After Wendy’s purchase, JAE banks on ‘The Machine’
Back in September, Pompano Beach, Florida-based JAE Restaurant Group announced it was now one of South Florida’s largest employers, having acquired 97 Wendy’s re-franchised restaurants within a year.
Some 5,453 people managed stores, flipped burgers and worked in accounting, marketing and real estate for the (now) 177-unit franchisee. The fast-food dynasty now stretched from Miami-Dade, Broward and Palm Beach counties to Albuquerque, New Mexico, and El Paso, Texas.
As exciting as that news was, Chairman Eddie Rodriguez was bursting with pride about another aspect of his thriving business: The Machine. “No one else is using the system because it is proprietary to us,” he declared.
Oh, and it’s “in process,” Rodriguez said with a laugh. At least it was when he and I talked in October. The Machine was then spreadsheet-based, he explained; Rodriguez figured by early 2017 the custom software would be web-based and ready to share. “We plan on offering it and licensing it to other franchisees,” he said.
Rodriguez, a fast-food veteran in South Florida, didn’t want to share many of The Machine’s details. Yet he did say the program gave senior management a “bird’s-eye view” of the entire restaurant system. “We know the compliance of every single thing that our people are doing by going onto The Machine,” he boasted.
Meanwhile, New York-born Rodriguez, whose father emigrated from Cuba in 1947, explained his long association with fast food — rising through the ranks at Burger King and now as a Wendy’s franchisee — despite a stint with a dry-cleaning company after Burger King laid him off in the ‘80s.
In 1993, Rodriquez and Sergio Balsinde, a neighbor, qualified for a Wendy’s minority loan program. Balsinde, an executive at UPS, had also been laid off. Both men had received large severance packages. Their goal was to open two restaurants. “Needless to day, we did a lot better than that,” Rodriquez recalls, citing18 units they’d opened by 2004.
Today, Rodriguez has different partners who have helped him grow JAE Restaurant Group. The partners began gearing up for their big move in 2014, naming several executies to management posts. Then last year the partners brought on CEO Ed Austin, who once oversaw 385 Wendy’s company and 2,670 franchised restaurants in the West and South Florida.
Rodriguez, by the way, was inducted into the Wendy's Hall of Fame this year.
Only one percent of earth’s water is palatable, scientists claim, and thus is shared by the 7.6 billion people on the planet. Even so, says Chris Moore, a Watermill Express franchisee in Houston, some of the city’s diverse population can’t abide the stuff flowing from their home taps.
“A big part of the marketplace here is people from other countries who grew up not trusting their water and always drank bottled. So they look forward to drinking tap water here,” he explains.
Houston, by the way, is indeed diverse. The U.S. Census Bureau reports 44 percent of its residents identify as Hispanic, 24 percent as black and six percent as Asian. Nearly four percent of the foreign-born population moreover is from Africa, where overall water quality is poor.
City water tastes bad to many due mainly to chlorination, Moore contends. In turn, a number of people fill large plastic containers, paying 35 cents a gallon at one of Moore’s 94 units on the west side of the Houston metroplex. “No one in that market buys high-end stuff like Coke or Pepsi’s water product. They want to buy in bulk, and they know quality,” he adds.
But it isn’t only chlorine-laced H2O spiking sales; it’s the heat. The temperature from April through September often climbs past 90 degrees. Outdoor workers, Moore says, are “definitely part of the business.”
Yet opening a Watermill Express kiosk requires care beyond slapping one down in a busy strip-center parking lot. “You have to look at access because these guys are driving big trucks,” Moore explains. “The ideal spot is residential and specialized with big-box stores and grocery stores. We want to be on periphery of those, but out as far away as we can get.”
Moore launched his watery empire, in Harris County, in 1994. He recalls at the time the franchisor didn’t think he was developing fast enough and began opening company stations (as they’re called) in the eastern half of Houston. Today, he describes the relationship as “a happy little marriage.”
The Brighton, Colorado-based franchisor estimates opening three stations (the smallest lot franchised) runs from $456,700 to $581,700, including a $75,000 franchise fee.
Donuts and Tar Heels
Gray Daughtridge, the 33-year-old president of Safari Foods, a five-unit Dunkin’ Donuts franchisee in eastern North Carolina, believes the brand competes so well against Wawa, Sheetz and McDonald’s that he’s agreed to open nine more over the next six years.
Safari Foods is a division of Daughtridge Gas and Oil Co., founded by Daughtridge’s great-grandfather in 1929.
“We went into Dunkin’ Donuts initially to compete with the Sheetz and Wawas of the world,” he says. “Dunkin has brand recognition and fierce customer loyalty. And the potential for expansion.”
Safari Foods is opportunistic when it comes to real estate. Sales at a Dunkin’ Donuts in a company-owned C-store/gas station on I-95 are among the highest in the group. Yet sales at a free-standing unit under lease match it. Neither location was anticipated to ring up so much business. Seasonality is the unintended difference, with the C-stores doing well during warm weather and the neighborhood locations succeeding when everyone stays put, in fall and winter. “It is nice to have a mix,” he said.
David Farkas has covered the restaurant business for 25 years as a reporter and food writer, and writes about development deals in The Pipeline in each issue. Send your franchise’s development agreements to him at firstname.lastname@example.org.