When former fund manager Dave Plate purchased a small bar in Manhattan’s Nolita neighborhood, he initially viewed it as a side project. The bar, however, soon morphed into something larger after Dave joined forces with nightclub promoter turned attorney Hari Kalyan.
In 2007, the business partners officially opened the coffee and cocktail bar Randolph at Broome. A few years later, Randolph Beer opened its doors to the public, and was soon followed by the duo’s newest establishment, Randolph Brooklyn, in South Williamsburg. Dave and Hari, along with two other partners, oversee nearly 50 employees across their three stores. They are actively looking for a fourth location to further build the Randolph brand.
In July 2015, Randolph Beer was selected as winner of the second annual Citi Small Business Call-Ups program. Baseball fans have been enjoying Randolph Beer’s unique Jerk Chicken Po’ Boy sandwich, which is the featured menu item at the Randolph stand at Citi Field, home ballpark of the New York Mets.
Randolph’s dedication to serving customers premium drinks and savory foods in some of New York City’s trendiest neighborhoods has helped the company expand at a rapid pace—by roughly 800% since 2009.
In light of their success, Dave and Hari tell how they beat industry odds to create a solid restaurant business based on authenticity, delicious fare and great value, in their own words.
If you start out with too much capital in the beginning, you may miss out on the lessons you can learn by being involved in every aspect of your business.
How to Self-Finance Without Resorting to Equity Funding
Dave: There’s no debt in the company anywhere, except for a credit line we’ve used due to its low cost. We self-financed the first location, Randolph at Broome. When we opened Randolph Beer, we took on two new investors, and utilized all excess profit and cash flow from the first business.
Once we opened our third location, all the partners agreed to invest their own money into the venture. We also pulled profits from our existing locations to successfully launch our most recent store, Randolph Brooklyn.
We’re very conservative by nature, since failed restaurants tend to be riddled with debt from credit cards, borrowed money or equity capital. Our business strategy is to open the next location when we can afford to. If we borrow money from a bank, it’s only because it’s a loan with a low interest rate that makes sense for the business.
We’ve never done a capital raise or taken out a massive loan. Though ironically, we’re seeing businesses doing both in the marketplace. In our opinion, you need to have equity to be motivated. Raising money from silent investors means you’re giving away that equity to someone who isn’t contributing to the business. When we brought new partners in, we also required that they be active participants in the business.
Hari: Capital raising in the restaurant sector is a new phenomenon. Years ago, these types of hospitality businesses were not reliable investments. Now, due to emerging technologies and big data, restaurant ownership is a much more reliable business. People are seriously considering restaurants as investments.
Things are slowly changing with these new investment models. On the other hand, bootstrapping our growth is how we went from zero to where we are today. If you start out with too much capital in the beginning, you may miss out on the lessons you can learn by being involved in every aspect of your business.
The transition from being a full-time worker to an entrepreneur is not so much as a learning curve as it is blunt force trauma.
Find Employees Who Do What You Do Well
Dave: If there’s anything you should spend the vast majority of your time obsessing about, it’s the people you bring under you. Building the right team is huge and absolutely critical to the success of your company.
But we didn’t realize just how important team building was when we launched our first restaurant. It only dawned on us later that hiring the right team members from the start is Business 101. Conversations about small business usually focus more on the cost to acquire or lose customers. However, when you lose a critical team member, the fallout is significant.
While we’re super focused and obsessive about the business, we also try to create an approachable and laid-back vibe at our stores. The employees who stick with us over time really buy into that idea of a premium product sold in an approachable environment.
Hari: When building a team, you’re basically trying to replicate yourself. The transition from being a full-time worker to an entrepreneur is not so much as a learning curve as it is blunt force trauma. It’s real and wonderful, but it also becomes your entire life.
From the time you wake up in the morning until the time you arrive at work, there’s no stopping. But you get better at it and figure things out. Things start to get easier. And if there are people whom you can delegate to, they become replicas of you. You need to find people whom you can trust, who are committed, and who can do the tasks that need to get done.
Given how transient workers are in the restaurant business, we’re very lucky to have very dedicated employees—even at the management level—who’ve been with us for years.
Back to the Old School: Interact With Your Customers Offline
Dave: If you’re starting a restaurant and you think your PR strategy should be mostly posting photos on Instagram, it’s time for a change. As a business owner, you need to get on the phone and start talking to potential customers and vendors.
Prior to social media, we attracted customers by going out and finding them. That meant physically meeting people on the street and walking them into the bar.
Now that we’ve grown our online brand and following, we’re using tools like social media because it’s necessary to have a presence there. Though we’ve noticed as more value is placed on social media, more weight is also given towards using traditional marketing methods.
Having a great product is basic. Everyone in NYC has a great product. The next level is being able to pull people towards your brand. Once they come into your store, there’s the opportunity to wow them with great service and a great product so they keep coming back for more.
Hari: We’ve never relied solely on social media to tell our story. For us, that isn’t real. The best PR people go into actual bars and meet people. That’s how we started our business back in 2007. We’d go into every single bar in the city, meet the bartender, and hand them our card. Eventually, word about Randolph spread.
Yes, plenty of folks are on social media. But you’ve got to get to know those people. It’s impossible to have great social media marketing and not have real relationships with your customers.
As a restaurant owner, you still have to be out there in the world. Everything you do revolves around how you grow the business. It’s about meeting people on the streets and actually talking to people about what they want. That part of marketing your brand never stops.
Follow the Opportunities to Gain Exposure
Dave: It remains to be seen how Citi Call-Ups affects our business. Nevertheless, it’s an awesome thing for us. Exposure is really hard to come by. So when you see an opportunity to get exposure, go for it.
From a social media standpoint, there’s no doubt that being voted this year’s Citi Call-Ups winner has impacted our brand. It’s also an opportunity to not only promote the Jerk Chicken Po’ Boy sandwich being served at Citi Field, but it’s also a shot at creating an identity for Randolph. Citi Call-Ups is one of the X factors that will help bring Randolph to the next level.
Hari: The exposure from Citi Call-Ups has been great for Randolph, from the impact on our business to participating in the program.
Connecting the dots is so important. But being open-minded enough to see the dots is priceless. It’s easy to take a myopic view in this business and lose sight of the fact that you need to look at things differently. Sometimes you need to take a step back to discover different ways to further expand your company.
Stay True to Your Brand (i.e. Don’t Be Something You’re Not)
Hari: The important takeaway is that you’ve got to know your business inside and out. Is it all or nothing? If you read the history of any big restaurant group or corporation, they’re not just finding people to invent products. They’re partnering with and purchasing companies started by people who believe in their [own] ideas.
When selecting a location for our next store, we don’t necessarily choose locations based on foot traffic or some other analysis. It’s based on what we like and who we are. As we grow, everything we do embodies the culture of Downtown Manhattan and Brooklyn.
Dave: We’re not looking to go into Midtown Manhattan and open a restaurant in Times Square. As lucrative as that might be, we’re still fixated on operating in neighborhoods like Nolita and South Williamsburg where there’s brand-building opportunity and a trend-setting demographic.
One of the things I’d attribute to our success is that Randolph is a true DIY company. The tables where our customers eat are tables we built. The beer we’re drinking is a beer we collaborated on with a local brewery. If we identify a trend but can’t authentically embrace it, then we let it go and move on.
Don’t ever try to be something you’re not, particularly in a market like NYC. People will sniff it out in three seconds. They’ll figure out quickly whether or not you’re authentic. You’ve got to be what you’re trying to sell. People in NYC relate to that on a subconscious level unlike anywhere else.
If we were to give advice based on our own ups and downs, I’d say you’ve got to grow your business organically and build it based on your core competencies. Don’t manufacture an idea or business model. Instead, add to the stuff that’s working, take away from the stuff that’s not, and don’t get emotional about it. You might have the best idea in the world, but if it’s not working, it’s not the right one.
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