Marguerite Mariscal, Momofuku CEO, joined Yahoo Finance Live to discuss the company's direct-to-consumer product line and COVID-19's impact on business.
SEANA SMITH: The Momofuku Group is expanding beyond its well known restaurants, which I'm sure a lot of our viewers have either been to or heard of before, and launching its first direct to consumer product line. For more on this, we want to bring in Marguerite Mariscal. She's the CEO of Momofuku. And Marguerite, it's great to have you on the program here. We know it's been an extremely past-- extremely tough past 10 or 12 months for the restaurant industry. Just talk to us just about what you've done in order to navigate this very difficult time and then the launch of your direct to consumer product line.
MARGUERITE MARISCAL: Sure. It's definitely been a year like any other. And we're still, I think, in the thick of it with 25%, 35% capacities in the cities that we operate, and some cities that we operate where it's outdoor dining exclusively. So we're still very much in it.
But over the past year, and particularly, in the fourth quarter of 2020, we were able to really expand outside of the four walls of our restaurants, which is something that I think has always been part of our game plan, but really got expedited with the pandemic. So that has meant everything from national shipping of some of our products, classes that we're offering with our chefs, and then the biggest push has been on consumer packaged good products that we're selling direct to consumers starting September of 2020.
ADAM SHAPIRO: So help someone like me, who loves to cook, but doesn't necessarily know how to do the right things-- I mean, I just learned you could wash rice and keep it from getting sticky. If I were to get your product, would I be a disaster? And I'm not a bad cook, but is it easy to use?
MARGUERITE MARISCAL: 1,000%. So I think one thing that's kind of been our North Star is that we only want to create products that we would use in our restaurants. And we use that really more as a standard test. We don't want to put Dave's face on a can of soup or a jar of tomato sauce that's not representative of the food you would come in if you ate at one of our restaurants.
So what we're really doing is replicating the flavors, but putting them into vehicles that are easy for home cooks. So we have seasoning salts that are-- basically, you can use them in place of salt and pepper. Chili crunch can basically go on anything. And we're using our social platforms to also educate consumers on how they can use these products.
One fact that has been kind of invaluable I think for us as a company is that 90% of our followers on social media between Dave and the company being over 2 million don't live in cities in which we currently operate restaurants. So we've been able to tap into a customer that I don't know if we quite knew existed or were ever able to really provide or add value. So that's really where we've been seeing the success in all these products, is really expanding the reach of outside of our four walls.
SEANA SMITH: So Marguerite, post-COVID, how big of a part of your business do you think the DTC portion is going to be, and what are your plans to scale that part?
MARGUERITE MARISCAL: I think for, honestly, every restaurant group, all of these things that everyone is doing to survive are going to become their bread and butter. Just, they're-- everyone's model, I would say, in the hospitality industry has been squeezed over the years. And rents have continued to go up. Cost of food has continued to go up. But I would say, consumers' appetite to pay more for food has not necessarily gone up at the same rate.
So everyone's been looking, I would say, for the past three to four years, in ways to increase margin, increase sales. And I really see these products, classes, all of this, as being the way that the hospitality industry continues to evolve and stay relevant. I think trends are going to change. I'm going to guess you're a better cook now than you were a year ago due to COVID and having to be at home. So I think that's true for the majority of the population. So we need to adapt, as a business, to how people are going to continue to eat in 2021 and beyond.
ADAM SHAPIRO: I'm going to brag that I make a mean short ribs, too. But I've got to ask you, post-pandemic, your business model is the direct to consumer, what percentage of the business, because a lot of us are just desperate to go back to restaurants.
MARGUERITE MARISCAL: Well, I would say, Dave and I set a goal pre-pandemic of having 50% of our business not come from our brick and mortar restaurants. And we really wanted to do that to kind of safeguard the business. And I think that's true now more than ever. So I think we'll get there, not in the immediate, but I think in the not too far distant future.
But I think we always see restaurants as being fundamental in that they help develop these flavors. They help show consumers how to use these flavors. But I think our business, moving forward, is going to be, hopefully, a pretty good mix between all of these different avenues that we've kind of explored during this time. And restaurants going back is only really going to strengthen the company and add that dynamic, which we've been missing for the past year.