Why can’t Netflix compete with traditional cinemas? Why will the UberEATS model struggle to see long-term success? What kind of long-term effect will social media coordination have on the stock market, like we’ve seen with stocks like $GME and $AMC? On today’s episode we’re thrilled to have back on the podcast Vince Guzzo, CEO of Cinémas Guzzo
Welcome to the The Voice of Retail , I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with Retail Council of Canada and this episode is sponsored by RIWI..
What if you could take a daily pulse of retail shoppers in every market in the world - hearing directly about their behaviors, views and fears? What if you could hear from more than just your own consumers and shoppers, and from people who don't participate in focus groups or research panels? RIWI collects real-time data on consumers in every market in the world. If you need to understand how people's views are changing in today's challenging environment visit RIWI.com to book a demo.
Why can’t Netflix compete with traditional cinemas? Why will the UberEATS model struggle to see long-term success? What kind of long-term effect will social media coordination have on the stock market, like we’ve seen with stocks like $GME and $AMC? On today’s episode we’re thrilled to have back on the podcast Vince Guzzo, CEO of Cinémas Guzzo
“by trying to say that watching a big budget movie on a 42 inch TV is the same thing as a 50 foot movie screen with Dolby sound with this with that with 300 other people laughing with you at the same time, or getting scared with you at the same time. Hey, those are two different experiences”
You might also recognize Vince as and one of the skilled investors on CBCs Dragons Den. We get the chance to discuss his thoughts on the evolution of consumer behaviour during/after COVID, and how our new habits will impact the way we work, live and invest now and in the future.
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I’m your host Michael LeBlanc, President of M.E. LeBlanc & Company, and if you’re looking for more content, or want to chat follow me on LinkedIn, or visit my website meleblanc.co!
Until next time, stay safe and have a great week!
Michael LeBlanc
Vince, welcome to The Voice of Retail podcast. How are you doing?
Vince Guzzo
Great. Thank you for having me.
Michael LeBlanc
Well, I should say welcome back, you and I talked in the before time pre COVID. So it was, it's great to have you back on the microphone again. And a lot has transpired between the last time we spoke and, and today. So it's great to catch up. How are you? Are you, are you well? it's an interesting time for sure, right?
Vince Guzzo
So, you know, health wise, I'm very well, in the sense that I've actually shed a few pounds. And you know, even though we've been confined at home or at the office, I have not overeating or not under exercised.
Michael LeBlanc
The Covid 15 as they’ve been calling it right?
Vince Guzzo
That's right. That's right. But on a mental side, I'm also very well, and I'm, you know, I'm actually surprising myself in the sense that I, you know, I had forgotten those really, really stressful times that entrepreneurs go through at the beginning of their business and so forth. So, you know, sometimes you ask yourself, could I do it again? Right, can I go through that crazy period? Seem to be, seem to be doing fine. In fact, in fact, that a lot of friends calling me up, and saying, I can't even believe you haven't, even like flipped your, you know, your whatever?
Michael LeBlanc
Yeah, your lid, or whatever, whatever.
Vince Guzzo
Yeah. And so, you know, I think I'm doing fine there.
On an economic basis, I mean, you know, nobody likes the bleed that we're having. But, it is what it is, I mean, it is a bleed. We’re, we're managing to build equity on it. We're, you know, we've got tons of projects. I would say, 90% completed. So, I think when we do get out of this craziness, you'll see, you know, Cinémas Guzzo or, or, or Vince Guzzo in many other things that people didn't realize that we could be doing or that we could be in.
Michael LeBlanc
It, I was interviewing a Bain consultant, and he talked about this as a six-month Mulligan. In other words, it's, it's an inflicted, they're enforced time when you get to reflect on, “am I doing all the right things?” And, you know, you get out of the meat and potatoes of operations, and you get back into visioning right?
Vince Guzzo
You're right. I mean, one of the things that, you know, one of the things it's allowed us to do is look back at some of the supply chain. And renegotiate some of those deals. I mean, you know, every year you get these increases, you know, based on inflation and whatever, whatever But you don't, sometimes you just say to yourself, “okay, it doesn't matter”, right? And you don't really, you're not as lean as you want to be. So now we're, we're gonna come out of this a lot leaner.
You know, we're gonna have more fat on the balance sheet, but we're gonna be a lot leaner in operation. So, we think we can tread, you know, trim that fat very quickly. Once we're out of this craziness. And given the, I would say the importance that retail food will take in 2021, and 2020, I think we'll be able to almost double our annual revenue as a consolidated group.
Michael LeBlanc
I've got to expect, and I wanted to ask you, I'd imagine post COVID, post vaccine. You know, we had actually, in Quebec, you had a bit of good news this week. We're recording here, early February with the lock, the lockdowns easing up a bit. But, I got to think there's going to be an equal response in the other direction. I mean, it's been all goods and grocery and buying stuff for the house, but I think people are just going to be jonesing for all the experiences that you offer. So, it sounds like you're getting ready for that as well., would you agree?
Vince Guzzo
Yeah, it's, I mean, you know, I would tell you, the best comparison I can give you is right after the, you know, the great wars. You know, where you have big boom.
Michael LeBlanc
The 20s all over again.
Vince Guzzo
That’s right.
Michael LeBlanc
The 20s all over again.
Vince Guzzo
That's right. I think, you know, people are gonna. And in fact, you know, I guess the best example I can give you is the following, and I say this to all of my, you know, my financial partners, and to the media all over the places. You know, everybody's really worried about movie theaters, because they're saying, you know, movies are now streaming, you know, and they're on platforms all over the place. And I said, “Well, guys, let's remember that the US makes 400 movies a year. We only show about 80. And out of the 80 of 2020. We've only lost four”, right? We lost Trolls 2, Moulan, Soul and Wonder Woman. What's interesting is if the studio,
Michael LeBlanc
That James Bond movie got delayed, too, right? That one got,
Vince Guzzo
It got delayed, right. So, for me a delay is not a lost movie, it is just we’re pushing, you know, forward. And we're used to that in the movie business. Because you gotta, you've got to know that we have a different schedule than what people see. And sometimes we'll factor in Bond, or a Bond like movie, at this date. And then we get told “Look, post production is not done. So, it's getting delayed”.
But what's interesting is, if studios have realized that with almost 100% lockdown in some markets, that they can't make, they can't cover their expenses of the making of the movie, you've got to, you know, realize that then they're saying to themselves, “Okay, so the only way to make money in, you know, with movies is really to keep on going to movie theaters. And, you know, using their pipeline to promote our movie”, because a lot of people need to know that.
Why is, for example, a Netflix, pushing so hard for their movies to go into the theater, call it platform, and then be on their streaming platform? And that's because it has been shown, you know, data supports that if a, if a movie is shown in a theater, and it has a theatrical release, you will have five to six times more eyeballs wanting to watch that movie on a platform.
Michael LeBlanc
Well, you know, you know, the last time you and I were speaking, it was, the controversy was the Irishman, actually. Now, right, and you and would, you, I think you'd seen it. And of course, I've seen the movie too. And it's epic, but you know, it's alright. In my generation, I think I love the movie, just the actors.
But, you know, so now we're fast forward. Just picking up on that, I was listening to what you're talking about. I was listening to this interview with Jason Kilar, from Warner Media. And he's talked about, you know, the, what he did with Wonder Woman, which he called the, what is it, windowing? Right, so that the theaters get an exclusive preview. Now, in my understanding of your business, which is pretty much on the surface of the business, it's really been a symbiotic relationship between you and as you've been explaining, you and the people who produce movies. You produce movies, we promote them, we both make money, everybody wins. He seems to be breaking that. As COVID broken the relationship between the studios, the theaters and the customer? What do you think about that?
Vince Guzzo
No, I would tell you, the best comparison I can give you is as a father, I, you know, like I have five kids Four boys, and my youngest is my daughter.
Michael LeBlanc
Congratulations.
Vince Guzzo
I have four kids, right? Five kids, sorry. And you know, as they're growing up, you want to make sure they don't make mistakes. So, as exhibitors, we've tried to tell Warner Brothers and all the studios, “Guys, you're gonna, you're gonna screw up the whole business plan that everybody has”. You got to remember it's five years. This is almost a 10 year fight now. But it's five years that the fight is really intensified,
Michael LeBlanc
and COVID, COVID got to amplify it, right. I mean, nobody's sitting in your in your seats, right?
Vince Guzzo
Well, what COVID did is it weakened us to the point that they felt they could literally just ignore our opinions, right. But you have to remember that COVID and the way the movie industry operates has, in some cases, has a lot in common. I'll give you an example. Very quickly, like I said. Is, you know, today, one of the biggest complaints we have with our governments is they're not being transparent. They're not giving us the data. We don't know how they're making decisions.
Well, when the studio's tried, in the last five years and did test markets, you know, test runs with movies, where they went PVOD and theaters at the same time. They never shared the data. And I've always said to them, “Guys, you know that if you were right, you would be showing me the data”, right?
Michael LeBlanc
That’s fair.
Vince Guzzo
There’s no wy
Michael LeBlanc
That’s fair.
Vince Guzzo
Right. And now, the problem is that because of the media being on their back and saying, “Okay, you took Wonder Woman. You did this. You did that. What’s the result?” Now, they're like, “Oh, my God, Like, How do we now justify?”
Michael LeBlanc
How do you walk it back, right?
Vince Guzzo
That’s right. Because the truth of the matter is, Wonder Woman at $65 million is a flop. Wonder Woman should have made 100 million opening weekend, in theater.
Michael LeBlanc
Have you seen it? It’s a good movie, right?
Vince Guzzo
I mean, let's put it this way for you. For you and I, it may be a good movie. But for my kids, you know, my oldest is 23, yea, yes, it was funny yesterday. And then, you know, my youngest is 10. They thought it was a little too vintagey feeling. You know, it reminded me a lot of, of Superman with you know, with the Brando with Marlon Brando and whatever.
Michael LeBlanc
Or the original series, right. Which I watched on ABC TV. I remember it was one of the first series I watched in color TV. I mean, I think you and I are about the same vintage. So right, it resonates with me. But what you're saying is, is that the movie going public?
Vince Guzzo
That's right. And that's where the whole idea is right. Is that as much as we might believe that the millenniums don't want to go to the theaters and they have their laptops and they have their phones. The truth of the matter is, I think they've had a lesson now in freedom of speech, or freedom of behavior. Meaning what? Meaning as long as they had the choice, they would choose. Now that you're forbidding them from going to the theaters, I can guarantee you that the first thing they're gonna want to do is contest, you know, the established rule and say “I'm going to the theaters. I'm going to go do everything that you forbid me from doing in the last 10 months”. And so
Michael LeBlanc
Can you, can you see a day though, when the studio say, “Listen, I'm not gonna window though, so let's let the customers choose. I'm gonna release it on,” what did you call HBO Max? I'm terrible with brand name, and theaters at the same time, right. Can you see that day, or what?
Vince Guzzo
I'm going to tell you, I see a day where you're going to have a 30,60 and 90 day window. Where you're going to have floating prices. Meaning a 30-day window movie will be worth this, and a
Michael LeBlanc
Oh, interesting.
Vince Guzzo
60-day will be worth a little more and a 90-day will be worth more because of the exclusivity part of it. In other words,
Michael LeBlanc
What they did with Moulan, right? Disney kind of did that with Moulan, right? A 34.95 ticket to watch it online, and then eventually, it just becomes part of the subscription, right?
Vince Guzzo
That's right. And the whole idea is that what I think is gonna happen is, the movie going experience will become closer to the live concert experience. Meaning, why is it that you know, at the Staples Center, you would pay $200 US to watch Celine Dion, but you'd only pay, let's say, $100 US to watch Billy Joel. One's not necessarily better or worse than the other. It’s that one has more of a perceived commercial value for a greater amount of people, so, you can charge more. That doesn't happen right now in the movie business, right? You have to remember that, if I'm paying $12 for three and a half hours of, you know, Avengers: End Game, but I'm also paying 12 bucks for an hour and 45 minutes of Woody Allen. There are people saying “I wouldn't pay 12 bucks for Woody Allen”.
Michael LeBlanc
I’d pay 6 bucks. Is that what you’re saying? Like, I’d pay less, but I'm not gonna pay the same as, as you know, whatever, right?
Vince Guzzo
That's right. And the key is that we have to find a model that works, where customers will say to themselves, “This may not have been the best movie of all times, but at the price I paid for it, I got my money's worth”, right. And that's where the movie business has been hurting itself.
The (inaudible) business is that we've taken direct to video movies, we'll call them, and gone through movie theaters to try and get those five or six times more eyeballs on the platforms. And we've made people feel like, “Hey, this wasn't worth 12 bucks. I got, I got ripped off here”, right?
Michael LeBlanc
But, sometimes it's worth more, right? Sometimes you walk in, you go, “That’s the best movie ever seen, I would have paid 20 bucks for that”. That variable price, it's a variable price model. It's very interesting.
Vince Guzzo
That's right. And the whole idea is, also you have to remember that the backlash that Warner Brothers got from creators,
Michael LeBlanc
Yeah, yeah.
Vince Guzzo
You know, and people who want to eat. You look, why is it that winning an Academy Award is such a big friggin deal. Right? It's because it's seen as the mecca of the awards, and it's the one that's hardest to get. Now, create
Michael LeBlanc
And it translates into, and translates into vast commercial success, right? I mean, once you've got that badge, you've, you know, you're gonna, I don't know, pick a number, but you're gonna double your revenue, right?
Vince Guzzo
Right. I mean, look, it's like, you know, it's like anybody who achieved something exceptional. You know, like an Order of Canada. What's he do, he walks around with his Order of Canada pin all the time, right? Because he, even though he may have gotten the 10 years ago, it doesn't matter, he still wants to. And it's the same thing with an Academy Award, it is a, you know, a stamp of certification, that, hey, you made it to the top of your industry.
Now, by trivializing it. And by trying to say that watching a big budget movie on a 42-inch TV is the same thing as a 50-foot movie screen, with Dolby sound, with this, with that, with 300 other people laughing with you at the same time or getting scared with you at the same time. Hey, those are two different experiences. You know, and the best example I can give you is, when I asked a TV producer, and we'll put Jerry Bruckheimer aside, because he's probably the only guy who can do both. But I asked a very, very successful TV producer, of French Canadian TV, and I said, “You think you could make a movie? And then you know, like, sort of do a circular motion where you have a, you know, you have a season then your season finale is a movie and then you're opening up with the movie the next season, and you know, and sort of drive people from home to theaters, from theaters back to home to watch your show”. And they tried it. And the problem is that it's two different ways of telling a story, right? I have 15 episodes of 45 minutes to tell you a story. I only have an hour and 45 minutes, two hours, two hours and a half. To tell you the whole story.
Michael LeBlanc
It's a very different craft. It's a different craft.
Vince Guzzo
It, there's two different art forms.
Michael LeBlanc
Yeah.
Vince Guzzo
Two different people seem to give more of a chance at storytelling in a movie theater than they do on TV.
Michael LeBlanc
It is what Scorsese tried to do. I think in the Irishman. The Irishman is three different movies put together, right? It's like a series of three. I mean, there's three demarcation points in it.
And let me let me sit back for a sec. I just want to say for the audience that may not know. At last count, I think you, when we were talking, you had 10 theaters. But I think you opened Mega-Plex, St. Jean. Is that 11 now that you've got in,
Vince Guzzo
No, so what we did is, is, in early 2019, we closed one of our very old, eight plexes. And it started construction on our brand new 12 plex in St. Jean. That theater was supposed to open in the summer of 2020. The problem is that we, you know, because of the restrictions, we've had to slow down some of the construction progress. And then out of sheer intelligence on, on managing burn rates, we said, “Why do we want to finish 100% of the finishings, the installation of equipment and so forth, when we're sitting here, not knowing”.
Michael LeBlanc
Like cash flow and who knows when the cash flow is gonna come, right?
Vince Guzzo
That’s right. So, you know, we have all of the, you know, the monies that we need to finish that theater, but we're burning it slowly. Because we want to make sure that when that theater is ready to go is when the movie business has come back in a big way. The last thing we need, is to open that theater and for example, Easter of this year, and then all of a sudden was shut down again, a few weeks later, because of whatever reason.
Michael LeBlanc
Or have nothing to play because the studios hadn't, hadn't yet released the big, the big shows, right? I mean, one of the other.
Let me let me step back, this great discussion on the theater business. Thank you for that. It's such an interesting business that touches us all one way or the other. And stepping back into your role as an entrepreneur is as a business person, I'm trying to get a sense from executives I talked to, as they step back and understand consumer behavior and the things that are going on and in business and the economy. You're you know, you've got construction, hospitality and entertainment. What changes do you think are going to be permanent versus like, permanent structural changes to how you operate and how business works, and how people behave? Kind of abroad question versus, you know, everybody's adjusting right now. I mean, you know, and you're in Quebec, so you can't go past a certain time. These are weird days. They fortunately won't continue forever.
You know, one of the things for example, I've heard often is this work from home movement to pick one. In other words, that really didn't exist, pre COVID. But now, most people are saying, Listen, I think, you know, only two thirds of people are going to go back. That seems to be a permanent change. Anything jump to your mind is a permanent change, thanks to this 18 months or two years of the COVID era that that you've been thinking about.
Vince Guzzo
So, I think what I you know, I'm actually maybe going to go against the trend here. And, if you watch Dragon's Den, you'll know that, Lane
Michael LeBlanc
That's not unusual, that’s not unusual for you.
Vince Guzzo
Lane Merrifield and I disagreed about, “Will we ever wear suits again? Will we ever go back to the (inaudible).” I mean, and Jim Treliving and I basically, off air, said to Lane, “Look only because you're a tracksuit kind of guy, you know, don't, don't pick on us because we dress better than you with everything”, right? But it was,
Michael LeBlanc
I’m on your side, by the way, I'm on your side for that. I do some work, I do some work with Harry Rosen and, and you know, there will be a response, you know, people are gonna get tired of wearing sweatpants at home. So, I do expect that to bounce back at all, at all ages, in one way shape or another. But anyway, I agree. I agree with you there.
Vince Guzzo
So you know, one of the things that, for example, has changed for me is, is I was not a very big casual guy. So, I still wear my suits. I'm at the office today, and I'm wearing my shirt. And you know, I was never a tie guy. So that's okay, but now that I when I dress casual, now I go even more casual, right? So those are things that I think people will now, you know, keep.
But when it comes to work, when it comes to the workplace, I'm telling you, you know, I don't care what people are saying, I can tell you that I'm you know, heavily involved in the real estate business. And I can tell you that office space is now in, everybody's getting ready for the return back to work. And I'll tell you why, because when we first went on lockdown, and started working from home, everybody wanted to make sure that we continued getting paid for working at home. So, everybody put their effort in it. I think as time passed by, we all took it for granted.
You know, I did some financing in the middle of COVID. The early financing took me a month to do. The middle financing took me three months to do. The end of COVID. It's taking me a lifetime. Why? Because now people have gotten comfortable at home. And now everything is being delayed, right? Everything's sort of like, well, I gotta get this from the cloud. And, then I got my back office who's got to do this. But now my back office could be very well. I mean, you can be logged on to your computer and be cooking. Which means you're working but you're not working.
Michael LeBlanc
And you think, you think the productivity is, has eroded basically from the from the first days?
Vince Guzzo
Of course, because what's happening is your focus, right? So, look at it as a sports team. Why does a sports team not allow its athletes to just train by themselves and then just show up for game one? It’s because we need to make sure that you're motivated that you're part of the team. That everybody's working in sync to accomplish a goal. The best way to do that is not to have Zoom, after Zoom, after Zoom, after Zoom. It is about interchanging. It's about the human connection. The other problem is that, whether we like it or not, somebody walking into an office, having access to your boss, or having access to your, you know, assistant, is way more efficient than let me try and call somebody, and they're not answering.
Michael LeBlanc
No, it matters, right. I mean, being there matters. That you get to show, you know, showing up. It's not just about a bum in a seat for eight hours a day, right? That is the dynamic in the office. You're right. I mean, the smart money is definitely going, you know, you hear some dot com firm saying, “We’ll never be in the office”, I don't believe that. And you see the big, you know, the big Facebook's, they're buying, you know, Hudson's, they're buying real estate like it's going outta style.
Vince Guzzo
And we have to remember that the dot coms were, off the bat, were not the conventional, go to the office. I mean, you know, I've been in some of the dot com offices and they look like, like playgrounds, right? Where there's all kinds of crazy. But,
Michael LeBlanc
it's an amusement park with a few desktops, right?
Vince Guzzo
That's right. But the other thing that you have to remember is, those people that work in those dot com spaces, like that, that are configured that way, are normally a certain age, where there's no spouse involved, and there's no kids involved. Now, your dynamic changes totally, when you got to be home, five or 4,5,6,7 o'clock, to help your spouse with the kids help for dinner and whatever. So, all of a sudden, you can't show up late at 11 o'clock at work and work till two in the morning, because you got somebody at home was expecting you to interchange with them, right. So, there's things I always like to say that there's, there's a way of working for every age group. And if you want to take the way you work in your 20s and 30s and apply it to your 50s and 60s, it's called you will get divorced.
Michael LeBlanc
Okay, but at the same time, you know, people are telling me I'm experiencing a little bit I've been a home office anyway, past couple of years. You know, I don't miss the commute. I am spending more time with my family. And it's better, even though you know, I'm not doing what you described, which is heading in at 11, work till midnight, but generically. So there is some positives to certain days, could you see certain days like two, three days out of five or something? How is, how are you thinking about that? That hybrid approach, I've heard that from a lot of executives.
Vince Guzzo
Look, I tell you, I don't know why I tried that hybrid approach with one of my in house attorneys. And somehow it always happens that when I'm really in need of her, she's at home. And I when I don't need her, she's always in front of me. Right, so, it is very annoying to me. But the other problem that we have to remember is the biggest mistake, I would say this the bankers all the time, this is the biggest mistake we make as people from the financial space is we think everybody has homes like we do. We, yeah, yeah. I have a bank rep of mine, who lived until not too long ago in a 750 square foot apartment with her banking husband. And so, every time she, her and I would talk, I would always hear the wind and I go like, “Where are you?” And she would say to me, “I'm on the balcony”. But why?
Michael LeBlanc
It’s private, private conversation?
Vince Guzzo
That’s right, the only place to have a private conversation. So now, put the kids into that, you know. You said you have a home office. My home office is probably bigger than the than the average Canadian home. But that's because I built it that way, many, many years ago, because I always work. I work seven days a week, no matter if I'm on holidays or not. But you know, when I cross borders all the time, it's always funny because I always have an extra piece of luggage and they say why the? and they open it up, and there's the “Holy cow. This is a whole office in here”. Yea, my office is moving with me. But
Michael LeBlanc
You're like, you're like Ted Rogers in that way. I worked for Ted Rogers at Rogers. And I remember him once we were in a meeting and he was, it was a Friday, late Friday and I was kind of on the periphery of the meeting. But, he said you know, we're not gonna see each other this weekend. I'm gonna miss you. And he was very genuine about it. He was a seven day a week and he is, his funny quirk was he like “What do you mean you don't want to be here on Sunday?” He was he was interested cat. You sound like you know, you run an office and you have a lot of respect for family and but you know, there's things that you need, need to get done.
Listen, um, I can't have you on the mic as an investor of entrepreneur without asking you a little bit about what do you think what what's going on with this, you know, this arbitrage whatever you want to call it, GameStop, I saw AMC Theaters kind of on the periphery of this. What do you think about what's going on? I don't know if you invest in the market, or you invest in yourself but, you have any thoughts on what the heck is happening with this, this crowdsource driving up and down prices in the market on these stocks?
Vince Guzzo
You know, my issue with the market is I Invest in the market. I invest very conservatively. You know, through my friendships over the years with Jason Kenney, and a lot of people in Alberta, I'm a big oil guy. And so, I have a lot of money in oil because I don't see oil only as the produce that makes my car go or that heats my home. I see it also as it's part of foam, it's part of, you know, PVC products are made with petroleum extracts, right.
So I see the advantage of that. My big problem has always been the tech space. One of the, one of the, you know, most heated discussions we have on Dragon's Den off the set with Michele or with Lane, is about the tech space, and how those companies are valued. You know, it just doesn't make sense to me that there are companies that have been there for 10, 15 years, haven't made a penny yet of profit, profitability. And yet, you know, they're worth more than, for example, a Ford Motor Company, right. So I'm sitting, that I'm just not getting it.
I think this generation has put way too much emphasis on members, or you know, or eyeballs that they think they have as a subscription model. But I think a lot of people need to realize that when you buy an ad agency, you're only buying the past EBITDA, the past revenue. Because all of those clients that you think you're buying, those clients have the right to get up and leave. Which means, when you're evaluating a Netflix or whatever other company that's similar, based on the X amount of followers they have, or repeat business, they have. That repeat business can leave. And so my question has always been, if you can't make them, if you can't make money now with it, right, after you've sort of paid your setup costs, and if you're still burning money, after so many years, how are you ever going to make a profit?
So, you know, the Ubers of this world? Yeah, pretty much killed the taxi business. But I can tell you that conventional taxi was a profitable business. Uber is not. And so how can a non-profitable business continue? And so, will one day conventional taxi come back with all of the all of the perks that Uber has brought, which means the application, the tracking devices, and so forth, and so forth?
Michael LeBlanc
The ease of use, the experience? I mean, I mean, we'd agree taxi drivers of the past, you know, before Uber. Uber came to be adopted by consumers for a reason, right? And wasn't right, and what convenience experience all those things on demand, there's a lot of there's a darker side, of course to it, like they don't make money.
And I guess they cross over into one of your other businesses, because I was listening to the interview with the CEO of Uber, and he spent 50, 50 now with Uber Eats and, and, of course, the rideshare is a lot less ride sharing. But what do you think of this? You know, as a hospitality owner, they would argue it's incremental business, this Uber Eats kind of an incremental business, the real cost isn't 30%, it's 17% without the courier. For that you get a lot of value. Where do you, where do you sit on that, on that side around the Uber, you know, the DoorDash, the delivery services, for restaurants and hospitality?
Vince Guzzo
I think, to be honest, I think, because it's COVID we've all swallowed a pill and had and had to do it. But the truth of the matter is that I don't think Uber Eats will be as, as busy or as successful, once restaurants reopened. Because the truth of the matter is, 30% is a huge cost. And what I'm saying is, look, it's very simple. What they've done is they took the model that in a, in a regular restaurant, your labor cost is 30%. So now we've eliminated your labor costs, because you know, it's a delivery system. So, we're gonna take 30%. But the truth of the matter is, in my 30% labor costs, there are chefs, there's sous chefs, there's busboys, there's all kinds of people. Now, what you've eliminated is my waiters. And you've eliminated my busboys. My big salaries, right, which are the kitchen staff, they're still there. But now you've tagged on 30 that represents maybe 15. So now my labor cost is 45. So, this is not a profitable business.
Michael LeBlanc
Even if the even if it's incremental, even if it's an incremental order. Which was, which is what they would argue said, “Listen, you wouldn't have this, you're on our platform, and people might not find you”. It's, you know, whether you agree or not, that's what I'm kind of trying to get at, is there's some of that business, it's incremental, and therefore that 30% you know, on the math can make sense.
Vince Guzzo
I haven't seen the incremental. What I have seen is my regular customers, instead of getting up into my, into minus 20 temperature will, you know, just order from Uber Eats.
Michael LeBlanc
And they want to support you. I think there's some genuineness amongst Canadians supporting. I know I do once a week, I order more than I used to actually, because I want to make sure the restaurants that I love are around post COVID, right?
Vince Guzzo
No, I don't think, I don't think most of the customers doing that, you know, realize that, you know, it's sort of I mean. I think they generally think they're helping us. And they are, right, let's be honest. Because instead of having X of a burn rate now you only have Y of a burn rate. But the fact of the matter is that if somebody tried to convince me that you can actually run a whole restaurant business based on these, these delivery systems, it's not gonna happen, it just doesn't make sense.
Michael LeBlanc
Now, I have read that hotels are using their, you know, nobody's gonna hotel these days, they're using their commercial kitchens to run these ghost kitchens. And that they, you know, they don't have seats. They don't have anything. They've got this brand that they create, on an Uber Eats platform, or DoorDash, or whatever. Do you see that? It's like, if someone came and pitched you that concept, you know, in your chair as a Dragon, would you, would you pay attention to them?
Vince Guzzo
So, as I said, if you're using it the same. I have a million dollar burn rate and doing this, I'm only gonna have $500,000 burn rate. So, you're slowing the bleed? I would probably say, okay, make sense, we should do this. But once it's all said and done, once we're out of this, you want that hotel staff to be busy taking care of your hotel staff.
The other thing is, you can get more bang for your buck, by having customers in your, as much as we can now in Quebec deliver wine and so forth. The truth of the matter is, there's more drinking going on in the restaurant when you're physically there than when I have to deliver at home, right? Because the fact of the matter is, alcohol is sold at least twice, if not three times the price that it would cost you if you bought it in a liquor store. So, but there's a whole, like I said, there's a whole socializing experience, that justifies why you're willing to pay more?
Michael LeBlanc
Well, it's like a movie is like watching a movie in your basement versus watching it in one of your wonderful theaters, right?
Vince Guzzo
Exactly, but the only difference here is that if watching the movie in your basement, would be as expensive as going to the movies, you would then say, “I might as well just go to the movies”, right? And so that's where the problem is with Uber Eats is because of their 30% markup we need to charge. In other words, I can't even discount my prices to try and make the delivery even more popular in these times. Because if I do that, then I'm eating more into my potential profit, based on the 30%. Right, so it's hurting me even more. And that's where the model doesn't, in my opinion, doesn't really work.
Michael LeBlanc
Let's, last question for you. Let's, let's talk about the Den for a sec. And with the concept that you know, post COVID kind of one of the things we've been talking about today, things are going to change. What, what kind of things do you expect, or would expect to be pitched in, what is it now season 16? And you know, what would you look for? What are the trends that you think are going to be big? We've talked about a bunch of them in your world. Is there anything that you're thinking of that you're saying, “you know, I bet I bet I'm going to see two or three of these ideas pitch to me next season”? Any thoughts on that?
Vince Guzzo
Well, I think we're gonna get all kinds of touchless technology coming forward, because you know, people,
Michael LeBlanc
Alexa furniture. More Alexa furniture ideas, I guess.
Vince Guzzo
Yeah, well, let's hope not. Because that what that was, that was not a pleasant one to sit through. Remember, right, our pitches are way longer than what you see on TV. You sit down, you rub your face and say,“Oh my god. Let's get out of here”.
Michael LeBlanc
Did I tell you I was involved in with the producers of CBC Dragons. when I was at The Shopping Channel. We had a partnership for a couple of years where we would try to find new vendors in the same room as you would try to find a, Dragon's Den would try to find people to pitch. Because it's very similar, right. So, I have a little bit more knowledge behind the scenes than the average person. So yeah.
Vince Guzzo
So I, so I expect a lot of the touchless technology. I still think there's going to be way too many pitches about living at home and everything is in your bubble at home. Because I think sometimes some of the entrepreneurs are like, on reaction mode, and are not necessarily on innovation mode.
You know, and I'm hoping I'm hoping to see a little more experience out-of-home stuff. I want to see new ways of in and I'll give you an example. You know, wearing a mask inside of a plane seems to be like, it's 2020, 2021 it's the thing to do, right? Yeah, a lot of people don't realize that I used to wear a mask in a plane. When I would say about two months after I did a season, my season one, which was season 13 Dragon's Den. I started wearing a mask in a plane. And a lot of people said, “Why are you wearing the mask” and I said, Well, because I had a kid one day, I was sleeping in the plane, I had a kid, take a picture of me. And it was basically me sleeping, but my mouth was open. So, I looked funny”. So I said, “You know, if I put a mask on, it doesn't matter”. And so, I made these masks that said, you know, #listentome. And, and so it looked like I was being innovative. So, will I be wearing masks past 2021? Yeah, because for other reasons, though. It had nothing to do with COVID, nothing to do with. So, there's ideas that have created, that have been created during COVID that will be adapted for the future.
But while keeping all that in mind, I still believe that for anybody who thinks that their idea is minded be, is sort of a result of or a thought process about, we will never shake hands again. Those people I tell you now, you are totally, unequivocally, delusional. People, you know, what has made humanity so resilient is its ability to repress moments like this. You do realize that in five years from now, this will only be a memory, right. And we'll all be shaking hands and we'll all be, and we'll forget. We'll all be going back to food buffets and sharing stuff that we shouldn't be sharing.
Michael LeBlanc
There Listen, is this the second time you and I've been through something like this right. In 911 everybody said nobody would fly for business again, right?
Vince Guzzo
That's right.
Michael LeBlanc
After 911.
Well listen, Vince this has been such a fun conversation. Very insightful and great advice for any of those prospects out there that are thinking about putting there, laying down the gauntlet in front of the Dragon's Den, the folks of the Dragon's Den.
Listen, I wish you much. I wish you much continued success and thank you so much for taking the time to speak with me today on The Voice of Retail.
Vince Guzzo
Thank you for having me.