From cafes to recruiting for Patrice ‘zee
It’s been tough this summer finding workers to staff Colorado’s 11,247 restaurants. After all, the state’s unemployment rate is a meager 3.8 percent. So hospitality recruiter Michelle Shriver wasn’t exactly surprised when a client wondered if she could help find reliable hourlies. He hadn’t been the only one to make such a request.
“They’re all placing ads and not getting called,” she said.
Shriver, a former casino operations executive who lives in Las Vegas, knows all about the hardships of hiring. Until this year, she and her husband operated six franchised Tropical Smoothie Cafes, three in Sin City and three in Greater Denver.
Shriver, by the way, doesn’t recruit hourlies. She scouts exclusively for management-level front- and back-of-the-house employees—as well as the odd corporate executive. Restaurant franchisee clients now have her in the hunt for a supply-chain manager, director of finance and IT exec. She claimed 18 years managing casinos qualified her to identify successful candidates.
While still a Tropical Smoothie Cafe franchisee, Shriver had signed on as an area developer and franchisee of Patrice & Associates, a Maryland-based hospitality recruiter. Las Vegas is her franchise territory; Utah, Colorado, Nevada and Maryland are her development states. Not coincidentally, Shriver also was an area developer for Tropical Smoothie.
She and her husband launched the smoothie franchise in 2010, believing a family-run business (it included their college-age sons) would be a grand idea.
What the Shriver clan didn’t foresee was the business can intrude mightily on family life. “We loved to travel, but it was very difficult to leave the cafes as a family,” she recalled. “It just made it almost impossible to have a normal family life.” The couple sold the last of their units to a manager this summer.
I asked Shriver—Patrice & Associates’ first area developer—why she took on development in Maryland when she lived so far away. She first explained that she bought the contiguous states (Nevada, Utah and Colorado) because she knew them well. She purchased Maryland because she loves the East Coast and the franchisor is headquartered there.
If you’re reading Franchise Times, chances are you’ve hired a recruiter or at least considered it. It’s a time-saving option and, depending on your circumstances a cost-effective one, too. Shriver, for example, boasts she can access a list of 200,000 candidates and their résumés.
Yet Shriver must sometimes school tightwad clients on compensation. In general, she said, assistant managers’ annual salaries fall into the $30,000-$40,000 range and GMs, $40,000-$60,000 (more in large metropolitan areas like New York). Overall, those salaries don’t range much among types of eateries.
But there are, apparently, “shocking” exceptions. Shriver cited a donut shop client that paid GMs a hefty $58,000 a year because they oversaw production and delivered to retail outlets. “People are surprised at what it pays, but the complexity of the job demands it,” she declared. Donuts? Who knew?
Iconic pizza in St. Paul
With an unemployment rate (3.9 percent) similar to their Colorado counterparts, restaurant operators in Minnesota also face a dwindling labor force. Consider Mike Meents, a multi-unit franchisee of St. Paul, Minnesota-based Red’s Savoy Pizza, a 14-unit chain of iconic pizzerias. About to open his fourth outlet, in Minneapolis’ trendy Uptown district, he’s wondering where staff will come from. “The bigger challenge now is finding people,” he said.
To date, the issues Meents recently faced have been developing store systems while opening three Red’s (two of which are small, delivery/takeout units). “Going from one unit to two was not that difficult. But two to three was where I had to rethink managing paperwork and all the back-end stuff,” he explained. “We’ve got a process now with operations and back-of-house. It’s easier.”
Meents, who employs his own marketing person, also works closely with the franchisor. “I use them like they’re another team member,” he added.
It wasn’t always the case. Ten years ago, Meents licensed the pizza operation from founder Earl “Red” Schoenheider. Then in 2012, things changed. The licensing arrangements were deemed franchises under Minnesota law, and a (then) new president registered a separate company to sell them after giving “licensees” a choice to convert or go it alone.
Facing royalty payments and ad fund contributions, Meents made the switch to franchisee. “The reason I stayed is, for one thing, Mike’s Pizza would take money behind it and time to build it up. There’s a lot of value in the Savoy name. When I made the decision, I went all in,” he said, adding the franchisees have more leverage as a group.
Meents has financed his first two Savoys with SBA loans. The third, a conversion, was financed by his partnership with a cousin and an angel investor who has since been bought out. The bank he has a relationship with typically wants a 15 to 20 percent down payment before making a loan, he said.
His Red’s are in the upper-middle-class suburbs of Eagan, Burnsville and Edina, where median household income runs from $87,000 (Edina) to $64,000 (Burnsville). In Minneapolis, where his fourth store opens this year, median household income is $50,767, just below the national median of $55,516.
Yet residential traffic is only part of the revenue story. Meents cited a large catering business from corporate clients. “I’ve tried to target areas where there’s lots of commercial activity,” he said.
It’s not all red sauce and pepperoni, however. His Edina outpost, just west of Minneapolis, isn’t the sales equal of his outlets in St. Paul, where the Red’s is a household name. “As you get west, you have trouble with brand recognition,” Meents explained. “I’d say in Eagan 9 out of 10 people know what Savoy is. When you get to the other side of the river, it’s 5 out of 10. But once they taste the pizza, they’re converted.”
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.