FOUNDER, SQUARE ROOTS KITCHEN
Derin Alemi graduated from University of Chicago Booth School of Business and entered the asset management realm. After finding success in hedge funds, Derin chose to start his own business, Down Beats. Down Beats was, and continues to be, a great success for Derin. Because of this, he went on to open a catering business, Square Roots Kitchen, in 2015. Square Roots flourished eventually leading Derin to the idea of opening a storefront. Partnering with a friend and fellow entrepreneur, Jason White, Derin debuted their high-tech, fast casual storefront in January of 2017 in Chicago’s West Loop.
I started my teenage career in the food industry, working every role from dishwasher up through manager at a variety of restaurants in my hometown of Orlando, Florida. While my later career got me into finance, I eventually moved into entrepreneurship, and after the success of my first business saw an opportunity in the food space that was very attractive. I never expected to be back in food, but I was well suited for the role after my initial experience in the industry plus later experience in finance and technology.
The two biggest trends that I see, and that Square Roots Kitchen is focused on, are automation and healthy eating. Within that, there are a lot of angles. On the automation front, we think it’s very important to have a human approach to that idea in food. You can always talk to a human in our stores, and you can see your food being prepared. But all of our ordering is done through digital methods. On the healthy eating element, healthy means something different to a lot of different people. We designed our menu to address a variety of diets and tastes, so that no one is left out at SRK. And we do all this with transparency, so no matter what you’re ordering each item is labeled with the exact ingredients along with calories, protein, fat, and carbohydrates.
The food industry is rife with challenges left and right and it takes a constant focus on all of them to succeed. The user experience and food quality are key to earning customers’ trust and getting them to return. Beyond that, there are the everyday issues – how is the food coming in, is it sourced well, are employees executing to our expectations, what has broken today that needs fixing? It’s not an easy business because of all those moving parts, but we know we can succeed in such a challenging environment because our founding team consists of two entrepreneurs who went in knowing in advance just how much work it would take.
The initial idea was mine, but Jason White, our CTO, was instrumental in getting from the vision to reality. It came to me as most business ideas do, a “Eureka!” moment. I was always customizing meals for my low carb diet and I was getting busier and busier as I got my first company up and running. I wanted a quick meal to my specifications and I found it so hard to do with transparency. And that was the moment where I realized technology could do so much more for a restaurant business with a healthy focus. Why someone hadn’t became apparent to me quickly as well – this is a hard business, with low margins. If you don’t start from day one with a technology focus then it is extremely difficult to retrofit stores to what we have implemented. Knowing that, and the challenges that competitors would face, made me confident that we had a real idea on our hands.
Next up for us is expansion. Our first location in the West Loop of Chicago is definitely a starter site. We knew this going in, but it has been able to increase our catering volume while proving the model for the retail element. We’ve already learned a ton of lessons here at 120 S Halsted and we’re excited to continue to improve our stores with site number two and beyond.
The two things that we’re really excited about for store two are changing our kitchen structure to avoid the ventilation system, and also improving the layout to make the process even more user friendly. Eliminating ventilation actually will not be as hard as I once thought, and will not sacrifice any food quality but will open up our real estate possibilities tremendously. On the layout, we noticed in the first week that while we had a human element to the ordering system we need to make that even stronger. We want our customers to walk in and see the staff, while using the layout to direct them to the touch screens for ordering. This also allows our staff to spot any confusion early and help customers who aren’t ready to dive into technology as some others.
Opening a store for the first time was definitely the hardest moment so far. We finally had budget, but this being our first build out so much of that budget was an estimate. Many costs came in higher than expected and even with a buffer on costs we came in just barely under budget. We learned a lot about the hidden costs of creating a restaurant and are much better prepared for the little costs that can add up quickly.
We want our customers to feel like our system is easy to use, they have plenty of options available between our pre-designed recipes as well as the ability to make a salad, wrap, or quinoa bowl from scratch, and then that they have an amazingly delicious meal once they make their choice. That’s really what it’s all about for us at Square Roots – delicious food and an easy experience. The technology helps us provide a lot of information to our customers, but if the food isn’t delicious they won’t be coming back.
We have corporate values that are important to us, and we go by the acronym PRISE – Positivity, Reliability, Initiative, Speed, and Efficiency. These are important internally, but they also dictate how our staff delivers on those to our customer. Beyond that though, I try to maintain a sense of collaboration with the staff. I want everyone’s voices to be heard. If something isn’t right, I want to know so that it can be fixed, and I make sure that everyone knows they can come to me with issues small or big.
Never stop learning, but also don’t forget the basics. The world is changing in many ways and every entrepreneur in every business needs to be ready to adapt. But in food in particular, quality food and quality service will never go out of style.
I think my best skill in the business world is bringing all of the functions together, while taking the analytical element into account. My original career was in finance, where I specialized in data analytics and portfolio management. But what that really meant was that I lived in Excel and made spreadsheets all day. I was good at that, but I always felt underutilized relative to the overall business. Now that I’m out on my own I see why, because I have a lot to offer from a big picture perspective rather than just as a number cruncher. I still think about problems in a data-driven way, but I accelerate in situations where I can do that while also taking the human elements into account.
I think for me, I have always had a drive that is hard to match. I’ve been working a job since I was 14, along with all the educational components that were necessary to get me to where I am today at the same time. When you grow up putting a combined 60 hours a week into your life from age 17 and on, the rest of life almost feels easy once the school part was behind me. I was already accustomed to crazy hours and hard work, so only having to focus on my projects once I took the turn into entrepreneurship was not a stretch. Certainly riskier, but from a workflow standpoint it was very manageable.
Step one for me has always been to achieve a certain level of wealth at which I could dedicate my time to making the world a better place. Fortunately, both of my businesses are already doing that, so I’m not having to sacrifice in that overall goal to advance my career. DownBeats protects hearing for concert-goers as well as all manner of hearing protection use cases, while Square Roots Kitchen is providing healthy meals that address a huge array of diets, allergies, and tastes. I somewhat lucked into these ideas in terms of how they work with my do-good perspective, but I think having that perspective helped me develop the concepts.
With some luck and a lot of hard work, one day I’ll be able to re-allocate my resources towards philanthropy. Much like with my businesses, I think there is a gap in the philanthropy market of getting the most bang for donation dollars and taking a data driven approach to achieve maximum results. There are ideas that do it – a great example is Toronto’s Pathways to Education Program, which provides mentoring and engagement for at risk high school students and enables them to reach college. Boston Consulting Group estimates their return on investment at $24 for every $1 spent, and it creates a cumulative benefit of $600,000 per student enrolled. This is enormously successful on its own, and the benefits of taking students that may otherwise not contribute to society and put them into roles that advantage them and those around them cannot be understated.
I think getting my first business, DownBeats, to a level of success without external investment has been the biggest success so far. I took a $22,000 investment and have returned 20 times that back and counting. I hope to do the same with Square Roots Kitchen, but the scale is much bigger so it will take longer to achieve. But I do believe we’re doing the right things to get us there.
During December 2016, I was definitely struggling with motivation for Square Roots Kitchen. We had launched catering earlier that year and were starting to see some traction, but the fundraising side was going much slower than I thought. Here I was, a proven entrepreneur with one success under my belt, plus a successful career in hedge funds and a University of Chicago MBA, and a year into operations I hadn’t raised a dime yet. I took my first vacation in over two years to Australia and had some time to really think about it. It was a tough road still, but I knew the vision for the concept was sound. It was funding that was the challenge, and that was where I needed to focus my efforts. I gave myself a deadline of 2017 to get it off the ground, and if I couldn’t do that then I was going to hang it up.
Of course it all came together even faster than I’d hoped, and by March 2017 we were underwritten for an SBA loan and had achieved serious revenue in catering. We opened the store in January 2018 and I am definitely happy that I stuck with it through the challenging period.
Above all else, to thine own self be true. It’s important to understand yourself to achieve happiness. Whether this is in career, personal relationships, or love, I know that I cannot find joy unless I’m doing things in my life that are true to my personality
In business, I am trying to mold myself after entrepreneurs who not only embody the versatility that it takes to succeed across different verticals, but also who live great, fulfilling lives that also help other people. One person that always comes to mind is Richard Branson. He self admits that he has had his share of failures, but he has always picked himself up and gone onto the next project with renewed vigor. He also does not shy away from philanthropy and does great things around the world to help enable people who have not had the same success that he has. I can only hope to have a career as a fraction as illustrious as his.
Most recently I fell in love with Australia. I love to travel and have been to many places (though never enough, this is a big world we live in!) and when I went to Sydney and Byron Bay about a year and a half ago I was amazed at how much I enjoyed it. The people are friendly, there is plenty to do, the scenery is gorgeous, and of course the weather is fantastic. Next up is Hong Kong and Thailand this year, but something tells me it won’t be too long before I make my way back to Australia.
I’m not huge on material possessions myself, so this is a bit of a tough question to answer for me. Most of the objects in my life serve a utility and they get the job done, from my car to my TV, computer and phone, etc. To be perfectly honest, the thing that enables so much in my life is fiber optic internet connection. Having 1000 mbps per second at my fingertips at home for all those devices is very helpful for a technology entrepreneur like myself.
I love exercising, and now that we’re into summer in Chicago I can finally get outside and be active outside of a gym again! I’ve always been an active runner but I’ve been getting back into tennis this summer and I love it. It’s a sport I played when I was younger but until recently didn’t think to revisit it, and I’m very glad I did! I love competition so I always need a sport to keep me going, and while basketball will always be there for indoor sports being outside and being active is one of my favorite passions.