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Smart Franchising With Fransmart

Episode #8: How Mike Axiotis Builds Winning Teams and Thriving Franchises

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Smart Franchising With Fransmart - Episode 1
May 21, 2024
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Join Mike Axiotis, a seasoned Red Robin and Wingstop franchisee, as he shares his incredible journey in the restaurant industry. Starting as an 11-year-old busboy in his uncle’s diner, Mike quickly climbed the ladder to become a prominent figure in franchising.

In this episode, he discusses the lessons learned from his early business ventures and the strategies that led to his success. Mike emphasizes the importance of investing in people, maintaining robust systems, and engaging with the community. He also explores the challenges and victories that have shaped his career and provides insights into the future of the restaurant business.

Look at the franchisor’s marketing strategy. Is it effective? Is it relevant? Is it mainstream and cutting-edge, or is it old school? Are they sending out coupon inserts in the newspaper? If they’re doing stuff like that or the coupon clipper, you don’t want to be part of it.” – Mike Axiotis

With years of experience, he provides deep insights into building and sustaining a thriving franchise. This episode is filled with helpful advice and inspiring stories, making it a must-listen for anyone interested in the dynamics of franchise management and entrepreneurial success.

Episode transcript

Dive into the text transcript of our insightful conversation where we uncover the strategies and stories behind successful franchise brands. Explore at your own pace and gain valuable insights to fuel your franchising journey.

Read the transcript

dan rowe (00:02.102)
All right. Welcome back to smart franchising with France smart. Today we’re talking to super successful multi-unit, multi-brand franchisee with red Robin and wing stops, Mike Axiotis, who’s from a part of Pennsylvania. I think where they filmed the office and who’s also on the ladder to become the next NRA chairman. So we’re going to get into everything. Mike thinks is, thinks it takes to be a successful franchisee and advice to franchise ors who want franchisees.

And any other nugget that comes out of the conversation. So welcome Mike and tell us a little bit about yourself and your journey so far.

Mike Axiotis (00:38.818)
Good afternoon, Dan, and thanks for that very gracious opening. I think you’re giving me a lot of credit that I don’t deserve, but it’s very well appreciated. It’s great to be with you as well. And you’re doing a lot of great things with Fransmart, so I feel honored to be here today talking with you as well. So my career began almost 40 years ago, believe it or not, even though I look pretty young. I started young.

dan rowe (00:59.558)

Mike Axiotis (01:09.11)
So there’s a lot of experience there. I started when I was 11 years old as a busboy working for my uncle in a Greek diner and He was my mentor. He’s still in this business today, and we have a great relationship He’s a really good golfer too by the way, but his golf passion Actually created his ability to delegate and give autonomy to his people and he gave me that autonomy at a very young age

And by the time I was in high school, I was pretty much running his restaurants for him while he was out on the golf course. So that was my inspiration and I saw him doing that and I was like, wow, maybe that might be me one day where I can be out on the golf course and have a great team of people working for me in the restaurant industry. So I always knew that I wanted to be in the restaurant industry and own my own restaurant watching him do that.

when I was a very young guy. So by the time I was in high school and graduating, I was ready to go to college and go for accounting and finance and then own a restaurant. But two weeks before I was ready to start, he approached me and said, hey, I’m signing a lease on a fourth restaurant and I need a partner and I’m looking at them. You have 24 hours to make a decision. I was 18.

dan rowe (02:33.006)
How old were you?

Mike Axiotis (02:35.71)
right out of high school. No college degree, just my high school diploma and a lot of experience working for him at a very young age. But he had a lot of faith and trust in me that he was betting on me. But my sister was also part of the equation. So my sister and I and my uncle went into business together and learned a lot. So that lasted about five years.

I made a tremendous amount of mistakes, didn’t know what I was doing, but I thought I knew I knew what I was doing. But I would say that today, looking back on that, at the time it wasn’t really fun to be making those mistakes and having an epic, what I’ll call an epic failure at a very young age changed my trajectory in my career. I would say that I got my bachelor’s, master’s, and PhD.

in business owning your own business because no one teaches you yeah no one teaches you how to you know file for taxes or what FICA taxes or what sales taxes or you know what a PNL is and back then it was just a cash register right you pay your bills and whatever’s left over at the end of the week is your profit and you don’t really know how to calculate you know food cost and

dan rowe (03:38.862)
No, no question.

Mike Axiotis (04:04.53)
and all of those things. So we were operating blindly. What we did know was we knew hospitality and that’s something that’s in our genes as a Greek American. Hospitality is what it’s all about. So we had raving fans, we had great food from scratch, we had a busy restaurant, but we didn’t know what was going out on the plate and what it cost and what…

dan rowe (04:32.294)

Mike Axiotis (04:33.13)
rent ratios were or what a good labor cost was. And we weren’t tracking or measuring anything. The only thing we measured was one thing, and it was sales. And you would look at your invoices to make sure that the vendors were charging you the right price for produce and meats and seafood and all that kind of stuff. So a lot of mistakes were made.

My uncle was fortunate to just have busy restaurants where he just by default was making money. Unfortunately, our restaurant didn’t have that same success because my sister and I were young and we had a lot of people taking advantage of us, stealing from us, lying to us, all kinds of things. We learned a lot about how to manage people and how to manage process and how to manage vendors.

dan rowe (05:19.642)

Mike Axiotis (05:28.722)
Unfortunately, our luck ran out after five years and my sister went her way and followed her dreams to be an educator. She had her degree in teaching and I had a lot of debt and bills to pay off. So I went and got a job working for the current company that I’m working for today, which was 26 years ago. And

And that’s kind of the next chapter of what I’ll talk about. But that’s pretty much my background and how I got started in this industry and still in it to this day.

dan rowe (06:04.909)
So no college, no college degree.

Mike Axiotis (06:07.654)
limited. So I went nights and weekends and I did the adult-like accelerated learning program and I did that for about two and a half, three years and you know I just couldn’t keep up with the demands of running the business and finishing my degree but I certainly have it on my bucket list that I will finish the credits that I still need to hang that degree on my wall.

dan rowe (06:32.742)
Well, you got me beat because I barely got out of high school. Like I think they gave me, they gave me a diploma just to get rid of me, but I barely got out of high school and I flirted with college a little bit, but, um, not for me. I was an entrepreneur, but yeah. So tell me about, tell me about the company you’re at. So you get there, were they already doing red Robin or what, what was the company configuration back then?

Mike Axiotis (06:35.63)
Thank you.

Mike Axiotis (06:53.906)
Yeah, so they were a small startup franchisee. They only had Red Robin at the time. They started in 1993, which was the same year I opened my restaurant. So by the time I got to them, it was 98. They were five years in with a development agreement to build three to five restaurants, and they only had opened two at that time. And…

What was intriguing to me was I wanted to go and work for a chain. And being that I’m an entrepreneur as well, going into business at 18, my goal was to do it again. But this time I wanted to go get an education in franchising because I knew that they had all the right systems and they had the elements that I was missing. I understood operations, I knew food, I knew how to manage people, but I didn’t understand.

the back office and even though my brain works mathematically and I’m really good with numbers, I just needed a formal education on how do they do it, how do they do inventory, how do they manage their P&Ls, how do they manage their systems and their training and their procedures because I like structure, I just am a structure guy so I was like I got to go learn what they’re doing and then in five years I had a five year plan.

I was going to take all of those best practices and go start my own thing again. And when I came on board, I had gone out before I decided to work for this group. I went and interviewed with all of the big chains that were out there at the time. Applebee’s, Friday’s, Darden, you name it. All the big players that were successful at the time. And I had job offers from all of them.

but they were very big brands. And what kind of drew me to a franchisee versus working for the franchisor was that it was something that still felt like family and a small business, but yet still part of a national brand. So that’s why I chose to come to this group. And there was a vision, you know, hey, we’re gonna open up five restaurants. And I was like, wow, that’s huge compared to…

Mike Axiotis (09:19.53)
what I was doing, I want to get in on the ground floor. And I felt that it was a good timing to get in on the ground floor, which ended up working out in my favor. I had the work ethic. I was used to working seven days a week with no days off. And they said to me, hey, five days a week, two weeks of vacation, I’m actually going to get a paycheck because I worked for free for five years, you know.

dan rowe (09:45.658)

Mike Axiotis (09:47.198)
So it was kind of a nice deal, but for me, I was like, five days a week and two weeks a year vacation sounds pretty easy to me. So I came in and worked really hard and I worked more hours than I had to. I didn’t take vacations. I worked six days a week. I at least took one day off. And the owners saw this and they were like, wow.

this guy really treats this like it’s his own. We like his work ethic, we like what he’s doing. We’re gonna give him opportunities. So, you know, I eventually started working my way up. Kitchen manager, general manager. Then they sent me out to do new restaurant openings. I was young and single at the time, so I was very mobile and agile, and I was like, hey, you know, yes is the answer, what’s the question?

dan rowe (10:40.846)

Mike Axiotis (10:41.93)
So whenever my boss would say, hey, I need you to go here. Yes, I need you to go there. Yes. So I was just going and doing these things. And I was learning along the way. And I made a lot of mistakes too. When you’re young and you’re single and you’re out on the road, you make some mistakes and some poor decisions that probably should have gotten me fired about three or four times. But my boss was a patient guy that gave me opportunities to learn from those mistakes. And it was great.

So I was like, all right, now I’m at five years. And at this point, I’m doing NROs. I’m also being sent in to turn around broken operations, go turn them around and fix them. And I got really good at that and I honed that skill in. So that was a very valuable skill to have. And I was like, you know what? I’m at five years and this is going really well. I’m getting promoted. I’m getting opportunities.

When I hit the ceiling, that’s when I’ll leave and I’ll start off on my own again. And here I am now going into year 26. And the company kept growing, we kept opening restaurants, they kept adding on more territory. And we got the unit count up to 21 units. And I became a multi-unit.

Then I became a vice president of operations. And then I eventually had an opportunity to buy in as a shareholder and become the president and CEO of our company and also a board member. So I was able to fulfill my dream of being an owner, again, here, instead of going out somewhere else and doing it elsewhere.

dan rowe (12:22.586)

dan rowe (12:32.57)
So, so let’s stop right there. So the restaurant industry gave a guy who was wiped out an opportunity, uh, to grow and now you’re president of a great big franchise company. So, but it was, yeah, I think that there’s, there’s unbelievable opportunity in this business that so many people don’t understand how many rags to riches stories there are. But the good news is you’re Greek and the best cooks are Greek, but

Mike Axiotis (12:46.09)
Yep, it’s a great opportunity.

dan rowe (13:00.13)
Uh, you struggled with your restaurant, but then you said something interesting. You said, I wanted to go to a franchise because they have systems. And really that’s what a franchise is. Franchise is really a business of systems. Fran the franchise itself is not why you like a burger or why you like a certain thing, it’s the ability to, um, it’s the system that allows you to do that. And at, at scale. So

Talk, talk a little bit more about some of the structure and systems that you found within Red Robin being a franchise or that you didn’t have being a mom and pop.

Mike Axiotis (13:28.769)

Mike Axiotis (13:32.498)
Yeah, it’s so amazing because to this day, I always think back to those days when I worked for my uncle and I owned my own restaurant. And I’m always like, man, if I only had this, how much better would I have been? How much more successful could I have been if I knew what I knew today? So let’s go for starters. When I started, it was a 13-week management and training program.

six days a week, and you had to learn every single position, every single recipe, every cut size, every shelf life, food and beverage, and then you had to learn every single operating system, how to open, how to close, how to onboard, how to fire, how to hire. There was a system for every single thing that we did. On top of that,

the franchise owner at the time who has since passed away, and he’s right over my shoulder here, Steve Hanslick. He passed away in 2010 from leukemia, and he battled leukemia three times, beat it, and then his fourth time, unfortunately, lost his battle at a very young age, at 52. But Steve was an engineer by trade and a military guy. He flew in the Air Force.

dan rowe (14:40.303)

Mike Axiotis (14:57.678)
And you know, in the military, it’s all about systems and training. As an engineer, everything is precise, nine decimal point accuracy. I mean, we had checklists upon checklists upon checklists, checking light bulbs, checking emergency lighting, having crisis management tools, opening procedures, closing procedures. So not only did the Red Robin brand have

a tremendous amount of systems, but then Steve layered on his own systems on top of that. And back in the 90s, we weren’t very tech-enabled yet at that time, so there were a lot of clipboards in the office, a lot of stopwatches. He would have us a gem. It was called a guest experience measurement as part of your management duties.

three times a week, every manager in the company had to sit down with a stopwatch and time every step of service from the time the guests walked in the door until they left, how long did the food take, bathroom check logs. I mean, we had lights and systems. It was crazy. I was like, wow, this is insane. But you know what? It worked because our group, Lehigh Valley Restaurant Group,

year after year after year from the time that Steve was leading the company until today, we’ve always won all kinds of accolades and awards from our franchisor, best operator, best this, best that, cleanest restaurants, best guest satisfaction scores. To this day, that culture is ingrained in our people even though he’s been gone for 14 years. The culture of…

precision and execution and systems is still in our DNA. And we carry that now into our new brand, which I know we’ll talk about in a minute, but the Wingstop brand, we’ve only been franchisees for 18 months, and they’re already singing our praises saying, hey, what are you guys doing? We wanna send new franchise partners to come and see what you’re doing and how you’re doing it. And for me, I just feel like, hey, this is just what we do.

Mike Axiotis (17:18.302)
It’s not rocket science. It’s just discipline.

dan rowe (17:21.878)
Yeah, no, we’re going to talk about that. That’s, that’s the main thing I want to get out of you today because you know, uh, you think about red Robin, I like red Robin. I’ve been going to it since the nineties. I dig red Robin casual dining in general has been taken a beating. And so, you know, you got all these Fridays closing the other, this, you know, yesterday I saw in my social feed, Chili’s is doing some like lunch for $10 or some nonsense like that. Like,

Chili’s is now cheaper than QSR. Like that’s desperate. That’s, you’re not making money doing that. So with, you know, to me, casual dining is not going away. The people that are struggling, you know, the population grows. People are gonna eat every day. There’s just, where are they gonna eat? And with a lot of these old dinosaur concepts that haven’t been able to make the turn, they go away. It just creates more opportunity for people that are performing. And your stores…

You guys are performing. You guys have same store sales increase. So, spend a few minutes. Like what do you guys do that’s different, not only than any other casual dining, but even like within Red Robin, like as humbly as you can, like what are some things that you do that other people should be doing?

Mike Axiotis (18:32.362)
Yeah, well, first thing is, I’m sure you’ve heard the old adage, you can’t cut your way to success, right? So it’s all about top line sales. So we’re very top line driven mentality. And then you still have to make sure that you’re protecting your margin. But it’s a lot easier to flow margin to the bottom line when you have sales. So, you know, we didn’t play all the games that a lot of the…

dan rowe (18:38.49)

Mike Axiotis (19:01.486)
brands that have struggled do where they start chopping labor, they start cutting back on portion sizes, they start heavily discounting, they cut back on management support. We have stayed tried and true to making sure that we have a great support system at our above restaurant level. We have a tighter span of control. A lot of times you have multi-unit leaders that have 10 or 12 or 15 restaurants.

We’re like, you know, five to seven. And when you’re entry level, we only give you two, and then we take you up to three, and then we give you four. You gotta earn your way to get a fifth, or a sixth, or a seventh location. And we wanna have a tighter span of control with those multi-units so that they can really coach and teach, have a frequency of visibility in the units. General manager, talent pool.

dan rowe (19:34.551)

Mike Axiotis (19:59.85)
We have a bench of GMs that are waiting for a spot. We’re not just picking people and saying, hey, go run that store. You have to go through a rigorous, multi-level, long-term development plan to become a GM or a multi-unit in our company. We have plenty of management coverage, four to five managers per location.

We have a lot of structure and systems in place. We reinvest back in the business with CapEx. A lot of times you go to tired brands where you walk in and you rip booth seats and sticky floors and burned out light bulbs and overgrown landscaping. If you walk into some of our restaurants that are now pushing 30 years old, they don’t look like 30-year-old restaurants. They look like 10-year-old restaurants.

dan rowe (20:58.246)

Mike Axiotis (20:58.99)
We’re re-imaging our stores every 7 to 10 years, but in that 7 to 10 year cycle, we don’t wait. We’ll change out carpets, booth backs, table tops. We have carpet cleaners coming into our stores every four weeks, hood cleaners, window cleaners. We have in-house cleaning crews. We have our own in-house construction and facilities team where they’re going around and doing…

preventative maintenance programs on our restaurants. The worst thing you could have is you have a guest come in and sit on a seat where a spring is poking them in the butt. You know, or you have a dirty restaurant. So, you know, we have cleaning schedules, we have dedicated CapEx projects. Then on top of that, we have our own in-house marketing and sales team that is doing social media,

dan rowe (21:36.068)

Mike Axiotis (21:56.254)
We’re involved in charitable partnerships with Make-A-Wish, with Leukemia and Lymphoma Society, the local sports teams, baseball teams, soccer teams, football teams, lacrosse. Our name and our logo is on the jerseys. We do spirit nights where it’s kind of a dine and donate where they’ll come in and we give 20% back to the organization. We’re involved with the Chamber.

dan rowe (22:24.354)
Yeah. Mike, all of this is all. No, but all of this is counterintuitive because, you know, I’m, I’m asking, Hey, how come you’re so successful? And most people, and you even said it, like, you can’t cut your way to success. Like you, instead of having one area person over 10 or 15 stores, you have them over five stores, right? Which means you need three times the number of area people, right? It’s like, um,

Mike Axiotis (22:26.29)
I could just keep going on and on, Dan. Yeah.

dan rowe (22:49.678)
you know, outback early on, they’d only give servers three or four tables. That’s it. And it’s like, well, you could save money by giving a server 10 tables. But in your, in your case, and then you’ve got marketing people, you’ve got your own cleaning people, you’re investing in the business, you’re fixing things before they’re broken. You’re doing things to keep them in near new conditions. So like you’re doing all these things. And when I said, how do you make so much money?

All you talk about is all these places you’re spending, but the irony is that that’s why you’re so successful. Like you’re super successful because you’re investing in the important things. You’ve got a bench of managers. Think about how hard people are saying, I can’t find talent. Like you’ve got a bench. Like you don’t even have your spots filled. You got a bench of people waiting and it’s because you invest in people, right? But talk about that a little bit. Like how do you invest in your people and what are some of the things why your people

Mike Axiotis (23:22.454)

Mike Axiotis (23:30.797)
Thank you.

Mike Axiotis (23:36.698)
Thank you.

dan rowe (23:41.902)
Don’t even not leave. They want to help you become more successful.

Mike Axiotis (23:46.107)
Yeah, it’s really fulfilling. I mean, look, we run into the same challenges that everyone else does with turnover in this industry, but I think when you compare our turnover to industry standards, we’re best in class. So management turnover for us was in the low teens in 2023. Hourly was in the 80s.

dan rowe (24:06.35)

Mike Axiotis (24:10.634)
And that’s still not good enough for us. I mean we still want to be better But I would say if you take that bell curve of top bottom and middle performers our top performers are in the low 40s and 50s when it comes to hourly Turnover and so it comes to culture right so culture. How do we treat our people? We are a people first Organization we believe that if we take care of our team our team will take care of the guests

dan rowe (24:25.85)

Mike Axiotis (24:38.898)
and the guest experience can never exceed the team member experience. We really believe in that. So we have all kinds of programs. And I would say we have a best in class HR team in our corporate office. We have five or six people in there that are all dedicated to just, what are we doing for the team? How can we give them more tools to be successful? We have a cash for college program where

we reimburse our team members to go to school. We have unlimited vacation policy, believe it or not. We have a 401k matching program. We have birthday programs and celebrations and milestone anniversaries. So like if anybody in our organization, no matter what level you are, if you celebrate five,

dan rowe (25:15.586)

Mike Axiotis (25:35.982)
10, 15, 20, 25, every five-year milestone, we have this annual party where our entire leadership team is there. It’s probably one of the best dinners that they’ll ever experience in their life. We wanna make it like a life experience for them. And their supervisor stands up and they bring them up and they actually read their bio and talk about

what they’ve done, their contributions, how many years they’ve been with our company, what position they’re in, in front of everyone. They get to bring a family member with them so that their family gets to see what we do. I can’t tell you how many spouses will pull me to the side that are in really big careers and bigger companies and industries that have higher margins than the restaurant business. They’ll pull me to the side and they’ll say,

dan rowe (26:09.143)
In front of everybody.

Mike Axiotis (26:34.122)
this is amazing. My company doesn’t do this for me. And, you know, I’ve been with my company for how many years and they need to come and take a page out of your book on how you take care of your people. So it’s just amazing the things that we do and we always just feel like we’re never doing enough for our team. We proactively survey them. We do stay interviews. You know, it’s the opposite of an exit interview. We interview people that stay and we ask them

Why do you stay? What keeps you around? And what can we do more? You know? Yeah.

dan rowe (27:06.022)
What a good idea. That’s a good idea. Hey, so, but you’re tripping on something I want to ask you about because so many people think in franchising, you’re basically just franchisees of a brand. In your case, you really have two cultures, right? You have, or three now, because you have three brands, but you have Lehigh culture, like your, your franchise company culture. And then you got the culture of whatever brand you’re part of. Talk, talk about the difference. And I mean, there’s some overlap, but also they’re different. And

Mike Axiotis (27:27.566)


dan rowe (27:35.374)
The best franchisees and most successful franchisees I know have their own websites for their company, have their own culture, have their own people. It’s different. It’s different than just whatever the brand’s culture is. But talk about that a little bit.

Mike Axiotis (27:53.03)
Yeah, so Lehigh Valley Restaurant Group, I’ll give a little hint here, but we’re going to be rebranding our group now that we have multiple brands to have an umbrella company, but we’ll just call it Lehigh Valley Restaurant Group for purposes of today. We have our own core values. We have our own vision and mission statement. We have our own playbook, our own handbooks. We have a full service restaurant support office for our…

Brands that has everything you can think of from IT HR off-premise sales and catering sales and marketing supply chain operations facilities and construction I May be missing something in there, but anything you can think of that needs to be supported by our Restaurants is housed in our restaurant support office that we call that you know we have our own culture. We we write our own newsletter

that goes out to all of our employees and our shareholder group, investors in our company. We manage this like it’s, you know, its own enterprise. And that also helps us from a capital perspective. So when we’re talking to local community banks that we typically do business with that, you know, fund us for our growth.

they say to us, hey, we don’t look at you as a traditional restaurant because, you know, banks typically don’t like loaning to restaurants. They actually look at us as a enterprise, a real professional enterprise because we have a professional management team, we have a professional office, we have systems, procedures, and they loan based on that enterprise.

dan rowe (29:27.383)

Mike Axiotis (29:48.106)
they don’t loan to us based on an individual restaurant. And I think that could serve well for other franchisees that are trying to shape and grow their enterprise instead of trying to run it like a mom and pop, which isn’t bad, but there are pros and cons to that. And I think that the way we’ve structured ourselves has really lent ourselves to the ability to have capital to keep growing and investing in.

in new and emerging concepts.

dan rowe (30:20.622)
Hey, I always say success leaves clues. There’s in every franchise system, there’s the best franchisee and the worst franchisee. For me, I always find it’s easy to gravitate and get ahold of the best franchisees. But in the two systems that you’re a part of, you’re Red Robin and Wingstop, like how, if I were a franchisee today of either one of those brands coming in, how…

open, how easy is it for me to gravitate towards a successful franchisees and have them take me into their wing? Like talk about that. So many people don’t do that.

Mike Axiotis (30:52.798)
Yeah, they’re very open about that and they encourage new prospective franchisees to reach out to existing franchisees. And that’s what we did when we were looking at our next brand because we’ve been a legacy with Red Robin and some of Red Robin franchisees own other brands. So we all talk to each other. That’s how this industry works. The Wingstop name just kept bubbling to the top.

We probably looked at two dozen brands, but the first thing that I did was I talked to who the top performing franchisees were in the Wingstop system. And when they’re all singing the praises, even the mid and lower performers love the brand. They’re all making money. They’re all reinvesting. They’re all growing. And you know, banks…

loan to brands that are growing and are successful. And the other thing you have to look at is what is the multiples trading at for concepts. And are other franchisees buying and selling from each other and are new franchisees knocking down the door trying to get into the system. That’s the success that I think leaves clues to be looking for.

dan rowe (32:18.357)
What is a wing stop? Like if I were going to buy a wing stop here in Arizona, what multiple is roughly, are those guys trading at?

Mike Axiotis (32:25.61)
Well, from what I hear, and I probably shouldn’t be sharing that financial information, but they’re in the high single digits to low double digits, from what I understand.

dan rowe (32:37.966)
Wow. Yeah. So we’re Taco Bell. I mean, Taco Bell, same thing. Taco Bell. I heard of a couple of them that went for 12 X is just like, what? Like that’s, that’s insane. So no, that that’s good. So, um, back to like, why do you guys, why like with, uh, with, with Wingstop? I remember you first told me that you had Wingstop the next time I saw you, you said you had seven or something like that. Like tell me how you are eight.

Mike Axiotis (32:47.783)

Mike Axiotis (33:03.146)
Yeah, yeah, we’re up to eat now. Yeah, yeah.

dan rowe (33:05.882)
But that’s been in like two years. So how, with all the headwinds that everyone talks about in the restaurant business, you guys obviously aren’t hearing any of that because you’re killing it, but you just opened, uh, eight stores in two years and they’re performing so well that the franchise or is asking you to be a reference. Like, what are you doing different?

Mike Axiotis (33:26.334)
Yeah. Look, I don’t call it different. I just call it right. And I say that in a humble way. You just, you know, take care of your people, invest in your business and have infrastructure and don’t think about how much money can I make today. It’s about how much wealth can I build for the future. So if you’re expecting to day one or even

a year in or two years in say, I want to be cashing out my profits. That’s short-sighted thinking. I think you have to, regardless of whether it’s Wingstop or any other brand out there, is invest in people, invest in infrastructure, invest for the future, and grow your unit count. Of course, it’s got to be profitable.

and you got to make sure all your stuff’s in line, you know, are your sales to rent ratios in line, you know, you don’t want to overpay for real estate, you don’t want to build them too big. And that’s the great thing about this segment is the operating footprint is the right size, the number of employees is the right number of employees, the tech stack is there to support not having a heavy labor model.

The menu is engineered to have limited amount of menu items that you just execute very well over and over again. So I think you want to follow the puck and where the puck is going. And the puck is going in the direction of smaller footprints, smaller menu, simplification, unit economics matter. And…

dan rowe (35:17.786)

Mike Axiotis (35:19.786)
you know, making sure you have the right people in the right place and doing the right thing. So, you know, we have a lot of white space here for Wingstop. So that was also working in our favor. And even though there’s white space and there’s a national brand fund, which we pay extra to advertise in our market, you know, we’re putting up billboards. We’re spending on…

dan rowe (35:45.226)

Mike Axiotis (35:49.118)
local digital, we’re getting involved in charity, we’re going out into the community. And you know the brand encourages you to do that, but they don’t mandate it. And if you’re not mandated to do something, that’s sometimes a growth mindset versus a fixed mindset. If you have a fixed mindset where the playbook says you do X, Y, and Z, and your intuition is telling you

I should also do A, B, and C, even though the playbook says you only need to do X, Y, and Z in order to run this business successfully. If your intuition is saying, well, I need to do A, B, and C, which is the things that I talked about, which is go spend some more money in your market, get your GM out in the community, invest in your people, but the playbook doesn’t tell you to do that, you still need to do those things.

dan rowe (36:46.789)

Mike Axiotis (36:47.262)
And I think that sometimes the fixed mindset sets in where it’s like, well, I’m doing everything I can. And I just don’t think that doing everything you can works anymore. We’re in an age of constant disruption, and the old playbook doesn’t work anymore. You have to really be constantly thinking two to three to five steps ahead on how you can differentiate yourself from your competition no matter what brand you’re in.

dan rowe (36:59.696)

Mike Axiotis (37:17.618)
And at the end of the day, operations matter. You have to operate. You have to execute. And it’s those three simple things. Clean restaurants, friendly people, great food, great hospitality, and you should have a great successful restaurant, even if you’re an independent or a chain or a franchise. Or it all comes down to those fundamentals. But then how do you then?

enhance those things by the extra bells and whistles of the people development piece, the community aspects, giving back, doing those extra things.

dan rowe (37:59.586)
Yeah, I wonder why more people buying franchises don’t start off day one with the idea of building something that they could sell, right? So like build something. So if you build, if you build a franchise that only relies on you, where it’s so poorly put together that you’re the only one that can do everything, no one’s ever going to buy it, right? Because it’s not sustainable. You have to build a business that’s that somebody wants to buy and continue to grow.

but you just said it like if it like most, most good brands out there, five guys, or I don’t know a wing stop that well, but most of them have like a two year payback, three year payback. You shouldn’t really look at a business that’s longer than that, but you know, two, three year payback and, but you’re getting eight times, 10 times EBITDA. It’s like that’s, that’s enough of a reason right there. But then if you do like, like what you’re saying where you make your first few stores,

so successful and you over hire for your multi-unit teams and you pick a sites, not B sites. You’re doing all those things, right? Your first three or four restaurants will fund the next 20. And then all of a sudden you’re selling 25 at eight X or 10 X or whatever the number is. It’s a staggering amount of money that people get so lost on that idea and they just start cutting their way. So it’s the, it’s the goofiest thing, but, um, no, I mean, I think that this is good advice. So,

Mike Axiotis (39:11.105)

dan rowe (39:23.422)
Any other advice? Like if a guy was going to start a franchise today, what I mean, let, let’s start with like, what kind of brand should they look at? And then the second part is like, you know, like how do they do it?

Mike Axiotis (39:38.218)
Well, again, I’ll go back to where’s the puck going. And there’s a lot of great reports out there, like the National Restaurant Association, which you and I are a part of, and I’ll make a plug there, is they always put their industry report out. And it just came out recently. I encouraged people to do their homework and read the industry report by the National Restaurant Association just a few years ago. I don’t know if you remember, but they did their 2030 report, which was…

done in 2020 right before the pandemic. And it was saying, okay, where are restaurants gonna be 10 years from now? And you don’t wanna buy for, you know, and invest in what’s happening now. You wanna be looking to the future. Where is the future going? And you wanna pick brands that know where the future is going. And I believe Francemark does a really good job of that with, you know, you have very tech enabled concepts

dan rowe (40:32.154)

Mike Axiotis (40:37.562)
very, you know, culinary-driven concepts and, you know, labor-efficient concepts. And there’s a lot of other ones out there, too, that are not part of your portfolio, but you really have to do your homework. And you know, I think every franchise system has some players that probably are not best suited to be franchisees, and I want to say that in the most respectful way. And it was like, hey…

I got a lot of money and the restaurant business is sexy and I want to own a restaurant. Those are not good decisions to make. If you’re a savvy investor, you want to hire smart people that know the business and you have to have a great operating partner, someone that has operations experience that has done it before and then hire a great CFO that understands.

restaurant financials to kind of get you on the right path and get out of their way and just support them and give them the tools that they need to be successful. So I think a combination of knowing the industry trends, knowing what’s going on, and having your thumb on the pulse, and then surrounding yourself with really smart, talented people that can take you to the next level.

dan rowe (42:03.094)
Yeah. And then when you get in, like I would never buy a franchise unless I spoke to franchisees. Like, like you said, with Wingstop, you talked to franchisees and they told you that they were happy and making more money and building more stores. It’s like, that’s better than any bro, anything, the franchise or the sales rep is going to tell you, frankly. So, um, good.

Mike Axiotis (42:20.214)
Yeah. It’s just like word of mouth with guests, right? Guests will tell other guests, hey, you gotta go try that restaurant. Same thing. Reputation, reputation.

dan rowe (42:27.318)
Yeah. So, uh, yeah. Yeah. Our reputation. What, what, any advice? I mean, not naming names, but any things that franchise or do that either drive you crazy or some things franchise or could do to make their franchisees happier and building more stores.

Mike Axiotis (42:48.51)
And by the way, this is broad too. This isn’t any indictment against Red Robin or Wingstop, but just being in the business and talking to other operators and other brands. There’s always pain points with a couple of areas, and one of them is supply chain, especially today. But even prior to the supply chain challenges that we’ve had, there have been franchisors out there and not ones that I’m involved with.

dan rowe (42:51.822)

Mike Axiotis (43:16.85)
that there are franchisors out there that are more concerned about trying to make money off of supply chain and off their franchisees than trying to make their franchisees more profitable. So you always want to make sure that supply chain is locked down really well. They have good supplier networks, good business partners, and treat them like business partners, not treat them like a vendor, treat them like a supplier partner.

dan rowe (43:30.01)

Mike Axiotis (43:46.486)
You’re getting the best possible price, and there’s availability of product, and there’s on-time deliveries, and the fulfillment rates are there. So make sure that you do your homework on that, on how supply chain is managed. The next thing would be marketing. Marketing and the marketing strategy. Is it effective? Is it relevant? Is it mainstream? Is it cutting edge? Or is it old school? You know, where…

you’re sending coupons out in an FSI. You remember what those were, those freestanding inserts in the newspaper? If they’re doing stuff like that or the coupon clipper or whatever, you don’t want to be part of that. And you also don’t want to be part of a brand that is heavily discounting. Because once you do that, you’re always stuck playing that game. You want brands that know the DNA of the brand.

dan rowe (44:20.894)
Mm-hmm. Hmm.

Mike Axiotis (44:45.442)
They know their core consumer target. They know how to speak to them through an omnichannel approach and meet them where they are, meet the guests where they are today. And most guests today are on social media or they’re on their phone or they have busy lives. How are you talking to that audience and getting them to choose your brand? I think Wingstop and Red Robin are doing a great job with that, by the way.

So I would like to make a plug on that. But there are a lot of brands that get it. And then there’s ones that don’t. They’re stuck in the ways of the past. And you definitely want to be, again, where’s the puck going from a technology standpoint? And that’s the next thing is IT. What’s the IT stack look like? IT is such a complex model today. And there’s a lot of things that need to integrate.

dan rowe (45:16.324)

Mike Axiotis (45:43.334)
into your system and there’s a lot of hodgepodge out there of different platforms that are all trying to talk to each other and it gets very confusing and complex. And as a franchisee, you want to have a tech stack that is ready to go and be supported so that you as a franchisee can really focus your time and attention on operations and developing people and not trying to be…

figuring out what your computers and your POS system and your online ordering and your app should be doing. So I think that’s very important. So those are the big three in my opinion. And then the other part is do your homework on the management team. Who’s running the company? You know, Warren Buffett only invests in companies where he believes in the management team.

and when you’re buying a franchise, you’re making a long-term commitment and you’re making a huge investment, you should really be investing in who’s the founder or who’s the CEO and who’s in the C-suite and what’s their reputation and do you believe in their leadership and where are they taking the brand into the future. Don’t just go there because you like to eat there. And a lot of times people make those decisions on…

You know, I want to buy this franchise because I love their food. Okay, what else? There’s a lot more to it. You really have to do your due diligence and do your homework on the entire ecosystem of the franchise and the network and the long-term viability of the brand.

dan rowe (47:27.822)
Yeah. You and I got in this business before the internet. Can you imagine back then if we ever even heard the term tech stack, like that was just not part of our fabric. Yeah. So it’s funny. Hey, back to Wingstop. So with Wingstop, knowing what you, I mean, you basically are the, you know, to me, the most, the best possible franchisee is someone who’s already a successful franchisee, right? Cause they made the decision to be self-employed, following someone else’s system.

Mike Axiotis (47:41.684)

dan rowe (47:55.754)
after they opened and realized it’s not an ATM machine, they built more and more and more and more markets or whatever. So to you, I mean, to me, a guy like you is a hundred times more likely to succeed because you’ve already done that. So knowing what you knew when you started Wingstop, you started off right away building a ton of stores. So that must have taken a big investment. So like share some of your knowledge about why.

It was better for you to do that than to build one, see how it went, build one, see how it went.

Mike Axiotis (48:29.002)
So, you know, that’s a catch-22, because if you were to ask me what mistakes did we make, I think we maybe built them a little too quickly, but I still would have done them.

you know quickly but not as quickly if that makes sense. So we built five and five months and part of the mistake we made was that we went into with a full-service mentality and you know 30 years full-service successful you go into it you say well I think I know how to do that better than them and my advice is

dan rowe (48:47.108)

Mike Axiotis (49:12.798)
no matter how much you know or how much experience you have, make sure you understand the brand. And we did. We went through training and we said, hey, we’re going to run your playbook exactly the way you want us to run your playbook. And we did all of that except for the labor model. We like probably put double the amount of people in the restaurants and we paid a price for it. You know, it was expensive. It was an expensive mistake.

I probably would have when setting up our development schedule, maybe spread those out a little bit longer just so we could learn that and not make that mistake. And we had to make the mistake faster because we did so many so fast. But why did we believe that building rapidly was the right way to go? I think it was because we went from a very complex model to a more simplified model.

dan rowe (49:55.532)

Mike Axiotis (50:11.302)
And to us, we were thinking like, well, if we could do 7,000 square foot buildings with 100 plus team members and liquor licenses and 75 menu items to a 1,500 square foot building with 15 team members and 10 menu items, we could probably do these faster than we did our full service model. So I think…

we were trying to translate the simplicity of the model into the speed of how quickly we could grow this thing. That was one thing. And then the second thing was the confidence that we had in the franchisees that we already knew in the system. So there were some franchisees that we had very close relationships with that gave us a real good look under the hood.

to say, here is the model, here’s how much we’re making. I mean, down to the P&Ls. I mean, we were able to see down to the P&L. And that gave us a lot of confidence to say, well, if they’re doing that, we could do this too. Now, you don’t always have that luxury. You know, if you’re just walking in off the street and you’re asking someone to show me your P&L, I’m doubtful that they’ll do that. But.

if you have a relationship already with existing franchisees and they trust you and they say, hey, look, here’s how we’re doing it. I think it’s a powerful thing when you’re able to share best practices in our industry. You know, from how are you making money to how are you driving top line sales to how are you hiring and firing and retaining and training your ability to learn faster.

is what helps you to grow faster versus I’m doing it all on my own and I have to learn through my mistakes. That takes a lot longer to get there.

dan rowe (52:17.654)
Yeah. And I, I mean, I think I find this industry filled of people that are willing to share. Share best practices, share ideas, share mistakes, right? Share mistakes. But even, even within competitors, like people, you know, you don’t, you don’t discuss everything, but I feel like people want to help each other in this business. So it’d be sort of a segue into NRA. You and I are both part of the national restaurant association.

And, you know, I’m one of those guys that thinks everyone that, that could be involved should be involved. Like I think every concept operator, independent chain, even vendors that are in our industry, I think everybody should be part of the NRA not only for advocacy and protecting the industry the way it does so much, but also for that sharing best practice. And just basically, it’s the one place where all the

most successful people in this business are already a member. But like, I mean, what, what are your thoughts on the NRA and some of the other things like, gosh, I mean, Surf Safe and just Pro Start and some of the other programs, people have no idea all the benefits of NRA.

Mike Axiotis (53:28.154)
Yeah, I agree with you. I feel the same way. I always scratch my head and wonder why not every restaurant in the United States is not paying dues and is a member because of the tremendous value that comes from it. So when I first joined my state restaurant association, and my advice to anybody that is just getting started and wants to understand how it works is to join your state restaurant association.

because that gives you automatic membership into the national, right? And they share a lot of information at a local level as well. So I first got involved with Pennsylvania Restaurant Lodging Association by accident. I read an article many years ago where they had this award on food safety. And I was always very proud of our food safety practices at Red Robin.

And I was like, you know what, I’m not really a big award guy, but I’d like our team to get recognition for how high our food safety standards are. So I filled out the application. We won the award. They came out and inspected our restaurant. We won the award. And then they invited us to their annual meeting to hand out our award. So me and my team go there. We’re all excited. We think we’re just going to walk in there.

and receive this food safety award from the Pennsylvania Restaurant Lodging Association, not knowing what they do. So we’re there for the annual meeting and we start hearing about minimum wage and tip credit and PCI compliance and all these different things that were going on and my eyes were popping out of my head. I was like, really? And then they’re like, you know, every year we go to Harrisburg, the capital, and we talk to our…

senators and our state representatives and We won this battle and we won this battle and we won this battle and oh by the way if you join us you get a discount on your credit card processing fees and you get a rebate on your purchasing and You know the list just went on and on and on and I was like Wow, and then I found out that they were part of serve safe and Then I was like, you know what sign me up. So we joined and we became members

Mike Axiotis (55:56.642)
Then the CEO at the time said, hey, are you involved in your local chapter? No, I think you’d be a great addition to our chapter. So I started going to chapter meetings. Before you know it, I’m the president of the chapter. Then before you know it, he recruits me to be on the state board. And then before you know it, he’s nominating me to be on the national board. And then I was like, you know what? This is really a great community of people. And not only

dan rowe (56:09.549)

Mike Axiotis (56:26.854)
Was it powerful in the sense that they’re doing all these great things for our industry? But I started to meet other people in the industry That were willing to share where they were willing to be a mentor And I was like, this is great. I mean like you would have to Pay like expensive consultants To give you the type of information that you learn and gain

dan rowe (56:50.182)

Mike Axiotis (56:55.426)
by being a member of your state restaurant association or the national. And it’s just opened up doors and opportunities for a lot of things. And I mean, I just can’t speak enough about it. And every time I get an opportunity to bring a friend to a state event or a national event or something that the restaurant association is doing from an advocacy standpoint or…

educational standpoint. I’m just trying to be the disciple of sharing, you know, the message and the word of what we do. And, you know, even if you don’t have the time, and I think sometimes there’s a misconception that, oh, I just don’t have the time to do that. Well, you could still, you know, be a member and gain the benefits and allow the other folks that do have the time to go out and volunteer and do those things.

dan rowe (57:53.998)

Mike Axiotis (57:54.782)
So, you know, I, hey, kudos to you, Dan, because I know that you’re a huge, you know, advocate of what the association does and all the brands that you’re involved with. And I know that you’ve nominated people to the board and you’ve mentored people. And you’re a modest guy, too. You’re not out there, you know, standing on the sidelines saying, hey, look at me, look at what I’m doing.

and you’re modest about it and I really appreciate how supportive you are of the industry and of the association. I just wish we could get the word out to more people and get them to join.

dan rowe (58:29.25)
Yeah, thanks. Thank you.

dan rowe (58:35.21)
Yeah. The funny thing that they realize when they get in there is the most successful people in our industry are involved in NRA and it’s like, you know, and we all have the same 24 hours in our day. You make time for the things that are important. And, but there’s a correlation to, you know, make time for NRA. The most successful people are there, but Hey Mike, this has been great. Thank you so much. So I appreciate it. You gave us a lot of good insights. I know you’re going to be heads down with, um,

building out your two brands for a while. The last question I have for you before I let you go is I know you’re busy building these brands for now, but what’s one thing like if you were gonna get tempted to do another brand, what does that franchisor need to bring to the table to get you to actually wanna take a look at it?

Mike Axiotis (59:21.878)
Boy, that’s an excellent question and it definitely has been on my mind because at some point, we will add more brands to our portfolio. First and foremost, it’s going to have to be non-competitive to what we’re already doing because franchisors have a lot of the competitive language in there. Red Robin, burger-based, going to be tough to do any other burger-based brands. Wing stops, chicken and wings. So it’s going to be tough to do another chickener.

or wing concept, so I’m going to have to look at what is the next most popular cuisine that’s out there on the horizon, right? That’s number one. Number two, are they a great franchisor? Do they really, truly value their franchisees as business partners? And you know, are they…

Are they profitable? Are they growing top line sales? Are they growing traffic? Because you know a lot of price has been built into our system over the years, so you have to look at traffic counts. Are the unit economics there? Are they bankable? You know, will my lending partners want to lend us the money to grow that brand? Is there available white space in our operating footprint? I know we didn’t talk about this, but

dan rowe (01:00:32.058)

Mike Axiotis (01:00:49.854)
I think it’s important that when franchisees buy territories, they buy them where they have infrastructure and they don’t hodgepodge and have units in four different states where they don’t have infrastructure because now they don’t have oversight. So that’s one thing that we’ve been very intentional about is we layered our operating footprint for Wingstop on top of our Red Robin operating footprint.

So the next brands that we look for, we want to do the same thing where we could just keep bolting on concepts where our infrastructure can support that growth. I mean, eventually we’re going to have to go outside and stretch ourselves into other areas. But for now, we have a lot of white space that we can we can plug into our territory. So I think that’s important. And again, where’s that puck going? Keep doing your homework on.

dan rowe (01:01:20.589)

dan rowe (01:01:40.985)

Mike Axiotis (01:01:45.642)
You know, the industry data that’s out there. I know Technomic puts out some great stuff. National Restaurant Association puts out great stuff. You know, the technology is the other big piece. Is it well integrated into the system? Is it supported properly? And then as you grow and you become a larger multi-unit franchisee,

You have to look at your own internal processes and ensure that your tech stack can integrate between all of the brands that you operate. So yeah, those are the things.

dan rowe (01:02:24.506)
Hmm. No, good stuff. Good stuff, man. Well, I’m going to, we’re going to stay in touch. Obviously I run Indy all the time, but we’re going to, we’re going to hopefully do another segment with you in about a year’s time. We’ll see, we’ll see how many more hundreds of restaurants you guys have built. So thanks so much, man. I appreciate your time. Appreciate your wisdom and we will be in touch.

Mike Axiotis (01:02:41.634)
hopefully many more. Thank you.

Mike Axiotis (01:02:48.394)
Thank you. Have a great day.

dan rowe (01:02:49.894)
Thanks, you too.

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