Franchisee Jamil Jamaldinian, who is opening his sixth The Greene Turtle this fall, was relieved that sales at all of his restaurants were finally recovering in mid-August. Even better, his restaurants were largely staffed and the recently proposed payroll tax holiday might lift their morale.
"A little extra money in our teammates’ pockets makes them feel better about the environment," Jamaldinian said, adding he hadn’t yet studied President Donald Trump’s controversial executive order to suspend the payroll tax beginning in September through the end of the year.
That environment of course is the coronavirus pandemic, which since March caused per-store revenue to fall as much as 70 percent at the full-service restaurants before leveling off at minus 45 percent. When we spoke, sales had since climbed back to just under minus 20 percent as indoor dining resumed on June 12, he said.
The sales increase was due in part to expanding patio seating to sidewalks, which local governments allowed restaurants to do, he said. It also gave employees bigger sections and more time to devote to serving customers. Servers are not required to bus and clean tables for sanitation reasons.
Still, Jamaldinian is aware that earnings for front-of-the-house staff have been trimmed by the pandemic. "We’re working hand-in-hand with them so they can make money," he said. "But, ultimately, we want to maintain the guest experience and to keep employees and customers safe." He also applied for and received a Paycheck Protection Program loan, though declined to reveal the amount.
Jamaldinian’s restaurant inside the Hollywood Casino, in Perryville, Maryland, wasn’t so lucky. "I went without customers for nearly two months due to being inside the gaming facility itself," he said. He and partner Miron Hernandez, however, used that time to redesign the space. They turned the outside exit into an entrance and blocked the inside entrance, allowing families to use the restaurant once indoor dining was permitted.
Both men, by the way, are veteran operators (and friends), having worked together at Red Robin. While there, Jamaldinian helped create and expand BurgerWorks, a 45-seat fast-casual concept launched in 2011. The brand grew to a dozen outposts before the company shuttered all but three in late 2016, renaming them Red Robin Express.
By then, Jamaldinian had joined The Greene Turtle as an operations executive, eventually becoming the full-service brand’s chief operations officer. In 2019 he became a franchisee, acquiring five units in Maryland.
The 38-unit Greene Turtle brand (23 franchised) describes itself as "a local hangout since 1976." It has restaurants in Maryland, Delaware, Virginia, the District of Columbia, West Virginia, New York, New Jersey and Pennsylvania.
"It’s thought of by the community as a local bar with better food than your average hangout," Jamaldinian explained. "The strategy is going into a market where there’s visibility and an ‘A’ location. But brand recognition is very important for our strategy."
The partners caught a break with their sixth unit, in California, Maryland, a conversion of a Cheeseburger in Paradise. They signed the lease "a week before COVID-19 hit," Jamaldinian said, adding a local bank had already agreed to finance the project. "We had that working for us. So when we saw the environment changing we moved quickly to sign for financing. I’m glad we did because it’s horrible now to get financing."
It does look that way. For example, in its second quarter earnings call, Wells Fargo (a major restaurant lender) acknowledged the bank added $8.4 billion to cover credit losses and that charge-offs had swollen by $204 million. More recently, research firm Black Box Intelligence reported that for the week ending August 9, "full-service restaurants have had some gains in their food market share but are still significantly below their pre-pandemic levels."
Tropical Smoothie Cafe franchisee Hani Halloun hails from a village outside of Haifa, a port city in Israel. He left Haifa after high school, eventually becoming a hairdresser.
"I didn’t see a future for me there. So I went to Europe and started doing hair and selling paintings in the street to make a living. I went to Holland," he said.
By the mid-aughts Halloun was living in Grand Blanc, Michigan, still "doing hair" but also operating his own liquor and convenience stores as well as several grocery outlets. He was also about to become a franchisee.
"When I was doing hair, I was very busy," he recalled. To keep his waiting customers happy, he offered to buy them smoothies from the Tropical Smoothie next door. "Customers loved it, and they looked forward to me buying them."
Halloun, who said he has a knack for organization, studied the smoothie business, eventually signing a franchise agreement with the Atlanta-based franchisor. He operates eight stores in Michigan, three in Grand Rapids and five in the Detroit metro. He won’t add more cafes in Michigan, he said.
In September 2019, he teamed up with Edward Joubran to open their first (and Tropical Smoothie’s 800th) unit in Arlington Heights, Illinois. The pair have since opened two more and are planning to add another nine in Chicago suburbs by the end of 2021. "We may have three of them underway by the end of this year," Halloun said.
Joubran, who joined the interview, said he’s known Halloun for more than 30 years. A relative of his works in one of Halloun’s grocery stores. "One thing led to another, and I wanted to invest for the future," he said. Halloun handles store operations while Joubran oversees administrative duties.
Meanwhile, the pandemic hurt sales in its first month. "It was tough for all the stores," Halloun recalled. "But we stayed open and got more traffic through the drive-thrus and online ordering." Five of his eight cafes, all endcaps, have drive-thrus and have done better, he said, than those without.
Except for one. "I just opened another store in Canton," Michigan, "without a drive-thru, and that’s doing even better than the drive-thrus," he said.
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 email@example.com.