As Bobby Flay Cooks Up an IPO, Can He Still Remain the Hands-On Guy?
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It’s 1 pm on a Thursday, and Bobby Flay is sitting in his favorite spot to conduct daily business: the corner banquette in the front window at Gato, the Lower Manhattan outpost of his fine-dining empire. He is dressed casually in a dark-blue henley and jeans, wrapping up a call as his team gets situated around him for the first agenda item of the day: testing 10 new cocktails.
Marlene is the new bar manager, and this is her first time pitching the boss her own concoctions. She’s a bit nervous, but she’s done her homework. And Flay is impressed, on the whole, with her creations. But he zeroes in on one drink in particular. “You know what the surprising flavor in here is,” he tells her with genuine admiration, “and not everyone’s going to pick up on this -- it’s the pink peppercorn.” But after a further moment’s reflection, the garnish in Marlene’s drink gives him pause.
“So you’re just going to slice a habanero in there?”
Marlene says yes.
“The only thing I will tell you,” he says, “is if people pick that up and eat it, they’re going to fucking ruin their night. When you have a garnish, people tend to use it.”
After 30-plus years running a kitchen, opening dozens of successful upscale and fast-casual restaurants employing, at present, more than 1,000 people and managing a widening universe of side projects, TV shows and product lines, the 52-year-old Flay is cocksure and precise in his knowledge of what will and will not go over with the customer, and he shares that knowledge freely with his staffers. Whether it be properly seasoning with salt and pepper (forgetting either is practically a fireable offense) or knowing when a garnish will go off in a customer’s mouth like a grenade, these “chef’s adjustments,” as Flay calls them, often stress nailing the fundamentals of food.
“Running a Fortune 500 company or running a basketball team or running a restaurant business, or whatever the fuck your business is, to me is all the same,” Flay says. “I’m rooted in the fundamentals. I was an athlete when I was a kid, and I now know why my basketball coach on day one, two, three and four never let us shoot the basketball. ‘Dribble with both hands until it becomes part of your body. Let’s practice passing. Let’s practice dribbling. Let’s run up and down the court.’ I was like, ‘What the fuck? I want to shoot,’ right? Well, before you shoot, you have to be good at everything else.”
Being good at everything else, staying hands-on, minding the details -- this is the core of Bobby Flay’s whole enterprise. He’s always learning and experimenting, never letting success or fame muddy his understanding of the simple, elemental pleasures of good food. Everything he does emanates from that core, from those fundamentals, from passing before you can shoot.
But perhaps more than ever before, Flay is about to test how far those fundamentals stretch.
His fine-dining restaurants allow him to reach only so many people, and a guy like Flay, whose Food Network celebrity made him a household name, has an ever-burning desire to give everyone a taste. At first, he seemed to satisfy that by launching Bobby’s Burger Palace in 2008; it’s a growing chain designed to bring the flavors and attitude of Bobby Flay to the masses. But that’s the easy stuff. Food he knows. Now he’s plotting an ambitious franchising plan and an IPO -- one designed to let everybody from Wall Street to Main Street own a piece of his empire.
Bobby Flay is a man of precision, of details, of calling his own shots. But in effect, he’s about to find out what happens when he lets everyone else into the kitchen.
It wasn’t always about discipline for Flay. In fact, even he will admit that his relentless work ethic and emphasis on nailing fundamentals is “kind of ironic” when you take into account the fact that he dropped out of school at 17. “I didn’t do any fucking work,” Flay says. “I failed every subject. I couldn’t find it in myself to actually be excited about doing any of it, so I didn’t do it.”
We meet at the Food Network studios -- his home away from home away from home -- and then go downstairs to eat at Morimoto, the extravagant sushi restaurant owned by his Iron Chef nemesis Masaharu Morimoto. Most people today know Bobby Flay as a Food Network star and a regular guest on the Today show and countless other programs. But unlike other “celebrity chefs” who have traded their tongs for days spent chasing any licensing deal that might bring in some coin, Flay has always identified first and foremost as a chef, a seasoned pro who still likes to work in his kitchens five days a week when his hectic schedule allows it.
That goes back to his youth, to his decision to drop out. “I hated school so much and didn’t know why I hated it,” Flay says. “I now know why: Because I wasn’t working with my hands.”
He left high school and began working at famed New York theater-district haunt Joe Allen, where his father, Bill, was a partner. A busboy called in sick one day, and Bill ordered his son to fill in. Bobby enjoyed the energy and the tactile work, and soon he was in the kitchen manning the salad station. The namesake owner was so impressed with the teenager’s skills, he offered to pay his tuition to cooking school. In 1984, Flay was in the first graduating class of the new French Culinary Institute (now the International Culinary Center). He found in the teachings of Escoffier what he never did in Moby Dick.
The young chef then worked a few kitchen jobs around the city, including one under legendary chef Jonathan Waxman at his buzzy restaurant Jams. Flay seized on Waxman’s then-uncommon use of Southwestern spices to fuel his California cuisine and wanted to put his own twist on it. He got his first opportunity to do so when he was hired as the executive chef at a small Southwestern restaurant in Manhattan’s East Village called Miracle Grill.
Meanwhile, Jerome “Jerry” Kretchmer, a politician turned restaurateur who owned (and still owns) the legendary Gotham Bar and Grill, had taken a trip to the Southwest with his wife and come back and told the people at Gotham that he wanted to open a contemporary Southwestern restaurant. Many of Kretchmer’s employees frequented Miracle Grill on their days off, and they suggested their boss check it out, too. A week later, he made an offer to Flay. After “many months of trials and tribulations” scouting a location, they opened Mesa Grill on January 15, 1991, during the height of the recession -- a time when almost nobody was thinking about opening a restaurant in New York.
“We basically took some paint, we bought the rights to some black-and-white photos that we framed,” Flay recalls of those first days of bootstrapping it. “The financing for that restaurant? Are you ready for this? Two hundred eighty thousand dollars.”
For comparison, opening a similar spot today might cost upwards of $10 million. Flay handled the food, Kretchmer the financing. The place was a hit, and it paid off. “[Jerry] made me equity partner right away, for a very small piece of the equity, and then I got more equity every year for the next five or six years. I did it in old-fashioned sweat equity,” he says. He was on his way.
There was another breakthrough at Mesa Grill. Flay met Kretchmer’s son Laurence there, and the two, being the same age and of similar gung-ho mindsets, became fast friends and business partners. Together, capitalizing on the success of Mesa Grill, they opened three-star tapas restaurant Bolo in 1993, and then began licensing deals to open other upscale spots, like another Mesa Grill in Las Vegas and Bobby Flay Steak in Atlantic City. They named their company Bold Food, which was also the title of Flay’s first cookbook. The foundation of the Flay empire was laid.
“I wanted to be like Wolfgang Puck,” Flay says, referring to the godfather of California cuisine, and perhaps the first chef to truly harness the power of celebrity as a vehicle for empire building. “I wanted to have multiple high-end restaurants and travel from restaurant to restaurant, hire lots of people and start to get a reputation for a certain kind of cuisine, like he did.”
Mission accomplished. Flay has his 14th cookbook coming out later this year (Bobby Flay Fit, which has a six-episode video tie-in on FoodNetwork.com); an Emmy-award-winning production company called Rock Shrimp Productions, which he co-owns; a mass-market line of spices, sauces and rubs; and more than a few trappings of success -- a multimillion-dollar stable of thoroughbred horses, a weekend house in the Hamptons and a Hollywood-actress girlfriend (Heléne Yorke, of Graves and Masters of Sex).
But Flay insists his growth and offshoots came “one day at a time,” and each step of the way, he’s left considerably more offers on the table than he’s taken.
“I say no a lot more than I say yes,” Flay says. “I say no 99 times out of 100. I’m fortunate to have lots of opportunities put in front of me, whether they’re restaurant deals, endorsement deals, television deals, whatever it is. I think about what I’m going to add to my portfolio that would be helpful, that would strengthen my company as a whole, that would enhance my life.”
Of course, the Food Network was one of those opportunities Flay didn’t say no to. He made his first appearance on the fledgling channel in 1994, at age 29, alongside the likes of Mario Batali and Emeril Lagasse -- and has been a fixture ever since, having starred on some 20 shows. But he never stepped away from his restaurants, which has proven not only shrewd but profitable.
“I didn’t give up one for the other,” he says. “I work my ass off for the Food Network to give them what they want, and it’s been really successful for both of us. The Food Network has been my family. They’ve been amazing to me. They’ve allowed me to live out my fantasies on TV. But I don’t own the Food Network. I’m not a decision maker at the Food Network. In my restaurants, I’m dictating the story. Good or bad, it’s on me. I’ve been on the Food Network for more than 20 years and I always think of it as my sideline job. You can ask anybody who works with me.”
His longtime partner, Laurence Kretchmer, agrees. “Don’t get me wrong; we reap some benefits from it,” he says. “It helps us get attention. Bobby has a lot of fans, and it’s awesome. But we try to keep the horse in front of the cart, and the horse is the restaurants. That’s really what’s most important to him.”
Late one afternoon, I meet Flay at the Roosevelt Field mall on Long Island, at one of his Bobby’s Burger Palace outlets. It’s just after 4 p.m., but the place is doing a brisk business, and the customers are thrilled to see the star in the flesh. He obliges several photo requests, from little girls to high school students, moms and dads. One father presents his daughter simply to tell Flay, “We just had your burger -- so good!” Another brings over his son and says to him, “This is Bobby Flay!” Then to Flay: “He loves your burger.”
Flay orders a burger, fries and a beer, and makes small talk with other customers sitting at the counter near him. Staff come up to talk to him. A black-and-white image of him in his chef’s coat looms just ahead. He’s in his element, comfortable, friendly and accessible.
The idea for Bobby’s Burger Palace came to him about 10 years ago. “I said to Laurence, ‘I want to open a burger place.’ He said, ‘What are you talking about?’ I said, ‘Well, I’m a burger guy.’” Flay grew up eating at Manhattan hamburger institution JG Melon -- which was opened by his father’s friend in 1972 -- and does to this day. “I’m, like, an original customer. I was in my Little League uniform eating cheeseburgers. That’s still always my go-to if I’m craving something after work.”
Flay wanted to take what he saw as the quintessential American food to its quintessential customer, but without compromising quality. “I wanted BBP to be in places where people could go if they couldn’t get to my high-end restaurants or maybe couldn’t afford them or didn’t feel like paying $100 a person to eat at Bobby Flay Steak,” he says.
So they got to thinking about it. BBP, naturally, would have to be an extension of Bobby Flay, which meant made-to-order burgers -- you want medium, you get medium -- each seasoned with proper amounts of salt and pepper, and cooked properly, unlike fast-casual chains’ “smash burger” style of smashing a patty with the back of a spatula until it’s well-done. Flay considers that an abomination. His fries would be hand-cut and double-cooked like at a bistro in Paris, and his shakes made with fresh ice cream and seasonal ingredients. What’s more, Flay would teach his BBP employees all the techniques he teaches staffers at his high-end restaurants. That way they wouldn’t be just flipping burgers; they’d be learning marketable skills.
Flay settled on a signature item, the Crunchburger -- a patty topped with potato chips -- and launched the first BBP in 2008 in a mall in Lake Grove, N.Y. Building a chain wasn’t the original intention, but before he knew it, one store became two, then three became five. Now there are 17 in nine states and Washington, D.C., in malls and on city streets, near colleges and inside casinos.
As BBP looks to continue to expand, Flay knows that it puts him in the crosshairs of another fast-casual burger, fries and shakes chain, run by another successful New York restaurateur who made his name in fine dining: Danny Meyer’s juggernaut, Shake Shack, which now boasts 137 stores in 18 states, D.C. and 12 countries.
“I know it’s inevitable that Shake Shack and Bobby’s Burger Palace will get compared more and more, and I’m OK with that,” Flay says, in a tone that suggests he may not be fully OK with that. But when has the host of Throwdown with Bobby Flay and Beat Bobby Flay ever backed down from a little competition? “Listen, if I got into this business to not have competition, I would have been out of business a long time ago, right?”
But he’s not competing with just Shake Shack. He’s competing against a changing industry. As food costs and rents rise, and diners’ tastes are ever-changing, Flay says he’s never seen a more challenging moment in the New York City restaurant business. BBP holds its own in his portfolio -- it brings in about $34 million annually, against $45 to $50 million in total from his six upscale restaurants -- but he thinks it has the greatest potential to grow.
To make that possible, however, Flay needs to expand. And to do that, his company has to do something it’s long been loath to do. It’s taking on outside financing and outside partners. “We’ve been in business more than 25 years, and we’ve always funded everything ourselves,” Kretchmer says. “But we don’t feel like we can really fulfill the potential of this brand by doing it that way. It’s time to grow up, you know?”
The outside partners will be fairly straightforward. Like most companies looking to expand internationally, they plan to find global franchise partners. But the outside financing part is where things get interesting.
Flay and Kretchmer have been “testing the waters” for an IPO, but on a smaller scale than Shake Shack’s. The original target for the IPO was this fall, but it may be pushed off until 2018. The goal is to raise a relatively modest $15 million -- and to expand slowly. Here, Shake Shack may serve as a valuable lesson. It went public, but after an initial spike, its share price sagged and has since been flat. Many analysts blame this in part on its rapid expansion. It may have raced too fast into a crowded market, and sales couldn’t keep pace.
Instead of doing a traditional IPO, Flay’s company is considering a different tack. It’s called a Regulation A+ filing, a new kind of fund-raising tool introduced in the JOBS Act, which was signed into law in 2012 by President Obama; the Regulation A+ filing was rolled out three years later. It allows companies to raise between $3 million and $50 million from any investor, not just the large institutional investors and investment bank clients that typically get a piece of an IPO. (It also allows those companies to sidestep some disclosure requirements, making the deal riskier for investors.)
Bobby’s Burger Palace would be looking at a low share price. Flay doesn’t know what price yet, except that it should be much less than Shake Shack’s debut at $21. (The next day Shake Shack hit $45.90, but it dropped in January 2016 to the low $30s.) “We want people to feel like they can be involved. That’s the whole idea. This is a real-life thing,” says Kretchmer. “If you’re tuned in to what’s happening at Bobby’s Burger Palace, either socially or by going to the restaurant, you’re going to find out about the offer.” This way, they say, the BBP customer can afford both the burger and a piece of Bobby Flay -- the clever, final push toward full democratization for a chef known for fine dining.
“I’m in a really interesting position,” Flay says. “Let’s say you’re a well-known actor. People know what your name is, and they might be able to go see your movies, but they can’t really actually touch a piece of who you are. But in my case, you can find me in my restaurants, you can eat the food I’m responsible for, whether I’ve cooked it myself, like at Gato, or cooked the way I want it to be cooked by the people I’ve trained at Bobby’s Burger Palace, with those kinds of flavors that are important to me. It’s a more affordable version than my high-end restaurants, but at the same time, they’re getting food that’s important to me.”
Going public can bring plenty of surprises, even to the most experienced of entrepreneurs. Growth suddenly becomes paramount. Investors will have a voice in the way that private CEOs may not be used to. Stock prices can feel out of a leader’s control. For a guy like Bobby Flay, who gained control of his career early and has dictated its direction ever since, it could be jarring.
But Flay seems unconcerned. He has a clear vision for the future -- and, perhaps most critically, no hesitation about executing it on his own terms. Flay’s success, he reasons, is in his own hands-on nature. If there’s a problem, he’s not delegating his way to a solution. “In my mind, there are two things I’m doing. I want to be in the window at Gato, sitting on that little bench there, drinking an espresso, going over my work for the day, cooking in the restaurant at night. And I want to be growing my burger business by day,” he says. “When I say growing it, that doesn’t mean I’m just raising money to build stores. That means I am completely hands-on. I am training the trainers. I’m inspiring the staff. I’m talking to customers. I’m in the stores.”
Like he has from the very beginning, he says, “I lead with an apron on.”