Capriotti’s uses big-time connections to grow
The Bobbie, with turkey, cranberry sauce and stuffing.
Ashley Morris isn’t above a little bit of stalking to land the people he needs to grow Capriotti’s, the 41-year-old sandwich chain founded in a Delaware apartment that he and a co-owner bought nine years ago.
After buying a brand with an admittedly threadbare corporate infrastructure nine years ago, Morris and co-owner Jason Smylie now say they have everything they need to grow Capriotti’s into one of the largest franchised sandwich concepts in America.
The pair’s good fortune came from aggressive industry glad-handing that resulted in attracting IFA’s newest chairperson and BrightStar Care CEO, Shelly Sun, as an investor, along with her husband, J.D., and David Barr, the former CEO of Great American Cookie Company.
Barr is also the chairman and founder of PMTD Restaurants, which owns and operates 23 KFC and Taco Bell restaurants, and is the chairman of Rita Restaurants, which owns Don Pablo’s.
J.D. and Barr both joined the Capriotti’s board with the understanding management would need an exceptional amount of hands-on help to reach their goals. Calling himself “the dumbest guy in the room” when his board is assembled, Morris is happy to say he’s the guy with the most to learn from his newly assembled dream team.
Ashley Morris is CEO of Capriotti’s and a huge fan of its signature sandwich, The Bobbie.
Stalky, but not too stalky
While landing those connections and “eight figures” of financing sounds effortless in retrospect, getting there wasn’t easy. Morris attended more than 25 industry conferences in search of the right funding and mentors, and was wowed by Barr’s presentation at an industry conference in Park City, Utah, that he said was “the greatest presentation I had ever seen.” He spent the rest of the conference trying to meet Barr in person.
“Not too stalky, but medium stalky,” Morris said of his guerilla networking. His quest brought him to the top of a nearby ski mountain alongside Barr where he pitched him on Capriotti’s and learned Barr wasn’t interested in becoming a franchisee.
Two years later, the food at Capriotti’s brought Barr back into the fold. Capriotti’s is best known for The Bobbie, a sandwich that combines turkey, cranberry sauce and stuffing. Barr tried the restaurant for the first time and, later, approached Morris at the Restaurant Finance & Development Conference in Las Vegas to rave about the experience.
“You have the best sandwich in all of franchising,” Morris recalled Barr saying. “I thought great, wonderful, this is amazing—we’re back in!”
From that moment forward, Morris’ plans fell into place quickly. Rather than becoming a franchisee, Barr asked if there was an opportunity to invest in capital just when the brand was on the hunt for funding. Morris was vehemently against going the private equity route.
“There comes a time when the guy making the decision in private equity isn’t the guy who wrote the check, the investors wrote the check,” Morris said. “What they do is incredible and they do it very well, but for me and the way I make decisions … this made more sense to me.”
Barr ultimately said yes to a personal funding arrangement, and brought his friends Shelly and J.D. along for the ride. Completing the deal took eight months of due diligence, but resulted in a 30 percent ownership stake that also led to Barr and J.D. joining the company’s board—as well as serving as the co-owners’ unofficial mentors. Morris reiterated his preference for non-institutional funding that puts everybody in the same boat, as he explained it.
“They’ve put their own money into this company, so their capital is risked the exact same way as my capital,” he said. “If we got into a disagreement, at the end of the day we are all rowing the boat in the same direction saying ‘I need to protect this company at all costs to protect our investment.’”
Capriotti’s has more than 100 units open and operating.
Building a happy life
Now that Capriotti’s owners are pushing 40, rather than 30, their efforts to build the brand are beginning to bear fruit, cranberries included. A company representative said the brand is receiving 50 to 60 inquiries a week from prospective franchisees, and plans call for 15 new shops this year, 30 in 2018 and 60 added the following year.
For its next phase, the company is targeting the Southwest, Midwest and Mid-Atlantic states. At press time, Capriotti’s had more than 100 units open and operating, including more than two dozen locations surrounding its headquarters in Las Vegas.
Looking at the brand’s competition, Morris likened the Capriotti’s concept to Chipotle, rather than Subway, given the larger footprints, dine-in service where guests order off a menu, and a menu where more than half the sandwiches are grilled hot to order.
Zeroing in on the crowded sandwich landscape, Morris called Jersey Mike’s “the best Subway competitor that there is” but added that competition shouldn’t be a problem as the brand works toward a massive build-out throughout the United States in future years.
Even with big unit count dreams, he added that maintaining franchisee profitability would remain top of mind.
“Our franchisees have to earn extraordinary returns in order for this franchise business to accomplish my internal goals,” he said. “When you put one on every corner and you try to have so many units you destroy the economic model.”
At the beginning of 2017, the company added David Bloom as its chief development officer. Bloom spent nearly 20 years as senior vice president of brand expansion at Quiznos, and also has worked for Famous Brands International, the parent company of Mrs. Fields and TCBY.
With a solid foundation in place, bolstered by some of the most prominent names in franchising, Morris said it’s still a “monumental” challenge, with new issues arising every day. He countered that narrative by saying it’s “such willing work” with the passion he, Smylie, his investors and board members share for building the organization to the desired scale.
Nine years into a big gamble that began with Smylie biting into his first Bobbie in Las Vegas, Morris is ebullient in describing their current phase. “I wake up, I go to work and I live a happy life,” he said.
“I have a wonderful home with a beautiful wife and two amazing boys, but I get to follow my passion, I get to build something I truly believe in, and I truly believe Capriotti’s has the greatest food in the history of franchising—I know that sounds like a bold statement and is what every CEO should say, but I believed that from the day I ate the first bite of that cheesesteak when I was in college.”