How We Created An Award-Winning Collection of Restaurants from Scratch - Sherry Villanueva, Acme Hospitality

Josiah:

Thanks for taking some time to chat. For me, this has been something I've been really looking forward to. I got married just a block away, and your restaurants have served as the backdrop for many special life moments for me, and so it's incredible to sit down with the person behind all of this. I appreciate you making time.

Sherry:

My absolute pleasure.

Josiah:

Let's talk a little bit about your journey to today. How did you get into the restaurant business?

Sherry:

Accidentally, I would say. Accidentally, in some ways and in other ways, it was really destiny, I think. I had always loved the connection that people make around a table, over a shared meal, family, friends, colleagues coming together to talk about whatever is happening in their lives and their days. For me, that's always been one of the richest experiences that I have with my family, with my friends, with other people in my community. So that idea has always been a central driver in who I am as a person. Getting into the actual business of the restaurant industry was more accidental. It had been a long-term dream that I had shared with my two children. I have two daughters, and we fantasize since they were very, very young about this restaurant we were going to open one day. We called it the Spotted Dog, and we would find ideas all over, "Oh, we could do this at the Spotted Dog, and we could do that."

And in my imagination, it was always like me and one other person, and we just had this little cafe, and it was so fun and beautiful flowers on the counter and beautiful food, handmade and from the heart. And so that had been brewing for many, many years. The actual place where we are now came through a relationship I had with really a real estate visionary gentleman by the name of Brian Kelly. And he is one of the most creative, innovative thinkers that I've known and have had the privilege of working with. And he approached me right as my career... I had been in marketing and trend research for a very, very long time, and he approached me because he had recently purchased a number of properties in a warehouse district in Santa Barbara called the Funk Zone. This neighborhood was really ripe for reinvention. It had roots in some really interesting things. Roots, traditionally, in the ocean commercial industry with fishing and boat repair and maritime uses.

So this very important sort of industrial economic venture of Santa Barbara back at the turn of the century when Santa Barbara was an important fishing port. And so these buildings rooted in the history of really what Santa Barbara was all about had been infiltrated, if you will, with artists and with surfboard shapers and designers and incredible talented people who were doing really innovative things all over the neighborhood. But the neighborhood as a whole had really become derelict. Buildings were breaking down, lots of properties that were not at proper building codes and proper safety levels. Just a place where, I think, Santa Barbara sort of forgot about it. And Brian had purchased a number of properties in the neighborhood and came to me. And at the time, my job was in ideation. It was in understanding what motivates people to behave in certain ways and consume products and services in certain ways and what makes people tick.

And so he came to me and said, "You understand the people side of this? I understand the real estate side of this. I know this could be an amazing place. Will you come work with me?" And so I said, "Sure." It was at a time in my life where I had a career gap, as we all do on occasion. So it was a perfect timing opportunity for me where I was in between projects. I had just completed a long contract that I had had with Target Corporation, and my youngest daughter was one week literally away from going to college. So my personal life was coming to a chapter close, and my professional life had this gap, so I thought, "Wow, this is the perfect time to kind of really dive into this." So I did that with him and helped him imagine the kinds of entrepreneurs, the kinds of businesses that would help to revitalize and re-energize this neighborhood. And we did that on a large scale basis.

Josiah:

I want to continue the story, but I want to hear just a little bit more about that transition because you mentioned wanting to do this for some time, but what was going through your head as you were thinking about making that leap? Was it a little scary, or how did that feel at that moment?

Sherry:

Well, when I actually made the leap to become a restaurateur, it was frightening with a capital F frightening. I had no experience in the restaurant industry. And when I had started this project with Brian, I was doing what I had always been doing, ideating. Like, "Here's an idea, and we could create this would be so cool, and we could bring really smart people who had lots of experience in these various businesses, whether it's running a bar, running a coffee shop, developing a microbrewery." There were all kinds of interesting entrepreneurs that we wanted to bring together in this neighborhood.

We were looking for a restaurateur who could see our vision and share our vision for creating an elevated experience in the neighborhood. And we had a really hard time finding that person or that group. And there was this defining moment, and I'll never forget it where I sort of raised my hand. I said, "You know what? This has been this simmering dream of mine for all these years. I'll do it." And I actually said out loud, which everyone teases me about now. I'm like, "How hard can it be? I can do this." And turns out it's really, really, really hard, hardest thing I've ever done in my professional life, but so exciting and so energizing and so fun, but very difficult.

And for someone like me with zero experience in the restaurant industry, I knew that I had to get to work to find the right team of experts who could teach me and who could help me to actually really bring this dream alive. And I spent about a year writing a comprehensive business plan. It was one of the most important steps I've ever taken. It was really at the insistence of my husband who said... It was actually a funny thing. I came home one night, I said, "I'm going to open a restaurant." And he said, "No, you're not." I'm like, "Yes, I am. No, you're not. You're not the boss of me. Yes, I am." We had this... He said, "Great, I completely and totally love you and support you, and I think it's fantastic that you want to follow this dream.

So if you're going to open a restaurant, you got to roll up your sleeves, get down and write a business plan." And of course, me, I'm a marketing person, so I'm like, "A business plan. I don't need a business plan. I have a great idea. Look at it." And I had pictures and all these beautiful images. I'm like, "Look how cool it's going to be." And luckily for me, he was just very wise and very, very smart, comes from a financial background, and he's like, "No, this is great, and I love your vision, and I love your ideas, and you got to keep those alive and keep that as your spark to drive forward. But we need to write a business plan, a real business plan."

Josiah:

So when you're creating this business plan, who is it for? Who's the audience, or who's it supposed to benefit?

Sherry:

So I think the first people it benefited was our team. We needed a guidebook. We needed a plan. We needed to say, "Here's what we're going to do, and here's why it's going to work." Because at the end of the day, we're in the business of running a restaurant. And if you're not in the business of running a restaurant, then you're in the hobby of running a restaurant, and there's room for that too. It just financially wasn't a place where I could be.

If I was going to go all in with my heart, soul, time, energy, put my career on the line, and invest a large portion of my personal savings, I needed to be able to run a business. And that's just a really important distinction, I think, between the two. And it still has all the passion, and all the love, and all the energy, but we just celebrated our 10th anniversary at The Lark, and we employ 500 people currently in our company. And that's really important to me that we provide a financially stable, great career opportunity for all of the people on our team. And in order to do that, we have to be smart. We have to run a profitable, successful business.

Josiah:

I appreciate you calling that out because our community at Hospitality Daily loves the excitement, the magic of hospitality, and you've certainly delivered that through your collection of properties. But as we're all learning together here, a goal we have is to become savvy business people because, as you mentioned, so many others rely on this for their livelihoods and the community as a whole, and we'll get into the community impact. But the stakes are high in a way. And I appreciate you walking through your journey there but also communicating that it's not an either-or situation. You can still retain the magic of hospitality, and be really financially astute, and think about the real estate and all those other components.

Sherry:

100%. We just read company-wide Unreasonable Hospitality by Will Guidara, and we used it as this catalyst for inspiration for our whole team. It's been fantastic. It was like a company-wide book club. And one of my favorite chapters in his book, he talks specifically about being in the hospitality business and being in the restaurant business. You need to have both. You need to have the magic and the passion and the true desire to care for other people. That's what we do. We take care of other people, and that drives us. But we also have to be fiduciary and responsible to our team, responsible to our investors, responsible to our landlords, and legal commitments that we have.

And so it's really, really important. And I was lucky to have a mentor in my very early... I had two mentors, a gentleman who I went to college with named Jeff Ames, who is a very successful restaurateur in New York. And he coached me along the way about writing my plan and about how the restaurant industry worked. And my husband, who was the disciplinarian to say, "Let's stay focused. Let's make sure we're making sound business decisions because you have a lot of people relying on you." And I think with COVID, for me, that was probably the most devastating part of it, was laying off our entire company, 350 people in one day.

It was absolutely devastating because, as an owner and an entrepreneur, one of the things that drives me the most every day is providing an incredible work opportunity and a safe and inspiring work environment for all of our team. And to not be able to do that and all of those folks who depend on us for their livelihood to care for their families was just... it was awful. So that's a really important part of it, and it's all the stuff. It's the working in the business versus working on the business. And that responsibility to my team is what drives me to work on the business because it's not as much fun, at least not for a marketing gal like me. It's much more fun to be on the creative side and the passion side, but having the discipline to stay on the business side is critical.

Josiah:

Part of the responsibility of a leader is managing both of those. I wonder if we could talk through the opening of one of your concepts. You talked about the history of the Funk Zone, and then you talked about this warehouse. You have a number of incredible places in just this very small neighborhood. But actually, in this one building, we're recording this at Pearl Social. I just had an amazing coffee and croissant at Helena Bakery, which is just on the other side of this wall, but I want to talk about the actual space itself. There's this big warehouse sitting here-

Sherry:

Right.

Josiah:

... and then you've transformed it to what it is today, is this whole collection of incredible diverse concepts. And so The Lark was the first one that you opened?

Sherry:

Yeah, so the first building that we decided to redevelop in this portfolio of buildings that Brian Kelly owned in the Funk Zone was at 131 Anacapa. It's a historic warehouse and fish processing plant that had been originally owned by the Castagnola family, very prominent fishing family in Santa Barbara, long-term family here. And Brian and I think connected over a love of history, a love of trying to repurpose properties that are there rather than tearing them down. It would've been way cheaper and way easier to scrape it and start over, and that's not at all who either of us are.

And so we were very committed to taking this warehouse and repurposing it into new uses and setting it up for a whole new chapter in its lifespan in the history of what Santa Barbara is all about. So we worked meticulously to try and preserve as much of it as we could while then upgrading it to meet all the building and health and safety codes that are required to create just a whole new vibrant use inside of it and offering for the community. So we started with three concepts together. One was called The Lark, one was Lucky Penny, and at the time, one was Les Marchand, which is where we're sitting right now, which we've now converted into Pearl Social. And one of the questions I can ask most often is, "Why would you open three restaurants all at the same time?"

And at the time, it never dawned on me that that was crazy. I think because of my inexperience and my perhaps naivete in what it actually takes to open a restaurant, I again had no experience in the restaurant business. I had worked in a restaurant when I was in college in the 1980s when things like POS systems didn't even really exist. And certainly, cell phones in the internet were just somebody's dream. So it was just a whole different world. So I just didn't know any better. I thought, "Well, we're all here. We might as well just get them rolling all in the same day." And miraculously, it worked, and it only worked because of the incredible quality of the team that I assembled.

Josiah:

And that's a key point. Being naive can be an advantage, but it can quickly be a disadvantage if you don't get a team around yourself. So I appreciate you sharing the backstory where you had mentors, you had collaborators, and then you assembled a great team to help you. But the piece around being naive that is helpful, and it sounds like it was for you, is you don't necessarily know what's not possible, right. So you kind of go in with the assumption, "Well, we could make [inaudible 00:14:52]."

Sherry:

Why not?

Josiah:

Why not?

Sherry:

Let's just, like opening a restaurant, how hard can it be? I think that it's really true, and I often reflect on my rookiness as a gift and really something that helped me. I think probably the other critical piece of that is humility. I approach this with tremendous respect and humility for the complicated and difficult nature of running a restaurant. And because of that, I worked really hard to ask questions and research and vet my ideas and ask, ask experts, and take feedback in from people that I respected. And it's interesting because some of the ethos of that is still alive in our culture today. We talk a lot about this internally, but we have this culture of feedback. We have chefs who actually do a survey every single night with all of their servers and ask for feedback from guests.

"How can I make a dish better? How can our service standards be better? What cocktails are working? What's not working?" Every day, just getting closer towards what we see as excellence. And that idea of constant vetting, constant openness, constant humility of, "How can we be better? How can this be better?" That's the approach I took to the business plan that I wrote, and that's the approach I took when we opened the restaurants was just constantly being open to ways that we could improve. And then trusting the expert team that I had assembled who had been through this before, and really giving them the empowerment to make those choices and make those decisions and create those systems. And it was very much a collaborative effort.

And I feel like that's an important part of our company now. We're big collaborators. Nobody is too important, or nobody's ego is too big that we can't all come together and bring our own individual expertise and perspectives to try and help one another be successful. Each of our individual success is really a culmination of our collective success. We all kind of gather together to try to build each other up. And I think that's been a important part of our success. And I, again, think it comes back and is rooted in that idea of here's this rookie, has no idea what she's doing and is willing to take a risk dive into the deep end and just pull a team together that can actually make it happen.

Josiah:

Well, it worked out because now you're-

Sherry:

[inaudible 00:17:39].

Josiah:

... overseeing an award-winning collection of restaurants and lodging businesses. But tell me a little bit more about the inspiration for launching multiple concepts simultaneously in this area.

Sherry:

So again, because we opened three restaurants together on the same day, it was the idea that we were really trying to root a neighborhood. We were trying to do more than just be a standalone restaurant. The Lark, which is really our flagship and sort of the heart and soul of the Funk Zone geographically located right in the center of the Funk Zone. So we knew as we were looking at this neighborhood as a whole that a restaurant in the heart and center really had the ability to shift the neighborhood. Restaurants are unique in that way more so than other types of commercial activity, in my opinion, to really build a community around it.

Josiah:

Why is that?

Sherry:

I think it's because you have people coming into it. Again, it's this idea of people caring for people, and you have people coming into a restaurant sharing lives, building. You said it when we first started, some of your important life moments have happened in restaurants and in some of our restaurants.

And so when that much love and energy and passion comes together hundreds of times a night, and our guests are using this place in this center of the neighborhood to celebrate the layers of life that are so critical, whether it's a marriage like yourself or it's an anniversary or a job promotion, new babies being born, sometimes people come together in grief, and it's all... that's the richness of life.

That's why I'm in the restaurant business. That's why I'm in the hotel business. It's the honor and the privilege of holding and actually helping to execute an incredible experience so that our guests can share that life experience with one another. And that's just unique to hospitality.

Josiah:

I can't think of a better pitch for why you should work in hospitality. So I think [inaudible 00:20:00] use that for... I'm always promoting hospitality is the place to be. And so I appreciate you walking through that. Tell us about the actual development process of the place because my understanding is you actually hired a photographer to document the process, so there was you... Tell me more about that.

Sherry:

So again, that's just being very humble and very much a rookie. That's a common question I get is because we... I hired a photographer to document the construction process so that we would have photos for our cookbook that we were going to write on our restaurant that was going to be a smashing success.

Josiah:

So wait, on top of all these restaurants, you're... at the same, you plan to launch a cookbook as well.

Sherry:

Correct. Because why not? And in my naivete again of, "How hard can it be to run a restaurant? How hard can it be to write a cookbook?" That was even harder. And so that was... A question I often get asked is, "How did you know The Lark was going to be so successful when you were only just building it and had enough confidence in it to actually bring a photographer in for this cookbook you were going to write? What if the restaurant failed?" And in all honesty, and I think this comes from being so new, is that I just never considered it wasn't going to work. I honestly never considered it. And I was afraid.

I had lots of fear and lots of anxiety, and my husband, again, can probably speak to that more than anyone, the four o'clock in the morning panic. But I just believed in it so much. I believed in our team. I believed in the neighborhood. I believed in what we were creating and why people love to come together so much that I just said, "If we work hard enough and we work real enough and true enough to that passion and that connection and what matters and serving our community and really being in this idea of service back to our guests, that there was just no way it wasn't going to work."

Josiah:

In retrospect, do you feel some of that subconsciously helped you arrive at where you are today, where there's almost this inevitability to it, and you're believing so strongly that this is going to end up well?

Sherry:

I think that's part of it. I think there's a balance between that just complete focus and drive and just belief in it. And then you have failures, and those happen too. And those are hard and painful and hurtful, and especially because you put so much of your heart and soul and passion into it. And when you do have a failure, it's just a good reminder of how critical the humility of it all is and how critical it is to stay real and stay smart. So the minute I feel that you are sort of too big for your britches is danger zone.

And I feel like that's something, again, that's very much a part of the ethos of who we are, which is why our drive for excellence is a daily exercise. Every day, how can we be better? Every day, where can we improve? How can we build each other up? How can we help each other see those opportunities? And then on a quarterly basis, really we take a broader view of how can we be relevant. The Lark 10 years ago is not The Lark today. The world has changed dramatically in the last 10 years. And I look at the future and where we're going for the next 10 years and how can we stay relevant.

How can we continue on our mission of building community, taking care of our guests, becoming this platform for social and human and personal connection, but creating more relevant offerings? It's really, it's outstanding food, service, design that brings people in, but the magic happens in the connection that people have with each other and the way they feel when they're in our space. So we have to keep innovating on those offerings because that's what keeps people coming in, and that's what allows us to do our job of creating that magic between each other.

Josiah:

How do you think about evolving? You talk about constantly looking how you move in this direction, staying relevant. How do you think about change and figure out kind of what should be changed versus this is a constant that we want to always remain part of our business?

Sherry:

So I think the constant is the critical piece, and that for us comes in core values. The very first thing I did when I had to write my business plan, besides all of my beautiful pictures that helped me with my vision, was core values. If I'm going to start a company, what do I want that company to stand for? What kind of company do I want to work in? What kind of company do I want to build that actually means something? And so we worked very, very hard at defining what are those core values, and they're rooted in things that are not specific to hospitality.

Some of them are. I mean, hospitality is the umbrella that all of our core values live under. But they have to do with our... the things that matter to us most, like community, like integrity, like originality is a very important thing to us. And we feel like originality covers all of our concepts and what we do with all of our offerings, but it also is a very important part of our team and the idea of inclusivity and being able to bring in a very diverse group of people. But because we're all focused on a common goal with a common set of rules underneath it, which are those core values, then it's an easy, easier, I should say, thing to manage when you have a diverse group of people, but we all are kind of singing from the same hymn book.

Josiah:

You said you worked very hard on that process. What did that include? How did you crystallize those values?

Sherry:

I think it's really a lot of self-reflection. Again, what... it's removing myself and removing the actual business of hospitality out and saying, "What kind of environment do we want to create that creates..." Because so much of what we do has to do with the team that's executing it. And if we haven't created a healthy, safe, inspiring environment for our team, it's impossible for our team to create magic for our guests. And so I think you kind of look inside first, and you define who are we and what do we stand for and why does that matter?

And then what's our goal and our mission? And then, so starting with core values of who are we and what do we care about? And then what is that mission? What is that common goal that we want to create for everybody in the company, in every position? And even outside of our own company and the suppliers and people that we work with, we feel very committed to finding partners that we work with who also share those core values, who work with integrity, who are honest, who care about the environment, who focus on sustainable practices, who are family-run businesses, who are rooted in their communities. And so we try to build those ideas into every aspect of what we do.

Josiah:

How do you figure that out? Because, a lot of people will say, they espouse a lot of those values. So whether it's another business you're partnering with or an individual that you're looking to bring on your team, how do you suss out this is actually how you live versus you're just telling me this?

Sherry:

Well, it's hard. I mean, I feel like you walk the talk, and I think actions are important. For me, a lot of those ideas come from just my life experience. I've been deeply rooted in the Santa Barbara community for 25 years and very connected to the nonprofit community of Santa Barbara, really extraordinary organizations that are doing really important work and understanding how they are filling critical needs in our community. And that has been one of the great gifts of my life experience is the connection to that aspect of the overall Santa Barbara community.

And so, that's one of our core values again, that we sort of integrate into what we do. We work with nonprofit partners and social service agencies throughout the county and into the other counties that we're now working, in Nevada County up north where our two hotels are, in Riverside County where Palm Springs... our hotel in Palm Springs is located. And again, I think it's just an integral part of being a member and what are our responsibilities to be a member of those communities. And so I think you just walk the talk, and you do what you say you're going to do, and you find those partners who do the same, and it's easy to suss out.

Josiah:

It's interesting to think about this on a business level, but even on a personal level, as you reflect back on the past couple of decades of building deep roots in this community, what have you found most useful in doing that?

Sherry:

I think the Santa Barbara community we were actually laughing about this this week. It's one degree of separation in Santa Barbara, and I actually even bought the URL onedegree.com because I want to open a bar or something at some point called One Degree because I think it's so fun that our community is so small, and the other communities that we're working in where we have some projects in developments currently in San Juan, Capistrano, so that's a new community for us.

And we've been working in the development process so far for several years now, and it's been one of the greatest things we've discovered there is that idea of this one degree of separation, and people really know each other. They care about each other. There's never... I mean, a perfect example is when we had the fires. We had a terrible fire about five years ago, the Thomas Fire and I was living in Carpinteria at the time and evacuated. And within a couple of hours of the fire breaking out, our general contractor that we worked here at The Lark was the first person to call me, "I have a truck. I can be there in 15 minutes. What do you need to load? How do we..." And it's so typical of the community that we live in.

Like, "I have a resource. You might need help. What can I do to support you?" And so we try to do that too with all of our resources in all of our businesses. There are hotels and our restaurants. If we have resources and we can help, we want to mobilize. And we've done that with the countless, it feels like countless, but emergencies and natural disasters that have hit us over the last five years, including the pandemic. What can we do to mobilize our resources to support others around us? And I feel like those are the communities we love to go into, and those are the communities that we really thrive the best in.

Josiah:

I wanted to ask you about resilience because, as you mentioned, going through the pandemic, incredibly difficult and painful. There's been fires. There's been floods here. There's been a lot hitting this community. It sounds the investments you made in the community over time have helped you weather some of that. Have there been... Is there anything else that comes to mind as you think about resiliency either on a personal level or for your organization that you've found makes your organization more resilient?

Sherry:

Resiliency is a word we've used a lot in the last five years, and I think it's been a critical skill that we've all developed our whole team. And I'm so grateful for so many people on my team who have shown that in spades. And COVID tested us in ways that I would've never even imagined before. And the idea of resiliency, and again, I think keeping our mission and keeping... staying rooted in who we are and what matters to us and this idea of people caring for people was the thing that keeps us driving through. It allows you to sort of keep your eye on the light at the end of the tunnel and just putting one step in front of the next and marching forward.

And COVID a good example of that when we were forced to shut down with no clarity. If you remember the beginning days, we had no idea we would ever reopen. We had no idea what was happening in the world. It was very scary. And one of the first things we did again is mobilize. All right, we have... First thing we had was eight restaurants worth of food in walk-ins. So we, myself and two of my key VP of Operations and Director of People Capital, we were the only three left, and we basically cleared out eight walk-ins worth of product. We repackaged it, reorganized it, we set up a free food distribution, and we just gave it to all of our employees.

And that launched a grocery program that we started where then we started buying product from our suppliers who were also devastated. And we just said, "All right. We're going to buy milk. We're going to buy proteins. We're going to buy dairy. We're going to buy bread." And we set up a grocery store, and then we made a free grocery store available to all of our employees. And we did that for several months where they would just come in and take what they needed. And then we did a fundraising campaign because we had so many people calling us, "What do you need? How can we help?" We said, "Well, gosh, we're actually... this grocery thing is working, and it's providing not only important resources to our team, but it was providing a point of connection.

They could come and see us once a week. We could make sure that they were okay. We could see... They could see us." And it was maintaining relationships and maintaining our internal community so that they knew we were here for them and that we were doing everything we could to try to provide what we had available. And it was really one of the most moving experiences, very physically demanding, but one of the most moving experiences of my life to be able to stay connected with one another of these really important people and our people caring for people has shifted from our team caring for our guests to our team caring for one another.

And it was amazing. We had people call and say, "X person isn't feeling well, and they're afraid to come out. I'm going to pick up groceries for them and drop them off at their house." And or, "I don't need groceries, but my neighbor needs groceries. Would it be okay if I came and picked up groceries and brought them to my neighbor?" And just little moments like that time and time again where there were all kinds of acts of kindness and generosity and care. I mean, that was the silver lining in that period that really, again, your question was resiliency. How do you keep it going? It's that spark and that inspiration that you say, "Wow, these are just beautiful people who really care about each other, and we want to be able to support them in their efforts to do that."

Josiah:

I appreciate you walking through that incredibly difficult time, but talk about people caring for people, and that's great when times are good, but it also is important when times are not good. And I think the story's also helpful for me because everybody in hospitality says they care about people. They care about their team. So it almost seems a little bit trite the more-

Sherry:

Mm-hmm. Yeah.

Josiah:

... conversations I have, but when you start to see people that do things differently, or they're running their organizations differently, especially as leaders. You're affecting the whole culture of your organization. I'm curious to hear some more of the things that you might do differently as it relates to people and culture. You have somebody on your team that I've never heard this title before, the Director of People Capital.

Sherry:

Mm-hmm.

Josiah:

Tell me a little bit more about this.

Sherry:

Well, and we really look at it that way. I mean, one of our most valuable resources is our team. We actually have two people in People Capital now. I mentioned my daughter had just come to work for us, and she's now the second person on that team because we're so committed to it.

She works building culture. Her primary role is internal communications, but it's about... And it's in our investment in how important it is, especially now that we're working in different geographic locations. How do we make sure that we are communicating and building culture and connecting our teams to one another in three very different markets?

Josiah:

How do you define culture?

Sherry:

That's a hard question to answer. How do you define culture? I think... Let me think about that for one second because it's so critical, and your point is really well taken, people caring for people, and we care about our culture, and we care about our team, does feel... it can feel very trite, and it can feel sort of talking points that are ubiquitous throughout our industry and others, but they're actually true. I think people say them so often because it's the truth. And I think the difference is is when your actions match your words.

And that's, again, walking the talk. When you actually put into action that aspect of people caring for people, that it becomes something real. And defining culture for me has to do with our team, and creating respect is a very, very important core value for us. And have we created a respectful environment where they respect one another at all levels of the organization. They respect the place in which they work, and that shows with the way that we care for our facilities. And that takes a lot of work and effort. Again, like putting the muscle and the money and the energy behind that, how they respect their guests and respect their acts of service. They're in the service industry.

And for me, that's so honorable. I love being in service to other people. I feel like it's just a true, true honor to be in the service industry. And when you can create a team of people with that shared idea, then those are the things you start to build culture. It's a culmination of all those things. And it's those acts of kindness. It's those acts of respect. It's those acts of care that actually create the culture of who we are as a team and why it matters collectively and not just individually and not just on the business side but the team side.

Josiah:

I appreciate you walking through that because it makes a big difference both as an associate working in the business, whether I'm on the front lines or in the corporate headquarters, but also as a guest. This really affects how we experience these places as a guest. And so when I'm dining at one of your restaurants, everyone has a unique personality individually, and each of the restaurants have unique personality.

But before we started recording, I was having a coffee and croissant at your bakery next door and talked to a couple of your associates there, and it was a lovely experience. They were friendly, and you could just tell that they were enjoying being there, even though it was early in the morning. And then I was watching them kind of... one was teaching another one how to make some pastries. And so it's interesting as an outsider observing this. It's like we talk about this on a conceptual level-

Sherry:

Right.

Josiah:

... but it translates down into the day-to-day experience of each of the individuals working in each business, right?

Sherry:

100%. And we get those comments all the time. "I went to Loquita for dinner last night, and it was so fun to watch your team. They all look like they're having so much fun together." That, to me, is one of the most incredible compliments I could ever receive when you actually are observing, and I appreciate you observing that real-time this morning because that's a big success. That's a big win. When people are excited to come to work, I feel excited to come to work. I bound out of bed every morning and just like, "I can't wait because I am just excited about what the day holds and what we're going to be doing." And when it feels like the team is also excited to be there.

They're having fun. They feel like they're in an environment where they can grow. Growth is a huge thing for us, not just as a company but on a personal and professional level. We want to give our team members opportunities to grow if that's what they want. It's been one of the great advantages of the company growing is that it creates more opportunities for our team, and so they... and they communicate that with us. Fill in the blank. "I work as a server. I'm really interested in going into management. What are the skills I need? Can you help me and train me?" And we love that. Or, "I feel like I've mastered this location, and I want to hop to a new location and learn a new wine list and learn a new menu and learn a new concept."

And we move people around to be able to take advantage of those growth opportunities all the time. And even hopping between restaurants and hotels. We have our general manager at the Holbrooke was our general manager at The Lark, and she was very excited to learn about what... how are hotels different and how can I spread my wings and learn a whole new level of the hospitality business. And so I think that's part of it too, creating a very positive environment that's fun. It's respectful, and it's honorable, the idea of being in service. And it's inspiring because there's opportunities abounding for people who are looking for them in their individual positions.

Josiah:

Growth is so important on a personal level to provide individuals with opportunities to grow in their careers and their lives. But on an organizational level as well, I feel like it creates positive momentum that attracts more interesting opportunities, more talent to your organization. I wonder if we could talk about growth organizationally for a moment. You've talked about controlled growth before. I'm curious, what does that mean to you?

Sherry:

Well, I think for me, I don't want to grow for growth's sake. I want to grow, and when I say controlled, I mean in a way that's very intentional. Someone asked me the other day, they said, "How long are you going to be working in this business?" And I said, "I'm going to work in this business until it's no longer fun." And it's still fun every day. And I feel the same way about growth. Not only fun, but I believe there's a certain soulfulness to our properties.

And I think that that exists because of the time, energy, and care we put into the development of what those concepts are. Who are they serving? Why do they matter? And really making decisions, even sometimes financial decisions that aren't always focused strictly on the bottom line. They're focused on how we can create a better experience for our guests and our team. And so I don't want to ever grow and lose any of that and grow for grow sake or just be so big that we're no longer connected to the integrity of the soulfulness that we have in each of our properties.

Josiah:

And that takes discipline. You and I were talking before. You're getting 10 plus new opportunities every single week. And so you're constantly presented with opportunities for growth, but you're maintaining that discipline. "This is what... These are our values. This is what we stand for."

Sherry:

Yep.

Josiah:

You talked about soul being really important, and how do you stay connected to that? I imagine it could be easy [inaudible 00:45:34] new interesting opportunities present themselves, and how do you connect it to that soul hospitality?

Sherry:

I think, again, it comes, and I don't want to sound like a broken record, but it comes back to core values. It comes back to what is our mission and what are the values that we are going to agree upon and actually commit to executing as our rules, our set of rules, our handbook to get to that mission. And again, one of our most important core values is community and connected to community, and it's our internal community, our external community. So if there's an opportunity that doesn't feel like it's going to serve that community in a way that's really interconnected and can create something special and unique and vibrant, then it's not the right opportunity for us. It might be... And we've turned down a lot of financial opportunities that would probably have been very lucrative, but they lacked... they had more of that cookie cutter.

I mean, I can't tell you again, that's another question I get all the time. "Will you put a Lark in XYZ city?" And it just doesn't fit. The Lark fits in Santa Barbara because it's a story of Santa Barbara, and it's a story of this particular place in Santa Barbara. And so my answer is always, "No because it's not what The Lark is. It's not..." So I think for us too, we like to create very individual restaurants and hotels. We like to create them to have their own unique story and their own unique personality. It's much more difficult to do it that way. We could have crazy efficiencies and economies of scale if we just made everybody have the same wine list, or we had... all the marketing was the same, or we were repeating concepts in other markets where it was just an easier thing to replicate. But we always believe that each local community is looking for something a little bit different.

Lucky Penny's the one restaurant that we've considered creating more of, but the conversation is always around how do we create a Lucky Penny in other markets that maintains the quality and sort of the ethos of this kind of funny, fun, irreverent idea, but make it unique in that other market and not make it... It's probably the... There were smart people in the franchise world are probably rolling their eyes, saying, "That's the dumbest thing I've ever heard." The whole point of replication is that you have consistent standards, and they're all exactly the same. And that's just so not who we are. We're just very original and unique. Originality, I mentioned, is one of our core values, and so we feel like that gets driven by the particular environment, the particular geography that those different properties are located in.

Josiah:

I love it. Sherry, thank you for taking time to share your story with us.

Sherry:

Thank you so much. Appreciate it.