[upbeat music] - Hello, I'm Nido Qubein.

Welcome to Side By Side.

My guest today went to school in a one room building with no electricity, no running water, yet today is the CEO of a major company that owns hotels and restaurants.

We're talking hospitality, and service, and sustainability with Dennis Quaintance.

- [Narrator] Funding for a Side By Side with Nido Qubein is made possible by: - [Announcer] Here's to those that rise and shine, to friendly faces doing more than their part.

And to those who still enjoy the little things.

You make it feel like home.

Ashley HomeStore, this is home.

- [Narrator] The Budd Group is a company of everyday leaders making a difference by providing facility solutions, through customized janitorial, landscape, and maintenance services.

- [Narrator] Coca Cola consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teams.

We are Coca-Cola consolidated, your local bottler.

[upbeat music] - Dennis, it's good to see you, and nice to have you on Side By Side.

I gotta figure this thing out.

At age 15, at age 15, you were an assistant housekeeper in some small hotel somewhere.

- Yeah.

- You attended school in one room building, and yet you went on to become a very successful entrepreneur.

I intrigued, what are the criteria that contributed to your success?

- I don't know.

I think my mom would say common sense, but then she'd say, why did they call it common, if it's so rare?

But when I started in the hotel business, I soon realized just a very simple thing is that, and that was that the guest expectations were predictable and reasonable.

So why don't we just meet them?

And that's really the sort of foundation of my career.

You know, if we can predict what our guests want, which is very easy in the restaurant and hotel business, they want a good night's sleep, they want it to be sanitary.

They want it to be safe, they want to be treated kindly.

People just expect us to be competent and friendly.

So really at 15, you know, I sort of got the foundation of what my career still holds is, let's not tell the guests why we can't take care of them.

- You were born in Iowa.

- Yes.

- And you lived in Nevada.

- Yes.

- What did you do in Nevada?

- My, [laughs] my father is quite a cowboy, literally and metaphorically.

And so he ended up there after his father and uncle homesteaded.

You could still homestead in the early sixties, in Nevada, near there.

And he took a job as a foreman of a ranch, but he started an irrigation well drilling company.

He needed an airplane to get back and forth.

So he got four hours, or six hours of instructions, excuse me.

And that's all he ever had.

And he had over 2000 hours of flying.

He always said, "You don't need a licensed to fly, you need an airplane."

[both laugh] So anyway, in Nevada, - He was a daredevil, you're dad.

- Oh yeah, well, we ended up moving to Montana from there because he got in the business of catching wild horses and legally, you know, cause there's an overpopulation.

And selling them as rodeo stock up in Montana.

So that's quite a stretch [laughs] from restaurants and hotels.

But you know, the basic ideas of taking care of people are that same way.

And that's where I went to the one-room school, you mentioned was in Nevada.

We were literally, we were 112 miles from Tonopah.

And Tonopah is where they developed the stealth fighter.

And they said they developed the stealth fighter in the middle of nowhere.

So I grew up 112 miles from the middle of nowhere.

- You did, didn't you?

Yes.

[men laugh] And what got you in the hotel business?

I mean, why at the age 15, did you become assistant housekeeper?

- Well, I [laughs] I started, I wanted to be in airplanes, around airplanes, and I thought the way to get there is to be around cars and learn how to fix them and that sort of stuff.

And I couldn't get a job at a gas station, or a car dealership.

And a friend of mine told me I might be able to get a job, he was a dishwasher at this place, but he said, you know, "don't apply to be a dishwasher because you're too short.

You couldn't put things away.

So why don't you go to the hotel side?"

And I walked in there and they hired me on the spot.

It was so funny.

I heard them in the back saying, "There's this cute little guy that looks 12 years old."

[laughs] - And it was legal to hire you at that?

- Yeah.

- Yes?

- Well, in Montana, legal is kind of comes as second price, you know?

- And that was the beginning of your interest in hospitality?

- I never left the business.

I'm 64 now, so.

- Tell us about your first entrepreneurial initiative.

- Well, when I worked for that hotel company in Montana through the rest of high school, and then I went on to Arizona and some other places.

But when I came here to North Carolina, my good friend, Bill Sherrill, who I met in Montana, he's an amazing man.

He now has the Red Oak Brewing company, asked me to move back here with him to help open Franklin's off Friendly.

Which was the restaurant that opened in 1978 near in Greensboro.

And so I was a part of starting that new business, and I was 21 years old.

- And then went into hotels and so on.

The intriguing part about you, Dennis, and get ready I'm gonna ask you about the hair in a minute.

- [Dennis] [laughs] Okay.

- I've known you a long time and I've never known your hair to be that long, so.

- Neither has my mom, she hasn't seen it.

- Something is going on.

We're going to get down to the bottom of it.

But tell me this, it seems like every project that you were involved in, especially hotels, has a unique story.

And it's embedded somehow in your interest in sustainability.

Take us to the first one and tell me why you have that interest, and how do you execute on that every day?

- Well, I'm growing up mostly in Montana.

You can see the tree line every day.

So it became really obvious to me that, that if there's a species that'll grow literally 15 feet away from where it can't grow, that this is a pretty fragile situation.

So, but I've always resented people trying to tell me what I, you know, wagging their finger and telling me what I should and shouldn't do.

So I decided to pretend like this sort of Native American idea that pretend like you're going to die soon and pretend like you're gonna live for seven generations.

So I enjoy this sort of pivoting between these two ideas.

So I just decided that I didn't want to live my life and die, not really actualizing some of the ideas that I hold.

And so I think that we ought to really think seven generations out, but not in a finger-wagging mean-spirited way.

But in, you know, I always say that you only know if you hold a value, if you're willing to voluntarily inconvenience yourself in service of that value.

So from the very beginning, when we opened our first Lucky 32 restaurant, my good friend, Mike Weaver, and I got together and, and started this business.

We started a recycling before it was a thing, but we stopped it because we learned that the people that were taking our recycling were, he'd literally one day I was out there, he didn't know who I was, the fellow picking up the cardboard, and he was hosing off the thing.

And I said, hosing off the cardboard.

And I said, why are you doing that?

And he said, because your worried it's gonna catch on fire or something?

And he said, no, he said, these fools buy it by the pound.

If I get wet, I can sell it for more.

[laughs] So we quit doing it.

Cause I was like, well, we don't want to be a part of that.

So we're not pious, but we're just like, let's not, you know, you would hate to get to sort of the end of the book of our life, and say, what did I really do?

Did I just sort of survive that?

Or did I do something?

But I prefer to do it by, you know, getting out and working at things as opposed to being a militant or something.

- So how does sustainability work in a hotel?

I mean, is it recycling soap?

Is it not washing the sheets if the guest stays there for two, three days, not washing it every day?

What is it?

Give us some examples of.

- Well, in our case, the proximity is does a lot of sustainable practices.

And we have elevators that generate electricity when they go down, rather than wasting that energy as heat.

So that's pretty sensible stuff.

We use the sun to heat hot water.

So that's kind of sensible.

It's there, that doesn't send a bill, so why not do it?

So those things, but the most important part of sustainability is that it's not sustainable to go broke.

So you do not want to have someone taking a shower and saying, I'm not satisfied with this shower.

So there's a sustainability about human satisfaction.

So we never would satisfy, would never sacrifice, excuse me, a guest satisfaction for the idea of saving a BTU of energy.

But we think we can walk and chew gum, and we've proven that.

It was frustrating to the designers that helped us cause they'd say now how much energy you want to save off of these standards?

And I'd say exactly as much as we can save without ever causing a guest to notice that we're saving.

- It's a question of balance then.

- Yes.

- Does it cost more to create a facility that is sustainable?

- Yes, but not as much as most people say.

We spend about $3 million more on the proximity and we had that incremental part of the investment back within three and a half years, maybe four, depending on how you calculate it.

- Yes, all right, so, as I said, I've known you a long time.

I've never known you to have long, long hair.

There's gotta be a story behind the image.

What is it?

- Well, you know, when this pandemic, kind of punched the whole world between the eyes back in March of 2020, we needed to furlough.

We closed our businesses and furloughed a lot of people.

And I said, well, I'm not gonna cut my hair until the majority of them were back.

And, and hopefully I'll be able to cut it soon.

- So, take us there, Dennis.

Something like a pandemic hit the hospitality industry pretty hard.

Can you take us to the moment when you had to make those decisions?

The moment when you acknowledged the reservations are not coming in, the cancellations are pouring in.

What do I do?

I have payroll, I have overhead.

And when will this go away?

Is my business, you know, caput or is there a potential for regrowth?

Take us emotionally to where you, as the entrepreneurial leader, were at that moment.

- We have a strong balance sheet.

That's one of the ideas I think that comes out of this background that I have, so.

I was not sweating the PNL and the cashflow.

That was not even hardly in my field of vision.

- But how long could you have gone?

- Well, but the point is, that what I was sweating is are our guests safe?

Do we know we can keep them safe?

Or is our staff safe?

Do we know that we can keep them safe?

And with all that ambiguity, I was like, we need to shut down.

We need to shut down until we know what best practices are, because we're just throwing stuff up against the wall as a society.

So it was very easy decision to shut down because we were not sweating that the we knew that the whole world economy would not collapse.

That there would be, that we were part of a bigger organism.

And so we were not sweating the short term.

We were thinking about the long-term.

If we end up with something where, you know, people literally die because we're concerned about cashflow, then where are your values?

So we just decided that we were gonna be very, very careful until we figured out, until society figured out what were best practices.

And we figured it out, and then we reopened.

We as a society.

- Yes, and when you reopen it was a slow open?

- Yeah, yes, it was because people were reluctant to come out and still business travel is way off.

I mean, just say it's way off is a huge understatement, but people are dining out.

So we have, you know, we had a public health expert that had been a part of our team for five years and he helped us design criteria protocols.

And we really went sort of, we just didn't want anyone getting sick, and knock wood, we've been this whole time and we have not had one contact trace back to our businesses.

- That's pretty amazing.

Congratulations.

- Yeah.

Knock wood.

- Yeah, Dennis, you made headlines when, at least in business journals, when you said I am gonna take our business and I'm gonna invite our employees to be owners.

What is that all about?

- I, like I mentioned earlier, I think that Einstein was right when he said that the strongest force in the universe is compound interest.

And compound interest works against a lot of the people that work in our industry, not for them.

And employee stock ownership is basically taking a compound interest and letting that work for them.

I also believe.

- Tell me how that works.

- Well, the way that it works is the company is actually owned by a trust.

And the trust, the only way you can participate in the trust is by working there, you can't put money into it or anything like that.

So if a staff member works there for more than three years, then their retirement units, as we call them, become vested and they can build equity in the company in essence, as being beneficiaries.

- They buy a share of the business?

- They don't buy it.

They get it just by working there.

No one can ever write a check to go into it.

So you can't not get it if you work there, you can opt out.

But why would anyone?

So the idea though, is that it's a non-funded retirement program.

It's not a 401k, it's a 401A.

So it's a, but it's a non-funded one.

So what it means is that each year the company's valued, and so the stock, we call it retirement units, are valued each year, but you cannot leverage that.

You can't go to the bank and say, oh, I've got, you know, $12,000 in this retirement account, so I want to buy a boat.

It isn't accepted as any sort of collateral.

So it forces people to benefit from the earning power of capital.

Without having to actually put- - How do they then cash out?

- Well, when they retire, if they reach retirement age, then they can obviously take it in a tax advantage sort of way, but if they leave before they retire, then in some instances they have to wait for a couple of years and they'll get it.

But they can roll it into another qualified retirement program.

So they can have a tax advantage accounts, so they can roll it into a 401k or an IRA.

- I see, and how do you carry that on your balance sheet?

- [laughs] Well, there are so few ESOP's around that most CPAs would be stumped by what you just asked.

But the bottom line is, is it is screwy.

The way your balance sheet ends up looking.

But people that understand ESOP's realized that the company that the trust started with no money, it borrowed all of the money to buy the company.

In this case, Mike and I were the lenders.

And so it has debt on that side of it, but, it's friendly debt.

- I see.

So you've hired a lot of people.

You continually hire a lot of people.

- Well, I'd like to say one more thing about that last one, though, if I may.

- [Nido] Yes, yes.

- So the other thing is that companies, you know, Mike and I own this business, the operating companies, and we know that companies are always sold.

You know, because people do this thing like die.

And so I think that most succession plannings for a company starts with, they think, when you say succession planning, you think about management, but there's also governance and ownership.

And ownership is the most important part.

So we wanted to do the succession planning of ownership, which we think is the most important first, because we really are, Mike and I are, he's such a great guy, are so vested in this idea of our value systems, that we would hate to sell the company to a normal hospitality company, that doesn't share our values.

So that was another big motivation.

So I just wanted to get that part.

- Well, that's sounds wonderful.

Has it helped you in terms of retention, attracting better associates?

- We are just fixing to figure that out and then we got clobbered with the pandemic.

[laughs] But it will.

The statistics out there show that it will.

- So you're known in the industry as a entrepreneur, an operator, who provides high level of service, very courteous employees, et cetera.

What is it you look for when you hire someone?

- [laughs] I don't know if I want to tell everyone.

[laughs] Well, the bottom line is you can't train friendly.

You've got to hire friendly.

- You cannot train friendly.

- You can't train someone to be friendly.

You can train people to be competent.

And our guests really only expect, our guests and our colleagues, really only expect two things of us.

They expect us to be competent and friendly.

So, hire the friendly part and teach the rest.

- All things being equal.

- All things being equal.

- All right, besides friendly, what else?

There's more to it.

- Oh, absolutely.

Well, you know, in our business, it really is a more challenging most of the job.

Almost all of the roles are more challenging than one would think.

I mean, if someone asked me to go work the grill tonight, or be a server in one of our restaurants, I would be terrified.

I would say, could you give me two weeks to prepare?

There's a lot to it.

So there's a lot about memory, organization, there's all these other things.

But most of that, you know, you've got to find the right seat on the bus for people.

But most of the time, if you've got this foundation of an inclination to treat people with respect, we can find a seat on our bus for most any other sort of aptitudes and skills, because we have such a variety of roles.

- I've often wondered what is the, I should know that, but I honestly don't know.

What is the occupancy rate in a hotel that makes it fundamentally successful?

- Well- - It varies, I'm sure.

- Yes, it does.

Most hotels have a lot more debt than we do.

So that changes based on what, because the big cost in a hotel, is your capital costs.

And so the answer to that though, is 60%.

In terms of the industry, 60, 65% is what people would throw out as a number.

But there are other instances where, you have a situation where the average rate's so high, that occupancy can go lower.

- Yes.

What about restaurants?

Is there such a thing as occupancy rate at restaurants?

- Well, yeah, I mean, you have to get to certain guests counts as a percentage, as a multiple of the number of seats you have in the restaurant in order to expect a positive cash flow.

- And what would that be generally, in the industry?

50%?

- Oh no, no.

You need to be able to, if you have a say two hundred seats, you need to be able to be serving on a weeknight 200 to 300 people.

- [Nido] I see.

- And then on the weekends and special events twice that.

- Is that the main reason why so many restaurants fail?

That they can't get the loyalty of the repeat customer?

- Yes, yes.

And I think the reason that sometimes restaurants don't get that loyalty is they forget that idea that I was thankfully able to recognize early is that people's expectations are reasonable and predictable.

And so, predict them and you know, you go into a restaurant and the bathroom's dirty, it's probably gonna fail.

- Dennis, I'm not asking specifically about your businesses, but just generally speaking, the cost of running a restaurant broken down into components or sectors, goes how?

30% for food, 30% for something else, and so on.

- Yeah, yeah, there's a thing called prime costs.

It's an expression, and that's where a payroll and related expenses benefits, and then a cost of goods sold, food and beverage at costs.

If that needs to be somewhere between like 58 to 63%, or you're not gonna end up with a profit at the end.

So that's the, those prime costs.

That's the old 20/80/20 rule.

That 80% of your costs are really in 20% of activities.

- What happens to excess food?

What happens if you buy a bunch of steaks, and you can't sell them that week, what happens?

- Some gets thrown away.

And I think that's something that we, as a society, and even in our company needs to get better at.

We are pretty good.

We have some amazing human beings that know, that are good at looking around corners and predicting how much food we should order.

But being able to have an outlet for food like that is a big thing.

And I think that we'll figure that out in the next decade or so.

- So you've received many awards because of your leadership, because of your community investment, because of sustainability, because of your personal achievements, and professional achievements.

What's next for Dennis?

- I tell ya, I am so excited, I'm skipping.

- Besides getting a haircut.

- [laughs] Yeah, I think I'm gonna be able to donate it if anyone wants this thing.

But the thing that is, I'm enjoying what I do now more than ever, because I feel so obligated, and in a sweet, loving way, to make sure that this employee ownership ends up meaning something to some people.

I literally imagined, you know, someone sending their daughter or granddaughter to a wonderful college or university and saying, "I was able to do this.

And I was a housekeeper for 28 years."

And that's sweet stuff.

- That's true impact.

- But that'll only happen if we really take great care of our guests and our colleagues.

And so my job didn't change very much, but I'm even more enthusiastic about it.

So what's next for me, is I just feel like a kid that has the greatest sandbox, because I'm able to do something within the capitalist system, that is so bloody exciting.

Everything I think is exciting if you have the right mindset.

So what's next for me now, is grinding the salt.

Just, let's just, let's do what we're doing.

Let's grow where we're planted.

Let's take great care of our colleagues and our guests.

- What is the biggest complaint you get in the hotel from guests?

- Oh, what is the biggest complaint?

That's a good question.

Well, [laughs], you know, we don't get that many complaints.

I mean, we really, we built this hotels really, really solid.

And I think most of them are around misunderstandings that we goofed up in some communication about you know, when they were gonna arrive, when they're gonna leave, those sorts of logistical human things.

That's the thing that we goof up on the most.

- Well, Dennis, you've come from a meager background, and you have accomplished so much.

We admire you for that.

You have extended beyond yourself and your personal needs to help the community at large, through sustainability, through investment in families, and schools who need your help.

For that, we also honor you.

It's my pleasure to have you on Side By Side with me.

Thank you for being with us.

- I'm delighted.

I enjoyed being here.

[upbeat music] - Funding for Side By Side with Nido Qubein, is made possible by: - [Narrator] Here's to those that rise and shine, to friendly faces doing more than their part.

And to those who still enjoy the little things, you make it feel like home.

Ashley HomeStore, this is home.

- [Announcer] The Budd Group is a company of everyday leaders making a difference by providing facility solutions through customized janitorial, landscape, and maintenance services.

- [Narrator] Coca-Cola consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teammates.

We are Coca-Cola consolidated, your local bottler.