Hello and welcome to another episode of the OddLots podcast. I'm Joe Weisenthal

and I'm Tracy Aloway.

We are eating pizza. We are recording this July 8th and we've done backto backtoback episodes and we haven't had time for lunch. So I too am going to eat this bite of pizza.

It's really good.

We're eating really good pizza in the studio. It's really good. People are probably wondering what's going on why we're All right. One second. I'm going to swallow my food.

But I swear we're not going to be sounding like we're eating pizza the entire time. Maybe we'll

speak for yourself.

Okay, Tracy. A few months ago, I noticed a new pizza restaurant had opened up in the East Village. And I thought to myself, what kind of person looks at the East Village and thinks, you know what, this neighborhood needs a new pizza restaurant? And I've always been sort of I've been vexed by that question for a long time.

Wait, it's a saturated market. But on the other hand, isn't like pizza in New York a slam dunk? Everyone loves pizza. We come here for pizza, don't we?

I guess that's true. It just seems like there there is a lot of pizza in the East Village and opening up a new pizza place. It's very capital intensive. There's the stoves, there's the risk, there's the brand, there's all these things. I would not have the guts to open up a new pizza restaurant. I would just assume that the market I would just take the it's saturated view. Maybe you have the more maybe you would be the more o optimistic and entrepreneurial. You can't go wrong with pizza.

Yeah, you can't. It's New York City. I guess I could see it both ways. But I did find it striking and it is of course one of the most ubiquitous businesses that you see at the ground level in New York City, great pizza city. And I don't really know anything about the business of pizza.

No. And we just spoke to a bakery business that is getting into the pizza business. So this is a really nice segue and natural evolution of the conversation.

Yeah. I want to know how you make money selling a slice of pizza in New York City. I'm really excited. We actually have three perfect guests in the studio today. They brought us pizza. So, there is a disclosure that we have to get out of the way, which we are eating the pizza that they brought us. So, if you listen to this episode and you think like we've been like, you know, painfully bought off or whatever, then this then that's why it's because I had some pizza. But, it's also an interesting one because a this pizzeria is right by Bloomberg. So, that's another excuse for why we're doing this one.

But also, two of the owners of the restaurant also own a um a deli or cafe near Bloomberg that I go to for lunch all the time. The Oxford Cafe. I don't really like eating pizza for lunch if I'm being honest. It's a little heavy, but I love a chopped salad. And the Oxford Cafe, which is very close to Bloomberg, in my opinion, is the best chopped salad operation in the entire city or that I've been to. No, for real. And so, I'm sort of curious about that, how you differentiate there. So, I just want to learn about like lunchtime food, including pizza.

Let's do it. our three guests. I'm going to introduce them. We're going to be speaking with James Shields. He is a restaurant tour here in New York City. He uh involved in multiple things, but he is a co-founder of Zeno's Pizza, which is on 52nd Street between Second and Third. And then we're also going to be speaking with the other Zeno's co-founders, Alex Xenopoulos, who also owns the Oxford Cafe, and his brother Evansopoulos. So, they're all involved in multiple things, and uh Evan and Alex and Oxford and James and pizza, etc. And we are going to learn how to make money selling a slice of pizza. So, I'll throw this out, James, or anyone else, but James, I'll start with you.

Why did you think there was capacity or a reason when you looked at this uh location at 52nd Street between Second and Third to think, you know what, this area could use another piece of place?

Sure. I mean, for us, it was clear during the pandemic, there was a great clearing event where a bunch of, you know, established places went out of business. and Midtown specifically, that area, 52nd Street and that corridor, it was a bit of a pizza desert and it's not the same as like the East Village or the West Village or Time Square or something like that where if you open up shop, you're going to immediately be in a knife fight. So, this was a a green space for us. And, you know, me and Alex and Evan kind of had this chance meeting through a friend of ours. you know, they were looking for someone to to do something with their pizzeria, which they had established at the mill. And we got to talking and we knew a space that was right across the street, and it just immediately clicked. And we're like, we have a partnership here. We're going to make an honest go of it. Let's throw some money in here and make this happen.

Okay. My first question is pineapple on pizza. Yay or nay?

This is the important stuff.

Exactly. So, this is all near and dear to my heart. So, I'm okay with pineapple and ham on pizza. It depends on the type.

If you try to put it on Neapolitan, that's sacrilegious. And then you're going to get like you're going to get your uh your pizza making card revoked. But if you do it on like a New York slice or maybe in a Sicilian, then you know what? You're you're in okay territory and we can we can give you a pass. I don't know how you guys are going to react to this, but at my local pizza place in Connecticut, they do a Hawaiian with cherries on top of it. So good.

So, I've done it with soapada and ricotta. And if you drizzle some of that like mariscino cherry juice on it, it just ties the whole thing together cuz you get that salty, that sweet, and you get a little bit of that like heat, too.

I do find that question kind of interesting because

this is Alex, by the way.

No, sorry. This is Alex. Because you know Italians do eat pudo with melon, right? So that it does have a similar profile to ham and pineapple. So you know I've always found it like an interesting kind of

I don't know why it became so controversial. It seems like a natural match.

No, there's a meme of like some Italian guy looking at a pineapple on pizza like get away that nonsense and then he sees the pushut on melon. It's like oh amazing delicacy.

Yeah. I personally I'm a traditionalist. that just when we were like partnering up on this, our aim was how do we make the best plain slice as well, right? And that's I feel one of the most important characteristics in New York. So, I've never been a big pineapple um pizza person, but you know, how do you get to that best plain slice is kind of one that was one of our big motivating factors when we met up and you know, trying to figure that out.

And that was Evan speaking, by the way. All right, let's talk about that. So, you guys uh Evan and Alex, you have background in other restaurants. I mentioned the Oxford Cafe which I highly recommend. When you thought about okay you want to partner and get involved in the pizza opportunity. We've established that this area is a pizza desert. How do you think about like the sort of where in the market high-end to low-end etc is optimal and what are the categories of the market that exist?

You know it's it's a good question. And you know one of the elements that like James mentioned earlier we had a pizza section in our place on 52nd lex the mill and you know before the pandemic a large component of that section's business was catering. So when we were looking at this specific location we signed a lease before the omocrron variant and obviously there were issues kind of with people coming back to the office afterwards and things like that. So part of the when we were looking at this location was the thinking was that we would have a lot more catering higher price point transactions that was kind of sustained the business versus doing uh solely kind of by the slice operations because that is a lower ticket price involves a lot of transactions to really get the volume and sales that you need to kind of you know cover all the costs. I'm sure we'll discuss kind of the elements of the business.

So I think what you've been seeing the last couple of years with a lot of costs across the board, you know, for food and beverage, it's become so much more difficult to operate. Everything's become more expensive. You relying on third party services, you know, different digital applications that all take a couple of points from your business, right? So, you know, you're seeing a transition in New York in terms of pizza where people are trying to go up the food chain to a higher price point to be able to kind of cover those expenses.

So you're seeing a lot of kind of traditional mom and pop places close, dollar slice shops, even really good ones that had, you know, a lot of, you know, had a good reputation. You're seeing a lot of those struggle as well. So you're seeing a a big transition, whereas I'd say, you know, 10 to 15 years ago, you know, you'd almost never see a pizzeria close. I mean, it was just really, really unusual. Now you're seeing kind of a lot of new entrance, a lot of people exiting. So there's a churn that in the business that just didn't exist. How does pizza actually move up in terms of pricing? Because I imagine, you know, I love pizza, but it is in some ways a humble product and there are limited things you can do to it. So, if you're trying to charge more money for pizza by making it, I don't know, like luxury pizza,

gold leaf, and caviar. Is that what you're trying to say?

Does that work? What do you do?

No, there's a window, right? And the way that Zenos is is kind of positioned within the marketplace is we're premium product, premium price. So, like we want to be on the higher end and we also want to use the best, freshest quality ingredients that you're going to find in our marketplace, right? Cuz we want to stand behind what we eat. We want to eat, you know, really good, healthy, fresh food every day, right? And that that even goes to like that facilitates the process that we go through. So, we ferment our dough for 48 hours, right? Most sliced joints in in New York City are like 24 hours. And why why is that different? Right? It makes the product a little more healthy because the yeast are essentially digesting the gluten and kind of softening the dough for your stomach to process, right? So, it's it's something that doesn't sit in your stomach, you know, and you feel that when you eat our slice, you know, you don't leave the place being like, uh, you know what I mean?

This is why I don't I didn't realize this. This is why I don't really usually eat pizza cuz I don't want to feel that in the middle of the day, but I didn't realize that this could be addressed by going more pre.

Brother, let me put you on the spot. How do you feel right now after eating that slice? I I've eaten two slices since we've started talking. I feel okay right now.

All right.

Wow. This is really I learned something.

Yeah. Eye opening. Right. And this this goes to the economics of like you need additional storage in your walk-in. You need to process this a couple days beforehand. So that means if you get an order, you know, 24 hours, you're already 24 hours behind in the process, right? So like the logistics of this is is quite impressive to manage on a scale that we do it at.

What else makes a difference in terms of ingredient costs and whether it's cheese, whether it's tomato sauce, like what is the difference between your slice and a dollar slice?

Yeah. So, I'd say cheese is the most expensive cost center that we have more than meat, more than uh any other thing, right? But you've seen inflation across the board and also like it ties into tariffs and things like that. We have, you know, Italian-based products that, you know, like canned tomatoes and that kind of thing that do get impacted, but cheese by far is the biggest cost center.

One of the more random experiences I have had in my life is talking to a pizza salesman in I think it was Tanzania of all places, like a door-to-d dooror pizza oven salesman. And one of the things I internalized from that conversation was pizza ovens are really, really tricky. it seems very difficult to like get them exactly right. So I'm curious how much equipment costs factor into the business and how careful you have to be about that sort of initial capital investment.

Yeah, I can jump in on that. This is Evan. So we opened the restaurant actually three years ago this Sunday. So three years ago. But

let's go.

We were looking at the equipment just as an example. So our oven now it's the pizza masters. Everyone's using it. Everyone's going electric now, which is definitely a big trend in the city's obviously going against, you know, gas powered grills, ovens, and things like that. But we bought our oven 3 years ago was $32,000. It is now, I think, $45,000.

Wow.

Just just as an example of what kind of

I see one for $91,000.

Oh, that's that's the five deck. We're at We're at a three deck, so we're a little bit less than that, but yeah. So, you're looking at that and then it's just all the extra equipment. That's where it gets daunting, you know, to open up. And we're only a thousand square foot restaurant. If you're doing like a fine dining restaurant, you can even imagine, you know, what what the kitchen equipment's going to. And yeah, so you're trying your best to, you know, make a business plan, keep your costs in order. But, you know, you're getting low fridges. Uh our pizza shredder cost low fridge lower to the ground, but you have a counter on top of it. Underneath there's just fridge storage.

Just as an example, our shredder costs $5,000. So you can see how all these little things you keep adding into the business just keep adding and adding and adding and you're trying to get the restaurant open as fast as possible. We had a hiccup during our construction is we needed a smoke hog which is the ventilation precipitator and ours got like backordered and we got delayed 4 months just waiting for one piece of equipment which we could not open our business without.

Wasn't that the plot of an actual bear episode? It was something with the ventilator, right? I'm sure it was. The Bear season two was perfect when they were building out that restaurant and the chaos as you're going through it. Um,

and yeah, go ahead, Alex. That was you mentioned earlier kind of like when you're looking at a restaurant and the type of uh so I mean the ideal situation is what's called black iron where you're essentially exhausting out through an exhaust and you have an exhaust fan and and you know the city's very specific about those types of buildings where you can do that versus you know in this situation the type of we have a precipitator that basically cleans the exhaust air and is vented out onto the street right so typically if you have like open windows things like that you're not allowed to have normal kind of like black iron exhaust.

But yeah, during the pandemic, a lot of different types of critical equipment were just non-existent. And you know, even for example, walk-in box. At some point, I remember during the pandemic, people were tearing down old restaurants and selling the old walk-in box just, you know, 15y old panels, you know, and just like selling it because people couldn't find them. And it was just a rat race to try to find this equipment or or also electric equipment, you know, breakers, things like that were on back order from China. And I know there's been some episodes on some of those issues on odd lots, but you know, for for restaurants where, you know, time is money. You're trying to, you know, build a team, get out ahead of, you know, the rent and things like that. And, you know, it was just a nightmare trying to pull it together.

How big of a challenge is labor and how skilled is pizza labor? Like, do they still have to twirl the dough? Like, is that a thing or is that just like for show at some restaurants? Talk to us about the labor component of the business.

So, it depends on the the segment of pizza. So like New York Slice and Sicilian and things like that, the labor bar is a little bit lower, but for us it's still very high-end. Like we'll take probably at least 30 candidates. We'll trial probably 10 of them and then one guy might stay 3 months and one guy might stay two years. Who knows?

For woodfired and coal fired like like I have a woodfired that's down in the West Village. That is such an artisal product that to have a guy that actually knows what he's doing can take six months to train and then three years to understand and then another 5 years to really understand. You know, like it takes a lifetime and you're just constantly learning.

I actually wanted to ask you about this, but why did you decide to go electric with this particular oven versus coal or wood?

Great question. So, it was a mandate by the building that we're in because we're in a, you know, a high-rise, right? But it also has the added benefit that the current is more consistent because you're drawing the power and you're heating the product more consistently than a flame, which might eb and flow in terms of temperature. So, our oven is more similar to like a Tesla than it is to actually like an oven. It's got a lot of electronics in it. And we saw that firsthand when we literally tore it apart on the street, the sidewalk, disassembled it, moved it through the door because it's a huge piece of equipment, and then reassembled it within the space. It was so impressive. The pictures are incredible.

Just to z back up, let's say Tracy and I wanted to open up a pizza restaurant. How much money do we have to have? Do we realistically both in terms of like putting down money for rent, but then the full like what kind of operation is this to get into? If you're talking about ours, you know, we did a,000 square feet. The biggest mistake all restaurant tours make is they just don't have enough working capital after they open the doors.

So, I would say to be safe, you're looking at minimum 400,000, but probably in the 5 to 600K range just to give you that extra cushion cuz, you know, I've been working with my, you know, my family's had restaurants in New York since the 80s and I, you know, started in ' 09. You would make your payback in like 18 months. Now we're looking with the way the expenses are, you know, insurance is up 20 30% since precoid labor, you're looking at a 3year time horizon often.

So, and it takes so long sometimes for someone cuz we're not a national, right? So, we're not getting that automatic like press. So, just as a mom and pop, you know, you often need more time to get the marketing out there. So, yeah, 500 to 600,000 seems like right a good spot for like a,000 square feet. But, yeah.

Yeah. And this is in the QSR segment, the quick serve restaurant. If it was full service, you're looking at, you know, 700 to a million. It gets up there pretty pretty quickly.

Yeah. because I mean it's just more involved like let's say in that space you know obviously the equipment and those types of needs the working capital needs are more because the staffing needs are more expensive but also just the finishes like anything now these days you know services are so expensive you know whether it's electric plumbing like all these different inputs that go into building a restaurant are just that much more expensive and you know I think that's just kind of like the way it is now post pandemic these types of services are just very expensive so you know for a your cost of the buildout is that much more expensive just because of that reality.

How does distribution work for you guys? Cuz I imagine this might be another big capital investment. And it's something that came up when we were speaking to the baker earlier. He pointed out that it's not just about making the bread. You actually have to deliver it to your customers. When I think about pizza, I think about pizza boxes. I think about pizza boxes coming directly to my door uh usually around midnight or something like that. How do you actually uh get the pizza out to customers?

I've kind of been involved in a lot of that, but yeah, it's like you just move heaven and earth and you just need to get it there anyway you can. So, obviously best cases, you know, we're really focusing locally. We, you know, love all the office clientele in the area and we've been doing a lot of like quick deliveries, but you know, we're looking at orders throughout the city and like there's been days where we'll rent a U-Haul and just fill it up with pizza boxes and get it down there. Yeah,

I've brought in, you know, my personal car. I'm originally from New Jersey, but I had my personal car one day and we had like a last minute like huge order. I'm just driving through the city in my personal car, you know. So, Subways, any way you can get it. And yeah, it's just one of those products where we have been trying to focus locally cuz pizza, it does lose its luster the further away you get, right? Traveling it when it's stuck in the boxes can be an issue, but you know, we just make it work and whatever it takes to get it there on time.

What are your capacity constraints? Let's say I'm at the office. Someone closes a big sale. I was like, "This is great. Let's have a party tonight. Could I call you up?" Like, "How quickly could I get 30 pizzas from you?"

30 if if you give us like three hours, we'll get it there. Yeah, for sure. I mean, we've we've done that.

And what's the most number of pizzas you can have cooking at one time? Like, and inventory of pizzas that you have already cooked. Like, talk to us through Yeah.

Yeah. I mean, we have a pretty decent throughput. So, you know, we've done 50 to 100 pie orders. you know,

and it's all about timing and moisture control. You know, the way that we design the dough, you know, it's very efficient on the reheat is what we tend to call. We're able to get that all out at once. And we feed a lot of desks in Midtown. Like, you know, shout out Jerry from Namora by the way and Black Rockck and all those guys like, you know, so we're feeding the desk and you know, once they order from us, it's game over. They're weekly, right? So, we're used to that kind of, you know, throughput and it is a like Alex alluded to earlier, you know, it's a functional part of our business. We really rely on catering and, you know, the offices to really sustain us in this one very very hyper local, you know, neighborhood.

So, speaking of hyper local, do you tailor the menu for that particular location or is pizza like a universal transportable good that can work basically anywhere in New York at least?

100%. You definitely tailor. So, when I designed the dough, I had a lot of things in mind like this is a very vertical area. So we limit the amount of blocks we go because by the time you take an elevator up and that guy comes back, this is 30 minutes, you know, like he's gone, right? So that's why as owners, the collective three of us, you could see us running around Midtown East like in carts and cars and U-Hauls and like we're all pitching in to kind of make this all happen.

But what about in terms of the actual menu, like the pizza flavors and design?

Yeah. I mean, yeah, we we avoid specific items that don't hold up well in a box or lose their heat. And, you know, it limits like you don't want to do fish, right? You never do you never see fish on pizza, right? It's rare.

My dad always ordered anchovi pizza. It was disgusting.

Yeah. It's usually the cured stuff, not like, you know, you're not going to get like sea bass on there.

Seabbass ceviche pizza.

Yeah.

Someone will do that. You know, they will.

I'm sure they will. Let's, we talked about this sort of upfront capital cost. Let's try to work the math in the other direction. Like I buy a slice of pizza or I buy 10 slices of pizza. How much of what I'm paying for is the labor that went into it. How much is it the raw ingredient? And how much is it your upfront capital outlay and the profit you need to make on your risk? Like talk to me about like how you're getting paid back for all these things. What's the math there?

So historically it's been 30 30 3010, right? Okay. So 30 fixed costs, 30 labor, 30 food costs, and then 10% profit, right? That's like normal for New York. If you're outside of New York, your profit gets a little bit higher, but you're also not doing as much volume. So you can get like,

you know, I mean, Shake Shack's numbers, if if you look at like 17% profit margin for them. You know, they're bigger, they can extract more value out of things, get better pricing. But in New York City, it's a little more cutthroat and you might even get 5% profit margins or no percent profit at all and you go out of business, right?

Are there items on a pizza restaurant menu or options that are particularly high margin? Like, you know, there's some X on this, but you really make your money on Y.

Oh, yeah. You could have what's called loss leaders, right? Like you have things that attract you to the place like you know stakes have a 50% margin, right? And when I said the 30 3010, by the way, it's changed in the last decade. Now your labor cost is 45%. You know, your food costs are where you're trying to save a little bit more money by getting creative with the menu items. And then your fixed cost, you know, you're trying to limit those as well. But the variables have been through the roof, right? Like the insurance has gone crazy.

Yeah. And just in terms of Yeah. The one thing that does attract most people to pizza restaurants is in general, your food cost is pretty good. Like you'll get if you're like really humming you'll you'll get it like close to 20% which is you know most restaurants like our Oxford Cafe and similar QSRS like that you're at the 30 to 35. So your food cost is the great component. It's now in New York 10% was the rule of thumb on rent. Everyone is now you know in the 15 to 17% range. So there's all these different changes and you know what you knew about you know your cost structures and you're just searching for new sales any way you can and you know you're trying to keep the walk-ins growing but yeah it's just managing it there's so many different expenses to manage but yeah there's just been a huge change since co

well this is something that keeps coming up increased costs in the restaurant business what levers do you have to pull what levers are available to you to try to keep those costs down because it seems like you You need to hire people. Presumably, you need to hire them at a competitive rate. You have a, you know, a premium pizza product, so you don't want to sacrifice quality. Insurance, I'm guessing, is not that negotiable. Like, what can you do?

It's just grow, grow, grow. You know, that's all all you can do. I mean, recently, I've I've taken on from all my businesses cold calling. You know, I've been looking at, you know, I I'll look at directories of buildings. I'm finding the company names, finding the phone numbers, and I'm just calling companies. And it's honestly, I've we've already netted like 10 to 15 new catering orders. So, you just have to keep growing. That's just that's just what it is. Cuz yeah, in terms of food costs, that's a good question. You also need to keep your purveyors honest. You need to have a book of other purveyors to constantly check pricing cuz yeah, we even, you know, I've been in our restaurants, the Oxford Cafe and the Mill. I mean, we had purveyors that had been serving us for 20 years and we kind of stopped checking and all of a sudden you realize even even people who are loyal to you are jacking up little prices here and there. So, you need to constantly be checking your invoices and doing your due diligence cuz it's on you to make sure nothing slides by you.

The other thing I'd add, one of the challenges on sort of the the vendors and purveyor side is that you've also seen a lot of concentration occur over the last like 10 to 20 years. So it so it's also a challenge to kind of be able to kind of price and and check with different suppliers and things like that. And one of the interesting things that happened with the pandemic though is that because everything became so expensive, you did start seeing a lot of jobbers basically people kind of pulling up in the back of the truck, you know, kind of bringing different products and things like that and often able to kind of undercut the pricing a little bit. But in general the especially on the supply side there is a lot of concentration there economically because just the nature of the business now and and the regulations and things like that there's just a lot of economic pressure that results in this concentration.

Do you use a lot of third-party services or like outsource certain things to middlemen because this again has come up in a previous conversation the idea that you're spending more on just the middle guy to get things done.

Okay. So yeah, in terms of yeah, obviously the big one I know is the all the third party delivery services. You know, that's one of those you have to make them work for you. Unfortunately, in this past week, they had capped third party fees at 5% after the pandemic to help out restaurants, but starting August 1st, those rates are coming back up to 20%. So you'll be at 20% on that, 4% on the transaction fee, and then if you're using the third party services, Caviar, GrubHub, etc. for deliveries, they charge another 10 to 15%.

Wow.

So I look at the prices I charge on my restaurants on my third party sites. We're 15% higher than our in-house pricing often

because you need it to manage that expense. But I can't even imagine where it's going to go again August 1st cuz people's prices are already crazy. And yeah, you need to make it work. And with the pizzeria, we always felt we at least take our deliveries ourself. We find, you know, with pizza, you want like really good control of that. Someone who doesn't work at your restaurant, they're just looking at that as a tip for themselves. So, you want to make sure your pizza's being delivered correctly. But yeah, that that's one of the hardest costs to manage cuz with deliveries, you obviously paper plastic goods, you know, everything that's going out, the cost just go crazy. And yeah, now if they're going to be charging 15% more again, you know, it really adds up. So that's one thing we've been discussing actually this whole week is how how much are we going to have to increase prices to like deal with that you know that shock again

to just add to what Evan saying. So, in recent years, like the last 2 years or so, venture capital has really stopped subsidizing these third party, you know, websites and they're no longer offering these heavy discounts and like they basically bought the market, right? They offered this free, you know, you can get it instantaneous lunch and then now we're actually going to rack up prices and like, you know, Uber specifically, they did this with the taxis. They put everybody out of business and then once they own the market, they're like, "All right, you know what? We're going to take our actual cut."

Yeah. I mean, they they are like really parasitic uh entities. I I they've just disrupted Sure. It sounds like you've thought about this before. I mean I mean they've really really disrupted the food industry and one of the elements that I feel like you know future historians when they're looking back on this time and really thinking about kind of the American and you know what's like the the defining aspect of the of the American and it's like you know they want convenience and these companies are trying to fulfill that but operating in such a parasitic manner that they just really really harm put themselves in between you and your customer you know the restaurant, their customer, and just basically absorb all the uh the upside there.

And in the process, they're basically just decimating, you know, this industry. And

you're also seeing in the way they're responding where, you know, now they're trying to go fully vertical, right? They're like opening up these ghost kitchens where they have all these weird brands and

the stupidest restaurant name.

Yeah. I mean, just like all the Yeah. It's just like the most ridiculous restaurant names and they're attempting to cultivate this like faux, you know, ital like local Italian deli and and it's just ridiculous. And

but you know, because they have so much capital behind them, they're able to kind of

manage through these concentrated apps like the access, you know, they're able to do that. I don't know how successful they'll be, but it's really harmful. They're asocial. They're really hurting kind of third spaces and where people used to come together. And it's very odd.

So in light of all of these gigantic companies parasitically extracting value and disrupting community, how are we feeling about socialism these days? which I only ask obviously because we're in, you know, we uh we may have a socialist mayor in a few months.

Yeah. I mean, nominally socialist. I feel like um

Well, it's interesting because I imagine you guys love making money and you're entrepreneurs. On the other hand, part of his campaign

was actually spotlighting small business and bodeas and deli, etc. So, I'm curious how you're thinking about like

Wait, wait, wait. Are you worried there's going to be cityowned? Well, you know, Zoram Mani ran an incredible campaign, so energetic. And

the one thing we always talk about is that everybody has a point, right? You know, cost living issues are are real. It's it's hard and daily life has become much more of a grind than it was before the pandemic, right? So, you know, I think he was addressing, you know, real concerns from people and, you know,

Yeah. but what are you worried about? You know the one thing I'll you know we were talking about this on the way over you know if you had not visited New York in two years and you know you came back two years later now you know the first thing you would say is the city's a lot cleaner and is actually more fun seems more functional and you know there's a lot less crime and kind of disorder.

Do you notice it? Because I was going to say I know the stats are good but I can't tell like how much am I being influenced by the fact that I read the news and the stats are very good these days but you absolutely notice it.

I I I think absolutely. I mean, do you

someone who like cuz we're I'm commuting all day between the restaurants. I mean, from like 2020 to today, it's like I go on the subway seven, eight times a day, walk around the streets, like it is very noticeable. I know obviously there's a lot of like there was a lot of trashing New York, you know, during COVID and the election cycles and all that, but yeah, it's definitely not at that level that it was, but I do understand, yeah, when you can pay for eggs or milk and stuff like that, I do understand why people are going in that direction, but it also the policies need to be sensible cuz we already have a crazy budget in the city and we, you know, if you keep adding more and more debt, you know, I just don't see how you can pay for all these things he's saying

without hurting us down the road, right?

The overregulation is the biggest the biggest problem for restaurants moving forward.

And I did see, you know, he had he had great campaign points. There was this really stunning video on how he wanted to appoint a small business ZAR, which I thought would really eloquently describe like the the plight that the mom and pop is currently facing, right? Like if you're Chipotle, you got like 10 guys that can handle regulation and they can just deal with all that stuff. But like me, Evan, and Alex, we're like just literally trying to just get you food, you know?

Yeah. I I think the other thing I would say is like, you know, if if you look at his campaign proposals, let's say housing and things like that,

you know, it's very much kind of trying to manage like a lot of existing programs that you know, from the Adams administration, city of Yes. and different like regulatory making it easier to permitting things like that.

It's not like, you know, he's proposing building a million housing units via Nicha. Do do you know what I mean? Like that's why I find like a lot of the conversation about him to be very strange because

hyperbolic.

Yeah. It's hyperbolic, but also his proposals really aren't, you know, you call him a socialist and he calls himself a socialist, but his proposals are are much more kind of like in line with what's kind of the progressive neoliberal paradigm that we've had over the last six years. You know, for example, like, you know, he talks about rent control and things like that. You know, a lot of that was enacted via Cuomo in 2019, right?

There's never been a real honest debate. Have those reforms that were enacted 2019, have they worked? And clearly, you know, based on this campaign, they haven't. So, what works, what doesn't work, you know, and I I also don't think I don't see a lot of foreign journalists coming to New York and saying, "Wow, this regulatory regime is something we need to we need to bring this to, you know, Tokyo. We need to bring this Vienna." Yeah. Read Vienna. Like, you know, nobody says that. No, you know, so that's kind of

I feel like sometimes we're not honest and you know, often times also like the debate about Evan mentioned the city budgets like $120 billion. It's massive, right? You know, so when somebody talks about austerity budgets, it always rings hollow to me because, you know, you you're spending a lot of money. It's nearly $40,000 per student for the NYC DOE, but it's not really delivering results. So what does that mean? Like is it more we're not spending enough? Is it, you know, we're not effective in governance? Like I think those are the more interesting questions that sometimes, you know, people don't want to discuss because those are hard questions.

Pizza and politics. I like this combination.

Be a good uh someone's got to be doing that already. But if not, it could be a recurring theme for us.

Well, talk a little bit more about the regulatory choke points. It's like give us a sense cuz if I think about regulation of New York restaurants like okay when you're opening I'm sure there are a lot of hoops to jump through but then after that the only thing I can really think of is the uh the health letter that goes up on the window and frankly like I see a lot of nonas around so it seems in my mind like maybe this isn't a big deal if you can continue to operate without getting an A. I mean the one I want to bring up is earlier talking about why we went electric.

If you try to get a new gas service into a restaurant, your restaurant may never wake up. I mean wake up may never open.

With the Coned process just for gas, it is actually funny story. I currently in my apartment our gas line cracked in January and we might not get it back to the following January or February. So that's just one where if you're trying to open up a restaurant, like you might just be sitting there calling Connet every day just begging for them to let your restaurant operate so you can make your investment back. So that's just one. But yeah, there's just a lot of constant, you know, at one point they put a regulation for you can't keep your doors open so air conditioning and flow out. You know, obviously the paper straw thing was a big one. So there's constant little annoyances that they just try to put into your business and it's like just

why are people straws still a thing? Trump won. I thought like wait I thought why did we get rid of that for real like how are they I still get them from time to time like who's asking for this

I couldn't agree more it's just like it's just these little things that we try to constantly do and it's just a headache for us like you know with the garbage it's like obviously I'm very happy Mayor Adams you know tackled that's been a huge issue for this city

do you perceive uh progress on that like when you look at the trash and also the rat situation in New York which he touts his war on rats a lot do you perceive are you able to see progress claims to be a single issue voter on rats. I'm not sure it's true.

Pizza rats.

No. Do you notice the kind of stuff?

I mean, I think it's just very good to just containerize garbage, you know, especially So, I was just in Europe and Portugal and they have these beautiful garbage cans where they it's a shoot underground, then they come and get it. Like, I would love to just stop seeing garbage bags everywhere, you know, and it's, you know, we just need to clean up the streets a little bit, right? So, it's good.

Yeah. I also want to add to that because um when COVID happened, they basically opened up the regulation for every three-letter agency. So, while you're seeing a lot more of the grade pending signs from the health department, I mean, I'm more concerned about the fire department and the department of transportation because the way that they tackled the outdoor dining has been ridiculous. There's a hundred new steps to doing outdoor dining whereas I used to just have to fill out a form, send in a check and it get renewed every year. Now I have 11 pending tickets from the Department of Transportation for various reasons.

That's a shame. I'm a big fan of outdoor dining and I wish there was more of it in New York despite the rat problem. Jerry, in terms of additional pressures on the business, there's another one we should probably talk about. Again, situation is kind of in flux. We're recording this on July 8th, but tariffs, right? I assume as a pizza place, maybe you're importing uh some tomatoes from Italy or I don't know, fancy flour from France, which I know is a thing. Is that expected to impact your business at all?

One area where it definitely has impacted is just paper and plastic. Um, a lot of paper and plastic materials that go into kind of branding and things like that do come from abroad. It's just become more expensive in the US to produce those types of things. So, you know, you're importing a lot of different products. The bulls that you see at at different spots come from, you know, Vietnam or China or some other areas and uh, you know, the pulp bulls. And so, that's one area where clearly, you know, for a lot of restaurants, they are impacted. You know, obviously there's, you know, it's been kind of a ridiculous couple of months with the the back and forth, but that's definitely an area where I think a lot of restaurant operators are concerned and will actually ultimately be impacted by it.

So, it it is a global supply chain and like here's an example, right? Like what do you associate the food product of Switzerland to be?

Cheese.

Cheese. Okay. Chocolate. How many miles you think is the local cocoa bean from Switzerland?

A lot.

A lot. Yeah.

Yeah. Like 1,200 miles.

But cheese is local.

Cheese is local. Yeah.

How would you assess the sort of current cyclical state of the New York City economy? People, I don't think have like ever been more divided and confused about just the trajectory of whether we're talking about the national economy or anything else. You could have people pointing to signs like, "Look, things are booming right now." And other people will have very compelling arguments like things are slowing down, Fed's got to cut and stuff. Like right now, July 8th, how are things feeling?

I mean I I could start. I know we all have opinions on it. I mean just back to why we started this business. We always believed New York would come back. You know obviously we took a huge risk uh in the middle of co and you know right now we are seeing it's always good and bad signs right. Obviously we just came out of the big holiday cycle you know between Memorial Day Junth and 4th of July and you know we are seeing more catering which is great. Obviously in an area like Midtown East it's very nice to see the foot traffic you know Monday through Thursday back again. So that's, you know, we're feeling very optimistic entering this.

Fridays are gone for good, huh?

That, so that was one thing we didn't bring up earlier. You know, one of the big issues trying to manage your expenses is that Friday, at least in New York, you know, I don't know about other cities or in the suburbs, but

losing that Friday, you know, that Friday we're, you know, you're

people probably don't eat more lunch on Monday through Thursday to compensate for the fact that they're not ordering up.

Exactly. Like when you're doing your basic, you know, modeling for your restaurant, losing one whole week day a week, right? It adds up. But I will say we are feeling way better entering this fall than the previous years. You know, just we've had a couple months where it's like, wow, this is, you know, we had two months that were up 25% at Zenos from last year, which is fantastic. So, feeling good on that end, but you know, we're always on edge, right? It's like we don't know what's going to happen with certain expenses and we're going to keep pushing. But, yeah.

So, yeah, to speak to that, the wealth effect, right? people can avoid coming into to Manhattan on Friday, but also during the summer when you have a Labor Day, Memorial Day, you know, the three big holidays, they're gone the week before and the week after. So, you're essentially New York City is turning into a little bit of a ghost town.

Well, because they're really rich these days cuz the stock market, so they're taking longer vacations around holidays. Is that what you're saying?

It's It's all the points.

They're buying pizza in the Hamptons.

Exactly.

That these are becoming longer holidays than they used to.

That's really interesting.

You can see it in the sales. Wow.

Yeah. I think I I think that's kind of part of the problem where before the pandemic, a lot of these being in the restaurant industry, it was very predictable. You kind of had like a sense of where each week would be and how to manage, you know, that was just kind of like second nature. And now with kind of remote work and, you know, how people approach work as well. You know, it's it's a much bigger challenge to kind of manage the business and predicting and you know, being able to kind of steady sales on the city as a whole. Well, it's it's kind of interesting like Midtown East, the Plaza District, as Manhattan was moving upwards and north, you know, what made that area that area was the transportation network, right? It's like a nexus of transportation. You have Grand Central, all the subway lines crossing there, and it's a real crossing of the whole tri-state area. East Side Access obviously was the big project that brought LIRR into Grand Central. Hopefully, they figure out how to actually like properly utilize that. But, you know, and that's kind of why we're bullish longterm on that specific part of the city. It's, you know, it draws people from all over the region and ultimately that's what's going to allow it to thrive again and, you know, replicate kind of the uh where it was pre- pandemic.

If you were opening Zenos again or if you could go back in time and and do it over, is there anything you'd do differently?

Well, that's a that's a heavy one. Yeah. I mean back to your yeah the question earlier it's like when you're picking the location you know you're looking for office clients tourists locals and you know you're trying to balance all those things obviously and then against the cost of the rent we obviously found a you know area where did not have a lot of competition we felt was going to give us a chance to

and you just found that by typing pizza in Google maps and zooming out looking for lack of red dots that's crazy when you're looking you need to yeah you need to check what's what's around you and we like the space. It, you know, obviously was a great space over there and we knew the area, but for example, one thing we've lost in this area is tourists because uh four or five of like the big hotels in the area have shut down since co

so obviously looking back you can't predict that and I do think if we had another chance it's like I mean we love this space but like maybe do you need to like go find an area that's a little bit more touristy but like how how can you predict that? And then the one thing we were discussing which is interesting is obviously pizza and bars usually go together, right? But you are seeing people are drinking less now. So are those areas not as good as you know they used to be? I don't know.

Evan, Alex, and James, that was fantastic. That was the conversation I hope to have. I I didn't even know we were going to get pizza out of it, but that was a lot of fun. We learned a lot. And uh thank you all so much for coming on Outlaws.

Thank you. Thanks for having us. Great.

Thanks for having us.

Shout out Chris Hatch, by the way. Oh yeah, Chris Hatch, by the way, who uh we've had on the podcast a couple of times. He introduced me to James and then I also met Alex by going to the Oxford Cafe. So, all coming together here. Thank you guys so much.

Thank you.

Thanks so much.

Tracy, I actually my stomach does not feel that bad. I did not know that about like oh you ferment for a long time and then eat the gluten and then you don't feel as heavy. I didn't know I didn't know anything about that.

I didn't know that either. Although I have to confess the whole lunchtime heaviness thing is I have never had that problem. I never understood it.

Do you think I have a gluten I'd be so embarrassed like I I don't want to I don't want to judge people who like I've always like what if I'm one of those gluten people.

Well,

oh I have a gluten.

Well, maybe you'll feel better if you actually take it into account. But that was really

fine. I have empathy now upon realizing that I'm one of those gluten people.

All right. Well, okay. So, we talked about pizza and politics,

Sicilian with a side of socialism.

Yeah.

Marinara and the macroeconomy.

Were you writing all these down?

Yes, I was actually.

I love your fidiousness about dropping puns and alliteration whenever you get whenever you get an whenever you get a opportunity. But no, I did think that was uh really fun. And I like entrepreneurs. They're optimistic. They have to be, don't they?

That's right. I am thinking about like a couple themes that keep coming across in these couple of episodes we've done on the sort of restaurant or wholesale food business. Yeah. And that's the idea of a lot of the cost increases coming from that sort of middle layer of third-party services. Whether it's because you have to outsource something like distribution or it's because you have to use something like an app, a food delivery app that charges an enormous amount of money to both the customer and the restaurant apparently. I feel like I need to impress this on people who are not in New York. The food app charges in New York. By the way, I never get I actually start I'm real oldfashioned. I walk to the store and pick up my food after ordering it online.

That's Lindy.

Yeah,

it is Lindy. Yeah. No, it's insane. It's It's completely insane.

All right. Well, we could probably talk about pizza for a long time.

But we have more pizza in the control room right now. So, rather than continuing to talk about it, I want another slice.

All right. Shall we leave it there?

Let's leave it there.

This has been another episode of the Odd Lots podcast. I'm Tracy Aloway. You can follow me at Tracee Alaway.

And I'm Jill Weisenthal. You can follow me at the stallwork. Go check out their restaurants. Um, Alex and Evan and James. They all have uh, Xenos. And also, I swear I I kind of want to do the Oxford Cafe on I guess 60th Street is the best chopped salad in the We could at one point I wanted to do an episode on their chopped salad because it's it's its own great logistic story. So, go check out the Oxford Cafe if you're in the area. Follow James Shields on Twitter, James A. Shields. Follow our producers Carmen Rodriguez at Carmen Armen. Dash Bennett at Dashbot and Kalebrooks at Kalebrooks. For more OddLots content, go to bloomberg.com/odlots where we have a daily newsletter and all of our episodes and you can chat about all of these topics 24/7 in our Discord, discord.gg/odlotss.

And if you enjoy OddLots, if you like it when we talk about the business of carbs, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely adree. All you need to do is find the Bloomberg channel on Apple Podcast and follow the instructions there. Thanks for listening.