The Sky is Falling? The Sky’s the Limit!

October 24th, 2011

I recently read a great article in The New Yorker about declinism, the idea that things are getting worse and are about to get even more so and we are all going down the drain. It pointed out that the ability for this pattern of thinking to continue is completely dependent on the last person who felt this way being wrong. People have been shouting “the end is near” almost since the beginning, but they have always been wrong. This time will be no different. Life goes on.

Here’s my proof. I recently reviewed Surrender’s client list and discovered that every group we work with has either expanded their business or is planning to: into new territories, locations, products lines, and concepts. Not what you would expect after (or during) the Great Recession. In just the past month, two of our clients have opened new restaurants. One invested even more than they have in the past to open one of their stores, expecting higher-than-average unit volume in return. Three others are looking for new sites. One is developing a brand-new concept. One of our B-to-B clients is crushing sales in a market where they have reinvigorated their focus.

Does that sound like a decline to you?

Over our 20-year history, many of our clients have had the desire to grow before they have had the plans to do so. Their ability to operate on a larger scale and harvest all their potential profits was not in place. We worked with one restaurant group that had expanded to four units and felt they were stuck. But, by working with Surrender to put the pieces together for growth, re-aligning and developing their management team, and bolstering their ability to attract outside capital, they are now at 10 units.

What can you do to move your business forward safely and successfully, prepare for growth and go from where you are now to make the impossible happen?

1. Define options for growth.

2. If you feel now is not the time to grow, look around and identify a competitor who is growing. What do they know that you don’t?

3. Identify areas of your organization that require an upgrade — products, process, people, or capital — before you are ready to take advantage of opportunities.

4. For each of those areas you identify, commit to an initiative, time line, and result. If you do not have the resources in house to do so, resolve to reach outside of your organization to get there.

When you figure out how you can grow, email me and let me know what you have learned. If you are stuck and cannot get started, or feel “now is not the time,” email me right away and I will assist you.

From our monthly newsletter. To subscribe, email us at info@surrender.biz.

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What tasted good in Vegas doesn’t stay in Vegas.

October 20th, 2011

You may have seen Capriotti’s Sandwich Shop in Vegas. Now, it’s coming to North Texas. The Dallas Business Journal recently wrote about their entry into the market. Staff Writer Steven Thompson asked me about its prospects. The sandwich restaurant segment is becoming focused on menu development, which gives a quality sandwich provider a good shot to compete. Capriotti’s designated a Dallas-Fort Worth franchisee who forecast growth to 50-65 stores in this area. That made me smile. I remember when Italian Oven forecast 100 stores, and Food Star forecast 40 stores. Anyone seen any of those lately?

Everybody has to have goals, but the way you get there is to first open one, then open a few at a time.

The possibility of Capriotti’s entering the market added to my recent reflections on business growth in a down economy. When you read the newspaper or turn on the TV you might think the end is near. But there is plenty of opportunity out there. All of our clients are either growing or pursuing avenues for growth. Not one is standing still. Is that counterintuitive or just the way life works? I am writing more on the subject in this months’ Surrender newsletter. To subscribe, contact our Client Concierge at info@surrender.biz

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To franchise? Or not to franchise?

October 17th, 2011

Many of our clients have asked me about franchising the brands we are helping them to grow. Who wouldn’t think about that? The idea of plenty of mail-box money and growing a business through capital from franchisees is very attractive.

My advice is clear. The only reason to franchise is if there is a realistic future opportunity to attract existing, professional, multi-unit and multi-concept franchise groups. If that’s not part of the picture, the owners will end up franchising to their cousins, their neighbor a few blocks away who is a restaurant manager, and the IT refugee who is cashing in her 401K to buy into the hospitality industry. In that case, I recommend sticking with company-owned stores.

The Saxton Group. You have never heard of them, but you may eat at their restaurants frequently. In this week’s Dallas Business Journal, Steve Thompson writes about changes in The Saxton Group’s management team, and interviews me about the implications of those changes.

Like many similar organization around the country, The Saxton Group is great at being a multi-unit and multi-concept franchisee. These companies are the unsung heroes of the restaurant industry. They tend to be outstanding at operations and execution and local store marketing. Concept development is not their thing. They pick and choose concepts to develop because there are more concepts out there than there are these professional groups to franchise them. Saxton operates 27 McAlister’s Delis in Texas and is the territory franchisee in a large swath of Texas for Pinkberry Yogurt.

You’ve probably never heard of our client OPH-DFW, either. The Dallas franchisee of The Original Pancake House, is another example of an experienced multi-unit operator. This Original Pancake House franchisee operates six units in North Texas. Since Original Pancake House is a relatively low-profile franchisor, many of their guests think they are an independently owned restaurant group. That works in their favor because they are perceived as home-grown.

Experienced groups of multi-unit franchisees can build brands and enhance reputations. On the other hand, when checks start arriving from people without a proven track record, the big risk is the deterioration of the brand and a bunch of headaches teaching inexperienced people how to run the branded restaurants.

Thirty years of experience has taught me that successful restaurant concepts have no trouble attracting growth capital. Mail-box money is a nice thought. Unless the owners are ready to dance with the big boys, they are better off attracting capital and building their own stores.

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Crazy? I call it conservative.

October 7th, 2011

Red Mango to grow by up to 100 stores

by Steven R. Thompson / Staff Writer
Dallas Business Journal 8/26 – 9/1/2011

Barry M. Barron, Sr., Red Mango CEO

Last week, Steve Thompson at the Dallas Business Journal quoted me in his story about Red Mango‘s plans for expanding by 100 stores and the tart yogurt segment in general. If you are like me, you have spent more than your fair share of time in the new wave of fro-yo stores over the last few years. One of the interesting things about the segment in Dallas is that independents got here first and planted their flags like explorers coming from a foreign land. Then the chains arrived with massive artillery, branding and real estate. Remember when Starbucks came to town and killed off the local coffee houses? Didn’t happen in fro-yo. There is something to be learned here about independents’ relationships with their guests, how independents and chains can survive (in some cases, literally) side by side, and the evolution of this trend. A good one to keep watching.

Kudos to Barry Barron and Red Mango. The company is right where it needs to be for growth, and they are looking at non-traditional venues to do just that. At Surrender, we support corporate teams at critical junctures like this. The challenges of bringing in a new CEO tend to be magnified if your existing team isn’t playing nicely with others. We work with leadership teams to understand their people better and to more effectively leverage their strengths.

By the way, in a recent follow-up story, the Dallas Business Journal noted that Red Mango has followed through on their intentions and just signed agreements with the San Diego airport and the University of Missouri.

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