Odd Lots - What an LA Bakery Says About the Economy Right Now

Episode Date: August 1, 2025

Bakeries are great microcosms of the economy. There's lots of labor involved. You need commodities like flours and eggs, plus energy for your ovens. You need capital investment to get the ovens in the first place, and you need sustained consumer demand to keep you in business. Put it all together and you have a business that tells you a lot about what's going on right now. In this episode, we speak with Andy Kadin, who is the owner of the Los Angeles-based bakery Bub & Grandma's, as well as a sandwich shop and a soon-to-open pizzeria. We talk about what the bread business entails, how much money people are spending right now, and the impact of Trump's tariffs on food costs. Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox - now delivered every weekday - plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Thanks for listening to OddLots. Follow the show on Amazon Music for more future episodes or just ask Alexa play the podcast, OddLots on Amazon Music. 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 very big. It's a lot. It's a firm. It's a few. It's a few. 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 is subject to risk vanguard marketing Corporation distributor. Thinking about buying the right home, but not sure when. What if you had the right design, the right lot and finishes at the right price? Not someday, but right now. Register at Democrat Homes.com and get everything you want right now. Bloomberg Audio Studios. Podcasts, radio news. Hello and welcome to another episode of the All Thoughts podcast. I'm Tracy Allo. And I'm Joe Wisenthal. Joe, I have a very personal question to ask you. Well, we've known each other for a very long time, so there's not much left that we don't know, but go for it.

Well, I actually don't know the answer to this question. Have you ever baked anything? Ah, not that much. I went through this. I'm just going to, the answer is basically no. Okay. No. Wait, you were going to say something.

You went through a phase? One time in high school I got in this weird, like, experimental baking obsession with a friend of where we just sort of tried to relearn baking by first principles and see what worked. Oh, my God. What does that mean? Just like not reading any recipes. I don't think so. Not reading any recipes and just start experimenting it out.

And then seeing like what caused things to rise and what tasted good without any starting principles or anything. We knew a few basic ingredients. It's fun. It's fun. You should get back into bacon. You should. It's really fun. Tracy, we know this is just a setup because you want to talk about your bacon.

So why don't you just tell us what you like to bake? Hey, look, I don't bake that much, actually. In my household, my husband bakes everything. So he does a really good basque cheesecake, really good chocolate chip cookies, things like that. But if you were doing first principle baking, I imagine you know how difficult it is and all the things that are involved in just making like a simple loaf of bread. I am aware. And the other thing is not only I understand that it's very complex, but beyond that I'm always flabbergasted. the idea of doing it at industrial scale or semi-industrial scale and how that even works. I have no

idea, to be honest. Honestly, industrial scale food preparation at all seems crazy to me, like steaks and everything. Like how do you do it over and over and over again and get a repeatable process? It's like a fascinating question to me. Right. So that's really interesting in and of itself. But the other interesting thing about the baking business at industrial scale, as you just pointed out, is it's kind of a microcosm for the economy. Yes. You have all these commodity in which obviously move around along with inflation. You have labor issues. You have to get bakers who want to get into work really, really early in the morning.

And obviously, you also have consumer demand. So it's really an interesting lens to kind of look through. Well, one of the favorite episodes that we've ever done, which I think was 2022 or maybe 2021. Long time ago. We talked to a commercial baker in Chicago. and I've always wanted to do more. That was such a pivotal episode for us.

And I was like, well, you know, we learned a lot about what was going on with commodity costs. We learned a lot what was going on with pricing power, et cetera. Well, it's 2025 now. I would like to learn more about what's going on. All right. So we're going to dive back into baking, possibly not on a first principal basis. But we have the perfect guest. We're going to be speaking with Andy Caden.

What did banking from first principles be a really good? That would be like a good name for cook. All right, sorry, keep going. Good name for a baking podcast, perhaps. Okay, we're going to be speaking with Andy Caden. He is the owner of a bakery in L.A. That's called Bub and Grammars. They do wholesale orders for a bunch of different L.A. restaurants, so industrial scale, as you mentioned, Joe.

But they also have a retail restaurant that does sandwiches, and they're in the process of opening a pizzeria. So all the baked goods. Andy, welcome to this show. Really good to be here. Thanks for having me. Shall we start out with where did your interest in bread actually come from? Was this like a COVID trope where everyone started doing their own sour dough and got really into carbohydrates? Or maybe I'm a little proto-COVID in my obsession.

I was a writer in advertising and TV for about a decade after school and learned fairly quickly after I got to Los Angeles about 16 years ago that, I hated it and hated myself for contributing to sort of the advertising culture, so to speak, and I needed to escape and always had an obsession with cooking and eating and decided to focus on something that I saw missing from the Los Angeles landscape. After I moved here from the East Coast, I grew up in New Jersey, kind of in an Italian-Jewish sandwich mecca, and saw that there was sort of a glaring absence of those style of kind of walk into it and have a great sandwich kind of experience in Los Angeles. There are a few notable spots, but they aren't everywhere like they are in New York and New Jersey. So I decided to start writing some business plans and figure out how to open a sandwich shop here and, you know, started working at a sandwich shop in Hollywood called potato chips for free on the weekends, staging at a variety.

of bakeries just to try and figure out how bread worked. And in that process of trying to figure out how bread worked simply just to talk to bakers about what I wanted, I started baking daily at home and got into that pseudo-COVID rhythm of daily baking and the obsession of that comes from falling into its grasp and started giving away all the bread I was making and it found its way to a friend of mine who worked at a local restaurant. And the owner called me out of the blue and asked if I could make bread for him daily. I said yes. And it hasn't stopped for 10 years. Wait, so initially, were you just baking bread at scale in your kitchen? I started just for me, just as an experiment, but very quickly kind of once I had that first account, which was maybe six months after I

started baking six months to a year, the attention came quickly. And I started needing to, level up over and over and over again. So the first place that I would mix the bread in my house and ferment it there and then shape it and take it to a pizza place around the corner and bake it in their pizza oven. It was a variety of these hacked together, baking in other bakeries off hours to get to get things done. And as the demand grew very quickly, I quickly had to figure out how to run a business, not just bake a few loaves of bread out of my house and moved into a semi-legitimate space at about a year and a half. Flash forward to today, zooming out, why don't you tell us about the size and scope of your businesses? What do you have right now? Just in terms of volume and

number of employees, stuff like that. The wholesale bakery, which is what that story evolved into, is now a 50-person business. We have a 6,500 square foot facility that produces bread, just bread, not pastry for about 180 restaurants in Los Angeles. It's a pretty wide distribution and we are still trying to grow. We're kind of wall to wall in that space and need to move in the next two years. So we're starting to investigate what that would look like. We also opened a retail restaurant almost three years ago, which is insane how quickly that three years has passed in our weird time vortex that we live within now. And that is another almost 50-person business in the Glass Hill Park neighborhood of Los Angeles. We are in the process of opening a pizza place in

Highland Park and neighboring neighborhood that will be open hopefully in the next four to five weeks. So that'll be another 30 employees growing to 50 over time. Why did you decide to do the retail sandwich shop? Because I imagine wholesale actually sounds kind of nice because you're still making a product, but you're divorced from face-to-face interactions with customers, which sounds nice to me. but obviously you have a different opinion. No, I don't. I mean, we started with wholesale. We started in this less sexy, less customer-facing environment for the first, say, five years of the business before we, you know, changed gears to open the retail restaurant.

The wholesale business is a much more steady ship. I sort of describe it as, you have this big ship. It's moving up and down in the water, but ultimately, is forward moving. It's harder to capsize. It's harder to knock off course. And that makes it a little bit, let's say less crazy. The restaurant business, which was what I wanted to get into in the first place, had I known what it would be like now that I'm there, you know, maybe wholesale would have been better to stay out. It's so much harder. It's much more dynamic. Everything is changing all the time. Much more difficult to isolate the variables. There's far more variables to consider

in the restaurant, especially when you bring in customer behaviors and how things really just consistently fluctuate across the board. 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 is subject to risk vanguard marketing corporation distributor. They say abs are made in the kitchen. Cool, but who is time for three hours of meal prep and a fridge full of Tupperware? That's why I started using Factor. Factor delivers fresh, never frozen, ready-to-eat meals that are dietitian designed for balanced science-backed nutrition. No prep, no cleanup. Just heat, eat, and move on.

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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. One of the themes that comes up in a range of topics that we talk about is distribution. And actually, both distribution in terms of sales, but also the physical distribution. How does it work in Los Angeles? Do you have your own vans? Are there third parties that drop off the bread to the restaurants? Like, talk about how you like built up that network and how the bread physically gets from your commercial bakery into the restaurant. Sure. Yeah, we have, currently we have six vans that are either leased or owned. And it's been a bit of an excruciating endeavor building out this whole network because it is a major, major part of what we do, especially because we're wall to wall, when I say wall to wall, it basically means there is literally no more oven space per hour available for new loaves of bread to increase our production. So if you start baking at 2.30 in the morning and you need to get bread

to all of these accounts before they open at 8 a.m., you have a very narrow window to cool that bread, pack that bread, get it into the vans, and get it out to these accounts. So our ops team at the bakery are true geniuses and building out these roots because you only have this very narrow gap to hit. And if there's famous LA traffic or anything else that gets backed up in the baking process, you are scrambling to try and make sure that you take care of these accounts in a way where they can still do their jobs. So we have to do our job, not only just the baking job, but the distribution job before they show up, before anybody else from our accounts show up to work. Also, the vans themselves are, you know, deeply problematic. They are the number one thing that breaks, needs service,

needs attention, you know, even more so than our ovens, which are in near constant use. And we have explored a number of different options, especially for when we potentially move to a bigger space about outsourcing our distribution. There are a lot of upstart wholesale distribution companies, some of which are based in LA, a lot more in San Francisco, that are sort of taking the Uber approach and outsourcing their drivers or having a dedicated pool of drivers who work with a variety of different accounts as opposed to one-to-one so that, you know, one of the major issues with our business is the, you know, fluctuating repair and maintenance numbers for our vans. If we can offload that to someone else, that is something that we have certainly

looked into. But when we get into the mix with these conversations, we always kind of end in the same place where, yes, we are not a customer, you know, a consumer facing company, but our business relies on that single interaction between the chefs and our drivers. They are our point of contact with our customers. And if that is not an authentic connection, if that is not something our employees are connecting with our customers, there's a potential for things to go wrong and a potential for that relationship to be soured. So we've ultimately stuck with our own employees and our own vans for now. Tracy, I'm just thinking about how crazy it must be, like, have an interest in bread, such as yourself, and then suddenly, like, you're in the brake pad. Become a mechanic.

No, you're at the breakpan repair business, too, and you've got to take that into account. I was thinking the same thing. And it's something that, I guess, when people envision a bakery, you don't necessarily think about the transportation and delivery aspect of it. But Andy, you mentioned 2.30 a.m. just then and the narrow window for delivery. And I have to ask, what's it like getting actual workers in the door who want to, I guess, wake up at like 1 a.m. in the morning and go bake bread. Yeah, it's tricky. You know, first of all, you have to love it.

You have to love the process. And I mean, the 230 aspect is, you know, very, very early and a very, very different lifestyle in a literal way. You are falling asleep at 5.30 p.m. And that means that your, you know, connection with your family or connection with your friends, you're operating on a completely different time zone than they are. And it makes things complicated if folks are not operating on the same schedule as you. But, you know, the, it's, that was the last baking ship that I, that I did, was the Sunday morning, 2.30 a.m. bake for the Hollywood Farmer's Market.

I would, you know, get up at two, roll down to the bakery. would be just me in the dark. A lot of people returning from their various parties on Saturday night, which made driving there a little bit sketchy, but always, you know, being careful. And then, you know, finish the bake, pack it up, put it in my truck and go to the farmer's market and sell it. And then the day would wrap up around 2.30. So it would be this 12-hour kind of sprint and then sail and then come back.

And, you know, at a certain point, it was the only bake shift that I was doing because I had to manage the business during the other days of the week that I was not doing that. And when you just bake one day a week at 2.30 in the morning, it scrambles your mind so wildly and your sleep schedule that I had to eventually abandon it just because I needed more time to manage the businesses. But you really have to subscribe to the lifestyle. If you try and push the edge, you know, especially when I was baking and managing five days, baking five days a week and still trying to manage the business, was getting sick a lot. It was very difficult to stay healthy when you're operating across two time zones, really. You're living in this kind of, oh, my wife and my friends are all living in

this time zone and my business is living in this time zone. And I need both, I need to be there for both. Those were far more complicated times for my own health. But we're on the other side of that now. We mentioned in the beginning, you know, we like this topic because it's sort of a lens into everything. But what are you saying today in terms of, you know, if you compare now to when you started, how do you think or versus the peak of the inflation, whatever it was, how do things look today when it comes to both hiring availability and also raw commodity cost, ingredient costs? Hiring availability is unique for us. Obviously, we are looking for a very specialized group of people. So the skills that they hopefully already have are in rare supply in Los Angeles. And that makes hiring complicated far more so for the wholesale bakery than for the restaurant.

The restaurant has a lot of over the pool is much wider. And we have very little trouble hiring at the restaurant. The bakery. Just real quickly, would you have said the same thing in 2022 or 2023 or does it feel easier today? than it would have back then at the retail level. Because that's where like all the complaints were, right? All the restaurants and service entities were complaining about how impossible it was. I think that it's impossible if you don't already have a name that people know.

And I think for us, we've spent a lot of our efforts making sure that our employees are well taken care of and supported and treated like the human beings that they are. and I think that when we open the restaurant after the bakery, that was already somewhat established in the public eye. So that helps us to kind of make this place. I mean, this is the point of it all is we want to make this a desirable place for people to work so that when they come here, they have a good time. They're well supported. They get fed. They get treated well.

They have health care. And, you know, we really built this thing on that. It's becoming harder and harder to have a functional business, including all of those things, which is, you know, the real issue at hand here is that the expenses are enumerating and the, you know, sales remain the same. So when we talk about raw materials, there's been, there's, we're actually in a much better place than we were, say, a year ago or even a year before that, the bakery goes by one ingredient. It's flour. flour flour is wheat and wheat is a global commodity that has a lot of fluctuations it's usually compared to others fairly steady but for example when the russia ukraine war broke out their Russia was not allowing ukraine's wheat to leave the country ukraine is the sort of bread

basket provider of wheat for europe and when that happens there's much more demand coming from the united states prices go up and that American users of American wheat are the ones who end up paying more so that those products end up in Europe to cover for the loss of supply. So we saw maybe a 10% increase in flour pricing. It caused us to have to drive our prices up for the first time in a long time, breadwise. Now it has settled back down. But in the meantime, everything else has gotten more expensive. and, you know, there's a, you know, massive wave of restaurant closures in Los Angeles right now, including yesterday, Coles, 117-year-old restaurant announced that it's closing the pantry,

which has been around for 100 years closed. It's a very, very, very, very difficult time for restaurants to thrive, let alone thrive in this town. So, interesting times for sure. 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. Factor delivers fresh, never frozen, ready-to-eat meals that are dietitian designed for balanced

science-back nutrition. No prep, no cleanup, just heat, eat, and move on. I've got gym days, work days, super long days, and Factor keeps me on track without slowing me down. It's real food, great flavor, and the kind of meals that actually support the work I'm putting in. We're talking chicken pesto, steak with veggies, roasted salmon, meals that feel like they were cooked for you, not by you. So, yeah, abs might be made in the kitchen. But thanks to Factor, I don't have to be in the kitchen. Right now, get 11 meals, free shipping, and free sides for life.

Hurry, this offer won't last long. Go to FactorMeals.ca and use code pro. That's 11 meals, free shipping, and free sides for life, but only with the code pro at FactorMeals.C.A. Factor. Canada's number one, ready-to-eat meal delivery service. Thinking about buying the right home, but not sure when? What if you had the right design, the right lot and finishes at the right price? Not someday, but right now.

Register at democrat homes.com and get everything you want right now. I'm Francine Lacqua, 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 there? 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 Lacroix 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 podcasts. Just on the commodities front, how does it work in terms of actually sourcing things like flour? Do you sign forward agreements with suppliers at a certain price? And I guess like how long term are those prices set? Yeah, it depends very much on volume.

And we are in this very unique sort of middle ground where we are not a giant 25,000 square foot bakery. And we are not one of the sort of more retail oriented 2,000 square feet bakeries. We are in the middle looking to make this leap to where we can buy directly from our purveyors. And when we can like purveyors as in non-distributors directly from King Arthur, directly from Camus Country Mill, directly from a variety of other flower purveyors. And when we can do those types of things and buy at scale, say 17 to 20 pallets of flour at a time, we can lock in forward pricing with King Arthur with some of the other ones. But in the moment now where we're operating through distributors, we are subject to their markup.

And they are fluctuating what they're doing based on whatever algorithms they're using to calculate proper pricing, not only just from what they're getting charged from the actual producer, but also however their business is doing and whatever markup they need to include. So what we do in that circumstance and what most restaurants do is regularly pit distributors against each other for our business, especially because we have a lot of leverage with our flour orders. It's a fairly significant regular order. So even if they're making a very small amount on that, on each bag, there's a large volume and a large frequency that has those purveyors kind of jockeying for the lower price. And that's, there's no service. There's no anything else that

really matters in that relationship. It's just if you can get us the price, we will order from you this week. And they know that and they fight. And it's a weekly price. It's, it's more frequent than weekly at the moment. There's a little bit of flux. June, you know, and I've just have regular conversations with King Arthur, who's our main breadflower supplier, who are one of the most wonderful businesses in the country and just good people and always, you know, driven to help their clients. They always are monitoring, you know, the commodity futures and how things are looking going forward. And I will sometimes reach out to them to find out, you know, how they are pricing things relative to who they're selling to.

to distributors so that I can see if the increases in price are coming via the distributor or via King Arthur, and then I'll know whether I have some leverage to kind of push down a little bit further to try and fight for cheaper prices. But there was a big spot, you know, things have been trending downward in price that the war, you know, the embargo opened up or whatever it was that opened up and allowed the wheat to leave Ukraine. So prices in the state settled back down because there's less exports. And it's a, something that if you're constantly monitoring it is changing very often in minor increments. But if you do that across an entire batch of milled wheat, that's hundreds of thousands of

dollars. So how does that actually feed into your prices for bread? And how dynamic are they? If you get a price increase one day, do you immediately pass that through to the customer? Almost never. And that's, you know, the increases. and decreases are fairly minor at the moment. They are

in flux, but they are staying in the general vicinity. If we're talking specifics, we're talking about somewhere between 15 and 1750 for one 50 pound bag of bread flour. And that fluctuation, it stays in that zone. Maybe a year ago,

it was up at 23. And if you think about that, if we're ordering let's say 5,000 pounds a week of flour, it's actually more than that, think it's closer to 6,500 pounds. And we're talking about a fluctuation of a dollar. That is a massive change in our end of year, you know, bottom line. So it's the kind of thing where if there are any changes whatsoever within that zone, they're multiplied over a large number of bags and end up

changing things fairly significantly. So we really have to, even if it's within that 15 to 17 range, as opposed to going all the way up to $23 a bag, that is, it's crucial for us to stay on top of it. But in terms of passing the pricing on, we've given ourselves a pretty wide range to stay within it that makes our pricing valid. And we're constantly staying on top of it. But bread in general, the food cost is not the main issue, unless you're talking about a jump from $15 a bag to $23 a bag. The main issue is labor. Because cogs typically with bread are in the 10 to 15 percent range, which is the cheapest food product you can possibly make, even if we're using like really fantastic ingredients like we are. The thing is, is it just takes a lot of human beings and a lot of skilled human beings to execute production.

So if we're talking about the traditional model where you see like 30% for labor, we're looking at more 42% for labor and 12% for cogs where cogs typically in a restaurant food business environment is somewhere at 25 to 30 if you're doing okay. We're at 14. So the model is a little bit different in the wholesale universe than it is in the retail restaurant. And that is, you know, we're able to have those extra bodies to get things done because the cost of goods are so low. This is fascinating. Let's continue on this. Whether you're talking about your wholesale distribution bakery, when you're talking about the restaurant, how do you think generally about the strategy of price increases? Because obviously, you know, you're not going to be sensitive to the day to day or the month to month.

My guess is most companies want to pass some sort of price increase on an assembly. regular basis, maybe once a year or something. But generally, like, talk about, like, how frequently you make those decisions to increase prices and when. Yeah. I would say that we are less on a schedule than is typical for a larger bakery. I think when you get to scale like us or larger, there's an inclination just from the operation side of things to make these changes regular.

And for us, it's more about making sure that our accounts are getting what they expect and are not being pushed further when it's no real issue for us relative to cogs to float a little bit of that within a range. It's also even more relevant to monitor our competitors pricing. Our products are not entirely apples to apples, talking about two different basic what we call a house loaf, but most places call a country loaf, basic basic sourdough. basic sourdough loaf of bread, which we charge $6 for wholesale, and a lot of other places might charge $750, but their loaf is 250 grams heavier than ours or some other difference. So it's difficult to track. But in terms of what the bottom line is for our customers, we have to stay within a range. We are a higher-end wholesale product, which makes us unique as well. But at the same time, that doesn't mean that we're not competing with those who are making some more, you know,

sort of commercially mechanized loaves of bread. So we have to be very mindful of our competitors' prices. And I would say that reality mixed with some of the increases in hogs are what drive our price increases. I'd say we've raised prices maybe twice in the last four years. You know, I think we had no choice when bags were all the way up at $8. more per than they are now. And by the time we were able to bring that price back down, which I think I would say, you know, was around May of this year. So it's a really long time of these elevated

prices. Other expenses like labor and outside things are, have increased to the point where we can't lower the prices back down. It's just the way that it goes as much as I'd like to because I, I feel the benefit very, you know, I feel the benefit from passing savings off to the to, to accounts, but at a certain point, you have to protect the business, and that's where we're at. So I mentioned at the beginning that you're in the process of opening a pizzeria. So congratulations on that, on the expansion. But one thing we hear a lot about nowadays is the idea of, you know, regulation slowing down businesses. And there seems to be certainly a dereg bent in the Trump administration and a general sense that all these rules and bureaucracy really slow things down.

And so I'm curious, what's the process been like for you in opening the pizza restaurant? How long have you been doing it? And I guess how much paperwork have you actually had to do? Well, Los Angeles within the restaurant world is fairly famous for the ineptitude of its governmental oversight agencies. We have to sort of deal with both the county and the city. There's building and safety in the health department. They don't talk to each other, but they're both kind of looking at the same thing, and they both point you in different directions, and it gets very complicated when the inspectors start showing up, which is throughout the process.

The thing about the pizza place is that it was a second gen space. It was already a pizzeria that said we're, you know, stripping out all the equipment and rebuilding it. But that makes the process significantly faster. And if I, you know, I don't want to say anything or be an absolutist in any way, but I will never do a first-gen space ever again because it's just excruciating. And, you know, when we opened the restaurant, we signed our lease in November of 2019. So taking, obviously, there's a pandemic to consider, but it took us three years to open. A lot of that was due to problems

with the city. You know, a lot of it is very analog. They print up your application and it sits on a literal stack on someone's desk. And if you don't follow up with them incessantly, that stack just gets piled on top and your thing just disappears deep into the, you know, into the file. So it's, it's a very, very, very difficult process. Do I think the exact opposite? Just stripping down things to nothing is the answer. Definitely not. But, you know, L.A. has a lot of red tape to navigate. It also is expensive red tape to navigate. So you're paying a ton for sort of non-service and making things really complicated for you. You can get to the very, very end of the finish line and you're ready to open and the health inspector walks in on the last day and says this floor drain is not in the right place based on the plans that they approved.

and, you know, eight months ago from somebody else, and then you have no choice but to spend an extra $8,000 rerouting your plumbing and then getting plumbing inspection again. It sounds like you're speaking from personal experience on that one. That's a very specific example. Well, no, I mean, by the way, I looked at Coles, the rest of you mentioned, and I'm reading the article. And to talk the quote, litany of reasons for closing, pandemic, actor and writer strike crime, labor costs, bureaucracy. etc. But just on this point, like, I have never worked in a, actually I did work in, well, actually, I've worked in a sandwich shop. And I worked in a Nigerian restaurant in college, which I never talk about. But is it like the bear, basically? That's all, because when people hear all of this stuff about like, oh, you got to move the drain, what was there was like something with a balloon or something like that? I don't remember the exact scene. But is it like that stressful where like, you know, they come in and everyone's like on bated breath about whether they see something or not before you can open the door. 100%. 100%. The, the fear. that is struck into the hearts of restaurant managers when someone with a hanging neck tag comes in from the city is overwhelming. The messages on Slack go immediately out and everyone springs into gear because a lot of the things that they require are not logical. Don't make sense. Are there for the purposes of checking some ridiculous box from 1965 that isn't applicable anymore, but no one wants to make the effort to change things with the state government or the county government.

government and you just kind of get locked into, you know, for someone who is so focused on logic and the logical approach to things and really reasoning things out and finding out the best way forward, it's just excruciatingly frustrating to be put in this position where nothing is logical and the decisions of this individual largely have to do with their mood that day or whether they don't, whether they like your place or whether they like you or whatever's going on. It could be motivated not by anything on paper, but more about this sort of unknowable nuance. And it's excruciatingly frustrating. There are known inspectors that people fear. There are known inspectors that people hope for, and you never know what you're going to get. I heard stories of, so a lot of architecture companies have sort of sprung out

to become expediters as well. So they basically will take all of your paperwork and the ridiculous amount of stuff that you need to do. You pay them a fixed fee. And they're the ones who not only, well, if they're architects, design the restaurant, but then we'll run everything through all the necessary channels with the city and the county and the state. And that costs an incredible amount. So that's another thing that gets, you know, piled on top.

But no one wants to do that anymore because it's so ludicrous that it just makes you go crazy. I hear I have no experience outside of Los Angeles that this infrastructure is one of the worst out there. So Joe listed a bunch of reasons that a restaurant might close earlier, but I would love to get your take on what exactly is causing restaurants to go out of business in L.A. And also, one thing I've always wondered about, why do people still open restaurants? Because the thing you hear is always that, like, it's a tiny, tiny margin. It's really difficult. It's really competitive. You have to basically give your entire life over to this endeavor. It sounds like a hard job. But, you know, Do restaurants open all the time? It's true. I think I'd say that the motivation to open most restaurants is a flawed motivation. It's usually based on ego or showing off cash or trying to acquire digital fame. Other things that will inevitably either lead to a short burst of success followed by an immediate decline or just an immediate misfire.

And that's why most restaurants close in the first year, because it's excruciatingly difficult to do this. And I think that the general view is that working in a restaurant is easy. It's a cop out from some more corporate approach to living. And it's just not. It's so much less manageable. It's so much wilder than, you know, a more corporate career that it makes it very, very hard to do. But there is, to answer your question, incredible joy in interfacing with people and making them happy and being connected to hospitality and the pleasure of taking care of people and giving them something that they get to do, you know, three times a day, but making it something that brings them joy. You can see that and that reverberates back to you in a way that feels far more authentic than it felt when I was writing and producing commercials trying to manipulate people into buying shit.

But it's about that authentic connection. And I don't want to have to feel bad for what I do for the rest of my life. I don't want to have to feel bad about it. And I did that for almost a decade. And I think that this provides an authentic reality for me and the people that work here, despite all of the challenges of doing it. And I think the challenges are in place because the challenges are always in place when you're trying to do something that's authentic.

and aside from the general flow of our sort of controlled existence that we have right now. You mentioned digital fame. You're at the pizzeria at the restaurant. Do you feel like the need to have your equivalent of like, you know, the viral heroin smoothie, like something? Like is that an important thing you think about that this is a thing that could blow up on TikTok or whatever it is? No.

No, but I'm unique in that way. I can't wait to remove us from social media. That is an intractable connection. Here's how I think about it now, where the restaurant and the bakery are established. Generally, people in Los Angeles know to some degree or the people who are involved in food know who we are. If I were to seek new customers in this moment for our retail restaurant, they would be in authentic connections with what we do. They might resonate with our BLT that we just put out for when the tomatoes are good now in the summer. And they might come to the restaurant on the weekend.

But ultimately, our bread and butter is going to be our regular return customers who have a relationship with the restaurant. And I don't want to ostracize them because they're the people who are going to keep us here for a decade, as opposed to the people who are going to make us famous in the moment, drive out our regular customers and then move on to the next trendy thing. So for us, trends are a business killer. You can get short, short success from a trend. But if you want to be here for a long time and build a customer base that's dedicated, you have to have an authentic relationship with those people. And that has to mean that whatever your product is,

they are authentically connecting with it because of their own desires, not because I'm forcing them to have an entertainment moment with our product by, you know, creating a TikTok video that goes viral. So that's, yeah. Well, speaking of the moment, we're recording this on July 8th, and we still don't really know what's happening with the tariffs. But I imagine in the course of building out a pizzeria, you're probably ordering equipment from various places, giant pizza ovens and all that. Have you been impacted at all by the tariffs yet? Very little. It's still very confusing from my vantage point as to,

what is happening or what is supposed to come down the road. And we were certainly anticipating, you know, our ovens are from Germany, our, you know, a variety of pieces of equipment are coming from international places. But I haven't seen any major increases. We did have some shipping increases. We make these coffee cans that we serve our rusted coffee in that come from China. There was a massive tariff increase on our shipping. That's part of the process. But in terms of, you know, the pizzeria equipment, we haven't seen it, really. I'm anticipating that potentially, we're talking about a 10% EU tariff, they said, floating around. I just don't know what that means. And if there's anticipatory price increases from the vendors who are in Italy,

say, selling us tomatoes or who are in a variety of other places in Europe where we buy some of our more luxurious ingredients, we just haven't seen those yet. I am still anticipating that as a possibility for pizza because we need to anticipate that. And we are certainly testing tomatoes, California tomatoes, to see if we can find something comparable because the, you know, San Rosanos are truly the best. And they do grow in California, but it's just a little bit of a different thing. So we are anticipating the need to work with California tomatoes, but so far have not seen anything really in terms of tariffs, increases, reaching.

us on this side. I just have one last question and it gets back to Los Angeles. It feels like major American cities are always sort of dying and thriving at the same time. And obviously, Los Angeles, you know, you certainly hear about it in New York and Chicago and Los Angeles is going through a lot or the fires, the recent ice raids and riots. And then, you know, what people, and I mentioned, you know, because it was in this article, I just looked up and reminded me, you know, people are talking about Hollywood, could it become the next Detroit in terms of that industry gutting out? On the other hand, it's probably the nicest climate in the entire world and people are always going to want to live in Southern California. How do you feel about doing business in Los Angeles right now as a city?

It's excruciating. This city is, especially in the food business, is very, very much struggling. I've never ever seen so many closures of restaurants, good ones that deserve to be open in my time, let alone being a consumer, but being in the business. I think that there's an endless list of factors that make Los Angeles complicated its expanse, the reliance on Hollywood as a major motivator for or a major provider for a large number of people in terms of income. And with that whole market shrinking, you know, you do see a lot less business happening in Hollywood proper. That said, it's a 400 square miles city.

You have, you know, where we are is about 15 minutes from downtown where some of the protests were happening and a lot of that stuff. But I don't see anything. You know, it's just a regular small neighborhood experience over here. And you're really kind of like these neighborhoods have a very distinctly, you know, unique way of behaving. So as Hollywood is sort of shrinking down and moving east and west, you see a lot of development. And then you also see a lot of gentrification protests. You see a lot of things where folks are, there's a lot of expansion and contraction in this really wide city.

Part of it is exciting because it's a dynamic, but it's also just makes things very difficult because the same. city doesn't really have its own identity. The identity is defined by the neighborhood. So as downtown and Hollywood are contracting, you know, Highland Park and Glacell Park and this area of Glendale kind of on the east side is expanding. Silver Lake and Echo Park and Los Felas are kind of becoming like Hollywood once was and getting a little bit more corporate businesses in there and they're all looking to capitalize on the growth of these neighborhoods. It's a very unique place. but it's very hard to work here. And you get a lot for choosing to be here and operating here and living here, but you're also

very much behind the eight ball. I got to ask one more question, but why is a San Marzano tomato grown in California considered subpar to San Marzano tomato grown in Italy? I wouldn't say subpar. I wouldn't say subpar. The climate is vaguely different, slightly different. So you end up with a little bit of different result. From what we've seen, the San Marzano's from Italy end up being a little bit sweeter, a little bit more robust.

And maybe that has to do with even more direct sunlight, more volcanic soil. Who knows? There's a variety of different reasons why the microclimates create slightly different. And results, it's just like wine. It's sort of like, you know, you can grow the same grape in southern France and in northern California and end up with a distinctly different flavor based on the microclimate, the soil, and the environment. So it's a it may just be our own projection, but we're working to try and find whatever the, the best possible option is for us. All right. Just a couple of seconds left. Give us one sandwich recommendation here on the East Coast that

we should try. Well, I would say, oh, that's really hard. I know. I mean, Defonti's, Defonti is in Brooklyn is a special spot. But, you know, the, the deli that I grew up with is in Milburn, New Jersey, it's the Milburn Deli. Okay. And has now become kind of like a famous deli somehow, which is crazy. I'll check it up. Yeah. All right.

Well, Andy, thank you so much for coming on Odd Lots. We're going to have to leave it there. But it was really fun to talk about the baking business. Yeah, that was great. Thanks so much, Andy. That's my pleasure. Thanks, guys. Joe, have you ever been to Alodoro's?

No. In Soho? It's in Soho. It used to be literally across the street from where I lived. Best sandwiches ever. It blew my mind the first time I went. went there. They've expanded since then. The expanded store is not so good.

You know, a shout out to our producer, Dash. Because didn't he, like, he did that tour where he, like, tried every one of the 100 best sandwiches in New York City. That's right. We got to get him on. We should interview Dash about the best sandwich. We should do a lot more with Dash at some point about New York City sandwiches. That'd be fun. Yeah.

Okay. But on a more serious note, there was lots of interesting stuff to pull out from there. But one of the things I'm thinking about, and this kind of came up in our chicken series. Yeah. When we talked to the DOJ. but it's that idea of the tyranny of the middleman, right? And this idea that, okay, obviously you're buying flour from a flour producer, but then in between the producer and it getting to you, there's the distributor, which is charging a markup.

And then when you're setting up a new business, nowadays you have to have like basically a red tape Sherpa to walk you through. That's another middleman. And then the shipping costs going up, I mean shipping not necessarily a middleman, but certainly the middle of the process. It seems like that's where the cost pressures are really coming in. No, I think all that's super interesting. Also, this idea that, like, you could have an Uber for distribution,

but then you lose that. A bread bus. But then you lose that personal relationship. And if that's important because you need to hear feedback from the chef at that restaurant, then you don't get it if you don't own the distribution. And then just, you know, L.A. itself, we should do, at some point, we got to go back to L.A. Because it does, I mean, incredible place,

but incredibly number of, like, sort of wrenching things going on. in that city. And opening a restaurant, as you mentioned, sort of seems crazy and the easiest of times. Like, I feel like you have to have a little bit of brain damage to do that and then to do it in a city. There's a lot there that was very interesting. I want to learn more about the pizza business as well. We're in New York. We should do pizza. We're going to do a pizza episode. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Oddlots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Wisenthall. you can follow me at the stalwart.

Follow our producers, Carmen Rodriguez, at Carmen Armin Dashobinette at Dashbot and Kale Brooks at Kail Brooks. And for more Oddlots content, go to Bloomberg.com slash oddlots, where we have a daily newsletter and all of our episodes. You can chat about these topics 24-7 in our Discord, discord.g.g slash oddlots.

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