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Weekly Podcast: Nick Kokonas Interview, by Tim Ferriss

After spending nearly 6 months wfh, the timeline of events has become a blur. I listened to a podcast on an interview with Nick Kokonas, one of the founders at The Alinea Group. Nick has some interesting perspective and solutions on overcoming difficulties in keeping a restaurant open in the midst of the pandemic, and also on what tactics to avoid (or to reconsider).

I have 5 highlights from this interview. (I will also give you the time slot on the podcast so you could skip around and find the segment that resonate with me the most)

8th minute and 55 seconds, and goes on for 25 minutes
Right off the bat, Nick introduces the concept of “asymmetry bets or risks” to frame the conversation around surviving the pandemic while running a business. Asymmetric bets could either give you high returns in investment or wipe your investment to zero.

In the example of hospitality, an asymmetry risk is the possibility of having zero customers, which none of us would have never imagined (except on a slow night, maybe), until the pandemic hit.

The concept of “asymmetry bets or risks” is fascinating because many of us are often willing to take an asymmetric bet and hope for the high return, while neglecting the high risks that are involved with the bets.

The first 25 minutes is about how Nick had tried to re-assess the asymmetric risk of running a restaurant business and tried to anticipate the worst if the pandemic reaches Chicago, where most of his restaurants are based.

26th minute and 35 seconds, and goes on for about 7 minutes
In the event of a crisis, leadership shapes the culture, by either reinforcing the original beliefs or reshaping the group mentality. Nick shows great leadership by putting his employees’ personal and job security first. Nick was also adamant about firing people who were not on the same page to protect the company.

One may argue that the act was unfair, yet, he and his ownership team sacrificed their pay to ensure the entire staff was getting its final pay and the added benefit of $1000 heading into the pandemic. Nick’s conviction in doing the right thing shows great leadership when many people were cynical or felt uncertain.

46th minute, and goes on for about 3 minutes
The Alinea Group https://www.thealineagroup.com/ immediately pivoted their business to no-contact takeout. The restaurant group was one of the first to change their business model to stay ahead of the crisis. The Alinea Group’s ability to switch on demand is worthy of notice; the hospitality industry as a whole needs to stay flexible during the uncertainties.

1 hour 9th minutes, goes on for about 1 minute
Our current commercial real estate business has been doing poorly in conjunction with restaurants shutting down. Young or aspiring chefs will have the opportunity to rent commercial spaces for cheap in the future, which brings hope to the restaurant community where it’s in the re-set mode while waiting for a vaccine.

1 hour 10th minute, and goes on for about 5 minutes
Couple of interesting perspectives on bad tactics in surviving the pandemic for restaurants. And the way to survive the current climate is to plan ahead.

  • Selling/buying gift certificates is not the most ideal solution to help a restaurant stay afloat. Gift certificates are liabilities to the restaurants. Given the current climate, the money generated by the gift certificates will be used right away; therefore, the x-amount of gift certificate could potentially be the “free meal” that the restaurant can’t afford to make for your in the future.
  • Suing an insurance company for business interruption insurance is a long process. I am not familiar with this subject, and am going to trust that the “long process” is not favorable to any business.

 

 

 

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