David Asman:
Well, still trying to lure employees back. Joining me now is Buddy Foy, Jr. He is owner of the Chateau on the Lake and Chateau Anna Maria, whose business is being impacted by the labor shortage, no doubt. So are you still, Buddy, having trouble getting workers?
Buddy Foy, Jr:
David, we’re having trouble in New York specifically. We have two locations. We have a New York location and this winter we opened up a location in Florida. In Florida we’re open seven days a week. We’re open for lunch and dinner.
David Asman:
Wow.
Buddy Foy, Jr:
In New York, we’re closed a day a week and we can’t get open for lunch because of the labor shortage.
David Asman:
How much are you spending? Not a dollar amount, but percentage-wise, how much more do you have to pay workers to lure them in specifically in those New York locations?
Buddy Foy, Jr:
25 to 30% increase in our labor rates.
David Asman:
Wow. Well a company like Apple that has a 43% profit margin can afford to do that. I suspect you don’t have a 43% profit margin.
Buddy Foy, Jr:
David, I’m in the restaurant industry. We don’t even get double digits.
David Asman:
So how long can you afford to do this? You can’t keep that up forever.
Buddy Foy, Jr:
You know, eventually it’s going to hit the customer. It’s going to hit the customer’s wallet. And the consumer’s expectations aren’t coming down. The consumer’s expectations are still up there. And we appreciate their business, don’t get me wrong. We’re loving the fact that there’s demand. But the expectations, they still want the service that was pre-pandemic. And eventually… There’s not a single restaurant in our town that’s open seven days a week, and this is our season. We’re a tourist town. We make money during summertime and New York’s not ending the unemployment until September.
David Asman:
Wow. Buddy, talk to me about the specific difference between the two states of New York and Florida. Because I read a piece that was written about you, talking about how you just got really fed up with New York business environment, with all the regulations and taxes and so forth, and you moved your family down to Florida, right? Explain the difference between the two regulatory systems. Because you still have a place in New York, but now your focus is Florida.
Buddy Foy, Jr:
Yeah. So we’re still here in New York. We shut down New York until about three weeks ago, Labor Day weekend, sorry, Memorial Day weekend. Florida’s… The taxes were the biggest surprise. I was a finance major in college and you still don’t understand it until you run that first payroll. And we ran that first payroll and the lack of state tax, which also means employer tax at a state level isn’t there, as compared to New York, that was a dramatic savings. And it’s helping us with the pandemic as we’re used to managing to the New York tax rate. That’s that’s our business acumen, right? The New York structure. In Florida, it’s been very successful for us. And people started getting back to work in Florida a month ago. And if you’re a politician, a month or two might not sound like a big deal. “Eh, it’s a month or two.” When you’re a small business owner, it’s another month or two on top of an already 15-month painful lack of business.
David Asman:
So it sounds like you have zero regrets about moving down, opening up in Florida.
Buddy Foy, Jr:
I tell you, I don’t always make the smartest decisions, but that’s definitely on the top of my list as the smartest decision I’ve ever made.
David Asman:
How long do you think New York can go on as a state attracting businesses and allowing for new startups with an environment like this?
Buddy Foy, Jr:
I don’t think they can. I think that’s been determined. It can’t happen. Businesses are fleeing the state. As you know, we’ve lost congressional seats in the state. The business-friendly states such as Florida, businesses are flocking there. I was in negotiations with two more locations, which we currently are. I got to tell you the rent conversation started at a certain level. And now the conversations are 20 or 30% increase in rent because of the demand of New Yorkers going to the state of Florida to open restaurants.
David Asman:
Wow. Wow. Well, something’s got to change here and in California, all the other business-unfriendly states. Because again, there’s plenty of reasons to move to Florida. Not a lot, if you’re a business, to move to New York. Buddy Foy, Jr., congratulations on your success in Florida. And we wish you continued success in upstate New York as well. Thank you for being here. Appreciate it.