Michael McDermott - CEO Chi Chi's

It's Adam West CEOs. You should know with me today, Michael McDermott che Cheese Restaurants.

Thanks for coming by, Thanks for having me.

All right, So the rumors have been well they're more than rumors now because I guess you guys there were rumors before there was anything efficient. But Chee Cheese is back.

Yeah, you know, it's It's something that I'd never had a desire to do over the last number of years, and I just.

Last summer I actually was. I was.

I'm a big, big proponent of meditation. I was meditating one morning and the thought came to me that I should bring Chee Chee's back, And.

You, on your own, came up with this.

Yeah.

Well I think it was like a divinely inspired moment, right. I mean, I'm a big I definitely believe in that. And I ran up by my dad and my uncle Jack Michael. Jack actually used to be the vice president chie Chee's back in the day, ok, and he's now the chairman and Coco Marco's Pizza the the fourth biggest

Was that the salside remember the commercials, the guy with the overcoat and yep, and the yeah that was again, yeah, the shortillas and margarita makes. I think they've got like twelve products and they're all over the country now. But and then then six, and then in two thousand and.

Four the last sixty five Chi Cheese closed and so the trademark became available to full Mark, and so Hormel got it. And so for in order for me to do Chee Che's, I had to get I had to make an agreement with them.

To use the name.

Okay, So I approached their executive team with the idea of bringing Chee Chee's back, and they loved it, and we reached an agreement, and so now you know, we have the rights to do Chee Cheese throughout the country.

I don't entirely remember Chee Cheese. I knew of it. I'm a little young for not totally young, but I mean there's probably some younger people. Can you tell me about the history what you know about Chee Cheese? I mean, you know, having a relative part of it, you probably know some.

Yeah, I do.

I mean so, so the first door opened up in nineteen seventy six, and was it here in Minnesota? It was that it was that Nickeolin in four ninety four. That was the first store, and uh, they ended up they ended up opening a couple more stores in the cities and then expanded it. Eventually the company went public. And the one thing with cheach is it did change.

Ownership a number of times.

So there was probably because they went private after going public, and so there was a number of ownerships of Chee Che's throughout the twenty eight years that was around.

Okay, it seems like it was longer than that. Was it only twenty eight years?

Well, I don't know, you're see if you're better not.

Technique, but it just I mean, that was such a seventy.

Six to two thousand and four. What is that?

Yeah, twenty eight you're right, Yeah, twenty eight years.

Yeah, twenty eight years.

I think it's been missed. Yeah, no, good move. Yeah yeah, because when you hear about different restaurants that are missed in the Twin Cities, that came up quite a bit. You know.

We actually, honestly, I didn't realize how much it was missed until we did a press release. We we did a press release in December, and I thought it would be picked up locally because this is where Chichie started, and I thought the trade magazines would pick it up. But I had no idea the coverage it that it that it received. We had over six hundred articles written.

Wow. Okay, And so now you told me some stuff. I assume that this is public stuff that you told me, But I'm so I'll just ask you, where's your first location?

So the first location we have announced, and that's going to be at the West End. So we're going to convert our Rojo Mexican grill to Chi Cheese, uh huh. And we're looking at third quarter of this year.

Okay, And so I know that's because that's close to where where iHeart is, so Minneapolis, so we love it. So what's what happens to Rojo, Well.

Goes away, That's what happened to so our planets convert the rows to Chi Che's and then you know, we're looking to expand it out of state. And we've had a number of people that already reached out to us that are interested in franchising the concept. We've had real estate developers reach out to us about locations. So you know, our goal is to get this first store open, but we definitely would like be in a position to expand the concept.

Talking to Michael McDermott's CEO of Chee Cheese, which is apparently coming back, tell tell me a little bit about you did you Are you from Minnesota?

So I was born in Minnesota, My parents grew up in Austin, lived until fifth grade. My dad moved to Arizona and I spent the next you know, most of the next thirty years there, and then twelve years ago my wife and I decided to move up here with our kids. For a number of reasons I had I had opened up Rojo, so that was here. We wanted the change of seasons, just a different environment. Scott still had gotten really big. So we've been here now for twelve years.

And so you, I guess you already have a relationship maybe with Hormel or they say down there hormal Right. Yeah, my neighbor's from Austin. She told me that. I was like, what what does that mean? So did that help being from Austin developing this relationship?

I don't know if that helped her now not, you know, like with the negotiations or or them being excited.

About yeah anything. Yeah, I mean I.

Think, uh, my uncle Jack as well does business with Hormale, so and he's been part of this is a part of my advisory board. So there's probably some connection there.

And so you talked about you just had this idea. Did it come from? Is there anything that made you think one day more about this about bringing back chee cheese?

Now?

Literally it was like a like a it came to me one morning. I mean it was I know, I had no thought what's over bringing it back every until that morning and then I then when that happened, I just literally ran with it.

I thought you were kidding, But yeah, that's awesome. Yeah, So do you I mean you don't really have any customers yet, right, I mean you haven't really opened officially. But what I mean, do you have a vision for for what serving your customers looks like?

Well, I mean the so the concept. So what we're doing with Cheaches is we're bringing the concept forward, right, So, I mean there's going to be I know, we're going to get We're going to get emails, We're going to get comments that people are going to say, this is not the Cheachers I remember, right, And it's not intended to be the exact Cheaches that remember. Now, we are going to bring back a number of the items right

I think for some people to say, it's not what I remember might be dishonest because they probably don't remember anything from right, it's from some of the nights they were there.

Well, yeah, you got to remember the last ones closed twenty what twenty one years ago? Yeah, so you know, if you're in your thirties, you probably right exactly, Well, you weren't old enough to drink I know that unless you were in your forties.

Yeah, but many people probably were. Yeah. How how will you I mean, Mexican's not new to the Twin Cities by any means. How will you different differentiate yourselves other than I mean, you got the Chee Cheese name, which is a big bonus.

Yeah, I mean we're definitely gonna leverage the name.

I think you know what we do too in our concept, which we've done with when ConA Grill, which is another concept I started.

We always have had a big bar.

Presence, unlike some other maybe Mexican restaurants, and we'll continue that with che Cheese. But I think we'll differentiate ourselves from the experience people have when they walk in the doors and all of our food is made fresh from scratch. There's no third parties, there's nothing we don't know, there's not a microwave on the premise. I mean, everything is

What challenges do you see starting up here? Maybe maybe the industry as a whole. I mean, I think you're we kind of see what what you're up against. Well, I don't know, maybe we want to talk about that. What challenges are you up against?

Well, I think.

All restaurants have experienced a tough time over the last two years. I think with inflation, everything costing more, whether it be at the you know, at the gas station, at the grocery store. You know, prices have been increased. There's been so people, you know, one of the first things they can cut back on is going out to eat.

Yeah.

Right, So we're actually a pretty good economic indicator either of going into a tough time or coming out of a tough time. And and so I think there's been a lot of pressure in our industry with respect to the top line sales. And we've seen since COVID, we've seen a lot of pressure too on just hourly labor. You know, what we pay our hourly labor especially in

Yeah. Do you see pick up and delivery, because that's obviously taken off since COVID. We pick up sometimes I've never had anything delivered?

Is that?

What's your philosophy on that?

It's just not a big part of our business now. It's probably three percent. There are other concepts that it's definitely a big part of their business. Yeah, but but for us, you know, we do do it, we will do it, but it's never been it's never been anything that's made a difference in our business.

There's a place in Lakeville that we sometimes will go to and get takeout and I bring it home and I'm like, how do they come out ahead on this? Like there's just there's so much packing and just I don't know everything. It seems like it's hard to make a buck that way.

Yeah, I mean, your margins are not great on delivery, but but it adds to the top line.

Sure, what success stories do you have in your resume?

You know what's so funny is I did my MBA and I thought, if I go back and teach, I will go back and teach a class. And all the things they don't teach you in school actually learn by doing it. So I've had a lot of things that you know, I've learned along the way.

But I guess.

You know, the one national chain I did was ConA Grill, you know that was that was a I stepped down a CEO of that company when we went public. I just was not there's a difference between starting a company and running a company, and I didn't want to run a public company. So that was the one national chain I did. I have done a number of other concepts along the way. I mean, Rojo has been a great success.

How that's really.

Been the foundation of of of how I approach business in general.

So I didn't ask you, so you you actually did you start ro HO? I did Okay, that makes okay, it's all make you more said there, You're just like taking it over somehow, And I feel better about this now now.

I think my strength has always been developing concepts and getting the people involved and raising the money and and then always having a really good operator that's been, you know, next to me along the way, so I and do what I've done.

Without the people around me.

I mean, I've always been really good at finding people that know how to do the things that I don't know how to do or I don't have the time to do. And I've just been really blessed with great people.

Well Rojo was awesome, so yeah, yeah, are you ever a secret chopper? That'd be the best part. Could you ever go in there? And just I better try it?

I mean, you know my own restaurants, Yeah sure, yeah, Well I can't go on my own restaurants with people, you.

Know, I amises right, Yeah, no, I've never done that, but I can't help but when every time I go into a restaurant, I can't help but notice things that I would do differently A lot.

Of times too, what they do right, yeah? Right? I mean you pick up ideas?

Did you work in the restaurants at a young age.

So I started out.

Uh. My first job was washing dishes at a restaurant called Lafonda del Sol call mixing restaurant in high school. And I did that because I wanted to get the salca recipe. Oh, they had the best sauce in the world. I worked at night and they made it in the morning.

Wait where was Lafonda's.

Lefonda del Soul was at Scott Still and Shay, it actually just closed.

It had been there for like fifty years.

Okay, small little Mexican restaurant, and so I was never able to get the salsa recipe.

But I started out.

There and then I I worked you know, pretty much every position uh in the business over the next number of years.

Why couldn't you get the saluca recipe? Was it that well they made it in the morning. Oh yeah, but but you'd think that that you could have talked on the people.

Well they didn't write it down.

Yeah, and well it's good they make it right out of their head.

That's yeah.

Yeah, yeah, all right, tell me about being a leader. What is that? What does that mean to you? What does it feel like?

Oh? I feel like you should be talking to my dad.

Yeah, okay, I mean you talked about having other people, partnering with other people, the people who really know what they're doing. I get that, But what I mean they people look to you. You're obviously very successful.

Yeah, you know, I I am.

I am a big believer and making sure that I prepare myself each day to show up in a way that I would want a leader to show off. So I'm a big So we were talking about this before this interview, But I came to Minnesota thirty six years ago because I was at Arizona State University and I wasn't. I wasn't I wasn't graduating when I should have, and I had I had a big problem with alcohol. Came up here, went through treatment, and I changed, you know,

And and I really believe.

That that is, you know, that is what sets me up for being a leader, being showing up for my employees and being a better listener, you know, making decisions not based on fear, but based on the principles I try to live by. So I don't have a philosophy like you know, this is how what a CEO should be. Like, I just tried to prepare myself each day every morning so that I show up hopefully in the right way.

Well that's that's the philosophy.

Yeah.

Yeah. Is it hard to focus when you're doing I've tried different meditations at different points, not an hour, certainly not an hour and I can fifteen minutes, No way is it? Do you are you thinking about business or you know?

Now you know what's funny is I got So this was about twenty five years ago. I got introduced in meditation through a guy that I you know, I really respected this guy and he carried himself in a way that I'm like, you know, I want what he has. And I asked him, I said, what do you do now to kind of have this type of piece and serenity? And He's like, I meditate every morning, and so I'm like,

In my living room in my apartment and.

Closed my eyes and was quiet, and I was like, I think my egg timer is broken. I could swear five minutes a gone by, and I looked at my egg timer and it was like two minutes ago by. And I would rather run five miles barefoot and gravel and sit for five minutes. It was like the worst just experience. And so I'm but I kept with it. I kept doing it every morning, and gradually I was able to sit for five minutes and then said for ten minutes, and and and you know, so it's built

Yeah, I'm right there with you.

Yeah, so I said on my guy and I and I tell you what.

I work with a lot of guys that that try meditation, and and I really I'm a big proponent of guided meditations if you struggle with it. So there's a lot of people that just really can't sit still. They have a problem in the beginning. And so I believe in using guided meditations, and there's a ton of apps for it. But I think that can be really helpful. And it's not really how long you go, it's developing consistency.

So if you can.

Start doing it every morning, if it's for two minutes, and just build off of that. But find a place that you really like and and you know that as far as I if it's your in room or at your office or wherever it is, and find that place that you can go to every morning and and be quiet.

I think there's probably different types or different ways of doing it too. It's still being quiet. I guess you got to be I mean, I can't walk my dogs and be quiet, But you know what I mean, Like different things maybe do they count? Would they be the same as you're looking for an hour or yeah, mowing the crass and I'm out there on my own. I wish, yeah, I wish I could sit there.

You know what.

There's moving meditations, there's walking in I and I've done them all, and I've done meditation with trees and everything. But I really am I'm a firm believer in incorporating at least you know, yeah, part of your day, your morning whatever, with just being quiet, okay, and just being still and connecting to you know, you think that there's nothing in that silence, but when you start doing it, you realize that everything is.

In that silence.

Yeah. Probably people in the restaurant industry could use a little bit of that, right, I'm just thinking, thinking ahead a little bit about it.

Well, I tell you, you know, what's you know, what's really amazing is that when we closed down for COVID in March of that and all the restaurants close, and this is where my and this is what I'm talking about how this is used as being a leader and a CEO and so forth, is that we closed down and also my income went to zero. You know, I had no idea, like everyone else, what was going to happen. There was definitely a period of fear.

I mean I was.

There was about a week or two where I was like a little bit of a panic and and but through this daily practice that I have and in my belief in something greater than myself, I was able to get to a point where I totally trusted and believed that it was all unfolded into goodness and it was all going to be okay, and the fear went away. And so my decisions that I made for my business

And the same thing.

You know, we're doing this crowdfunding for for for Chee Chees right now, But you know, I've always raised money through either friends and family or investment banks. And when we back in October of last year, we were looking to raise money for Chee Chees, and and I started the normal procedure of doing that, which is, you know, either calling people I know that have money or.

Reaching out to investment banks.

Yeah, nobody was like like we like I couldn't raise any money.

I was like, I was like, oh my god, Like this is never.

Yeah, you know, And instead of freaking out, you know, I was like, Okay, what's the next thing to do?

And so I reached out to a friend of mine.

He's like, hey, I know buddy of mine who raised money from crowdfunded.

I'm like, I have no idea what that is. What is Like, I've heard of it, but like, what is that? Yeah?

So I talked to somebody that had done it. I reached out to a number of companies that offer it, that have platforms, and we went forward with raising money for teaches and we're still doing it right now with start Engine. But it's so, you know, crowdfunding what it does is it allows people that typically couldn't invest in something that have done in the past invest. So typically ten percent of your investors are credited, and those are who we normally go after or you know that invest

But but my.

Point is is that you know, this whole meditation stuff, it's allowed me to to be open, uh, you know, new ideas or new ways of doing things and not being stuck.

Yeah. I think if more people knew about that, more people be a part of it, maybe unless they've already what's the crowdsource of the crowdfunding?

Yeah, I mean we're we we we will continue to get you know, new investors every day, and uh, it's been a great I mean, it's been an amazing avenue or platform to raise money because really, unless you have friends and family that can put in three to five million investment, banks just aren't doing that today.

They used to.

The friends and family thing gets weird.

Well, it gets hard, and there's not a lot of people that have got friends and family, got three family dollars.

I don't know, I mean you do, you know, definitely not.

But you know, it's it's just it's it's a tough environment. And so it's really been a great experience.

Telling to Michael mcdermot's EO of Chi Cheese, first location opening in the West End in Saint Louis Park. You said third quarter, So as specific as you can be.

That's expecific. Yes, I can say that word.

Yeah, what's your what's your thoughts on giving on philanthropy in that area?

You know, I'm I definitely try to give back wherever I can, whether it be my time money. I'm as I mentioned before, you know, I the recovery community. I'm involved in being sober, and I just believe that, you know, there's no amount of giving back that I can do to equate to what I've been given.

So I'm on the.

Board of the retreat that's in Wayseeta, which is a treatment center for both my women. I uh uh, you know, always get involved in There's a number of local charities in town that that we do that we that we contribute to from a restaurant standpoint, and so I just I've always you know, I always make time too for people.

I always try to make time.

Do you ever are you ever on the serving line? Are you ever playing stuff up or working behind the scenes?

I I have.

You know what, when we opened up the Rojo in Maple Grove, I was the lead one of the one of the bussers, actually the lead bussers. And and I actually love doing that because when I bust a table, maybe I'll talk to guests, Yeah, and find out how their experience was, you know what, when right when went wrong?

And you say who you are when you do that, I.

Don't unless it gets to a point where that's becomes.

Obvious or whatever. But you're wearing a tie, No, I don't.

I'm I'm wearing the same shirt the busses wear. Yeah, I look, I look like now, I look just like the rest of the rest of the team. But I I did that, especially.

When we opened row Hoo.

April Goova did that pretty much, you know, three four days a week for the first number of months we were open.

Wow, not afraid to literally get your hands dirty, be in there in the in the in the field. That's great. Yeah, what are you hiring right now?

Well, we're not specifically hiring for chee cheese we will be I think we're probably about three months out on that, but we're we're going to be keeping everyone that wants to stay, We're going to keep them on board.

But we're definitely need more people.

And the crowd funding where do we Where do we find that?

So that's on start Engine Start engine dot com. They're the largest crowdfunding platform out there. Kevin O'Leary from Shark Town, so he's behind that company and they've been really a great company to work with. But if somebody were to want to, you know, check that out, if they go on the start Engine dot compage, they can just find che cheese there.

Oh that's that's amazing. Anything else you want people to know about che cheese or about you?

Well, you know what I'm excited about. Except my mom is still around. My mom you know that's my mom is che che else?

You knew that?

No?

Yeah, oh yeah, so my dad started cheating. Somebody takes it, I know, right, so you named it for my mom. My mom is still around, my dad's still around. They are both going to be there at the opening. And I'll tell you one thing that that maybe to answer that question about what people don't know is that. So, my mom wore this seventies orange kind of pant outfit from Mexico at the grand opening in nineteen seventy six Coach Chee Cheese. She sent it to my wife. My

Yes?

Okay, she said, yeah, surprise because this will be out before No.

No, no, no, So she's going to wear that output opening night.

Super cool, pretty cool. One thing I didn't ask. I don't know if you could say this yet. How did you have a vision for how big Chee Cheese gets.

No, I mean, I mean we would.

I think there's an opportunity for for sure, fifty stores in the Midwest, East coast and maybe one hundred. Yeah, but like I said, there's gonna be opportunities like in airports where oh yeah, we're chi Che's did not have that opportunity before when it was around the seventies and eighties.

Returned to Richfield and a lot of restaurants I feel like, you know, started in Richfield or had a big presence in Richfield.

Yeah, that four ninety four strip, I mean, and I think that would be another great another great opportunity for us.

All right, I mean it's all it's all location driven.

Yeah, of course. All right, Michael McDermott che Chee's looking forward to third quarter twenty twenty five.

Yes, thank you, all right, do you want to join you those questions