FT: Why did you decide to invest in these brands?
Peter Capriotti: Taco Bell I’ve been involved with since 1968, so I grew up with Taco Bell. It’s a tremendous brand. The Wendy’s thing just happened last year. The fellow that used to run Taco Bell 10 years ago, Emil Brolick, went back to Wendy’s. I’ve always had a great deal of respect for him, plus they were selling stores. We had tried to grow through the Taco Bell brand, and it seemed we just kept missing getting packages. Wendy’s is a great concept.
FT: What’s great about it in your view?
Capriotti: They’re just a cut above, a little bit better than the other burger guys. I think their hamburgers are a little bit better, they’ve got the Frosty, which is a great item.
FT: What makes you stay with legacy brands for so long?
Capriotti: We’ve always made money. It’s that simple. I could give you all the fluff, but money’s the big part of it.
FT: The changes over that time must be tremendous.
Capriotti: I wasn’t always in the Taco Bell brand; my parents bought it in 1968. I helped when I was in high school, and went to the training program when I was a junior in high school. About 1972 I went away and did other stuff. And then I got back in. I remember when they didn’t want you to have your store on the corner, and they prohibited drive-thrus.
FT: What’s a red flag, that would make you reject a brand?
Capriotti: I think we all know what the good brands are and what the bad brands are. You know and I know, and there are cycles. Take McDonald’s. McDonald’s cycles are very short down and very long up. Burger King has had their struggles. We’re just getting into a new brand, which is Pieology. This year we’re up to 62 Taco Bells, and we’re up to 43 Wendy’s, and we own two Pieology.
FT: Why did you take a chance on an emerging franchise?
Capriotti: I already have a pretty good foundation so I can sort of take some risk. I spoke extensively to the founder, Carl Chang, and he operates like I do: Be honest, be fair, don’t irritate people. Well, I irritate people, but don’t cheat.
FT: For you it was the founder’s philosophy that’s most important?
Capriotti: Yes, absolutely. Plus they were the first to get out of the gate, in fast-casual pizza. It’s almost which one gets out of the gate fastest. Pieology is the fastest-growing chain in America, 60 units in seven states. We’re probably going to develop 25 to 30 units, over the next five to seven years. We have portions of California, and all of Hawaii.
FT: What’s one piece of advice you have for other operators?
Capriotti: When I’m looking at other concepts, I always look at how many other multi-unit operators they have. I don’t want to say anything bad about concepts that have one- or two-unit operators, but I didn’t get back in this business to run one Taco Bell. I got back in to grow with the brand.
FT: What due diligence did you do back then, when getting into Taco Bell?
Capriotti: I took the numbers of the store I was buying and gave it to the CPA. I took the contract to an attorney, and they both told me not to buy.
FT: But you did anyway? Why?
Capriotti: I knew you couldn’t change a franchise agreement so the attorney didn’t know what he was doing. And when I talked to the CPA I pointed out a few things that he missed. I realized then that you give stuff to an attorney and you let them interpret, but you don’t take their advice.
We’re pretty developed here, we have a full-time architect on staff. We’ve turned into a fairly large company, and we’re very aggressive, and we want to grow. We will grow in the Wendy’s brand and hopefully the Taco Bell brand, and Pieology. I have three great brands. I’m very lucky.
FT: You put a lot of trust into founders/CEOs, but as you know private equity can come in and everything changes. How do you deal with that kind of uncertainty?
Capriotti: I can’t control that. One thing my team learned five years ago—things will change. In the past, we would get upset about it when things changed. We decided to focus on, rather than fighting it, embracing it.
Private equity isn’t going to come into Wendy’s or Taco Bell, of course. But Pieology, sure they could. If that happens, we’ll deal with it.
FT: Sounds like you take a Zen approach.
Capriotti: Do you know how many weird things happen in this business every day? Kids falling off the tables in the dining room and getting hurt, because their parents didn’t keep an eye on them but it’s our fault.
A lady locked herself in the bathroom the other day, and she was pushing on the door and pushing on the door, and it never occurred to her to pull the door. We’re headquartered in California, too, and that sets a whole different standard for everything.