The Real Reason Most Restaurants Fail (He Beat the Odds Twice) | Michael Chernow🍽️EP127

What this episode is about

Michael Chernow shares his journey of success in the restaurant industry, discussing the challenges and strategies behind opening and scaling multiple restaurant concepts, including The Meatball Shop and Seymours. He emphasizes the importance of adaptability for entrepreneurs, particularly during the pandemic, and highlights the key factors that contribute to thriving in a competitive market.

Key takeaways

• Successful entrepreneurs pivot faster than they can say 'pandemic'; adaptation is the new hustle.
• Your morning meal shapes your day; start with oatmeal and watch confidence rise like dough.
• The intimacy of food mirrors human relationships; nurture both for lasting connections and growth.
• Passion is the secret ingredient in entrepreneurship; when founders care, success is just a matter of time.
• Finding daily 'little wins' can build confidence; in business, even small victories pave the way to greatness.

Who speaks in this episode?

• Michael Chernow (Guest) · 39 min speaking
• Unknown Host (Host) · 7 min speaking

What is discussed, and when

1. 0:00 – 5:00: Oatmeal, Creatures of Habit, Wellness, Michael Chernow
2. 5:00 – 10:00: Oatmeal, The Meatball Shop, Protein, Chelsea
3. 10:00 – 15:00: Oatmeal, Seymours, Protein, New York Magazine
4. 15:00 – 20:00: Creatures of Habit, Wellness
5. 20:00 – 25:00: Creatures of Habit
6. 25:00 – 30:00: Creatures of Habit
7. 30:00 – 35:00: Creatures of Habit, Crowdfunding, Oatmeal, Wellness
8. 35:00 – 40:00: Charity, Creatures of Habit, Release Recovery Foundation, Go Ruck
9. 40:00 – 45:00: Creatures of Habit, Charity, Oatmeal, Protein
10. 45:00 – 46:28: Creatures of Habit, Michael Chernow, Sleep Support Hot Chocolate

Notable quotes from "The Real Reason Most Restaurants Fail (He Beat the Odds Twice) | Michael Chernow🍽️EP127"

• My name is Michael Chernow. I am I'm an entrepreneur. Started my career about 15 years ago opening up a restaurant called The Meatball Shop in New York City. Had no idea what I…

  about The Meatball Shop · at 1:01

• Up a restaurant in the middle of the pandemic or the beginning of the pandemic. So, I pivoted and created Creatures of Habit, which is a wellness brand rooted in nutritional…

  about Creatures of Habit · at 1:51

• It's also one of the most difficult relationships we have. And I actually, my story is, I spent 10 years of my life in addiction. And I made a decision when I was 23 years old, a little over 20 years ago to get sober.

  about Michael Chernow · at 3:30

• And that's how I've built my life. So, I just knew that when this guy told me to eat oatmeal in the morning, I never thought it would be a business, right?

  about Oatmeal · at 4:28

• Amazing atmosphere and a super awesome experience for people. And boom, we opened up and we were the number one restaurant in New York City for 9 months in New York Magazine.…

  about Seymours · at 12:16

• And I was like I had heard of crowdfunding but I'd like never thought of crowdfunding. And then I just started doing research on crowdfunding. And I like found out like brands like Liquid Death did crowdfunding and like big.

  about Crowdfunding · at 30:52

• It on Start Engine. So, anybody listening, if they want to check it out, you can go to Start Engine and check out Creatures of Habit with a K. and you'll learn about it there. but this like it's not when we sell it for or if we.

  about Start Engine · at 34:00

• Okay, take off the making money and investing money hat. Put on the charity hat. Why do you think that brands should have some type of charity element whether it's public facing or just within their staff to get their employees behind it?

  about Charity · at 35:26

Who and what is mentioned in this episode?

People

• Michael Chernow — Person · Main guest · 3 mentions · first at 0:56
  Entrepreneur who founded multiple NYC restaurant brands and later created Creatures of Habit; he connects his sobriety, nutrition, community-building, and charity work to business strategy.

Companies & orgs

• Creatures of Habit — Company · Core company/topic · 15 mentions · first at 1:55
  Chernow’s current business: a wellness brand launched during the pandemic, built around high-protein overnight oatmeal, subscription revenue, community, and a crowdfunding plan.
• The Meatball Shop — Company · Prior venture / case study · 2 mentions · first at 1:10
  Chernow’s first major restaurant venture; used to explain scaling, media strategy, unit economics, and lessons learned about partners and private equity.
• Seymours — Company · Prior venture / case study · 2 mentions · first at 1:26
  Chernow’s second restaurant concept; used to illustrate brand creation, scaling, media success (New York Magazine), and an equity/role deal with an experienced operator.
• Start Engine — Company · Crowdfunding platform · 1 mention · first at 33:58
  The platform where Creatures of Habit plans to run its equity crowdfunding campaign to let the community invest.
• Release Recovery Foundation — Company · Charity foundation partner · 1 mention · first at 37:13
  Named as the foundation partner for Creatures of Habit’s charity event; funds are used to place people into addiction treatment and support recovery.
  Is our charity event and we partner with go ruck which is a rucking company that I love and our foundation partner is the release recovery foundation and we couple hundred people fly from all over the country that are passionate about.
• Go Ruck — Company · Charity event partner · 1 mention · first at 37:08
  Partner brand for the 'We'll Wear the Weight' rucking charity event that raises funds for addiction treatment.
  Habit every year we do an event called we'll wear the weight which is our charity event and we partner with go ruck which is a rucking company that I love and our foundation partner is the release recovery foundation and we.

Products & tech

• Oatmeal — Product · Flagship product category · 8 mentions · first at 2:00
  The foundational product behind Creatures of Habit; tied to Chernow’s sobriety-era nutrition routine and positioned as a daily habit with protein.
• Sleep Support Hot Chocolate — Product · Secondary product offering · 1 mention · first at 45:18
  A complementary product ('Creature Sleep') positioned to end the day, expanding the brand beyond breakfast and reinforcing wellness/sleep routines.
  There. It's super easy to make in 30 seconds. It changes the It really does change your morning. and then we make this creature sleep, which is a sleep support hot chocolate.…

Concepts & topics

• Charity — Concept · Core topic (podcast pillar) / mission theme · 5 mentions · first at 0:35
  One of the show’s three pillars and a major segment: Chernow argues brands should embed responsibility and describes funding addiction treatment via events.
• Wellness — Concept · Core concept / brand positioning · 4 mentions · first at 1:55
  Frames Creatures of Habit as a habit-based wellness brand; connected to nutrition, sleep, and recovery-driven life improvement.
  Up a restaurant in the middle of the pandemic or the beginning of the pandemic. So, I pivoted and created Creatures of Habit, which is a wellness brand rooted in nutritional…
• Crowdfunding — Concept · Financing strategy discussed · 2 mentions · first at 30:54
  Presented as a way to let the customer community become owners; positioned as aligned with community strength and used by other brands.
• Protein — Concept · Nutritional attribute emphasized · 3 mentions · first at 5:11
  Used to differentiate the oatmeal product and address a common consumer problem (getting enough protein), supporting the wellness positioning.
  Body in the morning ever. I don't it's like people spend time thinking about breakfast. People spend time thinking about how I'm going to get a bunch of protein into my diet.…

Places & events

• West Village — Place · Restaurant expansion location · 1 mention · first at 9:32
  One of the NYC neighborhoods where The Meatball Shop expanded, illustrating the scaling path from one store to many.
  Draw it down. And so Daniel and I just kind of like hit the ground running and we went out and we opened up a store in the West Village. Then we opened up a store in…
• Williamsburg — Place · Restaurant expansion location · 1 mention · first at 9:37
  Brooklyn neighborhood cited as a subsequent expansion site for The Meatball Shop.
  Just kind of like hit the ground running and we went out and we opened up a store in the West Village. Then we opened up a store in Williamsburg, Brooklyn. Then we opened up a…
• Chelsea — Place · Restaurant expansion location · 1 mention · first at 9:38
  Manhattan neighborhood mentioned as part of The Meatball Shop’s multi-location expansion.
  Store in the West Village. Then we opened up a store in Williamsburg, Brooklyn. Then we opened up a store in Chelsea. Then we opened up a store on the Upper West Side. Then we…
• Upper West Side — Place · Restaurant expansion location · 1 mention · first at 9:39
  Manhattan neighborhood referenced as an expansion point for The Meatball Shop.
  Opened up a store in Williamsburg, Brooklyn. Then we opened up a store in Chelsea. Then we opened up a store on the Upper West Side. Then we opened up a store on the Upper East…
• Upper East Side — Place · Restaurant expansion location · 1 mention · first at 9:40
  Manhattan neighborhood referenced as an expansion point for The Meatball Shop.
  Opened up a store in Williamsburg, Brooklyn. Then we opened up a store in Chelsea. Then we opened up a store on the Upper West Side. Then we opened up a store on the Upper East…
• 9th Avenue — Place · Restaurant expansion location · 1 mention · first at 9:45
  Avenue referenced as part of a Meatball Shop location ('53rd Street in 9th'); included to show geographic footprint.
  The Upper West Side. Then we opened up a store on the Upper East Side. And then we opened up a store on 53rd Street in 9th AB. And we were just this is a wave. And we were…

Media & podcasts

• New York Magazine — Media · Media validation reference · 1 mention · first at 12:23
  Cited as the outlet that ranked Seymours #1 in NYC for nine months, supporting the narrative of strong brand/experience execution.
  Amazing atmosphere and a super awesome experience for people. And boom, we opened up and we were the number one restaurant in New York City for 9 months in New York Magazine.…

Full transcript with timestamps

0:05 Ladies and gentlemen, welcome to a special edition of the Money Mondays podcast. As you guys know, for the last 2 years, 99% of these episodes are inside of an RV motor home. But our special guest happens to be in town from New York City. He came to LA. I'm in LA. Bada bing, bada boom. Ran up here on this couch at the W Hotel in Hollywood inside of the podcast studio. Brought to you by the content CEO. Now, Mr. Michael Cherno. As you guys know, we cover three core topics. How to make money, how to invest money, how to give away to charity. This gentleman has already exited multiple restaurants. He's building a business that I'm an investor in because I'm passionate about one, founders have already built up companies. Two, founders that are passionate about their product. Three, someone that can actually build something that people care about. And four, someone that can actually scale it. So, we're going to dive into all

0:54 those core topics, but first, Mr. Michael Chernow, can you give a quick two-minute bio so we can get straight to the money? Sure. Thanks for having me. Of course. Uh, my name is Michael Chernow. I am uh I'm an entrepreneur. Started my career about 15 years ago opening up a restaurant called The Meatball Shop in New York City. Had no idea what I was doing, but knew that I wanted to do something and I was in the restaurant business. So, I said, "Fuck it. I'm going to do it." Opened up the the meatball shop. It took off like crazy.

1:21 Scaled it to seven stores. Exited that. kept a little piece, launched a second restaurant concept called Seymours, did the exact same thing, scaled it to seven restaurants and exited that, kept a little piece. So now I own I own a significant piece of both businesses, but I sit on the board. And in 2019, uh, or early 2020, I I knew that I was going to open up another restaurant. The pandemic hit, and as entrepreneurs, you know what we do? We pivot when we have to. And I knew that I wasn't going to open up a restaurant in the middle of the pandemic or the beginning of the pandemic. So, I pivoted and uh created Creatures of Habit, which is a wellness brand rooted in nutritional healthy habits. We launched with a with with the oatmeal that I had been eating as my first meal of the day for at that point 16 years. And uh and that's it. We we created this business. I pitched it to Gary Vaynerchuk. Gary thought it was a

2:12 really cool idea, specifically in the time that we were in. He was the first investor. He introduced me to you. you guys came in and and here we are three and a half years later slinging lots and lots and lots of oatmeal. So it was interesting because you know Gary and I have known each other for many years. It was the first time that he sent me like the bat signal. He was like I really like this one. You know obviously Gary gets zillion deals put in front of him. He only picks and chooses a few that he actually invests into or joins the board of but so for him I I took it seriously that he messaged me about it and so I rallied the troops. We obviously did a round with you, invested into the company, and now you've just been scaling and scaling and scaling.

2:50 And what I like best is like your passion for the product. You mentioned you've been eating it for 16 years. That's really rare for an entrepreneur to actually be that passionate about their core product. And that was why I jumped. One, because it was Gary Vee, obviously, but two, because you really care about it. Where did that come from? Why is oatmeal in the morning so important? You get one day to put numbers on the board. What happens yesterday is long gone and tomorrow is not necessarily guaranteed. So how you start your day is ultimately going to paint a picture typically of what the rest of the day is going to look like. Human beings need food to survive. It is one of the most intimate relationships we have and it's also one of the most difficult relationships we have. And I actually, my story is, you know, I spent 10 years of my life in addiction. And uh I made a decision when I was 23 years old, a

3:43 little over 20 years ago to get sober. When I got sober, I was introduced to this world of wellness. And it wasn't called wellness 20 years ago, but it was it it basically I was introduced to a guy who basically took me by the back of my neck and was like, I am going to show you a different way. And he introduced me to nutrition. And and and for me, I needed a win. Like I I just needed a win. I had no idea where that win was going to come from, but it came in the form of nutrition and fitness. That's how I was able to control my wins.

4:14 There's very few wins you can control on a daily basis, right? Like we all know big wins take an army. And if you can figure out a few little wins to kick your day off with, it just builds confidence. Confidence builds courage. And that's how I've built my life. So, I just knew that when this guy told me to eat oatmeal in the morning, I never thought it would be a business, right? But I just knew that I I needed a little win in the morning and and a healthy satiating meal was what that did for me. And it came in the form of oatmeal. So, I just stuck with it. And the fact of the matter is the business is called Creatures of Habit with a K. It's called creatures of habit because when we find something that works over and over and over again, you stick with it and it and it and it essentially creates freedom in your life. I never have to think about what I put into my body in the morning ever. I don't it's

5:06 like people spend time thinking about breakfast. People spend time thinking about how I'm going to get a bunch of protein into my diet. People spend time thinking about a healthy meal. Like what do I eat in the morning? I just never think about that. And now there's thousands of people that are sub, you know, subscribed to this product that also just never think about what they're gonna put. Oh my gosh. Hey guys, I'm on a podcast. Love you. I'll call you back. Sorry, it's my kids. Um, they can, you can FaceTime them in.

5:33 Um, but I, you know, when I was thinking about what was the next thing, it literally just popped up for me. And I was like authenticity is ult authenticity and story is ultimately what what creates community and business right like community is what carries a lot of you like your whole entire business is built on a community of people that look to you and follow you for years and so I just knew that I can create a community around this and that that's why oatmeal was like what we did you know so pre oatmeal you open up seven restaurants and seven restaurants.

6:11 Again, there's this thing in people's minds that 90% of restaurants fail, especially the first location. How did you get from past that first location to number two to get up to three and then eventually get up to seven twice? Again, I have to bring it back to authenticity, you know, like I I I grew up working in restaurants and I, you know, when it when it came time for me to do it, there was I had no fear because I was so passionate about what we were doing and I knew that I was going to be able to tell a story um when people walked into the restaurant. And of course, right, like there is a little bit of luck involved, right? timing, luck, like things like that are real.

6:56 And and the time that we were in, it was it was coming out of the pit of a recession. Daniel, my partner, and I were like, "Dude, we have to create a recession proof business." So, we knew that if we came out the gate with something unique, fun, almost like a little nostalgic to evoke some emotion and inexpensive, we had something to we had a story to tell. And um we hired a publicist. Publicist really like sat with us, understood the story, was able to tell the story. And um and I learned very quickly that like if you're doing it for money, if you're doing if money is the is the is the primary goal, chances are you're going to fail. Most people that open up restaurants are like a they want to they they think it's cool, right? Like they're like, "Oh, I want to be a part of this cool thing." B they think restaurants make money. they [ __ ] don't make money if you don't if you're not like insanely diligent about the

7:54 margin is so slim in the restaurant world. Most restaurants fail because people don't know how to be diligent about a P&L in a restaurant. And um and so for us, you know, we we we had a story to tell and the story got told really well and the media loved it. And you know, we projected to do a million dollars in that restaurant year one and we did 4 million. 4 million out of one restaurant. Out of 4 million out of a 36 seat restaurant with a $17 check average. What? It was insane. And we paid our investors back in six months. And um you know there were lines like I'm not I'm not exaggerating what I'm telling you. The day we opened the meatball shop there was 250 people standing outside of the restaurant. It went to the corner of of uh of Stanton Street and Allen all the way to the corner of Rivington Street. It basically wrapped a full city block and um a New York City block.

8:54 A New York City block. And uh and that line just didn't slow down, you know. It didn't slow down. and and we were doing it because we were passionate. Like you said to kick off the podcast, like you invest in entrepreneurs that are passionate about what they do. And you know, I can't do something that I'm not passionate about, but when I'm passionate about something, I can't do anything else. Wow. So that was kind of it. You know, we we one of the initial investors like he was like, "Oh my god, you guys have paid back the full investment." He was like, "Boom, here's three and a half million bucks. Like go open up stores and you know, just tell me what you need. we'll draw it down. And um and so Daniel and I just kind of like hit the ground running and we went out and we we opened up a store in the West Village. Then we opened up a store in Williamsburg, Brooklyn. Then we opened up a store in

9:39 Chelsea. Then we opened up a store on the Upper West Side. Then we opened up a store on the Upper East Side. And um and then we opened up a store on 53rd Street in 9th AB. And you know, we were just like, you know, this is a wave. And we were young and hungry. And the two of us just went hard. um learned an enormous amount. Like I lost millions of dollars in that deal, millions and millions of bucks because um the two of us didn't know what we were doing. And um Meatball Shop is still around, but you know, we had a hard offer from a really really you know legit private equity fir fund that firm that that wanted to take Meatball Shop like global and you know we thought that we we we didn't need them.

10:25 Yeah, we can do that. Yeah, we got this. And so, you know, I learned I learned a lot. Um and and uh but what I ended up doing was I sold I sold a bunch of my equity um after that deal didn't happen because I just knew that there was there was going to be friction there because I wanted to get that deal done and I couldn't convince Dan and the board that that deal needed to be done. And so I ended up selling equity about a year later for unfortunately a fraction. But I I mean I still did well for my first business. And then I very quickly opened up the second concept and I knew that I was able to make meatballs cool. Um I said I was going to do the same thing with sustainable seafood. I was going to take sustainable seafood. Economically for me, you know, you think of a seafood restaurant, what do you think of salmon, tuna, halibit, cod, lobster, right? Like that's what you think of in a seafood

11:12 restaurant. I said, I'm gonna bring super underutilized fish to the New York City market that swims local because I found out that these fishermen on the East Coast were catching all these underutilized species of fish and then sending them to China and the UK for like pennies a pound. And I was like, well, if I can develop relationships with them, these fish are delicious. They're just they just don't have a marketing campaign behind them, you know? So, I can I can buy this fish for a dollar or $2 a pound, whereas other people are paying $18 to $27 for salmon or tuna, and I can dress them up. I can put them in fish tacos. I can put a really cool brand around it, just like I did with, you know, like this is this is a oatmeal dude.

11:54 This is oatmeal with protein, right? But it's it's it's about a brand. It's about a feeling. It's about an emotion that you create when you when you when somebody interacts with it for the first time. And so, you know, I I I took these these underutilized species of fish that I was paying, you know, $150 a pound for and created a really amazing atmosphere and a super awesome experience for people. And boom, we opened up and we were the number one restaurant in New York City for 9 months in New York Magazine. It just went bonkers. And I had no partners. But a guy that was a mentor of mine who was running uh the company Le Pen Koten, you know that brand, there's thousands of them around the country. He he personally opened up over a thousand stores. So he was a guy that I definitely wanted to get close to early on in my career and he came to the opening night of um Seymours and he experienced it for the first time

12:53 and uh that night he wrote me an email and said you came into my office about 8 months ago with a back of a napkin idea the menu the experience you told me exactly what it was going to be and I have never met somebody in my career of indust of restaurants that that explained a concept and then did exactly what they said they were going to do. And he was like, I want to leave Lenco Tinian and help you scale this thing. Whoa. And I was like, obviously the guy, you know, this guy was like a guy that I was like, this is the guy, right?

13:25 Um, but I also knew that he was 15 years older than me. He had opened up about 996 restaurants, more than I had. and if he were to come work with me, he would have to be my boss, right? And I just wasn't ready for that yet. So, I said, "Jay, I really appreciate it. Let me get my feet in the sand and like figure out what this brand is and understand like what the what the metrics have to be in order to scale because ultimately if you come on, we're going to scale this thing. Let me just figure this [ __ ] out on my own first and and I'll I'll circle back with you in a couple of months to like let you know where I'm at." And he just kept knocking on the door. He would come to dinner once or twice a week, bring in other, you know, other big wigs in the industry to show them what I had done. And about seven, eight months in, you know, he showed up with like 7 million bucks and was like, "Dude, I really want to do

14:21 this with you. I've got a team that is ready to just invest in it." And and I said to him, "Look, man, if you come in, I will have to take the president seat. you will have to take the CEO seat. And if we can scale this thing to eight figures over the next 3 to 5 years, I would want you to buy my equity out. You can take it from six to 600. I I would want to I would want to mitigate mitigate some risk and then create another brand because that's what I love to do. And he was like done. And so that's what we did exactly to the tea.

14:55 And I sold him a bunch of equity in 2019. And um you know I understand how to open up restaurants. Like that is something that I figured out how to do. I figured out how to create a brand that resonates with people in the world of restaurants. Um, which is one of the hardest industries because everybody gets into the business thinking that it's cool to own a restaurant. The fact is is that it's it's really hard because I always explain it like this. You walk into your favorite retail store for for clothes, right? You want to go buy a pair of jeans. You know you're going to walk in there and spend 160 bucks, right? You walk in, maybe somebody greets you at the door, maybe they don't, but you know that you're going in for the jeans. You walk over to the rack, you grab your pair of jeans, you say, "Hey, where can I, you know, is there a fitting room?" You walk over to the fitting room. Somebody takes you to

15:43 the fitting room. So, you interact definitely with at least one person there. You try on the jeans. You like the jeans. You bring them over to the cashier. You pay for the jeans and you leave. So, you've had two interactions for $160 check. In a restaurant, you know exactly what you want. You're coming for the fa your favorite dish, but you get greeted by a host. Host takes you to a table. Bus boy brings you water. Bus uh server walks over to your table, takes your order. Server puts the order in, sends it over to the bar. Two bartenders are behind the bar. That's five. Server comes back to your table, takes your your food order, sends it to the kitchen. That's five people in the kitchen. 10 people. You eat your food.

16:24 Your food gets sent down to the dishwasher. Three more people. 13 people. There's two managers on the floor, one in the front, one in the back. 15 people are involved in that same $160 transaction. That's the difference between the restaurant and most other businesses. It takes it it takes an army of people to pull it off. And so it's a human capital business and human capital is like the hardest thing to manage, you know. So few years from now, you sell Creatures of Habit for $145 million. would you get back into the restaurant game?

16:59 That is a great question. I I love the restaurant business. Uh and I think now that I've moved out of actually I've actually moved out of New York City and I live in a really beautiful place in upstate New York. Um there's a lot of people like me that have actually vacated the city after, you know, when the pandemic hit. And so the the area is kind of littered with lots of really cool, creative people that wanted to get out of the city, but there's just not a place that is the the place to eat um there. There's a lot of cool great restaurants, a lot of chefs have come up, but there's not like the spot. And so chances are, yes, I my superpower is connecting with human beings at scale.

17:46 It is the it is what I do best. It comes absolutely naturally to me. I do not have to work at it. I love it. It wakes me up in the morning. Like what drives me is meeting people and creating environments where people feel stoked about themselves and life. And I know that that is like the best place for that. The best place to do that is in a restaurant, you And so chances are probably um but yeah I mean this is the creatures of habit right now came at the perfect time in my life. Um it really g because it's given me an opportunity to tell my real story you know coming you know I wasn't able to really tell my story of coming out of adversity and you know building a building a a life based on wellness and then you know everything that I've created in my life today is only because I've committed to this like life of better and so this business has allowed me to tell that story which has given me

18:44 a bit of a platform to do that you know so why is it important to invest invest so much into brand. You have all these different colorways, different styles, graphics. That's expensive to come up with the feel and look of a brand. Why is it important to invest so much into branding? You know, the the the truth is is that first impressions are are important. They're important. And being able to like fabric is is is is not as important as as creating um an experience. And so typically, you know, you're the the the brands we all know and love evoke feeling. They evoke feeling and that's why you want to participate in it, right? Like Nike, Apple, they all have created this ability to like make you feel a certain way about a pair of sneakers, about a phone. Um, and in my opinion, you know, brand is brand and culture kind of stand together as sort of the the pathway to success in business. Um, and so I just know

19:52 inherently, I think also maybe growing up in New York City and being in the epicenter of like real sort of modern culture as a kid, seeing a lot of stuff, it was all brand. brand was is what moves people. Brand is what is what moves needles. And so I just every time I've created a business, brand has been sort of where I start. I start with brand and then kind of build everything underneath that. So you have a passion for an industry that has multi multi multi multi-billion dollar players, right? You're up against Quaker Oats and some of the most humongous companies on the planet that own the shelf space. They own our minds.

20:33 It's called top of mind awareness. Like how do you fight versus the 800 lb gorilla like Quake Roads? They don't have the time to think about community. They just don't. And so they I'm sure they know about us. Of course you're poking the bear. Yeah. I'm sure they know about us. and they would much rather have guys like me who are just like like ferociously passionate about community do it build it to a place where it's viable and then knock on the door and say yeah we want you right and so I'm not concerned about like you know I had a meeting early on in my entrepreneurial career with a guy named Ron Shake who is the founder of uh Albon Pan and now Panera Bread and I sat down with him at one of the meatball shops and in the meat like when we started the thing there was within the first three years I mean there was hundreds of meatball shop knockoffs around the globe the Wall Street Journal wrote a huge

21:39 piece about it like these two guys started this restaurant in New York and there's meatball restaurants everywhere now and I I said to Ron as this was happening probably like a year and a half in I was like I mean how do we think about the competition and he [ __ ] flipped. He was like, "Competition? The second you spend thinking about your competition is a second you're not spending thinking about your business. [ __ ] the competition. Do what you're doing. Keep pushing forward. Don't waste your energy thinking about that because if they're going to get you, they're going to get you. You got to spend all of your time focused on what you're doing." And um you know that I think was massive for me in my career just to be just to say you know what man like do it the do it to the absolute best. Put everything you've got into this thing and the big guys will take note. The big guys will take note and then they'll

22:38 want a piece, you know. So, when you're first starting up a brand and you want to go get the dream investor like Gary Vee, who could be number one really for most entrepreneurs is what they want as a most strategic investor that you could get, right? Someone that has humongous social media following, humong humongous humongous access to the planet, has a ton of data because he has like 2,800 employees within his own Vayner Media. that is pretty much the one for an entrepreneur, but he's got hundreds of deals pitched to him and hundreds of friends and acquaintance, thousands of acquaintances. Like, how do you stand out where he actually wants to put his name on something like this and get behind it in some fashion with his friends, his circle, his social, etc.

23:19 I'm going to ask you a question. Putting Gary Vee aside, like why did you invest in Creatures of Habit? You already had Exit. So that was important to me because it reduces my risk that someone can build something to X and you did it twice. Um so that's a big deal for me. The the cool factor, right? Like you have it you as the entrepreneur founder, you are easily marketable. You are easily talked about. I can proudly message people and feel confident that you're going to go try to build this thing. And if it doesn't work out, I feel confident that I picked the right person, right? I picked the right horse to to bet on because you've already done it. you like this thing. You you've been eating it for many, many years. Like everything about it has what I call the checklist. And the checklist to me is kind of like the four things I mentioned earlier. The founder is number one, do I believe that this person cares? Right?

24:14 Number two, do other people care? And typically, I don't raise money or invest in a company that doesn't have sales. Typically, I have to do 2 million to 20 million revenue. That's we raised $56 million the last three years only for companies doing 2 million to 20 million. You were the exception. you were just getting started, but it's you and I believed in you and you had the previous exits and you had some interesting characters behind you already. And so we haven't made an exception since, by the way, and not once besides you. Um, three, can this product sell in the wild when you're not there? Can this product sell on a shelf or on a website or on social media when the founders, executive, staff, someone, you know, the cheerleaders are not explaining what it is? Can it sell in the wild? And then four is, can you back it up? Meaning, can you explain to my CEO, my accountant, my lawyer, my adviserss why

25:07 the things that you say are true? Can you back up what you're saying? I'm going to build this. I'm going to design this. I That's great. Let's talk. Can you prove it to my lawyer, accountant, my CEO, and my adviser? And you had all the things across the board fast. Like that whole scenario was fast. Gary told me about it. I talked to you. We became friends. I asked some questions. I asked for a deck. Bada bing, bada boom. Everything about it was fast. And so my decision came from those four elements. But ultimately, I literally never before and I don't have any plans to do it after. I still I raised money for 17 companies in a row. I've never considered when people message me that they were doing less than 2 million.

25:45 It's not an option. And so you had all the it factors on the checklist and then you did back it up and then you did scale a company. You are doing millions and millions of dollars in sales. You did it. And so to me, I'm I'm proud about it. Whether it doesn't work out, becomes humongous, takes longer, I don't care. I made a bet on the person that cared. I think I think first of all, thank you for that. I I think, you know, for anybody that's listening that is either either an emerging entrepreneur or someone that's just looking to like, you know, under that's not an entrepreneur, but just understand more about the business. I I would I would just say 10 out of 10 investors that I've been lucky enough to work with over the years invest in me way before like most savvy investors know you invest in a restaurant you piss your money away most of them right so if there's not a strong person behind it

26:45 that they believe will will die on the hill. Like I think that is what Gary knows about me because one of the first times I met Gary, he immediately had me on the the Ask GaryVee show. It was like I came into the office, we were I I I had a sneaky way of getting to Gary. He had launched Empathy Wines. I had 12 13 restaurants in New York City. It was a DTOC business. I was like, "Dude, I'm a New York City guy. You're a New Jersey guy. like I got a bunch of restaurants, you know, my restaurants. Let me be the one guy to sell empathy in New York at retail, you know, and he like he [ __ ] shot me a DM right back like, "Get your ass over to the office." I go to the office, we immediately hit it off. He's like "Tyler boom podcast."

27:34 Yeah, Drock, let's go. And that was it. And we just we just did it. And that's how our relationship kicked off. And so I think what Gary saw is what I have been lucky enough to attract in other investors like you, which is, hey, I'm not I'm not the smartest guy at the table. I'm not the guy that's going to go build you out, you know, all this all the models to to tell you exactly what this business is going to do on a P&L for the next four years. But what I do know about a good entrepreneur is I might not have all the answers personally, but you bet your [ __ ] ass I am getting you those answers. I am going to get you those answers expeditiously. Like I'm really good at getting the answers. And I also I'm relentless. Like I will not most people quit. Like 99.9% of the people quit when it gets tough because it always gets tough. Like there are how many how many times in your career have you been like [ __ ] this is

28:37 every day? Yeah. This is this is not looking so good, right? Like we're going to we got to figure this out now, right? Even when everything's great and you're scaling, things are breaking, right? And so I've just, you know, I think, you know, some of the the the most, you know, the the necessary components of entrepreneurship is like insanely high threshold for stress, like abnormally high, and um a relentless mindset and you know, I'm going to die on the hill. Like that's it. It's like there's it's not a negotiation. It's like no matter what comes down the pipe, you figure it out. And hopefully you're able to figure it out with the right people around you.

29:22 You surround yourself with the right people. And so I think that's what Gary saw that I he just he kind of just saw the guy that was going to do that, you know. So walk us through Creatures of Habit now. It's gone through its iterations. You've perfected it and you're always going to keep adding features and products and things to it. Walk us through where does it sit now and what's the plan? Where's it going? So, creatures a habit um is, you know, we'll do roughly five to six five and a half million bucks this year in our third full year of business. Um 70% of that revenue is driven through subscription.

29:56 So, that was the goal, right? We wanted to get people excited about the product, try it, and then subscribe. And so, we made that super easy for people to do. I think it, you know, getting I think it's called a slippery funnel, right? like you get people in and then it's just really easy to get them to the to the goal which is subscribe. And so now, you know, our business is is really sort of it's it's it's sustain it's it could be self- sustaining if we weren't so focused on new customers. Sure. So now the goal is what we're do we're doing something really interesting which I told you about um a couple of weeks ago. You know, I'm big on community. I'm huge on community and every business that I've built to date has been driven and held and supported by the community that participates. And so I was thinking about like how what is like the coolest thing I can do with community?

30:52 And I was like I had heard of crowdfunding but I'd like never thought of crowdfunding. And then I just started doing research on crowdfunding. And I like found out like brands like Liquid Death did crowdfunding and like big brands and the reason why they do it is because they have amazing communities. They have amazing communities that love what they're doing. And so I was like, you know what? Instead of going back to you guys and saying, "Hey, like we're going to go raise a bunch of money. Why don't I allow the community to become owners and creatures of habit?" like give the whole the community that love this stuff that like I mean if you knew the conversations that I've had with customers I spend a lot of my time calling customers like that is where I think my time is almost best spent. I literally will open up my my computer 3 to five days a three three days a week two to three hours a day and just go

31:44 down the list of people that have that have ordered and I call them and I'm like hey I'm Michael I'm the founder of the company. I just wanted to first of all introduce myself. Second of all, thank you. Like, thank you for your 44th order of meal one. You know, thank you for your second order of meal one. I'd love to hear about your experience. So, I get data from like people that have ordered since day one and people that just made their first order and connecting with people that way and like the stories that I've heard. I mean, I'm telling you that I and and it's people that are, you know, fired up CrossFit athletes that found it at their gym to like 65year-old men and women who someone told them about it and like got them off their statins.

32:29 Like literal stories like that where people are like, "Yeah, like I started my wellness journey." I I spoke to a guy who was like 65 years old. He owns a casting warehouse in New England and he was like, "Yeah, some kid that works for me came into the office, came into the warehouse eating this oatmeal and knew that I was dealing with some high cholesterol heart issues and came up to me one day and was like, "Hey, like you should just try this oatmeal. Like this could be something that you know you should be eating in the morning. Look at me. Like I'm in I'm in great shape. Like this is what I have every day." and he started eating meal one and that literally kicked off a complete new journey for this guy. He lost over 100 pounds. He's off his statins. His cholesterol was at like 280. He told me his cholesterol is like at a 170.

33:20 And this guy like [ __ ] brought me to tears, man. You know, and so I said, "Look, you know, the community has spoken. They love this stuff. Let's open up creatures of habit to the community and allow them to invest and be an owner with me and let's build it together. Like you said, $145 million exit. Like that's the plan. Somewhere between 145 and 150 million. If I can get the community, if I can not only have the community stoked about it, using it every single day, like allowing them to make better decisions in the morning, changing their lives, like let's make them some money, too, you know? So, we're we we're kicking off a crowdfund and uh you know, we're doing it on Start Engine. So, anybody listening, if they want to check it out, you can go to Start Engine and check out Creatures of Habit with a K. Um and you'll learn about it there. Uh but you know, this like it's not when we sell it for or if we

34:16 sell it for like we are going to sell the company for somewhere between 150 and 200 maybe more uh million bucks and and I want to bring the community along with us, you know. So there was a company that we raised capital for the year after you and literally yesterday they did a round. We we raised them 4 million out of 30. They raised 30 million at a 135 135 million yesterday and wired us money at Elevator Syndicate today like 6 hours ago through through crowdfund through the Elevator Syndicate through the the round that we did for another food and beverage brand. Wow. And it just happened this literally 6 hours ago.

34:54 And well, the press release will come out shortly, but the wires literally happened six hours ago. Wow. And so when I throw out the number of 145 million, well 135 million real literally happened today from a brand in our same ecosystem. And so it's very real that you continue building the way that you're building it. And people, by the way, you'll get even higher valuation because it's subscription. Like you get a different multiple for a business when you have subscription as you know. And so you can you keep going at the rate you're going. It's really compelling because those valuations are much different than a traditional CPG brand or a food and beverage brand.

35:26 Okay, take off the making money and investing money hat. Put on the charity hat. Why do you think that brands should have some type of charity element whether it's public facing or just within their staff to get their employees behind it? I think mission moves mountains and I like as we spoke about a little bit before you know I've got a real history with addiction. Our country is experiencing the worst addiction epidemic of all time. People hundreds of thousands of people are dying every year. It is the number one it is the number one cause of death in people 18 to 45 years old in this country. drug overdose and it's just got worse and worse. And so, in my opinion, every business that I've ever launched has a responsibility component.

36:22 I find the greatest gratification in helping others. And that could be helping people within the company on the staff right? that could be just helping other people in my life. But when I'm building a business that's generating revenue and it gives me an opportunity or gives, you know, a business an opportunity to give back a piece to to actually like save someone's life. Save someone's life. I mean, how can you how can that not be the greatest thing on the planet? You to save someone's life. So creatures a habit every year we do an event called we'll wear the weight which is uh which is our charity event and uh we partner with go ruck which is a rucking company that I love and our foundation partner is the release recovery foundation and we couple hundred people fly from all over the country that are passionate about this and they we meet in New York City we put on weight vests and it's it's

37:28 called we'll wear the weight because for that day We're wearing the weight for those who cannot get out of their own way with addiction. We're taking the weight right off of them. We're putting it on and we raised money and we've raised close to $200,000 to get addicts who are struggling that don't have the means for treatment but want treatment into treatment. We pay for their whole entire journey. We fly them to the treatment facility. We pay for their treatment. We pay for their post treatment. We pay for their like whatever they need to get on the right path. And we've done that with a number of addicts. And I can honestly say like that in itself for me is is is is creatures of habit success.

38:10 Right. Like you said, right? Like this business will not fail. But in the event another crazy catastrophic things happens in the country and all business, you know, [ __ ] goes down. I'm successful. Creatures of habit is successful. We have literally saved lives. And so that in my opinion is like if you're not doing something like that, feeding people, figuring out a way to use the money that you've generated through a business that you're passionate about to help be of service towards others, um you're missing you're missing a really big opportunity and and component of of what I believe business is a big responsibility in business. So I you know I think It's it's just important.

38:58 And I think guys like you and people like, you know, probably all of the all of the people that you you you uh raise money with look at that and they're like, "Hey, like these guys are going to do awesome business, but like what are what else are they doing? Is there a component where they're where they're taking off their business hat and and and participating in real community?" You know, there's only one question that I ask on every single episode and I've never gotten the same answer before. I'm not going to get it right now either.

39:29 One day you finally sell the company for 145 million. You do another chain. You do a restaurant chain. Another couple hundred million. And eventually you've got hundreds of millions of dollars, but unfortunately you pass away. What percentage of those hundreds of millions of dollars do you leave to those children? My children. That's a great question. Um, well, I guess I'm I'm I'm going to try to make this not a long- winded answer, but I think I have to think about um where I how I ended up in the seat that I'm in today. I got nothing. I didn't get any help from anyone.

40:13 That gave me grit. That gave me drive. That made me really think. That made me triple, quadruple down on my God-given gift of emotional intelligence. And I would not have had that had I been given a silver platter. And so I haven't really thought of that. What am I going to give my kids when when it all goes down? But I they're definitely going to get something. My dream and my goal would be that they see their dad and how their dad creates and how their dad builds that they that they do the same thing. And you asked me, you know, are you going to open up a restaurant after you sell creatures of habit? And the whole the the honestly like secretly the main reason why I would want to open up a restaurant is to put my kids to work in a restaurant because I know working in a restaurant was one of the greatest things that's ever happened to me.

41:24 I wish I had a great answer for you. I wish I could say, you know, I I'm not the guy that's going to be like they're not getting anything. It's all going to charity cuz I don't know if I believe in that. I think that's incredible for people to do that. Um, but I just I I do think that, you know, my kids will will will participate in the money that I've earned. Um, damn, that's such a hard one. Do you know what you would you you would do now that you're a father? My answer has been evolving mostly because I get to hear, you know, 130 episodes of answers. Um, and I've heard every answer from zero to all of it to everything in between. Um, I would definitely have a structure so that I'm not handing her Ariana hundreds of millions of dollars in one shot because that's cuckoo. Um, but I would like to build her into someone that I trust to run it. Yeah. I I think I think you know it's hard to say what

42:25 percentage of that money I would I would give. And I and I and I'm sure right like 10 years ago I thought, you know, an old farmhouse in upstate New York was awesome. I now have an old farmhouse in upstate New York and I can't wait to be in a more modern house, right? Like [ __ ] changes, you know, like our whole like how we see through our eyes, how we hear things. It just changes as we evolve as humans. And so right now probably I would I would imagine that I am going to give them a chunk of cash that they're going to have to earn into as they as they get older. And there's going to be there is definitely writing and very very clear directions stipulations. Yeah.

43:04 That if if either one of those kids follows my path of addiction there's zero money going anywhere. Sure. So, there's going to have to be some sort of a steps and procedures, a standard operating procedure for them to receive money. And it's and like you said, it's not going to be like, yeah. Um, but I would imagine that, um, you know, I I pray to God that my wife outlives me. Um, I'm going to be like, you deal with this. Um, but man, ask me in a couple years after we sell creatures a habit, you know. Do you have any idea what she would say?

43:42 um zero to 100. Not not with the zero to 100%. She would probably the way the way my wife is like I think she'd probably give it all. She'd probably give it all. She probably give she she probably she you know I mean I think that she would probably knowing her she'd want to like give a bunch of charity to like equestrian you know like therapy because she's big into that. Um probably to you know there I I I I imagine that over the course of my career I am going to build facilities for addicts. I know that's going to happen for me that I'm going to be able to build really amazing facilities for addicts to find recovery. Y um and so I would imagine that's probably going to be 50% of my of my wealth. Uh and then chances are the family will as right now family gets the rest, you know.

44:40 5050. There we go. All right. So tell us where can people find you on social media? Where can they find Creature Habit? Tell us everything. Yeah. So you can find Creaturesofhabit at creaturesofhabit.com. It's creatures of habit with a K. Uh and just so you know what's in this product. It is a high protein overnight oatmeal. 30 grams of gluten and glyphosate free oats. 30 g uh excuse me, gluten and glyphosate free oats. 30 grams of plant-based protein, chia seeds, flax seeds, pumpkin seeds for omega-3 fatty acids, pink himalayan salt for uh for uh electrolytes. There's also a probiotic, digestive enzymes, and vitamin D3 in there. It's super easy to make in 30 seconds. It changes the It really does change your morning. Um and then we make this creature sleep, which is a sleep support hot chocolate. So, you start your day with meal one, you finish your day with hot chocolate. That helps you

45:24 wind down and get good restful sleep. So, creatureshabit.com. Also online uh on social media, creatures of habit. Remember, it's with a K. And then you can follow along my journey, Michael Chernow everywhere. Um, and this was super fun. All right, guys. As you know, the core reason for the Money Mondays is to have these discussions with your friends, family, and followers. We grew up thinking it's rude to talk about money. I think that's ridiculous. We have to have discussions about money because it's real life. Taxes, accounting, loans, borrowing money, leases, should I rent, should I buy this? Like, we don't know if we don't talk about it. And so many times we're in massive credit card debt or massive situations cuz someone didn't talk to us about it because it was like, "Oh, you can't say that. You can't ask about salaries. You can't ask about money. You can't ask about bills, things like that." So, have the

46:10 discussion with your friends, family, and followers. Follow Michael Chernow across social media. Check out Creatures of Habit on social media and creatureshabit.com. And we'll see you guys next Monday on the moneymunddays.com.

Questions about this episode

Who speaks in "The Real Reason Most Restaurants Fail (He Beat the Odds Twice) | Michael Chernow🍽️EP127"?

Michael Chernow (Guest), Unknown Host (Host).

What is "The Real Reason Most Restaurants Fail (He Beat the Odds Twice) | Michael Chernow🍽️EP127" about?

Michael Chernow shares his journey of success in the restaurant industry, discussing the challenges and strategies behind opening and scaling multiple restaurant concepts, including The Meatball Shop and Seymours. He emphasizes the importance of adaptability for entrepreneurs, particularly during the pandemic, and highlights the key factors that contribute to thriving in a competitive market.

What is mentioned in this The Money Mondays Podcast episode?

20 people, works and ideas are mentioned, including Creatures of Habit, Michael Chernow, Oatmeal, The Meatball Shop, Charity, Wellness. Each one on this page links to its own page with every episode that mentions it.

How long is "The Real Reason Most Restaurants Fail (He Beat the Odds Twice) | Michael Chernow🍽️EP127"?

The episode runs 46 min; the transcript is about 8,763 words in 59 timestamped sections.

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