Friends of Branded!

Happy Saturday and I hope you had a great week.

Are you feeling a little gangster this morning?

There's a scene early in Goodfellas, the 1990 American biographical gangster film directed by Martin Scorsese, that I think about more than a grown man probably should. Billy Batts is home after a long stretch away, and the wiseguys throw him a welcome back gathering. Jimmy Conway, played by De Niro, greets him warm and easy, and the message of the whole room is simple: you’ve been gone a long time, sit down, the drinks are on the house. It's a small gesture, and it does an enormous amount of work. It tells you, before a single word of business, exactly where you stand (we’ll leave the balance of that scene out of the Top of the Fold, IYKYK).

Don’t worry friends, this week's article is not about the mob (I've got range, but I'm not walking you through the Lufthansa heist). It's about that gesture, the drinks on the house, b/c I experienced the restaurant version of it last night, and while I’ve been to this joint before and knew it was coming, it still makes me smile and is one of the smartest things I see operators do.

My wife and I had dinner at The Smith on the upper west side of Manhattan near Lincoln Center (did I articulate that correctly JB?). We sat down, and before we'd even settled in, the server put two bottles on the table. One sparkling in a green bottle, one flat in a clear one, both complimentary, both poured from the restaurant's own in-house filtration system. A minute later, a basket of fresh bread and salted butter landed next to them. No ask. No upsell. Just welcome, and we're glad you're here.

The water is what got my attention first, b/c my wife and I like to drink sparkling with dinner, and I know exactly what that line usually costs. A bottle of sparkling on a New York table runs anywhere from eight to fourteen dollars, sometimes more (which is really not appreciated), and a good server will keep them coming. Schatzy is among the most positive people I know, especially when dining and hosting, but pour his sparkling water (or wine) and he will shut down that move immediately (and yes, it’s a move and a form of upselling).

To watch a restaurant simply wave off that revenue wasn't just a nice touch. It set the entire tone of the meal. And here's the part I'd put real money on, not being a coincidence: a few minutes into that warm, generous, nobody's-counting welcome, my wife ordered a mocktail. Then she ordered a second one. Seventeen dollars each.

Sit with that trade for a second, b/c it's the whole essay. The restaurant "gave up" maybe twelve dollars of bottled water, and in exchange it set a mood that helped sell thirty-four dollars of mocktails, earned a glowing dinner-table review from me to anyone who'll listen (hi), and it’s on the list of reasons The Smith is so good at what they do and why we keep returning to the their restaurants. That’s not a restaurant leaving money on the table. That’s a restaurant using the table to make money.

So let me make the case plainly, b/c I think the free-water, free-bread crowd is running a strategy, not absorbing a loss. Call it the generosity play, and it works on three levels (b/c I’m a guy that grew up watching School House Rock and I know that three is a magic number!).

First, the hospitality itself. Complimentary sparkling water elevates the room instantly. It feels a little luxurious and more than a little rare, and most of all it signals that this establishment isn’t going to nickel-and-dime you from the moment you sit down.

The Smith isn’t fancy, it’s an upbeat casual American brasserie offering great burgers, home kitchen-style entrees, and mac n’ cheese on the menu!

In a year where diners are exhausted by surprise service charges, "kitchen appreciation" fees, and menu prices that climb every quarter, unexpected generosity is a genuine pattern interrupt. The guest who gets free artisanal sourdough and a cold glass of bubbles has already decided this place is high-value, and they made that call before the appetizers (did I just take my article into Dr. Hughes territory?).

Second, the cost-benefit reality, b/c you know I always land on the money. Restaurants doing this well aren’t buying bottled water by the case. They install an in-house filtration and carbonation system (a Vivreau or a Natura or the like system). The upfront cost of the equipment is real and worth underwriting honestly. But once it's in, the cost per glass is pennies. So, the thing that reads to the guest as a luxurious giveaway costs the operator almost nothing to give. That is the best kind of gift, the one that means the world to the person receiving it and barely dents the person giving it.

Third (and final), the operational efficiency, which is the quiet kicker. House-filtered water frees up the storage you'd otherwise surrender to heavy crates of bottles. It kills the labor of hauling, stocking, and recycling all that glass. And it shrinks the carbon footprint of the operation, which is not nothing to an increasingly eco-conscious guest who notices these things and rewards them. Cheaper, simpler, and better for the brand, all at once. That’s a win-win-win (and for avoidance of any doubt, this article is NOT being sponsored by Pelligrino or Saratoga).

Put the three together and the "loss leader" turns out not to be a loss at all. It's a few cents of water and a loaf of bread, deployed as the cheapest and most effective marketing spend in the entire building. No media buys converts like a genuinely warm welcome, b/c the guest doesn't experience it as marketing. They experience it as being taken care of. And people pay, and come back, and tell their friends about being taken care of. Some patrons even write an article about the experience to open its weekly newsletter! 😊

So, here's the takeaway for anyone running a room. Audit your first five minutes. The check is coming regardless, at the end, the way it always does. The only real question is what mood the guest is in when it lands. If the opening move is a surprise fee and a QR code, you've told them to keep their guard up and their wallet closed. If the opening move is bread and water on the house, you've told them to relax, and a relaxed guest orders the second mocktail. Same check at the end of the night. Wildly different number on it.

Billy Batts got it wrong about a lot of things, and it did not end well for him (okay, I guess I did re-visit that scene from Goodfellas). But the room had it exactly right. When someone's been looking forward to a night out, the smartest, cheapest, most profitable thing you can say is the oldest line in hospitality: welcome back, the drinks are on the house.

It takes a village!

Deborah von Kutzleben, Chief Marketing Officer of Tropical Smoothie Cafe, talks about what happens after a brand has already grown across the map. LISTEN NOW

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This week we're staying local, and the Shoutout goes to our friends and partners at the New York State Restaurant Association (NYSRA). If you run a restaurant in this state, NYSRA is in your corner, and this month they're putting on two things worth your time, both on the same day, Tuesday, September 22, right here in New York City.

The first is a real one. From Restaurant Manager to Leader: Build the People Skills That Power Great Restaurants, (not a short title, but then again, no one ever called my writing style concise or tight, just saying) running 9:30 AM to 2:30 PM at HMG Plus (12 West 37th Street). It's a two-part conference built for managers, assistant managers, and the emerging leaders who are responsible for a team and want to get better at actually leading it. Part one is led by Tezra Bryant, The Restaurant MC, and part two by Sarah Diehl and Emily Helms of Empowered Hospitality. Tickets are $99 for NYSRA members and $139 for non-members, and that includes lunch (but I can’t comment on the water that will be served). 😊

Here's why I'm pointing you to it. We spend a lot of ink in this newsletter on the back of house and the P&L, but the truth is your single most expensive line item, labor, is won or lost on whether your managers can lead. A great manager retains a team. A struggling one bleeds turnover, and turnover is one of the most punishing costs in the entire business. A day of real leadership training for ninety-nine bucks isn't an expense, it's one of the highest-ROI checks you'll write all year, b/c it protects the people who protect your guests.

Then, that evening from 6:00 to 8:00 PM, NYSRA hosts its Emerging Leaders Council Happy Hour at the iconic Grand Central Oyster Bar, for hospitality pros under 40 looking to build their network and their careers. And in a lovely bit of symmetry with this week's Top of the Fold, this one comes with complimentary appetizers and an open bar. The drinks, quite literally, are on the house. It's free to attend, and it's generously sponsored by two more friends of Branded, SpotOn and Ecolab, who show up for this industry again and again. A genuine thank-you to both.

So, there it is. Spend the day getting better at the hardest, most human part of this business, then spend the evening with the next generation of people building it. Class in session, drinks to follow. Go register, and come say hello.

See you at Grand Central.

⚾ Salt Lake City is the frontrunner for MLB's next expansion team, with Nashville, Montreal, and Raleigh also in the mix. -ESPN

🥤12 drinks worth reaching for other than water, from green tea to kefir to fiber-packed smoothies. -Health

💪 No, creatine won't turn you into a bodybuilder or wreck your kidneys—an expert finally puts the myths to rest. -Men’s Fitness

📺 MobLand is back, and Season 2 opens with a bang as Tom Hardy and Pierce Brosnan head into another London gang war. -Esquire

🍺 Skip the O'Doul's: these 7 nonalcoholic beers, tasted and reviewed, are the best of the new low-ABV wave. -Esquire

This week DoorDash agreed to buy Grubhub's college-campus dining business, the old Tapingo, for $300 million, and in the same breath put $125 million back into Wonder, the company selling it. Announced September 15, expected to close in early 2027. I don't want to just rerun the headline, b/c the news isn't the interesting part (and I know that’s not what people look for from the Hospitality Headline). The trade is. This one's a clinic in the thing most growth companies get badly wrong: focus.

Rewind first. Wonder, Marc Lore's vertically integrated food company, bought Grubhub in 2024 for $650 million. The campus unit came along in the box. And it's not a broken asset. It runs at upwards of 450 campuses, letting students order from dining halls and local restaurants and pay with their campus dining dollars. It's a good business.

So why sell a good business? Simple. It isn't Wonder's business to maximize. Wonder builds physical food halls and owns the meal end-to-end, and it's expanding at a breakneck pace, having quadrupled its U.S. footprint since 2025 to 157 locations with Texas up next. Every dollar and every hour of management attention aimed at a campus-ordering rail is a dollar and an hour not aimed at the core. The discipline here isn't in what Wonder is building. It's in what Wonder was willing to let go of. Addition by subtraction.

Full disclosure, Branded is a stakeholder in Wonder.

Now flip to the buyer, b/c this is where it gets clever. To DoorDash, that same campus business is worth a lot more than $300 million of someone else's revenue. It's a customer-acquisition machine pointed at the single most valuable demographic a marketplace can land: the 18-year-old. Get a student ordering on your rails during freshman week, wired to their dining dollars, and you haven't bought a transaction. You've bought a habit that can compound for decades. That’s the cheapest, stickiest customer acquisition in the entire business, and it belongs with a marketplace that monetizes a lifetime of frequency, not with a food company that monetizes its own kitchens.

That's the pattern worth internalizing, and it's the whole point of this section: the same asset is worth wildly different amounts in different hands. A maturing market doesn't reward whoever owns the most. It rewards whoever owns the right things. The campus rail was a nice-to-have for Wonder and a strategic weapon for DoorDash, so it moved to where it's worth the most. And the $125 million DoorDash simultaneously invested back into Wonder is the tell that this isn't a fire sale, it's an alignment.

Both parties walk away pointed harder at what they each do best.

Spare a nod, too, for the balance-sheet artistry. Wonder paid $650 million for Grubhub, just clawed back $300 million of it by selling one division it didn't need, took a $125 million strategic check on top, and kept the core marketplace. That's how you buy a big thing: finance it by selling the parts that were never the point.

So, here's the takeaway for anyone building or buying in this industry. Know exactly what business you're in, and be just as honest about the business you're not in. Growth tempts you to keep everything you touch, b/c letting go of a good asset feels like losing. It isn't. The winners of the next cycle will be the ones disciplined enough to sell a good asset to a better owner and redeploy the proceeds into the fight that's actually theirs.

DoorDash got the freshman class. Wonder got its focus back, plus a check. Both came out richer. Focus isn't what you add. It's what you've got the guts to subtract.

If you’re interested in exploring opportunities with Branded’s deal flow, please click here or contact me directly.

There are two types of Sloppy Joes. There’s the one the rest of America knows…and then there’s the New Jersey Sloppy Joe. And as a completely unbiased New Jerseyan, I can confidently tell you ours is better. 😂

For me, one particular Sloppy Joe is also wrapped up in decades of memories from my hometown deli. College kids making three-hour round trips to get their fix, familiar faces behind the counter who knew to hold my cheese, a clown horn, giant containers of sides I absolutely did not need but somehow always bought. So when they finally opened a location SEVEN MINUTES from my house, I was thrilled.

The sandwich? Still perfect. The experience? Different. And it got me thinking about something much bigger than Russian dressing and rye bread: When a restaurant expands, how much of what made the original special needs to come along for the ride? Food can be replicated. Recipes can be standardized. But can you scale the weird, quirky, memorable stuff that turns a restaurant into a hometown hero?

Because sometimes the sandwich gets you through the door, but it’s everything else that keeps you talking about the place decades later. And in this case, I think it might all come down to one very important question: Where is the fog horn? Continue reading.

Your No-Shows Never Actually Promised

Who ghosts the most? The surprising data on no-shows, and the psychology that brings guests back to the table. READ MORE

By Melissa Hughes

Everybody's Asking Me How to Grow Their Following

Here are 5 things you can do right now. READ MORE

By Rev Ciancio

Success Is a System

Success isn’t one big breakthrough, it’s the system of small behaviors that makes the breakthrough more likely. READ MORE

By David Meltzer

That's it for today!

See you next week, same bat-time, same bat-channel.

It takes a village!

Jimmy Frischling

Branded Hospitality

[email protected]

235 Park Ave South, 4th Fl | New York, NY 10003

Branded Hospitality is a foodservice growth platform with three integrated business lines—Ventures, Solutions, and Media. We invest in innovative tech and emerging brands, provide expert advisory and capital strategies, and amplify visibility through podcasts, newsletters, social, and events—creating a powerful flywheel that drives growth, brand strength, and lasting success.

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