Catering boost for a Moe’s operator, while labor lights up Mister Sparky
Illustration by Jonathan Hankin
Before interviewing multi-unit franchisees for this column, I sometimes review Yelp to see what customers are saying about their operations. Of course, few businesses escape criticism online; most, in fact, get dinged—often painfully.
Yet what’s important is how franchisees respond to the criticism. Many, at least in my experience, don’t bother to acknowledge the complaints. Which is why I was surprised to see franchisees of Moe’s Southwest Grill and Mister Sparky answer complaints and promise to take action.
“We do it for a couple reasons,” explained the Moe’s franchisee, Michael Geiger. “One, it’s the right thing to do, and I’ve always felt any opportunity to connect with a customer—directly, especially—is a golden opportunity to make a lifelong guest.”
Today, the 43-year-old franchisee and a partner operate eight Moe’s in Pittsburgh and two in Erie, Pennsylvania. Their first unit opened in the Iron City in 2005. The two now want to open units along the 128 miles of I-79 running from Erie to Pittsburgh, an area that has demonstrated a strong demand for their catering program.
To accomplish that, they expect to add three units within the next two years. The pair would also like to acquire a second strip center. They redeveloped their first, an aging, 16,000-square-footer in Pittsburgh’s affluent North Hills, three years ago, anchoring it with a Moe’s.
They got the center “for a good price and refaced and re-tenanted it. But you just can’t find those around every corner,” Geiger lamented. Their franchise also owns its headquarters building, close by.
The partners initially financed growth with SBA loans via PNC Bank. Today, however, given their practice of retiring debt as quickly as possible, they use lines of credit from Pittsburgh-based First National Bank as projects arise.
Catering, by the way, is a special focus for Geiger, a former tech sales executive who recalled he often brought food to client meetings. He set a goal early on that catering sales would quickly reach 20 percent of total revenue. It hasn’t happened yet, Geiger conceded, but only because “our in-house traffic has grown at such a great rate.” He said the catering percentage is nonetheless in the upper teens.
The partners credit their units’ high average unit volume to patience, though Geiger said opening only eight units in 14 years isn’t a franchisor’s idea of rapid growth.
“But from a franchisee’s perspective, we live here and know the area and refuse to settle for anything less than a great spot,” he said, estimating the cost to open a Moe’s in suburban Pittsburgh runs from $500,000 to $600,000.
The partners’ only urban Moe’s is downtown, in historic Market Square. Three years ago the partners doubled its size and added a second make-line and separate entrance for mobile and delivery orders. The costly process, including meeting city requirements for historic structures, closed the restaurant for six months. The reconfigured unit reopened July 2018.
“We’ve been able to increase to-go business three-fold,” Geiger said, adding total sales in the unit have doubled. He expects a total return on the investment next year.
David Connolly, a Mister Sparky franchisee, thinks about Yelp the same way Michael Geiger does: Customer satisfaction is paramount. So he employs a marketing person who monitors online his business’s reviews. “If someone does make a complaint, we reply and get the manager of that location involved immediately. I want that customer to be happy,” he said.
Since 2014, the 35-year-old Floridian has acquired franchise territories in Tampa, Fort Meyers, Sarasota, Miami and Pompano. This year, he bought the Birmingham, Alabama, franchise. In all, he and regional managers operate eight of the electrical services franchises he’s purchased. He also has become an area developer.
By the end of 2020, Connolly predicts his electrical service empire will reach 13 locations. A location, ideally, is a 3,000-square-foot building (near a highway entrance) that offers room for office space, training area and parts warehouse.
Connolly, who got his start working for the Sarasota franchisee in 2009, isn’t a licensed electrician despite receiving training in high school. (He said he never took the test). He bought the territory from his boss three years later using an SBA loan. Since then, he has acquired the remaining territories with his own capital.
The cost of a start-up Mister Sparky franchise, according to the brand’s franchise disclosure document, is $178,105 to $416,612. That sum includes a $35,120 to $37,115 franchise fee. The “continuing franchise fee” is a heavily footnoted 6 percent. The FDD’s Item 20 shows 113 company and franchise locations (a net gain of five) among 34 states at the end of 2018.
Scarcity of trained labor is a serious issue for Connolly given the specialty of the job. Although experienced electricians tired of the one-man-shop grind often sign on as W-2 employees, he’s trying to recruit high school grads with vocational training. To that end, he said he’s been supporting school-related charity events in order to talk to board members.
“We like to hire people coming out of high school with good attitudes and who are good working with their hands,” Connolly explained, adding that he was vocationally trained in high school.
A Mister Sparky’s success doesn’t depend on income demographics or traffic generators like big-box outlets. The main concern is the number rooftops. “The higher-income houses might buy electrical landscape improvements, maybe,” Connolly said. “But for the most part, income doesn’t matter. Most people don’t want their electrician to be cheap.”
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.