11/2/26 Rising Costs, Changing Rules & the Fight to Stay Profitable

The Moneywise Radio Show and Podcast Monday, November 2nd BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ Guest: Art Ruiz, Owner of Golden State Restaurant Sales & Services phone: 661-864-7014 The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Art Ruiz and Golden State Restaurant Sales & Services are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield.

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  Call or text in at 661-396-1000.

• 0:29Speaker 02

  Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the MoneyWise Show. Welcome to the MoneyWise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on News Talk 96.1 and 1230 AM KERN, streaming live at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we are your hosts. I'm Sammy Abia. We're with

• 1:03Speaker 03

  Frank Lee.

• 1:04Speaker 00

  Frank.

• 1:05Speaker 03

  Sammy.

• 1:06Speaker 00

  How was, how was your Halloween?

• 1:08Speaker 03

  It was great, just a little wet.

• 1:10Speaker 00

  Yeah, I saw, I saw people trick or treating with cars.

• 1:14Speaker 03

  Yeah, yeah, a lot, a lot of cars and

• 1:16Speaker 00

  Like people will stop in the car with the car and then the kid will run to the front door, knock. But I, I think we had like two or three people this year.

• 1:26Speaker 03

  What?

• 1:26Speaker 00

  Seriously, that's all we had. So we, we decided to just, we didn't go to any parties this year or anything. We got some, we got some pizza, stayed home, watched some movies, was relaxing.

• 1:39Speaker 03

  That sounds good.

• 1:39Speaker 00

  Windows open.

• 1:40Speaker 03

  That sounds very unhealthy, Sammy.

• 1:43Speaker 00

  Well, which part?

• 1:44Speaker 03

  Pizza.

• 1:45Speaker 00

  It had, it had veggies on top.

• 1:46Speaker 03

  Okay.

• 1:47Speaker 00

  It had mushrooms and bell peppers.

• 1:49Speaker 03

  Just give me crap.

• 1:49Speaker 00

  I know who you are. I know who you are, man.

• 1:51Speaker 03

  We were just talking about eating healthy and all of this.

• 1:54Speaker 00

  Yeah, yeah. Yeah, that was my cheat day, man. Leave me alone, Steven.

• 1:57Speaker 03

  That's what everyone says. He forgot to mention all the chocolate he didn't give away.

• 2:03Speaker 00

  Well, you know, I started with this Halloween thing because you and I talked about this on the show, maybe about a month and a half ago, prepping for Halloween, $13.5 billion of spending on Halloween this year. Okay, costumes, $4.4 billion in costumes.

• 2:17Speaker 03

  4.4?

• 2:18Speaker 00

  Yes, decorations, $4.3 billion, candy, $4.1 billion in candy, and greeting cards is $0.8 billion in greeting cards. Now, here's what, you know, I'm a finance guy. I love numbers. I started thinking about what else goes into the Halloween spending? You know, we had a party for our office, costumes and stuff. I can, from my own, I probably my production that day was about maybe 25 to maybe 50% of what I typically do because I was looking at costumes, grading costumes. We had lunch outside the office. It was a lot of fun. I think if you count all that lost production, we're talking about a couple of other billions on the top of the 13.5.

• 3:01Speaker 03

  Yeah. So in actuality, how much, how much in, how much did it cost?

• 3:06Speaker 00

  Correct. I think a lot more than $13.5 billion.

• 3:10Speaker 03

  I see, I see what you mean.

• 3:11Speaker 00

  You know what I'm saying?

• 3:12Speaker 03

  Yeah, yeah, yeah.

• 3:12Speaker 00

  So, I mean, the kids love it.

• 3:14Speaker 03

  Yeah, it's all for the kids. It's all for the kids.

• 3:16Speaker 00

  It's all for the kids. Though at MoneyWise, our adults were dressed up in some really cool costumes too.

• 3:22Speaker 03

  Yeah.

• 3:22Speaker 00

  We had Obi-Wan, we had Princess Leia.

• 3:26Speaker 03

  Yeah, we had a, I, I forget the, the plant that she dressed up as.

• 3:31Speaker 00

  I don't know.

• 3:32Speaker 03

  But from that movie, a little, a little story of horrors or

• 3:37Speaker 00

  Little Shop of Horrors?

• 3:38Speaker 03

  Little Shop of Horrors. There we go. Yeah.

• 3:39Speaker 00

  That, that was probably on one of the top ones.

• 3:42Speaker 03

  Yeah, yeah. I think she won.

• 3:44Speaker 00

  I think so. Me, I just kept it simple. I dressed as Chef Richard. Put a beanie on and I started walking with the chef's knife. You know, like I'll stab you if you're not good at me, if you're not good for

• 3:55Speaker 03

  He almost did, yeah. He almost did. I think I felt it in the elevator. It's like a little stabbing in the back.

• 4:03Speaker 00

  Well, talk to us a little bit about, before we get on to the show, what's, how's the market looking today?

• 4:09Speaker 03

  Yeah, yeah, yeah. Let's, let's take a look. So a little bit of a mixture of both. Dow Jones up about 73 basis points, S and P 500 down about four, NASDAQ down about 37, and the Russell 2K up about five. So we still got, you know, about an hour left till the market closes, so we'll see. I mean, it's not huge gains or huge losses. It's just in between. I know there's a lot of rotation out of tech right now, but with earnings and all that, but

• 4:36Speaker 00

  How is, how, how are we doing on oil? It looks like oil fell a little bit today.

• 4:40Speaker 03

  Yeah, yeah, I saw that.

• 4:42Speaker 00

  This morning. It seems like we have some talks or potentially some talks between the US and Iran. So hopefully diplomacy, you know, gets involved and wins. And hopefully we can see a little bit of relief as far as the price of oil and eventually at the pump.

• 4:59Speaker 03

  Yeah, yeah.

• 4:59Speaker 00

  We're still averaging 5.8, I believe, in the state of California.

• 5:04Speaker 03

  Okay.

• 5:04Speaker 00

  Per gallon.

• 5:05Speaker 03

  Okay. And you're, you're definitely on the higher end there.

• 5:08Speaker 00

  Oh, yes. Now, now, I, I'm paying almost $8 for my, for my diesel, but it's still cheaper than having the, the Trailblazer I had. Trailblazer was costing me about 56 cents. And this one is about 34 cents. So I'm getting a break, not a, but $8 is still a lot.

• 5:31Speaker 03

  Yeah, oh yeah, yeah.

• 5:32Speaker 00

  It's still, it's just the mileage is a much, much better mileage versus the Trailblazer I had.

• 5:37Speaker 03

  Yeah, yeah.

• 5:38Speaker 00

  It was a cool, it was a cool truck though, that red truck. I miss it at times.

• 5:43Speaker 03

  I miss it for you. I miss it for you.

• 5:47Speaker 00

  Tomorrow is Election Day, Frank.

• 5:49Speaker 03

  Yeah, yeah, yeah.

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  And

• 5:50Speaker 03

  We've got some interesting statistics here.

• 5:53Speaker 00

  Yeah, yeah. Well, first, get out and vote, you know. A lesson I learned when I was younger, I had this older lady working with me and she's like, did you vote? I'm like, no, I didn't. But, you know, state of California. And she was like, then do not ever come to me and complain about anything that's happening.

• 6:11Speaker 03

  Yeah, that's true.

• 6:12Speaker 00

  And I was kind of like, oh, that makes total sense. So since then, I've been an avid voter and it's every time. So get out there and vote. That's our duty. So that's a good, a good reminder. Yeah, it's, it's interesting, the statistic of, of the nine last midterms since 1990. And, and, and how the S and P has done.

• 6:38Speaker 03

  S and P has recorded in the next 12 months after Election Day, so after November 3rd, S and P has recorded an average of 16.9% in gains for the next following year, which is substantial.

• 6:55Speaker 00

  Yeah.

• 6:55Speaker 03

  If you think about it.

• 6:56Speaker 00

  Correct, correct. And, and I know investors or people in general worry about the impact of elections on, on the market. But, I mean, looking at this statistic, that, that, that's not, that's more than just a data point. It's a little pattern.

• 7:10Speaker 03

  Oh, yeah, yeah, yeah. I mean, yeah, what's that saying? One or two is a coincidence, but three is a pattern type of thing. And we got nine, nine cycles ever since 1990 to show that S and P 500 has done an average of 16.9% in the next 12 months. Yeah.

• 7:28Speaker 00

  Yeah, that's, that's, that, that was an eye opener for me. I always thought, hey, the elections and because politicians go there on their podiums and start talking about how they're going to affect the market. But the, the, this data is, and since 1990, we had both parties, you know, and

• 7:43Speaker 03

  Exactly.

• 7:44Speaker 00

  In control. So this is pretty cool data, actually, data point for us.

• 7:48Speaker 03

  Which actually, one thing we didn't mention was the, the questions that we came in. This actually ties into one of the questions that we can, you know, circle back later.

• 7:57Speaker 00

  Sure, sure. Yeah, that would be great. The feds met last week, and I don't know if any other host talked about this last week, but since I'm an ex-banker, they held the rates.

• 8:11Speaker 03

  Yeah.

• 8:11Speaker 00

  Which, which means that there is no relief as far as mortgages, HELOCs, credit card debt.

• 8:18Speaker 03

  Loans, yeah.

• 8:19Speaker 00

  So in, in, in general, keeping the rates signals that they don't have inflation under control. But also there's talks about a potential increase in the month of December. So two of the, of the Federal Reserve Directors, two of the Federal Reserves voted to increase or hike the rate, rates, and the rest, the other 10 didn't. So they kept the rates where they at.

• 8:51Speaker 03

  Yeah, yeah. And that was the, the talk was that potentially that, because before this, they, they raised the rate, the rates and then now they're keeping it. But that still leaves us for another potential one.

• 9:03Speaker 00

  Potential one, a rate increase in the month of, of December. So as, as MoneyWise, what you want to do is when you use those credit cards, make sure that hopefully you pay them at the end of the month, so you're not incurring higher interest expense, right? If you have, if you're going to borrow against your house on a HELOC form, make sure that that makes sense as well. Either you're doing some type of improvements to the house. Don't just lean on that HELOC for toys and Christmas shopping. That's not a good financial plan.

• 9:40Speaker 03

  Exactly.

• 9:41Speaker 00

  You know a little bit about financial planning.

• 9:43Speaker 03

  Just a little.

• 9:43Speaker 00

  Just a little, right? Yeah, no, definitely. My advice here is since the rates are where they are, especially you revolving that, that's your credit cards, that's your home equity lines, and especially your credit cards being in the twenties to, to thirties on average, pay those as quick as possible, if, if, if you can.

• 10:07Speaker 03

  Right, right.

• 10:08Speaker 00

  And of course, increase your savings if you can too. So for the savers, this is great news.

• 10:12Speaker 03

  Yes, high yields, saving bond, or savings account.

• 10:16Speaker 00

  Correct.

• 10:17Speaker 03

  You know, not all is for loss here.

• 10:19Speaker 00

  Yes.

• 10:19Speaker 03

  Let's, let's take advantage of

• 10:20Speaker 00

  So this market is rewarding the savers.

• 10:22Speaker 03

  Yes, it is, it is.

• 10:24Speaker 00

  Right?

• 10:24Speaker 03

  And for safer alternatives like fixed incomes, bonds, you know, those, those are going to pay some dividends towards it. So

• 10:31Speaker 00

  That's correct.

• 10:33Speaker 03

  Definitely take advantage of those. Yes, the high-yield savings accounts are taxable, but it's going to be good to have that available for a lot of our more conservative investors out there who want to store away more in cash. You know, now's your time to really open up those high-yield savings accounts and just let those, you know, those dividends come in.

• 10:55Speaker 00

  Well, great stuff, Frank. We're going to take our first break. When we come back, we have a business owner, local business owner from Bakersfield, just going to join us to talk a little bit about business, restaurants and hospitality. We'll be right back.

• 11:25Speaker 00

  This is great, Steven. I like it. Welcome back to the Money Wise Show. I'm Sammy Abia with Frank Lee. I like this song.

• 11:35Speaker 01

  It came on that playlist you sent me.

• 11:37Speaker 00

  Ah, nice. I like it. Like it. Well, uh, welcome back to the show. I'm Sammy Abia here with Frank Lee and we're joined here with Art.

• 11:46Speaker 04

  Yes, thank you. Thank you very much for the invite.

• 11:47Speaker 00

  Yeah, welcome to the show, Art. Uh, so, so you, you were here before on the show with the Hispanic Chamber of Commerce.

• 11:54Speaker 04

  Yes, they invited me back then to come and, and join the podcast and we had a great time doing it.

• 11:59Speaker 00

  And, and we were talking off air about what you've done throughout your life. Are you a Bickersfield native or did you move here?

• 12:05Speaker 04

  No, we moved here. I've, I've been here for a little over 25 years. Origin from the San Fernando Valley.

• 12:10Speaker 00

  Okay. Okay. And, and when you guys came out here 25 years ago, what was the first thing that you guys opened? You opened like a restaurant or?

• 12:19Speaker 04

  I was actually the last one to come down here. Um, my, my family, they all moved out here, uh, and opened up other restaurants. They started the very first restaurant out in Marvin.

• 12:29Speaker 00

  Okay.

• 12:30Speaker 04

  After what we talked about in the last podcast about our, our, our big, uh, million dollar education that, that it took us to learn how to run restaurants. Cause back in Northridge, uh, back in the 88, uh, that's kind of what we lost to learn what we know now.

• 12:46Speaker 00

  Oh, yeah.

• 12:47Speaker 04

  So when the, uh, my, my parents and my brother were first ones to move out here, uh, and I want to say that was in 91, I want to say. But I was the last one to move out here. I, I came out like in 98.

• 12:58Speaker 00

  And you guys were all engaged in, in restaurant business at that time?

• 13:03Speaker 04

  Uh, they were. I wasn't. I, I, I worked for Home Depot for a number of years. Uh, and my dad kept telling me, hey, come to the business, come to the business. And you know, I was, I was.

• 13:11Speaker 00

  Restaurant business?

• 13:12Speaker 04

  Yeah, come into the restaurant business, you know, but I, I was happy. I was complacent where I was at, but you know, things started to change and you know, the, uh, when my dad kept whispering in my ear, hey, come to the restaurant business, it started looking better and better. So, so I did. And but, and I've been with them since, uh, 2000, I believe.

• 13:27Speaker 00

  Which restaurant is this, Art?

• 13:29Speaker 04

  The very first one that I, that I joined them was, uh, La Mina Taqueria on White Lane.

• 13:33Speaker 00

  Okay.

• 13:34Speaker 04

  Back there where there was a Walmart there on White Lane, there was La Mina Taqueria. Uh huh. That's the first one where I partnered up with them.

• 13:39Speaker 00

  Nice.

• 13:39Speaker 04

  But they already had a number of other ones. One in Lamont, they, uh, had, uh, the one on Oak Street. That was one of the, yeah, originals out there.

• 13:46Speaker 00

  Correct.

• 13:47Speaker 04

  So they had those, but when I jumped in, it was, it was on that third location there.

• 13:50Speaker 00

  The brunch, you guys did brunch?

• 13:52Speaker 04

  Uh, the, uh, we did it at the Oak Street.

• 13:55Speaker 00

  Yeah.

• 13:55Speaker 04

  And we did on the east side and at the southwest location. Yeah. Very successful. We, we really, really enjoyed doing the brunches out there.

• 14:02Speaker 00

  So, so you moved careers from Home Depot to restaurants and, and, and how, how do you feel about restaurants? Do you still, do you still like them after spending some years there?

• 14:11Speaker 04

  It's, it's, it's a difficult business. You, you really have to enjoy what you do and, and we did, you know, brothers and myself, we really enjoy what we do. Talking to people, meeting people, but it has become very difficult in between all the new regulations, laws and ordinances. And, uh, a lot of it unfortunately is also is the workforce out there is.

• 14:31Speaker 00

  So, so let's talk about that because we own the Woolworths Lanchonette upstairs and, and to, to your point,

• 14:39Speaker 00

  the lesson is not cheap.

• 14:41Speaker 04

  No.

• 14:42Speaker 00

  How to run a restaurant.

• 14:43Speaker 04

  No.

• 14:44Speaker 00

  And, and, and I would agree with you all heartedly as far as the labor.

• 14:48Speaker 04

  I think also Sammy, Sammy, some people just don't understand the margins there. They, they look at restaurant owners, say, oh, you know, we want to have a restaurant. Not knowing what it takes really to, to run it and really at the end, how much money are you going to make?

• 14:59Speaker 00

  Correct.

• 15:00Speaker 04

  When you're looking at a restaurant, a successful restaurant that you run it, controlling all your payroll, controlling all your expenses, you're still looking at making about 15% at the end of the year.

• 15:09Speaker 00

  Oh, wow.

• 15:10Speaker 04

  Which isn't much.

• 15:11Speaker 03

  Is that, uh, usually on the higher end for restaurants or?

• 15:15Speaker 04

  The national average is about 15%. You know, it all depends on what type of restaurant.

• 15:18Speaker 00

  This is a well-run restaurant.

• 15:20Speaker 04

  Yes.

• 15:20Speaker 00

  Right, right, right. You've got your stuff under control. You got your food costs at 30%, your labor costs at 30%, which by the way, never pencils to that.

• 15:29Speaker 04

  No.

• 15:30Speaker 00

  You, would you agree with that, Art?

• 15:32Speaker 04

  Yeah, no, I, I struggled. I, I struggled. No matter how, how well I tried to get my cooks to portion out everything. It's just too hard to keep up with, with rising costs all the time. You know, I got to the point where I said, you know, I can't sell a plate of chile verde for 20 bucks. You know, I just can't, nobody's going to want to pay for that, you know? But yet for me to still make that 15% at the end of the year, I mean, I would have to do that to 20 bucks and, and I just couldn't get myself to do that.

• 15:56Speaker 00

  So, so some of the things that you as a restaurant owner have control of, uh, what are some of those, those things to keep that profit margin, to keep people coming back to it?

• 16:07Speaker 04

  The way that we've always looked at our numbers, it's, you know, 30% is your payroll, 30% is your cost of goods inventory. Uh, 25% was your overhead and expenses, rents, insurance and so on. And then you're left with 15%. Well, if you look at that, the two biggest areas that you can impact, or, or I would say the one biggest area is really going to be your payroll. That you can control. Um, your inventory, you can control it as far as, you know, making sure that they're not wasting, throwing stuff away or over serving or over pouring and stuff like that. But the biggest impact is really going to be in, in your payroll.

• 16:42Speaker 00

  And, and lately since, since, since COVID, I mean, you're competing against, um, McDonald's or fast food restaurants that are paying 22, $25 an hour.

• 16:52Speaker 04

  Yeah, yeah, that, that, that made it very difficult. I mean, I obviously want to make sure that people get paid what, what they're worth.

• 16:58Speaker 00

  Correct, yeah.

• 16:59Speaker 04

  People aren't making the money. But when you're looking at trying to compete with somebody that's paying their employees 20 bucks an hour, it's going to be hard for you to retain good quality employees. It really is. You know, and we're already talking about our payroll has to be at about 30%, but now if you're going to bump up to 20 bucks, what's your payroll going to be? 35%?

• 17:16Speaker 00

  Correct.

• 17:17Speaker 04

  So that extra 5%, where's that come from?

• 17:19Speaker 00

  Yeah.

• 17:20Speaker 04

  You know?

• 17:21Speaker 00

  Yeah, you, you as a restaurant owner, you want to take pride in retaining the talent, training the talent and taking care of your people, but it comes at a cost.

• 17:28Speaker 04

  Yes, it does. Yes, it does. Uh, you know, another example would be like the, uh, the sick pay. You know, I'm all for that. Let's, let's take care of our people. If they need some time off, let's, let's take care of that.

• 17:37Speaker 00

  Correct.

• 17:38Speaker 04

  But when you're having to pay sick pay and you can't ask for anything in return, you don't know if they're out at the beach, you know, enjoying the, the day off or at, at Magic Mountain and you're paying them for that.

• 17:49Speaker 00

  And that's, that's six, six time now is what? Five days a year?

• 17:52Speaker 04

  It's, uh, I don't know.

• 17:54Speaker 00

  It's got increased.

• 17:54Speaker 04

  Changed. Uh, what I knew before was 24 hours.

• 17:58Speaker 00

  It's, well, the state of California, if you're a full-time employee now, you, you're required to give five days.

• 18:04Speaker 04

  Yeah.

• 18:05Speaker 03

  Oh, five, five, six days?

• 18:06Speaker 00

  A year.

• 18:07Speaker 03

  Okay.

• 18:07Speaker 00

  At, at a minimum. I mean, that's, that's, uh.

• 18:10Speaker 04

  And, and again, a lot of people don't realize where that comes from. They think that the government funds it or something like that. They don't realize that it's coming out of the owner's pocket.

• 18:17Speaker 00

  You're talking about employees.

• 18:18Speaker 04

  The, the, well, the employees and people in general just don't realize where that money is coming from, to be able to pay that sick pay.

• 18:25Speaker 00

  So we're talking about labor, we're talking, and you talked about food costs being at 30%, but that's rarely the case though. I mean, in my experience at least, now you're dealing with two large US vendors. That's US Food and Cisco.

• 18:39Speaker 04

  Yes.

• 18:40Speaker 00

  The smaller restaurant, uh, depot is kind of like going away or got merged with US Foods.

• 18:47Speaker 04

  Yes, they got merged with Cisco, I believe.

• 18:49Speaker 00

  Or, or Cisco. So you're going to end up with two large distributors in the United States. Maybe a couple more, Giordano's and others. So does that affect the prices?

• 19:00Speaker 04

  Uh, yes, it does because the, the competition is very, very limited now. So obviously when you want to make sure that you're getting some good pricing, good quality, there's got to be some competition out there. The way I've looked at also my restaurants, I'd say, you know, the competition is good because it keeps you on your toes. You know, at the point that there's no competition, you, you get a little complacent, you get a little greedy and then that starts affecting all the pricing. So, so I think because of the lack of competition in those markets, that the pricing is going to be very difficult, especially with our environment today, the way it is right now. You know, everything's up, diesel's up, everything's up. So my question like to the big companies would be, okay, when diesel and everything finally do come down, are these prices going to come down or are they just going to keep them up? You know, because everybody's used to it already.

• 19:44Speaker 00

  Well, I don't want to be naive to this question because 2020, we saw what happened with a lot of prices went up because of COVID, right? But a lot of them stayed there.

• 19:54Speaker 04

  Yes.

• 19:54Speaker 00

  Even though diesel and others went down after 2022.

• 19:58Speaker 04

  Yeah.

• 19:59Speaker 00

  And kind of like adjusted downwards.

• 20:00Speaker 04

  Yes.

• 20:01Speaker 00

  But prices remained.

• 20:03Speaker 04

  Yeah, no, and it was crazy. Things were going up, not 25 cents, 50 cents. These things were going up a dollar, $2. They're going quite a bit.

• 20:10Speaker 00

  Yeah, no, I'm, I'm, I'm with you. I'm, I'm, I'm actually enjoying myself talking about this just because I'm facing certain same, very similar challenges. We've been very, very lucky, but also very proud of the fact that we've hired people a year ago, but they're still with us at the restaurant. Cause we try to take care of them. To me, that's an accomplishment. Um, when we come back, there's a lot more with, with, with, with Art. We'll take another break. And when we come back, we'll continue this conversation with, with Art about not just restaurants, but other things. If you have any questions, send them our way. We'll be right back.

• 21:12Speaker 00

  Welcome back to the Money Wise Show. I'm Sam Yabia with Frank Lee. We're joined here with Art Ruiz, a local businessman, investor, restaurateur.

• 21:22Speaker 04

  Restaurateur.

• 21:23Speaker 00

  Right?

• 21:24Speaker 04

  Well, he used to be a restaurateur.

• 21:25Speaker 00

  And your family still has multiple restaurants here in town.

• 21:29Speaker 04

  Yes, they do.

• 21:30Speaker 00

  Can you give us, tell us a little bit more about?

• 21:32Speaker 04

  Sure. Between my brothers, my sisters, and my father, they've got Bootleggers, Toasted, Buena Vida, No Vacancy, Fresco, SoCal, and Cafinado. And I myself, I've got that restaurant warehouse that's called Golden State Restaurant Services.

• 21:52Speaker 00

  And what do you do with Golden State Restaurants? Is that like equipment?

• 21:55Speaker 04

  Yes, I supply equipment to restaurants and unstrucks, new and used. Because when I was looking to kind of get out of the restaurant business, I asked myself, I said, you know, what am I gonna do now? I'm leaving the restaurant business, what am I gonna do? And I already had connections where I used to get a lot of my stuff, you know, from down south. So I said, you know, I know the restaurant business, I know the equipment, I got the connections, I'll just start doing that. And I opened up my warehouse and started doing that.

• 22:22Speaker 00

  How long ago was this?

• 22:23Speaker 04

  We're looking at about, in my location where I'm at right now, it's been about four years.

• 22:27Speaker 00

  Oh, cool, cool. It's a little easier to manage than the restaurants?

• 22:32Speaker 04

  Oh, definitely, definitely. It is quite, you know, you've got inventory that's not gonna spoil, so you can sit on that inventory for a year, you're not worried about it.

• 22:41Speaker 00

  That's right.

• 22:43Speaker 04

  You don't need as much staffing, you know, to provide the service that you would in a restaurant.

• 22:48Speaker 00

  Correct. So you can plan ahead for things like that. Hey, I'm gonna run this by myself, but when I make the sale, I'll hire somebody to come pick up this thing and deliver it to the client.

• 22:57Speaker 04

  Yeah, oh yeah, definitely. Yeah, it's a lot more peace of mind.

• 23:01Speaker 00

  So you've been in the workforce for quite some time. Off air, you said, hey, I think I'm nearing retirement. You know, what prompted that?

• 23:10Speaker 04

  Again, because of restaurant businesses, that's a difficult business. I can't overemphasize enough, you know, my hat's off to all these younger guys that are getting into it, because it's a difficult business. When everybody else is off, their days off or holidays or whatever, that's when you're working the hardest. A lot of people don't realize that. It's hard for you to take, you know, weekends off, or you know, you normally have to try to schedule your vacations or anything like that during the week. And that's just a hard thing to do. You can't, there's time away from your family, from your kids, not being able to take vacations together.

• 23:43Speaker 00

  Yeah.

• 23:43Speaker 04

  So it's a tough thing, and after a while.

• 23:45Speaker 00

  It's definitely, to me, you have to really, really enjoy being in the restaurant business. It's not a job. If you consider it a job, then definitely you lose, you lose passion real quick. But if you really like actually serving people, making people happy through food and customer service, keeping your place clean, taking pride in that, then maybe, maybe that's for you. But then you still get hit with just challenges.

• 24:13Speaker 04

  One thing I can't understand, you have a lot of doctors, a lot of attorneys, and some of them have left their practices to go into the restaurant business. I'm like, man, if I was in, that...

• 24:23Speaker 00

  So I have a lot of respect for doctors, a lot of respect. They're very smart, one of the smartest people I know. But I made it a point when I was consulting, doctors were the best clients. Just because they're making this money and they were like, okay, well, I'm gonna go into the restaurant business. I'm gonna buy myself five acres of almonds. Do you know anything about this stuff? No, but it's a tax refuge. Well, there are other ways to be a tax, to create some tax refuge versus you getting involved in a restaurant business, for instance.

• 24:56Speaker 04

  Yeah. Now, one thing like the doctors and attorneys I'm talking about, if they're just investing in it, that's different. Some of these are actually going into it physically and running the restaurants themselves.

• 25:06Speaker 00

  Yeah.

• 25:06Speaker 04

  And I don't think, why?

• 25:08Speaker 03

  You know? It's a burnout. You know, I've been in the medical field myself, so I can attest to that in a sense. It's, you have different stresses. At this point, it's just choosing your poison, you know? And then some people, there's that passion you talked about, serving food, client interaction and all that. And just making people happy through food, you know, some people find solace with that. Others find solace in patient care. So then some, unfortunately, some people go into the medical field not by choice. And so when they go through that and they're seeing the ugly side of medicine, it's like, this isn't what I signed up for. Because to your point, these doctors, it's no easy work.

• 25:51Speaker 03

  From med school to residency, you're talking years on, years on, years without getting paid, really, to go into this program and to be doing 12, 14-hour shifts, day in, day out. So it's stressful.

• 26:06Speaker 00

  I would agree. I want to go back to Art, and you said that you started thinking about retiring. Not just because it's a restaurant business, but you want to enjoy life, which is a concept that, I'm not gonna say it's foreign to us in America, but other countries, they enjoy themselves a little bit more.

• 26:25Speaker 04

  Right. Well, what I looked at, you know, I looked at where I'm at right now, and I said, you know what? I no longer have that ambition to become a millionaire, you know? I want to live comfortably, but I want to be happy. So the way I look at it, I'm 60 right now.

• 26:40Speaker 04

  God willing, I've got a good 10 years of being mobile to be able to enjoy life. I said, do I want to spend those 10 years of working? I said, no, you know, I'd rather enjoy them, you know, spending time with my grandchildren, spending time with my children, with my wife, my family, traveling, vacationing, you know, really get into fully enjoy these next 10 years instead of waiting till I'm 70 to retire, and then all of a sudden, I can't move, I'm not mobile, and I can't enjoy it.

• 27:07Speaker 00

  That's true.

• 27:08Speaker 03

  This is the other side, I guess the darker side of being a business owner is that, you know, you think, oh, you're gonna make it great and all, but you don't understand the inner workings of what it takes or what it costs to run a business. It's literally day in, day out, all on you to run it. And that includes no holiday breaks, nothing. Just keep going. We actually have a question that came in, so we'll finish up here and then I can...

• 27:33Speaker 00

  Go ahead, go ahead. You want to read that?

• 27:35Speaker 03

  Yeah.

• 27:35Speaker 00

  If it involves Art, let's do it.

• 27:36Speaker 03

  Yeah, yeah, okay. So, question that came in, I've heard that it is tough to work in the food business. I have a two-part question for you guys. I heard you guys mention that the new laws and restrictions are tougher. What are the biggest things that they have changed? That's question one. Question two is, is it easier to start with a food truck? I have wanted to open my own spot, and I don't know where to start. Thought maybe going with a food truck since they are popping up everywhere these days.

• 28:06Speaker 04

  Good questions. Yes, good questions.

• 28:10Speaker 04

  On the first part of that question is, obviously, a lot of what has changed is some of the benefits that we now have to offer. And I've got nothing against benefits, but we have to realize where those benefits are coming from. You know, it is the owner or the employer that's paying for those. And when we're already talking about thin margins of 15%, now you add those benefits to them, it's cutting into their margins, so it makes it hard.

• 28:33Speaker 03

  Yeah, and I can speak on that because with the 401K plans, once you have more than one employee, you have to offer a plan. And that can, you know, have costs into it.

• 28:44Speaker 04

  Yes.

• 28:45Speaker 03

  So that's something to think about, as you were saying.

• 28:48Speaker 04

  Yeah, so it makes it tough because it's hard, you know, if you want to look at what your numbers are, your payroll, what we've seen in this industry is supposed to be about 30%, but now where do you calculate that number to? So we're talking about, you know, some sick pay, we're talking about minimum wage increases to 20 bucks an hour, we're talking about the Cal Savers programs, all that that could potentially cause the employer to have to put more money in, but there's really no money...

• 29:13Speaker 00

  Your margins are not improving, is what I'm hearing you say. So the 15% is the 15%.

• 29:18Speaker 04

  Yes.

• 29:19Speaker 00

  That's your playing field.

• 29:20Speaker 04

  If anything, right now, the margins are a little bit worse with the way the markets are right now.

• 29:24Speaker 00

  Yeah, I mean, if we add those fixed costs that you have, your margins probably are, I mean, you'd be happy with 8 to 10%, really, right? Given today's market, especially with, you know, diesel prices where they are.

• 29:38Speaker 04

  Yep. And the thing is, you can't be jacking up menu up and down daily. You just can't. I mean, I know a lot of people are going to digital menus so that they can kind of like do that. They're getting away from the paper menus because it's printed, you know? But you can't be bringing prices up and down, up and down, up and down.

• 29:53Speaker 00

  Well, you don't build a following if you do that, in my opinion, right? Like, look, to me, the restaurant business is about building a following, right? To this young person that's asking this question. So you want to make yourself unique in a sense. And what I tell my people upstairs is you have control of three things. Your cleanness, we have control of that, our customer service, and the quality of the food we serve. Those are the three things we have control of. You don't have control of the desires of people. You can push marketing as much as possible, you can push social media, whatever, the algorithm are the algorithms. But really, you control those three things. People are gonna wake up, they might not want a burger that day. They might want a taco instead. So all of a sudden... That sale is lost.

• 30:37Speaker 04

  Yeah.

• 30:38Speaker 00

  Regardless of how much marketing you put into it, in my opinion.

• 30:41Speaker 04

  Yeah. And the other thing that you brought up, social media, that, that has changed the restaurant business tremendously also.

• 30:50Speaker 00

  Yeah.

• 30:51Speaker 04

  You know, 15 years ago, if I wanted to put a special in the newspaper, I could put like a two taco combination, rice and beans. And the next day I was packed. I was packed. You know, or we'd have the radio station, they're doing the Taco Tuesday with us and stuff like that. And we'd get very good results. But nowadays, it's, it's, it's just hard to say that what kind of results you're going to get from newspaper, or radio, or TV, because mostly everything's all about social media.

• 31:15Speaker 00

  Correct.

• 31:16Speaker 04

  You know, and a lot of those older guys like me aren't that savvy on social media.

• 31:20Speaker 00

  Right. Yeah. So you have to end up to, you know, hiring somebody or hiring a firm or somebody to help you with, with, with that. And guess what? In my experience, again, you're competing with a bunch of other restaurants on social media as well.

• 31:33Speaker 04

  Yes. That do very good jobs on the social media.

• 31:38Speaker 00

  And the second part of the question, is it easier to start with a food truck?

• 31:42Speaker 04

  Yeah. I, I think that's a great idea because I've always told people, you know, make sure you do your homework. Do your homework. Like what I talked about last time is the Kern County Bank Chamber of Commerce offers these classes for people that are looking to get into business. And to me, that, that's a key thing because too many of us get into the business not knowing what's really involved. We think just because we can cook good at home that, you know, we're going to go kill it.

• 32:05Speaker 00

  Hey, that turkey sandwich you make is really good. Are you sure you want to open that restaurant because of that turkey sandwich?

• 32:11Speaker 04

  No, it doesn't translate.

• 32:13Speaker 03

  My mom said it was good.

• 32:14Speaker 00

  Yes. Yeah, well.

• 32:16Speaker 04

  Yeah. Well, you're going to be stuck just selling turkey sandwiches. But there's, there's, there's a lot involved with that. And that's what I said, do your homework. But I think the lunch truck is less of a risk. You know, because you're not, you're not nailed down to a lease. In case things go bad, you know, lunch truck, you sell it, you walk away and you're done. On a lease, you're obligated for five to 10, 15, 20 years on that.

• 32:43Speaker 00

  What, what, what's the startup cost on a food truck in your, in your experience?

• 32:46Speaker 04

  Food trucks right now, from what I've seen, they've been running anywhere from like 40 to 100, 110,000 dollars.

• 32:54Speaker 00

  Depends on how like.

• 32:55Speaker 04

  Yes. You know, most I'd say with the customers that I've dealt with, they've been about 40,000 dollars on it, which is still quite a bit. You know, for somebody that's putting all their hard earned cash into just one thing, it, it's tough. And the second thing is, is location. Location of these food trucks. Where are you going to park your food truck that's going to give you some good results?

• 33:15Speaker 00

  Yeah.

• 33:16Speaker 04

  And the third has to be, you know, the food and tied in with the social media. Cause everybody now wants something different. You, you can no longer go out and just do a traditional enchilada or burrito or anything like that. That's, that's not exciting no more.

• 33:28Speaker 00

  Right, right.

• 33:28Speaker 04

  It's got to have this, this, I don't know, Thai fusion with Mexican Italian and presentation. Then it, it, it's just a lot more to be successful right now. Because there's a lot of competition out there, a lot of good competition, a lot, a lot of good lunch trucks out there, a lot of good restaurants out there, you know, so it's really, it's a difficult, difficult environment to be in.

• 33:53Speaker 00

  Yeah. I agree. I agree. Well, Art, I'll, I'll tell you what, man. It's, it's, it's been a really good conversation and I really appreciate you coming out here and talking to us about not just the restaurant, but you, your life, your retirement. I wish you nothing but the best in the next phase. Definitely talk to a financial advisor. Yes. I, I, I know a couple of them. If you need me to refer you to one, he's sitting right next to you. But definitely, definitely work with one to prep for your retirement. I wish you nothing but the best on the next phase, whatever that is. And I'm going to come again and check, check your place out.

• 34:26Speaker 04

  Definitely.

• 34:26Speaker 00

  For some equipment.

• 34:27Speaker 04

  I appreciate you guys inviting me here. I had a, had a great time and.

• 34:31Speaker 00

  Until next time.

• 34:32Speaker 04

  Until next time.

• 34:33Speaker 00

  Thank you very much. We'll be right back.

• 34:49Speaker 03

  Is he paying?

• 34:53Speaker 04

  He's keeping his PG though.

• 34:55Speaker 03

  Yeah.

• 34:56Speaker 04

  He picked, he picked the right one.

• 34:59Speaker 03

  Have you seen his acoustic? Oh dude, he is, he is actually a really good singer. Yeah. Yeah. People are like, oh, he's just the only does. He's like, no dude, you should listen to him.

• 35:09Speaker 00

  Yes. Welcome back to the Money Wise Show. I'm Sammy Abia. We're here with Frank Lee. That was a good conversation with Art.

• 35:15Speaker 03

  It was.

• 35:16Speaker 01

  Oh dude, when I met him, I was like, Sammy's going to love this guy.

• 35:20Speaker 00

  Yeah. And I met him. I actually met him. Chef Richard and I went to his place looking for some equipment. So we're going to go back now and, and, and get something from him. He was very, very helpful too. Very helpful, very knowledgeable. So I'm glad you scheduled them today, Stephen. We have a listener question, Frank, and I think you, we can, we can.

• 35:40Speaker 03

  Let's do it.

• 35:41Speaker 00

  At least have a conversation around this. I'm sending this message over the weekend because it came to mind. Sorry, Steveo, but part of me wants to move some of, some of it into cash before things turn ugly. I'm guessing he's talking about cash. Is that smart or is it bad timing?

• 35:58Speaker 03

  Yeah, there's, there's a little bit to unpack here for, for a second, but let's just assume, you know, mid 40s, still working in your career, still making good amount of income and, and saving. You kind of want to take a step back and look at the overall picture. If the goal is for retirement, that's the goal, to save this money for retirement. You typically don't want to be touching the, the soap as much, you know? Cause the more you touch it, the more it disappears. And in this case, timing, we're not market timers.

• 36:32Speaker 00

  I didn't know what you were talking about there for a second there with the soap and stuff.

• 36:36Speaker 03

  I'm trying to, I'm trying to come up with some clever analogies. I don't know.

• 36:38Speaker 00

  That was very clever. I'm going to use this going forward. That was a pretty good one.

• 36:42Speaker 03

  Yeah. So it's, in, in this case, if, if you're, if you're that type of investor and you still have time to reach your goals for retirement, you, you don't want to be going back and forth. Because again, I, I keep going back to this study. Just missing out on the five best days of the market, you've essentially almost halved your return. So if, if someone, it stayed in the market for over 30 years or so, let's say you grew it to a million, you miss on five best days, you essentially cut that in half to 600.

• 37:15Speaker 00

  We, you, you talked about the pattern from earlier too, after election day.

• 37:19Speaker 03

  Right, right. Exactly.

• 37:20Speaker 00

  Right? Just earlier you mentioned, hey, there's a pattern here after election. The S and P 500 was higher the 12 months after the election day in all nine midterm cycles since 1990.

• 37:30Speaker 03

  Yeah.

• 37:31Speaker 00

  So again, we're not giving financial advice on the air here, but I, I, I like the argument you're making.

• 37:37Speaker 03

  Yeah. So it, and I always hate saying this, but it really does depend on who you are.

• 37:41Speaker 00

  That's right.

• 37:42Speaker 03

  If you're retiring within now to next year, maybe, yeah, move some of it to cash. You're still going to get good returns on high yield savings accounts, like we said. Interest rates are pretty high. So it's not a bad move. But if you're someone like me or mid 40s, still working, still putting away, contributing into your 401k, other savings, it doesn't make sense. Cause the, the studies show countless time and time again, you want to stay invested in the market. You don't want to time it. It's always timed in the market.

• 38:13Speaker 00

  It is kind of spooky though. I mean, not because it was Halloween. You hear that? See that, Stephen?

• 38:18Speaker 03

  Oh, he's laughing.

• 38:19Speaker 00

  Yeah. It is kind of, seriously, it is kind of spooky as far as the elections, what's going on in the world, gas prices, stock market, what happened Friday, kind of like we dipped a little bit. So I understand people's fear. What I'm hearing you say, don't succumb to that fear. Have the plan and stick to it.

• 38:35Speaker 03

  Yeah.

• 38:36Speaker 00

  Right?

• 38:36Speaker 03

  Yeah.

• 38:37Speaker 00

  And, and the plan could be cash, moving some things to cash, but don't just do that. Just, you know.

• 38:43Speaker 03

  Yeah. Just because you're, you're scared.

• 38:45Speaker 00

  So sit down with, with a professional maybe, or if you have been doing it solo, just rebalance maybe instead of exiting.

• 38:52Speaker 03

  Yeah. Yeah. Yeah.

• 38:54Speaker 00

  Right?

• 38:54Speaker 03

  Well, and that's, that's where the, the, the insights of a financial advisor can come in. It's mostly, it's not just investments that we talk about. It's about behavioral finance. It's like, okay, what happens when, you know, stock market pulls back? When you're taking distributions, how are you going to react? You know, are you, how do you react to the, the, the risk of sequential returns? You know, a lot of this is a lot of planning that people don't really think about. Cause people my age is like, oh, just invest, you know, you're not touching it, let it grow. So they have a lot of risk capacity. But once you depend on that money for income, then your, your risk capacity is obviously shorter, but your, your risk tolerance is also fluctuated.

• 39:38Speaker 03

  You're maybe not as risk aggressive, but more risk adverse. So there's a lot of behavioral finance in all this than just, hey, invest it, you know, and then just leave it.

• 39:50Speaker 00

  We have one more question. Hopefully we can get to the answer. Hey guys, I listen to the show on my days off, which are usually Monday and Tuesdays. And I keep hearing how great the market is doing this year. But everything still feels highly priced and maybe I'm just nervous. But are the markets telling us the economy is better than it actually is? Figured that I can't be the only one thinking this and could be a good topic. Thanks guys.

• 40:15Speaker 03

  Yeah. Yeah. I mean, we all feel the economic impact right now.

• 40:19Speaker 00

  I felt it yesterday. I want to do a little bit of just grocery shopping with my son and about $200 in. And the cart was not like overboard. Like back in the day, just a couple of years back, $200 and your cart is full and it takes you 10 minutes to unload it in your car. Well, that was not the case.

• 40:37Speaker 03

  Yeah.

• 40:38Speaker 00

  We're talking about like three bags of stuff.

• 40:40Speaker 03

  Yeah. And, and I think this is where people get mixed up a lot of times is that thinking that there's a direct correlation from economies to the stock market, but that's not really the case. Sometimes we can, we can have a pretty bland or bad economy and the stock market can still, you know, be breaking even or even doing better.

• 41:00Speaker 00

  And driven by maybe the magnificent five or seven or eight now, whatever those companies are.

• 41:06Speaker 03

  Exactly. Yeah. So when you, when you're, when you're thinking about the, the stock market and the current economy, there's so many factors to play into. Yes. If it was just the, the, the war in the Middle East, some of the terrorists and everything, we might have a different stock market reaction. Maybe not. But we also have to cut into the whole AI infrastructure and that play into the, the companies and the Mac seven, the tech companies, you know, how, how has that really elevated the, the P ratios of the stock market? So there's, there's a lot of factors, but yes, it, it's not always one to one. It's not a direct correlation, you know?

• 41:45Speaker 00

  And I think people talking about inflation slowing, that does not mean that prices are going down. When you, when you, when you hear that, it's like prices are still higher, but not at the same rate.

• 41:55Speaker 03

  Yeah.

• 41:55Speaker 00

  As when inflation is like rapidly growing.

• 41:58Speaker 03

  Yeah. You gave that example, 2020.

• 42:00Speaker 00

  Correct.

• 42:00Speaker 03

  Inflation was really high. It stayed there. It stayed there.

• 42:04Speaker 00

  Well, there you are. Great show today. Thanks Stephen for setting up us with, with the guest. And we're back tomorrow. I think it's myself and, and shared with no guest tomorrow. So keep.

• 42:14Speaker 04

  Keep them questions.

• 42:15Speaker 00

  Yeah. Please do. Keep those questions coming. And until tomorrow, what do we say, Steve? Be smart. Be safe. Be money wise.

• 42:34Speaker 02

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