march, 2020. >> states are shutting down restaurants. >> that's an industry sector that switched all. >> when you look at big moments like that, how do you face it? what do you do? >> it was so not in our play book. >> major d was telling people -- i know you're used to this, but that's a remarkable thing to have on a constant basis. people have been waiting for four hours. >> it was something i didn't have the strategy. we weren't able to go to work or order food. no food in the grocery stores. but my chicken farmer saying now his business is wiped out and big box stores are frantically trying to make deals with these guys. >> by the end of march, 2020, financial losses and employee burnout had taken a toll. >> introduce yourselves. >> did you close? >> we never closed. which in retrospect probably would have been the smarter move for everybody. >> because nobody knew what to do. >> nobody knew what to do. i think our business was already on a lot of ropes. my per view showed me we were running on very archaic system. >> in new york city, chef esther choi was equally shaken when the bottom fell out. >> we shut our doors. i had to quickly think of ways to recover. >> business had been booming at choi's korean hot spot mock bar in the city's meat packing neighborhood. we're here on a weekday at the chelsea market and the place is packed. always? >> always. can't wait to show you some tricks. >> yeah. i want to see some of my favorite dishes. >> so this is where our noodles are made. our rice bowls. we have a rice cooker here. all of these are kim chis, our topping for everything and our broth. this goes for 16 to 18 hours. >> oh my god. >> we were doing our all-time highest sales ever. i planned to open three more shops. we were ecstatic. business was booming. killing it. pandemic hits. within a week it drops to 50% of sales and almost 0. my heart sank. >> according to the national restaurant association, 110,000 restaurants closed by the end of 2020. many of them permanently. what about staffing? >> it was extremely difficult. i had my core team. when the pandemic hit, we were the ones working. we cooked every single day. we were the ones running everything with no hourly staff. >> reporter: back in phoenix, the staffing shortage forced chris to cut the hours at his four restaurants. >> for me to write like, hey, we're closing early tonight or we're closed today, you know, because -- >> less days a week. >> doesn't make economic sense. we can't pay everybody. >> more than three decades of restaurant jobs were lost, around 6 million jobs. >> you had two locations, this one in brooklyn. we were used to only the retail model. then i realized we have to quickly change that to something more digital, more online. and so, we partnered up with a company called cook unity. and basically we were making meals that people can reheat at home. a subscription service where people order five to ten meals and it gets delivered. we were getting a check every single week. and it really helped us get through the pandemic. we had to change our entire business model to make that work. now we're doing over 15,000 meals a week on that platform today. >> what? >> it's now such a big part of my business. and what i realized is mok bar is not a restaurant, it's a brand. not only are we selling on cook unity, selling meals to gold belly, so that's how i revisited the whole model of the business. so chef, can you grab the noodles? and do you want to give that a little mix. ♪ >> choi was able to reopen mok bar after two months, but it's not the restaurant it was before the pandemic. you don't have counter seats here anymore. >> after the pandemic, i decided we're just going to do quick service and our sales have gone up. >> what do you pickle those? >> so i sauce and rice vinegar. do you ever think about having a full service restaurant? >> it is my dream to one day do that. i have over 100 employees. right now the focus is making sure everyone's mouths are fed. >> chef bianco struggled with the changing times. >> what are we going to do? stay home, you're still hungry. we're doing sauce packets, we are takeout only now. that's all we could do. it was busy. i think busy is such not the barometer for wellness. >> check out the dining room. >> with this restaurant operating at half capacity, bianco had no choice but to pivot. he focussed on other parts of his business. >> local durham. if you can create things that have some stability in your life, like luckily i have a tomato business. >> talk to me about that? >> yeah. >> how old is that? >> 12 years. this is our little dining room. some paintings of my dad up on the wall. >> that's cool. i love that. >> then he took a huge risk. >> we opened up the middle of los angeles in the pandemic. we have good people and use good things. pretty simple stuff. >> i have to eat a pizza before i go. >> yeah, man. come on. let's go. >> all right. ♪ how has it been in l.a.? >> it's about six years old. it's brand new. but when you take three years out for the pandemic. people show up everyday. it's crazy because the middle of the pandemic, when i say, oh, we'll do something downtown l.a. anybody that's smart, that's the stupid as when you opened downtown phoenix. >> you picked a challenge. >> i do. but good restaurants go anywhere. >> they'll find you. >> yeah, totally. ♪ what's the story here? garlic. >> this is the story. i don't tell nobody but now they know. we don't charge any extra for it, but you can do half and half. half rosa and half marinara. that's nice. >> he says he's uncertain about the future, but that's the business. >> i think we're adjusting to it still. >> you think the business is more challenging post pandemic than it was prior to the pandemic? >> we're more aware of it now. >> thank you. we appreciate it. thanks. >> what's your future? >> my future is presumptuous. i prepare myself for tomorrow everyday. i start duct taping the yesterdays together. when we come back -- >> people across the country have reached out. what are you doing? how did you do that? ♪ that's why they choose t-mobile for business. mlb partners with t-mobile to not only enhance the fan experience, but to advance how the game is played. aaa relies on t-mobile's network to stay connected nationwide, so they can help get their members back on the road. and we're helping pano ai innovate, to stop the spread of wildfires. now's the time to see what america's largest 5g network can do for your business. (jack) we're standing up for our right to be lazy. (jan) by sitting down. (ronald) and reclining back (lyn) we work full-time and parent full-time. (lyn's husband) we will be reclined until further notice. (andi) it's our right to let the dishes soak overnight. (rob) and to mow the lawn... tomorrow-ish. (ben) we proudly declare that yes, we are still watching that. (ariel) and no, we won't be cooking tonight. (damon) we, the lazy, are taking back lazy... (doreen) ...by getting comfy on our la-z-boy furniture. (vo) la-z-boy. long live the lazy. my cpa told me i wouldn't qualify for the erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies. all right. how you guys doing? >> hi. >> how are you? it's a tuesday afternoon. and acclaimed russian-inspired restaurant in portland, oregon. before the dinner rush, the staff gathers in one of the dining rooms. >> so this is quarter one, first three months of 2023 we're looking at. >> but they're not going over the dinner specials. >> what's really meaningful, when you look at the percentage of sales comparative to last year, that's a huge jump. >> they're in a meeting with owners bonnie and israel morales who are discussing the restaurant's finances. >> yeah, uh-huh. >> one of the things that you guys do that i haven't really seen a lot of is that you share your p & l statements, profit and loss statements with your employees. why? >> when you're faced with something really catastrophic and it turns your whole house upside down, you can't go back to old practices sometimes. you can't really put the house back together. >> we retained i think eight employees and had to terminate -- >> 48. >> 48 others. >> as staff shortages escalated during the pandemic, the husband and wife team re-imagined their business model to address employee inequity. >> we were looking at the humanity of what we're doing and what our employees are facing. >> they all lived with each other. the dining room managers and the general managers are making less than the server and bartenders. when you go back and re-enter this atmosphere again, you realize, we have an opportunity to change things. >> in 2022, the morales' did away with tips instead charging a service fee. a they added health insurance and a profit sharing program. three times a year they open their books to the staff. >> we're looking at all the sources of the sales and how we break them up. >> we want to make sure there's that transparency. there's no way that there is -- that we're walking away benefitting from this change. >> main courses are here. this is your rabbit and clay pot. >> so you guys charge 22% service charge. how do you utilize it? you use it to pay your employees? >> we have a fixed starting wage. our lowest hourly rate is $25 an hour. >> no matter where you work in the restaurant. >> no matter where you work in the restaurant. and it goes up from there. and we use the 22% service fee to help offset those costs. because our total labor costs are far more than the 22% service fees. >> right. i've been in this business for a long time. i mean, you have occupancy costs. you have labor costs. and you have cost of goods. >> goods, uh-huh. >> those are the three big buckets. but, basically what you're saying is you probably have a 20 to 25% short fall when it gets right down to it and you need the consumer to pay for the short fall because that's just the way the business is. is that fair? >> that's absolutely fair. another way to think about it is places that rely on tips are basically just subsidizing the wages. just like you're saying, there are just buckets of money coming in, money going out. and you can rearrange it any way you want. >> in some ways you are asking the customer to subsidize. >> so we could say let's just fold it in. >> i'm going to ask you the obvious question which i'm sure some of your customers asked you. why don't you raise the prices? >> that's because since we are an outlier, people at the end of the day, people price shop. and -- >> you think perception. >> oh, yeah, absolutely. it's all about optics. ♪ >> any pushback from your customers about this? >> so minimal it's not even worth counting. honestly, it's positive. >> for even more clarity, the owners include a link on their menu that provides guests with more information about their new business model. >> obviously there's two sides of the coin. some customers think that they should not be charging this service charge. some other restaurants say it's 22% because otherwise i'm going to close and also please tip. so it's -- >> right. >> it runs all over the place. so the bottom line is there's probably no definitive right way to do this. and i believe, this is just my personal opinion, is that we are literally a half a generation away from people paying what restaurants need to cost. somebody who is 16 or 17 and hasn't started paying their own prices yet, i believe when they get to the age of when they're going to start paying their own bills, the sticker shock is not going to be sticker shock. it's going to be the norm. but we have to get to that point. >> right, absolutely. >> everything costs so much more, you want to stay in business. you want your employees to do well. and also you like to make a living yourself. basically, the restaurant business, as we know it, is fractured in many ways. that's unfortunate. >> yeah. and the thing is that if places like ours don't do this, we are going to see a huge regression in the kind of food that we're able to provide for people. ♪ >> is this working for you guys from a financial standpoint? >> yeah. we're doing it more than a year. we have felt really great about how this is. we're still profitable. >> hi there, welcome. >> we're still busy. >> you folks have everything you need? >> are your employees happy? >> we have great retention. ♪ >> hey, everybody. this is bobby. >> how are you guys doing? >> good. ♪ >> what are you making? >> herring under a fur coat? >> herring under a fur coat? >> i'm guessing you saw a lot of these every night. >> we have single handedly increased the herring consumption in portland by threefold. >> we do want to share more of the culture and the cuisine with people. >> it's so good. >> so we have the vodka that we just launched a few years ago. so we're trying to build that up. >> this is the place to be for some vod karks right? >> oh, yeah. we do pour a lot of vodka here. our most popular infusion -- you should taste this actually, is our horse radish vodka. >> oh, is this your own brand? >> this is our own brand. >> their both topped. so i would encourage you to mix that in, let it melt and create its own sauce. >> okay. >> we also sell our dumplings frozen for retail. >> really? ♪ >> yeah. we have a small but mighty little dumpling production space upstairs. so right now we're just in the portland metro area, but we're looking to expand that. >> is that since the pandemic? >> you have to find new revenue streams and you're thinking what else can we do? >> sure. >> this is all under the same business model and the same structure. so everyone who works at katcha in dumpling production or in vodka is all that same pay structure. >> when you see the p & l, you see how many bottles of vodka is sold. >> this isn't just lip service. we feel very passionate about. >> people across the country have reached out. what are you doing? how did you do that? how did you make that jump? >> you think this is just a natural evolution? >> i feel like this is a see change in the restaurant industry. >> hello. welcome back. >> we're just running a restaurant. coming up -- all of a sudden you guys have this demand that comes out of nowhere. what do you do? ♪ or more. that's why farmers new car replacement pays to replace it with a new one of the same make and model. get a whole lot of something with farmers policy perks. ♪ farmers mnemonic ♪ ♪ (upbeat music) ♪ ( ♪ ) ( ♪ ) ( ♪ ) -awww. -awww. -awww. -nope. 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>> we built a product called instant pay. that allowed restaurants to get paid out the next day rather than waiting a week, waiting a month. >> because they needed the funds immediately. >> because cash flow was super critical. let's go. let's do it. thanks. >> critical for the survival of their restaurant partners. this is the line to pick up. >> exactly. like this deli, a family-owned sandwich shop been a new jersey staple since the 1940s. taking away that commission rate, suddenly allows us to maintain our margins at a time when all of our other avenues, walk-in guests and things like that are shut off. we closed for 17 days initially. when we reopened, delivery only. it was a lifeline. >> how much more delivery or doordash business are you doing versus what you were doing prior? >> it's around double. >> yes. so it's continued? >> we had to do a small remodel to accommodate the number of orders were we getting on doordash. we needed more space so we took away some of the seating that guests had. >> set, guys? >> yes. thank you so much. >> got two. enjoy. thanks for stopping by. >> wow. these are heavy. ♪ >> good luck, you guys. >> go get 'em. so you're the chief marketing officer of doordash. but you still go on these runs sometimes? >> yeah. >> what is that about? >> that allows you to understand what's happening at the restaurant? wherever you might be picking up from. so this is part of our culture. ♪ >> it reminds me of one of the things my father said to me early on. he said if you want to be the boss, you have to know everybody's job. >> 100%. >> pick up. talk a little bit about how the dashers get paid. >> sure. >> i think that people are concerned about making sure they get their tips and that they're getting paid enough. how does that work? doordash and other third party apps faced years of scrutiny labor activists o. >> it's straight forward. we went on the dash today. the way it works, as a daesh, i opened the app. >> did you get a good tip? >> i did get a good tip. >> as a daesh, i open the app. i get an offer. there's an order. i choose whether to accept or decline based on what it's showing to me. the accept model tells me this is the minimum i'm going to make. that accounts for what doordash is going to pay. do i want this order, yes or no. i choose that order yes. a customer tips 100% of tips go to me. >> immediately? >> as a dasher. exactly. all that goes to my account. >> some cities enacted minimum pay stands for delivery drivers. in places where such laws aren't in place, doordash recently said drivers will now have the option to earn a pro rated hourly minimum rate in addition to tips. but doordash and others recently sued new york city other its minimum pay for delivery drivers. so the battle for fair pay for drivers continues. ♪ you were telling me before that you guys are up year over year over year even though the pandemic has subsided. >> correct. >> tons of people see that. they want to get in your business too. how you differentiate yourself? >> we try to do a good job of covering most of the country. so i think it's 90% of the country doordash is available. >> wow. that's a lot. >> which is nuts. we're more than half a million restaurants on the platform. >> despite the enormous growth of doordash and other food delivery giants, many investors are concerned about long-term profitable. doordash is still tweaking their business model. >> we're finding that more and more restaurants are really interested in building their own first party platform. we built a product called store front allows you to plug in play online ordering for your own website with 0 commission. >> i've been in the restaurant business for 30 years, longer. i started out as a line cook for years. you learn to adapt every ten seconds. >> the job is agility. >> didn't like rattle us. we were like, oh, okay. left no good, we have to go right. it's crazy. ♪ how have you seen restaurants change permanently? from the pandemic. >> today what we see, which is quite different than before, is that most restaurants understand that they need to have a digital solution. ♪ >> restaurants like chipotle, the popular fast casual chain, in 2020 their digital sales skyrocketed by 174% year over year. >> the big transition for us was that new customers started experiencing chipotle for the first time through the digital channel. team member knows, hey, i have some digital orders coming in. >> curt garner is the chief technology officer at chipotle. >> digital is about 20% of our sales coming into the pandemic. that rose to 80% of our sales during the pandemic. >> the brand's mobile app has driven digital sales. >> just selecting menu, we can go right to an entree. pick i'm going to drive through our chipotle. we just saw good news. your order is ready. >> the company built out drive-thru lanes, so-called chip lanes. exclusive for digital ordering. >> the traditional drive-thru experience you're in the lane for four to five minutes. the average window time in a chip lane is 15 seconds. >> i have an order for curt. >> chicken burrito, and small drink? >> i think the advantage that chipotle had going into the pandemic was really the super power of our dedicated digital kitchens. we were prepared for the volume. there we go. an order has just come through. >> and what's a digital kitchen without some ai? chipotle is testing out a robot dub that helps prepare their famous chips. >> talking to our restaurant teams, what's one of the areas they said could use the most help. we're really excited about where we are right now. ahead -- >> this is not the food that i think of when i think about louisville cuisine. switching things up in derby city. ♪ h anniversary. so come on in. even if it's your birthday, too. available for a limited time only at ihop. download the app and start earning free food. you're watching football wrong! what do you call a guy in face paint that can't get the game? ...a clown! sorry, what app was it again? no, no. just give me a second... amateurs. ohhh! sorry everybody. directv sports central gives you access to every game... ...so you never have to compromise on gameday. ...was that necessary? 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>> we also have outside. >> this is beautiful. >> and we just finished this renovation about two years ago. it seats an additional 100 people. >> in the summer of 2020, cities like louisville waived fees and shortened the processing time for outdoor dining applications. this helped restaurants get back on their feet. >> quick pivot. let's buy some picnic tables at home depot and serve food outside. >> right. >> and everyone loved it. ♪ i think we see a lot of that has happened to lots of restaurant owners. once they saw that people wanted to sit outside the pandemic started breaking a little bit, they didn't go backwards, they went forwards. >> that's exactly what we did. >> did it change the way you looked at business? >> i'm a first-time business owner. i truly don't know what i'm doing. i'm trying to navigate this new world of not eating in a restaurant but owning a restaurant and keeping people employed. i applied to take this business course. i'm like, how can i increase my top line and reduce my bottom line. what does this word mean on this spreadsheet. education is the most powerful thing you can have. ♪ >> all right, cool. this is like a new york city kitchen. >> yes. this is our executive chef drew. >> how you doing, man? bobby. good to see you, chef. >> pleasure. >> what are you making? >> i'm making our ramen sisilano. >> since the pandemic, how is getting staff? how has it been for you down here? >> i think retained a good staff. pretty much every single staff members has grown within the company. they are now working management positions. >> i think the pandemic has been a wake-up call for everybody, whether how you schedule staff, how you hire staff. >> 100%. we're learning how to do more with less. and that is the key. >> chef, that smells really good. >> thanks. >> i'm very -- i'm really looking forward to this. all right. is it cocktail time? >> yeah, you want to grab a drink? >> yes, i would love it. >> this is our open one way. it's a riff on a paper plane. we do ours with japanese whiskey and yuzu and blood orange. >> you're in the town of bourbon going away from the bourbon. >> i am. but what separates us is that i think we do something different. >> i love that. >> yeah. >> this looks very refreshing, cat. you don't consider this fine dining. >> i really wanted to make a space that everyone could come in any time of day, let's put produce at the front of every single plate. and i think it's really res nated within the community. >> speaking of the community, so i read that during the pandemic, you really turned your place into a market almost. >> i did. >> like a corner market. >> we transformed the entire restaurant into a bodega and take out and delivery within 24 hours. there's no other grocery store within this area of downtown. something that kentuckians don't really hear of. what's a bodega. >> when people would walk in here, what they would they sigh? >> tortilla chips, frozen burritos, anything you could imagine to keep the ship float. we were partnering with nonprofits, doing lunch specials. going live on social media. >> all of our specials are going to be centered around slightly healthier eating habits. >> we were theming our drinks around pop culture, doing buy one get one free to go cocktails. >> in 2020, 39 states allowed cocktails to go on a short-term basis. today, 22 states, plus d.c., have legalized to-go cocktails permanently. ♪ what about the delivery costs? that become an issue for you at all? >> we were doing delivery in-house, which meant myself -- >> you were running to people's homes with bags of food? >> oh, yeah. people are like, aren't you the business owner? i'm like, the delivery driver today. but you know, that's what it takes to succeed in a small business. >> why do you think that you've been able to survive all this? >> i just thought i can pivot. and i don't know, i guess other restaurants pivot, too. isn't that what you're supposed to do? hello. martini. >> you decided to open another restaurant after all this. ♪ how is it different than naive? >> during the pandemic, it is a great time because there's a bunch of opportunity. the space had not been touched for over probably 50 years. again, built out another kitchen. the new restaurant seats about 200 people. there's three dining rooms, two bars. is this your first time in? >> things are changing so much for the better in terms of our food. a town like this just rounding the whole thing out. it's so beautiful and unexpected. all right. >> i'm starving. >> wow. this looks great. ♪ >> this is our ramen sisilano that drew prepared. our snap peas have white chocolate and brown butter. >> this is not the louisville cuisine i think of, but much needed. >> yeah. i think we fill a really big void in the market. >> whoa, that's a killer. up next -- >> zero-9-2-enter. >> just pops open. >> just pops open like that. >> the future of ghost kitchens. >> 800 degree pizza. let's go eat. or more. that's why farmers new car replacement pays to replace it with a new one of the same make and model. get a whole lot of something with farmers policy perks. ♪ farmers mnemonic ♪ to finally lose 80 pounds and keep it off with golo is amazing. i've been maintaining. the weight is gone and it's never coming back. with golo, i've not only kept off the weight but i'm happier, i'm healthier, and i have a new lease on life. golo is the only thing that will let you lose weight and keep it off. who loses 138 pounds in nine months? 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you put the money in and you open the thing and take out a sandwich. >> you are the first face that smiled at me today. >> we cut produce fresh, we make wings. there is really humans back there doing the same thing that happens at normal restaurants around the world. we can operate with 40% less staff. >> how many different food concepts are here? >> we have 12, we have national brands and we also brought in local brands. 20% of the menu is local operations. >> you are a chef by trade. i looked at your resume, how did you transition from running the line of high-end restaurants to being in the ghost kitchen airport business? >> i wanted to give back to entrepreneurs, i started a company to help the underserved and created a culinary business incubator where entrepreneurs could rent the space by the hour. >> that ingenuity caught the attention of the airport senior vice president. >> most of the restaurants were closed after the pandemic, the ghost kitchen allowed that because we did not need front of the house people. >> he called me and asked if i could take multiple concepts and shove it in one box. in the process, they learned about the opportunity and they are the largest ghost kitchen operator in the world. so we partnered up. >> the vessels he is talking about our food trailers powered by recent technology. by 2021, reith expanded to 5000 sites worldwide where they installed trailers where cooks prepare restaurant delivery orders. there are many still around, as people left the pandemic era, they were forced to shut down. now they leased to third-party companies. >> now that the pandemic has subsided, how do you feel about it? >> i feel strong, a lot of five- star reviews, a lot of repeat customers. if you have a flight delay, it is great. >> this is where the magic happens. >> this is the central station here, all 12 brands being produced by our staff down there. we do branded products. this is be you cafc with a branded cup. you will see as she places it in it will change colors. the locker acknowledges that she put something in there. then she will punch in your specific code. >> 33909 to enter. just pops open. >> just like that. >> i can smell my grilled cheese, and i have my pizza. all right. >> this is the grilled cheese, what is the name of the place? >> america outbound. >> i am from new york, this is good, i like the bread, it is well toasted. who is training everybody to do this? >> each brand we license, they supply us with recipes and techniques and we get trained. >> if you do not have time to order food at the kiosk, do not worry. >> i can actually order dessert at my gate. i will order a couple of cheesecakes from the cheesecake factory. it is a good way to wait for your plane. delivery type, gait delivery. >> when the pandemic hit, the food service industry was trying to reinvent itself every hour. i got phone calls multiple times a week. do you want to invest in a ghost kitchen? like everything else, ghost kitchens also lost their edge. what do you think the future of ghost kitchens are going forward? >> they are definitely here to stay. it cuts down on your time, as long as we are solving that problem for travelers, airport ghost kitchens are here to stay. >> thanks a lot. >> thank you very much. >> the virtual ford halls are slated to open at the kentucky airport this year. >> everybody wants to be a chef . i tell people i am giving them a place to fail successfully. >> come in, make mistakes, do not lose your house or car, fix it, turn it around and keep going. >> here we are back in new york city. in a place called the meatpacking district. home to busy restaurants. you heard over the last hour how the pandemic through the restaurant business into a tailspin. definitely there is challenges ahead. higher food cost and labor cost and inflation. you also heard about the passion and determination to make it work. do i think they can make it? i am betting they can. >> chefs like esther is planning to open her fifth restaurant this year. >> i am excited, i work so hard, pivoting all the time. it is the mentality and the grit and work ethic that makes it count. >> back in kentucky, cat opened her second restaurant this year. >> at least i knew what i was doing this time. i knew what did not work and what could work. >> bonnie and israel in oregon still sees staff morale as the key to success in the restaurant business. >> a couple of weeks ago we took some of our management team on a research trip to help share what we know about growing up eating that food. i want everybody here to be passionate about what we are doing with us. >> a really special place. >> and the phoenix pizza king is finding his way to his new location in la. >> i talked to a lot of friends in the business, the sentiment has been that it is impossible to make a profit in this business. the costs went up not down. >> we are searching for new answers. >> you will just keep making food. >> i still love it. >> chef chris appears to be holding his own and just opened a standalone pizza spot steps away from his home in downtown la. he and others say they are continuing to adapt business models to keep their establishments running. thank you for watching. ♪ martin: there is a minute fraction of a percent of human beings that just aren't wired right. not sane. there is a minute fraction of a percent of human beings that are not wired right. it is not because they are not sayi