing up for him today and some of the challenges around that. And then we're also going to talk about his ESOP his employee stock ownership plan and really the detail behind the how and the why that he did that and the impact that that's having today on his team, the empowerment in his team, the ability to solve problems and tough conditions and just the overall culture of his company. So stick around for this episode. It's super impactful.

Christin Marvin:

Welcome to the no Hesitations podcast, the show where restaurant leaders learn tools, tactics and habits from the world's greatest operators. I'm your host, Christin Marvin, with Solutions by Christin. I've spent the last two decades in the restaurant industry and now partner with restaurant owners to develop their leaders and scale their businesses without wasting time and energy, so they can achieve work-life balance and make more money. You can now engage with me on the show and share topics you'd like to hear about leadership, lessons you want to learn and any feedback that you have. Simply click the link at the top of the show notes and I'll give you a shout out on a future episode. Thanks so much for listening and I look forward to connecting. All right rock and roll, justin. Thank you so much for being here today. This is a very exciting conversation. We have recorded this twice before. Yes.

Justin Cucci:

We had two good takes.

Christin Marvin:

We had two really good takes. I just went through this with a. I was on a guest of a podcast last week and we had the same thing happen. We got all the way to the end and then we lost the recording. So, anyway, I'm really excited to have you back on. Thank you For those of you listening. Justin Cucci is the owner of Edible Beats, which is a 100% employee-owned company. He has extraordinary concepts that are some of our favorites in Denver RootDown, rootdown, dia, linger, ophelia's El Ive, and Vital Root and we're going to have some just amazing time and conversation today around his concepts and his story. And then we're going to talk about his passion for sustainability and how that shows up in all the concepts, because it's very unique to anything that I've seen before, and we're going to talk about his ESOP, his employee stock ownership plan. So, justin, let's start with a little bit of your background and how you got into the industry.

Justin Cucci:

Yeah, sure, thanks again for having me. And yeah, I was born and raised in New York and my grandparents owned a restaurant in New York City. That's one of the I think it's the third oldest restaurant. It's called the Waverly Inn and it's still there. It's currently owned by Graydon Carter of Vanity Fair.

Justin Cucci:

But I was lucky enough to grow up in the restaurant business and really, from the time I could walk until I was old enough to work, I lived as a restaurant rat, just running through the restaurant, being a nuisance nonetheless, but really loving the whole idea of the restaurant.

Justin Cucci:

And so when I was old enough to work, I just started doing anything I could to make myself useful and get some extra spending money. But what happened was is eventually it just became like a passion. It became something that I lived and breathed and you know I just wanted to spend time in the restaurant instead of spending time outside the restaurant. So I was lucky enough to just go up the ranks and be a server, then a bartender, then a manager, and then they were actually trying to sell the restaurant, and while they were selling it I didn't have enough money to buy it, but while they were selling it I took over for them and they were retiring in Florida and I got to run the restaurant for a good year and a half two years, and that was my indoctrination into just being a restaurant rat.

Christin Marvin:

What was your biggest lesson that you learned during that time?

Justin Cucci:

Probably just how to stay connected to what my grandparents were like so hospitable, you know which I think you hear that word a lot, but they just breathed hospitality. It was just. It wasn't something they thought about, it was something they did, and so I really learned just sort of the art of hospitality authentic hospitality, not one that's regimented or a script and also just being connected to people. They were really great at being connected to the guests. So many guests knew them and so many regulars were just gravitating towards them, not just the restaurant, but to their person and the staff. And you know we had some staff there that was there for 40, 45 years, which is an amazing run. We had our two chefs there. Both were there over 40 years and that's a testament of just like an amazing connectivity that they had to the staff.

Christin Marvin:

I love it. So you moved to Denver, you start opening up these, these awesome concepts in really particular areas of town and you're I will say your creativity is really awe-inspiring for me. I mean, you've you've taken over a brothel, you've taken over a mortuary. Where, where does this passion and creativity come for these really unusual spaces and turning them into restaurants?

Justin Cucci:

Um, well, that's kind of you, thank you.

Justin Cucci:

Really, growing up in Manhattan, I had always had a real love for just the history of the buildings, and the Waverly Inn happened to be in an 1840s carriage house that got converted into a restaurant.

Justin Cucci:

So it had so much history in that building that when I moved to Denver I didn't want to do anything except in a building that had a life before the restaurant. And you know, root Down was originally the gas station and I just wanted to like pay homage to the architecture, to the sort of lifeblood of the restaurant, and so when I took these over whether it's the mortuary or the brothel or Vital, root was an old candy factory. It was just like part of the joy of it was really like speaking of the building's past but trying to hearken towards what it is in the future, which would be a restaurant concept. So it was always this, like you know, sort of dance of like trying to give a nod but not being hitting people over the head with it and, um, trying to be really thoughtful. I think at the end of the day is just, um, you know, honoring its history.

Christin Marvin:

Yeah, I love that. The. The airport is kind of an outlier in that whole theme. What was it about the airport that made you take that left turn?

Justin Cucci:

When we were offered the idea, you know, I was really naive about the machinations of running a restaurant in an airport.

Justin Cucci:

But what I wasn't naive about was I hated traveling and the food that you were like forced to eat or the choices you were given, and so I was really like, man, let's make a change to the way it works when you travel.

Justin Cucci:

Let's stop having people carry their own food or having to make, really you know, like fast choices that maybe don't feel good and let's try and find a way to like nourish people and, you know, give them, like you know, food that they would want to have. And so that was the lifeblood of DIA, was like just trying to make a change to that industry. And that's now 10 years ago it seems like a short time ago, but also a long time ago and we were just also passionate about trying to make the experience in an airport positive and one that people might deter themselves to go to that restaurant If they're in a different terminal. Say, hey, let's go over to Term C to root down. Or hey, we just landed, but let's go eat at root down first before we go home. And that's really the feedback that we've gotten over and over again as people who go out of their way to eat at the restaurant, to land and go there et cetera, and it's been really rewarding for that alone.

Christin Marvin:

Yeah, I will say we are. My husband and I are those diners, so we always go to the airport early because I want coconut gin fizz back in the day and duck wings.

Christin Marvin:

And so now there's. I mean you've really paved the way, for you know, we were just there last week watching all of these new local concepts come in. It's incredible. So now I was joking with my husband last week. I said, because we live in Tucson now I said we don't even have to go into the city to dine, let's just book an airline ticket to DIA, we'll just dine. We don't have to pack, we don't have to get a car, we don't have to do any of that, we'll just dine at three or four restaurants and then turn around and fly home.

Justin Cucci:

It's, that's so true. That's actually should be like a tour fly to the airport get the local restaurant scene in the airport and then fly out.

Christin Marvin:

Yeah, I love it. So talk a little bit about you know, one of the things again that really attracted, has attracted me to your, your restaurants. The design elements are just like dark but alluring and just have this really funky energy to them. And I, you know, I've heard the stories of the old you know you using the old basketball floors or bowling alley floors, and I've seen the tiny Jaeger bottles that you know make the bar at Ophelia's. I've heard you've got storage units around town of things that you collect. Where, where did that passion for reusing products again come from in terms of your design? And then we'll talk more about sustainability as a whole.

Justin Cucci:

Yeah, it's a great question. I don't know if there was a moment in time, but I know that I was at a certain age and it was when I was opening RootDown where I really felt disconnected my whole previous career in the restaurant business to the things that we used. Right, you just order it, it shows up and when you're done with it it disappears. And when I was in moved to Denver, I just felt differently about things and I wanted to be like have some connection to things. So it really just started from trying to find things that were unique and that were also like reused and there wasn't a playbook for that, it was just a matter of like a lot of eBay searches, a lot of Craig's listing, a lot of just like looking for opportunities. And so what started?

Justin Cucci:

As just you know, things that I thought I could collect and reflect back in the design, ie the basketball court or the bowling alley, or at Root Down we have a whole wall of discarded tin can lids I started to really see there's not only a good reason to do that, it's actually beautiful things, and so I always liked playing with this intentional misalignment, which is maybe a contradiction of light and dark, but I really loved the push-pull of things and putting things together that shouldn't go together, or trying to put things that shouldn't go together together and then, at the same time, having a set of rules of like, let's not buy this.

Justin Cucci:

In other words, let's not just go to a catalog and buy this, let's find these things. So it became find instead of buy. And then, even when it came down to like our chairs at Root Down, I just didn't want to have to buy, like you know, a hundred chairs from a catalog and look like every other restaurant. So I actually just started my eBay searching and found what was really the inspiration for DIA, which was Saarinen, who was an architect, a mid-century architect, and he designed LaGuardia, which is this beautiful 60s height of travel terminal. And so we bought the Noel Saarinen chairs. And then we just found places throughout the United States that were either selling them or they were broken and we took them in and had like a chair hospital and we just, you know, took care of these chairs. So all of those things became just like labors of love and, at the end of the day, I just think it's more beautiful than just like buying something beautiful.

Christin Marvin:

Yeah, I love that. I love the love the. We're very you know, very much in love with mid-century modern retro. That's totally our style. Unlock the skills to transform your leadership with the Hospitality Leaders Roadmap Move from ordinary to extraordinary, packed with practical strategies to lead with confidence and create lasting impact in your restaurant. Visit kristinmarvincom slash audio to download your free audio book today.

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Christin Marvin:

I love the old school, the vintage luggage that you have at the airport with the silk lining.

Justin Cucci:

We wanted these little vignettes.

Christin Marvin:

Yeah, it totally makes sense. I look at that stuff and I'm like I wouldn't want to clean that in a restaurant. That's exactly where my mind goes to logistics. But it's so cool. It just adds that touch, like you were saying.

Justin Cucci:

I was just going to say when someone's at the bar at DIA, we staged a whole bunch of these suitcases to be like moments in time, If you found someone's luggage circa 1950s going to San Diego, if you found someone's luggage flying out to Rome in the 1980s. So we staged all these little vignettes in these suitcases just to tell a story.

Christin Marvin:

How do you tell that story? How does that live through the concept and through, especially in a high volume setting like that? How do you tell that story?

Justin Cucci:

That's a really good question. The way I think we try and tell the story is to have people connect to things. If we can perk someone's interest and get them to just maybe pay attention a little bit more, maybe they'll find a connection. But even if it doesn't work on that deeper level, where there's a connection, we try and do it by having it have an overall experience.

Justin Cucci:

Can you be in the space and just have an experience that's maybe a little foreign, maybe just a little unique, so that you're not just you know letting your guard, so you're letting your guard down and just like you know being in the moment, cause I think so much of you know a great restaurant experience is being in the moment.

Justin Cucci:

Right, it's just like being in that time and space and being, you know, in your hospitality zone and eating great food and great beverages.

Justin Cucci:

So it really requires you know being in the moment. And so I think we just try to live that moment and have the moment shine. And that's not just the building and the design, that's the hospitality, that's the culture of our staff, that's the way we source our you know of our staff, that's the way we source our you know ingredients, so that at the end of the day, you can find levels of a connection to the restaurant and I always say we aim to be like your favorite band as opposed to your favorite restaurant, because you know, when someone has a favorite band, all they want to do is share that experience and all they want to do is relive that experience. And music has that way of really connecting deeply with people for a myriad of reasons Could be the vocals, could be the music, it could be the song itself, and I think we just try and apply that a little bit to the restaurant and see if we can have that same connection.

Christin Marvin:

I love it. Will you talk a little bit about how sustainability shows up for you beyond just the design elements, in all the concepts?

Justin Cucci:

Yeah, you know, when I started, all I wanted to do was do better. That was like my thing, like man, if we could just be better than what exists or better than we were yesterday. And so my ideas of, you know, being a green restaurant were naive, they were simple, but there were things like, you know, not having bottled water in the restaurants, because I knew that that was just not a good way to be a green business. And even if you find a more sustainable aluminum, you know water bottle. So we decided to just have all our water be super highly filtered, chilled, so people never had to order bottled water. And so that was some of my initial things is, I just wanted to have our sourcing and our resources really highly respected and valued.

Justin Cucci:

But what happened was people who started at RootDent especially had their own ideas and they started to challenge my ideas in great ways. They started to bring other ideas, and what happened was we just had this culture of being a business that was passionate about doing better, and you know I couldn't have planned that. I didn't plan that, but it just became so strong that everybody was a part of it. And then we just started composting. Years before composting was, I think, a thing. And we started to, you know, sign up for wind credits for our power, instead of just getting, you know, regular electricity grid, and started to just like, obviously, source our food, you know, locally and also with you know, clean proteins that were, you know, sustainably raised.

Justin Cucci:

But rather than just saying we're doing that, my chefs were so passionate they would go out to the farms or the ranches and they would spend time there and they would watch the process, and we found a lot of greenwashing where a farm would say we don't use any antibiotics and it's free range. But, you know, the definition of free range could be very different depending on who you're talking to. And so I just think the people in the restaurants did a great job of vetting all these businesses so that when we decided to partner with somebody, it was wholeheartedly, and we believed in it and we trusted them and we saw behind the curtain. And I think that's just how our culture of you know sustainability still is, you know, getting better all the time, but it's still challenged all the time in the best possible way.

Christin Marvin:

Yeah, do you find today that, with the generation of workers that you have, is it? Are they still curious about it? Are they still looking at ideas? I know the landscape has changed so much.

Justin Cucci:

Another great question. Yeah, because what I was referencing was maybe the first 10 years of our life cycle and the people who were there. But you are 100% right, it has changed, and so I don't think people are as passionate as and maybe they're just younger, right, maybe we're getting a younger generation who doesn't have that experience, so they're not coming with as many ideas, but I still think when they learn about it, they then are connected to it, and so we are constantly trying to talk about the food that we source and why, and we also, last year, opened our own. It's called a farm box and it's basically a I think it's a 40 foot shipping container that's converted to a hydroponic vertical grow room, and basically we're growing greens and herbs 365 days a year right at Vital Root.

Justin Cucci:

So we have this basically you know, farm that puts out a lot of product enough product that we can have it sold at all five of the restaurants, and so I think when people find out about things like that, they become curious, and, at the very least, I just want people to be curious about things, to be passionately curious about the things we do, and that curiosity will take some people really far, and some people it's just to be passionately curious about the things we do, and that curiosity will take some people really far, and some people it's just enough to be curious about it. So it is a changing landscape and, yeah, I think it's just well said.

Christin Marvin:

Yeah. Are you finding that your sustainability practices and the culture that you've built is that helping you attract people and helping you recruit? Are people coming to you saying I'm hearing what you're doing? This is amazing. I want to be a part of this.

Justin Cucci:

Again in the first 10 years. Hell yes, that was a thing that people would seek us out because I think they really wanted to work at a place where things mattered and their time and energies mattered. And then you know, bigger philosophies mattered about, you know just the earth, humankind, resources. I think less so now, but I do still think we're. Luckily there's people who still just want to come to the restaurants because they've heard about some of the things we're doing, whether it's the gardening, whether it's the way we do the design, whether it's our sourcing. So I think it's still there, but it's a lot less frequent.

Christin Marvin:

Got it. Yeah, I think a lot of people in the younger generation just expect businesses to be operating like this now.

Justin Cucci:

That is so true, right? Yeah, it's like you're not impressing me. This is what you should be doing. Like, don't brag about that.

Christin Marvin:

Yeah, exactly. So let's talk a little bit about your growth strategy and then we'll kind of get into this 100% employee-owned concept that you've adopted. I've had a couple conversations over the last two weeks so this is really really good timing of restaurant owners that have two concepts and they want to go to four, they want to go to five, but they're still operating solo and their biggest question is how the hell do I do this? I'm already buried, I'm already in the weeds. Would you talk a little bit about your decision to grow and then where your management structure is today?

Justin Cucci:

Well, another great question. So glad to get questions like this because this was a, you know, an inflection point in the growth of my restaurants. We opened Root Down. It was incredibly successful. I was a sole owner, so that obviously has a lot of benefits, but it also has a lot of detriments. And at the busier we got, the more I was being pulled, the more plates I was spinning and at the end of the day, you know, something has to give. And so I was at a point in my life when I really started to discover and I mentioned this a little bit with the our, you know, sort of sustainability practices.

Justin Cucci:

I discovered collaboration as the most beautiful thing. You know, I went from being a chef owner who had a singular vision, singular ideas. I had a way. Obviously I wanted to do things because I, you know, paid my dues in the restaurant industry and had been doing it 20 years at that point. But the more successful we got, the more I let go. And that was like a really hard thing to do. A you have to do it with intention. You can't just try and start delegating and hope that you're going to get where you have to get, because people have to understand what the vision is. You have to communicate what excellence looks like and what quality looks like, and authenticity. There's a lot of words at least in my group that I wanted the people who I'm collaborating with to speak the same language, even if they added their own words to this language. I wanted them to all speak the same language and that was a learning curve for sure. So as I opened additional restaurants Linger was the next one, and Linger was as successful, if not more so, than Root Down I started to get my ass kicked again and then I just started to look at like, okay, if this is going to work, because at times I felt we were the busiest restaurants but we were executing really poorly and I felt like I'm failing, whereas everybody from the outside looking in says that is the most successful restaurant we've ever seen.

Justin Cucci:

And I was feeling like a failure. And the way I bridged it was by really buying into leadership instead of management collaborating and then really just finding great collaborators. And that was something I was really fortunate to do was to find really great collaborators. But you know it's not as easy as saying you're a good collaborator. It's a trust thing, you know.

Justin Cucci:

You have to give a certain amount of voice to people, you have to let them make decisions that maybe you feel strongly about. There's many times when I'm in a room with my key people and I might feel strongly, but you know what? I want them to take this and see where it goes, and many times that doesn't end up where I think it's going to end up and it could be in like really great successes, and that's. I think it's just. You know, you have to be willing to give up a lot, but at the same time, I say that I was like a, you know, a democratic dictatorship because at the end of the day, being the sole owner, I still got to have veto power over it.

Justin Cucci:

But I think you just have to not feel like, hey, yeah, you just have to make yourself a collaborator instead of the final vote and I really try and avoid myself being the final vote, because I do have final vote to say yes or no, but I rather vote with everybody. But I'd rather vote with everybody. And if we have a chart in our room that goes from like minus three to plus three and we'll often take everyone's temperature, because it's not always yes or no, it's like I feel strongly about this. I feel okay if we move forward. I feel really strongly if we move forward. So we have this great chart. That's a great way for us to get people's opinions without it just simply being yes or no. So I think that's the way I navigated it.

Christin Marvin:

And I would say Justin, let me yeah, sorry to interrupt you Will you speak a little bit more as to what roles those collaborators played?

Justin Cucci:

Yeah, sure. So you know, I went from being a chef owner who tried to be a little bit in the kitchen and a little bit in the front of the house and also working, you know, on the books, to now saying, okay, I'm going to find, you know, a right-hand person to help me just be all of that finding. You know Megan, who's my VP, and she was my sort of right-hand person for a while but, you know, and I really was hiring for an assistant and she applied for the job of assistant but you know, soon after I realized like she is capable of so much more and so she became, you know, pretty much the VP of Edible Beats. And then we had other people. Just, I have someone named BB, who's Brian. He started as just like a part-time floor manager and but again, we recognized in him, and I think he recognized in the company, a mutual sort of you know give and take and I don't know he just gave so much to the role that he eventually became GM of RootDown and then he became my director of operations and so most of these collaborators are either. You know, like Jill also I'll mention she's my sort of. If we had a CFO, she's the CFO and these people just really I never could have written a script like this.

Justin Cucci:

I never would have known that I'd have these 10 and 15 year relationships with collaborators that now I feel like I just tell them, like I want to be obsolete.

Justin Cucci:

I want you guys to take this because this is as much of their vision as it is my vision now.

Justin Cucci:

And now we move forward, you know, sort of as a unit, but some of the other collaborators were just I had a culinary director for a number of years and then I had a sort of Shannon hate to mention names, but I want to give some props. You know, open Linger and L5, two of the like busiest restaurants in my group and two of the hardest restaurants to execute restaurants in my group and two of the hardest restaurants to execute. And she was another great collaborator that just took those restaurants up many levels by, you know again, having this push pull where when she needed my input, I was there and I would be willing to give her all the guidance she needed. But I was also willing to step aside and her not hear from me for a week if she didn't need to hear from me. And I think that's where a lot of people get caught up is not knowing it's a dance. At the end of the day, it's just dance and you probably have to learn the dance with the people you're dancing with.

Christin Marvin:

Yeah, absolutely. I love that. You. It sounds like you knew that you wanted to be the visionary for the company. You knew where you wanted to go, but you knew you were playing the bookkeeper. You were also the chef, you were also the floor manager, and so you hired people where you could at that time, right and then have just brought them up. So I think that's a beautiful segue. Would you talk about this employee stock ownership plan? How did it come to be and how do you do this if somebody is interested in it?

Justin Cucci:

to be, and how do you do this if somebody is interested in it? Yeah, it's a really impactful thing. Employee stock ownership program is essentially where the owner sells the business to the employees but the employees don't have to put up any money. Essentially, in most cases, a bank comes along and lends the business money and the business kind of buys itself. So it's this really unique way of having a succession plan with a successful tenured business, like I had, and I was at a point in life where I needed to figure out what is my succession plan, and so the options were far and few. There's sell the restaurants. There's, you know, maybe divide up the restaurants and sell them individually, or there's just run them to the end of their life cycle, and none of those felt very attractive to me. It would be really hard for me to sell them and then just say goodbye. So there's selfish reasons in there. But at the same time, I wanted the people who also built this company, of which it's many, many people, from the most minute roles to the biggest roles, that have all built the success that we've had, and so I wanted a way to share that success, built the success that we've had, and so I wanted a way to share that success. So basically I sold the business to the employees. We didn't get a bank loan in our case because the banks weren't lending money to restaurants. So I actually had to become the bank and do like what's an owner carry. It's essentially like you know, I hold the paper on the loan and eventually they pay me off. But I was willing to take that risk because I really felt strongly that our success was. You know, it was a celebration of the whole being greater than the sum of its parts.

Justin Cucci:

And now that we are an ESOP, every employee has a vested interest in the growth and the success of the restaurants. Each year there's a distribution of shares and employees get shares based on their W-2. So the more they earn in their W-2, the higher their share allocation. And basically every year we get a valuation for what the company's worth and that changes over time based on a couple reasons. One is how much debt we pay off. So the more debt we pay off, the more the company's worth, just like your home. Right, if you just live in your home and nothing changes, but you pay off debt, your home is worth more. But then of course your home also accelerates in value because of the market, and the same thing happens in the restaurant. As the market and as our success grows, we also grow in value from our sales and our EBITDA. So it's a complex mechanism. So if anyone's lost at this point, you're in good hands because you should be lost.

Justin Cucci:

But in the very simplest terms, employees get shares on the restaurant and, when all is said and done, when the restaurant either sells or we pay the debt off, those shares are worth a share price and that share price goes up every year based on the performance of the restaurant. So hopefully, at the end of the journey, there is many people whose lives can be incredibly impacted by an ESOP because they can work somewhere let's just say eight years and instead of having a job that you worked at eight years and when you move on you get up maybe a severance check for two weeks pay People could make. You know, some ESOPs can be hundreds of thousands of dollars for these long tenured employees. Even if it's in the tens of thousands of dollars, there's many jobs you leave with nothing. So it's a great way to have a culture of ownership that actually is a culture of ownership.

Christin Marvin:

Is your leadership team and the management team the ones that are benefiting from this from the share perspective, or is it all employees of the company from this in the share perspective?

Justin Cucci:

from the share perspective, or is it? Is it all employees of the company? It's all employees who have worked more than a year, so there's a year vesting period and then there's a five-year period of that vesting, so it's 20% each year. So after you work your first year, then you get, you know, 20%, year one, 40%, 60, 80, a hundred, but it is all employees and the. The way it really works is that my leaders, my managers, have higher W2s than, let's say, my, you know servers, and so it does, in a way, value them more in terms of the amount of shares they get. But that's just also because most likely they're putting in more time and energy into the restaurant than a part-time employee who might be working three shifts, who still can be eligible for the ESOP. But just their shares will be proportionate to their time and energy, if you will.

Christin Marvin:

You mentioned last time we talked about this. This is not a cheap endeavor. It's pretty costly.

Justin Cucci:

It is. I was made aware that it was costly, but I think you have no idea of what that cost is until you do it, and so I think they had told me it was going to be maybe $200,000, $300,000 to just do the ESOP and that's just. I couldn't even tell you how much work there is to do, but it took probably over a year and the amount of lawyers and CPAs and consultants you need is a lot, because this is a government recognized entity. This makes you a. One of the benefits of being an ESOP is you no longer pay federal taxes and so you're under the many governmental guidelines and they are fact-checking your plan documents and there's a third-party administrator.

Justin Cucci:

You can't just say I want to be an ESOP without really being an ESOP. It is a black and white thing. So it costs for us. I think it was like $400,000 to $500,000 to start it and then each year it's probably $50,000 to $75,000 in just all of our yearly upkeep, Because you do need a lot of players to make sure that we are following everything by the letter of the law and also that somebody represents the employees. So there's a lot of oversight on top of oversight, and I'm all for that because I don't want employees. Often in these kinds of instances employees can just wonder like, is somebody else being favored or am I not getting my shares? And there's just a lot of instances where I think people don't trust businesses and I understand why. But in this case there is so much oversight, it is luckily out of our hands and it's in other people's hands to basically monitor the health and wellness of the ESOP.

Christin Marvin:

What have you seen the impact be from your leadership team, specifically from I guess you know pre-ESOP, to where you're at today?

Justin Cucci:

You know I was lucky that I felt like my leadership team and my core team always had an incredible sense of ownership, like it's really like. When I look back at it sometimes I think, wow, there's been very little change, and not in a bad way, but there's been very little change because there was such a high level of ownership already in my leadership team. But there's no doubt that it's changed for the better, because I think now it's not just them blindly trusting me to take care of them, because there was a fair amount of blind trust that I was going to take care of my team and I always tried to do that. But now I think they know there is a tangible dollars and cents that's going to accompany their journey, that they could look on their account each month if they want to and look at their shares, and every year we get evaluation and they can monitor real dollars and cents. I think what it also did is it really gave them a deeper sense of what it is to run a business, because I probably kept some of that from my team because I felt that's my burden. I didn't want them to feel some of the burdens of when times are hard, what happens, where does the money come from? And when things get really weird, where does the money come from and when you know, when things get really, you know, weird, where does the strategies come from, and I I maybe like shielded them from some of that. But now it's like all right, guys, time suck, look in the mirror Like, what are we? What are we doing here? What, what are, what are we each going to do to change this situation? Or, if we've have a situation that we're situation that we're trying to solve, it's not just imbalance, it's really equal. For my leaders, so I do think they've taken on a much bigger burden than they have before and, again, I probably shielded them from some of that.

Justin Cucci:

And, generally speaking, though, I think the staff in general is probably divided. There's probably a lot of people in their 20s who have no real understanding of what this could mean for them, and that's okay. When I was in my 20s, I don't think I knew about health insurance or 401k. I just knew about the day and maybe the month, but I didn't think about the year and beyond. So we have many young employees, I think, that are just like yeah, it's cool, it's an ESOP, maybe something will happen. Maybe it doesn't. Then we have the other half of the employees that I think speak ESOP, have that ESOP ownership culture that feel like the decisions we make as a business affects everybody. So they might be the voice in the room and saying, hey, why are we doing this? We're taking away from us. We're not taking away from the man or the owners or the ownership we're taking away from us. So let's make these changes to make a better restaurant. That'll make our lives better in the long run and hopefully in the short run. So I think there's a lot of individual voices of people who are starting to understand what it means to be an ESOP.

Justin Cucci:

We're very young in our journey. This is going into our third year and ESOP is like anything in business. It's not a get-rich-quick plan when you go into the restaurant business. When I went in, I didn't think anything was going to happen for five or 10 years, and so I think there's a little naivete when people think they're in an ESOP and they're getting shares, they maybe think like, okay, let's get this money. Where's my shares? How much is it worth? And I will say our valuation each year has been, I think, very healthy. I think in our first year we actually doubled our share price and last year our share price went up 35% and I would take that on anything I owned in the stock market to double and then 35%. But because we're so young in our valuation, those shares are still early in their journey, so it's a little bit of a long game.

Christin Marvin:

Yeah, I love that. I just had this thought of those 20-somethings that are going to be spoiled by this environment that you've created. And then go look at another restaurant and go where's your ESOP, Like, what are my options here?

Justin Cucci:

I think the more people ask those questions and challenge businesses to find ways to really value the employees, because a lot of restaurants and a lot of businesses say it and they do. Don't get me wrong if you can offer things that are outside the norm, but to me this was the way I thought we could really walk the walk, better than any other plan that we could put into place. This was walking the walk that we are essentially giving this business to the employees by just working there. They don't have to bring a dime to the table.

Christin Marvin:

I love it. Last question, I'll let you go. What's your biggest challenge today?

Justin Cucci:

Running a restaurant, we had this incredible 15-year ascent and success, and when COVID came, I feel like we have long COVID right now of restaurants, and especially in Denver. Because my biggest challenges now are minimum wage is one of the highest in the country. We are going to be approaching $19 an hour, which is higher than New York City, higher than Boulder, which is a much more affluent city than ours. I think they're a city and I think we're in the top five in the country. So minimum wage is difficult because it really is forcing us to look in the mirror and figure out how are we going to make this work, and we can make it work by raising prices, but I think people are only ready to pay so much for their next you know their martini or their you know their burger, if you will. And so we're constantly having to reinvigorate and reimagine the way we do business, and for Edible Beats, a business that had 15 years of success, I never thought I'd be at this stage of my career evaluating so many decisions we make and looking at a microscope on so many processes that we have. And so in the last couple of years, we've changed our POS, we've changed our health insurance provider. We've changed our credit card processing. We've changed our oh God so much. Oh, our tip, the way we tip people. We went from a individuals keep their own tips to a tip pool model, and that was part of the ESOP. We wanted people to all feel like when people get gratuity it goes to the team, it doesn't just go to the select few.

Justin Cucci:

So we've changed so many ways that we've done business that in some ways we look very different than we did a couple years ago. But part of that is just a necessity. We have to evolve. But part of that is just a necessity we have to evolve. We have to look at the way we're putting out food and how many touches every menu item takes and how many menu items are on, and how many beers do we really need and how many tequilas do we need to have on the shelf, and how long do we need to train people and how much do we use technology and handhelds in the hospitality process, and so anybody who's a restaurateur is probably like nodding their head here saying yep, we're looking at that too.

Justin Cucci:

So it's a long list of things that have been a challenge. But at the same time I will knock on a piece of wood and say that we are still so busy, and busy doesn't always mean financial success. I said that before. We were busy early on, but we't always mean financial success. I said that before. We were busy early on, but we didn't have financial success, and nor did I think we really had, um, you know, the level of integrity success that I wanted. Now we're having that success and the integrity, but we're not finding the financial successes yet, and I think we will, as inflation and the election and all the things that everyone's like waited with bated breath. We are too, but we're lucky to be as busy as we are.

Christin Marvin:

It's interesting, I've never seen a divide, you know, in in my lifetime of really, you know, counter service and convenience and entertainment space is really taking off and and full service just really suffering. You know, we, like I said, we were in Denver last week and I haven't. I haven't been downtown I think the last three or four visits Um, so it's probably been a good year and just walking around and feeling the lack of energy on a Monday afternoon whenever it used to be bustling at Union station and seeing all the empty seats at a restaurant during lunchtime. I've been reading about it, I talked to a ton of people. Still, I've got clients in Denver and across the nation. But to feel it, to be there, to feel it like energy in a restaurant is everything.

Christin Marvin:

And being in those moments where, in 07, everything was exploding, we were on a wait every day, spending seven years in the brunch world where people were willing to pay higher prices for breakfast to start their day. It's really changed and shifted and one of the things that I really admire about your model is you've always been intentional about your food, about your cocktails, the people we've seen the longevity. We've built relationships, you know, with the, with the teammates behind the bar I won't name everybody's names, but but we, we've always felt like we are, we're at home in your spaces and I know, I know that's what you're going for, um, and so I think it's groups like you, with this level of intention and empowerment of the teams and the vision, that are successful these days. And, um, congratulations on that. I know it's not easy and I just am even more appreciative of you being patient with me as this is the third time we're recording. I know your time is really really valuable.

Justin Cucci:

No worries. No, you said a lot of kind stuff there and the part about energy is so true. The Monday nights and you know that used to have this crackle to them, or even at seven o'clock, yeah, there's times when you could drive a car through the restaurant and not hurt anybody, and that's a strange shift. Interesting landscape right now and I'm excited for the challenges that it's giving us. But I'm also excited for the change that those challenges are going to reap and I'm excited to see where it goes from here.

Christin Marvin:

Yeah, me too. Well, thank you so much, justin, really appreciate your time. Please, anybody, if you're in the Denver area, go support these restaurants. Go have a rooftop cocktail at Linger, go watch the fireworks, go see a show at Ophelia's, go have a great meal at the airport, no matter where you're going, go to Vital Root and check out that garden. I love, love, love that space and that food there. And if you want something swanky that is hard to find, go to L5. Yes, for sure. So well, justin, again, really appreciate you, yes.

Justin Cucci:

Thank you very much.

Christin Marvin:

Let's meet up next time. I'm in town here in about six weeks.

Justin Cucci:

That'd be great Awesome. Thanks so much. I appreciate it.

Christin Marvin:

You bet that's going to do it for us guys. Please share this episode with anybody that you know in the restaurant industry that could benefit, and we'll talk to you later.

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