Interview with 2018 Chicago Rising Star Restaurateur Donna Lee

by Caroline Hatchett
June 2018

Caroline Hatchett: How did you get your start?

Donna Lee: I started when I was 16 as a hostess in Evanston. I stayed in full-service dining as a server for a few years. I helped open the original Boka. After doing all that, I decided I wanted to get to know the fast-casual industry and sought out training. I went to Noodles & Company, worked for them for four years, and met Laura [Goodman at Dine Out Chicago]. I worked as an assistant publisher for her, which allowed me to engage with numerous restaurateurs in Chicago. I had stopped eating a lot of meat around the time I was developing the concept for Brown Bag. It was hard to find fresh, affordable seafood in Chicago. I caught the entrepreneurial bug. [The East Randolph location] was my first restaurant, and since then we’ve opened one in Revival Food Hall and another in Lake View at Roscoe & Paulina. The fourth is opening at Wells and Hubbard, and we’re looking at opening a fifth. I’m not married nor do I have kids. This is my baby.

CH: How have you funded growth? Have you taken on investors?

DL: We only raised enough to open [the East Randolph] location at first. We funded all the other locations through internal growth; we have no investors. We’ve benefitted from creative real estate deals and opportunities like Revival Food Hall, where you can open a unit for less cost. To open a store, it’s basically $350,000 to $650,000. At Revival you can smack something together for less than $100,000 and still do great numbers. I love full builds though. They’re fun. I selected the fabric you’re sitting on and designed the menu with my brother—it’s a lot of familial blood, sweat, and tears. It doesn’t hurt that my mom is an architect and real estate developer, my uncle is a signage producer, and my brother is a graphic designer. 

CH: How similar are the look and feel of your restaurants?

DL: The layout of each space is so different, so I’ve tried to be hands-on with each. It’s tough because as you become multi-unit, you want to maintain the same level of creativity, but you’re also trying to become more standardized so that the identity carries. We’re not doing [a build-out] every two months, so we have time to marinate on ideas. The store at Roscoe & Paulina has the same color scheme, but it has a refinement that’s specific to that neighborhood. River North will take on the same palate but will be built for a higher volume. 

CH: Tell me about your sourcing. How do you keep costs in check with seafood as your focus?

DL: We have made great strides in procurement in the last 12 to 18 months. Out of the gate, we used two primary suppliers for fresh fish. One of the challenges is never getting boxed in. If a supplier has a problem, you have a problem. Our food costs are generally running 30 percent to 31 percent of our revenue. It is also a huge challenge to deal with a delicate product in a not-so-delicate environment. Fish is handled more delicately in restaurants that have more time and can use tweezers. It’s almost like fresh fish has to be in a high-volume environment because it needs to be rotated so frequently.

We did a big exercise where we dove into every menu item from a scraps and labor standpoint and figured out which menu items were slowing us down and weren’t priced accordingly. 

At Brown Bag, we have lots of menu options because of the grid structure. We have 50 SKUs, instead of 25 to 30. The grid system get people excited about a healthy, sustainable concept. But some combinations that include a base plus fish are much more expensive. We don’t fluctuate costs. In December and January, lake whitefish is at its all-year high. If someone orders a white fish and veggie box blend, the highest food cost will be in the winter; in the summer it will be the crispy shrimp tacos. Procurement in a scalable business is certainly a challenge. It’s at the front of our minds when we think of growth outside of Chicago. All our products go through rigorous double-checking for Monterey Bay Aquarium standards.

CH: What markets are you most excited to expand?

DL: We want to be represented everywhere. I don’t know if we max out in Chicago and then expand, or grow more slowly here and expand elsewhere. The seasonality of people’s fish eating habits plays a role in Chicago. In summer, people eat lobster rolls and drink Chardonnay, but they eat braised meats in the winter. How reliable would our data be in a warmer market? Some seafood concepts already exist in warmer markets: where do we overlap with those concepts? What would the other players respond? How are you first to market in an unexplored niche?

CH: Whom do you consider your national competitors?

DL: California Fish Grill and SlapFish.

CH: Do you have a corporate chef?

DL: No. All of the core recipes have been created by me. I’m always looking to collaborate with the team, for sure. We have a seasonal sandwich, and the last time we developed it we did a competition between the restaurants in which every employee was able to participate. We ended up going with a marble rye, lemon pepper fried white fish, avocado, and parmesan. I would have never thought of that on my own. 

CH: What does your corporate structure look like?

DL: I have a right hand and a left hand. I have an area manager, Chrissy, who handles operations. She oversees operations in the four stores. Then we have Zach, our chief strategy officer, who’s focused on growth strategy and best-in-class systems.

CH: How did you develop the menu?

DL: When I first came up with Brown Bag I was inspired by bags of crispy fried shrimp, which is more of a nostalgic treat. During our evolution, it took on a healthier identity, which bodes well for us because the number of returning customers is high. You can eat our food every day.  With proteins, we asked, “how do we shave the right split between crispy, grilled, and broiled?” We need fish that’s easy to handle and sustainable. People pick the bases themselves. Tacos and sandwiches were always on the menu, and we’ve added the straight up and power box options. 

CH: What’s your biggest challenge?

DL: There are so many things on my mind right now. They’re more to-dos than challenges. One issue is figuring out how to disseminate values that are important to you as you grow. As of right now, I stay in touch with every employee we have. I see each of them every few days. Even if you don’t sit down and talk to everyone, just being there lets the employees know what you’re about. They know the company cares about them. As we’ve grown, the most painful words I’ve heard have been, “I never see you anymore.” I’m focusing a lot on personnel development right now—growing people. With the labor force being what it is, growing employees as fast as the company needs them is a challenge. When you create a culture it’s hard to bring in outsiders. Internal promotions are important, but even though you may want to make someone a manager, you have to make sure that they have the right skills for the position. If we swap out assistants in one location for another, they should have the same skill set.

CH: How many employees do you have?

DL: 50, though it’s a bit seasonal. 

CH: What are some other restaurant concepts that you admire, or that inspire you?

DL: The culture has grown a lot. It’s not fast casual; it’s premium casual founded by independent operators. In my immediate circle I admire: Dig Inn, Sweet Green, Dos Toros, and Roti, a Chicago-based, Mediterranean concept with close to 30 units.

CH: How have you secured real estate?

DL: You have to be a brand that’s sought after and make it a millennial-friendly environment. Because this [shop] was the first, I had to prove myself. No one was seeking me out. Our later deals came from developers seeking me out.

CH: How many units do you want?

DL: We would like to see ourselves in the double-digit department in the next two years. We’ll be four years old in May. There are so many possible advancements to make. My personal passion is people, operations, and creativity. I want to be the person to do those things. I may not be the person to scale to 100, but it’s all very possible; the space is underpenetrated right now. We’re intent on developing leadership teams as we grow. We’re focusing on taking the temperature of existing team members from a work culture standpoint. We want best-in-class happiness, wage transparency, etc. The people component is important: we have to groom and groom faster.

CH: How much seafood do you sell in a week?

DL: We move a lot of seafood. The daily catch, salmon, whitefish, and crispy cod always sell well. We are, at this point, one of the biggest salmon consumers in the city of Chicago. It costs $28 on someone else’s menu because it’s handled with such care. We are literally slinging salmon. We go through a lot of it. It’s fun to teach young people how to fillet, take skin off. It’s easy and exciting on a culinary level for someone who has only worked for Chipotle.