GE 103: How Adam Fleischman Built Umami Burger & 800 Degrees Pizza Into Thriving Restaurants That Generate $70M A Year

adam picHi everyone, today we’re talking with Adam Fleischman, a self-taught food innovator and entrepreneur who’s founded Umami Burger and 800 Degress Pizza, both of which I really love. (He also made Fast Company’s Top 100 list for creative people in business.) Today we’ll talk about the struggles Adam faced with growing his restaurant business to $70 million per year, and how he uses physics to make better business decisions.

Background -> Passion -> Business

Adam started out his career by studying liberal arts, and then by came to LA to work in different jobs to try different things and figure out what he really wanted to do.

He worked in finance for a little while, and though he liked what he did, he wasn’t passionate about the product.

After that, he got into the wine business where he worked on wine bars, tastings, importing, and selling on a retail basis. It was here that he got really interested in and passionate about taste and palate, which are things he’s deeply involved in today with his restaurant businesses.

The Size & Scope of His Business Today

Right now, Adam says he’s more concerned about growth than revenues, but revenues are still pretty good.

Umami Burger has around 25 locations and does about $50 million per year, while 800 Degrees Pizza has 10 locations and does $20 million per year.

They’re still in the expansion stage though, including expanding to Asia and the Middle East.

Fast Yet Gourmet Food Concepts

The concept of Adam’s restaurants draws from the concepts of Chipotle and Subway, where you walk down a line and create your own meal rather quickly.

But to do something unique, for 800 Degrees Pizza, for example, Adam noticed that no one in the LA area was cooking pizzas in wood ovens, so they were the first ones to revive that.

To make things quicker, he noticed that you could cook a pizza in 90 seconds at 800 degrees, so the concept of that restaurant was born.

To take things to another level, they make everything–including the dough–from scratch and by hand, which is something Subway & Chipotle don’t offer.

The first restaurant was in Westwood, and it struck a chord with the office crowd across the street and the college students at UCLA, especially since the cost is only $6 to $7 per pizza.

The Main Driver for Their Restaurant Growth

Adam says a lot of factors moving together helped create the perfect storm for their restaurant growth:

  • The economy shifting towards a fast, casual price point
  • People wanting to eat out more
  • The desire for a better quality experience at a lower price
  • Need for speed
  • An expanding food culture that demands better ingredients

Take for example, the ingredients: Adam says that the ingredients used at Umami Burger & 800 Degrees Pizza are the same that you would get at any fine-dining restaurant, except re-made into casual food.

How Has Technology Changed the Restaurant Industry?

Mobile has created a huge change in the restaurant industry and how people interact with it… along with customer feedback platforms like Yelp.

However, according to Adam, a lot of technological change is only starting in the restaurant industry. In the future, he thinks there’ll be a lot more apps for different types of ordering and payments.

He thinks that with the advancement of technology, restaurants will start to better-serve their customers by remembering preferences and catering to individuals in a way that hasn’t been done before.

But at the same time, says Adam, you can’t be a tech company that’s trying to start a restaurant. You’ve really got to know food, taste and flavor. Because at the end of the day, the ones who win will be the ones who offer the best taste.

An Introduction to Continuum Physics

Continuum physics is something Adam’s been working on for a long time… well before his restaurant businesses came into being.

Basically, it’s an algorithm that allows business people to make decisions properly… especially since a lot of times decisions are made in a vacuum without considering the component of time when building a brand.

How a New Entrepreneur Can Apply Continuum Physics

First of all, Adam says, you need to read the website to really understand what it’s all about.

Once you understand the basis, you don’t apply the concept to your business, but you apply your business to the concept.

There’s an underlying understanding about how time and space work, and you can look at your business to see if the model you’re using is creating the right brand experience.

If you look at successful businesses, for example, the founders put their efforts behind the right things. In a bad business, on the other hand, it seems like the founders waste a lot of time on things that don’t really matter.

It’s a tool that helps you orient yourself towards spending your crucial time on the things that actually matter for the success of your brand.

The long-term goal of the site (which is free to use) is to create an app (that will be paid) to help business people use the physics for their business so they can make decisions in the right way.

Getting The First Customers in a Restaurant

Growing a restaurant business can be extremely tricky, especially since there’s naturally a lot of competition.

To stand out and attract customers, you need to create product differentiation.. because if you have a different product, you’ll get people in the door.

In 2009, for example, there were no real gourmet burger restaurants, and they were the first ones to offer a full menu of high-end gourmet burgers. Everyone took notice of this, and they got tons of press from magazines and newspapers… loads of free PR.

In business in general, says Adam, do one unique thing so you’ll get picked up.

You can have a normal business model (rather than a revolutionary one), and do one unique thing to get people excited about, and keep your focus there.

One Big Struggle While Growing Umami

The real struggle, says Adam, is getting to a certain scale that prevented him from getting around to all the restaurants to do everything himself.

The biggest struggle he says, is the need to start trusting other people to do your job for you. And the real struggle, he says, is finding the right people to hire.

For example, he says he might have to go through 3 generations of people before finding the right CEO and people for the operations teams. Because at the end of the day, restaurants are all about execution.

But tech is the same way, he says. If you don’t execute a good experience, it doesn’t matter how good your product is.

Finding Talent in the Restaurant Industry

Adam says there’s nothing you can really do except build a great brand and hope that the right people will come to you. You can find people, sure, but you end up cycling through them if they’re not the right fit for your business.

The first step, he says, is to build a great brand. After that, you let people come to you, hire them, work with them, and give them the power to execute on their vision and your vision together.

Being on the Brink of Failure

All of Adam’s companies were on the brink of failure in the beginning, he says.

You have to start one customer at a time, but you never know if people will show up and if you’ll be able to maintain your operation.

When he started Umami, for example, the first few months were really scary and he didn’t think he would succeed, but by month three, it took off.

The Importance of a Cross-Negated Mindset

Going back to touch on the physics of things for a bit, Adam says there’s a difference between affirming something and negating something.

Affirming means you’re putting your will behind something, while negating something is just the opposite.

A lot of people get caught up in the affirmation side of things, acting as cheerleaders for their business.

But Adam attributes his success by starting out with a negation perspective. He still showed up everyday and did the work, sure, but he had a strong attitude of skepticism… almost a controlled pessimism fused with his affirmative actions.

A cross-negated mindset means you affirm the temporal side of your business (showing up, doing your job every day, working in the moment), and negate the overall essential value of your brand.

Advice to Someone Just Starting Out

Adam says he gets asked for advice a lot, and the only piece he gives is to do it yourself.

Don’t market your business to death or drown yourself in research. Instead, look inside, see what you’re passionate about, and go with that.

It’s easy to over-think things and get too many people involved, he says. But that dilutes the overall purity of your brand.

Following the Physics Because They Work

Adam says there’s a reason why some people can start multi-billion dollar businesses and others struggle to find a job that will pay them $50,000 per year.

Having a negation mindset is really important.

The only thing Adam does in running a business is to follow the guidelines of the physics he outlines in Continuum Physics, and it works for him every time. It’s all about finding what works and doing that repeatedly.

Making Changes at 25 Years Old

Even if he had the power to go back in time and change something, Adam says he wouldn’t do it.

It’s easy to say that you want to change the failures, but in reality, the failures are what led you to your success.

Everyone at 25 has to go through some failures, he says, and without those failures, there’s no chance for success.

In terms of his career trajectory, he says he wouldn’t change anything. He may not have done everything right from an outside perspective, but he’s certainly done everything right from the perspective of his own personal goals.

How to Learn New Things

Adam says that to learn, it’s important to keep your eyes open and live in the moment.

Most people, he says, go throughout their day with blinders on, and don’t pay attention to the jobs of other people. But by paying attention to other peoples’ jobs, you learn new things.

And once you make a passionate connection with a particular topic, Adam says to research the hell out of it.  Take advantage of the free information on the internet and learn as much as you can.

Day-to-Day Working Advice

“Work as fast as you can, learn from your mistakes, and definitely work on the things that need working on and manage your time wisely.”

One Productivity Hack

Though Adam tries to stay away from the administrative side of things, he doesn’t outsource his appointments and manages his calendar for himself.

If you have 10 hours available to work each day, he says you need to tie it all together into some package of usefulness and get the ball moving forward a little bit.

“If you outsource the control of your time to the point where you’re so busy,” says Adam, “I feel like you’re losing productivity over time, and losing focus.”

One Must-Read Book

Not meaning to get too overly promotional, Adam suggests Continuum Physics.

The reason he spent the time to write it was because he couldn’t imagine a more important book about there.

To learn about reality, he suggests reading Continuum Physics.

But to learn about life, he suggests The Works of Shakespeare.

Both together make for a well-rounded person.

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