Sleuthing methods favored by franchisees
Mohammad Haque knows how to pry information from unsuspecting restaurant employees. It’s a vital skill if, like Haque, you’re researching a franchise or a competitor.
Haque explains the method: “I like to talk to assistant managers, because GMs typically give you a sugar-coasted version of business. You first compliment the food to break the ice. Then you might mention you once worked in a restaurant, letting a little truth slip in. That’s when you start asking how busy the restaurant is at, say, night.”
Haque, who recently signed an agreement to open three Roy Rogers units in Maryland, employed the technique as part of his due diligence. Yet he also knew plenty about the legacy brand. The former executive spent more than 30 years operating fast-food restaurants in the mid-Atlantic, the same region Roy Rogers has plied for years.
He started as a swing manager at McDonald’s shortly after arriving in the U.S. from his native Bangladesh in 1982. A couple years later, Haque joined DavCo Restaurants, a large Wendy’s franchisee headquartered in Crofton, Maryland. “We were growing quickly, like mushrooms, in the mid-1980s,” he recalls.
A dedicated worker, he eventually rose from single-unit manager to senior vice president of operations with responsibility for the company’s 152 restaurants in Maryland, Virginia and Washington, D.C.
Today, Haque expects his first restaurant to open by Thanksgiving in affluent Aspen Hill (median household income: $80,960). The city, some 20 miles from the nation’s capital, boasts a population of 48,579. The first unit will be in an endcap in a shopping center anchored by Kohl’s and Home Depot. Others units are planned for Beltsville and Laurel.
Roy Rogers has been a beleaguered brand over the years, shrinking from 650 restaurants in the late 1980s to 49 today.
Yet the enthusiastic operator looks on the bright side and sees nothing but growth in store. He believes the brand’s legacy is its strength. “It’s not something I have to sell to landlords, like an emerging burger chain,” maintains Haque, who will use an SBA loan to finance the Aspen Hills unit.
Plus, he happily adds, the franchisor has a new prototype featuring a contemporary decor and building. “It matches with today’s young crowd,” he says.
All about falafel
Majoring in engineering turned out to be a propitious career choice for Matt D’Alessio. It landed him his first job at an energy company, and it gave him his first taste of falafel.
He regularly consumed falafel sandwiches in the original Amsterdam Falafelshop, in the Adams Morgan neighborhood, while a student at George Washington University. It was a taste memory he couldn’t shake.
So three years ago D’Alessio, who had moved to Boston for work, quit his job and bought an Amsterdam Falafelshop franchise. He admits he wanted it largely for emotional reasons.
“I really loved the falafel, and I thought everyone else would, too,” he recalls.
He nonetheless sought advice from a friend who had founded a two-unit burger concept in Boston and another who owned three McDonald’s in New Hampshire. They gave him the thumbs up after scouring the FDD for red flags. D’Alessio says they found a couple, although nothing major.
He opened the offbeat outpost in Davis Square, an up-and-coming retail area in Somerville, just outside of Boston, financing it with his own money. The store is a 10-minute walk from Tufts University, whose students often drop by. Its dining room features photos of landmarks in the popular Dutch city; there’s also a nod to the city’s marijuana culture.
Like up-to-date burrito, coffee and yogurt shops, customers design their own falafel sandwiches by adding fresh vegetables and sauces from a long food bar. “The Davis Square unit did well, and I couldn’t stop thinking about opening a second one,” D’Alessio says.
He would need a partner to open it, though. Franchise consultant Richard Sharoff, who helps founders Scott and Arianne Bennett attract franchisees, introduced D’Alessio to Boston restaurateur Laurence Wintersteen.
Wintersteen (who signed to open three units) and D’Alessio formed a 50-50 partnership in all future Falafelshops. They opened their first unit together in March, in Kenmore Square, an affluent neighborhood near Boston University. The pair is looking for the next site, yet want to better understand how the Kenmore Square site performs before signing a lease.
While D’Alessio maintains food and labor costs in the unit are “surprisingly consistent” with the first, he notes dessert sales have jumped by 200 percent. The shop’s homemade brownies have proved inviting, to be sure. But it’s the boxes of imported stroopwafles (waffles with sugary caramel syrup in the center) that are flying out the door.
Says D’Alessio: “People come in, notice them and buy 10 or 20 boxes, saying, ‘My god, I haven’t seen these since I was traveling around Europe.’”
Fast-food to fast-casual
Rebecca Fuller has been hanging around restaurants since childhood. That’s because her dad and his partners were the first Wendy’s franchisees in Louisiana. She worked on the financial side of her dad’s business before assuming an operations role and multi-unit responsibility for the franchise’s seven fast-food restaurants.
In 2011, however, the 47-year-old operator caught the fast-casual bug and signed a three-store agreement with Newk’s Eatery, headquartered in Jackson, Mississippi. The pizza, salads and sandwiches chain expects to end the year with 102 units, 18 of which will be company owned.
Fuller’s first Newk’s opened soon thereafter, in Monroe, Louisiana, with help from an SBA loan. In August, she opened her second Newk’s—financed the same way—a few miles away, in West Monroe, on the other side of the Ouachita River.
The third unit is scheduled to open in early December, in Ruston, Louisiana, home of Louisiana Tech. It won’t be her last, she insists. Fuller maintains she intends to sign another Newk’s agreement giving her the rights to open a half-dozen more.
Despite the area’s relative poverty (Monroe’s annual median household income, for example, is $28,470), Fuller insists the brand does well across economic boundaries. Part of the reason for that, she adds, is Newk’s support of numerous local charities; it’s also on account of people’s desire for higher quality food in a limited-service format.
“People living on smaller incomes,” Fuller says, “see Newk’s as a destination restaurant.”
David Farkas has covered the restaurant industry for 25 years as a reporter and food writer. Submit your company’s development agreements to him at firstname.lastname@example.org.