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The Barcode Podcast is presented by Titanium CPG Insurance. Titanium protects forward-thinking consumer brands with a range of commercial insurance products and risk management services designed specifically for natural and organic food and beverage companies. Learn more at titaniumcpg.com

Today on The Barcode Podcast, Ben Ponder is joined by Nelson Monteith, the restaurateur behind Honest Mary’s in Austin, Texas. You will hear about Nelson and his wife’s journey into the restaurant industry. Their goal was to offer quick, delicious, and life-giving food. Nelson shares about his education, goals of starting a business, and how he maintains an excellent customer experience.

Nelson went to the Acton School of Business which offered a different perspective than most schools. He learned to think for himself and he became passionate to start his own business. At first, he did not know exactly what he wanted to do. His wife, Mary, brought up the idea of a healthy fast food restaurant and some of the details quickly came together. Nelson really did his research to avoid making a spontaneous decision. He worked at a Chipotle, found restaurateurs to mentor him, and spent six months processing the business-idea. A year later, the name Honest Mary’s was solidified and the restaurant started to come to life.

You will hear about some of the benefits of being an entrepreneur when starting a restaurant. Nelson enjoys cooking but is not a chef. This can work to his advantage so he truly sees what the customer wants. He is not as distracted by an emotional attachment to a recipe. Nelson’s integrity is evident in the way he views his restaurant. He values the hiring process, word-of-mouth marketing, and doing the small things that add to your brand’s trustworthiness.

Continued below…

WATCH THE INTERVIEW:

TAKEAWAYS FROM THIS EPISODE

You can end up in places you never expected. Nelson shares how excited he was to start a business after getting his MBA from Acton School of Business. Although he did not have a lot of experience in the restaurant industry, the idea of a healthy fast food restaurant really stuck. Thanks to his wife’s help, Honest Mary’s started to take shape.

Be patient and get feedback. Nelson took a good six months to sit on the idea of starting a restaurant. He looked to other restaurateurs for advice and learned as much as possible about the industry. Although there was pressure to beat anyone else to the idea, being patient was more important to Nelson.

A warm introduction goes a lot farther than a cold call. Nelson shares how he raised money from friends and family for his startup. Nelson and Mary’s research, passion, and excitement were evident to those they spoke with to get investments. You will learn about the importance of working with accredited investors.

Good-hiring is crucial. Caring, humble and hungry are characteristics that are important to Honest Mary’s staff. These qualities can help ensure a great customer experience.

Customers see the small things. Nelson shares how customers just want to know that you are really trying. Nelson says, “Most of the time, the answer should be- do the thing that is the right thing to do- because ultimately, at the end of the day, all those things amount to a brand- this sense of trust…”

LINKS

The Barcode Podcast is brought to you by Titanium CPG Insurance.

Nelson Monteith on LinkedIn

Check out Honest Mary’s

Learn more about Acton School of Business

See Patrick Lencioni’s books: The Advantage, The Ideal Team Player

Check out How I Built This

See Brené Brown’s book Dare to Lead

 

CLICK HERE TO VIEW FULL TRANSCRIPT

 

BEN                          Welcome to the Barcode Podcast. My name is Ben Ponder. I’m your host. Really glad you’ve joined us today for our conversation with Nelson Monteith of Honest Mary’s. We’re going to talk about their quick-service, fast-casual restaurant that has made waves here in the Austin community and I suspect will make waves in more markets soon. And so, we’re going to talk about food, talk about the clean eating movement, and really what they’re seeing from their customers and patrons.

BEN                          So before we get started with Nelson, I do remind everybody that the Barcode Podcast, as always, is presented by Titanium CPG insurance. Titanium protects forward-thinking consumer brands with a range of insurance products and risk management services that are designed specifically for the needs of food and beverage brands in the natural and organic food industry. You can learn more online at TitaniumCPG.com. Nelson Monteith, welcome, man. So glad to have you here.

NELSON                Thank you. I’m really honored you’d have me on.

BEN                          Absolutely. So, I do want to disclose to everybody, Barcode really started as this kind of super informal meetup thing that happened in the Austin Java Barton Springs Tree Room, which is a big room with a live oak tree growing out of the middle of it. Austin Java Barton Springs isn’t there anymore but was there for a long time. And Nelson, who at the time was working for a company called Able Lending, actually attended some of those early meetups.

It was really meaningful to me because back in those days very few people would come. It was more or less if Nelson and a couple other people hadn’t been there it would have just been me and the tree talking about CPG stuff. So, it is still really meaningful to me. But it’s going to be fun to connect your background in business and finance and some other things to how you ended up launching this really exciting new venture. But before we do that, let’s kick it off with your best meal ever.

NELSON                Best meal ever. So, I couldn’t decide between two so you’re going to get two. One is something that happens essentially every year and the other is a celebratory dinner. The one that happens every year is a dove dinner that happens at our ranch on Labor Day weekend, my family’s ranch. Growing up and still today, every Labor Day weekend we go out and we hunt dove.

BEN                          Is this in Texas?

NELSON                It’s in Salado, Texas, an hour north of here. Something about just getting together and eating the thing that you personally killed is just so significant. It has so much more meaning than just going to the store and buying that thing.

BEN                          There’s a connection to the land, a connection to kind of the larger ecosystem.

NELSON                Totally. I’m sure other people make or prepare dove better than my dad but, in my mind, his bacon-wrapped dove are the best. And it’s so fun to get around. We’ve always said that’s the most significant holiday in our family is Labor Day and most people mix up Labor Day and Memorial Day. No, Labor Day is the one in September.

BEN                          That’s right. So how many years have you guys been doing this?

NELSON                Forever. I mean I’m 31 so as long as I can remember.

BEN                          Yeah. Absolutely. That’s awesome.

NELSON                The other one, graduating from my MBA program a few years ago, Actin, which is an MBA program here in town and just doing a celebratory dinner with my family at the Jeffery’s private back room. My dad paying for that meal and just celebrating. My brother-in-law had graduated with me and I mean you can’t beat Jeffery’s.

BEN                          And the back-room thing is a really nice. Kind of, again, feels a little bit more upscale, a little more intimate.

NELSON                It’s intimate. We had just worked so hard. That’s one of the cool things about school is you graduate and it’s this moment where you’re done.

BEN                          Yeah. Which life doesn’t provide you with that many of those, right?

NELSON                Yeah. So, it was just a cool moment of being done, celebrating it, not really at that time having much stress of what was going to happen the next day and it was just kind of this fun6 moment.

BEN                          Yeah. That’s really cool because food is that. It’s memory, it’s the cycle of years with the dove dinner on Labor Day, and then it’s often how we commemorate big moments. Births, deaths, and anything in between are really punctuated with food and that food is associated with all kinds of really important things in our memory.

NELSON                Totally. I completely agree.

BEN                          That’s awesome. So, tell us, in a nutshell, tell us the story of how you ended up being a restaurateur. Was this your lifelong ambition? Was this what you were always going to do?

NELSON                Yeah. The short answer is, no, definitely not. Let’s see, I mean growing up always had a little bit of a knack for wanting to do something on my own and entrepreneurship. I didn’t know what that word was until five years ago but something about just wanting to go out and do something and create was always in me but never really explored that until a few years after college. Graduated from the University of Texas. I went and worked with a ministry for a few years on the UT campus and then went and got a sales job at a software company and it was there where I was connected with a couple of other Actin MBA guys, who had graduated and this was the school I would end up going to.

BEN                          It’s very nontraditional.

NELSON                Nontraditional and the whole goal was to teach you principled entrepreneurship, which just struck me as just a really fun thing. I was like what if I could somehow not end up in the corporate world and just be a cog in the big machine and do something on my own and create significance and value and maybe even be more successful than my friends who are in the corporate world. It was like, “Gosh, that sounds awesome.”

BEN                          And that’s for people who are not familiar with it, your traditional MBA, though they often have entrepreneurship programs or things like that, they’re really finishing schools for people who are going to be corporate executives, right? That’s really what they’re tailored for. Actin has taken a different approach, this kind of Socratic learning method. You’re welcome, Actin, we’re doing a little commercial for you, but I know it’s been meaningful for you.

BEN                          It really is geared in a very focused way toward entrepreneurship. So, you really gravitated toward that?

NELSON                Yeah. And just to piggyback a little bit on Actin because I do love it so much, they don’t care about the three letters. MBA really doesn’t mean a whole lot. It’s all about actually teaching you the tools to start your own business and it’s Socratic teaching. So literally for the five months, by the way it’s only a five-month program. They kind of take a Navy SEAL approach.

BEN                          Very, very focused.

NELSON                You’re over 100-hour weeks for five months. In that five months, I never heard a master teacher make a declarative statement. I mean to the point like, “Where do I put my homework,” and they would say, “I’m not sure.” So that was kind of their approach.

BEN                          Where do you think you should put your homework?

NELSON                Yeah. Exactly. Where are other people putting their homework? So anyway, I ended up going to Actin and that just sort of lit the fire underneath me and thought, “Okay, now I have to start something. I went and just got my MBA from this school that teaches you how to start businesses. I’ve got to start something.” And there’s a little pressure there and I had to almost reel myself back for about six months. Just like, “Okay, I am not what I create. I am not startup success.”

BEN                          That’s right. Yeah. You’ve got to separate your identity a little bit from that.

NELSON                Exactly. But all the while, to get back to your original question, never in a million years would have thought I would have started a restaurant. I had worked in a smoothie shop in high school and that was literally the extend of food in my life. I cook eggs and I guess I enjoy cooking, but I was looking for an opportunity. In the meantime, I went and worked at Able Lending. A financial technology company and I was, again, a sales guy and making some money and enjoying the sales side and learning about the startup world and it was fun. I was needing to start something though.

                                    So I was tinkering with a couple of things. I was roasting coffee in my garage and by saying roasting coffee in my garage I bought a $200 instrument and did it once sort of thing.

BEN                          Maybe burned it a little bit.

NELSON                Exactly. Yeah. We actually still look at that item though as relic of kind of the beginning of starting something.

BEN                          It’s a process.

NELSON                Yeah. Even though it probably was the biggest waste of money, but it was something. I liked coffee, kind of thinking about beer and just I was thinking about a coffee delivery service for a while trying to just think of something that had legs and then December of 2015, my wife, Mary read an article about a healthy fast food restaurant in California called The Organic Coup. Kind of a creative name. So, it’s an organic Chick-Fil-A sort of concept out of California.

                                    The article wasn’t all that fantastic and the concept is cool but that wasn’t what really struck us. It was more just this idea of healthy fast food hit us as really, really relevant and I mean within 15 minutes of her reading that article she had shared it with me. I had read it, and we were talking about starting a healthy fast food restaurant. By the end of the night, we thought we had a name. We had the concept already. The wheels just started to immediately turn.

BEN                          So let’s dig into that a second. Tell us more about that conversation. The name of the restaurant, it turns out, is Honest Mary’s. Did you land on that name that night?

NELSON                No. It took us a year to end up getting the name. So we were in a hotel in Dallas attending a wedding for my sister’s brother-in-law and just sitting in the hotel and Mary was actually in the bath just scrolling on her phone sort of thing, reading an article and she calls me in and she makes me read the article and it’s healthy fast food. The immediate thought was we can’t start a restaurant.

BEN                          That’s a terrible idea.

NELSON                This is a terrible idea. You just hear horror stories.

BEN                          Restaurants go under all the time.

NELSON                Yeah. And they sound dirty and stressful and everyone wants to start a restaurant and talk about a sexy industry that everyone’s a part of that you’re never going to really find value in being a part of, restaurants.

BEN                          Right. Yeah. Because typically there’s a real estate investment and then it’s a heavy labor operation, which also adds to the complexity to it. People who invest in restaurants, often it’s characterized as the most vanity of investments where it’s mainly-

NELSON                I want a place to go eat or something.

BEN                          Well, rich people who invest in restaurants and bars often are just sort of like, “Yeah, I’m kind of a baller. I’m a co-owner of this restaurant.” They never actually think they’re going to make their money back because most restaurants don’t do that well. Even the prestige ones don’t do that well.

NELSON                That’s right. Yeah. And so, for all those reasons that was all in my mind and I was thinking, “Gosh, what are my MBA friends going to think when they hear I’m going to start a restaurant?”

BEN                          What was the original idea for the name?

NELSON                Oh, gosh, well Honest Mary’s came, I mean that was literally a year later. I think at first, we had no idea about naming. We were just trying to think of anything with bull in it. Bull’s Inc. or I don’t know. Something not cool. We had to hire someone to help us actually think cool about a name.

BEN                          That’s good.

NELSON                Yeah. So, we took hacks at the name that night.

BEN                          At that moment, what did you envision? When you were both super intrigued by this idea did you think it was going to be a fast food restaurant or a quick-service restaurant?

NELSON                Yeah. So, we immediately knew that night it was a walk-through style line. We really like Chipotle a lot. We’ve seen how efficient that is. We like how simple it is. Walk-through style line build your own grain bowl. Grain bowls are something that we’ve just always made at home and it usually looks like this. We get a CSA box, or we get a box of just random vegetables, whatever’s local that come to our doorstep on a Tuesday night and throughout the week we just try to figure out how to incorporate them into our meal. And so, we open the fridge and we see what we got. We have a chicken breast and some vegetables and we just kind of throw them all in the oven and then we throw it in a bowl and get some rice cooking and it’s like you just throw everything in a bowl.

BEN                          Rice or quinoa or whatever it is.

NELSON                And that’s what we would eat at home all the time because it was easy, and it was nutritious.

BEN                          It’s filling. It checks all the boxes.

NELSON                And you can just eat it right here as you’re having a meal or watching TV or whatever. It’s just right here and it’s easy.

                                    So walk-through style line, build your own grain bowl. That was within three or four hours. Then really, I spent the next six months doing two things, one, talking with every restaurateur I could possibly get connected to, to try to convince myself that this was a bad idea. Just learn as much as I can, really truly trying to talk myself out of this.

BEN                          That’s a really savvy move. It’s something that I’ve talked to a number of people about and I think that’s really wise because you can get really enthusiastic about an idea and some ideas, they’re kind of a flash in the pan. They’re here today and you’re like, “Maybe. Maybe not.” But I like to say, if you can’t dismiss an idea, if you keep coming back to it and other people who actually know what they’re talking about validate that that’s not the dumbest idea they’ve ever heard, you may be on to something.

NELSON                Completely. Yeah. That whole original idea thing is so funny because on one hand you want to fan it into flame and take advantage of that moment where you think you have this idea. On the other hand, it kind of makes me sick to my stomach because I know a week later I’m going to look back and think did I really have that idea? You really have to sit on it, be patient with it, ask people about it, be really open to getting feedback. Even if I had, had all the learnings that I had over those six months in two weeks, I don’t think that would have been sufficient. I needed six months almost to just sit with it and think about it. I’m not suggesting everyone take six months before they start their idea.

BEN                          But you were really processing it deeply.

NELSON                It’s like this was a big deal and I needed to hear that this was a good idea from talking with people and then the other thing I did was I just started traveling around the country to different places that I found were doing this concept or something close to it. That’s one of the unique things about restaurants is nothing’s hidden. You literally go to the restaurant and you see the entire operation and it’s kind of unique. So, the same way I was able to do that, other people can see what Honest Mary’s does.

BEN                          That’s right. So, did you feel pressure? Because sometimes when you’re a startup you think, “Oh, I have this idea. I need to get this going really fast before somebody else does this same thing.”

NELSON                Yes. There’s definitely an element of that. That was definitely there but also at that point it was more important that I was patient and really thoroughly vetted the concept and knew what I was doing. I struggle with this more early on, less so now, but early on the competition felt like such a big deal and I really had to look hard at the competition when I wanted to, when I was in a healthy state and when I could learn from it and then put the blinders on and then get focused on my own thing and then I’ll still get Google alerts for certain restaurants that I know are competition. So, I can kind of see daily what’s going on, but it really doesn’t help me to focus much on it.

BEN                          No, so it’s good to be aware of what’s happening in the market, but again, if you’re overly paranoid it’s probably going to force you to make some poor decisions that are reactionary or defensive or things like that, and often aren’t focused. They’re not focused on how do I make my brand the strongest? How do I make my customer or restaurant patron the best?

NELSON                That’s it.

BEN                          Yeah. So, did you know, at that point as you were refining your concept through these conversations with people, was there a clear thesis for you? Was there a clear like I think there’s an opportunity to do this and these are the reasons why?

NELSON                Yes. So again, this was a first couple of days sort of thing. Mary and I, as we were thinking about this idea and this idea and this concept and why it felt so significant to us and relevant to us and why it struck us in such a significant way. For as much as Austin is talked about as a healthy spot and kind of crunchy and granola and people love their recreation and they’re healthy, we could not identify any restaurants in Austin that were all three of these things, healthy, genuinely healthy, high-quality food, fast. So genuinely fast food that you could get on the go and fresh. And what we mean by fresh is cooked vegetables.

                                    So checking the first two boxes is your salad joint but salad spots typically don’t cook a whole bunch of vegetables in the oven and so the more we thought about every place that we go to in Austin there was nothing that checked all three of those boxes. I still feel like there’s a lack, and I feel like we do those three things better than anyone else as a unit.

BEN                          And that’s really important because, yes, there are places where you can get healthy, fresh stuff but it’s not fast.

NELSON                There’s tons of places that check two of those boxes. But all three of them we felt like were really, really important in people’s lives.

BEN                          Yeah. If you can triangulate between those things, then you’re really on to something that’s innovative.

NELSON                That’s right.

BEN                          So you have these conversations. Again, you’re validated in that initial idea. How did you decide to officially pull the trigger and do this thing?

NELSON                Yeah. I think there were little moments along the way, but I can remember a few. I remember specifically getting connected with the guys at Hat Greek and they were super helpful all along the way and just helping me understand restaurants and Drew, the CEO, and then Mica Anderson became a very good friend. He used to run operations over there, and he actually helped me build processes to start Honest Mary’s. I think those guys were really helpful because Mica especially was just very realistic about what I can expect about the restaurant industry, almost, in a way pessimistic, which was healthy for me.

BEN                          Because he lived it.

NELSON                He lived it. He felt it. He experienced it. He managed the people. He built the processes. He was in it, fast food. But the more I heard conversations like that and people who had the experiences on the ground in restaurants the more it felt like a challenge that I wanted to take on versus something that I was like, “That sounds hard or uninteresting.” I felt like I could specifically bring a unique approach as an entrepreneur and not as a food guy.

NELSON                So I think the conversations with those guys and other conversations along the way were moments where I thought, okay, I could potentially come away from that conversation thinking let’s not do this but instead I’m kind of doubled down on my excitement to do it.

BEN                          Partly because you agree that this is going to be challenging but you see it as an opportunity to rise to that challenge.

NELSON                Exactly. That’s exactly it and that felt motivating. I was like I’m excited about these challenges and I feel like I can do it. That was really important for me to just feel like I’m going to do this thing. I can do this and having a couple of those moments along the way was helpful. I mean the real moment was about six to eight months after the original idea, around August / September of 2016, and I remember having a whiteboard in my tiny little office of the second bedroom of our house in South Austin. I made a list of everything that I felt like I needed to do before I quit my job because the quitting my job was the moment.

BEN                          That’s scary.

NELSON                It was the quitting the job and then genuinely starting to look for real estate. Those were the two things we were like point of no return moments. And so, I literally had that question on the whiteboard. What do I need to do to quit my job and start looking for real estate? And I had a whole bunch of things and then I let Mary come in and throw a whole bunch of things on the wall because nothing’s going to happen without her right?

BEN                          That’s right.

NELSON                And we were able to kind of whittle this list down and it was just like, okay, these are the conversations I need to have. This is the pitch deck that I need to build. These are the kind of conversations I need to have with friends and family just to make sure I’m not completely stupid and I think I can start to raise this money. I need to figure out what our personal financial runway is for doing this thing, how long do I have when the clock starts ticking.

NELSON                So that was a big moment for me just to think I checked these boxes. I’m quitting my job, which I was so antsy to do. I loved Able but it was like I want to start this thing.

BEN                          You were ready.

NELSON                I had moved on mentally and I was ready to start this thing. So yeah.

BEN                          Yeah. That’s awesome. So, you were really systematic about how you approached making that decision. That’s really cool to hear. Do you feel like, and you alluded to this a little bit before, let me rephrase it. How is it helpful or maybe perhaps more challenging the fact that you’re not a chef? The fact that you don’t even necessarily consider yourself some uber foodie, right?

NELSON                Yeah. I mean I would say it’s 80% helpful.

BEN                          Yeah. I see that a lot. I think that’s a little bit counterintuitive for people, too. Go into why you think that is.

NELSON                Sure. So I feel like this is one of the advantages that I have approaching the restaurant industry as an entrepreneur and the way I would succinctly put it is I believe that I am more focused on just serving the customer and genuinely trying to understand what the customer wants in solving that problem and not trying to insert my own creativity into the mix that is a distraction from serving the customer, which I think happens in the restaurant industry a lot. It’s like a chef has a really cool idea or really great dish or set of dishes and they want to bring that specific thing into the restaurant industry. I think that works really well for fine dining.

And creating a really cool fine dining experience. I mean all of Mary and I’s favorite date night restaurants in town are all exactly what I just described.

BEN                          I compare it to it’s sort of like if you had an architect, there are famous starchitects out there and they’re going to design their style of building and they’re the famous one.

NELSON                Who’s the person living in the building?

BEN                          That’s right. Then you have a different type of architect who’s saying let me really get to know you and how do you live. Do you have a lot of shoes? Do you not have a lot of shoes? Whatever the thing is. Right. So, I think there’s a really different mentality and I think that sometimes chefs, maybe stereotypically but there’s a lot of reasoning for this. My lean toward that kind of let me express my creativity, and I’m this gifted person. The world needs to see this.

                                    You didn’t come into this and today you’re not in a position where you say, “Oh, the world has to try my particular take on sweet potato hash,” or whatever the thing is.

NELSON                That’s exactly right. Yeah. I mean to be really frank, in 15 years, I would think I’m probably not going to be in the restaurant industry. I’ll probably be doing something else because I would identify myself more as just an entrepreneur looking for a cool opportunity and wanting to create something that blesses people and helps people but not necessarily restaurants. So, in this particular case there’s probably not a lot of industries where that would be helpful. And the restaurant industry, I feel like especially in fast food it was a helpful asset for me to kind of approach it with fresh eyes, learn it all new for the first time in about a year-and-a-half. I went and worked at Chipotle for a little bit, and I just met with restaurateurs and I was able to kind of do a deep dive and then just start it versus coming in with a bunch of kind of baggage from the restaurant industry.

BEN                          What did you learn? So how long did you work at Chipotle and what did you learn from that experience?

NELSON                Yeah. I’m a little ashamed because-

BEN                          I’m sure you were helpful. You were probably a really good employee for that period of time.

NELSON                I think I was for the month I was there. I’m sure I cost them more than I added value because I was in and I was out so in that way I kind of feel bad. But yeah, it was tremendously helpful. I mean I’ve always thought of Chipotle as just an incredible brand.

BEN                          I’ve, for a long time, felt like the industrial engineering of Chipotle is very impressive.

NELSON                It’s so great in just their simplicity but yet the customer’s willingness to go back two, three times a week. It’s just how fast they go. Their customer service is great. Honestly, from working there my thoughts of Chipotle only went up, which I think a lot of people can’t say about places they’ve worked for.

BEN                          Of course, particularly restaurants.

NELSON                Exactly. Yeah.

BEN                          It’s really well-run. So that was clearly a model for you now. You mentioned I’ve got to make this decision, I’m going to quit my job, which means I’m eliminating some financial security from my life, but I’m also raising some money and, in this case, doing a real estate search. What did that look like? Again, because I assume you were pretty focused on opening this in Austin but there are lots of places where you could have opened your first restaurant and Austin. You didn’t have the full real estate department that a lot of these big restaurant chains have, and they can do all the demographic analysis and that sort of thing. You’re just kind of having to figure out based on intel, local knowledge and that sort of thing. How did you go about it?

NELSON                Yeah. In a lot of ways, I felt like a really small fish in a big pond. I mean on the real estate front I mean I basically have no credit and no leverage to go get a class A spot and a prime real estate strip center in Austin, Texas.

BEN                          So people wouldn’t take you seriously?

NELSON                I mean I don’t know if I would go that far but they’re just not going to give me the same kind of time that they’re going to give a proven chain with great credit and awesome investors. I mean I didn’t have my money raised by the time we secured real estate, maybe 20% of it. I was out there kind of just trying to show my concept and get in front of people and show people that I’m a competent person who can hopefully run a business, but I didn’t have much else to show beyond that. I give actually a ton of credit to the deck that I built that showed my concept, which I would give credit to Evan Loomis, a couple of Austin guys for making the book Get Backed, which helps you build a pitch deck. Shout out to that book and those guys. Truly, that model for building a pitch book was tremendously helpful for selling myself to landlords on the real estate side and also for raising money.

BEN                          Did you have some sort of architectural or interior design renderings that were helping people envision this?

NELSON                No, not at that time.

BEN                          Because today, the actual design thing is very design forward. It’s very cool and hip and that sort of thing. But you were just kind of trying to go in there.

NELSON                No, because in Austin I think you just have to be so opportunistic with the space and you never know what you’re going to get.

BEN                          It won’t last very long.

NELSON                I mean I didn’t hire a designer until after we signed the lease and it was like, “Okay, this is our space. Now what can we do with this space?” We have to make this one work. It actually worked out so well. I’m so thankful. We found a spot up in The Arboretum in Northwest Austin. The Arboretum is what I like to call the 30-year-old domain, which is the way nicer strip center that’s just modern and outdoor mall.

BEN                          It was the domain before there was a domain.

NELSON                Exactly. It’s a 30-year-old domain with better parking.

BEN                          That’s totally fair.

NELSON                That was a huge thing for us is we needed to be accessible. If we’re going to be fast, we don’t want to be the destination spot in the domain where you’re only going to get us if you’re shopping. We wanted to be the place where you can hop in and out during your workday or on your way home. So, we found this just awesome 2,500 square foot, semi-corner spot and a strip center in The Arboretum and it had great parking. It was vacant. It used to be a walk-through style line, fast casual spot, used to be a Qdoba and then it was a place called Bullritos for about a year, which is the same thing.

BEN                          Which is probably really helpful from just sort of a basic sort of building infrastructure standpoint.

NELSON                Totally. I mean, yes. So, we ended up taking that property. It was nerve-racking because there’s a reason places are vacant.

BEN                          And you always feel like, oh, is this place jinxed?

NELSON                Exactly. Is the place jinxed? So, we were just trying to see if it checked enough boxes to do it but frankly, I tried to raise money knowing that was my property from a couple of people in the real estate industry and they immediately said no. The Arboretum’s old.

BEN                          That’s right.

NELSON                We’re not doing that. So, it definitely felt a little bit out there. The actual strip center itself was a little tired.

BEN                          Yeah. It’s hit and miss. There’s some good stuff there. There’s some things that have been kind of sleepy for a long time.

NELSON                That’s right. But we pulled the trigger on it and it was awesome in so many ways. One of them, the point that you just made, because the structure was already there, we were able to spend a lot less money than we would have if we got a blank box. We were able to use the vent hood and the basic structure of the line and the plumbing and the electrical. It was all kind of setup, so that was really, really important because I’m out there raising money for a startup restaurant. It’s like the more expensive this thing is the more I’m just going to lose in equity.

BEN                          Absolutely.

NELSON                I’m trying to raise the money and I can’t go take out a bunch of debt. No one’s going to give me a loan for this thing. The raising money was a really big portion and getting something that was cheap was crucial to retaining some equity on the front end.

BEN                          Yeah. So, when you were pitching to these early investors what was the vision? I’m sure they thought this would be cool to have a hand in this new concept but what was the pitch to those folks. At that point, what did you think you were building?

NELSON                Yeah. That’s a good question. So, from the beginning I have said that I want to build 30 restaurants in 10 years and then we’ll see what happens after that. That was what I thought three years ago when I was looking for real estate and raising money and that’s what I think now. So fortunately, that vision was there on the front end, and so I had that vision to cast to people. The people I ended up raising money from were mostly friends and family and then referrals of friends and family.

BEN                          Which is important for people who’ve never raised money before. It is like having personal relationships or strong referrals, trusted people who are introducing you, warm introductions is a huge deal. Most of the time when you’re just cold calling or cold emailing people it’s not going to go very far.

NELSON                That’s right. And I mean the word you said, trust. Trust is everything. If I’m going to give my money to somebody I just need to trust in that person or if they have a whole bunch of experience, I’ll trust that. In this case, I had none of that.

BEN                          And they’re betting on you.

NELSON                They are, especially for a startup with no experience from the founder, they’re completely betting on me, and so friends and family, people who literally knew me from childhood were throwing $25,000 or $50,000 dollars at me and that was the most I ever got was $50,000 and the lowest was $25,000. So, everything was in that range and I raised money from somewhere around 15, 20 people and was able to get a small loan that was personally guaranteed, and cash deposited by my father-in-law so essentially that was equity, too. So, friends and family and the pitch I would say it’s a couple things.

                                    One, a number of them certainly just wanted to help me out in this cool venture, and while I didn’t really want that, and I never would have asked for that. I think that’s just, by nature, what happens when you go to your friends and family. They want to support and all those things. But the actual structure of the deal was focused on the one restaurant and the payback was pretty compelling. Essentially, I wasn’t going to see a dollar. I was going to get paid a salary, but I wasn’t going to see a dollar of the upside until they all got paid back plus some. And so that structure was helpful for me to say, “Look, obviously, I’m doing this because I want to ultimately make some money from it and I’m not going to see any money until you get paid back.”

BEN                          And in kind of finance terms that normally is characterized as a liquidation preference. That they’re going to make their money back, at least make their money back. Maybe make their money back and then some, so it de-risks it for them because it’s not I’m going to give you money and then you’re just going to run off into the sunset and I’m out the money and you just paid yourself really well.

NELSON                That’s it, and Mary and I were able to throw in some and personally guaranteed the property. So, if that’s not skin in the game I don’t know what is. I mean we’re in it and they knew that. They could see the passion with which I was talking, all the research I had done. I ended up talking with 120 people and got 20 investors, so I guess 18% success rate or something like that.

BEN                          That’s a pretty good percentage. How long were those meetings, typically? So, 120 people, what percentage of those people are those phone calls versus coffees?

NELSON                Yeah. 60% I never met in person. It was like fire an email to them and quick email back or not even an email back. The ones I was able to get in front of, they had already seen my pitch deck and there was at least some level of interest or they were going to introduce me to somebody. I don’t feel like I wasted a ton of time. I was scratching for meetings.

BEN                          That’s right. But did you find that getting to that face-to-face meeting was really helpful for you to kind of secure the checks or in some cases it didn’t matter?

NELSON                Maybe 50/50. Most people, after looking at my deck, anyone that I met with had probably looked at my deck to the extent that they were at least somewhat interested or had a reason for meeting. Certainly, the meeting in person was a huge part of it, but I also really just didn’t want to get in front of people if they hadn’t taken a glance through the deck. Hey, look, I’m starting a restaurant.

BEN                          You’re not that interested.

NELSON                If you don’t want to be a part of a restaurant this isn’t going to work.

BEN                          That’s right. But again, you have to be judicious about how you use your time as a founder.

NELSON                Totally.

BEN                          I think it’s really helpful for people who are, again, whatever venture you’re in to understand what’s happening a little bit behind the scenes because more often than not I meet people and they think if I can get in some pitch competition or something like that then I’ll be up on stage and rich people are just going to come out of the woodwork and write me checks. Usually, that’s not how it works. Now, depending on how wealthy people are and the amount that you’re asking them for then that can also determine their level of engagement because, again, it’s hard for some people to grasp this but again, for a really wealthy person, $25,000 to $50,000 is an insignificant amount of money to them, which again maybe it shouldn’t be but it just kind of is.

                                    They can make a bet on that without sweating it too much. So that’s where you can have, sometimes, these email exchanges and people are like that sounds good. I’m in. Versus if that’s everything that you were planning on investing this year then you’re probably going to do more due diligence around it.

NELSON                That’s exactly right. And I think one kind of side note thing that I learned is as I was structuring this thing, I had to hire an attorney, which who knew you had to hire an attorney but of course you do to create documents. So, I had a corporate attorney and he essentially was like, “You’re not going to take a dime from someone who’s not an accredited investor.”

BEN                          That’s right.

NELSON                And I was like what? What is an accredited investor? You go searching on the internet and you really can’t find much but it’s like I had friends who wanted to be a part of this and who were genuinely caring and wanted to be a part but they didn’t have a million bucks in a bank account. So, they weren’t able to be an investor. That was just a small thing that I learned along the way that was like this is kind of funky and weird. I think it’s there for a reason. At the end of the day, I got people who were able to afford a $25,000 check.

BEN                          So the premise of it, and we talked about it in other episodes is that it all goes back to really the Great Depression and people losing their entire savings and everything else through speculative investments in the Roosevelt Era, so the securities act of 1933 instituted all of these restrictions. So, the premise is that an accredited investor is somebody who has a million dollars in net worth outside of their primary residence. So, if you have a fancy house and no money in the bank and no money in other investments, that doesn’t count.

                                    The idea is these are people who hopefully are sophisticated enough and / or wealthy enough that they could lose the money that they’ve invested in your business and it won’t be financially devastating to them. So, the idea behind it is to actually protect investors.

NELSON                Yeah. I didn’t know the history lesson behind that. That’s really cool. I don’t know if it always plays out perfectly but in this case it did really help kind of filter out people who I really should be asking money from versus those who: “ Look, thank you, I really don’t want your money if you’re a friend of mine.”

BEN                          This is a risky venture. There’s a chance it doesn’t work. I want to be able to look you in the eye and not avoid you if I see you coming down the sidewalk on the street and that sort of thing. So, you launched all this stuff. It seemed, again, as a customer, it seemed like it resonated pretty quickly. Sometimes you start a new thing and there’s a really slow ramp up period. But I don’t know exactly when my family and I first went but it was pretty busy really kind of out of the gate. You could tell there was a market demand and it was hitting some notes early on.

                                    Let’s start with this, what have you learned about kind of clean food and clean eating since you started this restaurant in terms of what do customers respond to? What’s meaningful to them?

NELSON                That’s good. Customers are always going to want delicious food that tastes good. I mean there may be the unique set who just care about healthy and they have that kind of discipline to not eat a tasty meal.

BEN                          Almost never. The reality is it has to be delicious.

NELSON                At the end of the day, you’re going back to the places that taste awesome and you really crave the food. So, we knew that had to be a check box no matter what. The clean eating one is really pretty simple. Our whole thesis was we believe people are genuinely trying to eat healthy food that helps them get back to whatever they’re doing in their life and thrive and feel good about their bodies and have energy. I mean the definition of historical fast food is like you go and get the fastest meal possible and it just deteriorates your body. We were trying to change that by saying we can offer a fast meal that also makes you feel good and actually gives life to you.

                                    So life-giving was a phrase that we’ve used from the beginning. We’ve really stuck with that phrase and that word because at the end of the day I think what we’re trying to provide is life-giving not just food. Primarily food but also hospitality, aesthetic of the space.

BEN                          The full experience.

NELSON                Yeah. The idea is anyone that comes and interacts with Honest Mary’s is going to leave with more life than when they came. We want to send people off feeling like they’ve put something in their body that they genuinely loved, it tasted good, it was healthy. They feel good about where they got it. It was local, which local food tastes better and also people just feel good about eating local. They feel good about the space they were in. It was a rejuvenating space. We put a lot of thought into our design and the way it functions. People enjoy being in spaces that feel good.

BEN                          Yeah. It has a very kind of progressive, really kind of So Cal vibe in many respects, too. Yoga studio-ish, a thing that feels very natural and clean.

NELSON                For sure. We wanted that clean, vibrant feel but also to sort of feel like you’re in your living room or dining room or someone else’s kitchen. That homey, books on the shelf, you can see the kitchen, or you can see where we’re cooking the food. So that’s another element of life giving. It’s just the transparency. We’re Honest Mary’s. You can see our food right there. You can watch us cooking it. There’s nothing hidden. We’re chopping our vegetables right in plain sight. And then the hospitality is really big, too, especially in the fast food industry where we’re not able to afford to pay employees $20, $25 an hour. They’re getting paid better than the typical fast-casual but $10, $15 bucks an hour sort of thing. We really take a ton of pride in getting great people who just have a zest for life and hopefully they like clean eating food but for the most part they just love people.

                                    Our core values are caring, humble, and hungry. They want to just help people and serve people and they’re going to have a smile on their face. That matters so much. I think before I got into the restaurant industry, I didn’t realize how important service was to people coming back on a consistent basis. I think people just want to go back to the place where people are happy and it makes you feel good.

BEN                          Inconveniencing you, all of that stuff. You can have one negative interaction with one customer service person, and it can ruin an otherwise really great experience.

NELSON                Totally. That’s exactly right. So, all those things I think is, back to your original question, what do customers want? They want to feel like they’re going to a life-giving place that makes them feel good. If they’re going to go spend money, they’re going to take a break from their day to go spend $10, $12, $15 on a meal you want to feel like you’re getting something, and I would say we’re giving something even more than what they’re paying because we’re giving them great food, hospitality, ability to feel good about what they’re putting in their body, about the place they went, all those things. All those things amount to a customer experience, and I think we’re solving a need of wanting to feel good about wellness in our lives.

BEN                          That’s great. Those values of caring, humble, and hungry, how do you hire for those things or how do you reinforce those things with your team?

NELSON                Great question. The hiring, I mean even more lately we’ve just realized how crucial good hiring is and spending time in the interview process. We build specific questions trying to probe for whether caring, humble, and hungry is in the DNA of that particular person. Asking questions about work experience in the past. I mean what was the last time you apologized for something. Is it a humility thing? And if someone has to kind of really dig for that and they can’t figure out a time it’s like humble may not be top of the list. Caring questions, anything that just promotes them talking about ways that they’re willing to serve people and care about other people outside of themselves. I think we’re increasingly living in an individualistic world where we’re constantly trying to fill ourselves up and feel good about ourselves and be okay. But when we can find someone who’s willing to help other people be okay is just awesome.

BEN                          They’re compassionate in some meaningful way. Obviously, hungry is sort of a double entendre there. How do you isolate people who you feel like meet your definition of hungry?

NELSON                Yeah. This one I think is maybe the easiest because it’s just do they have this sense of wanting to grow? Are they excited? Are they ambitious?

BEN                          Are they driven in some way?

NELSON                Yeah. Are they driven? When you ask them about their hobbies and what they enjoy doing outside of work, do they say that thing with passion? It really doesn’t even matter what it is. One of the most significant questions I remember from my interview process with Chipotle was they asked me, “What are you passionate about?” I kind of struggled through and I ended up giving them a couple answers. Then I asked them because I was trying to learn. I was like, “Why did you ask me that question?” She was like, “Oh, we really don’t care what you say. We just want to make sure you have a passion.” It’s like, “Gosh, that’s right.”

BEN                          That’s right.

NELSON                You just want someone to have that sense of I want to do something and let’s go. Let’s go do it.

BEN                          Yeah. Because otherwise they’re apathetic and that’ll reverberate through their actions, it’ll reverberate through the environment in the restaurant.

NELSON                That’s exactly right. So caring, humble, hungry, to be quite honest, we arrived at those on our own but also with a tremendous handholding from Patrick Lencioni in the book The Advantage and now he has a book, I think, called The Ideal Team Player. He has been a rock of a resource for me and all his books he puts out.

BEN                          So you’re still constantly reading and learning. Just because you finished your MBA doesn’t mean that you’re done by any means, right? You’re learning. You’re taking more inputs. How can I become a better leader? How can I become a better manager, entrepreneur, all of those things?

NELSON                That’s right. Exactly.

BEN                          So Patrick Lencioni is an important one for you. Are there other sources that you go to frequently for ongoing kind of continuous learning?

NELSON                Yeah. I mean How I Built This, Guy Raz.

BEN                          Absolutely.

NELSON                I mean you’re not going to learn a whole lot of real tactical things in that but just the storytelling and the inspiration and hearing how people built their stories.

BEN                          And that all these massive success stories were not always that.

NELSON                Yeah. They run the gamut, and I think it’s easy to put yourself in the shoes of each of those people. That is one that just is easy to listen to and has always been really inspiring for me. Lots of books. Patrick Lencioni’s huge. Meehan Brooks, who’s our COO and people and operations lead is really who we like to refer to him and myself. I don’t really like to use the COO, CEO titles. We’re about to read Brene Brown’s Dare to Lead. So definitely a little softer and not as tactical from a leadership business-running standpoint.

BEN                          But about that humility, transparency, really getting outside of your comfort zone.

NELSON                Yeah. I mean we want to learn the tactical things about how to run a business and how to be great and passionate and how to have strategy and all of those things. But also, I would say our company is very focused on the soft elements of people skills and be very people focused and how do we lead people with humility. Servant leadership is something we talk about a lot. So, a lot of different authors.

BEN                          So how did you learn, you had mentioned earlier sourcing locally and that sort of thing being a really important part of the business model. How did you learn that supply chain side of it? Did you just start doing Google searches for local farms that you might but able to buy things from? How did you and your team grow in your ability or capacity to be able to source cool, new stuff?

NELSON                Yeah. I mean I had no idea about anything about this industry coming in, and so it was a lot of talking to other restaurateurs, figuring out who the vendors were out there in the space, which of those vendors; when I say vendors, a lot of distributors. I don’t know if people have this idea, but we typically don’t have farmers knocking on our front door like every day dropping off vegetables.

BEN                          There are other businesses that are collecting hopefully fresh produce from those.

NELSON                Totally. But they’re really, really great and we’re really lucky in Austin to have great vendors who are connected to those local farms that are that middleman and can obviously store those items and distribute them. I think first of all, being in Austin is just a really great place for that because there’s just really good connectors. People already care about locals. There’s already this economy of local going on when we entered it.

BEN                          And Texas, like California, happens to be a really good place because a lot of things are grown here.

NELSON                Yeah. It’s not the same in New York or in the Midwest. So that was really helpful and then just establishing these relationships with these distributors and really understanding what are the seasons here, these sweet potatoes can be local for these six months of the year, but they’re not the other six months. Where are those going to come from? Just asking those questions. The food world is pretty disguised, and you have to ask a lot of questions. I think it’s easy as a restaurant to accept the first answer as the answer because it’s easy because the vendor kind of knows what you want to hear so you can check your box of local or organic or whatever and they might be kind of disguising a little bit of the truth or maybe they’re not asking the questions to the farmers.

                                    So I think you’ve really got to establish a relationship of trust with your distributor, your vendor where you know they’re asking the questions and there’s a clear path of clarity and honesty all the way back to the farmer, and I would be lying to say that we have that down perfectly. We’re one restaurant and now we’re a two-restaurant store so we’re still kind of figuring that out, but I think we’re becoming more and more aware of who are the vendors we can trust. What are those relationships genuinely like with the farmers? How do we get that food? Where is the food coming when it’s not in season and that sort of stuff. It’s a whole world.

BEN                          It’s an ongoing challenge for sure. Now, as a self-described obviously not chef but not even super foodie, how did you approach the innovation side of the business, like recipe development and all that stuff? Did you find partners and other experts to surround yourself with? Were you and Mary in the kitchen experimenting with kind of basic ideas along the way? How did you tackle that? That was outside of your domain expertise.

NELSON                Yeah. This just makes me immediately think of a pretty trite statement in the business world, but you are who you’re connected to, at the end of the day. Relationships are just so important. I’m thinking about the chefs that we’ve hired, and we’ve had multiple, since we started, contract chefs along the way have helped us, and all of them have been kind of through random connections because I was not connected to the food world really.

So, one of them was through Able Lending. I literally sold a loan to a chef who was starting his own restaurant. Joel Freid, who is the owner of El Dorado Café.

BEN                          That’s right. It used to be a Taco Deli.

NELSON                Yeah. It used to be a taco deli and now he has started El Dorado and done a fantastic job, has a cult following.

BEN                          This amazing kind of local hub.

NELSON                I’m so proud of him and the work he’s done. He’s done a really, really good job. That’s a guy who genuinely is a chef who figured out the business side and did a really good job getting of getting into the shoes of customers. So, he was a guy who ended up helping us go from zero to one on our recipes. Actually, that’s not true. The zero to one was Mary. So, in our own kitchen, Mary was the one who was making bowls. We had an idea of what we wanted, what we liked. We knew how we liked our sweet potatoes cooked in coconut oil. We knew we liked certain things and certain combinations of food, but we knew we couldn’t just take that to a restaurant. We had to get someone to help us make it restaurant ready and also the big factor for us is like our sauces. So, Joel was huge with helping us develop some of these into real recipes.

BEN                          And how they paired with a variety because you’re dealing with the nature of a bowl restaurant and again, if you’ve never been to Honesty Mary’s, you can think of it like a Chipotle. You’re creating sort of a factorial menu. You have a relatively limited menu components but thousands upon thousands of theoretical combinations and your sauces have to work with things that might be outside of your control. You’re like “I wouldn’t recommend putting those two things together but.”

NELSON                That’s exactly right and that’s a big deal. With Chipotle everything’s Mexican food so you’re really not going to mess it up.

BEN                          It’s going to be pretty consistent.

NELSON                I mean with are mostly like American food. We have some Mediterranean and some Asian.

BEN                          Yeah. You’ve got poke.

NELSON                We’ve got poke and it’s like you could potentially mess this up.

BEN                          Do you ever have people behind the counter going are you sure you want to do that?

NELSON                Yeah. We can remake that for you.

BEN                          There are no wrong answers, but you might have actually just made a big mistake.

NELSON                Yeah. That’s right. I mean, yeah. Certainly, that can happen at Honesty Mary’s but finding a chef that could help us kind of make it so that was as least likely as possible.

BEN                          Yeah. You create these sauces that kind of bridge a variety of different cuisines.

NELSON                Yeah. So, Joel was a really big one. There was a point where he was ramping up with El Dorado and he kind of waved his wife out. He was like, “Look, I’m a Mexican food guy.” These are my sauces, that’s it. That’s my capacity. Great. Go find someone else. So, we went and got a guy named Jason Donahoe who was at Vertz for a while and was at Fino here in Austin and now he works out at Driftwood Recovery. He’s an awesome chef, helped us kind of go from one to two and helped us develop menus. He was with us into the actual making the restaurant opening. So, he helped us with seasonal bowls and those sorts of things.

                                    Then we eventually moved on to a team, the Contigo team actually, another Austin favorite. They had a consulting group called Edgewise, and they helped us create some of our menus and now we’re actually about to just continue to work individually with one of the guys from the Edgewise team who now is at Salt and Thyme. So, it’s been sort of this evolution of people.

BEN                          Yeah. Absolutely. It doesn’t have to be static at all.

NELSON                It’s worked well for us because it doesn’t make sense at this point for us to have a full-time chef hire. I mean to pay someone six figures to be an in-house chef would make no sense. We literally need someone to help us develop a few items here and there, help us with our seasonal bowls, and a few other things but it’s fairly basic. It’s having contract chefs who are really good at what they do but have a full-time gig elsewhere and can help us on the side has been great.

BEN                          That’s excellent. Yeah. I love it. So, you focused on the food. You focused on the environment and you’ve built a brand. That brand is Honest Mary’s. What have you learned about building a brand in the restaurant space or just building a brand in general?

NELSON                Yeah. That’s a good question. I met with a group recently, and we are not at all at the stage where someone is looking to purchase us as a company, but I like to continually meet with people.

BEN                          Yeah. You’re having conversations.

NELSON                And they mentioned there’s three things that we care about more than anything when it comes to buying a restaurant it’s “Do we trust the founder? How are their sales? And how is their brand?” And brand has always been a tricky one for me because, to be frank, marketing is not my favorite thing. It’s not super measurable. It’s hard to quantitate but I’ve seen the value of having a brand that people connect with, that they feel like they should go back to and can go back to, that it’s a part of their rhythm and the routine and it makes them feel good about their life, but to hear that a few weeks ago and hear someone literally put that in their top three things of like what is a good restaurant for us to invest in. It was like that’s powerful but that they would go out on a limb and say that.

BEN                          It’s a pretty big deal and that’s ultimate what, in a restaurant, and a CPG environment, in almost anything your intellectual property, you have some trade secrets, you have some recipes, you have hopefully some good customer relationships but truthfully, your brand and what it stands for, how it resonates or doesn’t with a particular set of customers is a huge deal.

NELSON                Totally. And it flows into the conversation not only of who’s going to be interested in buying us way down the line but more applicably now is like do we do our third location in Austin or do we go to a neighboring city where they don’t know us as well and our brand isn’t established? Certainly, that’s more risky but do we need to go ahead and establish that brand there? All of that sort of speaks to this sort of mystical, for me, it feels mystical because I can’t grab ahold of a brand.

BEN                          It’s soft skills.

NELSON                It’s so soft but it’s so important. Is who we are, is our story out there in the world being talked about because it resonates with people? Are people saying, “Man, that’s a cool story I want to be a part of that. They have great food and I really enjoy going there with friends.” I would love for Honest Mary’s to be the sort of place that is at the level of a Taco Deli or a Torchies or of a P.Terry’s of just a beloved brand because people think of those places and they’re like, “Yes. That’s an Austin favorite.” It’s reliable. It gives me a certain feeling when I go there, and we’re cheering for that brand to do well. They’re an Austin company.

BEN                          And that’s super powerful because you can imagine so if you don’t have that, if you don’t have that organic, enthusiastic reception and following then what that means is every time you try to entice a new customer to come to your business you’re having to pay for it.

NELSON                Totally. Exactly.

BEN                          Which is unsustainable. If you have no brand nobody can talk about it and then there’s no story behind it. They can’t say, “Oh.” And again, the story isn’t necessarily the Honest Mary’s story. It might even be their story at Honest Mary’s or how their experience at Honest Mary’s was so awesome and transformative for them in whatever way. Then organically they share that with their friends and family and their colleagues, or they say, “If we have to go somewhere for lunch we might as well go to Honest Mary’s.” And somebody goes, “Well, I’ve never been there,” and so then you may be influencing a whole new customer, a whole new influencer through that but that’s really happening because of the brand Honest Mary’s, which is the experience. It’s obviously the name, the logo, and the experience but it’s everything combined.

NELSON                That’s exactly right. Yeah. So, I think a good kind of picture into this is when we opened the first store, we hired a public relations company for I believe maybe six months total. Three months before and three months after to kind of help us launch. The first few weeks of opening the first one were slow. Really like after the first week I was like, “Okay, I don’t think people know that we’re here.” Then eventually, it took about a month-and-a-half for us to be profitable. It ramped right up after that.

BEN                          Which is awesome, by the way. Again, that’s not typical in the restaurant world.

NELSON                Yeah. Totally. Very, very thankful but even after we lost the PR company and we basically stopped doing anything marketing related outside of our own social media, for the next 18 months we saw month over month growth. The only thing that that can be attributed to is people telling their friends. We had splashed already. We had made our entrance into the world. Now this is just like the routine of month over month and we were growing, and I know that that was happening because people were having good experiences and they were talking to their friends.

                                    I mean to your point, it’s free and word of mouth is absolutely the most powerful marketing tool. The next restaurant I go to is going to be the one my friend tells me about that they just went to that was awesome.

BEN                          Yeah. And they will go there because the food was delicious, it aligned with some aspect of their values or identity and they had a great experience there, which again back to the team that you build, the interactions that they have with your patrons, it makes or breaks that experience.

NELSON                That’s it. I think a thing I would add to that, this is going to sound really general, but customers want to know that you’re trying, and I think in Austin especially it’s like you’ve got to tell me that you’re trying. I think that why a lot of companies didn’t move into Austin and aren’t local don’t make it because they just kind of put their cookie cutter thing somewhere and people in Austin and I think just our culture in general is becoming so resistant to fakeness.

BEN                          Yeah. It’s needs to be earnest, yeah.

NELSON                It needs to be earnest. So, I’ve gotten to be friends with some of the Torchies guys recently and that’s been something that I really admire about them is they do things the right way. I mean they mentioned it multiple times in our conversation. You just kind of do things in the right way. Even when you don’t really feel like it matters or maybe there’s part of a build out that you’re kind of making a tradeoff of that will be expensive and I don’t really know if customers are going to really even know.

                                    Most of the time, the answer should be do the thing that is the right thing to do because ultimately, at the end of the day all those things amount to a brand, this sense of trust where the customer says I actually saw that small thing that I didn’t think they would see. I saw that plus the five other things or five out of the 25 things and that amounts to them as, “Okay, this is a company I can trust. I want to go back to it. They’re on my side. They’re doing things for me. They’re working for me. I feel like I can trust continuing to go back here over and over again.”

BEN                          And it may be conscious, or it may be unconscious, right? So sometimes there are things that we experience that instill trust in that relationship that, to your point, maybe five out of the 20 or 25 things, that’s all you really noticed but all the other details, and Torchies has done a great job of this, the details in their restaurants and in their menus matter a lot. Even if you miss it, it’s sort of like think about some various clever TV shows. If it’s The Simpsons or Arrested Development or something, there’s little Easter eggs in those things. The writing is so perfect. Or Breaking Bad or Better Call Saul, the details matter so much and some of it may be lost on you, but they were faithful to their objective.

NELSON                And man, when you’re the customer or you’re watching Better Call Saul and you see that Easter egg you feel so important and in it.

BEN                          You’re like you’re smarter because you got it. Absolutely.

NELSON                A la Donald Miller. The customer then becomes the hero of the story. That’s the moment where they’re going to keep coming back because they feel like a hero every time they come. They feel like they’re important.

BEN                          Absolutely. That’s great. Do you have any general advice that you give to other aspiring entrepreneurs? Because you are an entrepreneur first. I would say as you describe it, you’re a restaurateur second. So yes, you’ve been an entrepreneur in the restaurant space and you’re growing, and you have this really exciting venture that’s on its way to all kinds of cool success. What are the things that you, either to people who are thinking of opening a restaurant of food truck or maybe again it’s somebody who they have a physical product or brand. What are the kind of lessons you’ve learned that you find yourself frequently sharing with those people?

NELSON                Yeah. I feel like most of the conversations I’m having these days are people in the position where I was three years ago where they’ve got this desire to be an entrepreneur. They maybe have an idea; they’re starting to explore it. They still have their day job and they want to be an entrepreneur but they’re just not sure how to take the leap. I mean I am, in so many ways, so new at this thing. I mean I’ve been at it for two-and-a-half years.

BEN                          I appreciate that humility but there’s also an element where that’s arguably more relevant advice to people who are starting or thinking about starting something today rather than if you were some billionaire and you had started this thing 25 years ago. You started it in a different world.

NELSON                Yeah. In 20 years, if I’ve hopefully had some success and I’m doing something else like I am not the person they should reach out to.

BEN                          Which is weird. It’s a little bit counterintuitive. So, the fact that you’re still relatively in the trenches, you’re still building this thing means that your expertise and your experience is more relevant to them than maybe even some more household names.

NELSON                Yeah. That’s exactly right. Even over the past year or something I felt like I’ve lost a little bit of the feelings that I had when I originally started, and I’ve become a little less relevant to the person who’s in it and they’re trying to figure out when to create their LLC. I’m like at this point, two years ago I would have been like do it at this exact moment and here’s how to do it and here’s the person to talk to. Now I’m just like, “Dude, it’s just an LLC, whatever.”

BEN                          It’s fuzzy.

NELSON                Already I’m kind of losing that connection.

BEN                          Because you’ve got bigger fish to fry today.

NELSON                Yeah. I guess.

BEN                          But that was everything back in the day. It’s just not where you’re at and you remember a moment where if you’re a parent and you have a baby or a toddler, man, it’s the most vivid thing in the world but then time passes and you have a teenager and somebody comes to you with baby advice and you’re like what did we do. I don’t really remember, but man, did you remember in the moment.

NELSON                Oh, man, it’s everything. So I guess back to your point, that has been most of my conversations I can start to feel a little bit more like my expertise is now in how do you go from being that startup to like I think we got some traction here to being more of a developed company. I would consider ourselves now entering a mode of growth phase where we got processes, we’ve got something already, the concept is proven. Now we’re trying to figure out how can we shift into this building mode.

BEN                          How do you scale it?

NELSON                Where we’re thinking about the right people, who do we have on the bus, and what kind of processes do we have. How do we continue to take risks in the right direction but not make a big mistake that could hurt us real bad? So, I guess that’s kind of the world now where I could maybe offer some thoughts. So, our conversation just now, sort of just whatever the thing was that you just did.

BEN                          Yeah. Yeah. Which again, I think that’s really important insight because it is most helpful, often, to find mentors who have recently been in the situation that you’re in. Maybe they’re half step or one or two steps ahead but if they’re 50 steps ahead their advice may or may not be as relevant, even though maybe they have their own episode of How I Built This or something like that. You think, “Oh, if I could just get a meeting.”

                                    I meet a lot of entrepreneurs that sort of thing and they think, “If I could just get a meeting with that famous person, that super rich person then they’re going to have all of the answers.” Again, somewhat counterintuitively, in my experience those people, the advice they give is often bad advice or it’s irrelevant to the person’s situation because, again, if you have hundreds of millions of dollars in your investment accounts you have a different set of problems than the person who can’t rub two nickels together.

NELSON                Completely different.

BEN                          The person who can’t get a meeting with the leasing agent to secure the corner strip mall thing. Those people don’t have those problems. They can get any meeting they want to. So, you’re like how do I get that meeting? They’re like be me I guess is the answer. You can’t do that. But you, Nelson, you were there not that long ago. How did you get the meeting? You can actually learn a lot from having those conversations.

NELSON                Totally. That’s it. Yeah.

BEN                          Obviously, you’re in this world of restaurants and things like that. And I know you’re not in the world of packaged food and that sort of thing, although there’s to-go orders and takeout things. But is there anything different about starting and scaling a restaurant that maybe people who have a packaged food or beverage brand might be somewhat counterintuitive. The reason I ask is it’s not uncommon and it doesn’t happen all the time but particularly for food and beverage companies of some kind or another, you see a lot of restaurants or food trucks that aspire to launch a product and then sometimes you see a lot of product companies that aspire to have either. Maybe it’s a flagship or if it’s an ice cream place, it’s a scoop shop or something like that.

                                    You’re mainly a product company but then you’re thinking of going into the restaurant space or you’re mainly a restaurant and you’re thinking of going into the product space. What are your thoughts around that transition?

NELSON                Like are you asking how could someone possibly go from one into the other? How do they overlap?

BEN                          That’s right. Do you think it’s a good idea?

NELSON                Oh, man. I mean in a lot of ways it’s entrepreneurship and you just have to figure out the problem and solve the need. To me, that’s like 80% of any successful entrepreneur is just what does the customer want, put yourself in their shoes, solve the problem, work your way to creating processes. So, in a lot of ways, it’s probably very similar the fact that it’s food and you’re thinking about safety of food and consistency of food and all those. I’m sure there’s a lot of overlap there. The biggest difference is, in my mind, and I’ve never been in CPG so I’m a little bit shooting from the hip here. With CPG, you’re thinking a lot about working capital and the logistics of the timing of when do you purchase and how long until you get paid.

                                    For restaurants, it’s kind of the opposite problem. I get to pay my vendors 30 days late and people are paying me on demand, so the cash is not really the thing unless you’re building a restaurant but for us the harder part is, we are interacting with the customer.

BEN                          They’re not hidden behind a curtain.

NELSON                No. I think there’s even more of an emphasis. I think you always want to care for your employees really well. There’s even more of an emphasis to do that in a restaurant space because treating your team members well, those team members are going to turn around and serve your customers. What are they going to be like? How are they going to represent our brand?

BEN                          So the training and coaching part of it’s really, really significant in a way that’s very different. Maybe it’s not but at least on some level you have a restaurant, typically, you have more employees or more team members than you do if you were just a standalone brand. So, let’s take some big examples. You can look at a Starbucks. So obviously Starbucks has all the coffee shops, but they also have the Frappuccino’s that are sold in grocery stores and convenience stores. You have pizza things.

                                    You’ve got from Home Run Inn, based out of Chicago to California Pizza Kitchen out of California and they have frozen meals, too. Some of these restaurants, they’ll either dabble or some go pretty aggressively into having products on the shelf or on the border here in Texas, things like that.

NELSON                Yeah. Like Amy’s, the organic food company, created a fast food restaurant just recently in California and they’re trying to expand that. So, I don’t know if I have a ton to offer.

BEN                          And they’re probably not just opening up cans of beans and handing it to people so it’s a very different business.

NELSON                Yeah. But I guess in some ways they’ve established a brand and a level of trust with their customers and they know how to do food from a general standpoint and so they’re able to open up a restaurant and do that.

BEN                          Absolutely. Well, Nelson Monteith, thank you, man. This has been really insightful. Again, you’ve already built something here in Austin that’s very admirable and impressive. It’s pretty clear from your first two locations and your pathway to hopefully getting to those 30 locations in the next few years, who knows what happens beyond that. Certainly, you’re on a really good path, and I think anybody who’s visited either of your restaurants can see that there’s a lot of deliberate thought and strategy that’s gone into what you’ve built that kind of comes through not just in the food but in the overall experience.

NELSON                Yeah. Thank you. We’re continually getting better. There’s a thousand things we’ve got to do better and we’re continually getting better. I will take the compliment. I appreciate that. Really honored that you had me on the show, too. I mean I went and listened to a bunch of people who have been on the show, and they are way farther along than I am, so I’m thankful that you’d have a young buck like me, who’s just kind of trying to kick and figure it out.

BEN                          No. I think it’s great. And again, to my earlier point, I think it’s actually really useful to hear the real story. And even I love how I built this stuff, too, but sometimes it’s more valuable to an early stage entrepreneur to hear the story as it’s unfolding rather than, “Oh, 20 years ago, I went through some hard times but I don’t remember those hard times very well.” Right?

NELSON                Exactly.

BEN                          And so what are the strategic decisions you had to make to actually get to a position where you could be successful and take advantage of opportunities. I think that that’s really, really helpful and so I appreciate your time.

NELSON                Thank you.

BEN                          So I want to just, again, thank our listeners and viewers for joining us again. If you’re getting a lot out of these conversations and specifically this conversation with Nelson Monteith of Honest Mary’s, please share it with your friends, colleagues. Maybe you’re in kind of a mastermind group or you co-work with somebody and you guys are talking about or maybe actually walking down a path where you have a project or a business or an idea that you’re trying to flesh out.

BEN                          If the kind of information that we’re talking about in these very kind of real deep dive conversations is helpful to you, please share it with your friends and remember to subscribe, review, rate, share. We really appreciate all of that stuff because that’s ultimately how people discover this content and hopefully can benefit from it. So, you can always go to BarcodeStartup.com to learn more and to listen to, watch, or read any of the episodes that we’ve recorded so far. So, until next time, thanks for joining us.

 


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