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Restaurateur Nick Kokonas on COVID-19 impact

Restaurateur Nick Kokonas spoke with Yahoo Finance about how the restaurant industry is handling the coronavirus pandemic.

Video Transcript

JEN ROGERS: Nick, we've talked to a lot of restaurateurs, and I want to start with the restaurant business right now. We had a number of chefs on from people that worked with Jose Andres, also David Burke, you know, a slew of them. And I have to say, it's kind of depressing every time they come on.

NICK KOKONAS: OK. We'll try to be positive.

JEN ROGERS: So can you help us out? How-- first of all, do you think you're going to reopen all of your restaurants, and when do you think that's going to happen?


NICK KOKONAS: Well in some respects, it happened three days after we were mandated to shut in place. So we closed for three days only before we started doing a very active carry out program at Alinea, and Next, and Roister. And then Aviary, our bar lounge concept, does the carry out cocktails and cocktail packaging on top of that. So by mid-March, we were doing 500 or 600 meals a night.

Now, some on the weekends, we're doing 2,000 or 3,000 a night. And it's not just about redeploying all of our staff, which we did as of May 1, it's also about bringing some emotional connection to our communities, some joy back to life, some surprise to families on special occasions. So we're doing that. I think what you meant by your question though is will we "reopen" reopen so you can go sit down at one of our restaurants.

JEN ROGERS: For real, yeah.

NICK KOKONAS: For real, and the answer is, who knows? We will. We will certainly make a try of it. We want to do so when it's safe for our employees and for our customers. We want to follow the guidance of our city officials and state officials, but we also want to do it in a way that makes sense for people to come back and really enjoy the experience. In the meantime, we're doing enough of a carry out business to sustain ourselves and our employees and to feed a lot of people too.

JEN ROGERS: What about the restaurant industry overall? I mean, you're very successful, you have popular restaurants, so maybe this has been, you know, you have a committed following. But it's still-- you're part of a broader community, and you're in Chicago.

NICK KOKONAS: Oh, for sure.

JEN ROGERS: Are you worried about more of the mom and pop places having trouble reopening again, or do you think that, you know, in a year or so, everybody will be able to get back and will look at this in the rearview mirror?

NICK KOKONAS: I think it's about building a bridge to that, and it's incredibly individual. I spoke to a restaurant this morning in rural England that is a pub that's the epitome of a mom and pop, and they've done very, very well with carry out. In other places, it's much more difficult, so it is really a case by case basis. There is no real precedent for an entire industry going to zero so quickly, and so, you know, the Independent Restaurant Coalition came together to try to put some best practices around the kind of aid that can be given to restaurants.

But at the end of the day, like if this last 12 months, 18 months as we think it may or if it might cycle so that you open and then have to close again, that's going to be tough on any operator whether they're huge or small. And it's really, some of the nimble small mom and pops are actually faster at getting going than some of the mid tier chains and larger restaurant groups, just because there's different considerations there. So it's case by case basis. It's really hard. It's hard for us. It's hard for everybody.

But at the same time, as we start to reopen, I think, you know, the people who open these places are entrepreneurs. Every one of them. And so consequently, the cornerstone of that is that you figure out a way to do something, and I am very confident that as people have wrapped their heads around, hey, this is a longer term problem than being closed for two weeks, or four weeks, or eight weeks, they'll start to come up with solutions to these problems.

AKIKO FUJITA: Nick, I know you're joining us to talk about Tock, but I'm curious, you know, when we talk so much about what restaurants are doing to try and survive right now, we talk about delivery, and yet, I'm just thinking about sort of fine dining, and I know that's not a big chunk of the restaurants out there, but I'm curious what restaurants you think are actually going to survive? Are our habits in terms of going out and eating, is that going to change and are we really not looking for that kind of dining experience that maybe we had pre-COVID?

NICK KOKONAS: Well, you know, are you talking about six weeks from now, or six months from now, or six years from now?

AKIKO FUJITA: Six months from now.

NICK KOKONAS: Yeah, I mean, it's really, really hard to tell, right? But I do know is that I like to look towards history. And so I looked at pictures from the 1919 pandemic, and then I looked at 1922, and people were partying their brains out in the roaring '20s. For individual business owners, it's about finding that bridge. How do I stay sustainable for myself and my employees between this moment and whenever that comes? Whether that be through, you know, a treatment or a vaccine.

We don't know yet. And so for me, I think what we're trying to do is look four weeks out. I just had a call before this looking, you know, to August and what would staffing look like if we had 25% occupancy or 50% occupancy and our carry out operation goes down. So I don't know what kind of operations will exist other than what I do know is that the resilient and adaptive ones will be the ones that people will feel comfortable going to I think.

MYLES UDLAND: And I guess, Nick, maybe a broader question just in terms of these conversations. I hear from you that there's a lot more optimism or at least people are like thinking about, OK, let's be practical. Let's work through what we can do. Is that a big change from, you know, maybe like the abject like wow, this is all coming to an end. The end of the world feel that I know that I had sitting here New York City six weeks ago, I feel a little bit better now. Is that kind of where your peers are at in your conversations?

NICK KOKONAS: I think so. I think that it also is very different in different places. In Seattle, the Catalyst brothers are up and running in two days. In places where we have these little tin boxes called automobiles, things tend to be a lot easier. Like generally not as good, we want more people on bicycles and sustainable transportation and whatnot, but New York City is a particularly tough spot, because even the employees can't get to work, because they generally don't have cars or they live quite far away from the restaurants. So if you live in Brooklyn, you have to get to the Upper West Side, that's a different kind of employee situation than we have here in Chicago, or Seattle, or Cleveland.

So I think, though, that people have moved from that moment of inaction to proactive, you know, safely trying to figure out what to do, what's conceivable, what's optimal, and it's different city by city, state by state. It's different restaurant by restaurant, but everyone I talk to now is doing something. And you may do it and fail 10 times, but at least they're doing it and they're trying to get [AUDIO OUT] restaurants tomorrow in Chicago. We probably wouldn't, but again, that's an individual decision based on that particular kind of restaurant.

JEN ROGERS: Nick, let's talk about Tock. So this actually started in late 2014. You power reservations, and table management, carry out operations for some 3,000 restaurants right now. And you've done a $10 million fundraising last week, so you're still very active right now. We're all in this time when we're getting food delivery and carry out is really important. Talk to us about what's happening with Tock, because-- and specifically like onboarding of restaurants. We've been hearing from so many restaurants just about how much money the delivery services are taking, and we're seeing consolidation possibly coming there with Uber and DoorDash. Are restaurants coming to you in bigger numbers right now than you've seen in the past?

NICK KOKONAS: Well you know, eight weeks ago, 12 weeks ago, we didn't do any carry out. We left that to all of the third party delivery folks, and we did business intelligence and reservations as a platform for restaurants in 28 countries. When we saw this coming, we very quickly adapted our data structures, and our kitchen pacing, and the advanced hospitality features we had to do an elevated style of carry out, because we knew that this would be a lifeline for many restaurants. Since then, we've onboarded over 1,200 restaurants in five weeks. We have a staff of 100 people. When I say they're working 24 hours a day, we all look like this.


It's not good. We are working 24 hours a day to help restaurants literally all around the world. We have clients in Germany and Australia. But every day, over 120 new restaurants, wineries, pop-ups, food trucks. We're starting to talk to retailers about doing reservations for shopping. And it's really all about this concept that timeslot management is critical, and it's been critical for the restaurant industry in ways that they perhaps didn't understand 10 years ago, and now it's more critical than ever. And so we charge a flat 3%, and it's incredibly more economical than the third party delivery apps.

JEN ROGERS: And talking about those economics, cities like San Francisco are starting to get involved and see if maybe they can cap those. I think people now as they want to save their local restaurant are realizing how expensive these are, but can you stop the Google's or the DoorDash's from going and, you know, scraping the information and setting stuff up? I mean, is this--

NICK KOKONAS: Yeah, I mean, look--

JEN ROGERS: Is it harder for you to plan?

NICK KOKONAS: I mean, a couple of weeks ago, Yelp scraped information on my restaurants, and it took me about three tweets to shut down their entire operation countrywide, because they were doing a terrible GoFundMe campaign. The answer is yes, you can stop that. And I'm actually against those caps. You know, if someone has a great service and wants to charge 30% of gross and a restaurant gets involvement in it, and they know what it is, and they feel like it's worth it, great. That's great. I don't think it should cost that much. We've built the service that we think is superior that only charges 3%, but I don't know that like there is a right amount to charge.

What I do know is that a lot of hidden fees, predatory sort of practices like, you know, scraping the data or creating fake phone numbers for restaurants. That's terrible. That should be regulated or at least as a as an industry, we should be on top of that. And that's really the ethos of why I started this. I didn't want to start a tech company in 2014. I felt like I had to, because my own restaurants were being taken advantage of in the same way.

JEN ROGERS: Nick Kokonos, it's always good to talk with you. Tock CEO--

NICK KOKONAS: Nice to see you.

JEN ROGERS: --so much more. Yeah, thanks so much.