Did Dan Rowe Find the ‘Next Big Thing’ at Ike’s?
Good food—and good unit economics—caused Fransmart's Dan Rowe to take notice of Ike's in its early days.
Everybody dreams of striking it big, winning the lottery, finding a lost masterpiece or shooting at a varmint and instead finding geyser of oil a la Jed Clampett. Fransmart founder and CEO Dan Rowe chases those dreams further than most in the restaurant industry.
The company has helped some of the trendiest concepts emerge or drive their franchise program to the next level. The stable currently includes Halal Guys, the Hawaiian-themed Fork & Salad, Rise Southern Biscuits & Righteous Chicken, Mutt’s Canine Cantina, the dog park with booze, and Slapfish. And before that, Rowe was instrumental in bringing both Five Guys and Qdoba to the masses. Finding the next big thing and making it bigger is his job.
“Half of what I’m doing is meeting brands because that is my role in the company, to find the next Five Guys or Halal Guys and mentoring them in that strategy to get them to the next level,” said Rowe. “I kind of trust myself to look at what’s the next big thing, the rising tide that lifts all boats.”
It might seem like a fool’s errand or a game of roulette. But finding gaps and the better version has proved awfully successful.
“When I was first doing Five Guys, people said, ‘Every corner has a Burger King who needs another burger brand? I said, ‘Yeah, but we're doing it different. People were like, eh,” said Rowe. “And one of the things with Halal Guys, there’s a billion and a half Muslim people, it’s a huge population and there’s no brand.”
So what’s his next big thing? Well, it might just be Ike’s Love and Sandwiches, the 55-unit sandwich chain with a cult-like following. He said his first litmus test was the food, and Ike’s has some really good sandwiches.
“He puts these combinations together, every cuisine in the world has about the same protein and starches. It’s all in the sauce, that’s what makes cuisine different is the way you season and sauce it. The way he builds his flavors is just incredible. When you’re eating it it’s just so good,” said Rowe, who said it passed the “next thing” test, too. “He’s in a competitive market in San Francisco and he’s just killing it. I think half the appeal is that the food is good, but it’s also not Quiznos or Subway, people like supporting the next thing.”
The chain started inauspiciously, to say the least. The way founder Ike Shehadeh describes it is almost like a horror movie. He planned to open the doors on Halloween of 2007 because the surrounding neighborhood around the 400 square-foot space was really into the festivities. But while he was setting up, his oven broke and when he got his backup there somehow in his convertible, it slipped off the counter and put a “foot-and-a-half wound” in his leg.
And when opening day came, nobody wanted a sandwich.
“We realized that people aren’t coming in. I change into my costume. I give away lollypops and, so we went outside and started handing out candy,” said Shehadeh. “We couldn’t even give away a piece of candy to kids. We couldn’t sell anything and we couldn’t give anything away. That was the first day.”
So after healing for a week, he just stood outside the shop and bought a sandwich for anyone who responded to a “hi” or a wave. By the third day, he had sold a monumental 13 sandwiches. So maybe it wasn’t the next big thing in those early days, but it didn’t take long to find some viral success on then-fledgling Yelp as one of the first top-rated restaurants.
“Somebody took a picture of me making sandwiches, and if you went to Yelp anywhere in the world my face would be on there worldwide. And people would say, ‘Oh my God you’re famous,' but I didn’t know what Yelp was at the time,” said Shehadeh.
He was ranking above Michelin-rated restaurants and the lines started growing. That’s about when Rowe showed up to say hello.
“Dan approached me when I had one location, I had a lot of people approach me at that location. We had 400 square feet and were doing about $3 million in sales,” said Shehadeh, who said “No” a lot back then, but Rowe stuck around. “He was willing to help me even though I wasn’t going to franchise. They remained as a resource. For me, when it was time to do it, they were the people that were there for me, it made it super comfortable.”
For Rowe, obviously, it was about more than good food. That $3 million unit volume was a big part of the partnership when franchising became the path.
“That frankly is what I look for, fast ROI. Half what I look for is the next big thing and half the better version, but the common aspect is good unit economics,” said Rowe. “I might talk you into buying a territory and you build one and it doesn’t do very well, you’re not going to build any more.”
The partnership started in earnest in April, and Rowe said he predicts the pipeline will fill up with the multi-unit operators that have already been clamoring to get their own Ike’s. He said he expected one deal a quarter, then accelerating to one deal a month in 2020 and increasing as markets come online and are proven further across the country.