Life after Moe's
Raving Brands\' other children want their fair share
Raving Brands founder and CEO Martin Sprock sounds as if he’s high on Planet Smoothie’s newest drink, a Manic Mango Smoothie with extra shots of Adrenaline Rush. On August 30, Sprock, 43, finalized the sale of his Mexican concept, the 345-unit Moe’s Southwest Grill, to FOCUS Brands, also of Atlanta. Terms of the sale are secret, but Sprock said gleefully, “I made more than my high school guidance counselor ever thought I would.”
So, it seems, did Sprock’s partners. “There are 15 to 20 others who can now pay for private schools for their kids and give money to charity,” Sprock said. “It’s a dream come true for a lot of guys. Now we have to go back and do it again.”
What Sprock did in the first place is unprecedented in franchise history. In a dozen years he purchased or launched nine franchise companies and grew them to a total of about 600 units. Along the way, he delighted customers with his quirky names—a popular Planet Smoothie beverage is a Chocolate Elvis and a vegetarian taco at Moe’s is called The Ugly Naked Guy—and charmed reporters with his Spartan ways. During an interview in 2002, he told me he was working from a “wedged-in little space in a converted bathroom in Atlanta. We run lean,” he added, “and everybody makes $50,000 a year or less.”
Today, Sprock says, “By forcing everyone to live lean, we were able to use the money we made to fuel the growth of our companies. I told them (his employees and partners) if they kept working hard, they’d eventually have winning days.”
The people left out of the winner’s circle are some Raving Brands franchisees, who are suing, have closed or are doing neither but are still feeling neglected. “I’m the only Planet Smoothie franchisee in Pennsylvania,” said Shannon Lelli of Doylestown. “My store’s done well and I’m very thankful. But for all I’ve paid in royalty and marketing fees in seven years, it would be nice to get a little attention.”
Raving Brands today
Planet Smoothie—Estimated 130 units in 20 states
Mama Fu’s—20 units in seven Southern states
Shane’s Rib Shack—69 units in nine states
Monkey Joe’s—15 units in four states
Bonehead’s Grilled Fish and Piri Piri Chicken—seven units in three states
The Flying Biscuit—three units, all in Atlanta
PJ’s Coffee—48 units in six states
Last December, 40 members of Mama Fu’s franchise groups did sue, claiming Raving Brands failed to provide the support, training and advertising help required by their franchise agreements. Five Moe’s franchisees in California filed a lawsuit in March 2007, claiming they had received so little support from corporate they all had to close. And in April, another lawsuit by several Georgia and Tennessee Moe’s franchisees alleged that the company took kickbacks on purchases and kept some proceeds from a “Cinco de Moe” promotion the franchisees had held to benefit the National Center for Missing and Exploited Children. Their attorneys, Robert Casey Jr., of Gilson Leibel P.C. in Atlanta and Robert Einhorn, of Zarco Einhorn & Salkowski in Miami, said recently that more franchisees want to join in that litigation.
Sprock said Raving Brands has stopped selling Mama Fu’s franchises while the litigation is pending. The Moe’s lawsuits are still Raving Brands’ responsibility, he said, “and showed us some franchisees were not happy. They may be happier now, because FOCUS Brands has more resources.”
Resources—like franchisee field support and training, communications and marketing programs—are what Raving Brands, so far, has lacked. Franchisees and analysts alike hope they’ll become part of the mix now that the company’s largest brand is gone. Dennis Lombardi, executive vice president of restaurant consulting firm WD Partners in Columbus, Ohio, said, “Raving Brands has been like an incubating house. They create concepts and develop them quickly. But running a system with eight or nine brands, especially with franchisees who own just one to five units, requires a lot of infrastructure.”
The lack of support for new franchisees held Planet Smoothie to around 130 units over the past decade while competitor Jamba Juice grew to over 600, Lombardi said. So many Planet Smoothies have opened while others have closed that no one, including Sprock, can give an exact tally. When we made random phone calls to stores currently listed on the Planet Smoothie Web site, several were no longer operating.
Expansion also has been hit or miss, said Darren Tristano, executive vice president of foodservice research firm Technomic in Chicago. While the majority of the company’s franchises are in the South, most brands have a few outliers. Besides Lelli in Pennsylvania, Planet Smoothie has just one unit each in Louisiana, Massachusetts and Tennessee. Doc Green’s, a salad concept, has single franchises in Texas and North Carolina and PJ’s Coffee, with 31 franchises in Louisiana, has a loner in New Jersey. During its expansion into 34 states, even the popular Moe’s failed when franchisees first opened units in Illinois and Wisconsin. “Raving Brands always believed they could just follow their instincts into new markets,” Tristano said. “What they need is a solid, strategic growth plan instead of putting a toe into a new area and hoping it succeeds.”
Craig Weichmann, a boutique investment banker in Greenville, Texas, said he had been called in by a restaurant operator who wanted to open a sandwich shop in a location in a far flung city where the previous tenant, a Moe’s franchisee, had failed. “There was no question that this was a good location,” Weichmann said, “but Moe’s had done nothing to promote its brand in such a remote area. My client opened and started right out doing 50 percent more volume than the Moe’s franchisee had done.”
Sprock is aware of these problems and said, “It’s time to focus on our smaller brands and take them to the next level, too. We still have eight brands whose franchisees expect our full support. And we have several people at corporate who came along too late to share in the Moe’s grandness. We have to do something for them, too.”
Whatever they do, Raving Brands will be doing it with a smaller staff. About 40 of the 100 people working in the Ravings Brands corporate office (they moved out of that converted bathroom last year) have moved over to FOCUS and it’s undecided whether Raving Brands President Stephen LaMastra will follow. LaMastra, an attorney who had been an executive with Ritz Camera, runs Raving Brands on a day-to-day basis ever since last year when Sprock moved to Palm Beach.
According to published reports, LaMastra talked with FOCUS CEO Steve Romaniello about Moe’s for some time before the deal was announced in April. LaMastra currently works under a shared services contract, “making sure nothing falls through the cracks during the Moe’s transition,” Sprock said. “In six months, we’ll determine with FOCUS where he needs to be.”
LaMastra could not be reached for this article, but when we interviewed him last February, he said his mission was to turn Raving Brands into a “stronger company.” “We’re trying to better match prospective franchisees with our concepts. People with no experience can run a Planet Smoothie, but now we require five years of restaurant experience before we’ll let anyone open a Bonehead’s,” he says.
As for the future, Sprock said, “There will never be another Moe’s. I struggled over letting that concept go.” He is, in fact, still holding on a bit, because the sale requires him to leave some money on the table. “I’ll keep rooting on the sidelines,” he said.
Franchisees of the remaining brands hope he’ll cheer for the home teams. Shane’s is on a good trajectory, with 69 units open and 40 more under construction. Its cooking method—electric cookers instead of giant smokers—means units can tuck into strip malls instead of free-standing buildings, and still average $1 million a year in revenues.
Doc Green’s, said Lombardi, “is an example of what Raving Brands does well. They look at the trends and jump in, in this case with a salad and sandwich menu that does well in high daytime population centers.” The dozen open average $825,000 a year in revenues and franchisees are in the process of building more.
Last year Raving introduced Planet Smoothie Café, a deli with a limited, healthy menu, and a few have already opened.
One of them, in Jensen Beach, Florida, belongs to Tim and Caroline York. Tim York said, “The concept is phenomenal. But we’re isolated here, and we’re not getting any support from corporate. If Raving could redirect some its focus back to its franchisees, this could be an empire.”