David Noël-Romas: Welcome to the Manitoba Business Podcast, featuring interviews with business leaders and entrepreneurs based right here in Manitoba. I’m David Noël-Romas.
Today’s guest used to work in the propane business. It’s more fascinating than you’d expect. Since then, though, he’s opened several of Winnipeg’s most popular and unique restaurants. He is both passionate and calculated when it comes to the business of food, and that shines through in our conversation. I hope you enjoy it!
Now, normally at this point I insert a little reminder to tell your friends about the show–and you should! The website is www.manitobabusinesspodcast.com. But for the next several episodes, I want to try something different. If you enjoy the show, and also if you don’t, send me a text message! My phone number is 204 400 4255. I want to know what you think of the show, and how I could make it better. Once again, the phone number is 204 400 4255.
Alright, now let’s get started. Here is Noel Bernier:
[to Noel] All right. So Noel, thanks a lot for taking the time.
Noel Bernier: Good morning David.
David: Could we start by having you tell us a little bit about who you are and what you do?
Noel: Well, my name is Noel Bernier. I’m an entrepreneur and restauranteur in Winnipeg that currently is either the principal or a major shareholder in seven restaurants in Winnipeg. I’m originally from the North Interlake, Fisher Branch, Manitoba. And most of my career actually up until the restaurant industry, I’d only joined it about eight years ago, was built in commodities and energy sectors. So a bit of background about me was I grew up on a small farm. My first job was working in a grain elevator, shoveling out the bottoms of the grain bins and my first career was being a grain buyer’s assistant.
So dumping trucks, grading grain, talking to your neighbors. And from there, I had a career that really spanned itself in that agricultural industry and then morphed into energy and had stings with companies like United Grain Growers, Imperial Oil and the regular cooperative, Federated Co-operative, [inaudible 00:01:13].
David: Cool. What kind of roles did you have when you were the energy sector?
Noel: One of the things I loved about energy was that I got to touch a lot of different points in it. So from a historical standpoint, my first touch to it was with Imperial Oils and a bulk agent in a rural area. So I dealt a lot with commercial and agricultural clients. So small airlines, farmers, local gas stations. You know, a wholesale, a regional or a small area wholesale business. From there, I actually…I spent some time with Federated Co-op and got to work on the retail side of the business. So within the gas station sector, developing sea stores, land development, understanding or learning a lot about what that offering looks like or the very end of the retail chain for gasoline commodities.
And then I spent seven and a half years with a company called Superior Propane. And then my career as a regional manager for them. With this, an area spanning the Alberta border in Wawa, Ontario, with about $400 million a year in sales and about 350 employees.
David: Wow. Did you say you were based in Wawa at that point?
Noel: No. I was based in Winnipeg. With that company, I was based in Dryden, Thunder Bay, and Winnipeg throughout my career but it was a really…propane was an amazing business to see the world, the lens through from the energy sector because in propane, we touched everyone. But we touched everyone in a way that you wouldn’t normally think is top of mind. So most people would relate that business to the propane guy, Hank’s barbecues, but barbecue business was less than 5% of our overall sales.
David: Propane is huge in industrial processes and like I think forklifts are propane powered, aren’t they? Something like that?
Noel: Absolutely. One of the biggest segments for propane in a city like Winnipeg is power and forklifts.
David: Really? Wow.
Noel: Yes. It’s a very competitive market and it’s a B2B model that the three or four competitors who do it are after a pretty small market but it’s one of the bigger markets in Winnipeg for propane is for forklifts usage. But it’s really the vast majority of propane sales come around two unique things to its energy property. It’s portable so it’s a frontier business. You spend a lot of time and a lot of your sales are driven by places that don’t have natural gas as a component with where they’re at.
So you really work on the frontier lines a lot. And when I say frontier lines, some of my…going back to that history, some of the most interesting client transactions that I worked with were with working with the growth of Tundra Oil in south and western Manitoba and as a vendor to that company, really orchestrating and planning a major resource plan to help accommodate their growth because again, where they were drilling and where they were growing their oil business in southern Manitoba, many places didn’t even have hydro access.
So again, it’s like a frontier line. And then the other customers that I would consider the biggest players in that, were mining companies because there is a really unique thing that I learned. Again, energy is just amazing because you strip away sort of the 30,000-foot political conversation about energy, within it, we always use energy and propane just had these touches to so many industries that I learned from. But in the mining industry in particular, most mines that we’re dealing with operated well below the surface of the earth.
And so for example, a gold mine at around like Ontario would be operating at 6,000 to 7,000 feet and at that depth, the temperatures are actually 72°. However, if you’re mining, you need machinery and people and they need air exchange down there. So propane is the most efficient way to provide heated air because it’s safe to…it doesn’t have emissions. It’s a clean fuel. So one of the most amazing engineering things or projects that I’ve been involved with are mineshaft heaters because you have massive air exchange needed to supply fresh air to people who are thousands of feet below the ground.
And if the air on the top of the ground minus 35 in January, you can’t blow minus 35 air down in the ground and you also have to blow air that’s clean for people to breathe. So propane being an extremely clean source of fuel was a natural choice for mineshaft heaters and to envision what a mineshaft heater looks like, it doesn’t look like much if you drive up to it, just a two or three-story building on the ground. But when you walk inside of them, there is 10-foot span fans blowing thousands of cubic feet of air down into the ground with a wall that’s 20, 30 feet wide and high full of nothing but propane flames. So it’s like a very interesting engineering uses for energy.
David: No kidding. That’s not something most people go day to day thinking about, that the air requirements in a mine would be pretty crazy.
Noel: Yeah. So energy opened me… That part of my career really allowed me to touch so many industries from, again, small lodge owners to big mines. So it really helped me learn a lot.
David: Awesome. And then, what sort of…what made you decide to get into the hospitality industry?
Noel: It was no one single aha moment. My career, I was an entrepreneur for the first time at 21 but was way ahead of what my capabilities at the time and…
David: What did you do at that point?
Noel: I actually owned a small bulk fuel agency in my home area in Fisher Branch, Manitoba. But again, I didn’t come from a business background and I didn’t come from a… I had no wealth within my surroundings. So trying to be an entrepreneur with no capital, running a business that sold fuel and fertilizer on credit to farmers was basically suicide. But again, I was ambitious and the experience taught me a lot. It taught me a lot but it also, you know, when I look back and reflected on it taught me a lot about my exit as well and how much effort I put into making sure that my relationships were good when I closed down my business and that that was handled in the most positive way possible.
So yeah, after that, after spending many years inside of the corporate world and inside of large national companies, the entrepreneurial side of me was omnipresent in my corporate career and I didn’t suppress it. It was part of my…one of my advantages but it was also my hindrance. There was a limit for me inside of that world because within these especially large multi-national companies, the amount of things that are at stake require certain protocols at certain levels and entrepreneurialism is less valued the larger the organization is.
So I knew there was going to be a time to which that was going to happen. I just didn’t know when it was. And moving… I moved my office with Superior Propane regionally into the Exchange District about 10 years ago and I think that was really a catalyst for me starting to look at different opportunities. And then I went on a trip with a friend of mine to Buenos Aires, Argentina and completely had my eyes opened to a culture that I had no awareness of, and fell in love with this steak loving, wine drinking farmer culture that is Argentina.
And it planted the seeds of hospitality, you know, why wouldn’t we do food like this at home? Many people ask that question and the journey from that to a restaurant is a long…is big one inside of one’s mind but I decided to spend a year of my corporate world, I was on the road a lot and traveling a lot. So and I’m an intuitive learner. I’m just like a nerd in the most positive sense. I like to learn all the time. So to keep myself entertained through my corporate travel, because I was on the road 150 to 175 nights a year at that time, I actually decided to study the restaurant business.
And everywhere I ate out, I would ask questions, I would watch things, I would count the amount of staff on, I would count the amount of patrons, I would look at pricing, I would understand the food. I really made it a learning project for me. And after about a year of that, and combined with this inspirational experiences of America, and you know, a new partner in my life at the time who was from Brazil who had a big influence on me and she guided me into looking at the business from a different way and from a more emotional aspect on how we could portray these cultures in a really positive way by using the restaurant as our model.
So without a doubt, the combination of those three things led me to the courage to saying, “Let’s do a restaurant.” And I opened Hermano’s restaurant across the street from where my office was at the time and it was a restaurant already that was struggling but it was one of my favorite restaurants and was Taste of Sri Lanka. I still like their curry. It’s Sebastian’s, makes a great curry and I visit him every now and again. But I purchased that location from him and went through the process of enlisting some of my lifelong friends as partners, again something most people would warn against in business.
But when you come from a small place and you have no business connections and no capital entities in your world at all, it sort of forces you if you wanna do something, to take those risks and I have amazing friends, and we’ve been friends since we’ve been five. And there’s times that we don’t talk to each other but we always love each other. And so we named the restaurant Hermano’s and that is, of course, Spanish for brothers but it was in reference to my friends coming together to help support opening this restaurant.
And after a year of studying it and had knowledge, I had everything. I felt so confident and after opening the restaurant, within three weeks, I realized I knew nothing about the restaurant industry at all and I was in desperate trouble and so was this new business that we had started. So that was the path to getting there and sort of realizing I wanted an entrepreneurial project and the hospitality industry offers a couple of things that are attractive to a lot of entrepreneurs. It’s very high risk and the failure rates are absolutely extreme and there’s constant turnover.
However, there is a couple of things that were really attractive about it to me from a purely business standpoint, not the love of the restaurant standpoint because that’s a story we’ll talk about next. But the return to equity on a successful restaurant is crazy compared to just about any other business.
Noel: Yeah. So when I say ROE, I don’t mean ROI. So return on total investment margin on sales, it’s a brutally thin line business regardless of what people think when they’re paying for food in a restaurant. Most restaurants, most statistically speaking, they average less than 5% profit on sales and those are the ones that are open and most of the ones you’re eating out at are losing money at any given time. So it’s a very thin business with a lot of not very attractive matrixes. However, and it has no barrier at entry or very little barrier at entry so the competition levels are extreme and constantly changing.
But the beauty is that restaurants can, from a business perspective with a small amount of equity, create a tremendous amount of business energy from them in both cash flow and both communications and connectivity. Because you’re in a business where you’re really getting to meet a lot of people. That was attractive to me. The second thing was that actually, where I heard in my first studying of the business that it was, oh, it’s a trendy business, you gotta get out at the right time. What I realized, these were all statements from people who definitely were not in the business for a long time.
Restaurants are a long-term play in my mind, not a short-term one. It is not about opening, catching a bunch of business, making that profit on it, and paying it off within a year, and then holding your fingers tight to see what happens in the future. It’s quite the opposite. If for me in my standpoint, I only wanted to attack projects that had longevity. And what I mean by longevity is 20 plus years and institutional type restaurants. And those business plans are long and they’re completely…it’s a different model that I first thought of when I got into the business and that was very attractive to me, you know, that you could…that the nature of these businesses were that if you could develop a really good relationship with your customer, the customer rewards that with longevity and their loyalty.
And that was my challenge. I wanted to develop a relationship with my customers even if it wasn’t my personal relationship. It was my relationship through the offering, through what we gave them, through the experiential side of hospitality. And yeah, so it was very attractive from a couple of points, business points.
David: Interesting. You mentioned at the beginning that there are seven that you are a major shareholder in. What are they?
Noel: Yeah. For a little bit of background, I’m just… I had to do this the other day for somebody because it’s been a very active couple of years, a few years since I opened my first restaurant, which was Hermano’s on Valentines, seven and a half years ago. In chronological order, because they’re all different companies. One of the things I explain to people is, about, “What’s your company?” I’m like, “I don’t have….” Our centralized company operates really as more of an accounting function and as a service provider to different restaurant ownership groups.
So part of the strategy is within this business because we’re working on niche restaurants that are really focusing on specific offerings within the marketplace, is that you enlist partners who are passionate about those niches. So the partners aren’t always the same from project to project and there is different influences and different passions. So we don’t operate as a conjoined unit because we are not. It is a group of companies and the common link is me, more from a conceptual personal standpoint.
And this allows each of the individual brands to really compete. And one of the things we realized was I was heading into a space, sort of this occasional dining. You know, where places that are a little higher on the cost level but that are a place to celebrate, to come together. It wasn’t a huge market so one of the ways we needed to actually grow was by competing with ourselves. And there is no better example of that than Carnaval which a lot of people again questioned, “What were you thinking building Carnaval 100 yards down the street from Hermanos?”
So maybe I’ll start with that story. I founded Hermanos at 179 Bannatyne, which is a South American steakhouse and wine bar and without a doubt, has the influence and the support of dozens of people. You know, most notably, my original friends who were partners in the project, Justin, Jason, Darcy, and Leonard who you just met and my partner, Najara Barros who is a passionate Brazilian and she is part owner in the restaurant and her influence really made…all of that combined makes Hermano’s what it is.
Shortly after that, I opened Corrientes which is an Argentinian pizzeria, about 50 yards down the street from Hermano’s. I opened that one solely without any partners and about two years after I opened it up, I actually sold it to one of my chefs. So I had a chef who was originally from Argentina but had migrated visa via Israel where he’d worked for 10 years and he was doing phenomenal things as my chef at Hermano’s and then eventually, my chef at Prairie 360. But Alfonso Maury is his name, a very strong man and he’s such a good friend of mine and he had ambition to really work hard and we had reached the limits within the company of what I could offer him to really work for more.
So I actually sold Corrientes to him, helped transition, you know, went through the whole process and I consider it one of my…it’s the only time I’ve sold something that I owned 100% and it definitely wasn’t a profitable sale. The restaurant was very new and still in that phase of having more expenses than revenue. But Alfonso, who’s only been in the country for a couple of years at the time, and I worked together to really get him going and I’m really happy to say that Corrientes is one of the biggest successes in the East Exchange right now. And it’s just a wonderful restaurant but that belongs to Alfonso Morey now after I founded it.
Down the street from there is Carnaval which is at the corner of Bannatyne Waterfront which is Winnipeg’s only and first Brazilian barbecue. So Hermano’s is more of a fusion influenced restaurant with influences from many countries and it’s not an ethnic restaurant. It’s our artistic vision of what South American influence should look like inside of a Canadian environment. Carnaval is a far more strict cultural reference restaurant. We built a Brazilian barbecue in the image of a Brazilian barbecue in Brazil and enlisted a lot of people from the part of the country that actually developed that style of cooking which is a rotisserie barbecue of like 15 types of meat over wood and served tableside with these big swords, if you will, these big skewers and it’s a wonderful experience.
From a business aspect, the vision was to create a street with energy. At that time, Bannatyne, most of the commercial units on Bannatyne waterfront were empty or weak, I would say, with owners looking to sell and within a very short period of time after opening Carnaval, we saw the fruits of this. But the belief was with my partners, I said, “We’re not gonna compete against each other. We’re not gonna be stealing from Hermanos. That would be the way it starts. But we actually need to create a competitive energy against ourselves and we need to compete for the customer in the East exchange and through that, what we’ll do is create an offering that is superior or better in a lot of people’s minds than other offerings.”
And so, it still goes on today. So I’m not the principal at Carnaval. A couple of my partners are the majority owners there, but I am the largest shareholder. But when I say it’s a family ownership that I had partnerships with, but we’re very proud of…all of us are of Carnaval and it was ability to not only compete but actually establish and carve out a whole new customer base that had never come to the East Exchange before. So competing with ourselves was tactically one of our most important strategies at the beginning and we felt buoyed by that because it worked in the East Exchange.
David: I think by competing with yourself, what you’re actually doing was, as you said if you’re competing for the customer, ultimately, you’re growing the entire market I would think, right? Because you’re creating a space where people who wanna go and have these experiential dining moments instead of before, they might have just stayed home.
Noel: Yeah. And really from a strategic standpoint, right across the country, right across the continent, the business model of the group restaurant is not unique and exists everywhere but one of the commonalities that I saw in a lot of them and that we chose as a different route was we never wanted to brand as a group. We felt we were far too creative in our partnerships, that customers would have trouble seeing the commonality anyway and that this usually is seen as a way to save money on marketing, right? You can market all of your brands at once and you can present all your brands under one banner.
We actually fundamentally thought that was a weakness because the theory is your strongest brands within a group bring up all your brands. And I felt that our weakest brands, wherever they come, could bring down our strongest brands if they were all connected together too much. So and this isn’t from a legal entity or…it’s really about conceptual marketing and operations. It’s about driving home that the experience here is different and not generic and not communicating to the customers at their commonality experiences.
We stuck with that and we still do. You won’t see FB Hospitality as a company that, again, in the office here now is, we focus on the human resources and the financial management for the companies but each restaurant really develops its own personality and its own vision for what it wants to be and sort of drive equality.
David: I wanna let you continue talking about the chronological ways to opening the different restaurants but I wanna also jump in here because I’m hearing you describe that, you have a very strong opinion or strong personal concept of what brand should be based on what you’re saying. And while it’s typical in a lot of industries, I don’t think…or not typical but while that can be found in a lot of industries, I wouldn’t expect to see it from someone coming from the industrial energy sector. Where did you gain that sort of appreciation and understanding and sort of motivation behind a strong brand concept?
Noel: Well, inside the energy company, there are powerful brands.
Noel: And I worked for Imperial Oil within a period in my career. I was an agent with them and really understood brand power for the first time at 21 years old under the brand of Imperial Oil. Because from what I saw internally in that division which was a midstream division, wholesale, so it wasn’t upstream where we’re talking about the exploration, where the real money is in oil and it wasn’t downstream which is the gas station and the retailing. I was in the middle part of that energy function. And in that space, Imperial was not very good.
They were pretty terribly organized and operating and they knew it. They eventually sold that division and got out of it completely or migrated a lot of that to independent operators and got out of management altogether. But I was still able to garner business, not because just of me but because that flag above me was something that had been around a long time and that everyone knew. And even if they knew the failings, and even if they knew the challenges, and even if they knew that that brand wasn’t operating really well for them, there was a comfort in operating with the brand. And that’s what I learned about brand power.
And that longevity is extremely important in our Midwestern thinking and we are. We’re not coastal people. And there is a real nuance to that and the way we think and the way we love our world is shaped by our geography, shaped by our weather, shaped by who we are and we have more in common with Kansas City than we do with New York City at the end of the day.
David: For sure. For sure.
Noel: So within all those contexts, longevity and brand is critical in the Midwestern market. And so, yeah, I know that’s what drove a lot of our decision-making to really allow these brands that carve out their own niches, to understand their own customer bases, and to go for that long term business in the restaurant business based on that relationship with their customer.
David: Okay. So sorry I interrupted.
Noel: Yeah, no problem.
David: The story was Hermano’s, Corrientes…
David: Carnaval, and then what next?
Noel: So actually right at the time Carnaval happened, our group of part…we were feeling pretty bolstered by just the development of Carnaval. And because I’m an entrepreneur and I don’t like to have any one project on the go, I’d like to have five or six, is I know that things kill deals. My entire business knows it and there is no…deals are hard to make. They are far harder than people give them credit to make especially on any kind of scale. So for me to have three, four, five potential projects in a hopper was not uncommon. What happened next was sort of a really one of the more…started on the journey to where we’re at now but boy, and I look at my friends and my partners today and I just smile in my heart and in my head when I think about how courageous we were because if we knew what we knew now, we’d probably be scared. But we weren’t.
And it was a testament to our courage because right at the same time that we were working on the Carnaval opening, which took a long time because of the complications of the real estate and the particulars of the deal, we had two other deals come together that were completely different in scope but also had been in the hopper for some time. And one of them was the revival and opening of the revolving restaurant which had been closed in five years and how after a long time of thinking and proposing to the owners of that building a way to move forward in the concept, that deal came together.
And then a concept we were looking at around the craft beer market. We were looking at potentially a pub theme. We had real estate open up at the Polo Park complex and within the…it was in Applebee’s, no, not in Applebee’s. It was Kelsey’s location that opened up and we felt that this was a good opportunity for us to test our Barley Brothers brand. And at that time, Polo Park was a very exciting place to be because there was part of the country’s largest targets coming and there was a lot of investment around Polo Park at the time and not a lot of competition in that realm. And so, we knew that wasn’t a long term thing but it was a great opportunity for us to go into a retrofit restaurant to test the brand.
So that year, that I tell people, was there was a 12-month span and we’ve…there is no real history in the restaurant business but I tell my partners that we really embarked on something that doesn’t happen very often. And in one year, we put into the marketplace with those three new restaurant concepts about, I wanna count up the numbers here but it was about 750 restaurants seats in that category. We don’t know if anyone has ever done that much in a 12-month period. And most certainly, it strategically is not recommended. But low and behold, we did it.
So we went into a space, when you’re looking to get people to adopt new brands and new concepts, you’re only dealing at any given time with a fraction of the total marketplace. Because no matter what you have to offer them, there’s only a certain amount of people that are early adopters, that are adventurous and you’re fighting that battle in a brand build right at the beginning for a long time. So three brands launched at the same time and we were all competing in the same space for the same customer.
And again, I believe we’re here today and those brands are successful only because we allowed them to compete within their own space and not be marketed under a single brand. And from that, came Barley Brothers. Barley Brothers at Polo Park, the first location, and the opening of Prairie 360 with Carnaval all within about a 12-month period. I wouldn’t recommend it to anyone. I fail to see the upside of that move, you know, like from a standpoint of when I look back, there would have been better strategic ways to lay that out. But you know what, I’m proud of all of our team.
It’s been hard work but our owners were and my friends and partners have been resilient and positive and have worked hard together to meet the challenges we faced because we basically kicked the door into an industry where overnight, we went from being niche player to basically trying to take a large portion of that market share. And so, yeah, we started on that journey and then that was the crazy year I talked about. It was just, again, so challenging but so exciting at the same time. Within a year after the openings of, and in sequentially, I wanna get this right, it went Carnaval in October of that year and I wanna say… What year is it? 2016?
So that would be October 2012. And then in the following fall, in October, we opened up Polo Park. In the following November, we opened up Prairie 360. So we worked through those for a year and then the next one after that, that I was involved doing was The Good Will social club.
David: Oh, I didn’t realize you were involved with that one. Interesting.
Noel: Actually, yeah. I actually founded that place with a fellow by name of Donovan Robinson who is the current principal owner there. And it was really, when I say that The Good Will itself and the name and what it is, is it really belongs to the group of owners there now. When I say I was a co-founder of The Good Will, I was a co-founder of the idea of a live music venue, with sort of that dive bar feel by the UW and filling a space in a size category for that one where there was only big venues that were nightclub driven and there was a real hole for the smaller venue because, or the midsize venue, because there was a lot of…I think at the time, there was people running at 555 Osborne.
Where I was born, there was a few small locations to which live music congregated to. Most notably the pub that was behind Portage Place, the name…
David: Oh yeah, the Low Pub?
Noel: The Low Pub. So really, what we looked at was a category that we needed to fill and I really wanted…I had never been involved in music and I thought this would be so cool and I was…my head was in music at that time because I was…I had just put on a great after party at Hermano’s for the Juno’s, like the soul music red carpet awards. So I founded that with Donovan Robinson and one other partner but very quickly thereafter, they didn’t need my help. It was a group of seven or eight really passionate people about the music business and I realized that my job in this project was done pretty much the day after we got the lease in the business property. Because these were passionate owners.
They didn’t need to be told what to do. They knew what they wanted. And so, I made the decision to sell my shares back to them and to step away. And I think it’s one of the better business decisions I’ve ever made because The Good Will is open and thriving and doing a great job and it’s all credit to the owners that are there now. So there was The Good Will and then we did Barley Brothers Stadium. And the Barley Brothers Stadium from a business perspective was really us polishing off the brand of Barley Brothers and understanding that we are an experimental site.
We had a very short term lease and it was a retrofit, like it was really not our look and we wanted to sort of plant the flag that said, “Okay, this is gonna be what the Barley Brothers looks like and is.” Because we knew we have a short life at Polo Park and we only had a five-year stint there and we were uncertain about the renewal timing. We wanted to have a place that really represented the Barley brand so we could shape and mold it for the future. And that project is still, to this day, one of our most ambitious and where it’s one of the ones I have the lowest ownership in. It’s really a team effort and it’s really, again, the one that’s more connected to those historical friends I have from Fisher Branch.
And you know those roots and Barley Brothers stadium was really meant to show that we would take craft beer and the whole idea of small beer manufacturers like small businessmen and small farmers in the same context and they weren’t getting a place to showcase their beers in the market. So we built a place with the most taps of beers in Canada so that everyone who has a craft beer in Winnipeg or Manitoba would always have a place that they could sell it to.
And so from Barley stadium, I had to go through, here is a couple of more quick ones, I also then did… Oh sorry. After Barley Stadium, I’m losing my time and years and months here but I went back to more niche projects to which I was more of a driving factor with and were not a part of that original hometown ownership and explored a couple of other projects with a couple of different partners that have both been tremendously successful within their niches. But the first one was Sherbrook Street Delicatessen which is a, you know, I love the Deli and…
David: I live right by the Deli. I spend a fair bit of time there.
Noel: Yeah, my partner there, John Hochman, actually, he had developed a restaurant before there that was unsuccessful called Fitz Roy and he reached out to me for some business advice and help and we realized there was nothing we could do together in the current context but I used him for some technical advice there. And he really drove the food concept from a standpoint of being like, “We’re a 100-year-old Deli. And we do everything exactly the way they would’ve done it 100 years ago. And we’re kosher style. There’s no meat and cheese. The smoked beef is hot and fresh and made by us. It doesn’t come in a bag.
We make the pops and sodas just like they would have…make an egg cream. Nobody makes that. So the Deli is small. It’s never gonna have much of a financial impact on our business because of its size, it’s very limited in what it does but it’s absolutely one of our most loved propositions and it’s an important part of our branding. And then the last one that I was involved in, it’s been a little bit of a different business journey for me but, is Blind Tiger. The speakeasy on South Osborne, it’s 725 Osborne. I actually founded that one with a partner named Jack Mosley, a friend of mine and definitely he brought the artistic vision to the space.
But, again, conceptually, it was myself, him and a chef friend of mine, Todd Bichon, who came together and said, “Hey, let’s do a Speakeasy because Winnipeg needs that.” And Jack really was a principal and he drove that business. Shortly after we started construction, I actually stepped back and exited that business and actually have taken a break from the management side of all of my business together to spend six months in the political realm. And so, that was an amazing experience for me and speaking purely from a business context. I learned a lot about my business by stepping away from it. And it absolutely strained relationships. It was hard work for the…I couldn’t have done it without all of the amazing people that are my partners and coworkers and employees coming together to really pitch in while I exited for that. And it was important to me personally.
So I never stopped to thank them for that. But I learnt a lot about my business and by being away from it and seeing what happened and watching it but not being a day-to-day hand in a lot of things But through that process, Blind Tiger, Jack, my partner, ran into some family health issues and really realized quickly that he could not be a restauranteur. Being a restauranteur is a lifestyle decision, not a business decision. And so after some…him trying to work that out on his own, we came to terms and I founded the restaurant with him but built a new group of partners and purchased it from him and have been operating the Blind Tiger ever since.
So the seven that I’m involved in now, of course, are the Hermano’s, Carnaval, are the ones that I’m a principal in from a standpoint of ownership, if you will, and sort of more from, and I don’t like to use that terms in business because we’re principles from a legal perspective but we operate all of our partnerships where people have influence. And so they’re not run democratically. They’re run autocratically but there’s a lot of influence from…and everyone owns a stake in how the success of those places go. But the ones that I would be directly overseeing as a principle right now would be Hermano’s, Blind Tiger, The Deli, and Prairie 360.
And Prairie 360, I share from a management perspective just because of workload with a group of partners that are my corporate partners and we have a management team specifically for the other ones that I’m an owner in, along with them which would be Barley Brothers Polo Park, Barley Brother’s Stadium, and Carnaval Brazilian Barbecue.
David: Cool. And so we’re getting close to time here and I don’t wanna take too much of your time. So I actually wanted to ask you about the political stuff but we’ll skip it, in the interest of time. I do wanna ask you, in terms of the structure, I wanna dig into that a little bit, the business structure that you have set up with these companies. So FB hospitality, what’s that? How does that…is that just the vehicle that you invest in, through or is that something…?
Noel: It’s a very good question. And again, assuming your audience is a business audience, right?
Noel: This is about understanding our business strategy, not our emotional strategy, not our branding strategy but our business strategy. Because of the high risks involved in the restaurant business and because again of our branding strategy of wanting to keep this uniqueness of each brand alive, in my study of the business, the number one reason for restaurant failure, actually was not knowing what was going on. So again coming from a corporate world where I was highly…I like data-driven decision making, data-driven decision making. I’ll say that again. Data-driven decision making. But you can’t make decisions if you do not have current and accurate data about how your business is operating. So people who really struggle in the restaurant business just had no idea how they were doing, first and foremost.
They didn’t know what they were doing wrong. And that’s a strong financial support system. The other challenges that we are wanted to be an employee-first company. So we provide things that most employers or competitors in the industry don’t. We provide full benefits to our employees. Anyone who is working full time, we…and in an industry that’s got a lot of, I would say, pressures for people to work outside of the legal law, we didn’t want that. So we realized that there was two functions, that it didn’t matter what the name of the restaurant is, it didn’t matter the name of the brand, that the business functions could be common.
So FB Hospitality is really an accounting and administration function…an accounting, administration, and human resource support function for restaurants. And when we first founded it, we actually thought that it could be a business model to grow. And we actually took on some customers that we didn’t own the restaurants within my core ownership group in the early faces of FB. We’ve changed that direction. We really wanna only work for the ones that are, again, that are a part of the ones that I’ve touched and inside of that group.
But the reason for developing FB that way, and so FB is not a model for any revenue nor is it a…it’s not a good vehicle really for anything and that’s by design. It’s not meant to go anywhere. It’s meant to provide a service. It’s not meant to make money but centralizing those services allowed us to leverage purchasing, allowed us to leverage vendor communications, allowed us to streamline a lot of things so that our front store staff is focused on the brand and customer service. And we don’t have business function happening inside of our restaurants for the most part.
Business function happens away from the restaurants, customer service and hospitality function happens at the restaurant. And FB Hospitality was our solution to that quagmire. How do we maintain and, you know, individuality of our brands while still getting the advantages of working together?
David: Interesting. And so do the individual restaurants then pay FB Hospitality like a service fee or something like that in exchange for…?
Noel: We operate it as a shared cooperative basically.
David: I see. Interesting.
Noel: As a group of partners, we fund its costs based on a number of factors including what the core cost of the function is but also by the success in sales of the restaurants. So the restaurants that sell more pay more than the small ones and it’s really operated like a…again, it’s a service, an internal service cooperative provider. So the upsides and the downsides of that business structure as we’ve learned and as I’ve learned as the business grows, because sometimes when you’re growing a business, you’re not thinking about that future or you are. You have to put your head in places that you’re nowhere near yet. Because if you do actually get there, you don’t wanna say to yourself, “What did I do?”
And so, it was really meant as a strategy to keep our individual brands both financially and identity-wise separated from each other so they could really foster their own success and we compete each other through our market. And that’s worked very well for us. What hasn’t worked and what limits us now within this organization and this is really gonna be more niche restaurant stuff, is it’s not a vehicle at all and none of these companies are for growth through acquisition or amalgamation. And that’s never gonna be what FB does.
FB supports our niche restaurant providers, the ones that are looking for those small places in the marketplace and but it’s not a vehicle for anything else. It’s not a vehicle to make an acquisition, it’s not a vehicle to, you know, it’s not a business that we promote because really, it’s an interior service business. And there was a short period of time where we, because of the demands from the public, like< “Who are you guys?” We would donate money and what company would it be? And for a short period of time, we field with that, well, let’s have courage and say FB Hospitality and we still do.
But at the end of the day, FB Hospitality is really just about my old friends and business partners working together to find the best solutions for our restaurant investments. And I think if we try to make it anything other than that, we might hurt ourselves. And every time we’ve tried to think of ourselves differently than that, it hasn’t worked, and every time we’ve really focused on having FB be the solutions provider for those restaurants from a business aspect, we’ve had much better success. So I think that’s what we’re gonna see going on. We’re not gonna see any flags of any centralized company.
There is not going to be a brand that encompasses all of these restaurant brands because they each have their own really unique families, groups of customers, and brands and we want that to thrive and keep going.
David: Awesome. I have three more questions and I’ll make them quick. First one, I’ll say the three in succession and you can answer them together even though they’re kind of different. First one, what’s the toughest thing about the restaurant industry? Second one, which people have shaped your thoughts on business the most? And third, do you have any book recommendations?
Noel: Wow. You know, those are sort of I guess the standard questions you’d see more often in some interviews and I didn’t even think about them. The toughest part of the restaurant business is the stress of the ups and downs at the beginning of your Genesis. It is a brutal business from a standpoint of your cash flow, understanding how volatile your cash flows are when you’re open. And also understanding the impacts on your relationships and how you deal with customers and all of those pressures combined make it hard for people to make it. Two years, three or four or five which is when really a restaurant starts to blossom and most restaurants fail in the first three years because those pressures are just really insurmountable for a lot of people.
So that’s the worst thing of the business but it’s also the opportunity for the best thing because none of any of this, no restaurant in and of itself, no combination of restaurants, no success with these rebrandings is possible without an entire group of people working together. And I guess in the end, that’s why I’ve never put my name on anything because I really don’t feel like I own anything. I have a shared experiment that allows…requires everyone pulling their oars in the same direction. And without everyone pulling their oars in the same direction in the restaurant business, you’re in a lot of trouble. The second question was?
David: People that have influenced you with thoughts and business the most.
Noel: Well, you know what, I’m gonna leave that one for last because it’s not coming to me right off the top of my head but I do have an answer for it. The second one is easier for me, which is the books. There’s two books that I would absolutely recommend any entrepreneur at least familiarize themselves with. I didn’t have a formal business education but I’m a self-educated person when it comes to that. And I think Peter Drucker may be from an economic theory, the most influential person in my career, and I think “The Essential Drucker” is absolutely critical reading for anyone who really wants to be competitive in competitive atmospheres.
Understanding how every single person within your business model and the Druckerian theories have been twisted in over time, turned into terms like stakeholders and you know. But he was the first person who really formalized that everyone needs to win for you to succeed. And for business to succeed, you need your employees, you need your vendors, you need your community, you need your shareholder, you need everyone to be winning so they all pull together. But in my view of Peter Drucker, that exercise wasn’t about being benevolent, it was about being competitive and that this is a war. That you are in a combative atmosphere in business whether we like to say it or not.
That is the reality of it. We’re fighting over dollars. And to understand that if you’re going to build a business that stands the test of time, to assume you are never gonna have bottoms is crazy and to assume everything is easy is crazy. You need to assume that everything terrible is gonna come at you and that everything good is gonna be there for your potential as well. And you need to keep everyone who has a vested stake focused on both of those things at all times. And that makes a company ultra-competitive. So relationships within those realms are very important to us. But either way, “The Essential Drucker,” recommended read. The second one, and this is definitely more for restauranteurs…but, “Hamlet.”
Noel: Yes. Because if you dither here, you end up dead. And that’s exactly what that book is all about. If you dither, you’re dead. And I tell people all the time and inside of our own company that making a decision and taking a risk is never gonna be something that is going to be penalized. What will be penalized or what will be looked at, what we need to do is understand that we learn from mistakes. Mistakes are the most important commodity we have and we need to understand that every time we make one, that we are soaking up that information openly to make sure we avoid it the next time. And people who dither are people who have trouble with that process, who when even faced with all the facts and faced with all the data, still have emotional troubles making a decision.
In the restaurant business, you can’t make it. You’re done. Because the decisions need to happen fast and you need to accept the accountability of them and people who dither, end up dead. So, “Read ‘Hamlet’,” is what I tell people.
Noel: The last question as far as my business influence is, I have no single business influence. One of the things that I have and I’m gonna list a…if I listed off a few names that I remember through my journey, I did not come from a business background at all. I grew up on a very small, what I call a small family or peasant style farm in North Interlake. I had a beautiful life, but it was not a rich life financially. It was a rich life with experiences and everything else, but business was something that I backed into by having my first job really and then falling in love with it and learning about it.
But my influences are a collage of people that I have worked for and worked with throughout that corporate career. So to mention any one person is to discount the influences of many. I tell people all the time that my business mentor is sort of like James Bond. It’s a book written, but really is based in fact on 50 different people culminating into one. But without a doubt, some of the key people through my business career was my, you know, the first person I met within my first job which was an uncle of mine. An uncle Guy who still is a site manager in my hometown. But he was the only person in my family in business.
And he was how I got my first job and got me into my first industry and he had a lot of strong opinions on how to run a business which is that’s how you learn. You don’t learn from people who don’t have opinions. You learn from people who can tell you directly, “Do this and do not do that.” And I understood a lot of the value of details and because he was very scrupulous and he managed every detail of his business. Along the way, some of the other people I met from a standpoint of understanding how to do business within the city of Winnipeg, doing real estate development and understanding our political interactions, there is no bigger influence in my career than Jim Spencer who was my…he was the general manager at the time of the co-op, when I was working there.
I really learned a lot about him about sort of navigating the urban landscape, if you will, from a real estate development standpoint. Most recently, when I worked inside the propane company, I learnt a lot from my last boss there I guess, if you will, before parting ways with that company. But his name is Bruce Johnson and Bruce is, I’m not sure if he still is, but he was the former president of the Wheat Board and former vice president of Sas Wheat Pool. And working with Bruce helped me understand just how naïve I was to the influences that were at play inside of business and how being a passionate entrepreneurial thinker.
Until I worked inside of that realm, I was still hammering at the door with every idea I had and Bruce was a person who really helped me understand that there is a far greater picture at play all the time and you need to understand the landscape if you’re gonna try to make some miles to it. And so those are just three off the top of my head. There’s far more since then, but I really don’t wanna talk about any of my business influences for the last 20 years because I’m still talking to them. I don’t want them to change what they’re telling me.
But some business leaders in the city that I look up to who I’ve dealt less with but who I would put in the category of people who I’ve watched and definitely sort of admired for how they operate within our urban landscape, without a doubt, Doug Harvey. Early in my career, I had a chance to touch his organization and yeah, no matter how challenging or difficult things get, I remind myself that I’m blessed to be doing what I’m doing where I’m doing it, because Doug Harvey reminds me of that and that philanthropy goes hand-in-hand with everything we do here.
For me personally, giving back to the community is a central part of what I dedicate my time to and it’s because of people like Doug Harvey who’ve set that standard for me. And I’m not close to him. I don’t see him all the time, but he’s absolutely somebody who set that standard for me to aspire to for the next 25 years of my career. And from a standpoint of navigating some of the other things in my world, from a standpoint of understanding my bigger market, Sandy Shindleman has been a fantastic resource for me and has been a one…all of my landlords are business partners and have been amazing partners through our tough times and good times.
We really, really value those relationships and if ever they break down, we try to work hard to repair them because to me, they’re important. But within that, Sandy has had some…and his team, I’ve gotta put that clear. His team of people have always had our success in everything they talked to me about, in mind. So yeah, in a nutshell, those are the things that sort of guided me to this point.
David: Awesome. Very cool. Well Noel, thanks again so much for your time. You’ve been very generous and I really appreciate it.
Noel: Excellent. Thanks a lot David.