Dan Rowe (00:02.984)
All right. Welcome back to smart franchising with Fran Smart. And today we’re going to be talking to a self -made multi -unit, multi -brand, multi -state, including California of all places. Franchisee started with nothing and now has over 60 locations heading to a hundred locations and who knows what after that. And as tough as people are saying the industry is right now, you’re going to hear from one who’s cracked the code and dishing some secrets. So with that, let’s get going with Andrew Fagali.

We first met when you were looking at one of our brands and my first memory of you was being kind enough to send me a gift card to a nice restaurant when I moved to Arizona. It was a nice gesture, something that I’ll never forget, but just one of the many things that I’m impressed with you about. So, and look, it’s okay to talk about the wealth that can, that can be created in this industry. That’s what we’re here for. So, you know, I want people listening to this to learn how to do this stuff for themselves. So with that, Andrew, tell us your story. Let’s get going.

Andrew Feghali (01:02.863)
Yeah, definitely. And I think actually Charles Figali connected us and we can get back to that because that’s kind of a random story and it kind of connects the dots on YPO, which is a organization we’re both mutually connected to. But I’m pretty sure I was talking to Charles who I met through YPO and he said, you got to meet Dan Roe and then, yeah, sort of dominoed from there.

Dan Rowe (01:22.28)
He’s, he is a gem, a gem.

Andrew Feghali (01:26.512)
Yeah, so I’m sure we’ll get back to that. But yeah, as for my story, I grew up on the East Coast. Parents were college professors. And then for personal reasons, kind of abruptly had to move to the West Coast to be with my dad’s side of the family who are Little Caesar franchisees. And so starting at an early age, around 13 years old, I would start working shifts in my family’s Little Caesar pizza restaurant. So ran every position you could think of.

flipping the sign on the corner. Little Caesar’s used to be kind of famous for shaker boarding. So I would do that. Then I would hire all my friends to do that with me and we would take different street corners in town and then ran restaurants, went off to college, worked for another franchisee, then continued my education and was always kind of connected with my uncles and their Little Caesar’s business and helping them out. And I was always fascinated by it. I thought maybe.

I would own one or two one day as maybe passive income or something like that. But then got the knock to be an operating partner for them. And so that’s how I got started. In my early 20s, I was a minority partner in three restaurants and I was essentially the operating partner. So I had some sweat equity and small salary and started off running three Little Caesars in San Diego. And that was 15 years ago. That’s how I got started.

Dan Rowe (02:51.656)
So as an operator, you are just the operating person. That’s a good, that’s a good indication because so often the people that do all the work in a restaurant business don’t have carrier, don’t have pathways to get wealthy. And in your case, you were the operating partner and you had a piece of the action. I mean, I recommend any franchisee should actually vest their, their operating team.

Andrew Feghali (03:16.273)
Yeah, I agree. And we’re starting to do that more and that’s more common now, I think with people want some ownership and want some skin in the game. So we’re trying to figure it out. It’s not easy, especially kind of like retroactively, but going forward, we’re seeing how we incorporate more of that. And yeah, but a great point. I mean, I, I’m so self -made is kind of one of those words where it’s like, I don’t know, a lot of people helped me to get started. I didn’t inherit anything, I guess. And I wasn’t given anything.

But I had a little bit of a head start having family that were franchisees, but it was definitely kind of just laying bricks after that. So got my shot, got a little bite at the apple, and then we continued to grow. And then with the intention that I would buy them out, which I eventually did, and then was off to the races after that.

Dan Rowe (04:06.984)
And so you started with little Caesar. So just stay there. So how did you go from day one of being an owner to how many little Caesars do you have now? And what, what, what’s that story?

Andrew Feghali (04:16.498)
Yeah, 40 now and we’re continuing to expand. We have another, I think 13 in escrow that we should be closing on in the next couple of months and hopefully won’t be stopping there. But yeah, the evolution was actually really slow for many years. So I was at five stores for a number of years and actually only three and a half years ago I was at 17 stores. So it took me a while to kind of figure out the unlock and start to build my network and kind of just download more information, learn the whole world of franchise finance. Cause.

We never brought in outside capital. So it was literally just saving money, reinvesting, saving money, reinvesting. I mean, and it still is that way. and so yeah, the, the, the, the high growth trajectory has been fairly new in the little Caesar’s business. And then, four years ago, I became the first franchisee of Dave’s hot chicken. That has its own kind of like inception story where it’s in my three brands, little Caesar’s Jersey, Mike’s and Dave’s. I have a different business partner.

So they all run totally separately of one another. There’s no kind of shared office or shared services. So my partner and I in the Dave’s Hot Chicken business met Bill Phelps. He’s the CEO and he was the founder and CEO long time with Wetzel’s. And so we met him of all places at the Dodgers game and struck a deal there to become the first franchisees of Dave’s. So that one kind of happened a little serendipitously. And then Jersey Mike’s I got in about two years ago. I’ve been talking to them for about a decade and really loved the brand.

and then finally found San Diego, which is where I live, was sold kind of right away. So it couldn’t develop in San Diego. So it was just working with them on finding the right market to get in and then penetrate.

Dan Rowe (05:55.944)
Well, with Little Caesar, so what do you like about the brand? Like tell us what you like about the brand, the model, the leadership economics. Like what, what, what makes someone want to be in a brand like that? That’s a mature brand. I went to my first Little Caesars in San Antonio, God, 35 years ago or something. And it was only remember their niche at that point was just carry out call, you know, you call ahead and you just carry out. But what do you like about that brand?

Andrew Feghali (06:19.635)
Yeah. So I think I’m pretty fortunate that in each category, I picked a horse that is really strong and I wouldn’t take, take back any of the brands. Little Caesars is kind of the brand I, I fell into. So I didn’t necessarily pick it, but like I said, I wouldn’t, I wouldn’t change anything for the world. I love the brand. I think a lot of things it’s got, you know, 70 years of operating history. So it’s weathered several economic cycles. And I think that’s largely cause it’s a value play. So I think we serve.

the best quality pizza at the price point that we serve it at. It’s hard to find a better pizza for the value of Little Caesars. I think, you know, for many years, look, it’s gotten a little more complicated the last few years with all the new technologies and all the things coming out. But for many years, I kind of looked at us as like a pizza manufacturing facility, right? So the saying was stack them high and let them fly. So it’s easy to get people trained, you know, in one to two days, you get someone trained, they can run the business. So I like that kind of,

You know, it’s good quality, great value, simple operating model. Brand’s been around for a long time, great leadership team. The leadership team’s been, you know, very little turnover at the top. It’s been the same CEO, Dave Scrivano, since I’ve gotten there. So it’s easier to build relationships when there’s not a lot of turnover in the leadership team. And, you know, then you start speaking the same language and then it feels more like a partnership.

Dan Rowe (07:39.752)
Yeah, it’s also a good warning sign. If you’re looking at brands that have a lot of change in leadership or a lot of change in the organization, you gotta run for the hills, right?

Andrew Feghali (07:48.947)
I think so. Yeah, I think that there’s impending doom when that happens, definitely.

Dan Rowe (07:53.112)
Yeah, I like little Caesars, but you went so then you went from a mature brand that had a jillion stores when you started to a startup essentially or a newbie. How big were, how many locations did they have when you signed up?

Andrew Feghali (08:09.588)
So when we met Bill Phelps at that Dodgers game, there was one location and they hadn’t even started their franchising arm, but they were about to kick it off. And so it was just kind of pure luck. But then when we have a video of us taking our check for our first territory agreement when they were opening their second location.

Dan Rowe (08:30.44)
Wow. So you got in at a really raw. I mean, that’s usually when I like to get into brands when they’re rough and don’t have it figured out. And I like to help figure that out. But what, what was the magic at Dave’s? What was the secret sauce, both that drew you into the brand and then that’s been a meteor. So like tell, tell us the inside scoop there.

Andrew Feghali (08:48.853)
Yeah. Well, so meeting Bill Phelps, he said a couple of things that were just key words that I’ll never forget. So first of all, he was open about the sales early on. So he didn’t make me sign a million things or whatever. And I don’t know that I can share, but the sales were astronomical for the size of the space, the investment, the return of capital, the food costs. So he was pretty open with that stuff early on. And so.

He said something else too, which I’ll remember, because you don’t hear a lot of franchisee who are saying this, but he said, I want my franchisees to be rich. And, you know, we could, we could come back to that and what I think that means now, but he was, he seemed to be really dedicated in building a franchise model that was a partnership and where the, you know, he wanted to bring in the best franchisees in the world, not compromise at all on that. And, wanted, wanted his franchisees to be really successful. And so when you have that as a starting point,

It makes you want to do business with someone like that. So we went, we saw the restaurant. Like I said, there was one at the time there’s like a line wrapped around the building. It was a Wednesday night, I think at like nine or 10 PM. So super obscure hour and day and they have line wrapped around the building, two hour wait for chicken. And so, yeah, we said, you know, we got to bring this to San Diego.

Dan Rowe (09:50.76)
Yeah.

Dan Rowe (10:10.28)
Where was the first location? Okay. There’s been so many copycats. Like what is it? Cause we get hit on all the time by people that are trying to knock it off. What is it you think about that brand that keeps it so successful?

Andrew Feghali (10:11.861)
West Hollywood.

Andrew Feghali (10:26.486)
I think there’s a lot of components, but I’ll try to touch on them. I think number one, Dave’s is a chef driven business. So the recipe chef, Dave, who’s still pretty active in the business and has become a good friend and actually a business partner. he’s, he’s an incredible chef. And so he’s not going to put anything out there that he doesn’t think is the best in the market. So I think you’re getting, you know, chef gourmet quality chicken at, you know, fast casual QSR price points and environment. So I think that’s one.

Number two, there’s another partner Armand who’s the chief brand officer. And I think he has a really good pulse on what people want from a guest experience. So if you go to a Dave’s, you know, a lot of things are going to be consistent in the food quality and the experience, but you’re going to go and you’re going to see different exterior artwork and interior artwork for that market. You’re going to hear music that you wouldn’t hear normally in fast casual or QSR. You’re going to see cool.

uniforms, you know, our customers are always asking us, how do we get a hat? How do we get a t -shirt? How do we get a bandana? So I think just all those, all those things are, it makes it kind of a unicorn, right? Then I think there’s, then you talk about the leadership team. Like we said, there’s, you know, the, the folks at the top are absolutely incredible. I think it’s a star -studded lineup from the COO, the CFO, just everyone on that leadership team. I mean, they’re really invested and they really care. And,

You know, I think I can share this, but Bill Phelps, he lets a lot of his leadership team become franchisees as well. And so they’re very connected on both ends of the business with making sure that they understand our needs and wanting us to be successful.

Dan Rowe (12:00.264)
Hmm.

Dan Rowe (12:09.032)
The, I mean, you said that earlier. I painfully, I’m aware of so many cases where the franchise ors are not in it for their franchisee success. They almost look at franchisees like a necessary evil. And the only way a franchise or is ever going to be successful as if their franchisees are successful. There’s no money in selling the franchise or getting people to open up one and wanting to get out or something. All of it comes when you have multi -unit franchisees. And if you could have.

eventually hundreds and hundreds and hundreds of locations with only dozens of franchisees. Like then you’ve really got something special. And the fact that, that, that, that he wants his leaders to also be franchisees. That means I, I mean that that’s, that’s right there exactly is practicing what he preaches.

Andrew Feghali (12:56.248)
Yep. And I think you probably hear this a lot, but I, you know, people are always like, Hey, why don’t you become a franchise or that’s where the money’s at. It’s like a clipping coupons. And that’s just like nails on a chalkboard. because that’s, those are the franchises you want to run from, right? Where the, the, the, the ownership, the leadership team, they’re not invested. They’re not, you know, they’re just looking at it as a revenue stream for them. And yeah.

Dan Rowe (13:07.432)
Yeah.

Dan Rowe (13:11.688)
Yeah.

Dan Rowe (13:20.744)
Yeah, now how many Dave’s are there now?

Andrew Feghali (13:23.991)
Actually, they just opened their 200th location.

Dan Rowe (13:27.016)
And how many years? So they’ve gone from one to 204 years with exceptional numbers, exceptional operations. Like that’s, that’s a crazy amount of growth. And so what do you think that they do that all of you guys do to, to, to keep the operations running the way that they’re supposed to with that much growth?

Andrew Feghali (13:28.599)
four years.

Andrew Feghali (13:48.536)
So Bill kept his commitment of only bringing in world -class franchisees. So when you look at the Dave’s franchise roster, they’re all proven, successful, multi -unit franchisees. So it’s a collaboration, right? It’s not folks that need to come in and learn the business. It’s folks that can come hit the ground running and add value right away. So I think that’s definitely one thing. Timing and spacing has been really critical to Dave’s success. So they’re not rushing us.

the I’m pretty sure almost every franchisee is meeting or exceeding their development agreement, but that’s because they put together responsible franchise agreement, responsible development agreement. So you hear about some franchisors that, you know, you got to do 40 stores in five years or what, and, you know, a hundred percent of the system is behind on their development agreement. Dave’s is exactly the opposite of that. And it’s a very rational approach. So.

you know, space them, time them apart, open with really high volumes and be successful. So I think that’s really important.

Dan Rowe (14:51.208)
One of the things when a brand sells, if a brand eventually wants to sell, the buyers are going to come or the bankers are going to come look right at the development schedule integrity and tear apart your valuation. You could say you have 500 units in development, but if only a small percentage of them are actually hitting their numbers, you don’t get credit for it. It’s so much smarter to give people longer time because they’ll build as fast as they can find great sites and have the right team, but give them longer. I don’t know why you’d rush someone to do five stores and

a year or something goofy like that.

Andrew Feghali (15:22.138)
Yeah, and what’s also great is that they sold territories. So, you know, we have an exclusive on San Diego County, for example. So it gives us a ton of white space. It gives us plenty of opportunity to chase the A real estate. We’re not worried about competing with other franchisees coming in. And that just makes it a lot easier to develop in good faith and feel really good about kind of investing because it’s a lot of money. So, you know, they make you feel good about it. That’s for sure.

Dan Rowe (15:49.864)
So let’s then talk about, then you get into Jersey Mike. So why did you take a third brand and why that brand?

Andrew Feghali (15:56.538)
Yeah, so I guess Little Caesar’s kind of chose me. Dave’s was kind of pure luck. And then Jersey Mike’s was the deliberate one. A lot of Little Caesar franchises were getting into Jersey Mike’s. So I was exploring it. You hear the, you know, the first thing any franchisee hears is the numbers, right? Let’s just be honest. So, you know, what, what’s top line? What’s four wall leave it on? How much does it cost to build one? What’s the return of capital? So, I mean, let’s just put all that aside, right? Cause assuming all that has to check out for anyone to even be interested.

Jersey Mike’s is a phenomenal product. So I’ve been a customer for a long time and love the product. Every time I go to a Jersey Mike’s, regardless of where in the country it is, I get the same experience. Like it feels like they’re all company owned, which is kind of mind boggling for, you know, fragmented franchise or system. And, and then the big one was the community involvement and the way they, they get back locally. So even though they’re this big company, it’s, it feels, it feels local. And then.

I would say the biggest one is the reputation of the franchisor and the founder, Peter Cancro. And so when you hear about all the things he’s done, like paying for franchisee remodels and what he did to support his franchisees during COVID and the way he, you know, there’s a lot of things that even don’t make the headlines. A lot of folks that he’s given an opportunity to. And so when you hear those stories, that’s how the culture emerges. And I just knew I wanted to be a part of that. That’s, you know, yeah.

Dan Rowe (17:20.648)
Yeah. I know a lot of, I know a lot of Jersey Mike’s franchisees. I’ve never heard anyone not talk about them the way you did. Everybody loves that guy. Revere’s that guy. So what do you think it is? Like what could another franchise or learn from Peter? Cause he’s now got a concept that’s in the papers talking about billions of dollars in sales. So everything he’s done, obviously remodel franchisees. He gives fr

He gives his best employees a store. I mean, he does a lot of really things where he’s giving. It’s not like he’s, it’s not like he’s making himself broke doing that. He’s making plenty of dough, but what do you think it is about him that other franchisors ought to emulate?

Andrew Feghali (18:04.156)
Couple things, so beyond just wanting the franchisees to be successful and be profitable, right? I think, you know, that’s again, that’s a given, right? The economic proposition has to be there. What I’ve seen is that there’s an immense loyalty in his core group. I think that’s really important. We talk about leadership and turnover, there’s none. So you really feel that culture there, right? People are in it, like people have drank the Kool -Aid and they’re in it for the long haul.

But I think the biggest thing there is there’s an unwavering commitment on operational integrity. So the training for the franchisees, the standards of kind of operational excellence, it’s got to be perfect all the time, right? They don’t let things slide. So I think that’s the biggest thing is that when leadership is in the market, I mean, the stores, they always have to be perfect, but they’re not going to give you any slack. They want you to be a top notch operator.

Dan Rowe (19:00.52)
Yeah. Yeah, good. And they should, they got to hold a high bar, especially with that many sites. So what’s the big difference between the established brands and the emerging brands to you? You’ve been successful with both. So it’s not like you can only be successful if you’ve buy a franchise of a thousand unit chain. You’ve been successful at both. Like what’s the big difference between the emerging and the mature stuff in terms of opportunity?

Andrew Feghali (19:25.98)
Well, the mature stuff is more…

You know what you’re getting, right? So you can do your research on the leadership team. You can talk to a bunch of franchisees. You can do quite a bit of diligence. And then it’s just who’s going to operate the day -to -day of the business is kind of the biggest thing there, right? So do you have the right operator, operating partner, director of ops, et cetera? So, you know, franchise financing is a big distinction, right? It’s certainly a lot easier to go get debt on the mature brands and underwrite them. There’s more for sale.

Right? So if you want to consolidate, I think Jersey Mike’s and Little Caesar’s probably the average franchisee has three units. So tons of opportunity to go buy, buy legacy franchisees that want to retire, whatever, get out of the space for whatever reason where emerging brands, more capital intensive, there’s going to be more development. And then there’s going to be more kind of iterations of, of everything, right? Changing softwares or changing operational procedures or things like that. So,

You definitely got to have your kind of ear to the ground a little bit more and kind of be a little more involved with what’s going on and be prepared for change. I mean, if it’s emerging, it’s going to change over and over and over again. You got to be okay with that.

Dan Rowe (20:45.288)
Yeah, I know a lot of franchisees that we have a franchisees also in Jersey Mike’s was one of the first Qdoba franchisees, one of the first glow franchisees. There’s some people that just like getting to merging brands, even though they’re a little rough around the edges. They like being, they like feeling like they’re part of, creating these brands, but Hey, so you said some a second ago, buying versus building. So you’ve obviously built plenty of stores. You’ve bought plenty of stores. What’s the big difference? What’s the big opportunity?

Andrew Feghali (21:15.645)
Well…

I look at building restaurants like mining for gold. You don’t know what you’re going to get and sometimes you’re going to strike out. Sometimes you’re going to do very well. And so I think you have to be a little bit okay with that risk tolerance. When you’re buying, it’s easier for me with a finance background. So it’s a little easier for me to develop a playbook and kind of systematize it. But I would say nowadays we have a pretty strong playbook for developing restaurants.

We’re not perfect every time, but I think we’ve got it pretty much down to a science. I think when you’re developing, at least for me, as a prospective franchisee of a lot of brands, when franchisors are looking at developing, I just want to know really, what is the, well, first of all, what kind of support are we going to get on the development side? Site selection, lease negotiation, construction, all that good stuff. But then what is the expected return of capital?

So, you know, I probably wouldn’t be a builder in a brand where you’re not expected to make your money back in two to three years when you’re building that restaurant. And that’s just simple because, you know, right now, let’s say they would sell it five times EBITDA. You want to get some value for all the work and all the risk you’re putting in, right? And now that could change brand to brand. Like, you know, if a Taco Bell is trading at 10 times EBITDA,

Dan Rowe (22:29.96)
the brea –

Andrew Feghali (22:46.847)
then maybe it’s, you know, if you get your money back in five or six years, it’s still, you’re still going to double the value of the enterprise. But yeah, I think that’s the biggest formula I look at when I’m developing.

Dan Rowe (22:59.72)
Yeah, so what you mentioned ROI. What sort of ROI do you look for in a new brand or or really in any brand like before you strike the check, sign the lease? What what’s your expectation for ROI?

Andrew Feghali (23:13.823)
two to three years, return on invested capital at store level. So four Wallet Bida’s, 200 ,000, probably the overall build out cost would be 400 to 600 ,000.

Dan Rowe (23:27.24)
Hmm, got it. Hey, so everybody says California sucks. Everyone says doing business in California, being a restaurant guy in California, minimum wage, everything in California sucks. I don’t think that’s true, but you’re in California fighting these fires every day. How’s it going?

Andrew Feghali (23:46.368)
Look, there are some things that certainly suck about it, you know, doing business in all these other states. There’s a lot of times where I’m like, man, why can’t we just have, you know, Texas laws or whatever in California. But the fact is there’s also a lot of benefits of doing business in California. And I’m still bullish on growing my business in California. So I think there’s, you know, there’s a lot of people here. So there’s a lot of customers and there’s a lot of talent at the store level.

You know, the volumes are higher here. You know, surprisingly, my occupancy costs are still pretty reasonable in California. You know, just the sheer amount of density, right? The traffic. So I’m okay doing business in California. I think you got to underwrite it a little differently. I mean, you’re going to get your eventual lawsuit or whatever and maybe need to beef up your HR a little bit more. Prepare that, you know, that’s going to be higher prices because you’re going to need to offset some of that labor. But,

But I still think it’s a great place to build wealth.

Dan Rowe (24:47.976)
Yeah, I do too. I mean, that’s, that’s why you rob banks. That’s where the money’s at. Like California is super, super, super dense. So, but yeah, you know, you hear these stories, but every, you know, you hear people kind of poking fun in California that everyone’s moving out. Every time I go to California, it doesn’t look like it. They play the streets are busy. Freeways busy. Restaurants are busy. And you said, even with the higher cost of California, your occupancy costs are still in line because your volumes are high and.

Andrew Feghali (25:05.504)
Yeah.

Dan Rowe (25:17.224)
whatever the labor cost issues are, people are still opening up more stores because net net it works.

Andrew Feghali (25:23.905)
I love when people tell me they’ll never do business in California. So that makes me happy because I’m definitely a buyer.

Dan Rowe (25:29.018)
Yeah. Yeah, that’s good. And then, Hey, what, what do you think? Let’s get into this. What do you think separates you from other operators? And then at the same token, like what do you, what do you think separates in every chain? You’ve got good ones and bad ones. Like what are the good ones doing and what are you doing that other people just aren’t, just don’t seem to get their arms around.

Andrew Feghali (25:53.537)
My background definitely helps. The fact that I come from store level operations and have done everything helps me see the bigger picture a little more clearly and understand what the folks are going through. So, you know, when we buy stores, there’s little, it’s little things when we turn around stores, right? People are always like, well, how do you double sales in a restaurant or whatever? And it’s, it’s just a very simple playbook, right? Like,

small upgrades, making sure people are treated right, have enough uniforms, right? You’d be surprised when people, it’s like you get two t -shirts on the first day and you never get anything again, right? And so since I’ve been there and done that, I think I understand those little things really well. And I think that separates me. And then I’m also able, you know, I’ve educated myself a lot on the business. So I think I’m able to kind of be up on the balcony looking down and then be down on the dance floor with the folks and kind of going back and forth.

So I think that is probably a pretty unique perspective for a franchisee of my size to have kind of both experiences. When I look at common success factors, look, I’m going to probably keep going back to this, but it’s all about who’s running the business, right? And just the maniacal focus on taking care of those people, you know, from a kind of a bottom -up approach. You know, most of the successful franchisees I know agree that the general manager is the most important person in the business.

And everything’s revolved around serving the general manager. So it’s, I hate to make it sound that simple, but it really is, right? Who’s running the business day to day? Is that their sole focus? Are they, you know, trying to be best in class at it? And then are they serving the general manager? Are we getting the general managers the tools they need to be successful?

Dan Rowe (27:38.984)
Yeah, and so for you, the most important person is not necessarily the customers, the people dealing with the customers for you because you don’t want to be in you. You’re an owner. You don’t want to be operating shifts for you to have restaurants that run lights out. You need to have people that are that are motivated, right?

Andrew Feghali (27:55.33)
Yeah, that’s certainly changed from when I was a three store operator starting and I could do everything and run to the bank and go get produce and do the orders and come back and cover shifts and all that. But yeah, I mean, as you scale, you got to delegate and elevate other folks. So yeah, so I learned that early on. It’s the general manager store. I want them, some jargon that we, we want them to be the mayor of the town, the mayor of their city and the owner of the store.

And so that’s what we try to build the culture around.

Dan Rowe (28:28.36)
Yeah. And across so many brands I’ve worked with, you can take a struggling store, a store that’s struggling and maybe people start to say, we picked a bad side or we did whatever you put that same store in the hands of a good operator sales go right, right where they’re supposed to. Like, what are some things that, that you see struggling operators do over and over? What are some warning signs? If someone’s like, I’m thinking about getting in your system and you just know that they’re not going to be right.

Andrew Feghali (28:53.571)
So just real quick, just to go back to that operator point, because I think there’s some important anecdotes there that, you know, I have restaurants where literally all I do is change the general manager and profitability will double. And so, you know, I think that’s what people miss a lot is, you know, the cost between, you know, a C or a C plus GM versus an A or an A plus GM is not all that much. I mean, it could be $10 ,000 a year of

of additional comp to retain that A plus GM. But the impact that could have on the bottom line of your restaurant is five to 10 times that. So why wouldn’t you always want to protect that A plus GM? And, and, you know, it’s like, that’s the thing, right? You go, you go into restaurants all the time. You, the good restaurants are the ones where you walk in and you know who the GM is, right? You can kind of feel their energy, right? You know, that person must be the manager or must be the owner. Sometimes you think they’re the owner, but they’re the GM, but that’s because they.

Dan Rowe (29:30.408)
Yeah.

Andrew Feghali (29:52.356)
feel like the owner. And so that’s what we want to create in each of our restaurants. Going back to your question, it was, I’m going to try to rephrase it. Where do I see operators kind of miss or kind of warning signs that.

Andrew Feghali (30:11.876)
think about that for a second. I mean, a few things are coming to me. When people want to own stores outside of their core market, I think that’s a big one. So, you know, we, you live in one state and you want to own and operate restaurants in another state. But, you know, it’s like, like, yeah, we’ll just hire someone. And I think that I always am kind of just like, you know, make sure you know what you’re, you know, if you’re going to do that, I highly recommend having an operating partner, someone who’s bought in. Yeah.

Dan Rowe (30:29.032)
Hmm.

Dan Rowe (30:38.44)
partner.

Andrew Feghali (30:40.164)
that’s running the day to day. But I think I see a lot of franchisees struggle that will acquire restaurants outside of their core market, outside of where they live. And it just, you know, everything starts slipping and falling. And I think we’re seeing a lot of franchisors notice that and go back on approving deals and forcing franchisees to operate in contiguous markets or having the local operating partner, things like that. I think that’s a good thing for the industry.

you know, a couple other things, I mean, just when they stop investing in the restaurant. So, you know, like for us, when an air conditioning unit goes out, it’s, you know, same day, right? You know, call the vendor, replace it, whatever. And so sometimes that’s not always the case, right? Sometimes it’s like, well, let’s wait till summer until it gets absolutely necessary to replace the AC and we do that. And I think.

Dan Rowe (31:22.92)
Mm -hmm.

Andrew Feghali (31:34.789)
When you start, that’s a slippery slope. And I think your employees notice that and your customers start to notice that and that’s impending doom. And then just when you’re not, when you’re not, I think it’s a, it’s easy for our, for our folks to see what market comp is. Right? So if you’re below market comp, it’s easy for folks to, to move somewhere else and, and get, and make more money. So if the culture is not there and you’re not paying at least that market, I think you’re going to have a tough time staffing.

All my restaurants are fully staffed right now. We don’t have any problems staffing. I think it’s just those little things where, so when I hear operators say, we can’t find good people, to me that’s a warning sign.

Dan Rowe (32:16.68)
Warning sign of them or the market. Yeah, yeah, because I knew that that’s what you meant, but with I mean, because the market is tight, right? Labor’s tight, but you’re not having labor problems. So what’s your thoughts around how you comp, how you motivate? I mean, some some of the reasons people stay is certainly financial, but a lot of it’s not right. But what are some of the things that you do both financially to keep people longer and?

Andrew Feghali (32:19.365)
Of them. Of them. Yeah.

Dan Rowe (32:45.992)
some of the non -financial things.

Andrew Feghali (32:48.677)
Financially, the biggest thing is we want to be at or above market and we want a bonus off of EBITDA. So we have full store level P &L transparency with all of our general managers. And so that makes them feel like they have full ownership of the restaurant. So they get a piece of what they bring to the table in terms of their variable comp piece. So that’s the biggest financial thing. I don’t think you need to over complicate it much more than that.

Dan Rowe (33:16.04)
Yeah.

Andrew Feghali (33:17.478)
In terms of culture and things like that, there’s a ton of little things we do. I mean, it’s from the little things of like, just knowing when people are having milestone events and sending gift baskets or giving them paid days off or sending them on vacations or, and the Dave’s business, I think we have a phenomenal culture. Some of our above store leaders have Pelotons and, so to focus on kind of just like mental, physical, just all those little things, right? I think they add up and goes a long way with folks.

Dan Rowe (33:46.856)
But it’s true that all those things that you do financially and then just things that are just being thoughtful, that’s an investment that pays you a return, right?

Andrew Feghali (33:56.07)
Yeah, every time someone gets promoted in the day’s business that would go to a steak dinner, you know, either Morton’s or Ruth’s Chris or something like that. you know, our little Caesar’s business, we took our whole team out to Vegas and went to a Cirque du Soleil show and all. And so, yeah, I think there’s just the ROI on things like that. Besides it just being the right thing to do. I think it’s a good investment.

Dan Rowe (34:19.048)
Yeah, good. Hey, what if you were to go now do a fourth brand? What are some of the things that that you would look for if someone’s trying to sell you a franchise? What are the things that you look for in that brand?

Andrew Feghali (34:35.815)
I think the most important thing is I want to believe in the product and what I’m selling. So like I said, with all three brands that I’m in, I really do love the product and love the brand. So I don’t think I could sell something that I didn’t feel passionately about. The leadership team is probably the most important thing. Who’s there, who’s running the business? Are they going to be around for a while? Or is it?

Every five years the leadership team turns over with a private equity sale or whatever. That’s probably a brand I’m not going to invest in. What is the franchisor doing? Does it feel like a partnership? Is the franchisor, when I’m talking to them, is it all about what they want to do or is it about wanting to serve the franchisees, like you said? So what are we getting for our royalty dollars?

What does the training look like? What does the supply chain look like? In short, what are we doing to collectively work together on improving store level profitability? So if I hear all those things, I think that’s a brand I’ll probably want to get into. The other thing is, do I think that the brand can last several economic cycles? Does it already have that history, or do I think it has potential?

People are always asking me about Dave’s and how long I think it’s going to last. And I think it’s going to last forever. As long as the leadership team stays intact, I think they’ll figure out a way to continue to build the brand. So without naming names, there’s certain categories or certain brands that I wouldn’t get in if I thought I was just going to be in for a short period of time and then sell them or if I didn’t think the brand was going to make it for 20, 30, 40, 50 years.

Dan Rowe (36:26.632)
Yeah, how about tech stack? Like when we first got in this business, nobody talked about a tech stack. Nowadays, tech is everything off premises, everything apps are everything. I was just at the off premise conference and in food on demand in Vegas and it’s just mind boggling. But what’s like, what are some of the things that you guys do in terms of tech stack that actually have a positive ROI? Because so many people are throwing money at stuff without any ROI. Like what’s working for you?

Andrew Feghali (36:59.465)
Yeah, I think less is more when it comes to the tech stack, because it can become all consuming. Look, I think I’m biased. There’s a company that I’m on the advisory board of called Landed, which helps restaurants hire hourly workers. I think Landed is a game changer for those folks that are having a tough time staffing at their restaurants. So something that’s going to serve kind of your operations.

There’s another one I like that’s non -operational called Lease Cake, which I think is really beneficial. So really affordable kind of cost of entry. And I acquire a lot of restaurants and it always kind of mind boggling to me how many franchisees don’t know anything about their leases. A lot of times the leases are expired. So I’ll buy a store and I’ll have to just go ahead and negotiate a completely new lease because they’ve missed some sort of deadline or whatever. So those are two.

Dan Rowe (37:33.128)
I’ve heard of those, yeah.

Andrew Feghali (37:57.96)
you know, obviously all the third party stuff is, you know, a lot of the brands now, I think 30, 40, 50 % digital. So making sure that they’re on all the, all the platforms and capturing all those sales. And then, yeah, I don’t know. I guess I’m a little old school Dan and in the tech stack and I, I’m more of like an operator at heart where it’s like all that stuff or tools that. That can help your employees be successful, but if you don’t have the foundation there, I don’t think a tech stack is ever going to save you.

I think it all starts with running really good restaurants. So I don’t know. I don’t know if I have a good answer to that question.

Dan Rowe (38:27.88)
Yeah.

Dan Rowe (38:31.4)
That’s a good point. Yeah, no, that is a good point actually. so if you think back on your journey, if you’re, you know, going from where you started, to 60 locations, whatever, if you had to do it all over again today in 2024, how, how much easier would it be or harder would it be to do what you did?

Andrew Feghali (38:54.568)
Well, it’d be a hundred times easier. I mean, I think I could go build the exact business I have in a year or less, where it’s taken me 15 years. So I think it would be a lot easier.

some kind of big lessons, I guess, if I were to go back some things I would do differently. I think when you’re an operator and you’re bootstrapped the way I was, you take on that burden of feeling like you have to do everything. And so it’s hard to get past certain inflection points of growth, right? Going from three stores to five stores to 10 stores to 20 stores when you feel like you have to do everything. So.

I think the biggest kind of one -liner there would be hire not for where you’re at now, but for where you want to be a year from now. And I think that’s really, really hard for bootstrap operators. You know, hopefully there’s someone listening to this where that resonates with them, right? Where it’s like, it’s really hard to get past paying someone a hundred thousand a year, 200 ,000 year, whatever, but you’re never going to get to that next phase of growth without building your team and hiring the best people in the industry.

And I think that was really hard for me to get, you know, cause I wasn’t paying myself anything. So I’m like, it was just, it was really difficult. So if I could go back, you know, hire for where I want to be one year from now. and I think I do a pretty good job of that now. And that’s why we’ve, we’ve had all the growth we’ve had. so building the team, making sure I have administrative support so I can work on my kind of highest and best use of time. I think for many years, I was also doing a lot of the administrative work. I don’t.

I don’t know that I’d start another business without having some of these resources just from day one, right? So that I can work on the stuff that’s going to maximize output. Two more things, learning franchise finance really at a super deep granular level has been a game changer for me. It took me way too long to learn that. And that was this last thing is I learned all that through a product of building my network.

Andrew Feghali (41:02.856)
So the more I got out there, went to restaurant conferences, I mean, that was a huge unlock for me, you know, going to MUFC and RLC and RFDC. I mean, the first few, my mind was just blown. I would go back and just crash because I was just information overload. And so I was a little late to the game on that stuff. You know, joining YPO, Young Presidents Organization, being a part of other, you know, organizations and groups and things like that where I’m.

out there talking to other franchisees and learning best practices. I think for many years I just kind of had my head down charging and was just working night and day and I wasn’t, I was working in the business, not on the business.

Dan Rowe (41:47.72)
That’s good. But you think today, 2024, you could start, you could do zero to 60 units just as easily today. Like there’s no reason in 2024 you couldn’t have the same success, right?

Andrew Feghali (42:00.712)
No reason. There’s still great opportunities out there. There’s still franchisees that have been at it for a long time that are ready to retire. There’s still great brands out there where development makes a ton of sense. There’s understanding sources of capital, I think, is important. So I did it kind of the old fashioned way of saving and reinvesting, but you don’t have to do that. You can get capital partners or you can raise capital. There’s all sorts of ways.

You can figure that out. You can buy underperforming stores and turn them around. So there’s stores I bought for as little as $30 ,000. And those are out there. You probably see them all the time too. If you want to get into franchising, it’s really not all that hard if you put your money in.

Dan Rowe (42:55.048)
So which leads me to what about mentors? I’ve been lucky. I’ve had some success in my life largely because of mentors. So if I were getting into a brand new system, I would search, if I were getting into Dave’s or Jersey Mike’s, whatever, I’d go search out the most successful franchisees. And I’d just say, what do you do? Like, what do you do? How do you do it? Your, your experience, how hard is it for you to get mentors in this business?

Andrew Feghali (43:21.448)
So I was really late to that game. And that’s another reason why I say if I could, if I go back, it would, I would be able to do it a lot easier. because like I said, for the first price seven years, all I did was work. I mean, I was just in my restaurants, and I didn’t even think about getting mentors. And so when I finally did, it was a massive unlock. yeah, I would, I would, I mean, now I tell myself everything I need to know is out there. I just need to know the right person to teach me.

And so I have very much of that mindset of ask a lot of questions, get a lot of advice. Yeah. Join, like I said, young presidents organization. There’s, or I’m in a franchise forum. That’s all we do is talk about kind of tricks and tips and needs and leads. So I would do exactly that. And I found that the most successful people are the most generous with their time. So I have no problem emailing a CEO of a company or.

someone I admire and if it’s a LinkedIn message or whatever and 100 % of the time they get back to me and they’re very generous with their time and I’ve learned a ton. So it’s just a matter of reaching out. I think the franchising community is really open and really generous and everyone wants to help everyone.

Dan Rowe (44:37.608)
Yeah, I agree. What motivates you personally now? You’re past the stage of working to pay rent. So what keeps you going now at 60 locations?

Andrew Feghali (44:48.936)
I think I finally got to a place right now where I think I’m really good at what I do, which makes it fun. So it’s sort of, I hate to use the word it’s a game, but it feels, I get that sort of satisfaction. Like it does feel like a sport almost where it’s not about an ego thing or a store count thing. I have no goal of I want to be at a certain number of units, but I just, I really enjoy the process. I really enjoy working with the franchisors, working with our teams.

you know, improving restaurants and just getting better that whole process of continuous improvement. So that drives me. but the most important thing is bringing people up and along with me for the ride. So helping people become franchisees, promoting people from within, you know, it’s a, it’s a vehicle for improving a lot of lives in a short period of time. And so I think that’s the biggest driver now is like, if I, if I’m looking at something, it’s like, well, how can we make an impact?

And so there’s definitely a shift in mindset where it was kind of survival mode to now it’s how do I help the most amount of people with what I do for a living.

Dan Rowe (46:00.2)
Yeah. And, and it’s, I mean, and the good thing about that is you could get wealthy helping people get wealthier. You can get wealthy changing people’s lives. It’s not, it’s not one or the other. Like it’s, it’s good. So you mentioned YPO, you and I are both in young presidents. I love YPO and I strongly can like urge anyone to either get into YPO or EO or, or otherwise build a peer group of mentors or peer group of advisors. But what, I mean, what, what have you gotten out of YPO?

Andrew Feghali (46:30.696)
Wood made another podcast for me to talk about all the benefits of peer groups and what I’ve gotten out of YPL. I mean, so a couple things. I think when you’re a smaller franchisee, the way I was for many years, it could be a pretty lonely place and you could feel somewhat isolated or on an island. And if I would just wish I had joined a peer group earlier, because I think they’re a huge cure for.

for isolation or executive isolation or whatever else, right? So that’s the biggest thing I’ve gotten out of it is just having a peer group of folks talk to and that I can share the wins and the losses and things like that. There’s actually a lot of research that shows that expanding your network leads to making more money, right? So there’s a research article out of UC San Diego where they studied CEOs and their Rolodexes and they found that the more

network CEOs make, I think it was about $17 ,000 per additional person in their network. So I mean, it’s, you know, just from a financial perspective, it makes sense to go out there and meet people. And that’s basically the reason for that is through the transfer of information, right? You’re going to learn something and information and knowledge is power. So, you know, joining a peer group, I think, you know, I’ve met a ton of people, I’ve learned a lot and made a lot of great friends.

Dan Rowe (47:54.248)
Yeah, what’s next for you now?

Andrew Feghali (47:58.192)
acquiring a bunch of little Caesars, developing some Jersey Mikes and Daves and looking at other opportunities and working with the team. Yeah, just kind of staying course.

Dan Rowe (48:08.296)
So you got a hundred units, is a hundred units in your sites.

Andrew Feghali (48:12.881)
So that’s not a number I focus on, but I just know it’s going to get there through just focusing on the process. So I think that’s another thing I’ve done a good job of is I don’t get distracted too often. So I know what I’m good at. I know what I enjoy doing. And I’m just focused on being the best franchisee in the three brands that I’m in. And I think if I just focus on that, I’m sure we’ll be at a hundred units. But if I always say, if I never buy or build another store again, I’m very happy.

But there’s so much opportunity out there. So I’m excited to see where we’ll end up a few years from now.

Dan Rowe (48:49.8)
Good. Any other thoughts? Anything we didn’t cover? Any advice you want to give franchisees or franchisors? Franchisors got to stop frustrating their franchisees.

Andrew Feghali (49:00.509)
I think it’s just really simple with franchisers. I mean, the more you see it as a partnership and the more you collaborate with your franchisees to improve store level profitability, the more people will want to develop. We’re entrepreneurs. We want to make money. We want to invest capital and get a return of capital. So I think just go back to the basics, right? And then focus on training. I think that’s the biggest thing right now is our teams need us.

They need us to give them the support and the tools they need to be successful. So I think operations have gotten complicated the last few years with all this technology, all these new things coming out. Like I think there needs to be kind of a re -correct.

Yeah, refocus back to training now that all the COVID stuff is over.

Dan Rowe (49:50.856)
Yeah. Yep.

Yeah, you think about a franchise or like with the right franchisee, they prepay you to come in the system. They pay you to stay. They take the personal guarantees on the leases and grow. And they, if you want to add cupcakes in your menu, or if you want to do whatever the franchisees have to follow your whims, it’s like, just don’t frustrate them. Like you get franchisees that they don’t actually want to reinvent the wheel. They just want to run the system. It’s like, stop frustrating.

Andrew Feghali (50:21.778)
Yeah, I couldn’t agree more. And then with, sorry, I was just going to say with franchisees, it depends what stage of the game you’re at, but like I said, I’ll just kind of go back and underscore a couple of things. Just hire for where you want to be a year from now, not where you’re at now. And I know it’s hard, but it’ll change your life when you get that right person, right? When there’s something missing there and you’re not working on the things you love working on, there’s someone out there that…

Dan Rowe (50:23.88)
Andrew, you’re… No, go ahead. No, go ahead.

Andrew Feghali (50:50.162)
We’ll love to work on that and we’ll do probably a better job than even you would ever do on it. And they’re out there and it’s just, you just gotta get past it. You gotta fork up the money, whatever it is, whether it’s saving up or budgeting for it or whatever. Once you get that right person, it’ll change your life. And that’s true for different inflection points over the journey is what I found.

Dan Rowe (51:10.792)
Yeah, I always say staff for the sales you want staff for the company you’re trying to build, right? You can’t. You can’t do 2 million in sales with an $800 ,000 team. Period. Cool Andrew. Thank you. You’ve been amazing. Really appreciate your candor and your advice. Got some really good nuggets here, so thank you very much. Thanks for anyone tuning in and thank you again for joining smart franchising with France. Mark Andrew see you soon.

Andrew Feghali (51:20.563)
100%.