Meet the restaurant Medicis of Salt Lake City
If you’re a startup restaurant brand, this is your dream team. From left, Four Foods Group CFO Tyler Nelson, Chief Restaurant Operator Nate Duvall, CEO Andrew Smith, President Shauna Smith and COO Josh Boshard.
Photo by Dave Blackhurst
There’s a restaurant renaissance happening in a suburb of Salt Lake City. Much like the wealthy Medici family that bankrolled some of the greatest Renaissance artists, Four Foods Group is empowering early-stage restaurant concepts to become the next Leonardo da Vinci of fast-casual or Michelangelo of sandwich sculptors.
Restaurant founders are a lot like artists. They’ll work themselves ragged, grinding through the many challenges of running a business with sheer passion and grit.
“It’s a chaotic mess, they’re just very primitive when it comes to business. They don’t know what they don’t know. They’re doing well kind of in spite of themselves,” said Four Foods Group CEO Andrew Smith. “There’s no life, no balance and there is no opportunity to scale because you’re that inefficient. Most brands at one to five units are like that.”
As he describes those issues, he gets pretty animated.
Smith is close to seven feet tall, with a head of long, arrow-straight hair. Commonly spotted wearing stylish boots and a wrist full of bracelets, he might be mistaken for a successful heavy-metal guitarist or professional wrestler—he does have a penchant for calling everyone “brother.” Does his crisp corporate dress shirt hide armfuls of tattoos? Maybe. Suffice to say, he stands out in a crowd.
His approach to business stands out, too. The systematic approach he’s using in the restaurant industry is a lot like his past as a serial tech entrepreneur.
He tackled marketing with CaptureQuest, financial education with MoneyWizard and the construction industry with a company called AxisPointe. Aside from the dot-com fondness for mashing words together, all three companies had a common goal of quashing inefficiencies with smarter systems.
But it wasn’t a grand plan to jump into restaurants. Their first restaurant was essentially something for Shauna Smith, his wife and business partner. The sport-jacketed dynamo is a natural foil to Andrew, translating his passion and big ideas in real-time.
In fact, her new role as president of the company puts her directly between him and the emerging brands they seek to help. But this is the first time the two have worked together officially; while he was in the tech industry, she was at home with the family’s two boys.
“We were doing it as a pet project, so it was like, ‘Let’s get me something to do,’” said Shauna Smith. “I took care of the day-to-day and he took care of the back end. Then we realized this is our thing. We really liked what was happening, we loved being in the hospitality industry and creating that many jobs with one building and one restaurant.”
And for a tech entrepreneur in 2008, it was more attractive than riding the bubbles and the recessions. Even though Andrew Smith was able to sell his companies, the boom-bust cycle was not pleasant.
“The whole market had been crushed. I had gone through three dot-com bubbles and then the recession, too,” said Smith. “That was the time we opened going through the recession and thinking, Gosh, you know, our restaurant is killing it. People are still eating, that’s recession-proof—I like that.”
So in 2009, the duo pivoted fully to the restaurant industry, but brought some key Silicon Valley lessons to the Salt Lake Valley. “That’s why we started Four Foods, there’s inefficiency here, just like I saw in tech. So we decided to find solutions to make things more efficient,” said Smith.
The counter at R&R Barbecue, Four Foods’ meaty concept with seven locations. It was started down the road from SLC in 2008.
‘Buy, build, sell and repeat’
The first restaurant they worked with was Kneader’s Bakery & Café, which started just down the road in Orem, Utah, in 1997 with a big emphasis on the bakery.
“I looked at it and it was a very popular brand locally, it had a cult following but they had only grown four units in 10 years which is slow in my mind, especially coming from the tech world,” said Smith. “I saw that there was something supremely broken.”
So Andrew and Shauna started implementing systems one after another and replacing those that didn’t work. They put in systems for staff training, onboarding and leadership training, then worked their way up to vendor contracting for substantial savings because of the company’s scale and empowering leaders to push the brand further.
“Thinking back to those days and where we are now, almost every system either needed to be refined or completely replaced and it’s all by now been completely replaced,” said Shauna Smith.
As they grew the Kneader’s brand from four units to the 50 they own and operate today, it was not the typical franchisee-franchisor relationship. As they grew, the Smiths radically changed the brand to expand the menu and add a small-but-mighty retail program to extend profitability even further. As they built up the chain, they also built a playbook to do the same with others.
The strategy sounds a lot like another Silicon Valley mainstay: the business accelerator. But instead of funding a novel app for a billion-dollar buyout, Four Foods helps push through those chaotic early days to a point where the brand can stand on its own.
Nate Duvall, the chief restaurant operator at Four Foods Group, summed it up succinctly: “We have a plan to get to a certain point with each one of the concepts. Essentially, buy, build, sell and repeat,” said Duvall.
Kneader’s is the furthest along in that cycle, and behind it are three other independent brands: the seven-unit R&R Barbecue, the seven-unit Mo’Bettas (a Hawaiian food brand), the 18-unit Swig ‘n Sweets. And while the team isn’t saying anything publicly yet, they expect to add two more brands in 2019.
Shauna will act as the bridge between the corporate office and the growing group of brand leaders who line up for insight or a partnership with Four Foods.
COO Josh Boshard, who worked with Andrew at AxisPointe previously, handles a lot of the early-stage conversations with new brands. He said it’s a little like dropping their kid off at school for the first time.
“That founder, it’s their baby, right? They’ve come to Four Foods for help to scale,” said Boshard. “So we’re putting all those policies and procedures in place and that’s a bit of a learning curve.”
But once the Four Foods Group system is in place, he said they start seeing benefits immediately and can actually focus on operating the business.
“Then they start seeing the benefits of scale,” said Boshard. “They see cost compression instantly, so that makes a difference. Essentially they’re getting support you’d see at 50 stores.”
In 2017, Four Foods put the playbook to work in an established brand after acquiring 71 Little Caesars restaurants and building a satellite office in Alabama.
COO Josh Boshard says there’s a lot of “grit” at FFG, as everyone pushes forward together.
Swept off their feet by the Smiths
Of course, the Smiths had a lot of help to get here. Andrew’s college job at Olive Garden and Shauna’s short stint as a Subway “Sandwich Artist” weren’t quite enough experience to become an operator with more than 150 restaurants.
The Smiths built Four Foods Group by following that adage of surrounding yourself with people smarter than you. And they were persistent when they found the right people.
Brad Giles, the vice president of real estate, development and construction at Four Foods, was actually a neighbor who helped with some personal real estate and finance projects for the Smiths.
“He sent me a text one night saying, ‘I’D like you to consider coming over to Four Foods Group to do development.’ I said no,” said Giles. “I went to lunch with Andrew, and three days later, I started.”
Much of the management team has similar stories. They’re happy, successful and—boom—they’re swept off their feet by the very persuasive Smiths.
Duvall was one of the first people hired from the outside, and it wasn’t an easy pitch. He had come up in Subway, working his way up from store manager to development manager for Utah. When his brother started working at the group’s first Kneader’s location, he came to help out a little. It didn’t take long to get noticed.
“Shauna called and asked what we had to do to get you here full time,” said Duvall, who was looking forward to a winter off from his new landscaping business. “I said, ‘It’s going to take ownership.’ She said, ‘No problem, the next store we do you have ownership.’ So I should have asked for a Ferrari, too!”
And Duvall wasn’t the only one who sought ownership. Much of the management team shares in the company equity—a fairly common perk, especially with the Silicon Valley DNA in Four Foods. But equity has been a key factor for keeping talent.
The outcome has been incredible, especially as turnover across the restaurant industry hovers around 70 percent, according to the National Restaurant Association.
“I haven’t lost a manager,” said Andrew Smith. “You have to do something to keep people around and make them feel part of it. I’ve been doing it for 10 years, that’s one thing I pulled from the tech industry.”
The hardest part of the equity program is just explaining it. Smith said the majority of managers say it sounds great, but they don’t really get it. But once they do, they really start to take on an ownership mentality. That first payout, however, usually connects the dots.
“When we say, ‘We’re paying out a $20,000 dividend, so here’s your $6,000.’ And they say, ‘Seriously?’ They close that gap on what equity means,” said Smith.
Prospective partners, many of whom come from within the restaurants, can buy into a location for that chunk of the upside. The amount of equity varies by brand, from 5 to 10 percent for $40,000 at Mo’Bettas to 20 percent for $12,000 at Swig or $125,000 for a 30 percent stake in a Kneader’s location.
A sampling of Mo’ Bettahs, the Hawaiian concept known for long lines and large portions.
A heartbreaking moment
The Smiths said it’s not a dollar-for-dollar trade. The future “sweat equity” from the managers who are working hard in the store every day makes up for what the company gives up. Creating opportunity for the rank-and-file was a major motivator when the company first started in the depths of the recession. Then, executives were clamoring for a counter position.
“I think both Andrew and I had this heartbreaking moment where we opened our first store, and we had 60 positions to fill. We had 900 mostly very overqualified applicants, it was insane,” said Shauna Smith. “There was this moment where we thought, Wow, we can create this many jobs and this much opportunity very quickly.”
A job back then evolved into life-changing salaries, and a big part of why they keep growing: to create more and more enticing opportunities.
“We’ve had people make $250,000 a year, people coming in and never making more than $50,000 or $60,000,” said Andrew Smith. “We enjoy that and they love it, especially after they’re beat down because it’s hard work.”
And from a control perspective, though the Smiths say they never like to pull that card, the partnership keeps operators and store-level managers around. They emphasize just how much work it is up front, but if burnout looms, the equity partnership can convince waffling store-level managers to remain at the location when things get especially hard.
“It’s been a couple people out of all our partnerships that have come to us and said, ‘I’m tired, I didn’t realize how hard this would be, I think I’ll go back to a sales job,’” said Smith. “We don’t want you to be miserable, that will hurt us, but someone coming and saying they just want to get out, no, you made a commitment.”
Keeping the mishmash of brands, equity partners and locations in harmony is a uniquely freeing management style. All in the management team said while they like heading up to Andrew’s well-appointed office, there aren’t endless meetings or procedures. Really, for how systematized the approach is at the unit level, the management structure is largely free-flowing.
“My philosophy is to just not micro-manage. People want to breathe and decide how to execute on their own,” said Smith.
An extremely high degree of trust in the executive team keeps things running like a startup. Everyone knows their role, and they push forward as best they can.
“There’s a lot to get done, but there’s a lot of trust. So people want to go forth and make sure things go well,” said Maryam Chaney, VP of food and beverage. “I love that, there’s nothing about them that says I know what’s best, I know the way to do this. So they ask a lot of questions, they want to bring in the people that know. From there the best decisions are made.”
That kind of culture encourages free speech and emphasizes a common refrain in the office.
“The best idea wins, we say that all the time,” said Shauna Smith. “We’re not the most experienced in everything, but boy do we have the smartest people around us. So we all throw our ideas out there and it’s really evident what the best idea is and we all get behind it.”
The Mormon connection
While both Andrew and Shauna grew up Mormon and live just a short drive from Temple Square and the Mormon Tabernacle, their religion isn’t a major part of the story.
And as their expansion far out of the Salt Lake Valley shows, the systems honed in and around Salt Lake City can work elsewhere. But they said the Mormon community does help get the word out ahead of their marketing.
“The difference is because Mormons do church and activities during the week, we’re much more engaged with our neighbors and their kids, which is not really how it is in a lot of parts of America,” said Andrew Smith. “There’s a big benefit to that social network.”
It might not make a company great, but a great company’s reputation will spread further faster. He’s seen that at the Kneader’s brand. As the company expanded to Kansas, some of the first people in line were Mormons who heard about the Utah brand from their Mormon friends back in Salt Lake City.
“I think that there is a benefit for entrepreneurial startups here,” said Smith. “If you hit it right it will be supported fast and it will spread fast because there’s so much more social interaction.”
What the management team says
Chief Restaurant Operator
What stands out to you about Andrew and Shauna?
I don’t think I’ve ever seen them be negative, and I think they’ve always got this positive, upbeat, optimistic way, but they’re also realistic. They think they can conquer anything, and I don’t think there is a doubt in their mind.
What would it take to leave?
Probably a contract in the major leagues, but I’m 40, so I don’t know if that’s going to happen.
Chief Operating Officer
What’s the biggest challenge for Four Foods Group?
Our biggest challenge for the past few years is waiting out to see who will be the industry leader in technology. We don’t want to go with anyone who is bleeding edge, but someone median edge because the legacy systems don’t work for the type of scale we’re looking for.
What would it take to leave?
I’m hit up daily on LinkedIn, but there is nothing that would move me to leave what I’ve seen here. And that’s because the defeats have felt like wins, even when it’s tough or really hard and we’re grinding or something slips, or there’s a major fire within the brand, we work together to make it happen. I haven’t had that in other companies and I don’t see it in other groups. Even our vendors want to be working for us.
VP of Real Estate
Why do you like to control the real estate?
The first reason is control, it gives us great control over what happens with a site. The second component, with those brands, it helps offset the costs for my group. We don’t treat real estate as a profit center. We’re extremely driven not to use it as a profit center so we keep the rents as low as possible.
What would it take to leave?
It would take a significant change in how FFG does business or the culture. Culture is thrown around a lot, but this is the only organization I’ve ever been in that has a very positive, living, breathing fun culture that really drives success. It’s not because we’re forced to stay late or come early, it’s really that everyone does the best we can and we pull in really good people with that.
VP, Food & Beverage
What’s one of your favorite moments at the company?
I have a great video of Andrew in a nice suit mopping. They’re all like that; you’ll see Shauna up on a ladder dusting. They’ll do that and pivot right into an executive meeting. It makes a difference, seeing people take out the trash.
What would it take to leave?
There’s so much potential here, there’s such a future at this company, it would take a lot. I’m having fun and I see a big future ahead of us, so I’m staying right here.