Four C-Suiters—from Taco Bell, Toppers Pizza, Honeygrow and Naf Naf—talk shop
Liz Williams was named president of international for Taco Bell in early November, and spoke with Franchise Times after her keynote panel at the Restaurant Finance & Development Conference, November 13-15 in Las Vegas.
Photos by Joe Veen
‘International is white space’ for Taco Bell prez
Taco Bell CFO Liz Williams has turned her attention to international growth. The energetic CFO was named president of international, proceeding longtime international leader Melissa Lora, who retired at the end of 2017 after more than 20 years with Taco Bell. Williams discussed her new role with Franchise Times at the Restaurant Finance & Development Conference in November.
Williams, who has been with Taco Bell since 2010, is following a very similar path. She’s been with Yum Brands and Taco Bell since 2010 and prior to that, was a principal at the Boston Consulting Group where she had a close focus on Asia.
As CFO, Williams put a special emphasis on innovation, operations and strategy. When updating the training capabilities with online video, she saw some leaks in the technology suite.
“You have to look at a lot of the plumbing of technology. You have to actually spend a lot of time and resources in terms of examining back of house and POS systems and the network. If you want to bring in all this video and our networks are slow, you’re paying a lot for a video to load,” said Williams.
A ‘growth pioneer’
She said she hopes to build upon the foundation of international growth Lora grew in her 12 years as president of international.
“My career as CFO has been spent focusing on a lot of different growth efforts across the business. I’m really excited to take that and follow behind Melissa Lora, who has truly been a growth pioneer and continue a lot of what she’s doing to bring that growth to the next level,” said Williams.
“International is a huge growth opportunity for Taco Bell. In the U.S. we have roughly 7,000 restaurants. Internationally, we have less than 400. So in terms of where the growth is going to come from, it’s going to continue in the U.S., but international is the white space.”
Her work enhancing the economic model will also continue. Under her tenure, she worked to make things more efficient and one just has to watch all the development deals from Taco Bell to see that franchisees are eager to keep growing. Williams said keeping up that enthusiasm and pushing the economics further is for international investment as well.
“I think our brand is a really hot brand, it’s a brand that translates well internationally. There’s so much enthusiasm and the economic model is only getting better. So it’s maintaining that enthusiasm and making the economic model even better,” said Williams. “I think people will invest in something internationally when they’re really excited about it, but also when they can make a lot of money.”
The new urban prototype will also help international growth. The smaller format location that has been thriving in Chicago is ideal for old, European cities that just don’t have the new developments American brands gravitate toward.
She’s also looking for lessons to bring back to the U.S. The open kitchen was one of the first lessons the brand brought back from an international market. It was a great way to help consumers with little understanding of tacos and burritos wrap their heads around the food. And as the U.S. consumer demands more and more transparency, it’s become a differentiator among U.S. QSR brands.
“We’ve moved from a world where food is fuel to food is experience. Consumers want the experience, they want to be in it, they want to see their food being made. People eat with their eyes and they want to be a part of it,” said Williams. “It also helps them answer a lot of questions about their food. It brings all the good thing that Taco Bell has to offer and shows everyone the experience.”
She said the most important thing as CFO and in her new role will be balancing innovation and value.
“I think we’re known in the category as the leader in terms of value, but also the category leader in terms of innovation. I think that’s a big tailwind. There are very few people who can go capture value and innovation and really build upon both,” said Williams.
“We spend a lot of time trying to do both. You can’t prioritize one at the expense of the other.”
At Toppers Pizza, “we bring the party to people,” said founder Scott Gittrich.
‘Genetic defect’ is key to finding Toppers partners
Scott Gittrich and his wife were saving up their money to become a Domino’s franchisee, and they had $30,000 in the bank. “They showed us two crappy locations in Dayton, Ohio. We thought, do we want to live in Dayton, Ohio, or do we want to start our own place?”
The decision: Create their own place, so in 1991 Toppers Pizza was founded when Gittrich was 28 years old, and is now headquartered in Whitewater, Wisconsin. The pizza business was profoundly different from today. Papa John’s was emerging and there were the big three players. “There really was no decent regional brand to speak of. Toppings were frozen and everything was vacuum sealed.” Then California Pizza Kitchen came along with unusual toppings, and Gittrich decided to go several times better.
Tom Monaghan, the founder of Domino’s, was still running the company back then. “He’s still one of my business heroes,” Gittrich said. “He pounded simplicity” as the bedrock of franchising. But Gittrich “could see casual dining places that were much more complicated,” so he thought he could do it, too.
“We would have a bolder menu and we still do,” with 100 percent Wisconsin mozzarella cheese. “We buy it from a dairy farm,” he says, and add toppings like tater tots and mac & cheese, along with their best-selling product, Topperstix.
“You asked me, why did you start Toppers? You have to have a genetic defect,” Gittrich says with a laugh. “I was wired that way from the beginning,” even though his parents were both social workers in Peoria, Illinois, a college town, and his mother in particular thought business people were evil.
But Gittrich used to walk over to the campus to play pinball with the college kids, and got an early start as an entrepreneur. “My dad taught me how to mow lawns. I had business cards made—Scott Gittrich, Groundskeeper. We had a club of kids who made macramé owls and sold them door to door.”
When he started working at a Domino’s franchise for a man who became another mentor, he was put in charge at age 20. “I was learning how to run a business at a very fast clip. I was working my ass off and loving every bit of it.”
What did he love? “You’re on the edge of getting your butt kicked all the time. You’re working with the same people every day. You feel like it matters.”
When Domino’s started its 30 minutes or it’s free promotion, the stakes got more competitive. “I worked six days a week and on my day off I’d get up at the crack of noon and I’d put on my uniform and get ready to get called,” to make a delivery when the regular person couldn’t get back to the shop fast enough.
Gittrich praises the special culture at Toppers, which includes edgy or even mildly obscene advertising aimed at 20-something males. But when asked to describe how he infused the culture into the chain as it grew, now to 84 stores, he can’t specify. “I never showed up and created it. This is what it’s always been,” he says. “We have a ton of Toppers people out there. That to me is by far the most special thing, when I meet people who are over the moon for Toppers.”
One key to keeping the culture going is selecting franchisees. “It’s choosing people that have that genetic defect” to be an entrepreneur. Most of the time he gets it right, but at least once he picked a franchisee with a lot of money but not much more. “I knew this person wasn’t a cultural fit. He called his people ‘workers’ on the phone one time and he was dead to me at that moment.
“People, they know we are full of ourselves and it’s founder-led. That is off-putting to the right people.”
Gittrich again turns to the subject of business mentors, chiefly Monaghan, the founder of Domino’s. “Each time I heard him speak, he spoke about values. He was a religious person. He talked about respect, being healthy, taking care of family. He said the last thing you should be concerned about was financial.”
Mack Patterson, the franchisee in North Carolina who gave Gittrich his first manager’s job, was also praised. “My mother, the social worker—she thinks big, bad business. But I know so many business people that do things right.
“That is business, that’s working with people who have the same values whether or not you make money. That’s what integrity is. That’s what values are.”
He said he believed all along if he can’t make money in the pizza business (or any business) by doing things right, then he’ll have to find something else to do.
But so far, at age 54 today, he’s finding plenty of success at the brand where he’s outstripped his target demographic but still praises the young people who run the restaurants. “I meet so many 20-year-olds in my business, and these people can do anything. They are special people,” he said.
“I love the pizza business because we bring the party to people,” he said. “I love doctors. I love our military,” and they do important work. But for him, nothing beats pizza. “I’m sorry if I feel our work in the restaurant business is important too.”
The red triangle and tiny camel were confusing customers, said Naf Naf CEO Paul Damico.
New CEO, new logo, new franchise plan is fueling Naf Naf
A red triangle with a camel standing in the middle. That was the original logo for Naf Naf Grill, but as the company adjusted its brand positioning in preparation to launch a franchising effort, it became evident the geometric shape and even-toed ungulate didn’t quite convey the right—or really any—message about the restaurant concept.
“Consumers were confused about the red triangle, the tiny camel,” explains Paul Damico, the former president of Moe’s Southwest Grill who took over as CEO in June with the goal of getting 38-unit Naf Naf ready to franchise. “It is actually a camel-crossing sign seen in the Middle East, but it didn’t translate to Middle Eastern food.”
With a new punchy orange logo, that camel takes center stage, its neck arching over a stack of two words: Naf Naf.
“We changed it to just Naf Naf and we’ve added the tagline Middle Eastern Grill,” says Damico, noting the redesigned logo is just one change that’s resulted from consumer surveys and other feedback channels as Damico sought to, as he puts it, “know what consumers felt about everything.”
This isn’t Damico’s first time fine-tuning a brand before putting it in aggressive growth mode. Not long after Focus Brands acquired franchisor Moe’s, Damico was brought on in mid-2008 not just to run the brand but reenergize and grow its presence in the Mexican fast-casual segment. In his six years there, Moe’s more than doubled in size, from 300 to nearly 700 units, with Damico putting to work expertise gleaned from 14 years in travel plaza and airport concessionaire development.
Now, says Damico, who was North American president of Focus Brands before he left the company, “I’m applying everything I learned at Moe’s from a franchising perspective.”
Expansion via franchising, says Damico, is what Roark Capital had in mind when the private-equity firm approached him about running Naf Naf earlier in 2017.
Roark in 2015 took a minority position in what was then a 13-unit Chicagoland chain run by co-founders and co-CEOs Sahar Sander and David Sloan. Sander and Sloan stepped down from their roles to make way for Damico, who says both men have been “very supportive” of this new planned growth path for Naf Naf. Sander took a new position as chief culinary officer and, notes Damico, “has been very gracious and really respects what I want to do.” Sloan is serving as an adviser.
As Damico solidifies his executive team to be ready to franchise by the second quarter of 2018, he’s also sharpening the brand’s focus around the authenticity of its Middle Eastern ingredients and working to standardize the menu so it’s ready to roll out across the system.
‘Not playing catch-up’
A trained chef before making a career in the franchising word, Damico says he immersed himself in Middle Eastern cuisine upon joining Naf Naf, and he touts the simplicity of a menu that lets Middle Eastern staples such as falafel and shawarma shine. Guests choose a fresh-baked pita to stuff (each restaurant has a bakery making pita bread from scratch), or a bowl to fill with basmati rice, romaine lettuce, couscous or hummus. Then they can add shawarma—chicken or steak stacked and roasted on a revolving spit until it is sliced off to order—or house-made falafel.
Topping options include purple cabbage salad, pickles, chopped lettuce salad, and seasoned onions. Finishing sauces include tahini, garlic sauce, a traditional pickled mango amba sauce, a pepper blend called S’khug, and a spicy harissa sauce. Lentil soup and hand-cut, coin-shaped Naf fries round out the menu.
Naf Naf is already attracting interest from established restaurant franchisees and Damico says once the franchise program launches, those high caliber prospects have an expectation that you’re ready to deliver. “We’re not going to play catch-up,” he says.
As he thinks about what’s to come, Damico says he’s excited “because I’ve been in this business for 33 years and I see such big potential” with Naf Naf.
“I think this brand could certainly grow to 1,000 units across the country, but it’s not a race.” It is clear Damico has big dreams for that little camel.
Justin Rosenberg pitched his Honeygrow concept to 93 investors before landing one.
At Honeygrow, attracting capital like the big dogs
There’s no shortage of ink spilled on the courage, patience, time and valor it takes aspiring restaurateurs to turn their culinary dreams into a sustainable fiscal success. It also requires stacks of cash, especially for those looking to create a multi-unit empire like Justin Rosenberg. He built Philadelphia-based Honeygrow into an independent, 23-unit chain with chic, high-tech restaurants in the most prominent—and pricey—cities along the East Coast.
Although he has no plans to franchise the fast-growing brand, which recently launched a second sub-brand called Minigrow, Rosenberg has broken the odds with a new restaurant that has attracted an eye-popping $70 million in financing over five rounds just five years after opening his first restaurant. His playbook can work for any small chain, franchised or not.
With beautiful restaurants in prime locations, Honeygrow pairs stir-fried dishes with homemade sauces, responsibly sourced proteins, high-end salads like “Make It Great” that includes wheat berries, red quinoa, organic arugula and an orange sherry vinaigrette, as well as create-your-own desserts with trendy ingredients like wildflower, buckwheat and clover. Reading the menu is diving into the heart of the urban millennial’s culinary bull’s-eye.
“I had a small window to create something,” Rosenberg said of the end of 2008 when he and his wife had their first baby and he began planning Honeygrow. “I just knew if I wanted to do something now was the time—I just took a shot and … it worked out.”
Comparing the two concepts, the original Honeygrow is a larger-format restaurant with a vibe that encourages sitting down to enjoy a meal inspired by fine dining. The newer Minigrow is designed to be an express version of Honeygrow with a smaller, less costly footprint that is slated to bring the concept to dense urban markets and capitalize on an intense lunchtime business.
“We have a lot of repeat business on a daily basis” with Minigrow, Rosenberg said. “I wanted to figure out how to take a small footprint, reduce our CapEx and really drive our returns … as we enter these denser urban markets, notably Manhattan and Chicago.” (CapEx means capital expenditures.)
Even as Amazon and other mega-trends decimate certain sectors of retail, the brand’s founder and CEO said new food concepts have propped up already high rents, which was a big reason behind the creation of a slimmer concept that was tailor-made for small, non-conforming spaces in hot neighborhoods.
“We underwrite like maniacs. How much is this thing going to cost us to build? What’s the lender willing to do in terms of working with us for TI and landlord work?” he added, referring to tenant improvements. “What are the rents going to be? What are the sales comps in the market?”
He has found countless applications for the landlord experience at his previous job, which helps Rosenberg make sales with landlords whose language he speaks with fluency.
“Landlords definitely have a comfort level in terms of the concept and our financials and our ability to pay rent on time,” he said. “It gives us a bit of an edge that we can really review things quickly and call things out we don’t feel are right, etc.”
‘The wealth is awesome’
Through five rounds of investor fundraising, investors have also shown their comfort with Rosenberg’s concepts—to the tune of $70 million that’s been dedicated to building out the brand’s executive team and adding further units in its existing markets.
“I didn’t start this to get wealthy,” Rosenberg said of his company’s exceptional fundraising success. “Certainly the wealth is awesome as you get successful, but the truth is I’ve done this to live the life that makes me happy, and the idea of cooking food and doing something that I’m passionate about and scaling a business around those values is, honestly, the f------g best so I’m pretty happy about that.”
It has also made major investments in technology at both concepts, with kiosks for ordering and virtual reality that is used during the hiring and training process. Rosenberg touts the little details with the technology, including shooting videos of little-known destinations in the vicinity of each restaurant, to engage and attract the best possible employees, including district and general managers. It is also looking to merge its two separate brand apps into one, allowing customers to accrue loyalty points with both concepts.
Even with gorgeous restaurants and on-trend offerings, investor cash didn’t come easily. Rosenberg said it took him a year and a half to attract financing, finally nailing it with the 94th investor he pitched. Philadelphia’s Miller Investment Management is the company’s lead investor.
“We’re really poised for smart growth,” Rosenberg said of his cash-rich next phase. “We’re not looking to open up stores just to open up stores or hit a certain unit count, we’re looking to open up in certain markets and … just backfill these existing markets and continue to build really strong brand awareness.”