Latest / The Inspired Stories Podcast / Healey Mendicino on the Acquisition That Changed Everything for Port of Subs

Transcript

Healey Mendicino on the Acquisition That Changed Everything for Port of Subs · The Inspired Stories Podcast

0:04
Welcome to another edition of the Inspired Stories podcast,
0:08
where leaders share their experiences so we can learn from
0:11
their successes and be inspired by how they've overcome
0:14
adversity. As you listen today, let one
0:17
idea shape what you do next. My name is Anthony Codispodi and
0:21
today's guest started her relationship with Port of Subs
0:24
not as an employee, but as a franchise.
0:27
She wrote a check bet on a brand she believed in and helped open
0:31
its 100th location. Then the 2008 financial crisis
0:36
hit and her world fell apart. What happened next is a story
0:40
about rebuilding. About walking back into a
0:43
company you love when the timing is right.
0:45
About steering a 52 year old regional brand through an
0:48
acquisition, a culture reset, and the kind of national
0:52
expansion most sandwich chains only dream about.
0:56
Healey Mendocino is the president and newly appointed
0:59
CEO of Port of Subs, the Reno born chain that has been slicing
1:03
fresh Subs since 1972. Under her leadership, the brand
1:07
has signed regional developer deals for over 300 future
1:11
locations, putting Port of Subs on a path to 500 units
1:15
nationwide. And somehow, she managed to land
1:18
their first Navy base location at a little place called
1:22
Guantanamo Bay, Cuba. This is one of those stories
1:25
that remind you what's possible when you bet on yourself early,
1:28
get knocked down hard and fight your way back.
1:32
But before we get into all that good stuff, today's episode is
1:35
brought to you by my company, Add Back Benefits Agency.
1:38
Listen, if you run a business, you are likely stuck in the
1:40
cycle of rising insurance premiums.
1:42
You're paying more, but your team is getting less.
1:45
And many people can't afford coverage at all.
1:48
We do things differently. We provide your QSR employees
1:51
with unlimited access to doctors, therapists, and
1:54
prescriptions. That's always free for them to
1:56
use. And here's where you really need
1:58
to pay attention. Unlike every other employee
2:01
benefit out there, our program puts more money into your
2:04
company's bank account. As an example, we recently
2:07
helped the client increase net profits by $900 per employee per
2:11
year. Gains like that can change how a
2:14
business is valued. Results vary, but the
2:17
consultation is free. See if you qualify today at Add
2:19
Back benefits.com. All right, back to our guest
2:23
today, CEO and President of Port of Subs, Healy Mendocino.
2:26
Thanks for making the time to Share your story today.
2:29
Thank you so much for having me. I'm so excited to be on your
2:32
program today. So, Healy, you were 26 years
2:35
old, working in commercial real estate and you attended a White
2:40
House conference on small business policy.
2:43
What were you doing there and and what was it like to be one
2:45
of the youngest delegates in the room?
2:47
Yes, it was incredible and it was huge national conference and
2:54
we had an entire Nevada delegation and John Larson who
2:59
is the founder of Port of Subs was our chairman of the Nevada
3:03
delegation. I was there because of my
3:05
background in finance related to SBA programs for my clients and
3:11
that was my focus and I was actually appointed by our then
3:14
governor and that was very exciting as well.
3:17
And so off we went to the White House conference and it was just
3:20
incredible. It was a really huge view into
3:25
how our political system works. And at that moment in time, I
3:29
thought I wanted to go into politics and that was great.
3:31
Well, when I was there, I realized how amazing it is.
3:34
But I also realized that politics was not going to
3:37
necessarily be for me. And you know, you have to trade
3:40
out a little bit of the things that are passion, that are a
3:42
passion point for you for things that people want to progress.
3:45
So it was really just a great experience, but also a learning
3:48
experience about that. Maybe I didn't want to be in
3:50
politics. You know, and I think in life,
3:53
often times you need to wear a lot of hats, not only to see
3:56
what fits, but what doesn't fit. So what was it about the
3:59
politics hat that you quickly discovered was not going to fit
4:02
for you? Yes, I very specifically, it
4:05
functioned just as our political system does.
4:08
And when we were charged with putting forward the top 100
4:12
legislative and policy issues for facing small business, I was
4:17
really passionate about that. But what ended up happening is
4:19
you got all these caucuses and other things and people saying,
4:22
OK, great. Listen, I'm going to vote for
4:24
the thing that you're very passionate about, but then you
4:26
need to vote for some of my things as well.
4:28
And that was a real hard thing for me to go.
4:31
I don't believe in that. And so and I, that's a tough
4:34
line to walk for the politicians, but that wasn't for
4:37
me. I'd rather be full in charge of
4:39
the things that feel like they have integrity for me, that I'm
4:42
passionate about, that I can champion and not have to try to,
4:48
you know, lessen my value in regard to what was important.
4:51
Yeah. So you mentioned that this was
4:53
the time where you met John Larson, the founder of Porta
4:58
Subs and he floated the idea of partnering on a franchise and
5:03
you're all of 26. What were you thinking?
5:06
What what was your experience in the franchise food business up
5:10
to that point? Yes, at zero, other than eating
5:13
there, I was a a fan favorite and everybody loves port of
5:17
Subs. Our food is absolutely
5:18
delicious. And because we were originally
5:21
Reno based and then Las Vegas, where I lived at the time, I had
5:25
been a customer for a long time and a very passionate customer.
5:28
So it was kind of fun when you go, Oh my gosh, the founder of
5:31
port of Subs, like I've eaten there for years.
5:32
This is amazing. And we just became fast friends.
5:35
We we just hit it off right away and became great friends.
5:39
And so when we returned from the conference, we continued our
5:42
friendship and that's how that evolved into, hey, do you want
5:45
to do some real estate with us? And then hey, why don't you
5:47
partner with me? And I said that would be
5:49
amazing. And it was so fortuitous because
5:53
that is where I learned about franchising and absolutely fell
5:57
in love with the franchise business model.
5:59
I loved being a franchise. I loved the relationship.
6:03
I love that the whole team helps you because I didn't know
6:05
anything about food other than eating it.
6:07
And so it was, it was really a turning point when I look back
6:11
on just the amazing aspects to franchising.
6:16
It was very fun. It was very cool.
6:17
I was doing the construction and I did the site selection and all
6:19
of those things that obviously now future forward allow me to
6:24
have a very unique lens in regard to the decision making I
6:27
make now. But it was a wonderful time.
6:29
So walk us through the timeline a little bit.
6:31
You met John at this White House conference.
6:34
You guys hit it off. You stay in touch.
6:36
How long until the sweet talks you into opening up the 100th
6:41
location as a franchise? Yeah.
6:44
It was about a year. It was over a period of a little
6:46
over a year. And part of that was floating
6:50
the idea, as you said, I love how you put that because that's
6:53
really how it happened, you know, hey, what do you think
6:55
about this? And part of the drive for him
6:57
was it's a family run business and for all the wonderful and
7:01
difficult things that that means to be a family business.
7:04
And he wanted to have a bit of cash flow outside of the family
7:08
money that was just his that didn't affect the corporation.
7:12
And so that was his drive. And he's a a very generous
7:15
person and he wanted to do things for others and that
7:18
included me very luckily. So he said, what do you, what do
7:20
you think about this? I said, heck, why not?
7:23
I've got a high risk tolerance. Let's do it.
7:26
Let's roll the dice. Let's roll it.
7:27
What was the the state of the company at that time you were
7:30
opening the 100 location? What was the balance at that
7:32
time between company owned and franchise locations?
7:36
Yeah, great question. And obviously 100th restaurant
7:39
is a huge milestone in a franchise, things that are very
7:42
elusive for many. And again, that big marker of
7:45
103rd digit, it was about 25. It bounced between 25 and 30%
7:51
corporate, which was very unusual.
7:53
Most restaurants, especially QR went one way or the other,
7:57
corporate store primarily or franchise primarily.
8:01
But the way that Port of Subs grew, the family built the 1st
8:05
10 restaurants out of sheer hard work and use the cash flow to
8:09
build those first two, sorry, 10 restaurants before they began
8:13
franchising. And people said, why don't you
8:15
franchise Port of Subs? They said what is franchising?
8:17
So they came from that corporate environment and loved the
8:22
corporate restaurants. It builds a nice big asset base
8:25
that allows you to grow in different ways.
8:27
So for them and the way they did it, it was really just perfect
8:30
and allows you to experiment within the environment and and
8:35
make decisions in those corporate units before you voice
8:39
them upon the franchisees, making sure that they work and
8:42
you have proof of concept. So it really worked well.
8:44
They've eaten their own dog food, so to speak, up to that
8:46
point. Not that port of Subs is dog
8:49
food. You understand the expression?
8:50
Yeah. Absolutely.
8:52
So I'm curious, you're going to open the 100th location, this
8:57
big milestone number, where were you getting the financing for
9:00
that? We did take a an SBA loan, but
9:04
for me personally, I was having success in my real estate
9:08
business, but I was still very new in that environment.
9:12
So literally when, you know, we had our partnership shares that
9:17
we were investing, it was literally virtually every single
9:21
dollar I had in my savings account.
9:22
And I said, OK, yeah, he's the founder of the organization.
9:26
I felt like there was some level of safety there.
9:29
But, you know, I just said, OK, I'm either going to do this or
9:33
I'm not going to do this and I'm going to figure it out later.
9:35
So I wrote the check. And when you write the check and
9:38
you sign on the loan and you sign on the lease and you do
9:40
those things, it's it's a moment where you're like, OK, you know,
9:44
we are going to make this work. And that's a big driver as well.
9:49
And I think other franchisees could relate to that.
9:53
You're going to make it work. It's your money, it's your last
9:55
dollar. It's all of those things.
9:57
And it's worth the adventure for sure.
10:00
So opening day comes. What are you feeling inside?
10:03
Oh my gosh. First of all, food is wild,
10:06
right? I come from an office where
10:08
things are not quite as wild. They're much slower.
10:11
So it's fun, it's exhilarating. It's really, it's like putting a
10:15
shirt on an octopus. You know, there's so many things
10:17
happening and you're trying to keep it all contained.
10:19
But the excitement and the exhilaration is amazing.
10:22
And that's what makes restaurants so cool.
10:24
They're so fun. You're you've got, you become
10:27
part of the community very purposefully.
10:30
You make so many differences in so many people's lives.
10:33
The customers that come through the door, you don't know what
10:35
kind of day they're having your team members providing
10:38
leadership opportunities and growth opportunities.
10:40
And but you know, perhaps that's a a look back of where I am
10:45
today at that moment in time. It's just fun.
10:47
Restaurants are fun. Let's let's do this.
10:50
And they, they move very quickly.
10:52
I had to adapt to that. And because I'm such a fast
10:54
person. Anyway, that adventure was
10:56
really great. It was a great kick off for me.
10:59
So you had been a fan of port of Subs for years as you talked
11:02
about, right? You've been a loyal customer for
11:04
a long time. For folks who haven't had the
11:07
pleasure of visiting a port of Subs, explain what the customer
11:11
experience is like. Well, it's our food is
11:15
delicious. And I know I'm biased, but
11:17
people do people never say, yeah, I like port of Subs.
11:20
It's OK, they say. I love port of Subs.
11:24
We slice all of our meats and cheeses fresh.
11:27
Everything is made to order right in front of your eyes.
11:29
You can have it exactly the way you want it.
11:31
It's a very interactive experience.
11:33
And again, because we we bake our bread fresh daily and all of
11:38
our food really is delicious and dare I say better than any
11:44
sandwich you've ever had. And our brownies are great.
11:46
We have a 2 foot brownie and a 2 foot brookie.
11:48
So our our food is delicious and it's fun to be able to interact
11:52
with our guests. It's wonderful.
11:53
Yeah. How many locations are we at
11:56
today? We're.
11:57
At 125 today, OK. So and explain to us, you
12:01
touched on this a little bit, explain to us why that 100
12:04
milestone, why that marker is so important in the world of
12:08
restaurants? Yes.
12:09
It's often your, your growth trajectory and the teams that
12:15
you need to make yourself successful in scaling, which
12:18
we're dealing with now in a different kind of a way.
12:21
But many, many brands when you're first starting, you
12:24
really need that royalty revenue and that franchise revenue and
12:27
all of those things. But it often trails because of
12:30
the way especially we're brick and mortar service businesses
12:33
might be a little bit different, but for brick and mortar, we've
12:36
got a timetable there. There's a gestation period.
12:39
And so it's depending on your resources.
12:42
And now you come about doing that, it's, it brings a lot of
12:45
challenges to bring your dream to life.
12:47
To get to that hundredth location takes a lot of
12:50
discipline. It takes a lot of planning and
12:52
takes a lot of resources, financial and human capital.
12:56
So it's those inflection points that that you hit along the way
13:01
can challenge you a lot. So, and a lot of people, I think
13:05
foundationally, people skip the part about foundation because
13:10
it's not really fun. It's not sexy, it's not fun.
13:12
It's, you know, oh, I want to sell franchises and bringing in
13:15
franchisees. That's the fun part.
13:17
We train and open our stores and you know, whatever that looks
13:20
like in anybody's particular business.
13:22
But being able to have the discipline to have the
13:25
foundation to ensure that you can build upon that to that
13:28
hundreds restaurant is fantastic.
13:31
And again, it's elusive because of all the ups and downs people
13:34
will have along the way. And remind me, what was the year
13:37
that you open this location? 199719. 97 and the.
13:41
Stone Ages. Very early days of the Internet
13:46
and lots of other texts. So I usually reserve this
13:50
question for a little bit later in the interview, but I I think
13:53
it's appropriate to to go here now because you were on a run
13:58
three construction projects real estate market 2008 2009 hit
14:04
things are in free fall. Walk me back to the moment when
14:08
you realize how serious this time period was.
14:11
Yes. And to provide a little context
14:13
for that because it wasn't just in commercial real estate.
14:16
I went on to develop for myself. I always wanted to do that.
14:19
So this was at the same time that that I had port of Subs and
14:23
I was the franchise. I did not have daily.
14:30
We had managers that ran the daily operation.
14:32
I did not run it as a manager. So I had my own company running
14:36
in tandem at the same time and I was doing commercial real estate
14:38
development. I also became a multi unit
14:40
franchise of a national diner brand and that's open 24 hours.
14:45
That was that's a thing, but you skipped right over.
14:49
That part, yeah. So I was doing some ground ups
14:52
at that time and there were there are so many lessons I
14:55
learned from this period because 0 grass growing under my feet.
14:58
Every single moment was like, oh, let's build this and grow
15:00
that and do this and be All in all the time, which is fun and
15:05
Mach 27 with your hair on fire is fantastic.
15:07
But when those moments came in O7 and O8I had an office complex
15:12
that I had built early on and my primary tenants were mortgage
15:17
companies. That was not very fortunate and
15:20
so that was really the start for me in late O seven.
15:24
I was a little bit earlier than when the markets truly tumbled
15:27
because of that and had to deal with, you know, tenants not
15:32
being able to pay their rent and trying to work with my lenders
15:35
and our restaurants. You know, we didn't know what
15:38
that was going to look like for the restaurant business.
15:40
Certainly we had a reversal there.
15:42
So I had immense reversal. I had three construction
15:46
projects at the time for retail and also, OK, here's something
15:50
I'm going to insert that'll be fun for you.
15:53
At that time, I was competing in ballroom dancing and the largest
15:58
ballroom dance competition in the countries in Columbus, OH,
16:01
the Ohio Star Ball, where you're from.
16:03
And so it was really incredible. I actually became a Max and
16:08
Ermis franchise at that time, and we were just getting going
16:11
with that. So million irons in the fire and
16:15
then this happens and it was so difficult to know what to do.
16:19
And I think it's great to learn things along the way, but our
16:24
failures, if you want to call them that, and they certainly
16:26
feel like that at the time. Those are really dark moments
16:29
for me because of all the irons in the fire.
16:32
And one of the biggest lessons that I learned because I had a
16:36
complete financial reversal, you know, my, my buildings and all
16:40
of the, the things that you have to try to correct and it's hard
16:44
to know what to do. There's no playbook for that.
16:46
Can someone give me a playbook for what I'm supposed to be
16:48
doing here and taking a lot of head punches at that time.
16:52
And I, I, one of the things that I learned, I and I bought this
16:56
little leather book and I notebook and I said, I got to
16:59
get these lessons because they are dramatic, you know, to lose,
17:02
quote UN quote, everything that you have is really eye opening
17:08
and it brings a lot of humility and a lot of self reflection.
17:10
And what am I doing and what did I do right and what did I do
17:13
wrong? And I made a lot of mistakes
17:15
along the way. And one of the biggest mistakes
17:17
I made after this reflection period was I didn't have people
17:23
around me not only to go, hello, what are you doing?
17:28
You know, you can't have all your chips on the table and be
17:31
All in all the time. Well, it felt really fun when
17:33
you're doing it. But then you look back and say,
17:35
Oh yes, perhaps I could have had a little, little more of a
17:39
modest approach, but but also not having a really solid
17:46
network of people or advisors or mentors or anybody outside of
17:51
the sphere at that time. Because when you're in a high
17:54
growth mode. And by the way, when you think
17:56
back to 2005 and six and seven and leading up to that, oh man,
18:01
everyone was on fire. Financing was easy.
18:05
I mean, things were just money. Was free business was flowing?
18:09
Yeah. For everybody in all trades and
18:12
it was really fun. And so in, in looking back at
18:16
that, that would be the one thing.
18:17
And actually what I've made corrections for now today is
18:20
saying you need others. You need people's perspective,
18:24
you know, whether that's a family member, my partner, I had
18:27
a great business partner at the time, but it really the business
18:30
outgrew him. So we didn't, it wasn't really
18:33
great for us when we had this reversal anyway.
18:36
The greatest lessons we can learn are from our challenges
18:39
and our difficulties. And there were moments where I
18:42
would just stay in bed, you know, pull the covers up and go,
18:46
OK, today is not the day that I am going to be able to deal with
18:51
this. And then here's what I would say
18:53
that has shaped my life so much at this time.
18:57
Because at some point you have to decide.
19:00
And that sounds very simple, but it's a really powerful tool to
19:04
just simply decide that you're going to move forward because it
19:07
doesn't matter how that looks at when you first start, just
19:10
start. You have to start and you have
19:12
to decide. And there was that moment, I
19:14
remember it very clearly, where I said, OK, got to clean this
19:18
up, got to move forward. I'm going to decide.
19:21
And by the way, I kept my health.
19:23
I was really appreciative of that, and I had great awareness.
19:26
And so I said, OK, well, what the heck?
19:29
I got kicked around a lot, but I'm still here and I still have
19:32
a great brain. And I'm, I'm going to try to
19:34
find my way to a new successful future because it doesn't matter
19:40
if I lost those things. I built those things.
19:43
I did those things, I built my team.
19:45
I loved my team. I had, you know, 150 of my own
19:49
employees and we did great things together.
19:52
And I really focused on the positives of what happened
19:54
instead of choosing to focus only on the negatives, which is
19:58
really easy to do. So just shifting my mind to say,
20:01
all right, I did those things. I, I have those skills.
20:05
I can do this again. I just might do it with more
20:07
people around me. So here's the part that I want
20:10
to explore a little bit, Healy is how did you get to that
20:13
point? Because I hear you.
20:14
And thank you for admitting there were times where you just
20:17
didn't want to get out of bed, pulled the covers over your
20:19
head. Because those are the unsexy
20:21
times, the unstrong times where we don't want to talk about
20:25
that, right? We just want to talk about.
20:28
I had all this success. Yeah, it was a rough spot, but I
20:30
picked myself up and I. But it's that in between time
20:33
that doesn't get enough air, time where you just feel
20:36
completely crumbled and broken. How did you get from that point
20:40
of not wanting to get out of bed with the covers over your head
20:43
and lots? Of tears.
20:43
Making What's that and? Lots of tears and lots of tears.
20:47
To that point where, OK, I am going to take an action today.
20:52
Was there a catalyst for you in that time?
20:59
I, I feel that, well, at some point you can't just stay in bed
21:05
either. I mean, you could, I suppose you
21:07
could, but at some point you have to have some stillness.
21:12
I think stillness brings about a lot of clarity when there's a
21:16
lot of chaos, just like regular life, right?
21:19
I, we could go into a whole big conversation about how I feel
21:22
about the importance of mornings to your life and to your brain.
21:26
But back at those moments, I didn't have that type of
21:29
exposure. I think you, when those moments
21:33
are still and you, you know, you suffer for a while, at least
21:36
this was my experience. You go through this, you know,
21:39
you built this, whatever you're building with your blood, sweat
21:42
and tears and heart and soul. And here you are going, holy
21:45
moly, what just happened? And it was, it took me a long
21:49
time, much longer than I thought to be in a great place.
21:53
But I believe that that catalyst, that inflection point
21:56
was OK, I had enough stillness and enough reflection to be able
22:02
to say, all right, I got this, I can do this.
22:05
I, I once again focus on the things that I focused on, the
22:09
things that did work and I really worked on my mind to not
22:14
pay attention to those very difficult things that happened.
22:19
And I was not willing to say to myself, gosh, why me?
22:23
Or I was never really that type of a person.
22:26
Luckily, I'm inherently a positive person.
22:28
So I think that was very helpful.
22:29
Also, I'm built for positivity. And so I just purposefully said,
22:34
OK, I am not going to look at all those ugly things and, and
22:38
take those on and, and attach my ego to those, those
22:41
difficulties. Instead, I'm going to focus on
22:45
what I did the best and what does that mean for me moving
22:48
forward? How can I take, what did I do
22:50
the best? Because when you have a big, you
22:53
know, a, a, a big challenge and you ride the big wave and then
22:57
it crashes on the ocean, you, you take a look and say, God,
23:00
what am I good at? Am I good at anything?
23:03
And so it was really, I think a, a slower ride.
23:06
It wasn't like this magical moment.
23:08
I, it was a slow lead up going a minute.
23:11
I am good at things, I am capable.
23:13
I can do this and let me focus on one great thing I'm good at,
23:17
which is people, one of my, my superpowers and what can I do
23:21
with my life. And, and even though it wasn't
23:24
this magical moment of some big shift, it was just a mindset of
23:29
I'm going to decide I'm moving forward because I have great
23:33
talents and I have great passion for life and great passion for
23:36
things and multiple skills and how can I use those?
23:39
And then the phone call came. Before we get to the phone call,
23:42
I want to highlight why I love what you just shared with folks
23:46
because I think so many times folks are waiting for that
23:50
sunshine moment. God parting the clouds.
23:53
Like here is the answer, here is the easy button.
23:56
Like everything is okay and it almost never happens that way.
24:01
It is just the confusing and the sloppy and the I am just going
24:08
to put 1 foot in front of the other without knowing exactly
24:10
what's going to happen. But I'm going to take some
24:12
motion today that starts to get that momentum going and get you
24:15
there, yes. Absolutely.
24:18
I, I, it's a really important because what, as you mentioned,
24:22
you know, you never know people's variables.
24:24
We want to look fabulous on the outside and be strong and
24:27
successful and everything is going perfectly.
24:30
And that just is not part of life.
24:31
Learning and progress are part of life.
24:34
And then you start saying that to yourself too.
24:36
Well, what's the purpose of life?
24:37
Well, what if it's progress and joy?
24:40
OK, well, I've had woo, I've had progress.
24:42
And then I would tease myself, you know, and you know, when
24:44
you're teasing yourself, you're getting healthier mentally.
24:47
I said, well, you know, you got to be clear with whatever powers
24:50
you believe that are higher than us.
24:52
And and I said, I want my life to be dynamic.
24:56
It was dynamic, all right. I forgot to be clear about what
24:59
I meant about that. So I've reframed that in my own
25:02
mind about I want to be done, have a dynamic life in a very
25:06
successful positive. That is a good qualifier there.
25:11
All right, so now Healy, tell us about the phone call that came.
25:14
So I get the phone call from John Larson and you know
25:18
everybody suffered during that time to very well.
25:20
Not everybody, some people did quite well, but many, many were
25:25
suffering the same challenges. And so he called me and
25:29
including port of Subs, and, you know, port of Subs had just
25:33
signed 11 leases or something, and then the capital changed and
25:36
the franchisees didn't move forward.
25:38
So that period of time was very difficult also, but recovered
25:41
very quickly. Our brand's amazing.
25:42
We have fierce brand loyalty and amazing franchisees.
25:45
And that's what helps lift your brand when you go through times
25:48
of trouble. So a lot of gratitude for that.
25:50
Anyway, he calls me and says, hey, what have you been doing?
25:53
I've been waiting for you to try to do something and you're kind
25:56
of not doing anything. What the heck are you doing?
25:58
I said, well, I've been cleaning up my big mess.
26:00
Thank you very much. And he said, how about if you
26:03
come over and set up the real estate and construction
26:04
department for me? I said, you know, that'd be
26:07
great. I was talking to another friend
26:09
about taking on a restaurant chain with him as a partner and,
26:14
and frankly, it was full service 24 hour restaurants.
26:17
And I, I didn't have the, I didn't have the energy for that.
26:20
That takes a lot. And I said, you know, so when
26:22
John called, it was cool. A brand that I love that I've
26:25
always loved my dear friend. And really he needed, he needed
26:29
that desperately, but he knew that he was trying to help me as
26:33
well. So it was a win win in that
26:34
regard. So I got in and, and set up the
26:37
real estate and construction department.
26:39
Having had my own organization for so long with a growth
26:42
mindset, I couldn't even help myself.
26:44
I'm like, after about, you know, six months, I got everything set
26:47
and I went, wait a minute, we need to let's, let's correct
26:52
this and let's grow this and we can do this.
26:54
And I just can't help myself. I'm completely out of my lane
26:56
because of operating my own company for so long.
27:00
And he finally said, oh gosh, fine.
27:01
And he made me the executive vice president and put me in
27:04
charge of the franchise development side.
27:06
And then of course, company strategy and growth and wanted
27:09
to really grow again and put forth something meaningful.
27:12
So it was really great for both of us and the brand and a lot of
27:16
people that I'd known for a long time.
27:17
So it was a little bit like coming back home.
27:20
It sounds like this was just like this was the easy button.
27:23
This was the the the clouds kind of partying for you.
27:27
Was there any hesitation on your side in taking this role because
27:31
you had been head of your own boss for a while and this was a
27:35
different kind of a role? Yeah, it's a great question,
27:37
especially to your point, you know, I hadn't had an employer
27:40
since I was 22 years old. Yeah.
27:42
So it was very different, but I was OK with that because I
27:46
thought I, I could bring great value to the brand and to the
27:50
franchisees and to the team. And it was a soft place to land
27:54
because I, it wasn't my organization.
27:57
I didn't have to think about all those other departments at that
28:00
time, of course, until I, you know, inserted myself.
28:02
But at the moment, it was a great, great way to start,
28:06
deliver value, be part of something that I've always
28:10
believed in, be back in franchising again, which I
28:13
absolutely loved. I loved being a franchise.
28:15
I loved being a franchisor. Why?
28:18
What? What's the big attraction for
28:19
you? Yeah, it's, you know, it's a,
28:21
it's such a unique relationship. It's so incredible, frankly,
28:25
that you can be an independent business owner and especially
28:28
when you're first starting, but even as you become seasoned, you
28:32
don't, you need each other to be successful, franchise or
28:36
franchise. You can't succeed without one
28:38
another, which is really interesting in a business
28:41
relationship. But you also have the resources
28:44
that you need and you don't have the pressure.
28:46
You know, you're not creating menus and marketing programs.
28:49
Well, we are now as the franchisor, but as the
28:51
franchise, all you have to do just follow the system, which is
28:55
kind of what drives franchisors crazy when the franchisees sign
28:58
up and then they don't follow the system like you signed up so
29:01
you could follow a system to be successful.
29:03
You know, we've got 15 years of proven, 50 years of proven
29:06
systems. So anyway, I love that piece of
29:09
it because now all you have to do is go execute.
29:11
And what does that mean you get to, if you do it properly, that
29:14
means you get to spend a lot of time with people and making a
29:16
difference in your community and, and doing those things that
29:19
make life, at least from my perspective, very meaningful.
29:23
Instead of, you know, it's not just operating a restaurant,
29:25
it's being part of something and creating opportunities for other
29:29
people through your skills. And it's really unique.
29:32
That's unlike having your own organization or doing different
29:37
types of venues, basically. So in those early days of
29:41
stepping into this new role, pick out one project that you
29:46
were particularly excited about that you wrapped your hands
29:48
around and really move forward. Yeah, there are two actually.
29:53
One is 1 was kind of foisted on me actually, where John said,
29:57
hey, listen, we've got a couple stores over there that are not
30:01
going to renew, so we'll take those on as a corporate store.
30:03
But I want you to do a new redesign.
30:06
Like, OK, I don't remember on my, you know, I've got a good
30:08
design eye, but I'm not a professional designer.
30:11
And he said, you know, do it anyway.
30:13
I said, OK, well, I just want to have the caveat that it's going
30:16
to be amazing and it's going to look good, but it's still an
30:18
amateur designing a restaurant. And then we did end up bringing
30:22
in some other folks who specialize in that.
30:25
But that was really fun because it was really the first big
30:28
brand refresh. And because I've had so much
30:31
real estate development under my belt, that visualization was
30:34
very easy for me. And it was very fun because it
30:36
was like, but it wasn't just the, the, the decor, which was
30:39
awesome, but it was, how do we make it more efficient?
30:42
How do we get our our customers through the line faster?
30:44
How can we give them a great experience?
30:46
How could it be fun and these types of things.
30:49
So it was really a fun opportunity to understand all of
30:53
the operational background of why we do things.
30:55
And you know, you can't have, you know, for us slicing fresh
31:00
and the way we, that we do our heated foods and hot, hot Subs
31:03
and everything, you can't have it 5 feet that way or 6 feet
31:06
that way. It ruins the flow.
31:08
So that part was really fun and that that prototyping and then
31:13
John said, hey, I want us to grow like crazy.
31:17
I'd like you to put together a framework for that growth, which
31:20
we did. And ironically, at that time it
31:22
was for essentially the regional developer model.
31:25
But we did not end up moving forward with it in that way
31:28
because the girls, his two daughters who were partners,
31:32
they didn't want to do that. They said that sounds terrible.
31:35
It sounds like a lot of work and a lot of risk.
31:36
And he's like, right, let's go because he was that guy.
31:40
You know what is? The regional developer model And
31:42
why didn't you go forward with it at the time?
31:45
Yes. So we have the regional
31:47
developer, developer model. Now.
31:49
I know we'll probably talk about the acquisition because that was
31:51
a huge, huge transformation of the entire brand that I'm lucky
31:55
enough to be a part of and leading.
31:59
But back to the the question, it's essentially an updated
32:04
version of what most people would call an area development
32:06
agreement, that type of thing, learning from others and making
32:11
some of those changes. But essentially where you've got
32:14
a regional developer who can acquire a territory that they
32:16
have exclusive control over. And the the goal and the program
32:21
is for them to build their own franchise network.
32:23
They have to build a flagship unit, not only for training, but
32:26
we are a community focused organization and we always want
32:29
to be that brand. And so having a flagship and
32:31
being part of the fabric of that community as you build
32:33
franchisees and offer opportunities to other is the
32:36
heart of the program. And also obviously, obviously a
32:40
very aggressive high growth program because even if you have
32:44
say, for example, for we, we have, we now have we just signed
32:48
our 19th regional developer and I know we're very excited, but
32:53
let's call it 10 or 20 for easy math.
32:56
I say this to the team a lot. This kind of a scaling growth
33:00
platform is not for the faint of heart because even if you had 10
33:04
regional developers and they each did two, you're already at
33:06
20 restaurants and you haven't you've barely even scratched the
33:09
surface or done anything. And so when we have our regions,
33:13
it's 10 units per region minimum development.
33:16
And so if you have committed to building 10 or 20 or 30
33:20
restaurants in a particular area over a five year period, that's
33:24
the program. And you know, and especially
33:27
when you have to in our brand and brick and mortar, you have
33:30
to find a piece of real estate to build.
33:31
So it takes a little bit of time and the first one's the hard one
33:34
and this type of a conversation, but but it it really the
33:40
framework was put together. But you cannot have a high
33:43
growth organization when all the partners are not in agreement of
33:47
that capital allocation and even conceptually that you want to
33:51
put together the team. This was, you know, previously
33:54
it was slower growth. John loved knowing all the
33:57
franchisees and the locations and really he was kind of the
34:00
dad of all the restaurants. And so for him, pardon me for,
34:06
for him, it was a change of, OK, I'm going to give up a little
34:12
bit of control, which can be very difficult, especially as
34:14
founders, you know, founders are like this is my.
34:17
Baby he's. Not John Larson.
34:19
He's John Port of Subs, right? Yeah.
34:20
It's my baby. It's what I've done my whole
34:22
life. And so.
34:23
But the girls, you know, they were always very, really good
34:27
with their money. But you know, they've been part
34:30
of port of Subs since the first restaurant and there are stories
34:33
about, oh, I'm sure they broke every child labor law in the
34:35
world at the time, But you could do that back in the 70s, right?
34:38
But and, and 80s, but the girls, you know, they would, they would
34:41
be in the restaurants and they're kind of short and they
34:44
were young. So they had like milk crates and
34:46
they were doing the cash register and all of that.
34:47
So they come by it honestly, but they've been doing it their
34:50
entire lives. And here it is 50 years later
34:54
and they're like, gosh, you know, we obviously it's part of
34:57
our DNA, but we want to go do something different.
35:00
And moving into a high growth mode comes with a lot of
35:05
challenges. And they, they wanted to, they
35:08
wanted to spread their wings in a different way after all this
35:10
time. And so I I said, look, you can't
35:13
have partners who are true partners that aren't going the
35:17
same direction. And so we just backed off and
35:20
said, then let's just have nice steady growth.
35:22
That's OK. There's nothing wrong with that.
35:24
You know, what we choose in our lives is how we think and what's
35:27
important for us. And I it was the right way for
35:31
them to grow. Even for John, he wanted to have
35:34
this big environment and he said, gosh, you know, some of
35:37
our competitors really have eclipsed our growth.
35:39
And I said, you know, that's OK because that's what he chose for
35:43
his life and I think it was a better fit for him.
35:45
Only later do you look back and go, Oh my gosh, well darn it, I
35:48
wish I had grown to 1000 restaurants and that it was
35:50
easy, easy. But but that's just not how
35:53
growth works. So.
35:54
Something changed after that, right?
35:56
Because in 2023, there was an acquisition that took place and
36:00
this really helped to set you guys up for the growth that
36:03
you're excited about now. Yes, a huge inflection point.
36:06
And really that whole conversation I just had was a
36:09
big part of that where the girls were like, we'd like to go do
36:12
something else if you want to, you know, the, the, the growth
36:17
was really at a moderate pace. It was really kind of
36:19
stagnating. And you know, in any
36:21
organization, if you don't evolve, if you're not evolving,
36:25
you're stagnating. And when you're stagnating,
36:27
it's, it's not a good thing for a business or the team and all
36:31
of that. So I, I, I really felt like I
36:34
was instrumental in saying, look, these are decisions you
36:37
must make. Whatever you guys want to do
36:39
doesn't matter to me. I can put together any framework
36:41
you want and we can do that. And, and, and the decision was
36:45
made to sell the company. Now it's not a normal company.
36:48
You know that the teams, it's not like buy and sell and you
36:51
know, part of PE and all of that.
36:53
This is a 50 year legacy brand family and founder run with most
36:57
of the team members. I think at the time, our, our
36:59
shortest term team member was the receptionist and she'd been
37:01
there five years. You know, everybody's 10 years,
37:04
15 years, 18 years, 25 years and so on.
37:07
And John was very caring and said, Gosh, I, I, I really want
37:10
this to be great for the, for my brand and great for the team.
37:15
And I really want it to move. Obviously you want your, your
37:17
life's work and your baby to be successful moving forward.
37:20
But it was a hard who that was a, I did not envy him the
37:26
challenge of going, okay, I think I need to sell it.
37:30
Like chopping off your arm, you know, but it was the right
37:34
decision for him and the family. And I think in retrospect, he
37:37
looks back and says, yes, I now he probably says, gosh, I should
37:40
have done it sooner and been on some, you know, beach with my
37:43
beautiful wife. But in any event, the decision
37:47
was made and he wanted it to be a private sale.
37:49
So I contacted one of my people in the franchising world who has
37:53
far reach and I said, hey, and he knows John and, and all of
37:57
that. And he said, I said, hey, you
37:59
know, anybody that would be interested in a very quiet
38:01
private sale, you know, because if you go to PE, you can make
38:04
one phone call and, and get it purchased.
38:06
But then it's on the street and the words on the street.
38:09
And even though they, you know, you sign NDA's, but it's hard
38:12
for people to keep it under wraps.
38:14
So and then why? Did you want it under wraps?
38:18
Actually, that was John, because he didn't want, he didn't want
38:21
the team to be harmed and he didn't want his brand to be
38:23
harmed and he didn't want to shop it on the street, have that
38:25
bidding war. And a lot of that was just
38:27
protection of the people. You know, interestingly when we
38:29
went through the acquisition, the only people.
38:34
That. Now Area 15 Ventures is our
38:37
acquirer. The only people they got to talk
38:39
to were the four of us partners, John, Lisa, Shawna and me.
38:43
So the girls, John and I and no other team members, which
38:47
they're like, that's so weird. We need to talk to the people.
38:50
We need to know what's going on in this brand.
38:52
I'm like, I'm sorry, if you would like to do this, this is
38:54
how it's going to be. Because he was very, he cared so
38:57
deeply about the team and the, and what he had built in the
39:00
community and the franchisees. He was very, very concerned
39:02
about the franchisees and wanted the type of buyer who would not
39:06
only carry on his legacy, but also have great care for the
39:10
franchisees because we're in the franchising business.
39:13
But these were friends, you know, that that grew together
39:16
for a long time. So his heart was absolutely in
39:19
the right place. And, and, and, and, and that's
39:23
when our consultant said, yeah, I've got, I've got a great,
39:27
great buyer. And I said, OK, well, where are
39:30
they located? And he said, well, if I tell
39:32
you, you'll know, I said they're located in Denver.
39:35
So now I'm looking up every food franchise in Denver and I'm
39:38
thinking, oh, Chipotle, you know, Anyway, then it gets
39:42
disclosed that it's the founders of re/max.
39:44
And I'm like real estate. How would have I even guessed
39:47
that? So here we are.
39:50
Obviously they are masters of franchising.
39:53
They have 9000 franchisees in 120 countries and but they've
39:58
never done the food business. And so we met for the first time
40:01
and they under Area 15 ventures, that's Dave and GAIL Linegar and
40:07
Adam Kantos, who was the previous CEO of re/max and Dan
40:11
Predovich is the other partner. And their goal with Area 15 is
40:14
to buy brands they can scale because they know franchising
40:17
very well and obviously have immense resources.
40:21
And which is, you know, a big shift because we're kind of a
40:25
newly emerging brand going with national expansion, but with the
40:29
resources, unlike most startups. And that's been very helpful.
40:33
In any event, we meet for the first time, and Dave Liniger and
40:37
John Larson get along extremely well.
40:39
And the magic happens and the deal gets made.
40:44
So what is it like? For you internally managing that
40:48
transition and the communication with the employees and the
40:51
franchisees, yes. Well, and communication is the
40:55
perfect word. There was a lot of fear,
40:59
especially because of the private nature of the company
41:01
and the longevity of the team members.
41:04
And it was really an unusual situation because how often do
41:08
you get the opportunity, First of all, in M&A, how often does
41:11
the entire team come along? Very, very seldomly.
41:16
And had it been a food business that acquired us, it probably
41:19
would have had a different result because a lot of those
41:21
brands already have their people and their infrastructure.
41:24
And so Area 15 team looked at me and said, do we need everybody?
41:28
I said, are you kidding me? We went from kind of a
41:30
maintenance slow growth to now we're going to embark on a
41:33
regional developer high aggressive growth program with
41:36
national expansion. Then of course, and then Dave.
41:39
Dave says, yeah, international. I say, can we just start with
41:43
the country first? You know, let's start with
41:45
America first before we get into other countries, because that's
41:48
how he thinks, right? He's, he's, he's a very focused
41:51
visionary. But in any event, so I said yes,
41:54
we need the entire team and then we need to start building from
41:57
there and building this infrastructure.
41:58
But really the, this was the beginning of Q2 of 2023 when the
42:04
acquisition happened. And that year really was
42:09
constant communication with the team and the franchise
42:11
franchisees to just quell the fear because if you let them
42:15
have their own narrative, then you know, you keep your eye off
42:18
the off of things. And that's when stories and big
42:21
monsters show up in your in your peripheral vision.
42:24
But it was really quite something to be able to work
42:29
through that. And when everybody got
42:31
comfortable, how often do you have this other opportunity
42:34
where you say to the team members, listen, if this isn't
42:37
for you, because this is not a bus, this is not about being on
42:40
a bus. This is about being on a rocket
42:41
ship. And that's a very different mode
42:43
than what we had had in the past.
42:44
So if if you're not up for it, then that's OK.
42:50
All we ask is that you if you want to go do something
42:53
different, let's just be honest about it and open about it and
42:55
work through it together so that it's a comfortable transition
42:58
for everybody. And that's a really unique place
43:01
to be. Most of the time, you don't have
43:02
the opportunity to have that level of transparency.
43:05
And then of course, meeting Dave and Adam, Adam Contos and Dave,
43:10
they're just great human beings. And one could argue that at the
43:14
success levels that they have. And I'm sure we've all met some
43:18
of them, You know, no offense to Wall Street guys, but a lot of
43:21
the Wall Street guys, you're like, wow, no heart or soul in
43:24
there, huh? Tink, tink, Tink, you know, and
43:27
they certainly could be those people at that high level, and
43:30
they're not. They're just, they care about
43:32
people, they care about their franchisees and they just have
43:36
strong values. And it's really not PE, it's a
43:39
family office. And explain the difference for
43:42
folks. Why is that an important
43:44
distinction? Yes, I you.
43:46
Know PE and again, I, I, I don't, I'm not.
43:50
I think PE is great. PE has a wonderful place, but
43:53
private equity firms traditionally are are really,
43:57
you know, am I going to cast them in a very kind of cold
44:00
business tone? Yes, probably because I think
44:02
they can be that. And you know, their focus is
44:05
we're going to deploy resources and we are, you know, usually
44:12
with the notion that they're going to handle it in one way or
44:16
the other to sell. And in some instances PE will
44:19
build and in, but in in many instances, PE loves to just you
44:23
know, they're just looking for the efficiencies, right?
44:26
What? Can they strip away What?
44:28
Can we strip away what? Yeah, what those efficiencies
44:30
are and sell it. And by the way, I say to PE, you
44:33
know, you guys always hide like you're not going to do that.
44:35
We'll talk about it. You might as well be transparent
44:37
about it and go look, guys, listen, we're going to build
44:40
this brand because we're going to add huge resources.
44:42
We're going to grow like crazy and then we're going to sell it
44:44
and let's all work on that together.
44:46
I think it would be a better result for them.
44:47
But regardless, that's, that's just my public service
44:51
announcement to the PE firms. But the, the family office
44:55
mentality really is, yes, we want to buy something, but it's
44:59
a building mode. It's the idea of building, it's
45:02
the idea of creating something. It's the idea of more than just
45:07
the vehicle for the dollars. It's also, you know, for Dave,
45:10
he said, I want to do with port of Subs what I did with re/max.
45:14
But instead of 50 years of re/max, we can do this in five
45:17
years. Well, it used to be started out
45:19
as six years and then it got down to five years.
45:21
Then Dave said three or four. I said, wait a minute, what
45:23
happened to five years? So we jokingly argue about the
45:26
time horizon, but this is a long term kind of an opportunity for
45:31
a family office. And we're very close.
45:34
The decisions get made very quickly because the group is
45:36
small. And it's really a gift to be
45:38
able to have that in this environment.
45:40
And in most environments. In my role, a big percentage of
45:46
my time would be toward raising capital.
45:49
Most people have to continuously raise capital and what a gift
45:54
that we don't have to do that. I don't have to do that.
45:57
So I can focus 100% of my energy on teams, our network and
46:03
growing our brand. And so that's probably a 40% of
46:07
30 to 40% of time allocation for me that I don't have to.
46:12
So then you're able to spend. A lot more of your time looking
46:15
for and developing relationships with these regional developers
46:18
because now that you've got the capital and you've got the huge
46:21
expertise of the franchising from the folks you know behind
46:25
re/max, you guys can go back to that regional developer model
46:28
and really start to throw gas on the fire.
46:31
Very much so. Very much so.
46:33
But then we then we start treading into the infrastructure
46:37
conversation because, you know, real estate is very different
46:40
than food. So it's been a bit of an
46:43
education process along the way with the team at Area 15 because
46:48
they're like, well, why can't we open, you know, 27 of them in
46:51
the next three months? And the the reason the
46:55
explanation is the explanation is because.
46:58
Luckily, my say, as we build infrastructure, luckily we have
47:04
to find the location, build the location, train the location,
47:09
open the location and stabilize and make it successful.
47:13
And you can't, you just can't force that timeline.
47:16
You can be more efficient, you can get it down to X period of
47:20
time, but it's not one month or two months and you just can't
47:23
force that process. And so, you know, again, part of
47:26
our goal are those efficiencies. But for me personally in our
47:30
team, it gave me the runway. And I would say to the team,
47:32
hey, these are golden runway moments.
47:34
Because what's going to happen as this hockey stick type of
47:37
growth happens that that we we only have a certain period of
47:41
time to build the infrastructure that's required to be able to
47:44
truly scale. Because it's super easy to say
47:46
scale. Oh yeah, let's grow.
47:47
I remember conversations that would go a little bit something
47:50
like, Oh my gosh, let's do 100 restaurants.
47:54
And I'd go, OK, that's, that's cool.
47:55
That's totally possible. Now we're going to take a step
47:58
back and plan for, but let's let's talk about this.
48:00
That's opening 2A week, right? And then everybody goes.
48:03
Everybody goes, oh. And so even if you say, OK, wait
48:07
a. Minute, let's just do 25 you say
48:09
that's still that's still one every, you know, so on and so
48:13
forth and the realities of those types of things.
48:15
So it's given me a great opportunity.
48:17
So if I could cast kind of a, a framework, you know, the 2023
48:22
was stabilizing the team and then beginning to build the next
48:25
team of growth. 2024 was continuing to build that team
48:29
and the infrastructure and 2025 we start having great traction
48:33
with our regional developers, yet that's still finishing all
48:36
those end to end tools because we ran into some bumps along the
48:39
way. This is, this is not an easy
48:41
thing, but I'm a planner person and I, I can't express enough.
48:46
A lot of people love to skip over that.
48:48
And even within our own organization and the Area 15
48:51
team, they're like, you know, why?
48:53
Why does this take so long? I said because we're talking
48:56
about having 500 restaurants by 20-30 and the realities of that
49:01
framework, you know, it's OK if one wheel falls, flies off, but
49:04
you can't have all four wheels flying off.
49:06
You got to, you got to keep those.
49:08
You have to be that systems thinking and that systems person
49:11
while making your franchisees and new markets successful.
49:13
So it's it's really adventurous. What is one of those bumps?
49:17
That you've run into in the last couple of years.
49:20
Yes, I, I. Think a lot of that is platform
49:22
related. Once again, systems.
49:24
You have to have a system and, and it's, I think a lot of the
49:30
quote UN quote bumps and train wrecks happen in the
49:33
transitions, you know, especially for us because we're
49:35
doing construction and, and there's elements to that are
49:39
esoteric to our work that others may not have, like service
49:42
businesses. You've got to get your web
49:44
presence, your digital presence down.
49:47
But I think a lot of it was the platforms that we have a couple
49:50
of the platforms we had early on were great for those moments and
49:57
we made a couple of decisions on things that we thought were
49:59
going to be awesome. And then when the reality hit of
50:02
these types of workflow programs and so on that you need to rely
50:06
on at scale, they, they started breaking down, you know, at, at
50:10
at 10 or 20 units or something, or even 30.
50:12
You can remember 10, you know, you start getting into 20 and
50:16
30, it's another level. But when you're really talking
50:18
about at various stages of the life cycle from, you know, a
50:21
franchise inquiry through approvals and financing and real
50:26
estate and construction, construction and all these
50:27
things that are germane to US, training opening and all and so
50:30
on. For us, it's if you have 50 to
50:35
100 people in your pipeline at any given time that you need to
50:39
give superb tools and superb service to, it's a different
50:42
level. It's a different thing.
50:44
And so it's taken us a little bit longer, a lot longer than I
50:47
expected to be able to get it right.
50:49
But you know, I inherently knew you have to be disciplined
50:54
sometimes depending on where you are in your business life cycle
50:57
and what you have going on. Sometimes you have to go slow so
51:02
that you can go quickly because otherwise, man, you could have
51:04
big train wrecks really quickly. And you know, in a high growth
51:07
model like we have, oh, believe me, it amplifies every challenge
51:12
that you have to the 100th power, you know, and I've seen
51:16
this so many. Times the tools that the tech,
51:19
the staff, the infrastructure, the vendor relationships that
51:23
you had that got you from point A to point B aren't always going
51:27
to be the ones that get you from point B to Point C And I, I want
51:31
to talk about one of those vendor relationships in
51:33
particular. You've had the same bread vendor
51:37
for nearly 50 years, and as you started planning locations for
51:42
East Coast S SE, parts of the country, Virginia, Maryland,
51:46
Florida, Texas, you had to go back to that vendor and have a
51:50
conversation that some people might dread having.
51:53
Walk me through how that went. Yeah.
51:56
I, you know, it's kind of funny how it rolled out.
51:59
It, it wasn't really a dread conversation for me because
52:04
because we have vendor partners, they really are amazing
52:08
partners. And but something interesting
52:10
happened for us, you know that 50 years of bread relationship
52:13
on a handshake by the way, which is cool. the IT was a 7072 year
52:24
company family operated multi generational and they called a
52:28
meeting when the acquisition was happening.
52:31
They had called a meeting with us because we are a huge portion
52:34
of their percentage of their revenue in business and they
52:38
said we have something to tell you and we're thinking gosh, we
52:42
have something to tell you too. They were also being acquired
52:45
and so we're being acquired. Wow, so are we.
52:50
And it was the, The Bread Company was acquired by a
52:54
husband and wife team, Colin and Mary Beth Smith, who whom we've
52:58
all known for 20 years. They didn't come from the bread
53:01
industry, but they came from the culinary industry and so on.
53:04
And so it was kind of fun. And actually Colin is a Wildman
53:08
and he's like, I don't care what it takes, we're going to make
53:10
everything work. He's that guy, you know, super
53:13
high energy, you know, everybody loves him.
53:16
And so I think it was a really unique transition from, I mean,
53:20
the family was amazing, but just with the more avant-garde type
53:24
of attitude. And we're going to make anything
53:26
work and I'm here to grow and I acquired this to grow was really
53:29
a great time to have this level of transition.
53:32
And he said, hey, listen, I don't care if I have to buy my
53:34
own trucks. I'm going to make it work.
53:35
And we're going to partner on this together.
53:37
So it's been a great relationship.
53:39
Well, that's fantastic, so. You've been able to continue to
53:41
work with the same bread vendor even as you guys have expanded
53:45
into completely different geographies that couldn't have
53:47
been supported by just the original location yes and you
53:51
know and I. Think as we move forward, you
53:54
know, we end up either doing our own bake bakery or we'll
53:58
definitely end up with some regional bakeries because what
54:01
happens is you, you get caught up in the freight game and then
54:04
it cost your franchisees just because you have a location on
54:07
the West Coast. So I, I think over time we will
54:10
have a solution for the East Coast, but meanwhile we plan for
54:14
that. We put numbers to that and said,
54:16
no, we can make this work. It's going to be great.
54:18
And again, I, I know that that will evolve over time just
54:21
because it's more practical. You know, if you have a bakery
54:23
right there and your franchisees are right there, it's going to
54:26
be are less cost for them. So we'll, we'll put plans in
54:30
place for that because we all focus so much on the unit
54:32
economics and the profitability and that's a big component of
54:35
that. So, but that's a planned and
54:37
it's a measured thing that we have that will work with our our
54:41
bread vendor on doing that. And you know, just like any
54:44
relationship, it's all about communication and transparency.
54:48
I'm a very direct, straightforward, put it on the
54:50
table to sort of a person. I think it clarifies and makes
54:53
things easier. And that's really helped us
54:57
respectfully, of course. But when you have transparency
55:00
with your vendors and your team and, and the things that are
55:02
happening and your franchise network, you're going to be in a
55:05
better place. And if you're going to have
55:07
challenges, let's get them out of the way early on and and
55:10
remove them. I have to.
55:12
Fit this one in because we mentioned it in the intro and
55:15
it's just kind of fun to talk about.
55:16
South Area 15 Ventures has ties to military community, and that
55:21
has opened an unexpected door. Your first Navy base location is
55:25
going to be at Guantanamo Bay, Cuba.
55:27
What was your reaction when that opportunity first landed on your
55:30
desk? Yes.
55:32
I remember it vividly. So Dave Liniger, Air Force for
55:37
tours in Vietnam, Adam Kantos, Marine, previous SWAT commander,
55:42
Dan Predovich at law enforcement.
55:45
And we've got so many of our franchisees that were some of
55:48
them combat veterans and all of that.
55:50
And I'm just deeply patriotic, so I fit right in.
55:53
And so we go to the multi unit franchise conference in Las
55:58
Vegas in the spring, which is coming up for us now and the
56:00
Navy's there and we have port of Subs.
56:03
They have port of Subs. They get excited, they call a
56:06
meeting and I'm like, this is amazing.
56:09
They have 109 locations that they need sandwich shops and we
56:14
are a sandwich shop and our food's amazing.
56:16
And we also have a full line of prepackaged convenience foods
56:21
that we make fresh daily from our restaurants for some of our
56:23
non traditional units. So it ties right in with the
56:26
Navy base. In any event, we get we go out
56:30
to Norfolk, VA, to meet with them at their headquarters, and
56:34
they start expressing that they're excited about our brand.
56:37
They want to partner with us, but they have a challenge.
56:40
They've got a location that's a challenge for them, and it's
56:43
Guantanamo Bay. I said, holy moly.
56:45
OK, that's cool. All right, this is wild.
56:48
And I share this back with, you know, Dave and Adam.
56:52
And they smile so big and I go, why are you smiling?
56:57
They said, oh, yeah, like, do we really want to do this?
57:00
They are so I'm so excited about doing this and and anyway, it's
57:05
it, it, it was just very it's kind of it again, it's wild.
57:09
But I'll tell you beyond the fact that it's Guantanamo Bay,
57:15
what a true sincere honor to be able to service the men and
57:19
women of our military. And I'm like, we're going to
57:22
fuel them up. And especially, you know, times
57:24
are a little bit interesting right now across the globe, but
57:29
to have the opportunity to serve our servicemen and women is
57:33
really something special. And it's a real honor.
57:35
And we just cannot wait to get out there.
57:38
As a matter of fact, we're going to be opening up toward the end
57:41
of July, beginning of August. So we're just right around.
57:43
This is right around the corner. We're recording.
57:45
Here in March of 26th, so just a few months away.
57:48
And the way you're talking, it sounds like you're hoping this
57:50
will be the first of many port of Subs at naval bases around
57:55
the world. Yes, indeed.
57:56
And. For us, it's kind of really
57:59
amazing because of our regional developer program and many of
58:04
which let's see, a third of our regional developers are veterans
58:08
and particularly those we've got 2 regional developers.
58:11
We've got them near our naval bases.
58:13
And So what a nice tie in to have veteran regional
58:16
developers, veteran franchisees that can be part of those
58:20
communities and part of those bases as we grow.
58:22
So yes, we, we're focused on creating, continuing the
58:27
partnership and being on, on the other bases.
58:30
And then of course, some of them are mixed bases as well.
58:34
And you know, Dave and Adam and everybody going, oh, then we can
58:37
move do Air Force and Army. And I'm like, how about if we
58:40
start 1 branch 1st and then we can talk about those things.
58:43
We need to master that and then we can then we'll be able to do
58:46
that. But we're all very excited and
58:48
it creates a lot of buzz for the whole team.
58:50
And they said, this one's really hard.
58:52
I said yes. That's what makes it so
58:54
meaningful when you're successful.
58:55
Then the rest of them, I said the rest of them on
58:57
domestically. That's going to be easy.
59:00
It's hard, and we can do hard. Things.
59:02
It's advice I give to my kids all the time.
59:04
That's great advice. I love that.
59:06
I'm I'm putting that in my quiver too.
59:08
Healey, I've just got. One more question for you today,
59:11
but before I ask it, I want to do 3 quick things for the
59:13
audience. First of all, anybody who wants
59:15
to get in touch with Healey directly, she's given us
59:18
permission to give out her e-mail address.
59:20
It's Healey. And I'm going to spell that, but
59:22
Healey at portofsubs.com. Healey is HEALEYHELHEALEY at
59:30
portofsubs.com. healey@portofsubs.com.
59:35
And don't worry, folks, that'll be in the show notes and then
59:38
anybody who's interested either in the brand as a customer or
59:41
the regional developer model that we've spoken about at
59:43
greatlengthportofsubs.com, really easy go there.
59:47
There's lots of information, lots of opportunities to contact
59:49
folks there. And if you're enjoying our show
59:52
today, please take just a moment to subscribe wherever you're
59:54
listening. It sends a signal that helps
59:57
others discover our show as well.
59:59
So thank you for taking a quick moment to do that right now.
1:00:02
And as a reminder, you can get your QSR employees access to
1:00:05
therapists, doctors, and prescription meds that, as
1:00:08
paradoxical as it seems, actually increases your
1:00:11
company's net profits, real gains that can change how a
1:00:14
business is valued. So contact us today at AD back
1:00:16
benefits.com. And one more time since I
1:00:19
butchered her e-mail address once.
1:00:21
Healey@portofsubs.com. Healey at portofsubs.com.
1:00:26
So last question for you Healey, a year from now, what is 1 very
1:00:29
specific thing that you hope to be celebrating?
1:00:33
Well, I hope to be celebrating successful launches in our new
1:00:37
markets where people can thrive and we can create opportunities
1:00:42
across the country to be part of those communities in a very
1:00:46
successful national way while still maintaining the soul of
1:00:49
our organization. And I really, we will be
1:00:53
celebrating our 150th location and beyond a year from now while
1:01:01
providing those opportunities to so many.
1:01:04
I love it Healy. Mendocino from Port of Subs, I
1:01:07
want to be the first to thank you for sharing both your time
1:01:10
and your story with us today. I really appreciate you being
1:01:12
here. I love being with.
1:01:14
You thank you for having me. Thank you so much, folks.
1:01:17
That's a wrap on another. Episode of the Inspired Stories
1:01:19
podcast. Thanks for learning with us.
1:01:21
And if one thing stood out, put that into action today.