444: Restaurants Are Broken with Akira Akuto

0:28This episode is brought to you by Resi and American Express. Cooking is different than running the business of running a restaurant. When you think about a lot of other creative fields, it's totally different. Where you're like, I'm going to be a successful ceramicist. You're still making ceramics. You're like, I'm a successful chef. You haven't touched food in a year. This is Taste. I'm your host, Matt Rodbarg.

0:59We welcome back our good friend Akira Akudo to the show. Akira is a Los Angeles-based chef and was behind the acclaimed Los Angeles sandwich shop and pastry counter, and so much more, Combi, which closed up shop in early 2023. On this episode, I speak with one of the more clairvoyant voices in the restaurant world. Akira is brutally honest, but why a seemingly successful restaurant was anything but on paper. We talk about the difficulties chefs and operators face on a daily basis and why California in particular is a challenging landscape for small business owners alike. We also talk about what he's been up to and the Japanese citrus he's backing in a major way.

1:42Akira is always welcome back in our studio, and I hope you enjoy this conversation.

1:57Akira Kudo, welcome back to This Is Taster. You're in the studio from L.A. I always love when you stop by. How are you, my friend? Good to see your face. Yeah, great to see your face. I usually see you in L.A. We're usually up in Highland Park having coffee. You're eating at Quarter Sheets next to me. I didn't say hi, but you were so in it with Aaron and Hannah. And they were like, you're going to come say hi? I was like, no, he looks busy. He's running off to another thing. I'll catch him later. I was in my LA 24-hour bag because I had to go do another thing. I was going off to - Boudou Noki?

2:32I went to Boudou Noki that trip. I went to the Melrose Wine Bar. Oh, dude, you're a crazy person. Stir Crazy. I was at Stir Crazy. Stir Crazy is great. Yeah, Stir Crazy is great. I was literally there because I wanted to see Aaron. Aaron was on the show. Anyways, what's good in LA right now, my man? I've been going to Lou's Cafe a lot. It's so good. Tell me about it. It's next to Here's Looking at You, and they do a Taiwanese cafe. So they have a couple Taiwanese dishes. The menu's quite short, and then they do pastries. And the pineapple bun is awesome. So I get a lot of those, but it's gotten a lot of press lately from Michelin Bib.

3:14So it's gotten very busy, but it's awesome. And otherwise, the usual stuff, but I've been getting a lot of Soban delivery, which is oh man I love that soban on delivery ganjan gejan on delivery thank you Deb Deb is the best Deb was DJed the career world launch party in LA no yeah she's so I don't know how she is everywhere all the time Deb is gonna be on the show soon Deb also has like two incredible cars yeah she's got she's a car head you should ask her about the BMW M3 she's got a real problem yeah she's got like those 90s BMWs that are incredible Okay, so let me ask you, in terms of new restaurants in L.A., when you're looking at Los Angeles, are you having the time to go to all the new spots, or are you kind of in your groove?

4:05I know you're going to Found Oyster, I'm sure, a bunch. Actually, I don't go to Found Oyster because Queen Street is right next to my house. That's your one, yeah. So I go to Queen Street a lot now early. Okay. They open at 4, so I go at 4 to 6 or right around there, and it's very easy to get in. And they're doing a special menu from four to six. So it's like very easy. So how do you stay on top of the restaurants? I know you want to, but you've got, you know, you've got, you know, a life. I have a life and I like to support the restaurants that are in business because you got it. You got to put your money there so they stay in business.

4:41But I like to check out new stuff a little bit later in the in the road to let them get their groove. You know, I think it's not fair to go early and judge. someone when they're getting their systems in place. It's not right. This is going to be a theme of this conversation. Akira, you know, we're going to talk about sustainability of restaurants financially and how you can support. I think you always have incredible takes and takes is not the right word, opinions and really concrete ideas about the future of restaurants and how they remain sustainable. One more general question before we get to that.

5:15New York City, you're back in a place you lived. You're back walking the streets to Brooklyn, you're back, you know, feeling, feeling the pulse of the city. Like where are you going first? I went last night actually. Well, yesterday I went to Golden Diner. Yeah, yeah, yeah. And I love Sam. We've been friends for a while. And I went on a Monday. Yesterday was Monday. And I went at 1230 and it was jamming. Yeah. Like lines, which is good to see. I had a great meal with a friend. And then I was just wandering around Chinatown. And I would say that I haven't really been around like when TikTok's been like a presence.

5:58So it's weird to see like a two hour line at like Melewa Bakery. And you're like, that's definitely a TikTok. Yeah. Because like you could always go get a pork bun there. No, but there's definitely. Bulba shop next door at two hours. You know, it's like that. I have not experienced that in New York. I see it in LA. But I'm going to go to Four Horsemen tonight. Yeah. superiority for lunch like the usual stuff um and like i'll try to get to outway bakery cool there's a there's a new bakery uh paloma bakery yeah i hear it's really good green point yeah i'll try to go there yeah paloma is amazing yeah i've heard some great things about it yeah absolutely cool so wanted to have you in the last time we spoke uh was the the fall of 22 you had two restaurants right you were you were here in fall 22 yeah and so we were talking it's a great conversation we'll link to the show notes but since then you know there's been changes you know You've gone from two restaurants to zero restaurants.

6:50First off, just generally, I think a lot of folks know about you from Comby, this restaurant that you founded with Nick Montgomery. And you really, I mean, I love the food, but that's not really the whole picture here. Just really there's a whole aesthetic. There was a whole ethic there that really was enjoyable to visit. And let me ask you, how difficult was it to close those restaurants? Well, first of all, thank you for supporting. You're always there when you're in town. I think it was very difficult to close the restaurants. It was very difficult to come to the conclusion to close them and just try to hold on as long as possible.

7:27That's just like a factor of opening a bigger location in a neighborhood that wasn't quite the right fit. So I think like I tried to explain it when we closed a bunch of publications, but I didn't get the full picture out. But I don't think it's like a matter of the business wasn't doing well. It was just like we have to remember, like we opened in a building that was supposed to be full of Apple employees. When we opened in October 22, it was empty. And that was, you know, supposed to be the main driver of us being there. We didn't have to pay to build out our space there, but we had signed that lease in 2019.

8:10So that looked good when we signed it, but things didn't work out that way. And we'll talk about more of this stuff. But, you know, when you design a space and you finally get it open after two, two and a half years, you're kind of tied to it. You can't make changes quickly. And I think if you're, you know, in this country, especially in California, if you are able to pivot and redesign a space and just reopen a new concept quickly, I think you can save a lot more businesses. But, you know, we were married to, you know, like a space we put an ice cream thing in, which, you know, we thought would do well, but it didn't.

8:49And, you know, I think we could have taken that out and expanded what we were doing into more of a bakery. Like those things would have been helpful if we were able to do them. Steering an aircraft carrier at that point, you couldn't make that quick change. Totally. And you know what? You want to give it enough time to get the data, but you're also like, okay, if it doesn't work, I want to know I can do this. It will definitely work, but I'm going to have to now go through another six to eight months of permitting, et cetera. That kind of stuff really deters you from making the changes you would need to do.

9:23But yeah, mostly I think the timing was just off. the neighborhood and the fit for the space was off. You know, there's not really a nighttime crowd in Culver City. You're talking about Culver City, right? Culver City is a very different location. Very different. Your east side's sunset location. So while Culver City is having its struggles, you know, obviously with the pandemic and office workers not being there, you know, it appears from the media, at least when you view Colby, there's lines all the time on sunset. You know, you're always busy, but you have to close both. And I guess the broad question is, Kira, do you consider Combi a success or is that a difficult assessment given that you had to close these in the media eyes prematurely?

10:05I have no idea what a success is myself. I'd like to hear from you, my friend. I mean, I think, I know, you know, having a year and a half to reflect on success, you know, I think we, I think we did the, what we wanted to do, which I know, I think that's a definition of success. You know, no one really kind of made us compromise our product or, you know, we got to pay the people as much as we could and provide benefits, give them very favorable working hours and make delicious food. But that's not really enough. I think the topic that I really like to talk about with friends is like success is not really the question.

10:53It's like how do you define sustainable in a business for a restaurant? I think things get lost when you're like, oh, it's sustainable. You're buying sustainable product. You're making a business that's sustainable for your employees. They have a work-life balance. But I think what gets lost is the owner doesn't have a work-life balance. And when you start out cooking and your skill set is making food that's delicious and making people happy, I think the more quote unquote success you have, you get away from that. And that's a weird thing to kind of process. And you don't have the space to kind of process that when it's happening.

11:37You're just kind of like, I have to do the next thing. I have to learn how to do P &L sheets, Excel, HR, you know, all those things that, you know, now we're more aware of. You try to tell people who are opening like, hey, listen, like this is going to come down the pipeline. I mean, I'll just say the dichotomy here is that, you know, the media story of Combee could not have been better. Right. You're on the cover of Bon Appetit Magazine, one of the 10 best restaurants, new restaurants in America. You're getting recognized by national publications, plus your local papers and websites are covering you.

12:09You're getting hit up by incredible demand of media requests and influencers to come in. So you're having to manage a lot of noise. And I don't think you worked with an agency that – oh, you worked with Blake. Yeah, we worked with Blake McKay for a few months in the beginning. She's super helpful. I think what people don't understand is when you open a business and you want to do it without a PR team or person. One, it's very expensive. So, you know, luckily Blake's a friend. She helped us out. You have to know, like, who to talk to at the right paper. I think that's, like, valuable things. Oh, yeah.

12:48No, PR is absolutely valuable. And I guess to close that initial thought, you had all these inbound requests and all this noise. But still, at the end of the day, you had to look at your P &L. And I think a lot of people don't quite realize that media attention doesn't quite equal to a P &L. That balance is. And Akira, let me just ask you, when you're looking at your P &L a year and a half ago, right when you were closing, where was it hurting the most in terms of the places that you felt were uncontrollable that you couldn't rectify? I would say that's easy. It's labor. Labor costs in California especially is brutal.

13:30And I don't think it's what everyone thinks it is. It's not just your hourly wage or your managerial wages. Everything on top of that starts adding up quickly. So we've discussed this before a lot. Let's take the minimum wage. It's a very simple concept. We're going to raise the minimum wage to X dollars. It's going to go up a dollar a year or whatever. It doesn't sound like a big deal. Why don't you want to pay? No, it's not. Everyone wants to pay as much as possible. That's not the argument. The argument is when you raise the minimum wage, a dollar, it's not a dollar because, as you know, like everyone's getting a dollar up an hour.

14:16That really drives up your workers' comp insurance. It drives up your federal taxes that you pay for the employees as an employer. Everyone before you has wages increased. So now the delivery driver, the farmer who's paying people to work for them, everything goes up and you're the last person who's taking that hit. You're trying to pass that on to the customers to recoup that money to pay wages. So it becomes exponentially expensive. And with the other regulations California puts in place, coupled with just the minimum wage is like they also require a minimum salary. So the tricky thing is, which you don't really know when you're in the middle of running the business every year, is like, okay, 65K minimum around there is not bad, except the requirements that come with that are you have to employ someone.

15:12So now the calculation is this person is making 65K. The person who works for them supposedly makes a minimum wage. but if you do the math, that person actually will make more than the salary person an hour. So then you have to bump up the salary person. You have an HR issue that you have kind of this inequality happening with the labor force. So how do you as a business solve that with a very finite amount of money where you're like, okay, I'm not trying to just pay you 65K. I would love to pay you 95K if it was possible. And now I'm going to be forced to pay you at least 75, 80K because of the minimum wage of the person under you.

15:53And that I think is very difficult for a normal person who doesn't work in restaurants, who is just a customer looking at the prices to comprehend. Like all those little decisions that happen in a room outside of restaurants in a vacuum that are good ideas in practice lead to very problematic situations. And lead to$23 sandwiches, which angers people. And I would say rightly so if they aren't educated and they aren't listening to our show and they aren't digging into the real facts or they don't have a family member who works in restaurants. But it's unfair when you start hearing this complaint about a$23,$25 menu item.

16:38Cocktails, I think a lot of that's been a really hot button issue. Cocktails are increasing to 22 23 24 though as an aside medicine wisconsin jenna's is still doing drinks like eight nine dollars like great it's surprising how some markets can keep cocktails but i'm saying uh and this leads into the idea of like akira how can we as diners think about dining out and think about all the things you just said that's the first part and the second part is how does the government of California in California or the federal government help you as an operator more? I think, one, I've just been a diner for the past year and a half, fortunately.

17:24And I have seen the prices increase in California. And objectively, it costs a lot of money to go out to eat. But you can't really complain about the prices because you know that it's the price that they have to set to make some kind of profit and some things don't make a profit like it's a balance across the board like all right i'm going to take a hit on this item i'll make more on this money and i think that's the game uh that people play uh so when people complain about prices or or like in conjunction with price complaining about anything that you have information to before the fact like i'm going to complain about the price i'm going to complain about the weight you're They're like, look, no one's forcing you to wait there.

18:09The menu prices are posted. No, you are not surprised. It's not like I've joked about it. Like everything should just be market price because the restaurant gets market priced. No, totally. Like you should just have a market price menu. But that's not possible because no one would go there. But, you know, I think the prices are there. They're posted. They're everywhere. Like you should know. Like this is what you're going to pay. Maybe you get offended if there's a service. I get all that stuff. Yeah, the framing can be challenging. If you're not communicating as a restaurant correctly, a customer gets offended.

18:43That's fine. But overall, no one's making you wait there to eat at a restaurant. There's lots of restaurants. No one's telling you you have to go here and pay$50 for anything. So I'm hearing as a diner, one thing we can do is be a little more educated about where you're going. and please like check the menu before if you're having a moment where you can't dine out freely and go to any restaurant you want, which is like most people. Yeah, I think it's important to like take a step back and say like, look, maybe I shouldn't go to every new restaurant and maybe I should just go to the places that I like and support them and become a regular there and I'll get treated better and I'll be supporting a place that I'll do my best to make sure they're staying in business.

19:25Like, I think if people can kind of get back to like, hey, like, I am going to appreciate these restaurants that are on my 10, you know, places I like to go to. They don't need to go to every new restaurant. And if you're going to a new restaurant when it's new, like, it's probably not going to be at its best. Yeah, that's the one thing I always keep in mind. So you're speaking to the diner there. I love that. Back to the government. Okay. Let's answer that. So I think to reframe your question a little bit, I think I'm going to include the customer in this conversation. So like, you know, when we were open, we get a lot of comments, which I used to make as well.

20:03It's like, hey, I could get this cheaper in Tokyo. I can get an egg sandwich for blah, blah, blah, X price. I can get a taco in Mexico. I can get something in Paris for cheaper. Okay. I totally get that, except you're not factoring any of the other stuff. my issue with that now is you're not factoring in the the government's role in those countries so like minimum wage is much lower but in fact they're providing health insurance and they have a very different insurance model they have a very different benefits model that you know the government is taking a lot of that on your taxes are whatever they are but you have things for that also as i've traveled and talked to other owners like the hurdles to open businesses are much lower so like you you get a chance when you go to paris and you're like hey i want to i'm just joking around i want to open a restaurant how long is it going to be and uh you know a bunch of friends that are like, you could get a permit to open a restaurant in five days here.

21:15It's free. You can open whatever hours you want. You can serve whatever you want. That's not the issue. You could build it in a few months. Those hurdles aren't there. So, okay, that makes sense. Japan's kind of the same way. You can open something in three to four months, build the spec. Permitting is so easy. You let it go online. I mean, Tokyo has like 50 ,000 restaurants, 80 ,000 restaurants. You fill out a form, you get the permit, you get beer and wine, you can do whatever you want. Like their thing is, look, if you're going to get people sick or, you know, it's not good, people just won't come.

21:50Why do we have to regulate them? So like I think if you could take some of that here, then the cost to the customer is going to be a lot less. If you're waiting two years to open a business. You're sitting on that big note as well and you have to pay that interest and you're getting like totally screwed. You've taken investor money, most likely. That's pressure on you to do something with it. You're spending to build out a space, waiting for a process that is not logical. You have no idea when you're going to open. And we've done it twice. The first time is daunting. You really don't know what's happening.

22:31So if you think you're going to open in six months, you've budgeted for that, even though people told you differently. I'm going to be frugal. I'm going to do this. I'm going to be there every day. Like, you're just not going to make it go faster because that's just not the way it's designed. You can hire an expediter. They are also going to tell you, I don't know how long this is going to take, which is a ridiculous thing to hear. So I think if a customer knew that, like, hey, a beer and wine license costs X amount of dollars, but you have no idea when you're going to get it. That's crazy. Yeah.

23:02So I'm hearing less friction. I'm hearing, like, get out of the way a little bit, you know, public government. But let me ask you about the minimum wage. Let's circle back to that. And I think this is always going to be a debate. And I don't want this to be a debate, but do you feel the minimum wage is too high? I don't think the debate is whether the minimum wage is too high. I think it's hard to determine what the minimum wage is because living in California has changed dramatically in the nine years I've lived there. Maybe when I moved there, it made sense at the wage it was, and it doesn't make sense now.

23:43But I would argue that the minimum wage is not even enough to really live there in a way you'd probably want to live there. $25 in LA is not going to cover much. $25 in New York is definitely not going to get you very far. So I don't think the argument is like minimum wage. I think it's more letting businesses kind of decide for themselves what makes sense. Like, you know, like I think a lot of this stuff just gets forced down a business's throat and you're not really ready to deal with it. So I think like talking about the point before is just like, look, if you're doing that to businesses, you need to give them easier ways to bring money in.

24:29If you're taking a business and you as the government are not doing the things you're supposed to do, providing services for the taxes, and you're like, I expect businesses to provide a 401k if you have more than four employees. And I expect you to administer this payroll and pay the payroll tax. And I expect you to provide health insurance if you're above these many employees. You got to get the money coming in. You got to be able to be like, hey, listen, you want to get beer and wine? It costs this much. It's in 10 days. You can't tie them up for 12 months or 16 months, right? Or just the unknown.

25:01It's going to be 12 months. Okay, but then let's make it 12 months instead of like, I have no idea. Yeah, and maybe pause some of those requirements, those taxes, those things that you have to pay day one as an operator because you obviously have more than four employees before you even open your doors as part of the business. I think a lot of those things in other countries that are older, they're mature in those respects. You're very diplomatic, calling America a young country. Yeah, yeah. We've been around for a minute, though. That's the way I would describe it. I mean, like, I talk to people who are friends of mine who opened in Mexico City just to just kind of ask.

25:36And they're like, well, when we opened, like, our taxes, like, are lower. They ramp up over time as you build up your business. Like, that makes a lot of sense. I agree. Right? Like, in L.A., you're hit with a bunch of taxes every year the instant you open, no matter what. And, you know, like, it doesn't make sense. Do you miss running restaurants right now, Akira? No. When you open Combi and your other restaurants in LA and working in New York at Franny's and working in New York at other spots, Momofuku, you're in it. You're an active chef. Combi wasn't your first thing. You'd been doing it. Oh, yeah.

26:14I opened it when I was kind of old. Yeah, exactly. Old guy. You're the one who said it. But it's interesting that you're not back in the game because you loved it so much and being there and serving. You really work in the bar, cafe, talking to coffee. I mean, it seems like that was a really big part of your identity, but you don't miss it. I don't miss the day-to-day operations. I think cooking is different than running the business of running a restaurant. um i think like when you think about a lot of other creative fields it's totally different where you're like i'm going to be a successful ceramicist you're still making ceramics like i'm a very successful hairdresser you're cutting hair you're like i'm a successful chef you haven't touched food in a year you know it's like i have not you know like that is not what you get into to the game to do.

27:11You get into it like, hey, I've trained all this time. I have an original idea that I want to present to the world. I think I'm going to do it this way. I want to create jobs. And then you get into it and you're like, oh, actually, the more jobs you create, you're actually, you don't get any benefits. And it's a drag. And you're like, why are the people who are taking the risk, who are creating jobs, getting punished? Punished with less than fish. And I'm not saying like business owners should be given slack for some of the people who've done very bad things. But I'm saying like, look, like there should be some balance between what employees are allowed to do legally and what a employer is held accountable for.