Multi-brand Sun Holdings Hits 1,000, CEO Sees More Ahead
From left: Adriana Perales, Sun Holdings CEO Guillermo Perales, CEO of Restaurant Brands International Jose Cil, and President of Popeyes Felipe Athayde cut the ribbon at Sun Holdings' new Popeyes restaurant, the 1,000th store for the franchisee.
Guillermo Perales considers himself something of a multi-brand franchisee pioneer, and with the opening of Sun Holdings’ 1,000th store in July, he’s also firmly established himself as a leading operator—and one who’s not done growing yet.
Perales and Sun Holdings opened the group’s 150th Popeyes restaurant in July in its home market of Dallas, Texas, bringing the company’s store total to 1,000 across nine brands spanning food and retail. There’s 293 Burger Kings to go along with the 150 Popeyes units, plus 94 Arby's restaurants, 20 Golden Corrals, 31 Cici's Pizza locations, 18 Krispy Kremes, 160 T-Mobile stores, 80 GNC stores and 10 airport restaurants. Another 144 restaurants came from Sun Holdings’ purchase of Tex-Mex chain Taco Bueno earlier this year.
“I’ve been multi-franchise since 2000,” says Perales, Sun Holdings’ founder and CEO, “so I see us as one of the pioneers in looking for brands that don’t compete with each other.” It wasn’t common 20 years ago for franchisees to operate multiple brands—or for franchisors to embrace multi-brand ownership—but after starting with one Golden Corral unit, Perales opened a Popeyes and “then Burger King let us in.”
While 1,000 stores sounds impressive, Perales says it was actually getting to the first 100 that proved most difficult. Once Sun Holdings reached that scale it had the ability to start acquiring large groups of restaurants and get in on aggressive refranchising efforts from the likes of Arby’s, along with Burger King.
“In the last three years we’ve actually built more than 210 stores and at the same time been able to buy more than 150 stores,” says Perales. “We’re constantly looking for deals.”
The labor shortage, increases in commodity prices and escalating competition are constantly on Perales’ mind, but he believes Sun Holdings’ continued shift into the QSR segment will help mitigate some of those pressures. “We moved a lot to the QSR segment which I feel provides higher margins and is somewhat safer, with that convenience factor versus fast casual,” he says. He’s watched other massive operators such as Flynn Restaurant Group and NPC International, who have large holdings in Applebee’s and Pizza Hut, respectively, follow suit.
“When their brands got softer, they had no other brands,” Perales notes, but Flynn has since acquired hundreds of Taco Bell and Arby’s stores, while NPC got into Wendy’s. “You diversify and try to minimize cycles” with multiple brands.
Proximity has also played a role in Perales’ strategy, with 90 percent of Sun Holdings’ stores being located in just two states. “I’ve always argued for more brands closer to where you live, so for me Dallas and Texas,” he says, noting 600 of the company’s units are in Texas, while smaller numbers are in Florida, Oklahoma and North Carolina. “I think the fact that we’re in a lot less states makes a difference. It’s easier to operate.”
The purchase of Taco Bueno puts Sun Holdings in the franchisor role for the first time and Perales sees opportunities ahead for a brand that filed for bankruptcy in November 2018. “Originally Taco Bueno came to me to buy it but they wanted too much money, then they went into bankruptcy,” says Perales of the Tex-Mex brand also based in Texas. He was able to buy it for a fraction of the original $120 million asking price, “and now it’s been a lot of thought on how do we improve the food, improve the marketing, improve the operations.”
Store remodels will come first to many of the chains older locations, says Perales, along with changes to “offer the consumer a better product, better quality” and compete with Taco Bell. Taco Bueno recently had success with a brisket taco, he says, and is getting ready to introduce chimichangas as it leans into Tex-Mex.