CoreLife operator says no thanks to finance calls
Illustration by Jonathan Hankin
Franchise lenders, be advised. If you cold-call Bill Janikies (as many regularly do) he’ll take your name and politely tell you Jan Companies may in the future need the capital you’re offering. But right now, well . . . no thank you.
In fact, should the company’s latest franchise agreement—to open 32 CoreLife Eateries along Florida’s Gulf Coast—exceed expectations, his response will likely remain “no thanks.”
“Even if things go gangbusters, we are all set,” declares CEO Janikies.
The company’s first CoreLife will open in Tampa, in August. Three of the fast-casual units will be open by year-end if Janikies and his team can find quality sites and 35 capable employees to staff each unit. That could prove tricky. Florida’s unemployment rate has stood at a measly 3.9 percent for five months through February, the lowest level since June 2007.
Janikies, who wouldn’t reveal the employee profile the North Syracuse, New York-based franchisor shared with him, was nonetheless upbeat about attracting workers. “It’s a hip and cool place to work. I don’t foresee enormous difficulties with employee staffing,” he declared.
The Jan Companies has been operating and franchising restaurants for years. Its franchise stable includes four Krispy Kremes, 82 Burger Kings and CoreLife Eatery. The Cranston, Rhode Island-based business also owns a full-service restaurant and Newport Creamery, a 12-unit iconic brand it purchased in 2001.
Janikies, the son of late founder Nicholas W. Janikies, says the company also owns and develops strip centers in Florida, giving it geographic expertise in the state. “We buy real estate and we get it zoned, develop it and tenant it with ourselves and other tenants,” he says.
Thirty of the company’s Burger Kings are there (the remainder are in Rhode Island, Massachusetts, Connecticut, and Georgia). CoreLife will expand contiguously, he adds, gradually moving away from Tampa: “We’re growing in a bolt-on manner, to Orlando, say, and then to Sarasota.”
The real estate strategy involves opening units in affluent areas where people like to eat healthy and exercise. College areas work well, apparently. Asked to describe the ideal customer, Janikies notes that in Florida “it seems like every community has its fair share of yoga moms and of healthy living individuals.”
Janikies would prefer to buy land and develop a CoreLife on it. “Yet if there’s a center we want to be in and can’t buy it, we will have to lease it,” he notes.
Why CoreLife in the first place? Janikies explains the company researched several fast-casual categories as well as looked at franchising models outside of the restaurant business. “We were looking for a brand with staying power and a management team that had leadership and foresight to grow the brand long term, and not something that was a flash in the pan.”
Last year 13 multi-unit franchisees in Wendy’s system bid to buy 34 franchised units throughout metropolitan Knoxville—an apparently attractive area to fast-feeders given its youthful population (median age: 37.5 years), affordable housing (median price: $188,000) and sheer number of people (population: 869,5456). In 2016 Knoxville and Nashville boasted the fastest population growth rates in Tennessee, according to the U.S. Census Bureau.
“We weren’t necessarily the highest bid,” explains JAE Restaurant Group Chairman Eddie Rodriguez, who with partners Andres Garcia and Jhonny Mercado acquired the restaurants from a franchisee exiting the system. “It was a combination of the operations we run, our commitment to develop this market, our capital structure and those credit lines I mentioned.”
Earlier, I’d asked Rodriguez about financing the deal. The veteran operator described how six banks—led by its longtime lender Citi National—extended JAE a pre-approved line of credit for development.
“So we can go ahead and buy a market,” he tells me. “That’s part of the formula of being able to be a successful franchisee these days. And it’s also part of the formula” for the franchisor “to have faith their bigger franchisees will continue to grow and do the right thing.”
Rodriguez declines to reveal the multiple JAE paid for the Knoxville units, describing it only as “a lower one.” Part of the reason, he adds, was the previous owners hadn’t maintained the restaurants, which were built in the late 1980s, or participated in Wendy’s Image Activation program.
“The prior franchisees cut labor, maintenance and re-investment,” he claims, adding they hadn’t added a single Wendy’s since acquiring the group in 1999.
The units “were on a downward swing for lots of years until the franchisee decided to sell them. Then they invested in marketing last year, and we were 4 percent up,” Rodriguez notes.
The Pompano Beach, Florida-based company already operates 212 Wendy’s in North, South and Central Florida, Albuquerque and El Paso. It plans to open 10 restaurants this year, including four in Knoxville.
Meanwhile, he reckons the company will spend “a big number” remodeling 20 Knoxville units over the next four years at a cost of $450,000 each. JAE will also add 13 new restaurants during that time at a cost of roughly $1.7 million per copy.
Finding additional workers could prove difficult. As of last December, Knoxville’s unemployment rate was 3.1 percent, well below the national average of 4.1 percent.
“But look at the opportunity here,” says a hopeful Rodriguez. “If you can go from the present AUVs of $1.4 million to $1.7 million, you’re talking about a completely different economic model.”
David Farkas has covered the restaurant businessfor 25 years as a reporter and food writer, and writes about development deals in The Pipeline in each issue. Send you r franchise’s development agreements to him at firstname.lastname@example.org.