Fast & Serious: 21-30
21. Scooter’s Coffee
At Scooter’s Coffee, it’s all about unit level profitability for franchisees, in tandem with aligned relationships, declares Todd Graeve, CEO. “Everything we do starts and ends there,” he adds. “We must be diligent, thoughtful and strategic in our daily decision-making.” A ULP focus isn’t necessarily unusual, although that particular acronym isn’t seen every day (most CEOs throw around AUVs or average unit volumes.) But another aspect of Graeve’s philosophy stands out from others. “We must walk with a posture of humility, integrity and an ‘others-first’ mentality. When we do that, we elevate trust with our franchisees.” Graeve said the biggest challenge for a growing company is staying ahead of expansion with investments. “If you want to grow, you must be willing to commit. This often means investment in infrastructure, people, technology, partnerships, etc., ahead of the curve and in advance of opposing forces,” he said. “With strong and positive growth trajectory, we’ve been challenged at times with approaching size and scale before making the strategic investments.” The goal is an environment for “thoughtful strategy and investment that is far less reactionary, and much more strategic.”
22. Newk’s Eatery
Newk’s emphasizes its menu of made-from-scratch soups, sandwiches and salads prepared in an open-view kitchen, both of which are on trend in the fast-casual space. The formula powered a 48 percent growth rate in systemwide sales over the past three years, and a 40 percent growth rate in number of units, both impressive numbers indeed.
23. Kiddie Academy
Children’s learning centers
Kiddie Academy leaped way up the Fast & Serious list this year, hitting No. 23 after last year’s rank of 50. Chief Development Officer Josh Frick attributed much of the momentum to technology, in which the brand seeks to be “first and foremost.” For example, parents get access to live, streaming video of students in classrooms through the WatchMeGrow app. “We view technology as a key differentiator within our space, said Frick. “We’re going to be on the leading edge.”
24. Anytime Fitness
International is the growth watchword for Anytime Fitness, the behemoth brand and perennial contender on our Fast & Serious ranking of smartest-growing franchises. “We will open globally in this year anywhere between 425 and 450 clubs around the world. About 200 of those are in the U.S., so as you can see we have more club growth outside the U.S. than inside the U.S.,” explains Chuck Runyon, CEO and co-founder. “It’s a big world out there and they are under-served when it comes to fitness.” Because Anytime Fitness, like most, uses master franchise arrangements in international markets, its percentage of revenue is lower than in domestic markets, but a 29 percent gain in systemwide sales and a 25 percent increase in units over three years shows this fitness brand is still going strong. Australia and Japan are the two standout countries across the globe. In Australia, “they are racing past 500 clubs open. In Japan, they are racing past 300 clubs open. They are right now the fastest-growing country for Anytime Fitness,” he said, giving credit to the master franchisees who operate in the two countries. Private equity firm Roark Capital bought a minority stake in Anytime Fitness in 2014, the first year covered in our three-year ranking, and their backing has been valuable, Runyon said. “They’ve been a value add,” he said. “What we’ve gotten better at is our reporting, strategically and financially,” which he attributes to the accountability a private equity board brings to a brand, versus a founder-led company. Anytime Fitness is actively looking for new brands to acquire, too, to add to its Waxing the City brand, although “as you know it’s a very hot market,” Runyon said.
CMO Jan Barnett simplified Another Broken Egg’s menu.
25. Another Broken Egg Café
Breakfast, brunch and lunch restaurants
Net promoter scores, the index ranging from minus 100 to 100 that measures the willingness of customers to recommend a company’s products or services to others, get loads of attention from Jan Barnett, chief marketing officer at Another Broken Egg Café. She’s been in marketing at franchise brands for 40 years, at Taco Bell, McDonald’s, then the agency side, then Egg and I until joining Another Broken Egg two years ago. “Net promoter scores weren’t something I focused on until coming here,” she said. Now, she and her team of five respond to every review the café gets, usually numbering more than 2,000 reviews a week from 65 cafes and pores over the data from an outside firm called Reputology. “This has become cultural, and now I’m publishing net promoter scores.” Franchisees will email and ask, why aren’t they at a higher score? “It’s a direct correlation to sales and profitability. If you’re a high-volume café, you also have a higher net promoter score,” she said. When she first started digging in, she noticed the biggest complaint was the time it takes for food to get from kitchen to table, so she began examining the menu. “I worked on menu engineering, simplification, so a huge project I completed year two. We reduced a ton of SKUs, both entrees themselves and ingredients. It wasn‘t that hard—you see what sells and what doesn’t,” Barnett said. Barnett has adjusted her approach to grand openings, something she learned at Egg and I the hard way, she said. “At Egg and I, where I did come in with hard openings, it crashed the kitchen, and it took quite a bit of time to rebuild that trust. I had cooks on the line in tears,” she said. Now she does soft openings and expects traffic to build more slowly over time. Barnett says the good news about her brand is it closes at 2 p.m., meaning operating hours for owners can be very attractive. Alcohol, too, is served at Another Broken Egg, which draws a younger crowd and a higher check average. “I’m forced to teach America to drink in the daytime all by my little self,” she jokes, contrasting that to McDonald’s, which has put huge marketing dollars into breakfast all the time and so has helped everyone in the breakfast category. One challenge is something she can’t do anything about. “Egg is in my name, and if egg is in your name, people think you can’t do lunch. But our lunch is amazing,” she said.
26. Which Wich
The Which Wich brand was built on the philosophy of “taking the leap,” or “buying in to the idea of owning a business that will create positive change in your life,” said Jeff Sinelli, founder of the sandwich chain that topped 433 units and $271 million in systemwide sales in 2016. “As CEO, I work hard to make sure that those franchisees who made the leap with Which Wich feel like the company has their back.” In the past year, particularly, that meant investing time and energy in shoring up operations and helping franchisees become more efficient and improve the customer experience. “Out of that came our ‘favorites’ addition to the menu, so that fans who may not enjoy our trademark brown bag ordering system have a way to point to a sandwich they love and have it made immediately,” Sinelli explained. The restaurant business has been a tough space “for several years now,” he added, “and a lot of competitors have emerged specifically in the sandwich segment.” Disrupters in the space include grocery stores, which are trying to steal market share from restaurants, the expansion of delivery options and the integration of technology. But don’t expect to hear complaints from Sinelli. The corporate team and the franchise system “have to work hard in order to stay ahead of the pack and anticipate the evolution needed to grow and thrive five, 10, 20 years from now,” he said. “The best is yet to come in 2018.”
27. Mosquito Squad
Pest spraying and control
Mosquito Squad was under the $40 million basement for revenue before this past year, and now appears in our top 40 at No. 27. Chris Grandpre, CEO, said his group formed Outdoor Living Brands as the umbrella company in 2008, and acquired Mosquito Squad in early 2009 from three partners, along with four other brands under the corporate roof. At the time, there were 15 locations doing a million dollars in systemwide sales, but at year-end 2017 he expected to cross through 240 locations with sales roughly three times that long ago number. How’d they do it? “We spent three years re-inventing that business. The average unit volumes were very modest; they were too low,” he said. “Our strategy has been to broaden the service offering to drive increases in unit economics.” The marketing message, too, has shifted slightly over time. “For the first six or seven years, all the marketing messages were tapping into lifestyle,” that is, helping people enjoy the outdoors free of pesky mosquitoes. “While lifestyle is still important, we’re seeing health concerns are being a very big motivator, such as West Nile, Lyme disease and chikungunya,” all carried by mosquitoes. “We’ve had to significantly ratchet up the education to tap into those trends that are out there, but doing it in such a way that we’re not trying to create unnecessary fear.” Why is that important? “It’s personal philosophy, ethics,” he said. “Fear is a big motivator, but I don’t want to prey on that fear. I don’t think it’s the right way to grow a business, is using fear.” Grandpre said he carefully evaluates the number of people at corporate it takes to support growth at each of the company’s five brands, and each one is different. Mosquito Squad is “probably our simplest” concept, so he knows he can bring on 25 to 30 franchisees a year, and has been doing that consistently for five years. With Archadeck, by contrast, “we’re talking about five to nine a year, because it is a much more complex business. I think you have to be thoughtful about complexity of the business model or simplicity of the business model, the capabilities of your team, and then instead of just selling everything you can sell, set your franchise development numbers to the number you can support,” he said.
BurgerFi’s Steven Buckley added people before growth.
BurgerFi is only six years old, peddling better burgers branded with the BurgerFi logo, but the amount of expertise on the corporate team is more like a prosperous baby boomer than an up-and-coming youngster. “We consider ourselves to be an adolescent in terms of the time that we’ve been in business but not in terms of the expertise and the depth of the organization,” said Steven Buckley, COO. The corporate team “has been built out very aggressively, with no resources spared to create a very solid organization and infrastructure that can support growth. That was done early on, in the overall conceptualizing of the brand.” Staffing up ahead of a growth curve is easier said than done, as typically new brands have to wait for revenue streams to get big enough to support a corporate team. But in BurgerFi’s case, founder John Rosatti provided 90 percent of the funding in the form of equity, and an additional minority investor was brought on. Rosatti also owns eight car dealerships, a chain of fine-dining Italian restaurants and a gastropub called The Office, so he had plenty of resources to deploy at BurgerFi. “The growth of BurgerFi was funded through an infusion of equity capital, not debt, and that allowed us to do things that were not financially driven. We were always able to take the high road because we didn’t have the financial burdens,” he said. “We’re a profitable company, with 100 restaurants and growing, but we never felt that pain of a company that has debt payments to make and has to worry about where the next dollar is coming from.” One of Buckley’s key initiatives was communication and execution, for which he purchased technology systems. “Everybody talks about collaboration as being important in a business, but not a lot of companies can deliver that and execute well in a collaborative environment,” he said. “If you have hundreds of initiatives going on, how can you execute?”
29. Jimmy John’s
For a sandwich chain blasting past 2,600 units and $2.14 billion in systemwide sales in 2016, its founder’s intense focus on operational details is surprising. But that’s what Jimmy John Liautaud revealed during an interview early in 2017 when his deal with Roark Capital was named Franchise Times Deal of the Year. He visits with the head of customer service at his Champaign, Illinois, headquarters, and asks how many complaints her team handles each day—400 customer interactions, she replies, each handled within 24 hours. In the IT department, he points out the social media interactions displayed on a big screen, which were spiking up to 5,000 on one mid-morning. And in the construction department, he brags about the team cutting out $100,000 in costs to build a Jimmy John’s store, to under $315,000. “We are exceptional operators, perhaps one of the best on a large scale,” he told Franchise Times. “What we aren’t is strategists and that’s what Neal Aronson is best at,” he says, referring to Roark Capital’s chief. “I’m a micro guy and he’s a macro guy,” and the combination is promising.
Founder Eric Ersher stresses culture at Zoup.
Soup and sandwich restaurants
Menu innovation, specifically limited-time offers, has helped boost Zoup’s growth in recent years, and that’s “kind of a new area for us. When we look back we have not been innovative for the last 19 years, so we’re excited,” said Eric Ersher, founder of the chain that grew nearly 44 percent in systemwide sales and 35 percent in units over the past three years. He’s been focused on elevating the quality of the breads, salads and sandwiches, and moving toward more of a seasonal, rotating soup list. “It provides more predictability, which our customers through research have told us they would appreciate. They want to know when their favorite soups will be there,” he said. What hasn’t changed for the brand, which started franchising in 2003, is promoting and nurturing a “positive and deliberate culture.” “One of the things we talk about is our founding story and how we got to Zoup,” he said. “We refer to it as the Zoup experience, which is the why behind it all.” And what is the Zoup experience? “Really good soup, and bringing those really warm qualities, and in an environment where everything matters.” That includes 14 “Zoupisms,” such as reach out, words matter, always better, and be proud. Although he’s short on specifics as to exactly what those things mean, perhaps for franchisees it’s all in the soup pot.