Leading The Way: Deneb Williams
I’ve learned how resilient my team is and how much the people who work with me love our company. They’re willing to sacrifice and do what it takes. I’ve learned a lot about the people in my industry and how much collective good we can do …
Unlike a lot of business owners, restauranteur Deneb Williams was ahead of the curve when he shut his restaurants down before the Governor issued the shelter-in-place order …
Tell me about your company.
Allora, our flagship fine dining restaurant
Woodlake Tavern, which is temporarily closed due to COVID-19
WM Catering & Events, a high-end catering company that does off-site events like weddings. We do a lot of work at the Crocker Art Museum, Gold Hill Gardens and different vineyards around the area. We’re also a preferred vendor for Willow Ballroom and a number of event centers.
Eatable Sacramento, a farm-to-table, chef-driven, restaurant-quality meal delivery service. Two days a week, Eatable delivers fully cooked, ready to heat and serve meals within a 25 mile radius in the greater Sacramento area.
When you think back to earlier this year, at what point did you realize you were going to have to do something different?
My investor, David Hardie, is a brilliant entrepreneur, having launched 60-80 companies in his life. He saw COVID coming a mile away because the companies, hedge funds and financial institutions he works with have analysts focused on this kind of stuff. As soon as the virus blew up in Italy, we started talking about it. What do we need to do? How do we need to position ourselves? How do we keep everyone safe and also create a revenue stream? We analyzed our restaurants and quickly came to the conclusion that mid-range dining didn’t have any viability during the pandemic.
We realized there were going to be two kinds of restaurants during COVID – high-end, Michelin-caliber restaurants and takeout. Mid-range restaurants were going to struggle because with Woodlake Tavern and any other venue with a “per person average” of $25-45, you thrive on volume. During a pandemic, that’s counterintuitive, because you can’t put enough butts in seats to generate the volume you need to be profitable. The low-end restaurants, like Chipotle for example, aren’t relying on butts in seats because people are taking the food to go.
With high-end restaurants, you can redesign your menus so that each guest is spending more money, and therefore driving the revenue needed. With a little creative design in your labor force and some reduction in your fixed costs, like your lease or your prices with vendors, you can survive.
What changes did you make?
Based on this analysis, we closed Woodlake Tavern immediately. We changed our menu structure at Allora from an a la carte to a prix fixe menu with the option of three, four or five courses. I think we’re the only restaurant in Sacramento who made this particular pivot from a la carte to prix fixe at a higher price point.
We went to our landlords, and we renegotiated our lease through the end of the year. We took a hard look at our company structure and went from 55 employees to seven employees overnight, then systematically brought 18 people back, as we brought other revenue streams back online. I’m proud to say the layoffs for most of Allora’s employees were very short.
Initially, Allora shut down completely. Then we were allowed to open with limited capacity. Then we closed down again and were allowed to reopen outside. So there were three pivots in that. We also started offering takeout after crafting entirely new conceptional menu items that lend themselves to family-style takeout food – six or seven different entrees with soup, salad and dessert, all very reasonably priced. With the inside now open at 25% capacity, plus the patio, we’re around 40% capacity total. With the new menu structure and the addition of takeout, we’ve been able to piece together a patchwork quilt of steady revenue at Allora.
Finally, we started talking about food delivery and how to provide customers food in their homes, and we came up with Eatable Sacramento. It took us about four months to conceptualize the business, build the website, create the online order interface, develop the menus and do the R&D. We launched in September.
Were you the only restauranteurs to close down this early?
We were part of a large group of chefs who got together and voluntarily decided to close down prior to the Governor’s shelter-in-place order. We could see the writing on the wall, but we also wanted to do our part to slow the spread of COVID-19. We never in a million years thought the shutdown would go on this long.
Tell me about the work you and your wife have been doing in the Sacramento community.
My wife, Elizabeth-Rose Mandalou and I felt strongly that there were going to be people in food insecure situations, and we wanted to help. We went to the board of our church on H and 56th in East Sacramento and said, “We have this idea … with every takeout meal, we’re going to ask people to donate money – “buy a meal, give a meal.” We’d like you to match the donations. Using this money, we’re going to make meal boxes that will feed a family of four and deliver 100 of them every Sunday to the church so you can give them away to families in need”’ We fed 400 people a week for 24 weeks this way.
Then I got together with Patrick Mulvaney from Mulvaney’s B&L, Clay Nutting and Brad Cecchi from Canon East Sacramento, Oliver Ridgeway from Camden Spit & Larder and Toki Sawada and her husband Craig Takehara from Binchoyaki, and we started Family Meal. We went out and found big donors – banks, private citizens – people who were willing to give tens and hundreds of thousands of dollars, and we started producing meal boxes. Pretty soon, I was delivering 50-150 of these dinner boxes for a family four and so were the other restaurants.
Governor Gavin Newsom caught wind of this and came down to Mulvaney’s B&L one day to see what we were doing. He then went to the Federal Emergency Management Agency (FEMA) and got millions of dollars for what’s now called “Great Plates.” Great Plates is a single box with breakfast, lunch and dinner for elderly people who are enrolled in a subsidized program. There are over 40 restaurants serving thousands of seniors quarantined at home, providing sustainable food seven times a week from a different restaurant every day.
How is the restaurant industry in Sacramento faring during COVID-19?
Restaurants are not doing well. The best case scenario is we lose a bit of money, or we lose all of the operating capital we have. Restaurants that were already geared for takeout are doing well, but everybody’s down. For the last fifteen years, profit margins have been dwindling. When I started in this business 35 years ago, restaurants would drive 15-20% to the bottom line consistently. So if you owned a restaurant that did $2 million in sales, it wasn’t uncommon for the owner to pocket $300-400K in profit. Now, a well-run, full service restaurant will make 4-5% in profit. Why? Our grocery bills have doubled but our meal prices have not kept pace. What else has gone through the roof? Labor. When I was coming up in this business as an hourly line cook, I’d make $6-8/hour. Minimum wage is now $13 which means your dishwashers are making $13/hour. Your line cooks are making $18/hour. Your managers are making $25/hour or more. Now let’s look at real estate. The cost of leasing space has doubled or tripled. Insurance and worker’s comp costs have gone up, not to mention every single ancillary tax the city of Sacramento, the health department, the fire department, the school district and the sewer board levy on small businesses. It’s death by a thousand paper cuts. That’s how that 20% profit margin fifteen years ago gets down to 4%. In a lot of cases, restauranteurs are just breaking even and paying themselves a salary. This is how they earn a living, but it’s no longer a business you can get into and make money.
My wife and I have taken three days off in the past six months. We work from the moment we wake up to the moment we go to sleep. There are many, many days where my wife will start work at 8:00 am and come home at midnight. Right now, we work together. So this is our lives … pre-pandemic.
Now you add COVID-19 into the mix, and I think there are a lot of people who are going to be walking away from the restaurant business, saying “I’m done.” They’re reporting that 40% of the restaurants are closed, and I don’t see a lot of them reopening. I think we’re going to lose 40% of the restaurants outright. Another 40% are going to limp along. Their survival will hinge on how long the pandemic lasts. Twenty percent of the restaurants will flourish in some way, shape or form whether it’s through a series of pivots, altering their revenue streams or changing their business models. COVID has been an absolute catastrophe for restaurants.
What precautions have you taken at the restaurant?
At Allora, we’ve done a lot. We’ve distanced our tables six feet apart on the patio. We’ve had big custom plexiglass barriers built, wrought iron with wood, and we roll them in between tables so people have physical barriers. Our staff wear decorative masks with N95 masks underneath. Our kitchen crew wear masks and gloves, and we’ve stepped up our hygiene protocol. We were a clean kitchen before but now we’re maniacal about it. We do temperature logs for every shift for every employee. We have strict contact guidelines, and we’ve paid to have our entire staff tested twice, which cost me $5,000 each time.
How are your employees holding up?
They’re suffering. This summer, we had some 110 degree days outside. The kitchen was 100 degrees, and my cooks are wearing masks and gloves. Working in a professional kitchen is like being on sports team. We rely on each other to get through a shift. We have to be in sync and rhythm, and now all of a sudden, we’re wearing masks, and our voices are muffled. The first couple of nights, I thought I was going to have a panic attack trying to call the wheel through my mask. I was sucking the mask into my mouth every time I took a breath. I’ve had a number of people quit because the stress of leaving their house to come to a high stress job is just too much. I’ve also had a lot of people questioning what we’re doing, why we’re doing it, what we’re fighting for. My service staff is out in the dining room every night, literally putting themselves in harm’s way. Walking up to strangers, introducing themselves, spending time in their midst.
Last weekend, we catered a wedding that was booked pre-COVID. The guests were supposed to wear PPEs and follow social distancing guidelines, and none of them did. I’m there working with my wife and my staff, looking around thinking “Holy shit .. we’re right in the middle of this. We shouldn’t be here.” Yet that’s what we do for a living. We are hospitality professionals.
Our mental health? I can describe it in four words – “hanging by a thread.” I don’t know how much longer people are going to be able to endure everything and continue to function. The whole working-from-home and homeschooling your kids is hard. Parents are losing their minds. So it’s not just our industry. It’s society as a whole. I think the restaurant industry might be the canary in the coal mine.
Our company is keeping it together through unity, the leadership of my wife and her vision for everyone’s safety and security, through trying to clearly define what our comfort level and our acceptable level of risk is. It really helps that we are the owners of the company, and we’re in the trenches with our staff every day. I’m better able to define what is and isn’t acceptable because I’m here with our employees. I’m not only risking my own health, but my wife’s health and my family’s health. I feel the tension, stress and fear. It’s palpable, every day.
What worries you?
My biggest fear is a resurgence in the fall and more ill-planned, knee-jerk reactions from local politicians which don’t coincide with state politicians which don’t coincide with federal politicians. Every time Governor Newsom says on a Friday afternoon, “We’re going to close down,” it costs me $10,000. I’ve already prepped all the food for the weekend. I’ve paid the staff. I’ve done the marketing, the advertising, the social media posts. When the state opened back up earlier this year, we couldn’t open for 10-12 days because we had to restart this machine. It doesn’t just flip on and off like a light switch.
Every hospital cafeteria is still serving food. What’s the difference? I can go to a hospital and eat a meal shoulder-to-shoulder with other people, but my restaurant is closed. What’s the difference? This is an example of bad pivoting that hurts those of us who are just trying to play by the rules and do what’s right for our guests, employees, investors and society at large. How can we possibly survive if the government won’t give us clear, definable guidelines and make the rules the same for everyone?
It’s been so nerve-wracking. Some nights, I don’t sleep. I lay awake and try to see my way through this. I’m a chess player by heart. I love to see the fifth move. My staff looks at me because I’m the chef and the CEO and say, “What are we going to do?” Recently, when I met with my director of operations and my director of catering, they said, “boy, that wedding sure was awful. What are we going to do?” I’m supposed to give them an answer, and I don’t have one.
I do know this. I have spent my entire life honing my skill to get to where I am now. I spent ten years at my last job building my reputation. My wife is an advanced sommelier, one of three in the entire city and the only woman, and it’s taken her the better part of a decade to get there. We don’t have a Plan B. And it’s not like ten years ago where I could leave my restaurant and to get a job somewhere else because the industry is in shambles. When I think about what’s at stake here, I quickly realize I can’t fail. Allora can’t close, because none of the people who work here have other options for jobs. Plus there’s nothing else that I want to do. I love this place. It’s the culmination of my whole life’s work.
Looking back, is there anything you wish you hadn't done?
That’s a difficult question. I try not to live in the past too much. I’ve always said that to be a restauranteur, you have to have the memory of a Major League baseball pitcher or a goldfish. You just gotta get back on the mound and throw the next pitch and not worry about the home run you just gave up. Some days, I do feel more like the goldfish, just turning around in the bowl saying, “Hi! What’s your name?”
I do regret how hard I’ve pushed my staff during a stressful time. It’s been hard to expect so much of my people and make them wear masks and PPE, but what choice did we have?
What are you most proud of?
My team. Our little restaurant group is myself; my wife, Elizabeth-Rose Mandalou; my sister Zoe, our director of operations and my sister Capela, our director of marketing who runs all of our social media, our websites, our marketing campaigns. Jessica Falkenstien is my chef at Woodlake Tavern with Eatable Sacramento and Lee Hinton in my chef at Allora. Although I work in the kitchen everyday, they’re the ones who do the nuts and bolts day in and day out. When I look back on everything we done over the past six months, I’m amazed.
What have been the biggest surprises?
The way our community came together, and the character of my fellow restauranteurs. I was always impressed and in awe of their work ethic and ingenuity, but their capacity to give back .. wow. I asked Patrick Mulvaney during the first few weeks of the pandemic who was paying for the food boxes he was doing for Our Lady of Guadalupe church downtown, and he said, “It doesn’t matter. The money will come. I’m just feeding people.” That was his instinct as a chef in crisis. How can I feed people? Patrick’s food boxes were going to undocumented farm workers. My wife and I were feeding young people at the LGBTQ shelters displaced from their homes because of their sexuality and the residents of a home for unwed mothers. Brad and Clay at Canon were feeding essential workers at hospitals and people in extended housing. So I don’t know if this was a surprise, but boy, it sure was an amazing affirmation of the caliber of people that work in our industry, the quality of their hearts and their selflessness. The positive energy in our group during the first few months of the pandemic helped me get out of bed in the morning, knowing that people needed us. Otherwise, it would have been easy to slump into depression.
What have you learned?
I’ve learned how resilient my team is and how much the people who work with me love our company. They’re willing to sacrifice and do what it takes. I’ve learned a lot about the people in my industry and how much collective good we can do. The people in our neighborhood that I consider clients and friends have been really, really rooting for us and have been going out of their way to spend their money here consistently with the hope that if they did, we would make it. I’ve had so many people reach out to say, “how are you guys doing? You have to survive this because our neighborhood needs Allora.” That was inspiring.
I’ve always said that restaurants are not about the brick and mortar; they’re about people. I hope our society has learned how important the hospitality industry is to our overall economy, our way of life and our identity as a city.
What's next for your company?
We’re going to grow EatableSacramento.com as quickly as we can. It has amazing potential. I think everybody that lives in Sacramento could use Eatable. It’s affordable, easy to use and delicious. It’s a little slice of what a lot of people are missing.
With respect to Allora, I hope the state and county allow us to stay open but I’m also designing my wind break for the patio and making sure my heaters are tuned up for the winter months. We’re pushing forward like any other fall season, bringing in fall vegetables, changing our menu seasonally, etc.
I don’t think anyone’s P&L statements are going to be great in 2020 nor will anybody’s investors or landlords be happy, but if everybody can just stay the course, we’ll be okay. I need to keep my clientele base interested and motivated to spend their money here, when and where they can. We’re in a position right now where, barring another crisis (I almost don’t want to say that out loud because I don’t want to evoke the wrath of the restaurant gods ..), if we keep doing what we’re doing, we can keep going indefinitely.
Deneb Williams was born and raised in the Pacific Northwest and has worked in kitchens all over the country since he was 12 years old. For over 33 years, he has pursued his passion for the culinary arts and earned numerous awards like the coveted DiRona and the AAA Mobile Four Star/Four Diamond Rating. In 2007, Deneb moved to Sacramento to take the position as Head Chef at the Firehouse Restaurant in Old Sacramento. For nine years, he crafted his culinary style at the Firehouse, designed over 40 wine dinners with the region's most celebrated wineries, and in 2015 was voted "Best Chef" by the readers of Sacramento Magazine. In 2016, Deneb founded WM Restaurants with his partner/wife and Certified Sommelier Elizabeth-Rose Mandalou. The restaurant group opened Woodlake Tavern in early 2017, followed closely by Uptown Pizza kitchen three months later and most recently, the Italian-inspired Allora in East Sacramento.