Odd Lots - How to Make Money Selling Pizza in New York City

Episode Date: August 2, 2025

Everybody knows that New York City has a ton of pizzerias. And yet, new ones are opening up all the time. Why do we need more? And how is there still money to be made? On this episode, we speak with Alex Xenopolous, Evan Xenopolous, and James Shields, three restaurant entrepreneurs that recently opened up Xeno's Pizza, a shop close to the Bloomberg offices in Manhattan. We talked about everything from location scouting, to the cost of ingredients, to oven technology, the state of New York City, and how any given establishment differentiates their brand in the hopes of making money by selling what on the surface looks like an abundant, commoditized market. Read more: https://www.bloomberg.com/news/articles/2025-08-01/5-top-new-york-city-restaurants-to-try-right-now-summer-2025 Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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Hello, and welcome to another episode of the Odd Lots podcast. I'm Jill Wisenthall. And I'm Tracy Allaway. We're eating pizza. We're recording this July 8th, and we've done back-to-back-to-back episodes, and we haven't had time for lunch.

So I, too, am going to eat this bite of pizza. It's really good. We're eating really good pizza in this. studio. It's really good. People are probably wondering what's going on why we're, all right, once a second, I'm going to swallow my food. But I swear we're not going to be sounding like we're eating pizza the entire time. Maybe we'll- Speak for yourself, too. Tracy, a few months ago, I noticed a new pizza restaurant had opened up in the East Village, and I thought to myself, what kind of person looks at the East Village and thinks, you know what,

this neighborhood needs a new pizza restaurant? And I've always been sort of, I've been vexed by that question for a long time. Wait, it's a saturated market, but on the other hand, isn't like pizza in New York a slam dunk? Everyone loves pizza. We come here for pizza, don't we? I guess that's true. It just seems like there's a lot of pizza in the East Village. And opening up a new pizza place, it's very capital intensive, there's the stoves, there's the risk, there's the brand, there's all these things. I would not have the guts to open up a new pizza restaurant. I would just assume that the market, I would just take the saturated view. Maybe you have the more, maybe you would be the more optimistic and entrepreneurial.

You can't go wrong with pizza. Yeah, you can. It's New York City. I guess I could see it both ways. But I did find it striking. And it is, of course, one of the most ubiquitous businesses that you see at the ground level in New York City, great pizza city. And I don't really know anything about the business of pizza. No. And we just spoke to a bakery business that is getting into the pizza business. So this is a really nice segue and natural evolution of the conversation. Yeah. I want to know how. you make money selling a slice of pizza in New York City. I'm really excited. We actually have three perfect guests in the studio today. They brought us pizza. So there is a disclosure that we have to get out of the way, which we are eating the pizza that they brought us. So if you listen to this episode and you think like we've been like, you know, painfully bought off or whatever,

then that's why. It's because I had some pizza. But it's also an interesting one because, A, this pizzeria is right by Bloomberg. So that's another excuse for why we're doing this one. but also two of the owners of the restaurant also own a deli or cafe near Bloomberg that I go to for lunch all the time, the Oxford Cafe. I don't really like eating pizza for lunch, if I'm being honest. It's a little heavy. But I love a chopped salad and the Oxford Cafe, which is very close to Bloomberg, in my opinion, is the best chopped salad operation in the entire city or that I've been to. No, for real. So I'm sort of curious about that, how you differentiate there.

So I just want to learn about like lunchtime food, including pizza. Let's do it. Our three guests, I'm going to introduce them. We're going to be speaking with James Shields. He has a restaurateur here in New York City. He involved in multiple things, but he is a co-founder of Zeno's Pizza, which is on 52nd Street between second and third. And then we're also going to be speaking with the other Zeno's co-founders, Alex

Xenopoulos, who also owns the Oxford Cafe and his brother, Evan Zinopolis. So they're all involved in multiple things. Evan and Alex in Oxford and James and Pizza, etc. And we are going to learn how to make money selling a slice of pizza. So I'll throw this out. James or anyone else, but James, I'll start with you. Why did you think there was capacity or a reason when you looked at this location at 52nd Street between second and third to think, you know what, this area could use another piece of place? Sure. I mean, for us it was clear. During the pandemic, there was a great clearing event where a bunch of, you know, established places went out of business. And Midtown specifically, that area, 52nd Street and that corridor, it was a bit of a pizza desert.

And it's not the same as like the East Village or the West Village or Times Square or something like that. Where if you open up shop, you're going to immediately be in a knife fight. So this was a green space for us. And, you know, me and Alex and Evan kind of had this chance meeting through a friend of ours. You know, they were looking for someone to do something with their pizzeria, which they had established at the mill. And we got to talk in and we knew a space that was right across the street. and it just immediately clicked. And we're like, we have a partnership here.

We're going to make an honest go of it. Let's throw some money in here and make this happen. Okay, my first question is pineapple on pizza. Oh, man. Yeah, okay. So I'm going to talk, since I've been making pizza and I'm... This is the important stuff. Exactly.

So this is all near and dear to my heart. So I'm okay with pineapple and ham on pizza. It depends on the type. If you try to put it on Neapolitan, that's sacrilegious. And then you're going to get your pizza making card revoked. But if you do it on like a New York slice or maybe in a Sicilian, then you know what? You're an okay territory and we can give you a pass. I don't know how you guys are going to react to this, but at my local pizza place in Connecticut, they do a Hawaiian with cherries on top of it.

And it is so good. So I've done it with soprasada and ricotta. And if you drizzle some of that like maraschino cherry juice on it, it just ties the whole thing together. because you get that salty, that sweet, and you get a little bit of that, like, heat, too. I do find that question kind of interesting because... This is Alex, by the way. Oh, sorry, this is Alex.

Because, you know, Italians do eat prosciutto with melon, right? Oh, yeah. So that it does have a similar profile to ham and pineapple. So, you know, I've always found it, like, an interesting kind of cultural... I don't know why it became so controversial. It seems like a natural match thing. No, there's a meme of, like, some Italian guy looking at a pineapple on pizza, like, get away through that nonsense.

And then you see is the prosciutto rector on melody. It's like, oh, amazing, delicacy. Yeah. Yeah, I personally, I'm a traditionalist that just, when we were like partnering up on this, our aim was how do we make the best plane slice as well, right? And that's, I feel, one of the most important characteristics in New York. So I've never been a big pineapple pizza person, but, you know, how do you get to that best plane slice is kind of one.

That was one of our big motivating factors when we met up and, you know, trying to figure that out. And that was Evan speaking about. the way. All right, let's talk about that. So you guys, Evan and Alex, you have background in other restaurants. I mentioned the Oxford Cafe, which I highly recommend. When you thought about, okay, you want to partner and get involved in the pizza opportunity, we've established that this area is a pizza desert. How do you think about like this sort of where in the market, high end to low end, etc, is optimal? And what are the categories of the market that exist? You know, it's a good question. You know, one of the elements that, like James mentioned earlier, we had a pizza section in

our place on 50 Second Alex, the mill. And, you know, before the pandemic, a large component that section's business was catering. So when we were looking at this specific location, we signed the lease before the Omicram variant. And obviously, there were issues kind of with people coming back to the office afterwards and things like that. So part of the, when we were looking at this location, was the thinking was that we would have a lot more catering, higher price point transactions that was kind of sustained the business versus doing solely kind of by the slice operations because that is a lower ticket price. It involves a lot of transactions to really get the volume and sales that you need to kind of cover all the costs. I'm sure we'll discuss

kind of the elements of the business. So I think what you've been seeing the last couple of years with a lot of costs across the board for food and beverage, it's become so much more difficult to operate. Everything's become more expensive. You rely on third-party services, you know, different digital applications that all take a couple of points from your business, right? So, you know, you're seeing a transition in New York in terms of pizza where people are trying to go up the food chain to a higher price point to be able to kind of cover those expenses. So you're seeing a lot of kind of traditional mom and pop places close, dollar slice shops, even really good ones that had, you know, a lot of, you know, had a good reputation. You're seeing a lot of those

struggle as well. So you're seeing a big transition. Whereas I'd say, you know, 10 to 15 years ago, you know, you'd almost never see a pizzeria close. I mean, it was just really, really unusual. Now you're seeing kind of a lot of new entrants, a lot of people exiting. So there's a churn that in the business that just didn't exist. How does pizza actually move up in terms of pricing? Because I imagine, you know, I love pizza, but it is in some ways a humble product and there are limited things you can do to it. So if you're trying to charge more money for pizza by making it, I don't know, like luxury pizza. Gold leaf and caviar. Is that what you're going to say? Does that work? What do you do? No, there's a window, right? And the way that Zenos is kind of positioned within the

marketplace is we're premium product, premium price. So like, we want to be on the higher end. And we also want to use the best, freshest quality ingredients that you're going to find in our marketplace, right? because we want to stand behind what we eat, we want to eat, you know, really good, healthy, fresh food every day, right? And that even goes to like, that facilitates the process that we go through. So we ferment our dough for 48 hours, right? Most sliced joints in New York City are like 24 hours. And why is that different, right? It makes the product a little more healthy because the yeast are essentially digesting the gluten and kind of softening the dough for your stomach to process, right? So it's something that doesn't sit in your stomach, you know, and you feel.

that. When you eat our slice, you know, you don't leave the place being like, uh, you know what I mean? This is why I didn't realize this. This is why I don't really usually eat pizza because I don't want to feel that in the middle of the day, but I didn't realize that this could be addressed by going more pre-brother. Let me put you on the spot. How do you feel right now after eating that slice? I've eaten two slices since we've started talking. I feel okay right now. All right. Wow. This is really, I learned something. Yeah. Eye opening, right? And this goes to the economics of like, you need additional storage in your walk-in. You need to probably. this a couple days beforehand. So that means if you get an order, you know, 24 hours, you're already 24 hours behind in the process, right? So like the logistics of this is quite impressive to manage on a scale that we do it at. What else makes a difference in terms of ingredient costs? And whether it's cheese, whether it's tomato sauce, like, what is the

difference between your slice and a dollar slice? Yeah. So I'd say cheese is the most expensive cost center that we have more than meat, more than, uh, yeah. other thing, right? But you've seen inflation across the board and also like it ties into tariffs and things like that. We have, you know, Italian-based products that, you know, like canned tomatoes and that kind of thing that do get impacted. But cheese by far is the biggest cost center. One of the more random experiences I have had in my life is talking to a pizza salesman in, I think it was Tanzania of all places, like a door-to-door pizza oven salesman. And one of the things I internalized from that conversation was pizza ovens are really, really tricky. It seems very

difficult to, like, get them exactly right. So I'm curious how much equipment costs factor into the business and how careful you have to be about that sort of initial capital investment. Yeah, I can jump in on that. This is Evan. So we opened the restaurant actually three years ago this Sunday, so three years ago. But we're looking at the equipment, just as an example. So our oven now. It's the pizza masters. Everyone's using it. Everyone's going electric now, which is definitely a big trend in the city's obviously going against, you know, gas powered grills and things like that. But we bought our oven three years ago. It was $32,000. It is now, I think, $45,000. Wow.

So just as an example of what kind of... I see one for $91,000. Oh, yeah. That's the five deck. We're at a three deck, so we're a little bit less than that. But yeah, so you're looking at that. And then it's just all the extra equipment. That's where it gets daunting. You know, it opens up. And we're only a thousand square foot restaurant. If you're doing like a fine dining restaurant, you can even imagine, you know, what what the kitchen equipment's going to. And yeah, so you're trying your best to, you know, make a business plan, keep your costs in order. But, you know, you're getting low boys, fridges. Our pizza shredder costs. What's a low boy? Low boy's a fridge lower to the ground, but you have a counter on top of it underneath. There's just fridge storage. Just as an example, our shredder costs $5,000. So you can see. You know, all these little things you keep adding into the business, just keep adding and adding and adding. And you're trying to get the restaurant open as fast as possible. We had a hiccup during our construction as we needed a smoke hog, which is the ventilation. Precipator to clean.

And ours got back ordered, and we got delayed four months just waiting for one piece of equipment, which we could not open our business without. Wasn't that the plot of an actual bear episode? It was something with the ventilator, right? Yeah. I'm sure it was. The Bear, season two, was perfect. when they were building out that restaurant in the chaos as you're going through it. And yeah, go ahead, Alex.

That was my former life. You mentioned earlier kind of like when you're looking at a restaurant and the type of, so I mean, the ideal situation is what's called black iron where you're essentially exhausting out through an exhausting, you have an exhaust fan, and, you know, the city's very specific about those types of buildings where you can do that versus, you know, in this situation, the type of, we have a precipitator that basically cleans the exhaust air and is vented out onto the street, right? So typically if you have like open windows, things like that,

you're not allowed to have normal kind of like black iron exhaust. But yeah, during the pandemic, a lot of different types of critical equipment were just non-existent. And, you know, even for example, a walk-in box, at some point I remember during the pandemic, people were tearing down old restaurants and selling the old walk-in box, just, you know, 15-year-old panels, you know, and just like selling it because people,

couldn't find them. And it was just a rat race to try to find this equipment or we're also electric equipment, you know, breakers, things like that, were on back order from China. And I know there's been some episodes on some of those issues on odd lots, but, you know, for restaurants where, you know, time is money, you're trying to, you know, build a team, get out ahead of, you know, of the rent and things like that. And, you know, it was just a nightmare trying to pull it together. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real. Lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard.

At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio, all investing in subject to risk Vanguard Marketing Corporation distributor. They say abs are made in the kitchen.

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Listen on Bloomberg Radio, stream the show live on the Bloomberg business app, or listen to the podcast. That's Bloomberg this weekend. Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg Television, radio, and wherever you get your podcasts. How big of a challenge is labor? And how skilled is pizza labor? Like, do they still have to twirl the dough? Like, is that a thing or is that just, like, for show at some restaurants?

Talk to us about the labor component of the business. So it depends on the segment of pizza. So like New York Slice and Sicilian and things like that, the labor bar is a little bit lower. But for us, it's still very high end. Like we'll take probably at least 30 candidates. We'll trial probably 10 of them. And then one guy might stay three months and one guy might stay two years. Who knows?

For wood fired and coal fired, like I have a wood fired that's down in the West Village, that is such an artisanal product that to have. have a guy that actually knows what he's doing can take six months to train and then three years to understand and then another five years to really understand. You know, like it takes a lifetime and you're just constantly learning. I actually wanted to ask you about this, but why did you decide to go electric with this particular oven versus coal or wood? Great question. So it was a mandate by the building that we're in because we're in a, you know, a high rise, right? But it also has the added benefit that the current is more consistent because you're drawing the power and you're heating the product more consistently than a flame, which might ebb and flow in terms of

temperature. So our oven is more similar to like a Tesla than it is to actually like an oven. It's got a lot of electronics in it. And we saw that firsthand when we literally tore it apart on the street, the sidewalk, disassembled it, moved it through the door because it's a huge piece of equipment, and then reassembled it within the space. It was so impressive. The picture, are incredible. Just to do back up, let's say Tracy and I wanted to open up a pizza restaurant. How much money do we have to have? Do we realistically, both in terms of like putting down money for rent, but then the full, like what kind of operations is this to get into? If you're talking about ours, you know, we did a thousand square feet. The biggest mistake all restaurateurs

make is they just don't have enough working capital after they open the doors. So I would say to be safe, you're looking at minimum 400,000, but probably in the 5 to 600K range, just to give you that extra cushion because, you know, I've been working with my, you know, my family's had restaurants in New York since the 80s and I, you know, started in 2009. You would make your payback in like 18 months. Now we're looking with the way the expenses are, you know, insurance is up 20, 30 percent since pre-COVID labor. You're looking at a three-year time horizon often. So, and it takes so long sometimes for someone because we're not a national, right? So we're not getting that automatic like press. So just as a mom and pop, you know, you often need more time

to get the marketing out there. So, yeah, 500 to 600,000 seems like, right, a good spot for like a thousand square feet, but yeah. Yeah. And this is in the QSR segment, the quick serve restaurant. If it was full service, you're looking at, you know, 700 to a million. It gets up there pretty, pretty quickly. Yeah, because, I mean, it's just more involved, like, let's say in that space, you know, obviously the equipment and those types of needs, the working capital needs are more because the staffing needs are more expensive, but also just the finishes. like anything now these days, you know, services are so expensive, you know, whether it's electric, plumbing, like all these different inputs that go into building a restaurant are just that much more expensive.

And, you know, I think that's just kind of like the way it is now post-pandemic. These types of services are just very expensive. So, you know, for a restaurant, your cost of the build-out is that much more expensive just because of that reality. How does distribution work for you guys? Because I imagine this might be another big capital investment. and it's something that came up when we were speaking to the baker earlier. He pointed out that it's not just about making the bread. You actually have to deliver it to your customers.

When I think about pizza, I think about pizza boxes, I think about pizza boxes coming directly to my door, usually around midnight or something like that. How do you actually get the pizza out to customers? I've kind of been involved in a lot of that. But yeah, it's like you just move heaven and earth and you just need to get it there any way. you can. So obviously, best cases, you know, we're really focusing locally. We, you know,

love all the office clientele in the area and we've been doing a lot of, like, quick deliveries. But, you know, we're looking at orders throughout the city and, like, there's been days where we'll rent a U-Haul and just fill it up with pizza boxes and get it down there. Wow. Yeah. I've brought in, you know, my personal car. I'm originally from New Jersey, but had my personal car one day and we had like a last minute, like huge order. I'm just driving through the city in my personal car, you know, so subways. Any way you can get. it. And yeah, it's just one of those products where we have been trying to focus locally.

Because pizza, it does lose its luster the further way you get, right? Traveling when it's stuck in the boxes can be an issue. But, you know, we just make it work and whatever it takes to get it there on time. What are your capacity constraints? Let's say I'm at the office. Someone closes a big sale. I was like, this is great. Let's have a party tonight. Could I call you up? Like, how quickly could I get 30 pizzas from you. 30? If you give us like three hours, we'll get it there. Yeah, for sure.

I mean, we've done that. And what's the most number of pizzas you can have cooking at one time, like, and inventory of pizzas that you have already cooked? Like, talk to us. Yeah. Yeah, I mean, we have a pretty decent throughput. So, you know, we've done 50 to 100 pie orders, you know. Wow.

And it's all about timing and moisture control, you know, the way that we design the dough, you know, it's very efficient on the reheat is what we tend to call. we're able to get that all out at once. And we feed a lot of desks in Midtown. Like, you know, shout out Jerry from Nomura, by the way, and Black Rock and all those guys. Like, you know, so we're feeding the desk. And, you know, once they order from us, it's game over. They're weekly, right? So we're used to that kind of, you know, throughput. And it is, like Alex alluded to earlier, you know, it's a functional part of our business. We really rely on catering and, you know, the offices to really sustain us in this one very, very hyperlocal, you know, neighborhood.

So speaking of hyperlocal, do you tailor the menu for that particular location or is pizza like a universal transportable good that can work basically anywhere in New York at least? 100%. You definitely tailor. So when I designed the dough, I had a lot of things in mind. Like this is a very vertical area. So we limit the amount of blocks we go because by the time, you take an elevator up and that guy comes back, this is 30 minutes. You know, like he's gone, right? So that's why as owners, the collective three of us, you could see us running around Midtown East, like in carts and cars and U-Hauls and like we're all pitching in to kind of make this all happen. But what about in terms of the actual menu, like the pizza flavors

and design? Yeah. I mean, yeah, we avoid specific items that don't hold up well in a box or lose their heed and, you know, it limits like you don't want to do fair. Right? You never do, you never see fish on pizza, right? It's rare. My dad always ordered anchovy pizza. It was disgusting. Yeah, it's usually the cured stuff, not like, you know, you're not going to get like sea bass on there. Seabas Cibati pizza. Someone will do that. You know they will. I'm sure they will. We talked about this sort of upfront capital cost. Let's try to work the math in the other direction.

Like, I buy a slice of pizza or I buy 10 slices of pizza. How much of what I'm paying for? is the labor that went into it, how much is it the wrong ingredient, and how much is it your upfront capital outlay and the profit you need to make on your risk? Like, talk to me about, like, how you're getting paid back for all these things. What's the math here? So historically, it's been 30, 30, 30, 30, 10, right? Okay. So 30 fixed costs, 30 labor, 30 food costs, and then 10% profit, right? That's like normal for New York. If you're outside of New York, your profit gets a little bit higher, but you're also not doing as much volume. So you can get, like, You know, I mean, Shake Shack's numbers, if you look at it, like, 17% profit margin for them, you know, they're bigger.

They can extract more value out of things, get better pricing. But in New York City, it's a little more cutthroat. And you might even get 5% profit margins or no percent profit at all. And you go out of business, right? Are there items on a pizza restaurant's menu or options that are particularly high margin? Like, you know, there's some X on this, but you really make your money on Y? Oh, yeah. You could have what's called lost leaders, right?

Like, you have things that attract you to the place, like, you know, stakes have a 50% margin, right? And when I said the 30, 30, 10, by the way, it's changed in the last decade. Now your labor costs is 45%. You know, your food costs are where you're trying to save a little bit more money by getting creative with the menu items. And then your fixed costs, you know, you're trying to limit those as well. But the variables have been through the roof, right? Like the insurance has gone crazy. Yeah.

And just in terms of, yeah, the one thing that does attract most. people at a pizza restaurants is in general, your food cost is pretty good. Like, you'll get, if you're like really humming, you'll get it like close to 20%, which is, you know, most restaurants like our Oxford Cafe and similar QSRs like that, you're at the 30 to 35. So your food cost is the great component. It's now in New York, 10% was the rule of thumb on rent. Everyone is now, you know, in the 15 to 17% range. So there's all these different changes in, you know, what you knew about, your cost structures and you're just searching for new sales any way you can and you know you're trying to keep the walk-ins growing but yeah it's just managing it's just so many different expenses to manage but

yeah there's just been a huge change since COVID well this is something that keeps coming up increased costs in the restaurant business what levers do you have to pull what levers are available to you to try to keep those costs down because it seems like you know you need to hire people presumably you need to hire them at a competitive rate. You have a, you know, a premium pizza product so you don't want to sacrifice quality. Insurance, I'm guessing, is not that negotiable. Like, what can you do? It's just grow, grow, grow. You know, that's all you can do. I mean, recently I've taken on from all my business is cold calling. You know, I've been looking at, you know, I'll look at directories of buildings. I'm finding the company names, find the phone numbers, and I'm just calling

companies and it's honestly of our we've already netted like 10 to 15 new catering orders. So you just have to keep growing. That's just what it is. Because yeah, in terms of food costs, that's a good question. You also need to keep your purveyors honest. You need to have a book of other purveyors to constantly check pricing. Because yeah, we even, you know, in our restaurants, the Oxford Cafe in the mill, I mean, we had purveyors that had been serving us for 20 years and we kind of stopped checking and all of a sudden you realize even people who are loyal to you are jacking up prices here and there. So you need to constantly be checking your invoices and doing your due diligence because it's on you to make sure nothing slides by you. The other thing I'd add, one of the challenges

on sort of the vendors and purveyor side is that you've also seen a lot of concentration occur over the last like 10 to 20 years. So it's also a challenge to kind of be able to kind of price and check with different suppliers and things like that. And one of the interesting things that happen with the pandemic, though, is that because everything became so expensive, you did start seeing a lot of jobbers. Basically, people kind of pulling up in the back of the truck, you know, kind of bringing different products and things like that, and often able to kind of undercut the pricing a little bit. But in general, especially on the supply side, there is a lot of concentration there economically, because just the nature of the business now and the regulations

and things like that, there's just a lot of economic pressure that results in this concentration. Do you use a lot of third-party services or outsource certain things to middlemen? Because this, again, has come up in a previous conversation, the idea that you're spending more on just the middle guy to get things done. Okay. So, yeah, in terms of, yeah, obviously the big one I know is all the third-party delivery services. You know, that's one of those, you have to make them work for you. Unfortunately, in this past week, they had capped third-party fees at 5% after the pandemic to help our restaurants. But starting August 1st, those rates are coming back up to 20%.

So you'll be at 20% on that, 4% on the transaction fee. And then if you're using the third-party services, caviar, grubb, et cetera, for deliveries, they charge another 10 to 15%. Wow. So I look at the prices I charge at my restaurants on my third-party sites were 15% higher than our in-house pricing often because you need it to manage that expense, but I can't even imagine where it's going to go again August 1st because people's prices are already crazy. And yeah, you need to make your work. And with the pizzeria, we always felt we at least take our deliveries ourselves. We find,

you know, with pizza, you want like really good control of that. Someone who doesn't work at your restaurant, they're just looking at that as a tip for themselves. So you want to make sure your pizza is being delivered correctly. But yeah, that's one of the hardest costs to manage. Because With deliveries, you're obviously paper, plastic goods, you know, everything that's going out, the costs just go crazy. And yeah, now if they're going to be charging 15% more again, you know, it really adds up. So that's one thing we've been discussing actually this whole week is how how much are we going to have to increase prices to like deal with that, you know, that shock again. To just add to what I've been saying. So in recent years, like the last two years or so,

venture capital has really stopped subsidizing these third party, you know, websites and then no longer offering these heavy discounts. And, like, they basically bought the market, right? They offered this free, you know, you can get an instantaneous lunch. And then now we're actually going to rack up prices. And, like, you know, Uber specifically, they did this with the taxis. They put everybody out of business. And then once they own the market, they're like, all right, you know what?

We're going to take our actual cut. Yeah, I mean, they are, like, really parasitic entities. They've just disrupted. Say more. Sure. Go on. It sounds like you've thought about this. I mean, they've really, really disrupted the food industry.

And one of the elements that I feel like, you know, future historians, when they're looking back on this time and really thinking about kind of the American and, you know, what's like the defining aspect of the American? And it's like, you know, they want convenience. And these companies are trying to fulfill that, but operating in such a parasitic manner that they just really, really harm, put themselves. in between you and your customer, you know, the restaurant and their customer and just basically absorb all the upside there. Yeah. And in the process, they're basically just decimating, you know, this industry. And you're also seeing it in the way they're responding where, you know, now they're trying to go fully vertical, right? They're like opening up these ghost kitchens where they have all these weird brands.

The stupidest restaurant name. Yeah. I mean, just like all the time. Yeah, it's just like the most ridiculous restaurant names. I think they're attempting to cultivate this like faux, you know, like local Italian deli and it's just ridiculous. And but, you know, because they have so much capital behind them, they're able to kind of manage through these concentrated apps, like the access.

You know, they're able to do that. I don't know how successful they'll be, but it's really harmful. They're a social. They're really hurting kind of third spaces and where people used to come together. And it's very odd. They say abs are made in the kitchen. Cool, but who has time for three hours of meal prep and a fridge full of Tupperware? That's why I started using Factor.

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an award-winning journalist, and I've got a new podcast, Leaders with Francine Lacqua, from Bloomberg podcasts. I've interviewed everyone from Heads of State to fashion icons about the news of the moment, but I've always been curious who are these people as leaders. I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacois wherever you get your podcasts. What separates good leaders from transformational ones? I'm Jessica Chen, and in season two of Leading By Example, we'll sit down with executives like Grace Chen of Bertie Gray to find out.

It's important to understand where you spike, but also really acknowledge where you don't and find people who can fill those gaps. Listen to Leading by Example, executives making an impact on the IHeart Radio app, Apple Podcast, or wherever you get your podcast. So in light of all of these gigantic companies parasitically extracting value and disrupting community, how are we feeling about socialism these days? Which I only ask obviously because we're in, you know, we may have a socialist mayor in a few months.

Yeah, I mean, nominally socialist, I feel like. Well, it's interesting because I mentioned you guys love making money and your entrepreneurs. On the other hand, part of his campaign was actually spotlighting small business and bodegas and delis and etc. I'm curious how you're thinking about like... Wait, wait, wait. Are you worried there's going to be a city-owned pizzaes? Well, you know, Zora and Mammu, we ran an incredible campaign. It's so energetic.

And the one thing we always talk about is that everybody has a point, right? You know, cost of living issues are real. It's hard. And daily life has become much more of a grind than it was before the pandemic, right? So, you know, I think he was addressing, you know, real concerns from people. And, you know. Yeah, but what are you worried about? You know, the one thing I'll, you know, we were talking about this on the way over.

You know, if you had not visited New York in two years and, you know, you came back two years later now, you know, the first thing you would say is the city's a lot cleaner and it's actually more functional. And, you know, there's a lot less prime and kind of disorder. Do you notice it? Because I was going to say, I know the stats are good, but I can't tell like how much am I being influenced by the fact that I read the news and the stats are very good these days. But you absolutely notice it? I think absolutely. I mean, do you... Someone who, like, because we're...

I'm commuting all day between the restaurants. I mean, from like 2020 to today, it's like I go on the subway 70 times a day, walk around the streets. Like, it is very noticeable. I know obviously there's a lot of, like, there was a lot of trashing New York, you know, during COVID and the election cycles and all that.

But, yeah, it's definitely not at that level that it was. But I do understand, yeah, when you can pay for eggs or milk and stuff like that, I do understand why people are going in that direction, but it also, the policies need to be sensible because we already have a crazy budget in the city. And if you keep adding more and more debt, you know, I just don't see how you can pay for all these things he's saying without hurting us down the road. The overregulation is the biggest problem for restaurants moving forward. And I did see, you know, he had great campaign points. There was this really stunning video on how he wanted to appoint a small.

small businesses are, which I thought really eloquently described, like, the plight that the mom and pop is currently facing, right? Like, if you're Chipotle, you got, like, 10 guys that can handle regulation, and they could just deal with all that stuff. But, like, me, Evan and Alex, we're, like, just literally trying to just get you food, you know? Yeah. I think the other thing I would say is, like, you know, if you look at his campaign proposals, let's hand housing and things like that, you know, it's very much kind of trying to manage, like, a lot of existing programs, you know, from the Adams administration, city of yes and different like regulatory, making it easier to permitting, things like that. It's not like, you know, he's proposing building a million housing units via Nica.

Do you know what I mean? Right. That's why I find, like, a lot of the conversation about him to be very strange because hyperbolic. Yeah, it's hyperbolic, but also his proposals really aren't, you know, you call them a socialist, saying calls himself a socialist, but his proposals are much more kind of like in line with what's kind of the progressive neoliberal paradigm that we've had over the last six years. You know, for example, like, you know, he talks about rent control and things like that.

You know, a lot of that was enacted via Cuomo in 2019, right? Right. There's never been a real honest debate. Have those reforms that were enacted in 2019? Have they worked? And clearly, you know, based on this campaign, they haven't. So what works, what doesn't work? And I also don't think, I don't see a lot of foreign journalists coming to New York and saying, wow, this regulatory regime is something we need to, we need to bring this to, you know, Vienna.

Yeah, Vienna. And like, you know, nobody says that. Yeah. You know, so that's kind of, I feel like sometimes we're not honest. And, you know, oftentimes also like the debate about, I haven't mentioned the city budgets, like $120 billion. It's massive, right? You know, so when somebody talks about austerity budgets, it always rings hollow to me. because, you know, you're spending a lot of money.

It's nearly 40,000 per student for the NYCDOE, but it's not really delivering results. So what does that mean? Like, is it more we're not spending enough? Is it, you know, we're not effective in governance? Like, I think those are the more interesting questions that sometimes, you know, people don't want to discuss because those are hard questions. Pizza and politics.

I like this competition. Someone's got to be doing that already. But if not, it could be a recurring theme. Well, talk a little bit. Well, talk a little bit more about the regulatory choke points. Like, give us a sense because if I think about regulation of New York restaurants, like, okay, when you're opening, I'm sure there are a lot of hoops to jump through. But then after that, the only thing I can really think of is the health letter that goes up on the window.

And frankly, like, I see a lot of non-A's around. So it seems in my mind, like maybe this isn't a big deal if you can continue to operate without getting an A. I mean, the one I want to bring up is earlier talking about why we went electric. If you try to get a new gas service into a restaurant, your restaurant may never wake up. I mean, wake up, may never open. With the Con Ed process just for gas, it is actually a funny story. I currently in my apartment, our gas line cracked in January, and we might not get it back to the following January or February. So that's just one where if you're trying to open up a restaurant, like you might just be sitting there calling Connet every day,

just begging for them to let your restaurant operate so you can make your investment back. So that's just one. But yeah, there's just a lot of constant, you know, at one point they put a regulation for you can't keep your doors open so air conditioning didn't flow out. You know, obviously the paper straw thing was a big one. So there's constant little annoyances that they just try to put into your business. Why are people's straw still a thing? Trump won. I thought like, why did we get rid of that?

For real. Like, how are they? I still get them from time to time. I'm like, who is asking for them? I couldn't agree more. It's just like, it's just these little things that we try to constantly do. It's just the headache for us, like, you know, with the garbage. It's like, obviously, I'm very happy Mayor Adams, you know, tackle that's been a huge issue for this city.

But, yeah. Do you perceive progress on that? Like, when you look at the trash and also the rat situation in New York, which he touts his war on rats a lot, do you perceive, are you able to do you see progress? Joe claims to be a single issue voter on rats. I'm not sure it's true. Pizza rat. No, do you notice the kind of stuff? I mean, I think it's just very good to just containerize garbage, you know, especially, so I was just in Europe and Portugal, and they have these beautiful garbage cans where it's a shoot underground, then they come and get it.

Like, I would love to just stop seeing garbage bags everywhere, you know, and it's, you know, we just need to clean up the streets a little bit, right? So it's good. Yeah. I also want to add to that because when COVID happened, they basically open up the regulation for every three-letter agency. So while you're seeing a lot more of the grade pending signs from the health department, I mean, I'm more concerned about the fire department and the Department of Transportation because the way that they tackle the outdoor dining has been ridiculous. There's a hundred new steps to doing outdoor dining, whereas I used to just have to fill out a form,

send in a check, and it get renewed every year. Now I have 11 pending tickets from the Department of Transportation for various reasons. That's a shame. I'm a big fan of outdoor dining, and I wish there was more of it in New York, despite the rat problem. In terms of additional pressures on the business, there's another one we should probably talk about. Again, situation is kind of in flux. We're recording this on July 8th, but tariffs, right? I assume as a pizza place, maybe you're importing some tomatoes from Italy or, I don't know, fancy flour from France, which I know is a thing. Is that expected to impact your business at all? One area where it definitely has impacted is just paper and plastic. A lot of paper and plastic materials that go into kind of branding and things like that do come from abroad. It's just become more expensive in the U.S. to produce those types of things. So, you know, you're importing a lot of different products, the bulls that you see at different spots come from, you know, Vietnam or China or some other areas and, you know, the pulp bulls.

And so that's one area where clearly, you know, for a lot of restaurants, they are impacted. You know, obviously there's, you know, it's been kind of a ridiculous couple of months with the back and forth. But that's definitely an area where I think a lot of restaurant operators are concerned and will actually ultimately be impacted by it. So it is a global supply chain. And like, here's an example, right? Like, what do you associate the food product of Switzerland to be? Cheese. Chocolate.

Cheese, okay. Chocolate. How many miles do you think is the local cocoa bean from Switzerland? A lot. A lot, yeah. Yeah, like 1,200 miles. But cheese is local. Cheese is local. Yeah. How would you assess the sort of current cyclical state of the New York City economy? People, I don't think, have, like, ever been more divided and confused about just the trajectory of whether we're talking about the national economy or anything else. You could have people pointing to signs like, look, things are booming right now.

And other people will have very compelling arguments, like things are slowing down. Fed's got to cut and stuff. Like right now, July 8th, how are things feeling? I mean, I get started. I know we all have opinions on it. I mean, just back to why we started this business, we always believed New York would come back. You know, obviously we took a huge risk in the middle of COVID. And, you know, right now we are seeing, it's always good and bad signs, right?

Obviously, we just came out of the big holiday cycle, you know, between Memorial Day, June 10th and 4th of July. And, you know, we are seeing more catering, which is great. Obviously, in an area like Midtown East, it's very nice to see the foot traffic, you know, Monday through Thursday back again. So, you know, we're feeling very optimistic entering this toll. Fridays are gone for good, huh? So that was one thing we didn't bring up earlier. You know, one of the big issues trying to manage your expenses is that Friday, at least in New York.

You know, I don't know about other cities or in the suburbs. But losing that Friday, you know, that Friday, you know, you're not a month. And people probably don't eat more lunch on Monday through Thursday to compensate for the fact that they're not ordering it. Exactly. Like when you're doing your basic, you know, modeling for your restaurant, losing one whole weekday a week, right? It adds up. But I will say we are feeling way better entering this fall than the previous years. You know, just we've had a couple months where it's like, wow, this is, you know, we had two months that were up 25% at Zenos from last year, which is fantastic. So feeling good on that end, but, you know, we're always on edge, right?

It's like we don't know what's going to happen with certain expenses and we're going to keep pushing. But yeah. So, yeah, to speak to that, the wealth effect, right? People can avoid coming into to Manhattan on Friday. But also during the summer when you have Labor Day, Memorial Day, you know, the three big holidays, they're gone the week before and the week after. So you're essentially New York City is turning into a little bit of a ghost town. Oh, because they're really rich these days because the stock market. So they're taking longer vacation because they're on holidays. Is that what you're saying? It's all the points. They're buying pizza in the Hamptons. Exactly. That these are becoming longer holidays. the year holidays. That's really interesting.

You can see it in the sales. Wow. Yeah, I think that's kind of part of the problem where before the pandemic, a lot of these, being in the restaurant industry, it was very predictable. You kind of had like a sense of where each week would be and how to manage, you know, that was just kind of like second nature. And now with kind of remote work and, you know, how people approach work as well, you know, it's a much bigger challenge to kind of manage the business and predicting and, you know,

being able to kind of steady sales. On the city as a whole, it's kind of interesting. Like Midtown East, the Plaza District, as Manhattan was moving upwards and north, you know, what made that area, that area was the transportation network, right? It's like a nexus of transportation. You have Grand Central, all the subway lines crossing there. And it's a real crossing of the whole tri-state area. East Side Access obviously was the big project that brought L-I-R into Grand Central. Hopefully they figure out how to actually properly utilize that.

And that's kind of why we're bullish, long-term on that specific part of the city. It's, you know, it draws people from all over the region. And ultimately, that's what's going to allow it to thrive again and, you know, replicate kind of the where it was pre-pandemic.

If you were opening Zenos again, or if you could go back in time and do it over, is there anything you'd do differently? Wow, that's a heavy one. Yeah, I mean, back to your, yeah, the question earlier, it's like when you're picking the location, you know, you're looking for office clients, tourists, locals, and, you know, you're trying to balance all those things, obviously, and then against the cost of the rent. We obviously found a, you know, area where to not have a lot of competition we felt was going to give us a chance to really. And you just found that by typing pizza and Google Maps and zooming out looking for a lack of red dots.

That's crazy. On the very most basic level. Yeah, you need to check what's around you. And we like the space. It obviously was a great space over there and we knew the area. But for example, one thing we've lost in this area is tourists because four or five of like the big hotels in the area have shut down since COVID. So obviously looking back, you can't predict that.

And I do think if we had another chance, it's like, I mean, we love this space. But like maybe do you need to like go find an area that's a little bit more touristy? but like how can you predict that? And then the one thing we were discussing, which is interesting, is obviously pizza and bars usually go together, right? But you are seeing people are drinking less now, so are those areas not as good as, you know, they used to be?

I don't know. Evan, Alex, and James. That was fantastic. That was the conversation I hoped to have. I didn't even know we were going to get pizza out of it, but that was a lot of fun. We learned a lot. And thank you all so much for coming on, Adlaws.

Thank you. Thanks for having us. Shout out. Chris Hatch, by the way. Oh yeah, Chris Hatch, by the way, who we've had on the podcast a couple of times. He introduced me to James, and then I also met Alex by going to the Oxford Cafe. So all coming together here. Thank you guys so much.

Thank you. Thanks, thanks, so much. Tracy, I actually, my stomach does not feel that bad. I did not know that about, like, oh, you ferment for a long time, then eat the gluten, and then you don't feel as heavy. I didn't know anything about that. I didn't know that either. Although, I have to confess, the whole lunchtime heaviness thing is, I have never had that problem. I never understood it.

Do you think I have a gluten? I'd be so embarrassed. Like, I don't want to, I don't want to judge people who, like, I've always like, what if I'm one of those gluten people? Well, I have a gluten sensitivity. Well, maybe you'll feel better if you actually take it into account. But that was really fun. I have empathy now upon realizing that I'm one of those gluten people.

All right. Well, okay. So we talked about pizza and politics, Sicilian with a side of socialism. Yeah. Marinera and the macro economy. Were you writing all these down? I was actually. I love your fastidiousness about dropping puns and alliteration. Terrible puns. Thank you. Whenever you get an opportunity. But no, I did think that was really

fun. And I like entrepreneurs. They're optimistic. They have to be, don't they? That's right. I am thinking about like a couple of themes that keep coming across in these couple of episodes we've done on the sort of restaurant or wholesale food business. And that's the idea of a lot of the cost increases coming from that sort of middle layer of third-party services, whether it's because you have to outsource something like distribution, or it's because you have to use something like an app, a food delivery app that charges an enormous amount of money to both the customer and the restaurant, apparently. I feel like I need to impress this on people who are not in New York. The food app charges in New York are outrageous. I stopped, by the way. I never get. I actually

start, I'm real old fashioned, I walk to the store and pick up my food after ordering it online. That's Lindy. Yeah. It is Lindy. Yeah. No, it's insane. It's completely insane. All right.

Well, we could probably talk about pizza for a long time. We have more pizza in the control room right now. So rather than continuing to talk about it, I want another slice. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway.

You can follow me at Tracy Alloway. And I'm Joe Wisenthall. You can follow me at the stalwart. Go check out their restaurants. Alex and Evan and James. They all have Zinos. And also, I swear, I kind of want to do it. The Oxford Cafe on, I guess, 60th Street is the best chopped salad.

And this is, we could, at one point I wanted to do an episode on their chopped salad because it's, it's its own great logistic story. So go check out the Oxford Cafe for in the area. Follow James Shields on Twitter at James A. Shields. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashel Bennett at Dashbot and Kale Brooks at Kail Brooks. For more Oddlots content, go to Bloomberg.com slash Oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord.

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