Transcript: Daniel Gershburg, Joe Davis, Pat LaFrieda



The transcript from this week’s, MiB Bonus WFH Edition, is below.

You can stream and download our full conversation, including the podcast extras, on Apple iTunesSpotifyOvercastGoogleBloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.


VOICE-OVER: Masters in Business is brought to you by Interactive Brokers. Interactive Brokers charges margin loan rates from as low as 0.75 percent to 1.75 percent. Rates subject to change. Learn more at

This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: Hey, it’s an extra special edition of Masters in Business. It’s our shelter-in-place version of Good Friday. What we thought might be interesting to do was to reach out to a number of people in a variety of different fields and see if we could have a conversation about how the pandemic is affecting them and their business.

So we spoke to a number of people; a real estate attorney, a meat purveyor, an economist, a variety of folks who all explained how life has changed under the shelter-in-place provisions.

Some of the things we talked about were really amazing and unexpected. Everybody is doing what they can to get by. Everybody is trying their best to get through what is obviously a difficult situation. And there is a lot of ingenuity and a lot of creativity, and a lot of people working to keep the gears of commerce moving, to keep food and essential services flowing. I think you’ll find some of these quite fascinating. Some of it is very amusing.

So with no further ado, our special shelter-in-place Masters in Business.

VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: You’re listening to a special shelter-in-place Good Friday edition of Masters in Business. We thought given the circumstances of everybody being forced to work from home if you’re not in the medical field, or providing some other essential service; fire, police, grocery, what have you. Everybody is trying their best to adapt to these circumstances, and I thought it might be interesting to talk to some people and find out how they are adjusting to these current rules.

And so my first guest today is Daniel Gershburg. He is a real estate attorney at Romer Debbas, working in Manhattan and Brooklyn. Daniel Gershburg, normally, I would say welcome to Bloomberg, but welcome to wherever you are sheltering in place.

GERSHBURG: Yes, thank you so much for the distraction, Barry, and thank you for having me.

RITHOLTZ: So Daniel, tell us a little bit about your practice under normal circumstances.

GERSHBURG: So under a good month, or a good day, I primarily practice in real estate, transactional real estate; someone buys, someone sells; and also consumer bankruptcy.

So for the most part over the last I’d say five or six years, the majority of that was obviously devoted to real estate. The market was doing incredibly well. And so I would be involved in closing transactions, someone’s buying a place, so I would be at the closing or negotiating contract. I’d have for instance a desk and computers and a working phone system. And I plot through those things; speak with brokers, do normal, normal things throughout the day.

RITHOLTZ: So you live in Brooklyn. Were you going into Manhattan on some days, most days, all days?

GERSHBURG: I had my own firm for about 12 years before I merged with Romer Debbas a couple of years back. And I was working very close to home in Brooklyn. Many of my clients are based in Brooklyn, and so I didn’t want to commute. And so I had an office in Brooklyn.

About a year or so ago, I began going into the main office at Madison Avenue. And for the past year or so, I’d say four in really five days, I’d be in the city working from that office base itself. And Brooklyn was a bit of an afterthought.

I’ve lived now for about three to four years in Williamsburg, Brooklyn as well. So I live and work there and breathe.

RITHOLTZ: So, Williamsburg is a very hot neighborhood in Brooklyn for people who are not familiar with it. A lot of condos and co-ops. Prices have gone up, but ton of transactions have been taking place there until I’m going to guess about a month ago. How has the practice of real estate law changed in this current environment?

GERSHBURG: I was practicing during 2008 with a market just south. The market has essentially just stopped. And any deals that we’re in contract – and again, this is anecdotal, you could speak to other attorneys maybe that have a different feel for it – but any deals that are in contract literally just time stopped. People are neither going through the contracts themselves, or they’re taking a pause, they’re renegotiating the prices. And deals that are currently in contract, when I represent a seller and the sellers are calling me, and I’m having more Zoom calls than everyone have in my entire life where the sellers are calling me and saying, how do we make this deal happen. And on the flip side, my buyers are calling me and saying, how do I get out of this thing.


GERSHBURG: And so real estate – yes, on a sort of a larger level, Brooklyn-wide and again across New York City as well, we’re in this sort of unchartered territory right now where frankly there aren’t any easy answers as people are trying to get out of deals, and that’s where I think 90 percent of my day is right now, is in navigating the ability for someone to get a better price, get out of a deal, or on the seller side, just stay in the deal itself.

RITHOLTZ: So let’s talk about the other aspect of your practice, which is Chapter 7 and 13 bankruptcy filings, the discharge consumer debt. I’m going to ask you to – I’m going to ask you to look forward and imagine that this goes on for two, four, eight weeks longer before things normalize. What happens in the consumer realm with people carrying credit card debt, and auto loans, and perhaps even mortgage debt if they lose some or all of their income either temporarily or permanent? What is a consumer debt world looking like three months from now?

GERSHBURG: I’m going to go out in a limb, and as my wife often reminds me on everyone (ph) most of the time. I will say that I think congress has to deal with this in a particular way because I think that you’re looking at a deluge of cases that the courts may not be able to handle.

So bankruptcy to a certain extend is trailing. You don’t file for bankruptcy as the first thing you do. You file for bankruptcy is the last thing to do. You pay your credit card minimums, you try your best to negotiate with your creditors, you do everything you can because there’s a stigma attached. So people will be filing two months from now, or three months from now.

Remember, there’s – in New York, there’s all they’re talking about evictions and foreclosures for at least three months. So people are going to sort of stay in place, right. No one is going to be thinking this way.

I think what you’ll see is if this continues for like say, three, four, five months, then you begin to see people filing because frankly they won’t have incomes, they won’t be able to make – and remember again, ’08 was about people not being able to make their mortgage payments. Now you have people that can’t make their rent. And you’re bringing in this other section of the workforce and that wasn’t there before.

You’re going to have a large number of cases, you’re going to have people that are living off of credit cards for a period of time, you’re going to have people that are taking personal loans, or cashing out their 401-Ks or their getting 401-K loans to the extent that they can. And then once all of that stops and they can’t take any more credit out from anywhere else, only then do they come to – how this sort of come to – you just remember what they say, oh my god, I think I have to file for bankruptcy, right. And so I would say trailing, you’re looking at it rather than three months, you’re looking at six to seven months from now.

But I think you’re going to have an enormous number of cases. And I say this, I know it sounds ridiculous, because obviously in self-interest, more clients is more money that comes in. I don’t even want this. You hear these stories sometimes of these people, and ’08-’09 really changed me in a lot of respects.

I would rather people not filing and there’s going to be a way out, because the emotional toll that this takes on people is underappreciated when it comes to a lot of this stuff. So I think if you see anything, it’s going to be again half a year from now, but I’m hoping that congress sort of brings them relief within the laws themselves.

RITHOLTZ: Let’s talk a little bit about life in a Brooklyn apartment. I’m assuming you’re not on a 3,000 square foot giant apartment, you’re in a fairly normal Williamsburg apartment? Are you in a condo, or a co-op?

GERSHBURG: Yes. So I’m in a condo. I’m a renter of a condo. And by fairly normal, just to give your audience some idea as to why it’s ridiculous to live in the city – I am in 1,100 square foot, which is big for the purposes of New York, and a garage for the rest of the country.

So for the apartment, only for my wife, my almost three year old son, and a newborn daughter, which again, a really, really great life-changing for me (ph) prior to a pandemic, as well as a 70 pound English Bulldog. So I try my best to leave that apartment as much as I can and work out of my car downstairs.

RITHOLTZ: Is that true? You’re sitting in your car?

GERSHBURG: No, I kid you not. My office, I have no problem deducting anything regarding my car and my taxes this year. My car – I have a Nissan Pathfinder that I got this year, I leased it. And I work six hours a day out of this vehicle. Because to try to get anything done in what is basically – and I’m saying this item upstairs is impossible.

I have one area of that apartment which is my wife’s closet that I work out of sometimes, and I will literally put a laptop on the footstool and close the door so there’s no light anywhere there, because if there’s light, my son will rip the door open.

So I’m two minutes away from a cool pan and a candle. So most of the stuff that I do is running downstairs, taking calls, doing Zooms again, and sending emails out from my car.

RITHOLTZ: Is that where we’re speaking to you right now, from your Nissan Pathfinder?

GERSHBURG: I am in my Nissan Pathfinder as we speak, as I would have to say, my remote office.

RITHOLTZ: Which seat are you in? I’m trying to picture this.

GERSHBURG: So I’m in the driver’s seat, because god forbid, the cops were to pull off if I’m double parked a fire hydrant, I would be able to move and continue my Zoom call, I would switch to audio only, or I would stop the video itself.

Occasionally, when I need the laptop, I would go to the backseat. The Pathfinder is wonderful and that there’s a three-row capacity here. So I can basically go to the third row to take a nap if I need to. I haven’t done that as of yet, Barry. But this is where my career is taking me.

RITHOLTZ: So I lived in the city for a long time. I lived on Lexin and 28th Street. And I remember what a pain it was dealing with parking.

But I have to imagine that the New York City traffic enforcement division in the midst of a pandemic, of which New York State is a hotspot and New York City is the hottest hotspot within New York State have eased up on that sort of stuff.

Are you telling, alternate side of the street parking is still in effect?

GERSHBURG: No, we’re good. I’m just neurotic. And I don’t want to take it even through a pandemic itself. And nothing – no one wants to get close to anyone, Barry. So I …

RITHOLTZ: I’m with you.

GERSHBURG: … I would imagine facing me, yes. So I’m just – it’s just be being neurotic.

RITHOLTZ: All right. So you’re sitting in your front seat of the pathfinder. Tell me a little bit about the technology you use to do your job. What are you working with and how are you communicating with clients and others?

GERSHBURG: So it’s a variety of sorts of things. But obviously I’m taking calls with my iPhone. I’m Zooming, doing the Zoom calls has become this new thing with my iPhone as well. Most of my files of course are saved on Dropbox, so I have access to those as well.

Look, I’ve been remote and virtual for a number of years prior to that, just because of again, going for Brooklyn to the city and having two offices. So it hasn’t really been that bad. The problem is you can’t get a lot of work done in the car itself when you have to send emails out and literally go up to the apartment when I know my son is either taking a nap or my wife has them in a different room. And I will hyper-focus on sending an hour’s worth of email out in that closet.

I mentioned that I have a newborn as well. So at some ungodly hour of let’s say 3:30 in the morning when my daughter is up, I’m also – as I’m feeding her, sending out emails from the living room itself. So I leverage as much as anyone kind of this point, my Macbook, my iPhone, and everything else, just to – again, this is – I’m not thriving just to survive.

And I think what you’re really seeing to be honest with you, and maybe it’s a left turn to a certain extent, is every lawyer is dealing with the same thing, or every person I’m dealing with is dealing with the same thing; that same skit where the guys giving interview and his two kids running behind him. That’s just everyone these days. So you don’t feel weird about it. You don’t feel weird about someone showing up with a sweatshirt on a video on Zoom because you know that they’re going through the same hell that you’re going through (inaudible) which is good, which makes this palatable (ph).

RITHOLTZ: That was a BBC broadcaster whose son came running into the room during a broadcast. He subsequently brought the whole family in during the lockdown, and nobody even thought twice about it.

GERSHBURG: It’s a new reality.

RITHOLTZ: So if you’re using a laptop in the car, are you using any sort of jetpack, or Wi-Fi connection to the laptop, or you’re just using your iPhone as a connection? Or do you not need that? You just use the iPhone for the Zoom conferences and you could deal with the laptop when you get back up to the apartment?

GERSHBURG: I try my best to separate those two things, because the second I do – listen, my life resembles that of Larry David quite often. So the last thing I need to do is try to connect the hotspot and I’m connected to someone else’s Wi-Fi and have this virus.

I try my best to separate and do the iPhone thing. I have brought the laptop down and use it as a hotspot. Sometimes it’s better than others. Sometimes emails are unfortunately go out very quickly. But I try and make it so that if I need to send out emails, I’m running upstairs to – I can’t believe I’m saying this on a radio interview – to my wife’s closet, and the rest of the time I’m in my car doing calls and everything else on my iPhone, and Zoom on my iPhone itself.

RITHOLTZ: So I’m picturing a street in Williamsburg with all these high rise condos, and rows of cars parked. Are you the only person sitting in your car, or do you see dozens of other people operating similarly?

GERSHBURG: I am probably the only person sitting in their car. Half of this neighborhood has fled to god knows where, to second homes that I don’t have, to their parents’ place. And my mother lives in Miami, my wife’s parents live in Europe, so we don’t have that option. So there’s no one in any cars really other than me. I see sometimes the same cops going around and the same sort of people going around and walking their dogs and everything else.

There’s really not a lot of traffic in the street itself. So if you want to picture it, it’s really just me running a vehicle, inside the vehicle itself, doing Zoom calls, sometimes with the windows open when the weather actually allows me.

RITHOLTZ: Thank you, Daniel Gershburg of Romer Debbas, real estate and bankruptcy attorney.

My next guest on our special Good Friday edition of shelter-in-place Masters in Business is a former MIB guest, Joe Davis. He is the Chief Economist at investment giant, Vanguard. And I was surprised to learn that he is considered essential personnel during a pandemic.

Joe Davis, are you not sheltering at home? Are you actually in the Vanguard office?

DAVIS: Hi Barry, thanks for having me. I am. Although, we – for some time, we’ve taken pretty significant steps. I’m the only one on my floor here in the building that I work at. Because I’m a part of the investment management group. There’s this very select personnel that maybe either in the building, or in what we call hot sites.

So it’s – in one sense, even though I’m in the office, I’m actually alone. So it’s – and sequestered in my office where I can close the doors. So it’s still – it’s pretty much an isolated environment. Any meetings that we have clearly are video, even for certain crew that may be on campus, which is fairly few.

RITHOLTZ: So let me paint a little bit of a picture for those people who have never made it to the enormous campus that Vanguard has in Malvern, Pennsylvania. It is like a college campus with lots of three-storey brick buildings, and here’s a conference center, and there’s an auditorium over there, and here’s a parking garage. And it goes on for – it feels like thousands of acres. I don’t know if I’m overstating it. But it’s like a giant 25,000 student campus.

And when I’ve been there many times, when you’re there, there are cars coming and going, and people walking around, and offices filled with people, and various conference rooms, and public facilities. It’s a small city kind of in the woods of Pennsylvania’s. Is that a fair description?

DAVIS: Yes, Barry, it is. I mean, it’s actually a beautiful campus right in the suburbs, about a half hour from Philadelphia Airport.

RITHOLTZ: So given that this is normally a bustling city, how different is it today when you walk in? Is it like a weekend, is it – how do you compare what you’re experiencing today compared to the normal day to day operations of Vanguard?

DAVIS: Yes, I think it’s for – I would imagine it’s still similar to others and other industries maybe around the country. At best, it feels like a weekend, although I can see the highway from my building, and very little traffic. So even that seems really out of place.

But I think for – I lead a group of roughly 65 employees around the world. I think the – what we’re fortunate is that we can do our jobs pretty much anywhere in the world. We have wonderful technology, we’re continuing to operate day to day as if – as best you can as if we didn’t have this unfortunate health crisis.

But you try to – I think many of my team, it’s just trying to balance what goes on in your personal life, with your work life even more so, because you’re often at home trying to navigate those two worlds.

I’m isolated here. So again, even if I have meeting with someone else who may be in different building, which again, are few, and/or they’re at home, we’re just operating on Microsoft teams. And like, it’s been a real benefit.

You get out some of the cadence, some of your habits. But I’ve actually been pleasantly surprised to how productive you can be if you have access to really good technology and to the information you need to do to do your job.

RITHOLTZ: You’re telling me that a constant stream of people walking into your office to interrupt you with questions or issues or things somehow reduces your productivity? Is that what the normal workflow is?

DAVIS: Yes. Well, I’ll you, what’s been challenging is just keeping up, which is the rapidity of events. And again, we’ve been watching the unfolding of this unfortunate health crisis since December 30th. I recalled that in China, because I recalled that because it was my birthday.

And we’ve been using alternative data sources for years, and particularly apply them in this situation. I’m spending just as much time thinking about what potential additional solutions we may need in the United States from a policy perspective in terms of a public services as much as I am importantly thinking about the economic conditions and what that may mean for the markets over the coming months and years.

So I’m spending a lot of time with that, with some of my colleagues at Vanguard, to try to help policymakers. Because we’re going to need additional firepower applied to the situation.

RITHOLTZ: Joe, let’s talk a little bit about the impact so far of the coronavirus. We saw the initial unemployment claims two weeks ago at about 4 million new job losses. This past week, it was 6 million. God knows what we’re going to get the week of April 5th. Already, 10 million job losses, that’s more than we lost in the entire financial crisis of ’08-’09. How significant is the labor market damage to date?

DAVIS: Well, it is pretty significant, Barry. And we’re not – I don’t think we’re – I don’t think we’ve seen the worst of it necessarily, which is unfortunate. And really my heart goes out – in fact, I have family and friends who have had to go on unemployment insurance. So it’s – I mean, it’s one of the – it’s certainly, we were projecting over a month ago and yet we’ve had to revise our estimates. It’s the worst single quarter in terms of the rate of the change and deterioration of labor markets, that I think is we have own record.

I think it’s – it may not be – we may not get to unemployment rates first that were as high as the great depression, although that played out over three or four years. This has played out in a matter of weeks and months. And so it’s been a significant reversal on conditions.

I mean, it gets back to this there’s just vacuum of cash flows from any businesses across the entire economy, which is why it’s important to really try to arrest that. But it’s – most sectors are impacted. And so it’s broad based, it’s significant, and it’s been fast. And we will – we are expecting at least 5 million additional job losses just from the jobs report over the next month.

I think we’re seeing – additionally, we are seeing claims elevated a little bit. I don’t mean to dismiss them, but they are elevated a little bit because the CARES Act makes unemployment benefits a little bit more generous and has changed some of the criteria by which you can qualify for unemployment insurance.

To be very positive from a – for those that have been affective, right, in terms of their job, but that is leading to even additional increase in claims over and above just those losing their job. But I mean, it’s – I didn’t think I might – I would be in a place of my career where I’m projecting GDP declines as large as we are, and job losses as high as they are, and yet worrying that perhaps we don’t – perhaps, they’re actually too optimistic.

RITHOLTZ: So I know most economic data comes out with a bit of a lag. You’re always looking backwards that would just occurred. But I keep hearing anecdotally that people who have been trying to file claims for unemployment, they can’t get through on the phones, the website is crashing. How curious how accurate is the data as to the true state of the labor market damage? Are things worse than the official data states? Is it possible that we’re just not keeping up with all the new job losses?

DAVIS: Well, I think it is. I mean, again we’re going to have a lot – there’s no doubt about that, Barry. But we’re trying to triangulate – when you triangulate on I think more real time data – we were doing this in China, and doing it for Europe, as well as the United States. When you look at the usage of credit cards, when you look at Google searches of certain keywords, we were tracking that over a month ago.

We started with airline cancellations, and now you look about unemployment search activity. It tends to correspond with our economic outlook which is really coned for a significant fall, not only for this past quarter, but just both for the second quarter.

So I think when you look at the distillation of information and as well as some more high frequency data, I think it’s generally consistent with the headlines which are not – which are concerning.

I think though, I will tell you is that we do see as our baseline conditions stabilizing and then modestly improving as we get to the back half of the year. Now that rests largely on the big assumption which we still have as our most likely outcome that at some point this year, these needs for shelter-in-place dissipate over time.

But that’s really the key variable is really – is the health variable more so than the economic one.

RITHOLTZ: Let me ask you a more speculative question that requires you to use a little bit of your imagination. This has obviously been a wrenching and unprecedented experience for everybody who’s been involved. What’s sort of lasting changes are going to come to the economy, how business is conducted, just look across the board; service sector, real estate, labor – how is the world changed on a permanent basis by the coronavirus?

DAVIS: That’s a really good question, Barry. I think when I study world history, well at least what I have learned is that when there’s profound shocks and crises; they could be war, this certainly economic shocks, and this clearly qualifies – it usually does two things; one is it accelerates a trend that was already in place before the shock began, and then secondly, there are typically I’ll call them social or political reactions to the very shock itself. So let’s take the first one.

I mean, I think since we’re already seeing, you’ve talked about and documented in a number of times, I think both the need for I think a revisit of some aspects of the global supply chain will be in order. I think we may see more serious conversations of that from a risk perspective, meaning these shocks may occur every so often. And so from – and we may see more supply chain changes than we did from the trade war.

RITHOLTZ: Explain that a moment, how might the supply chain shift? Are you referring to the just in time delivery system, or …

DAVIS: Yes, I think so. I mean, it’s been hugely – there’s been a number of positive economic benefits of just in time. But because when the industrial economy, when the whole broad base global economy runs so lean for lack of a better word, there is a risk to that. The risk to that is you don’t have capacity in the system, or – and we’ve seen these shocks before, but they weren’t of the same magnitude. I mean, we can go back to the unfortunate earthquake in Japan, right, and what did to parts of the electrical, computer industry.

So that I think – when you start to say – now if you assign a certain probability to these events occurring ever so often with a very large negative economic loss, you then – if you’re in the seat of Chief Financial Officer, or CEO, you may start to find a little bit greater assets or investment into adding redundancies into the system, right, than before. It’s just from a risk control perspective.


DAVIS: So I think we’ll see some of that. In what magnitude, I don’t know. But I think it’s hard to imagine that, in my mind that we’ll go as lean as possible in just in time as we did before. Because that opens business on operational risk.

Secondly is that I think we’ll see a little bit more – we certainly will see acceleration in automation. But again, this was something that was already occurring. I think we’ll also see – it will take some time for some sectors to come back from like, air travel, and things that really are social, social interactions of human being.

So I don’t think though – I think there will be a recovery in business travel. I think there will be a recovery in individuals going out to eat. I mean, I recall 9/11, there was a significant concern over future of air travel. But it will take time.

That’s where I think the antibody tests, and the ability in you and I and all of our human citizens, Barry, to be able to know that if I go into a certain social setting, am I – is my health at risk? I think when we get greater confidence with that, right, I think we all – that’s when we see a return to some of those sectors, but it will take a little bit longer and totally anticipates. But we will see a recovery in some parts of the economy that really under duress right now.

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This is part one of our special edition Good Friday’s Masters in Business, talking to people how they are adapting to the coronavirus and working at home.

Our guest today is Pat LaFrieda. He is a third generation butcher from a family that’s been in the meat business for over a century. LaFrieda Meat Purveyors supply steaks to many of New York City’s high end restaurants including Minetta Tavern, Spotted Pig, Union Square Café, Blue Smoke, and Market Table; perhaps most famously Danny Meyers tapped him to help create the unique Shake Shack Burger which became an immediate hit, and is now a global chain, largely attributed to the success of the custom meat blend Pat LaFrieda created.

Pat LaFrieda, welcome to a work from home edition of Bloomberg.

LAFRIEDA: Thank you very much for having me. It’s a pleasure.

RITHOLTZ: So your business really developed as a meat supplier to high end restaurants. Obviously restaurants are under incredible duress today. What are you hearing from your customers?

LAFRIEDA: Well, I’ll tell you that the restaurant industry is really – they’re struggling. I would say they’re split between thinking of closing down completely, or reorganizing. But the brighter side of the other 50 – I call it the positive 50 that many of them I’ve talked off the ledge – which is get off the couch, improvise, and we’ve seen so much of that. I’ve seen more ingenuity and original ideas from restaurants than I’ve ever seen. And sometimes it takes a chaotic time like this to really get people’s minds rolling. And there’s so many great examples.

But I think restaurants that had never thought of anything like curbside delivery before, thought that they were above that, but really wanted to do this.

So when we talk about high end restaurants in New York City, we kind of looked down upon curbside pickup or a takeout. They actually didn’t permit it, but they wanted to, historically. Now, this gives them the chance to actually take that leap and to begin that part of this evolution, because that’s what this is going to be. Restaurants are going to be different forever.

We hope that there will be some return to normalcy. But for any foreseeable future, things are going to be different. We already feel it. And when restaurants get to reopen, I think we’re going to see the biggest surge and rebound in the New York City.

Despite it being the epicenter of the coronavirus, I disagree, I think it’s going to be – we’ll have more people that have contracted and have gotten past it, and those are the people, the very people that will be the first back to work and the first to feel most comfortable in restaurants.

But to have restaurants think like they have now to create concepts, meal kits; again, we have cars pulling up to the restaurants, popping the trunk for orders that were already paid for with their credit card, confirming through the window, a closed window as to who that customer is, who customer that was picking up, and then someone from the restaurant just putting the food in the trunk of the car and the car driving off, talking about social distancing.

Restaurants are a place – it’s New York City’s golf course, it’s where we do businesses, where we celebrate, it’s where we spend time together. But at the same time, 60 percent of New York City residents got their meals from outside of their home. So when you close that down, you’re closing a major part of not just food supply but culture. And how will that culture change in the future, and I certainly hope we get back more to a personal place where those meals are unique and meaningful.

I really think that’s going to take some time. So between now and then, for restaurants to survive, that 50 percent I was talking about, those restaurants may not be making money right now. It’s really not what it’s about. No one is doing well right now. But it certainly feels better to be operational in some capacity so that when it is time to come back online and it is time to get the troops back, that it will be that much easier.

And the feeling of desperation of being on a couch watching more cable pay per view and Netflix than you ever thought you were to watch, just is so much more of a life in feeling that – yes, it’s a virus, it’s horrendous, it’s taking lives. But you know what, it’s not going to take my life. It’s not going to take all our lives. And we need to fight it by living. We need to fight it by succeeding.

RITHOLTZ: That’s a great philosophy, Pat.

When you say 50 percent of your client base which tends to be middle to high end restaurants, how many are still operating today and doing either curbside or takeout service in New York and in any of the other boroughs?

LAFRIEDA: Well that’s – I put the number at about 50 percent. 50 percent that are so close from the day that the restaurants were asked to close. And that’s really scary. And not just 50 percent of my business, not just 50 percent of my receivables, it’s 50 percent of our lives. We’ve built our lives around supplying restaurants.

And I’ll tell you, we have to pivot ourselves. We didn’t change – not our business model, but we were already diversified into supplying retailers and let our own home delivery service. But we really ramped up our production.

Our production has been running six days a week, 12 hours a day. We haven’t gotten to take a day off from this – during this entire pandemic because we are an essential part of the food chain. We were essential personnel. So we’ve been in the fight from the beginning. And quite frankly, we like it that way. We wouldn’t want to be forced not to be able to come to work.

RITHOLTZ: Pat, I noticed on your website that you are now delivering directly to consumers. Tell us about that?

LAFRIEDA: It’s a sector that was always about 1 percent or 2 percent of our annual sales, and now will probably account for about 15 percent or 20 percent. And it is really the access.

What we saw in the first few weeks of the pandemic when it was actually called such, is that the run on supermarkets was extreme. And what none of us want as Americans is panic. I think we’d all agree upon that. We don’t want unnecessary panic.

So when you own a meat company, or a food company, and we run mine for five hours at a supermarket to find out that they have nothing on the shelves, that will cause panic. And the virus cannot break this country, cannot break our cities, cannot break these states. It cannot do it. But panic can.

And that’s what we felt – we made a statement to ourselves among our family and among our team. We need to sort of think of how to alleviate this panic. We are a bridge to food, between food and people. And we need to get meat to people. And we are not going to tolerate in any one that we work with. So – and I’ll explain how we had others involved to help distribute the product. But we’ll not tolerate a price gauge by a penny. It’s just it’s not going to happen. It’s not who we are. This is really to stop panic.

I mean, our lives are bridging food with people. And if we are able to do that during this, then we would have saved so many more, maybe not lives, or maybe lives – I mean, we just – we’ve got a lot of feedback, and we don’t like to accept that. But we’ve just saved so much worry by staying open.

RITHOLTZ: So let me ask you a little bit about the supply chain. How is your business adapting, where are your – what are your suppliers doing when they’re making their delivery? How do the logistics work? Is this business as usual, or have things really changed radically from the farm to when you ultimately dropped off a package of burgers and steaks to a restaurant, or somebody’s house?

LAFRIEDA: Well, I have to say that the meat industry has become one of the most efficient systems, food systems in the world. And it has not been broken. So there’s still – people still need to eat regardless if it’s coming from a restaurant or retail markets that’s getting delivered to your house, or getting curbside delivery. People still need to eat.

For most people, they eat meat. And it’s one of the staples their family needs to see on the table. So just making sure that our suppliers – and our suppliers from out west have been so – they really don’t think it’s East Coast, and like New York-centric problem. And I’m trying to explain what’s happening here has been happening there, 181 countries in two month. I guarantee you, it hit all 50 states. But maybe they won’t see as such a rate that we saw.

But we’re in constant contact. About 50 percent of restaurants opened up again for what they are telling are about one third of the sales that they used to have. However, if you speak to a restaurant that’s partially opened, compared to a restaurant that’s completely closed, you hear a big difference in their voices. You’ll know and feel the pressure for those that haven’t opened at all and boredom.

And you’ll hear triumph in those that are going in every day, and they know they’re losing money, but their customers are so happy that they’ve stepped out and they’re providing food. It’s a very strange time, but things change in time. And we all need to adapt to what’s ahead of us.

I truly think if we stick to that April 30th reopening, I really think New York is going to be one of the cities that bounces back so quickly that we’ll be talking for years as to why it was reported internationally that New York was crumbling. I’ve gotten condolence letters basically from friends in other countries. Like, I don’t know if you guys have heard, but we’re OK. The faster we get through this, the faster we’re going to rebound.

RITHOLTZ: Let’s just talk a little bit more about how your day to day work life has changed. You’re an essential service provider. Are you still going into the shop? Are you still supervising the distribution of meat to restaurants at homes?

LAFRIEDA: Yes, that’s the one thing about being a part of – an essential part to the meat supply chain, is that as essential personnel, our schedule never changes; never changes during Hurricane Sandy, at 9/11 we were very close from the towers unfortunately to witness the tragedy, the atrocity; and we’re only closed for one day then. So this, we were – we haven’t closed at all. And actually because of our pivot to help retailers restock their shelves to not being a more labor-intensive process, my production team has been working at full capacity ever since this began.

RITHOLTZ: Wow. So in my freezer, I have a couple of Australian racks of lamb that shrunk wrapped from LaFrieda Meat Distribution. How are you selling product directly to households? Does everything show up shrink wrapped, or is it like going to a local butcher?

LAFRIEDA: Everything gets delivered vacuumed. But it’s vacuumed fresh. It’s never been frozen. So our product – this is just the way our culture as butchers has always been; from my grandfather to my dad to me. Meat is always better fresh.

So when we vacuum a product, you’re actually able to – you make the decision. If you’d like to freeze your product, go ahead and freeze it, it would be good for over a year. If you don’t, your product would be good in the refrigerator for about 21 days. So you really have meat as fresh as a restaurant would get it, as fresh as a butcher shop would get it.

RITHOLTZ: Hey Pat, tell us a little bit about how you’re getting these products directly to consumers?

LAFRIEDA: So our product is shipped fresh. And it’s got ice gel packs in the boxes. And the boxes are insulated themselves. So although we ship overnight, that box is good in room temperature, I think we’ve tested it up to five days without it having the temperature being compromised. But we do all the fulfillment here, and we work all night long.

So after the virus chaos, yes, our home delivery business has really shot up. However, so has all retail. So whereas most of our business, 95 percent of our business were supplying restaurants, right now, about 90 percent of our business is supplying retailers. To include Amazon, to include Shoprite, FreshDirect, and Eataly, and just trying to help resupply the retailers so that we can avoid panic in the city, and panic into the Tristate, we just don’t want that to happen, because there’s no reason for it.

The food supply chain has not been broken. And I’m proof of it right here. Like I just said, we have not closed one day. We’ve been in production every day, in constant contact with my growers out west, and the harvesting facilities again out west. Everyone is – in food supply has really been – have come together. Like, you’ve seen all the parts of – in other industries, our country, really when it needs to get together and bind together, it does.

RITHOLTZ: So let’s talk a little bit about everybody’s favorite barbecue item, the hamburger. You have been credited with stoking a giant burger boom in New York City prior to this whole current situation that’s taking place. How much of that is hyperbole, and how much of that is true? How responsible are you for all of these lovely high end hamburgers at all of our favorite restaurants in Manhattan?

LAFRIEDA: Yes, I’m guilty as charged. And I’ll tell you that before we began making blends specifically for restaurants, specifically for the cooking equipment that those restaurants had in them, and specifically for the taste buds of the chefs in those restaurants.

Really, chopped beef or ground beef was sold in burger form or in bulk by its fat percentage. So you saw 80/20, or 85/15. We never really use those numbers. Those numbers are really – in order to calculate those numbers, if you send that product to a lab, what you do is taking imported trimmings and that are tested for how lean they are, and then adding it with some domestic trimmings and maybe some mechanically deboned beef. Making the burger that we’ve all seen is more gray and flavorless than it is a real steak experience.

So my grandfather always said, “You cannot hide your sins in the chopping machine. So what you put in there is what you’re going to get out there.”

And what he meant was when you use whole muscle only, so whole cuts of beef – when you’re using a whole chuck, when you’re using the quad, we sent the flat iron attached, which has many, many retail cuts in there, you’re going to get the flavors of rib eye, you’re going to get the flavors of New York Strip. And a big part of our recipe is to use whole briskets. Briskets have a buttery flavor from that fat layer that separates the two muscle groups in a brisket. Brisket holds up 30 percent of the weight of the animal. So it’s a real tough, slow cooked type of beef. However, when you chop it, it has great flavor, and it really holds back a little bit and gives the burger some bite, so that you don’t have a mushy, gray cafeteria burger that we had back in high school. These burgers are coming in very special.

And actually, how it was started, my grandfather always made great burger meat. And although we didn’t sell to some or the really fancy restaurants like Les Bonnes (ph), or to Chef Olivier (ph), yet during growing season, it stopped by our place for their burger meat to grill for burgers, because my grandfather had such a great reputation for that.

And that’s really carried through. So all of the disciples, so all of the chefs that spawned from that group, they moved on to other restaurants that they know. And they know where to get – they won the best caviar, they won the best burger – they know where to go.

RITHOLTZ: Let’s talk about something that’s a little bit blasphemous, and that is the Black Label Burger. How did you ever decide to say, “I know, let’s take the most expensive cut of dry aged meat in our refrigerators and what the heck, let’s just grind it up into hamburgers.” A lot of people thought that was just blasphemous.

LAFRIEDA: Yes. And as I experimented with different blends for different restaurants according to what they wanted, I have met with a chef that was going to open a restaurant in six months and wanted something very different. And you have to remember, we were on the cusp of the financial bubble. Like, it bursts.

In the planning stages of – I guess you could say that the financial crash happened during the planning stage of this chef trying to find something special. And I just so happened to have been working on – because of my love of dry aged beef, a portion of the burger having dry aged beef in it. I thought it would give a dry aged steak experience with not as expensive as a steak, but not as inexpensive as a burger. I was trying to reach somewhere in between, but still have that great dry aged flavor.

So that restaurant wound up to be Minetta Tavern. And the Chef Riad had asked me for an agreement that we would not sell Black Label to that specific dry aged blend anybody else. And we shook hands on it. And he is no longer at Minetta Tavern, but we still hold our promise. We’ve never given that appointment to anyone else and …

RITHOLTZ: What was the pushback like to a $26 hamburger in 2010?

LAFRIEDA: Well – so when the restaurant opened in ’08, the crashed had happened. So ownership and the chefs were really considering not putting it on the menu. Black Label almost did not exist because they thought a $26 hamburger as opposed to the $16 hamburger which was a great burger also, it’s a short rib blend. But they’ve figured, “OK, let’s do it.” And they’ve got a little bit – there was a writer or two that brought it to everyone’s attention that during these times, why is there a $26 hamburger from the menu. Yet, they didn’t complain about the $90 cote de boeuf. So a dry aged rib steak was $90, but the burger was $27.

After one year, I remember the chef called me and asked me, “Pat, do you know how many Black Label burgers we sold in year one?” I said, “Yes, 16,500.” He’s like, “Well, how did you know that?” “I sell you the beef.” It’s an 8-ounce burger. I know exactly how many products (ph), because its traceability. We track every pound for our USDA guidelines and their own personal traceability.

And of the less expensive short rib burger, 8,000. So slightly less than half of the $26 burger.

RITHOLTZ: So the $26 burger is 300 a week, is back in the envelope calculations. That’s a lot of burgers.

LAFRIEDA: Yes, it’s a lot of burgers. Especially for …

RITHOLTZ: So let me …

LAFRIEDA: … a steakhouse.

RITHOLTZ: So let’s talk about some steakhouses. And I want to ask you about two specific ones that you’re involved with. Tell us a little bit about the Chop House at Citi Field where the New York Mets play?

LAFRIEDA: Well, I had become friends with the ownership of the Mets. They were big fans of ours, as we were of theirs. And one day, they asked me, they’ve said, “Pat, you know, there’s one thing that our ballpark does not have, and that’s a steak sandwich.” They had asked me if it’s something that we would consider if we had a steak sandwich in our family. And we did. It had a skirt steak. We had to change that because skirt steak is my favorite cut of beef, but it’s just too – I don’t want to say tough – it’s not tender enough for a sandwich in a ballpark. Now people would be ripping away at it because they don’t know what the actual beefs on the skirt steak are.

So they asked me to come cook our steak sandwich. And I didn’t think that I would be cooking it. I thought that the chefs there would be cooking it. And it wound up to be me. And they loved it. And they told me that the sooner (ph) we’ll be starting in 12 days, and that I’d be operational in two occasions in 12 days.

I’m not one to say no. I did. And Jerry Stone (ph) told today, a big hit, in a ballpark that if you haven’t been there, then listen, a ballpark in which there’s no better food than any other large format capacity than at Citi Field.

RITHOLTZ: It’s a giant upgrade. It’s a giant upgrade from Chase Stadium to say the least.

But since you mentioned ballpark, I have to bring up MSG. You sell Pat LaFrieda steak sandwiches at the home of the Knicks. In fact, it’s only the reason to go to the Garden these days. What gave you the idea of saying, “Hey, here’s a venue where we can reach out to the public with a really high quality food experience at a place that usually sells not necessarily the greatest food?”

LAFRIEDA: Yes. But unfortunately, that building is under major renovation to the tone of $1 billion. So our footprint at the Garden is – will be suspended until that construction is finished.


LAFRIEDA: What we did open though was in the Time Out building in Dumbo, which was a great food hall and filled with groceries. But we’ll reopen when all the restaurants reopen. It’s the same concept on the first floor, on the fifth floor, with an additional concept at the first floor. So with three locations in one food hall that has 23 concepts, with only concept that has more than one in under one roof and the most accessible. So we’re really proud of that.

And it’s amazing. As I kid – I’m born and raised in Brooklyn. And as a kid, I was being allowed in that vendors areas. And to see how it’s changed and the amount of tourism, people that – you just can’t even drive on the street down there on the cobblestone. I mean, it’s just littered with tourists in a very good way. I don’t know how tourists know to go there, but they have found a beautiful place that overlooks New York City at the base of the Brooklyn Bridge and the Manhattan Bridge. And right there, overlooking the water is a gorgeous food hall called Time Out. And we really can’t wait until we get back here. We really can’t wait until we get – Time In, I should say.

RITHOLTZ: And those are epic views over there from the esplanade looking at the skyline of Manhattan.

We keep hearing that there’s going to be another round of stimulus coming out of Washington DC. If congressional leaders called you and said, “Pat, we’re trying to figure out what we need to do for restaurants across the country?” What sort of advice would you give them to help ensure the restaurant industry recovers when all this is behind us?

LAFRIEDA: That really is a great question. Even with this current loan that they are – they’re all able to access, this SBA loan, what’s the one thing they can’t do with it? They can’t pay their meat purveyor, they can’t pay their produce purveyor, fish purveyor. So not being able to pay bills – you see the whole system has to work from the restaurant suppliers all the way through the finished dish.

But let’s just stick with the restaurants for now. They’re devastated. They don’t know what to do. So when has any restaurant – as a whole, when does the country ever forced restaurants to close? Never. Not in the history that we know of. I don’t even believe it’s in 1918 during the Spanish Flu do they closed all restaurants.

So it’s a difficult question. And I want to help the restaurants more than anyone. But where does it end then, because there are many industries that – I don’t know an industry that has been profitable during this time either.

So again, I want to help restaurants. I know that the administration is met with some very well-known and celebrity chefs to get their input on how to help restaurants. But restaurants are in a lot of trouble.

And I think that the biggest part of the stimulus bill that helped restaurants in general was to help their employees get on employment. To me, that was the most important part because again, they’ll be whole, and now the small business owner is left with a huge chunk of missing revenue. So yet, they have rent, yet they have expenses, yet they have no incoming money for weeks. And as opposed to what the general public thinks, restaurants don’t make large profits at all, if all.

So it’s a really tough question. At the same time, I am a realist. This money was not just sitting somewhere in the back shelf ready for a stimulus. We’re borrowing this money from foreign countries, and we’re going to have to pay it back as a country as some point also. So there’s got to be some balance in there.

I – originally the stimulus was $1 trillion, then it went to $2 trillion with the idea the idea that we may need more. I think the idea of asking for non-business related things during their time by certain political leaders was just atrocious. Really, we need to worry about the businesses.

And to help restaurants, the administration would really have to have more of these small business loans that they could loan restaurants, I wouldn’t say completely forgivable. I think that when restaurants build back like any other industry, they would have to pay back these loans.

The interest rates right now are at all-time lows. The Federal Funds rate is at all-time low. So if they could have longer term loans – so these loans are two-year loans. Well, why not extend that for restaurants, if we’re going to pick a sector that really needs help. Let’s loan the restaurant money, so that they could get back on their feet with small interest rate, then they pay that loan over a 10-year period. I think that would be a great way to help restaurants.

RITHOLTZ: I love that idea, Pat.

LAFRIEDA: Yes, this scene was started that way, but it went to two years. It’s not with forgiveness.

I’d say no forgiveness. I think the restaurants will even be happy to have a low interest loan for a longer period of time, and that would really make them sound.

RITHOLTZ: Thanks Pat. We’ve been speaking to Pat LaFrieda of LaFrieda Meat Purveryors on how restaurants and the food chain is actually being impacted by the coronavirus.

If you enjoyed this conversation, well, be sure and go to your favorite podcast host; Apple iTunes, Stitcher, Spotify, and you could see any of the previous 300 such conversations we’ve had over the past five and a half years.

Be sure and check out my weekly column on Follow me on Twitter @ritholtz. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.



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