While huge swaths of the foodservice world started to crash and burn in March, Nick Kokonas was well-armed and ready to fight. The founding partner and co-owner of Chicago-based The Alinea Group (TAG) and CEO of the reservation booking site Tock had been closely analyzing the potential fallout of COVID-19. Without quick action, he knew his world and TAG’s team members would be deeply, perhaps fatally, fractured.
In an insanely short amount of time, he had his restaurants churning out carryout meals, previously an impossible idea for Alinea, the only three-star Michelin restaurant in the Midwest. He also launched Tock To Go to ensure the platform’s restaurant users could begin contactless selling of ready-made meals.
A rare, unscheduled slot in Kokonas’s jam-packed schedule allowed for a conversation (edited for length) about the inspiration behind his emergency action plans and how operators can plan for the future.
Q. You seem to have an infallible sense of what to do, way before others. How do you so aptly identify problems and quickly cobble together solutions?
A. Well, I don’t know if that’s true. My training as a trader taught me to see things as they are, not as I wish them to be. Daily business is, well, pretty simple. You run, you refine, you iterate. (You make) thousands of small improvements and then keep doing that. But once in a while – in my life, it’s been about once every 10 years – you see something that’s very lopsided in terms of risk. Before COVID-19 was a pandemic, it represented one of those risks. As the booking data started changing, slowly at first, I could see that it was potentially disastrous. So you hope you’re wrong in the outcome, but the decision to plan is actually quite easy.
Q. The first reported COVID-19 case in the Chicago area was in late January. As things heated up, when did you start formulating contingency plans?
A. Late February, basically, when I saw what was happening in Seattle.
Q. As soon as on-site dining shut down, you transformed the highly experiential 18-course meals at Alinea into three courses of carryout comfort food. Roister, Aviary and Next were similarly distilled. How’d that happen so fast?
A. It was a way to keep people working. (The restaurant staff has mostly been furloughed, unpaid but eligible for unemployment with benefits still intact from Alinea Group; immediately prior to furlough, full-timers received a $1,000 payment, part-timers half that amount). They can come back to work and help us with this if they want, and most of the kitchen staff has. The chefs were instantly on board and came up with the menus. At first, everyone was trying to be super creative as usual, which is great but not now. I had to keep telling talented people to dial back the creativity. Maybe we do that in week three or four. For now, just get up and running with delicious food. Don’t cut corners; make it perfect.
Q. You’ve removed titles, ranks and pay differentials (Those with an ownership stake, including Kokonas and Chef Grant Achatz, receive no pay). How is that working out?
A. Fine. Everyone gets it. The roles haven’t changed. Leaders are leading. Young cooks are learning what “the push” is.
Q. When more normalcy returns, will you be able to revert to a more structured system?
A. Of course. That’s just execution. That’s easy.
Q. Early in the crisis, you were selling about 700 meals per night. Above or below what you had projected?
A. No, we’ve ramped up to much more than that. For the coming week (first week of April) we have a little over 7,100 meals sold.
Q. You’ve posted lots of documents on Twitter, including internal memos about processes and procedures. Why is it important to be so open and communicate what you’re doing?
A. My dad used to tell me that you can have a great idea and shout it from the hilltops, but people either won’t listen or won’t get up at 5 a.m. to work hard on executing the idea. Ideas are great, but they are absolutely worthless unless you act on them willfully and diligently. So I lose very little, competitively speaking, by sharing. And frankly, it’s the right thing to do. I want others to succeed, and in turn, they help me succeed. It’s about 50-50 being helpful and ‘greedy’. And I’ve met some amazing people that way.
Q. Let’s go back to March 1 when COVID-19 was spreading but still an abstract problem. What should operators have done to prepare?
A. Go even further back. Operators need to be questioning everything ... and “own” their own customer relationship. Then, in times like this, you can quickly monetize that by serving those customers. Beyond that – cash reserves. If you are running 5% margins, not paying any benefits, only relying on tipping, not offering any retirement plans and you consider that “well run,” then you’re apt to go out of business anytime demand lags even a bit. The unfortunate thing that I tell many chefs who want to open their own places is that if they didn’t love doing HR, spreadsheets, food-cost analysis and purchasing negotiation while working for someone else, well, they’re unlikely to enjoy that in the future. If you don’t learn to love it and do it very well, you won’t survive.
Q. Tock has roughly 3,000 clients. How are you supporting them?
A. We gave back all the monthly fees to restaurants and wineries for April. That’s a big dollar amount, but it’s also symbolic: a show of our commitment to them. We also are helping them communicate with clients, reschedule and refund diners and, of course, build new tools to help them pivot operations in the next few months.
Q. You put the “go” in Tock To Go pretty quickly. How many people hours were required to build it?
A. We haven’t done the post-operations document for it yet, and we keep improving and iterating on it. We had about 15 people working on it – engineers, designers and senior-level management – for about a week, more or less constantly. We utilized existing data structures of “tables” to convert to inventory” time slots. We built it to resemble how a kitchen works in a sit-down restaurant instead of just slinging burgers out the back door. We’re using it for TAG, and it’s working like a charm. It’s definitely something that will be part of the product, albeit in a more refined manner, forever.
Q. How many Tock client restaurants are using Tock To Go?
A. About 215 restaurants are online and actively selling right now (in late March/ early April) approaching $1 million in sales per day. We have over 850 in the queue around the world that are either in process or have expressed interest. Many of them are realizing that it will likely be months before they are able to reopen, and even then, it will be at a lower demand level and they may need to keep curbside pickup as an option to stay viable.
Q. How many meals need to be sold per evening to be profitable?
A. Define “profitable.” We are doing a ton of sales compared to being closed, but revenue is of course a lot less than normal. We are paying everyone who comes in and expanding that. We are working with our landlords to defer rent. One of them is being obstinate and does not see the scope of the issues. But yes, day to day, we are making money, and we will build a reserve of cash to reopen, pay obligations and distribute the rest across the team. I’m super proud of how we have responded.
Q. At present your restaurants are carryout only. Any plans to add delivery service?
A. No. I don’t trust the timing or quality of the delivery services, and I don’t want our people driving their own cars for insurance reasons. Plus, the pick-ups have been fast and smooth.
Q. Regarding the pandemic, what are you most afraid of for TAG and for yourself personally?
A. For individual employees of TAG, we’ve let them know that we have their back and that money from our operations will flow to them. We will reopen. My biggest concern is that if demand is very low when we do reopen that we will not be able to keep everyone on staff. That’s a terrible feeling. Me? I’m just tired but doing what I always do.
Q. What has been the hardest part for you?
A. It definitely has been emotional. I almost cried getting a package from our UPS guy at home because he’s just such a nice person and still had a smile on his face. I feel very appreciative of the small things, as I think many of us do. I know some big-name folks who are basically broke and trying to save their own asses instead of leading. And, frankly, I’m more worried about the future of our country and what that means for my kids. This has been an exercise in terrible leadership, but with some really striking examples of people who have stepped up, too.
Q. How do you make yourself available to team members during these stressful times?
A. Same way as always – email. Everyone has my direct account and of the support team in HR and business development. My email is a 24/7 operation. If employees need something, I’m personally ready to help, and that’s before, during and after this.
Q. What do you anticipate will be some of the fundamental changes in a post-COVID restaurant industry?
A. It all depends on how COVID-19 ends. If it’s a long, slow process getting back then I think all of those lessons will be learned for a while at least. If an antiviral cure is found that is safe and effective, it’s likely that not much changes at all. Just look at (the market crash of) 2008-9 and where the bond markets are today. Everyone conveniently forgot those lessons.
Q. What would you have done differently or better in the earliest days of the pandemic?
A. We didn’t do everything perfectly, by any stretch, but I’m content with what we’ve done and continue to do. We saw the situation clearly, came up with plans and worked to implement those plans.
And we did it under a lot of stress and terrible circumstances. We owned our situation and our future. Honestly, it feels great. I had a conversation with Grant (Achatz, co-owner/chef) and he was like, “Man, it feels bad to say it, but I feel very alive right now.” I knew what he meant.
ON THE MENU at two restaurants of The Alinea Group:
Alinea, an 18-course experiential menu, starting at $210 per person
CARRYOUT: Coq au vin, 50-50 mashed potatoes, salad dressed in mustard vinaigrette and dark chocolate pot de creme, $39.95 per person.
Next, a modern interpretation of a global or regional cuisine, such as Tokyo, starting at $155 per person.
CARRYOUT: A nod to Mexico City with pork belly mole, rice and tortillas, an esquites salad and a tres leches cake for $24.95 per person.