He had a 9-Figure Exit (Then Almost Lost It All) | Ep. 412 with Steve Salis CEO of Catalogue.co

0:00I moved to New York City with no money. I put every dime I had into the business. Then to see what came of that by opening that first store up was unbelievable. We had lines out the door every single day. Steve Salis built one of the most scalable restaurant brands in America, achieved a nine-figure exit at 35, and lost it all to COVID. This is how he rebuilt. When you're going through hell, you just have to keep going. I think I'm very dangerous because...

0:36Everyone I know is like, I want to open a restaurant. I want to be in hospitality. But I don't think they understand the grind, how hard it is to open a restaurant, to own a restaurant chain. What is it really like? It's a lot of work. It requires really a few different ingredients, no pun intended. It requires building a great brand, having a great product, driving a great experience. And then you wrap it with an extraordinary hospitality model. You know, it's funny when you're building something for scale. I think a lot of people don't recognize in order to get scale, you have to have a lot of people that like what you do.

1:19Otherwise, you can't scale it because there's not enough excitement about what you're doing. So when you're able to define your business with those principles and then have the, you know, the model that can work, you can then scale it from there. It's a hard business, but I have a lot of friends that love it. They go in, they enjoy restaurants, they go out to eat every day and, you know, they talk about getting into it. But the reality is, is it's a really challenging business to be in. But, you know, I think a lot of businesses are challenging to be in. And so we just happen to have chosen that as one of the things we do.

1:55What do you think people are so fascinated with restaurants? I don't know what it is. I feel like when I think of, okay, hey, I want to go meet somebody. I'm going to go to the restaurant. I feel like we wrap our lives around going to restaurants because that is the place where we meet our community, where we meet our friends, our family. Why do you think that is? Well, I think in a lot of cases, they have cultural resonance, right? They're beacons to the communities by which they serve. And so the energy is a byproduct of creating a great environment. And a lot of times the people within the environment is what makes the experience so unbelievably great.

2:34um i you know when i built pizza as an example um i wanted to recreate the mom and pop pizza shop experience because that very thing was so uh essential to the dna of building that company i remember as a child um how important that local pizza parlor was to my life what was funny was as i got older the pizza wasn't actually that great but it was a conduit for connecting people connecting community inside of one place. It didn't matter what you did or didn't do. It didn't matter how much money you did or didn't have. It didn't matter what ethnicity you were or weren't. Everyone felt like they belonged in this environment.

3:16I think that's emblematic of what a restaurant can provide to its community is that, and you know, to be candid, our pizza business was built off of those origins, those very origins. It was how do I create or recreate the mom and pop pizza shop experience for the today and the going forward consumer? How do I tap that zycus, right? How do I tap into that, that bringing you back to your, you know, your formative years as a child, where you're fighting with your brother over that last slice, when you're engaging with your parents and connecting with them about your day at school, or whether it's you're there with friends or other family members, or you run into others that you know from school or from the neighborhood, like that's what a restaurant can do.

4:04It's the power of that. And I think that, you know, it shows out to be time and time again, the thing that definitely is a critical component to being successful in the business. So what did it take to scale your pizza company to a point that it was a nine figure valuation and you were able to exit it? I saw an opportunity in the pizza industry. Taking a step back, I was in New York City. I moved there when I was 21 years old. I was a college dropout. I was a scholarship athlete. And I moved to New York because I had a different vision for my life. And I started out getting into the food and beverage industry, largely to supplement myself because I lived in a one bedroom apartment with four other guys.

4:52And even then back 22 years ago when that happened, And rent was very expensive coming from New Hampshire to New York. And so I worked in the food and beverage industry. I then got into the nightlife industry and I learned a lot about it. Street guy. I just started learning the business by doing, seeing. And eventually that got me into opening up my own bar in the West Village. I wanted to open up my own business. I was about 24 years old and that happened. It was a tequila taqueria bar. And it happened right when the financial crisis took place in New York City. At that very time, I actually pivoted the business model because the financial crisis happened right before we opened the business.

5:33And it was at that time where I said, OK, we need to deliver a premium product and experience, but we have to price people in. Because I saw firsthand what all the bravado and the moxie that New York had, how vulnerable it became so quickly. And so I felt like if I could create an environment where people could sort of lead their lives at the door and then come in and enjoy themselves in a premium experience, but having, you know, a really good value proposition, I felt I could have a business that worked and it was working. And then I had this idea because below me, this was a second story bar in the West Village.

6:08Below me was a Qdoba Mexican grill. And I happened to be sitting there eating a, I think it was a quesadilla and I'm watching people line up. And, you know, at the time, you know, we call it the walk the line business model. You know, we come in and you choose your, you know, and build your product and whatnot. And I was sitting there and I literally had an epiphany and I said, why is no one doing anything like this for pizza? And I started doing a lot of homework and And long and behold, no one really was doing anything like that for pizza. At the time, you know, being in New York, you buy the slice on every block, right?

6:42And the barriers to entry are low. It's highly bastardized. And frankly, I got to tell you, I felt like a lot of the buy the slice pizza shops are pretty gross. You know, I really do. I thought they were gross. They're sitting in the case for a long time. You know, you come in, you say, okay, I want this slice. It takes you five minutes to reheat the slice anyways. ways. And so I felt like if I could make that experience better, but bring some semblance of quality and sophistication that I was starting to see happen in sort of the fine casual or the fine dining side, and sort of bridge this proverbial aisle, if you will, I thought I had a model and a positioning of a business strategy that could be really successful.

7:21And then of course, we had to drop in the brand over it, which was to recreate the mom and pop pizza shop experience. and that's how Ant Pizza was started. I mean, Ant Pizza was every sense of what I stated a moment ago, which was pizza was the conduit to connecting community and place. And that's why it was called Ant Pizza. And so when we opened up our first store, which by the way, I left New York City, I traveled the United States for six weeks. I went to all these emerging markets back in 2011 and Washington DC was the last place I came to. I'd never came here in my life, not even for a field trip or anything.

7:59And I got in the back of the broker's car. I took the train from Penn Station to Union Station, from New York to DC, traveled the market, got back to the train station to head home. I looked around and I said, I think I needed to be here. I got here. It was a real struggle and a real grind to open my first door. Matter of fact, I opened in an area where my brokers told me I was playing Russian L.A. and I had a bullet in every pocket. And I said, I don't really give a hell. I'm doing it anyways, because I can't keep losing opportunities. I got to open this business up. I was, I mean, I put every dime I had into the business.

8:32So I was, you know, I was broke. I had no income coming in. I put all my money into it. And then to see, you know, what, what came of that by opening that first store up was unbelievable. We had lines out the door every single day. And that's really how it started. And then from there, you know like i said earlier your product brand environment right are three really important ingredients uh again no pun intended and then by a quality model and that became what was very scalable so let's break this down because huge risk like you're going into like you're saying there's a pizza place on every corner everywhere like every city every state you can always find a lot of pizza and it's been it's like a something i don't think it's really changed in a long time so one part formula is maybe it's a good thing if it hasn't changed in a while you have you know some way to come into the market it seems like you look at high value so you're not cheap not cheap pricing but but good good value for the money at the same time you're you're doing something that is different which is massive risk and on top of that it sounds like you might have an idea for something, you might build a restaurant, it might take time, but the whole world might change.

9:51Like there might be a recession by the time you open, there might be a collapse or something, which obviously puts even more risk. How do you weigh the risk? Because that's what I'm hearing is restaurants come with an inherent large amount of risk. And you're doing it also in a space where at least before it had never been done before. I've taken a lot of risk in my career. And, And the word risk is a funny word because it has a negative connotation. You hear the word risk, it hits anybody, even people who make a lot of decisions. It innately hits you in a weird way. And then what ends up happening, and by the way, present company included, you go to the worst place you could ever imagine when you think about the worst case scenario that has like a less than a 1 % chance of happening because we're conditioned to go there.

10:45What has been really helpful for me is then able to say, okay, if that were to happen, that very sort of doomsday situation, I got bigger problems as I suspect many others do too. And that happening is so remote. And so what I then do is I walk myself back and back and back and I get to a place of quantifying risk. We put so much stock in risk and I think it deters people from doing things. When in reality, I think it's important to quantify the risk. Understand what you're getting yourself into. There's three things that we do. We look at the known knows, the known unknowns, and the unknown unknowns.

11:27We can quantify the known knowns. What are they? We can lay them out. We can quantify the risk. We can quantify the known unknowns to the extent of tabulating what things could happen and just getting comfortable with that. The unknown unknowns are just life. So you made the reference of, hey, you're building something and then you have an economical event or something like that. I can't control that. But what I can do is I can put a proactive strategy in place so that as life happens, we can act reactively in a thoughtful and pragmatic manner. And that's a principle that I've adopted across all my companies.

12:03And it's something I've been able to develop over many years of building business. I started the pizza business when I was 27, 26, 27 years old. I sold it when I was 35. I tell people I stubbed my toe a lot, but I never broke my foot. Okay. And there were a lot of things that went into that. Um, and, and look, you know, there's luck, there's, um, timing, you know, I can never build a business like that today. It would not resonate to the extent that it did when it was launched. And that's where preparation, timing, luck, and execution, you know, and perhaps some other things come together. And those forces enable you to take the lead.

12:45But quantifying risk is a really important thing in business and in life. And I would push people to really think about whether it's something in the personal or the professional side, to really try to understand what the risk is. Because, Some of your greatest breakthroughs come by taking those risks. And so I take a lot of it, but it's risk that is quantifiable to the extent it can be. And then I make the decisions pursuant to what I think I need to do. The higher the risk, the higher the reward sometimes. So you think, because we hear a lot about timing, right? We hear a lot about timing from a lot of people.

13:27Like if I was to do what I did then, it might not work now. Well, what I think I see is visionary, where a lot of people come up with ideas around the same time, but they didn't do anything. I almost feel like the most successful people, and this is what I'm hearing from you, is you really are a visionary. You're sitting inside a restaurant. You're envisioning something that is missing in the market somewhere. You go to these cities, and you find a place, and you're like, this is where this place needs it. You really are a visionary. Do you think that is the biggest separation of highly successful CEOs?

14:03I think that a lot of people have ideas. You know, you've ever heard someone say, hey, that person took my idea or hey, that was my idea. A lot of people took my ideas, Steve. Yes. Well, but here's the thing. There's a difference between having an idea and actually doing something about it. And the reality is the successful executives, I think, generally have the innate ability to have an idea and execute on it. Like, I think that's why I'm really dangerous. And I say that humbly. I think I'm very dangerous because I know how to execute. I know how to operate. So I can take an idea and I can actually, in a lot of cases, make it come to life.

14:39And I think that is the secret sauce, right? The secret sauce is bringing an idea and taking sort of the, I don't know, pick the one side of the brain that's the creative side, we'll call it, and bringing the other side of the brain, which is the tactical side, and bringing them together to formulate an opportunity to take a leap in doing something. So, you know, ideas are great. We have a lot of them. We stress test a lot of different ideas, but the biggest thing is being able to execute on them. And I think that we've been able to do an extraordinary job on that. And that's where you can really sort of see substantial breakthroughs as a result.

15:14When did you have to change your mindset now that you're, you, you've created a luxury restaurant empire. I'm making the phrase up. It sounds, I feel like that's what you are. I'm defining that as you. When did you change your mindset? Because I imagine it's a huge mindset shift, owning one restaurant, two restaurants, like locations, to then owning multiple restaurant companies and brands. What was that mindset shift? And when did that happen? I made a comment earlier when I said, prior to opening my restaurant bar in the West Village, if you recall, right when the financial crisis happened. And I opened it right after that.

15:57And I made a very specific business decision. If you recall, I said, hey, I went and took this premium experience and I decided I'm going to bring my prices down so that I can support, let people leave their lives at the door, right? Remember? And that business model was successful. Well, innately, that's what I thought I needed to do. I made that decision when I was 24. What's fascinating is that actually has evolved into a principle that I think is so crucial in so many of the things we do, which is this idea around premium and approachability. It's the very juxtaposition that actually makes a lot of sense for us.

16:32It's historically taking what premium is, premium experiences usually come at premium prices and approachable experiences generally come at approachable prices, and actually stress testing them sort of, you know, and bringing and developing and designing and putting out all these very unique outputs that I think are so crucial to our success because it acts as a beacon as a principle to so many of the things that we do. So why am I able to own a bunch of brands and scale them out? It's because we come back to the singular principle of delivering extraordinary through the lens of premium and approachability.

17:10And then everything else cascades from there. And so by doing that, we're effectively in a belief system business. And then we leverage that to then, you know, build out multiple brands through acquisition and through development. And we scale them in a very thoughtful and pragmatic manner. And, you know, that's how we've been able to build our business. You know, you made reference to luxury conglomerates. A lot of those guys are in the singular belief system too. I mean, you know, to own 80 brands and five verticals and to do all that, I mean, you have to have a rubric for being able to do that.

17:45And, you know, we have ours and they have theirs. And once you have that rubric and you have that flywheel going, it can be pretty powerful as to what you can do. But one thing I just have to say, you still have to take care of your P's and Q's. Like you still got to drive great experiences. You got to deliver hospitality. You got to offer extraordinary products. and you gotta be able to deliver it every day. Yesterday's wins don't entitle you to today's successes. That is something I got from being an athlete. You have to win every day. There's a game to play every day and you go to play the game and you go to try to win.

18:18Otherwise, don't play the game. And when you do win, that gives you an opportunity to come the next day and prepare for the next game. It's no different than in sports. We were talking offline about the finals last night. Great example of, you have to earn it every single day. to be great in this business. You have to earn it to have an opportunity to play for an NBA championship. You have to earn it enough times, win enough times, have enough of the right things happen to get you to that place. And yesterday was a great example of a team that you thought was down and out. It just kept going and going and going.

18:52It's emblematic of entrepreneurship and business at its absolute finest that game last night. What was your down and out situation during your whole entrepreneurial journey? When was your moment, like you were the New York Knicks losing 35 points, but you came back to win with one? I've had a lot of them, but the one thing that comes to mind is COVID. COVID was such a, it's interesting. There was no playbook to deal with COVID. You talk, I said earlier about preparation, quantifying risks, known knowns, known unknowns, right? And that was an unknown unknown, right? That falls squarely in the unknown, unknown bucket.

19:32that was a very challenging time. Rooted with so much going on innately in my mind from the public health and life safety situation, my family, my friends, my colleagues, my associates, making sure they were safe and dealing with this once in a lifetime situation. Meanwhile, I have thousands of employees and trying to ascertain how to deal with that. Also having lenders calling me, Mr. Salus, you owe me$47 million. And I'm like, well, I have no business right now. And they're like, great. Well, we're going to look to proceed to take over your business. Oh, and you have a personal guarantee. You know, um, that wasn't awesome.

20:18Um, that wasn't awesome at all. And, you know, like I look back at COVID and I contend that everyone tried to do their best. No one knew how to deal with the situation. You know, that lender, while they were very aggressive with me, inevitably stood down. They knew I had no business. I had a business doing hundreds of millions of dollars that went to zero. You know, that's not easy to deal with. I mean, and I actually financed payroll for multiple pay periods to our staff. This was before government subsidies and all the things that did come out. And we were fortunate to, you know, potentially, you know, get those opportunities, but, um, that was really hard.

20:56You know, imagine having lenders knock on your door, you're putting out money to a business to cover people's livelihoods while having no revenue, not sure if, and when you're going to have revenue, having a lender thinking they might take over that part of your business, which is a massive part of my business at the time. You know, it's hard to say, stay safe, stay safe and well, When you have all these sort of extracurriculars going on, while also dealing with the personal strife of just everything happening around myself and others around me. So it was a really complicated time. But look, you know, like, you just have to keep going.

21:32It's one of the things I've learned in business and in life. When you're going through hell, you just have to keep going. Every day, one foot in front of the other. Um, every day you do your best and you try over many days that end up becoming weeks, months, and ideally longer. The more days you win of those days, the more they compound into things. Nothing is generally as bad or as good as they seem. And that's one of the disciplines I've had to, I think, develop, um, over the, you know, I'm, I'm in my early forties now, so by no means old, but like, um, I've had so many experiences at such a young age that are informative.

22:14I guess, you know, our experiences drive our views and our realities like we all have, right? Those things. But I just think that like, you know, you just got to stay at it. Nothing's as good or as bad. Try to stay even keeled to the best of your ability. We're human. And just keep going. You got to keep going. Endurance is the name of the game. It's the most important attribute in business is endurance. I mean, you could say to me, grit and tenacity, none of them would be wrong. It's just if I had to pick one thing it would be endurance you have to be able to out endure everybody else this sounds like we had david grutman on okay and before he mentioned something very similar because he does a lot of hospitality restaurants and such um and he mentioned about every day waking up if he was in the red which even to this day still worries him which was kind of shocking to me but i could see it's a very unpredictable business.

23:11If a war happens, all of a sudden people might not go out to eat, right? Like if something happens, you have so many uncontrollables within the business. What's been your personal sacrifice? Because I imagine like you said, 26 to 34, you were able to exit, you kept going, you continue to open more, like you're continuing, continuing, and continuing, I imagine there had to be a personal sacrifice. Yeah, I think that just I want to if I can go back for one second, I just want to make it the first or the point you were making in regards to David, you know, our business is relying on emotional beings.

23:52Okay. Right now, we have sentiment that's fairly low. You have inflationary dynamics that have increased. any time a consumer has to increase their spending on the staple side, like with gasoline or things like that, it reduces the amount of money they spend discretionarily, generally rule of thumb. So what does that mean? Well, that means that's less money for them to go out and eat, less money to go out and have discretionary experiences, leisure, anything of the sorts. Restaurants squarely, like I said, fall on that. So you're right. Things are happening all the time. And we're relying on emotional beings.

24:33We're also relying on a climate where the attention spans are lower and people are being pulled in all kinds of directions. And so to stay front and center and to stay rooted in and to be constantly thought of and be at the forefront of people requires you to just really continually do a good job and try to focus on the things I said. in regards to what I've spared. Look, I think this is not for the fate of the heart. You know, there's a lot that goes into being an entrepreneur, being in business. And one of them is, you know, dealing with your, you know, the mental dynamics that come with it and the stamina that comes with doing this.

25:14This is hard stuff. And, you know, just trying to make sure you stay close to yourself, check in with yourself, give yourself a little grace. You know, I'm very hard on my, I tell people like, no one's going to be more harsh on myself than myself. Like you could say something, you could say anything you want. You'll never move me more than I move myself as far as what my expectations are for myself. But that comes with a lot of demands and a lot, a lot of responsibility. And so, you know, I just try my best to give myself a little grace because that's good for everybody. I'm a human being. I'm gonna make mistakes.

25:56I'm not gonna be great all the time. Sometimes I'm gonna show up in these situations and I'm gonna be great and ready to rock. Hopefully I'm showing out that today. And in other times I might not. You know why? Because I'm a human being. That's why. And that is the reality of dealing with a lot of stuff. You wanna come in, you gotta be professional, you gotta be on your game. Being at the top is thankless and it's lonely. And you have to be understanding of that. If you're going to want to be great at what you do, that's the trade off for that. And also there are other trades to family, personal stuff, etc.

26:36That comes with leaning in at the level that, you know, myself leaning in or David or others that you have interviewed that are running companies and building things. That's, that's what comes with it. When you think about motivation, if somebody tells me I can't do something, or if somebody doesn't want to like partner with me and I are collaborating, I want to, I get really, really motivated to prove them wrong. Right. I don't know what it is. It's probably bad. I probably need to go to therapy and change this, Steve. I don't know what it is, but what motivates you? Are you proving? Did somebody at some point say you couldn't opened a restaurant or was there, are you trying to prove someone right that believed in you?