Often called America’s most famous butcher, Pat LaFrieda is a 46-year-old Wall Street dropout who came back to his family meat business in 1994 and turned it into the distributor to the best restaurants in New York City. Founded in 1922, he runs Pat LaFrieda Meat Purveyors, which was originally named after his grandfather.
Today, it’s a $200 million (sales) business selling steaks to Michelin-starred establishments like chef Michael White’s Marea, April Bloomfield’s Spotted Pig, and Danny Meyer’s Union Square Cafe. He also dry ages steaks for 100-plus days for Eleven Madison Park, which was recently named the best restaurant in the world. It grinds burgers for Shake Shack’s 135 locations and cuts filets for meal kit delivery service HelloFresh and Amazon Fresh. (He’s also a top distributor of Greater Omaha Packing, a beef supplier out of Nebraska which Forbes featured in its October issue.)
Forbes sat down with LaFrieda in his 36,000 square-foot facility in North Bergen, New Jersey to talk about how he’s spent the past two decades perfecting his dry aged steaks and becoming a favorite among award-winning chefs in the process. He also gives Forbes a sneak peak at his new plans to triple production before the end of 2018.
FORBES: Let’s start with when you were on Wall Street and why you wanted to make a change.
PAT LAFRIEDA: I hated Wall Street so much. I was selling intangibles to strangers over the telephone, paying for leads, calling people that had been called eighty times already that day. I was trading. I was also an account executive, which means I was just trying to get new business.
FORBES: Tell me about the moment you got fed up.
LAFRIEDA: It was about nine months in. I’ll never forget going down the elevator with half of my personal belongings from my desk. In comes my boss. He’s like, “So, you’re leaving, aren’t you?” It was just a feeling that I was doing something wrong. Week after week, our analysts would tell us to push the same stocks as the week before. It just was not making sense. We weren’t making our clients money. We were making money. It wasn’t tangible. It didn’t make sense to me. I had worked with my dad since I was a kid. This is what I wanted to do. It’s what he did not want me to do.
FORBES: But your dad never wanted you to join the business. As a kid, he would bring you in at three a.m. to make you realize how hard this job is, compared to a desk job in his mind.
LAFRIEDA: Yeah, come in and rub pennies together. Lift quarters of beef that were a couple of hundred pounds and carry them across the room. Any menial task, sweep, clean the fat trap. That’s always fun. Be a helper on the truck. I drove around. Just anything he could possibly do, but to me it was fun. It was exciting to go to the different restaurants, to go into the different kitchens and meet chefs. Actually then joining the business, that was the best education because I knew what the chefs wanted because I was the one owner that actually was in all the kitchens and spoke to all of them. They showed me. I’d come back with a piece of cardboard with this diagram of a veal shank and show my dad that this is how he wants it cut. Any chef could call and say, “What I’m looking for … ” And I’d say, I know exactly what you’re talking about.
FORBES: After you quit Wall Street, you were trying to convince your dad to let you join the family business. How did you finally do it?
LAFRIEDA: My aunt, who was real tough. If there’s a lover and a fighter, my father was the lover, my aunt was the fighter. She had just retired, and she had to convince my dad to let me join the family business. It was the end of ’94.
FORBES: And the reputation now is that this is the best meat that goes to the best restaurants in New York City. I’m curious how you’ve seen that evolve since you joined in 1994. Have there been any clients that have stayed or have been there from the beginning?
LAFRIEDA: We always liked the smaller restaurants. And the reason was that restaurant accounts will come and go, and if you lost a really big account, especially when we were small, it was the most depressing thing. It was the end of the world. But if you had a bunch of smaller restaurants and you lost one, you were gonna live. When I started, we had 44 restaurant accounts. And we were not computerized. Each restaurant had their own book.
FORBES: So how did you all scale up and as you grew bigger, and how did the higher end come in?
LAFRIEDA: So when I took my suit off and put jeans and flannel on and ten fleeces, went to work early in the morning, I helped cut and portion all the product, helped put the orders together, the picking process, load the trucks. Ultimately, was a driver and made the deliveries. And then went back to LaFrieda Meats, ran up to the tiny bathroom, changed into a suit and went out on the road and went after accounts and tried to grow the business. It was a tedious, long process. But I loved it. It was funny, I’ll never forget getting Becco was my first big account. I’m like, “Dad, I got this guy, Joe Bastianich?” I couldn’t pronounce Bastianich. He’s like, “Who the hell is that?” I’m like, “Dad, it’s a big account. He uses a lot of veal ossa bucco,” and I went through the whole menu. The next day, a driver called out, and I had to take that route. I’m going back to the same restaurant to make the delivery. I was in the suit a couple hours before, got the account, and I had my LaFrieda hat now on. I pulled it down real, real, real low. I was the one making that delivery, and I didn’t want them to see that it was the same person. But that’s how small we were. That was the first big account that I got, by just walking in and speaking to the chef. It just so happened I walked in at the right time. They had an argument about veal pricing, and I think that Joe may have found out that his chef or receiver was getting paid off by the meat company or by the purveyors in general. In leaving that meeting, Joe said, “I’m gonna tell you one time. If I find out that you pay off anybody here, any money that I owe you, since this is a current business, I’m not paying it.” I was like, “That’s an odd thing to say. Where is that coming from?”
FORBES: And what was the moment that you realized the business was really changing to be what it has become today?
LAFRIEDA: I was arguing with my dad at the butcher table in Manhattan, and our sales went from $42,000 a week to $88,000. I was like, “Wow, what a drastic change.” And he was like, “Keep up the good work.” It was all on these really small customers in Manhattan. We never owned a burger machine before I joined the company. We ground chopped beef, but we didn’t make patties. We only sold chopped beef in ten-pound bags. I said, “Dad, what if we were to buy a forming machine to form burgers?” He’s like, “What are we gonna do next? Go to the restaurant and cook for them?” But I said, “I got this new customer, and they want four-ounce pucks.” He goes, “What the hell. We don’t sell hockey pucks!” That was Shake Shack.
FORBES: And now it’s one of your most famous products, right?
LAFRIEDA: Yes. The restaurant had to hand form them. Shake Shack got so big so fast, they demanded us to make it. So some of my key butchers, they got hired because I needed more people to make burgers by hand. I said, “Dad, we have to get a burger machine.” So he’s like, “No way, absolutely not.” I ordered one anyway.
FORBES: How much did it cost?
LAFRIEDA: Yeah, it was $80,000. It wouldn’t fit in the door. The hopper was too high. I had measured the ceiling height, and we were good. But I didn’t measure how to get it in. I had to get the hopper off the machine to get it in the door and then reattach it once inside. But I had to get all that done before the morning, before my dad got there because he would give me hell. So he was furious when he came in and saw the machine. Absolutely furious. Now we have five, and they run all night long. God forbid one breaks down.
FORBES: So what’s next for Pat LaFrieda Meat Purveyors?
LAFRIEDA: We’re building another facility two blocks north of here. That facility will be all production. That’ll be three times larger than what we have. We’ll be able to triple our production overnight. From there, this will be more of a cross-stock. Our grinding operation, our dry aging process, all of that will be tripled. We need that yesterday.
FORBES: How many times a week do you get asked for licensing deals?
LAFRIEDA: We want to always be perceived as the meat specialists. But licensing deals to open steakhouses? Constantly. I can’t open Pat LaFrieda Steakhouse on 5th Avenue and compete with my clients. That would not happen.
FORBES: So then can you talk about how you did open a restaurant in 2016, The Pennsy in Madison Square Garden?
LAFRIEDA: Well, a restaurant that’s a sandwich shop inside the bubble of the Garden is the only —
FORBES: It’s not a steakhouse on 5th Avenue.
LAFRIEDA: Exactly. We have no clients there to compete with. It was a great way for us to actually help our clients, in a way because brand exposure is everything, and the amount of brand exposure we got from the Garden, from The Pennsy is amazing. Of the six concepts that began there, only two have been successful. Ours and the vegan bakery, which is hilarious. It’s the only restaurant that we actually own and operate. We also have five restaurants in Citi Field and a couple at the airport.
FORBES: Getting back to expansion, do you have a timeline and do you know what type of investment are you talking about here?
LAFRIEDA: That building will wind up costing about $15 million. This building was $10 million. We learned a lot from building this. A USDA facility is very unique. The one big thing in building that we learned: it’s not who’s the least expensive. Who can get it done the fastest? The least expensive person that takes the longest amount of time costs so much more money at the end because you’re waiting on everything else. That will be the biggest thing, to get the building up as fast as possible.
FORBES: Many food distributors borrow against their inventory. Did you ever take out a loan?
LAFRIEDA: Nope, we just grew very slowly and very steadily, and instead of putting the money in our pockets, we always put our money back into our business. It seems like such an easy thing. It’s not. At the end of the year, your money’s there. You take it, or you pay tax on it. Pay your bills. Growing that way has really helped us stay and be more competitive than anybody. Usually when you call a smaller company, like ours, as opposed to Sysco, they’re surprised that we’re less expensive. Why? Because Sysco is paying 6.5% off their inventory, where we don’t. They may pay 2% less than us because of the tonnage that they use. They want to pay more because they have to borrow for their inventory, where we don’t.
FORBES: But you will have a mortgage on your new facility.
LAFRIEDA: We’ll borrow to build, like we did here: 20-year loan, 20-year mortgage, 5-year fixed, and we paid it off in 4. So it’ll be the same there. Owning the property that we were in is my father and my aunt’s genius, and the fact that they bought in the meatpacking district when everybody else only leased. Why buy the building when rent went from $40 a square foot to $400 a square foot then to $4,000 dollars a square foot? Yeah, I’d say that’s pretty genius.
FORBES: What have you’ve learned that you would tell your 18-year-old self?
LAFRIEDA: Put your company profits back into the business if you think that’s what’s going to be your source of income for the rest of your life. I said it sounds a lot easier than it is. I think it’s a big lesson for restaurateurs. Restaurateurs come up with an idea of what they should be making, and regardless of how busy the restaurant is, that’s what they’re making. Slow months, busy months. No, no, no, no. If you have slow months, you have to start to make less. You have to feel pain to understand and better your restaurant, to do better before you can take the same amount of money as you would if you were busy.
FORBES: And credit and reputation are everything in this business.
LAFRIEDA: Collecting money is very difficult, and we have a whole staff of people upstairs. All they do is make calls to collect money. Some restaurateurs will call me and say, “Pat, you’re putting me under too much pressure.” Really? What pressure am I putting you under? They say, “Well, first of all, your staff wants us to sign a personal guarantee.” Yeah, everyone has to sign a personal guarantee. I can’t buy anything without a personal guarantee. Packers want my financial statements for the last ten years. I’m asking the restaurant to just check their banking information to see if the first check they give me is going to bounce. So you have to stand behind your business and sign the personal guarantee, and put your money back into your business so that you have that leverage. I would say we probably get about 30 restaurants a day that send in credit apps, they want to buy from us. The restaurants that get to the top of the list are ones that sign the personal guarantee. They have that leverage. They have good credit. They’re able to pay their bill. We’ll jump through hoops for them. Literally had a restaurant a couple days ago that — they’re brand new, no credit references, won’t sign the personal guarantee, and want to know why I can’t give them 30 days credit. What does 30 days credit mean? It’s different for every restaurant and every accountant. At the end of 30 days, does that mean that you’re gonna pay me for the entire 30 days? Or more likely, at the end of 30 days, that’s the end of the pay period, then give them 4 or 5 days to process the check for the first 7 days. How does that work? Now all of a sudden, we’re at 45 days and the check bounces and I’m pulling my hair out of my head. Collecting is so hard. If you have the ability to pay your vendors, you’ll find that you have so much more leverage and really been one of the key factors to our success.