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Freddy’s Franchisee Focus Boosts Net Unit Growth · Choppin’ It Up by Bloomberg Intelligence

• 0:21
  Speaker 1: Welcome to Chopping It Up. I'm your host, Michael Halen,
• 0:24
  Speaker 1: Senior restaurant and food service analyst at Bloomberg Intelligence. Today
• 0:29
  Speaker 1: we're joined by Chris Duhl. He's the CEO of Freddie's
• 0:31
  Speaker 1: Frozen Custard and State Burgers. Thanks for doing this, Chris.
• 0:35
  Speaker 2: Hey, Thanks Mike. It's a pleasure to be here and
• 0:38
  Speaker 2: it's an honor that you would have us on your show.
• 0:41
  Speaker 1: A sure thing, man, Why don't you kick us off
• 0:44
  Speaker 1: with some history about Freddy's. You know, I'm in a
• 0:46
  Speaker 1: business that's that's New York based, and from what I understand,
• 0:50
  Speaker 1: there's a couple of Freddie's in New Jersey. I don't
• 0:53
  Speaker 1: know how many are in New York, so, you know,
• 0:56
  Speaker 1: maybe not all of our listeners are familiar. So if
• 0:58
  Speaker 1: you can give us some history, talk about the service
• 1:01
  Speaker 1: model and the menu, that would be great.
• 1:03
  Speaker 3: Sure.
• 1:03
  Speaker 2: So, Freddie's is a brand business that's been around since
• 1:07
  Speaker 2: two thousand and two, was founded in Wichita, Kansas, celebrating
• 1:12
  Speaker 2: our twenty first birth rate this year. With currently four
• 1:16
  Speaker 2: hundred and eighty three units open and operating around the
• 1:19
  Speaker 2: United States. We're not necessarily a regional brand because we
• 1:24
  Speaker 2: do have units that span from New Jersey all the
• 1:27
  Speaker 2: way to California, soon to open restaurants in Canada, and
• 1:32
  Speaker 2: you know, saturate the southern half of the United States.
• 1:36
  Speaker 2: But we do have a very strong presence through right
• 1:38
  Speaker 2: through the middle of the country. And we are a
• 1:42
  Speaker 2: standalone drive through custard burger and fry concept. We make
• 1:49
  Speaker 2: all of our food from scratch, so.
• 1:52
  Speaker 3: We are our.
• 1:53
  Speaker 2: Food is fresh, our guests are able to order. They're
• 1:57
  Speaker 2: not getting anything that's been sitting in a heating sure,
• 2:00
  Speaker 2: anything of that nature. It's made on site and to
• 2:04
  Speaker 2: order for each one of our guests. And we take
• 2:06
  Speaker 2: a tremendous amount of pride in offering genuine hospitality. We
• 2:11
  Speaker 2: are a very friendly group and love having folks in
• 2:13
  Speaker 2: our restaurants. And we also operate in a very clean environment.
• 2:18
  Speaker 2: We believe very strongly having a great, clean, family friendly
• 2:24
  Speaker 2: environment for folks to come and enjoy a great, fresh
• 2:27
  Speaker 2: made meal at Freddy's.
• 2:28
  Speaker 3: Yeah.
• 2:29
  Speaker 1: A lot of times it's about doing you know, those
• 2:31
  Speaker 1: core important things and doing them well right.
• 2:34
  Speaker 2: Yeah, And as New Jersey goes, we just opened our
• 2:37
  Speaker 2: second location out there in Tom's River, So we're coming,
• 2:41
  Speaker 2: We're coming.
• 2:42
  Speaker 3: It's just a matter of time for long we'll be
• 2:43
  Speaker 3: in the city.
• 2:44
  Speaker 1: Okay, very cool. Yeah, I have to get next time
• 2:47
  Speaker 1: I'm at the Jersey Shore, I have to get down
• 2:49
  Speaker 1: to the Toms River location. Can you discuss your career
• 2:53
  Speaker 1: path a little bit and what attracted you to Freddy's.
• 2:56
  Speaker 3: Sure.
• 2:56
  Speaker 2: I've been in the food franchising business now for close
• 3:00
  Speaker 2: to twenty seven years, and I started in restaurant. I
• 3:05
  Speaker 2: started scooping ice cream at a marble slab creamer in Houston, Texas, So,
• 3:09
  Speaker 2: you know, I got to learn, you know, how how
• 3:13
  Speaker 2: life is. A platform level store level employee was and
• 3:16
  Speaker 2: worked by way through corporate there and became the CEO
• 3:21
  Speaker 2: of a company called Global Franchise Group out of Atlanta.
• 3:24
  Speaker 2: I helped build that organization through acquiring multiple brands, and
• 3:30
  Speaker 2: I served as the CEO of that company for fourteen
• 3:32
  Speaker 2: years and then.
• 3:33
  Speaker 3: I took a short hiatus.
• 3:35
  Speaker 2: Fortunately for me, it was right about the time that
• 3:37
  Speaker 2: COVID was happening, so it was pretty good timing. And
• 3:41
  Speaker 2: in my career, I've I've got I've had the pleasure
• 3:45
  Speaker 2: to get to know a lot of private equity firms
• 3:47
  Speaker 2: and I was working with several groups on various acquisition
• 3:51
  Speaker 2: targets and Freddie's was in the midst of a process
• 3:56
  Speaker 2: with Thompson Street Capital Partners out of Saint Louis, Missouri,
• 3:59
  Speaker 2: and they asked me.
• 4:00
  Speaker 3: To come along as an advisor.
• 4:02
  Speaker 2: And you know, I knew Freddie's like a lot of
• 4:05
  Speaker 2: folks I had. You know, I had knew Freddie's. I
• 4:07
  Speaker 2: had heard of Freddie's, but it wasn't in my you know,
• 4:10
  Speaker 2: daily routine, especially being a Georgia guy where we didn't
• 4:15
  Speaker 2: have any locations in the heart of Atlanta at that time.
• 4:18
  Speaker 2: But very quickly I fell in love with the concept.
• 4:21
  Speaker 2: And I think the thing that really stood out to
• 4:24
  Speaker 2: me early on was the strength of the franchisees of Freddie's.
• 4:27
  Speaker 2: While while we do operate thirty three company owned restaurants,
• 4:30
  Speaker 2: the bulk of our system or franchise down and the
• 4:34
  Speaker 2: Freddie's franchises were the most collaborative, smart, professional group of
• 4:40
  Speaker 2: franchisees I'd ever been around, and I wanted to be
• 4:43
  Speaker 2: a part of it. And so when the opportunity came
• 4:47
  Speaker 2: post acquisition for me to step in as a CEO,
• 4:50
  Speaker 2: I jumped at it. And it's been a great two
• 4:54
  Speaker 2: and a half years.
• 4:54
  Speaker 1: Oh that's awesome. Man, what percentage of the store basis franchise?
• 4:59
  Speaker 3: Right?
• 5:00
  Speaker 2: So now it's about ninety four percent franchise, six percent
• 5:03
  Speaker 2: company owned. And we do develop one to two company
• 5:07
  Speaker 2: owned restaurants a year, but this year we will open
• 5:10
  Speaker 2: you know, right around sixty total restaurants. To date, we've
• 5:13
  Speaker 2: opened twenty seven and only one of the twenty seven
• 5:16
  Speaker 2: has been a company owned restaurant.
• 5:18
  Speaker 1: Okay, well, that's good. It's at least enough to show
• 5:21
  Speaker 1: that the franchisees that you have skin in the game, right.
• 5:24
  Speaker 2: Yeah, And I think it gives us a great platform
• 5:27
  Speaker 2: to test and try things and not put a franchisease
• 5:31
  Speaker 2: investment at risk. You know, earlier this year, we opened
• 5:34
  Speaker 2: our new prototype, which was an unproven operating structure. It's
• 5:40
  Speaker 2: kind of like having a new race car, and we
• 5:43
  Speaker 2: went in and we've driven it for a while and
• 5:46
  Speaker 2: we've tweaked some things, and we've got it to where
• 5:48
  Speaker 2: we really love it, and now it's starting to roll
• 5:51
  Speaker 2: out through system. But being in the in the public
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  Speaker 2: I'm sorry, being in the company owned restaurant game gave
• 5:58
  Speaker 2: us the opportunity to take on that risk and to
• 6:01
  Speaker 2: try things out on our own dime.
• 6:03
  Speaker 1: Okay, cool, and about how many franchisees do you have
• 6:06
  Speaker 1: in the system? Opening source?
• 6:08
  Speaker 2: So we have sixty eight total operating groups across the
• 6:11
  Speaker 2: four hundred and eighty three restaurants. But I think one
• 6:14
  Speaker 2: of the things that makes us super unique is over
• 6:18
  Speaker 2: eighty percent of those groups are currently developing another restaurant
• 6:22
  Speaker 2: right now. So you know, our folks are very aggressive developers.
• 6:27
  Speaker 2: They love Freddy's, they love the investment, and they continue
• 6:32
  Speaker 2: to build and open new restaurants with us, and we're
• 6:35
  Speaker 2: super fortunate to have them.
• 6:37
  Speaker 1: Okay, cool, And out of those restaurants that you expect
• 6:39
  Speaker 1: to open the second half this year and next year,
• 6:43
  Speaker 1: what percentage of those are coming from the existing seventy
• 6:46
  Speaker 1: sixty eight operating groups and what percentage of those builds
• 6:50
  Speaker 1: are coming from new people to the Freddy system.
• 6:53
  Speaker 2: Yeah, this year, of our sixty ish openings, twenty three
• 6:57
  Speaker 2: of them will be opened by groups that have zero
• 7:02
  Speaker 2: to one restaurant. So we do have and on the
• 7:05
  Speaker 2: heels of the transaction to private equity years ago, we
• 7:10
  Speaker 2: really did, you know, light the fires on the development
• 7:12
  Speaker 2: front and started to bring in some new developers and
• 7:16
  Speaker 2: we're starting to see those folks open restaurants one in
• 7:18
  Speaker 2: restaurants two now, So it's exciting for us. But I
• 7:23
  Speaker 2: would say, you know, the split is not quite fifty
• 7:26
  Speaker 2: to fifty yet on new to existing it's probably you know,
• 7:29
  Speaker 2: closer to sixty forty somewhere in that range.
• 7:32
  Speaker 1: Okay, cool, Yeah, but it shows, you know, when you
• 7:35
  Speaker 1: have more more of the development coming from existing franchisees
• 7:40
  Speaker 1: typically is a sign that the franchises are happy. So
• 7:44
  Speaker 1: if you could talk a little bit about the unit economics,
• 7:47
  Speaker 1: you know, the size of the units, how much they
• 7:49
  Speaker 1: cost to build, and you know any other numbers that
• 7:53
  Speaker 1: you'd like to share.
• 7:54
  Speaker 2: Yeah, the typical Freddy's today is about three thousand square feet.
• 7:57
  Speaker 2: Our new prototypes are slightly smaller than that at twenty
• 8:00
  Speaker 2: eight hundred and twenty four hundred square feet. The total
• 8:04
  Speaker 2: cost to build a restaurant, not including the investment in
• 8:07
  Speaker 2: dirt or site work, is roughly one point six million dollars. Today,
• 8:14
  Speaker 2: our average unit volume is right at two million. And
• 8:17
  Speaker 2: in our company owned restaurants where we have you know,
• 8:21
  Speaker 2: full visibility to our p and ls, we operate in
• 8:24
  Speaker 2: the high teens from a ebidah margin four wall ebidah margin.
• 8:31
  Speaker 2: You know, a lot of our franchises actually acquire their land,
• 8:35
  Speaker 2: build their buildings and own the dirt and building and
• 8:40
  Speaker 2: operate in what we refer to as an ebadar environment
• 8:43
  Speaker 2: because they're paying themselves rent. And you know, I think
• 8:48
  Speaker 2: that while that can take a little bit more time
• 8:52
  Speaker 2: to get restaurants open when you're dealing with purchasing land
• 8:55
  Speaker 2: and site work yourself and all of that, we love
• 8:58
  Speaker 2: that it gives our franchisees the ability to create real wealth,
• 9:02
  Speaker 2: not just cash flow business, but actually have an asset
• 9:06
  Speaker 2: that's worth quite a bit. And you know, when you
• 9:10
  Speaker 2: look at the bulk of our developers, that's that's the
• 9:12
  Speaker 2: route that they are going.
• 9:14
  Speaker 1: Cool. So I think you touched on it a little
• 9:16
  Speaker 1: bit at the top. But where are you strong geographically
• 9:20
  Speaker 1: and and what areas of the country are you most
• 9:22
  Speaker 1: focused on developing right now?
• 9:24
  Speaker 3: Sure?
• 9:25
  Speaker 2: Well, when you look at absolute strength, the Midwest is
• 9:29
  Speaker 2: a is a is a is a huge market for us,
• 9:32
  Speaker 2: right up the middle of the United States, you know,
• 9:34
  Speaker 2: going from Texas, Arkansas, Oklahoma, Colorado, New Mexico all the
• 9:39
  Speaker 2: way up to uh Michigan and everything in between. We
• 9:45
  Speaker 2: do have you know, a significant number of units in
• 9:48
  Speaker 2: the southeast. We have growing very strong market in Arizona
• 9:53
  Speaker 2: and growing quickly in Nevada. Just recently awarded an eight
• 9:57
  Speaker 2: unit development agreement in La County Callfornia. Currently operate three
• 10:02
  Speaker 2: units out there, but we'll be adding a meaningful growth
• 10:05
  Speaker 2: in California this year. We have a unit that's opening
• 10:08
  Speaker 2: in Barstow here in the next couple weeks, and we
• 10:12
  Speaker 2: do have a lot of focus on the Eastern and
• 10:14
  Speaker 2: Northeast for our concept. We believe very strongly that we
• 10:18
  Speaker 2: can be great in the northeast. We feel like there's
• 10:22
  Speaker 2: a void of really that better Burger, and so we
• 10:27
  Speaker 2: are working hard to secure some strong developers up in
• 10:30
  Speaker 2: the northeast.
• 10:31
  Speaker 1: Very cool. Are you and your franchisees having any issues
• 10:34
  Speaker 1: finding quality real estate for twenty twenty four and beyond.
• 10:38
  Speaker 2: You know, our real estate pipeline is pretty robust, and
• 10:41
  Speaker 2: we like to see somewhere around, you know, fifteen or
• 10:46
  Speaker 2: twenty sites of middles every period, and that doesn't mean
• 10:50
  Speaker 2: that all of those get approved, but it's a good
• 10:53
  Speaker 2: flow for us. And that's kind of where we've been
• 10:56
  Speaker 2: coming through COVID. There were some periods where it was
• 10:59
  Speaker 2: a little light, but on the backside of that, we've
• 11:03
  Speaker 2: we've seen strong flow of sites and where Freddie's operates
• 11:06
  Speaker 2: is a is an interesting demographic. You know, you won't
• 11:10
  Speaker 2: typically find Freddie's right in the heart of major metro
• 11:14
  Speaker 2: and you won't find Freddie's in the super small towns
• 11:17
  Speaker 2: where you might only find a dairy queen. But somewhere
• 11:20
  Speaker 2: in between there is where we like to be. We
• 11:23
  Speaker 2: also liked I call it the edge of suburbia. You know,
• 11:28
  Speaker 2: we love millennials, We love the family, the millennial families
• 11:34
  Speaker 2: that you know are growing and they love Freddie's and
• 11:37
  Speaker 2: we like to be convenient for those folks. And in
• 11:40
  Speaker 2: that environment there seems to be quite a bit of
• 11:42
  Speaker 2: available dirt.
• 11:43
  Speaker 1: Okay, that's great. You know when we spoke previously, you
• 11:49
  Speaker 1: know what really stood out to me and about our
• 11:53
  Speaker 1: discussion was when we really got into the franchise ease,
• 11:57
  Speaker 1: and you know, you said some things that were reminiscent
• 12:02
  Speaker 1: to me of Cheryl Batchelder and Popeyes and her dedication
• 12:06
  Speaker 1: for really helping the franchisees grow their p and l
• 12:09
  Speaker 1: not just the top line. So if you could talk
• 12:13
  Speaker 1: a little bit about how you're helping your franchisees booster profitability,
• 12:17
  Speaker 1: I think that would be great.
• 12:18
  Speaker 3: Absolutely.
• 12:19
  Speaker 2: So you know, unit level economic and profitability is at
• 12:24
  Speaker 2: the very top of importance at Freddie's. We are highly
• 12:27
  Speaker 2: focused on our franchisees and their return on investment. And
• 12:33
  Speaker 2: you know, just recently we went from going from an
• 12:37
  Speaker 2: annual p and L template to.
• 12:40
  Speaker 3: Receiving those p and ls quarterly.
• 12:43
  Speaker 2: And not only do we receive full p and L quarterly,
• 12:47
  Speaker 2: but we also have a team of field business coaches
• 12:51
  Speaker 2: that work with our franchisees to measure their profitability against
• 12:56
  Speaker 2: the system and our expectations. And also we have a
• 13:00
  Speaker 2: great list of KPIs that help us see where there's
• 13:05
  Speaker 2: opportunity to drive more bottom line in each of our restaurants.
• 13:09
  Speaker 2: And so we have a great bi tool that we
• 13:12
  Speaker 2: use that populates the data for us and for our franchises,
• 13:17
  Speaker 2: and then we meet with our franchises on a regular
• 13:20
  Speaker 2: basis and walk through. In many cases it's period by period.
• 13:25
  Speaker 2: You know, here you are on a KPI basis, here's
• 13:28
  Speaker 2: where you're deficient, Here's where there's some opportunity for you
• 13:32
  Speaker 2: to make improvement, and here's a look at your peer
• 13:35
  Speaker 2: group as to where they're at. And and you know,
• 13:38
  Speaker 2: if we need to call them to understand how they're
• 13:41
  Speaker 2: achieving these higher levels. Let's do that because at the
• 13:44
  Speaker 2: end of the day, there's nothing more important than the profitability.
• 13:47
  Speaker 2: And I think you know, also as we look at
• 13:51
  Speaker 2: product development and limited time offerings and all things that affect,
• 13:56
  Speaker 2: you know, the top line and sail through, we're in
• 13:59
  Speaker 2: a constant state of pushing products forward that have greater
• 14:03
  Speaker 2: bottom line contribution than the products that they might potentially cannibalize.
• 14:09
  Speaker 2: And so if we're going to sell something, we're going
• 14:11
  Speaker 2: to sell it understanding that our guest loves it and
• 14:13
  Speaker 2: wants it, but also that it's a product that generates
• 14:17
  Speaker 2: a greater bottom line for our franchise community. So we
• 14:21
  Speaker 2: are hyper focused on profitability and it is as important,
• 14:27
  Speaker 2: if not, I'll just say it's as important as anything
• 14:30
  Speaker 2: else in the restaurant. Cleanliness, quality, hospitality, all of that's paramount,
• 14:35
  Speaker 2: but nothing trumps profitability for our franchisees.
• 14:40
  Speaker 1: Yeah, that's fantastic, And i'd imagine that that stack ranking
• 14:45
  Speaker 1: of your franchisees kind of creates some competitive fire with them.
• 14:50
  Speaker 1: You know, from what everything I've heard and the people
• 14:53
  Speaker 1: I've met, the franchisees can be a pretty competitive group.
• 14:56
  Speaker 3: Absolutely.
• 14:57
  Speaker 2: You know, they those folks want to win, and they
• 15:02
  Speaker 2: take a tremendous amount of pride in their operations. And
• 15:04
  Speaker 2: so when you're able to say, hey, you know, you're
• 15:06
  Speaker 2: doing great, however, you know you're you're you're three percent behind.
• 15:12
  Speaker 2: You know these folks over here, and here's where it's
• 15:16
  Speaker 2: coming from. You can you can generate some pretty immediate
• 15:20
  Speaker 2: action on on those opportunities.
• 15:24
  Speaker 3: And so it's exciting. It's exciting.
• 15:26
  Speaker 2: And our franchisees are all close. You know, Freddy's is
• 15:29
  Speaker 2: very familial, and and so there's a lot of banter
• 15:33
  Speaker 2: between the groups.
• 15:34
  Speaker 3: And who's gonna who's gonna win, who's going to be
• 15:36
  Speaker 3: at the top.
• 15:38
  Speaker 1: That's good stuff, man. Yeah, and I love your dedication
• 15:41
  Speaker 1: to the franchisees. I mean my mentor you know, we
• 15:43
  Speaker 1: are talking about the stock business, but it definitely holds
• 15:46
  Speaker 1: true here as well. You know, he always said money,
• 15:49
  Speaker 1: money flows to where it's treated best, right, And so
• 15:52
  Speaker 1: when you have a lot of operators, you know a
• 15:54
  Speaker 1: lot of operators that are building different brands underneath their umbrella,
• 15:59
  Speaker 1: you know, they what they want.
• 16:00
  Speaker 2: To Yeah, and I think it's important to point out
• 16:02
  Speaker 2: that Freddie's was you know, The founders of our company
• 16:05
  Speaker 2: were franchisees, and so they came into this business understanding,
• 16:10
  Speaker 2: you know, the challenges that you can have in a
• 16:12
  Speaker 2: franchise e, franchise or relationship. Even when you look at
• 16:15
  Speaker 2: our pricing structure, you know, Freddie's charges a four and
• 16:18
  Speaker 2: a half percent royalty, and even though we have a
• 16:21
  Speaker 2: three percent ad fund, we only collect a percent and
• 16:24
  Speaker 2: a half of that today because we don't we feel
• 16:26
  Speaker 2: like those dollars, the remainder of those dollars today are
• 16:30
  Speaker 2: best in the hands of our franchise partners. And so,
• 16:33
  Speaker 2: you know, we try to create an environment all the
• 16:35
  Speaker 2: way through the business where we're setting our franchisees up
• 16:39
  Speaker 2: to be successful and profitable, and at the end of
• 16:41
  Speaker 2: the day, if they are, they're going to grow. And
• 16:44
  Speaker 2: while we're sitting here opening sixty restaurants this year and
• 16:47
  Speaker 2: probably close to eighty next year and one hundred the
• 16:50
  Speaker 2: year after that, I think that the proof is in
• 16:52
  Speaker 2: the pudding.
• 16:54
  Speaker 1: Yeah, it took the words out of my mouth, man.
• 16:56
  Speaker 1: It It explains why you're able to grow at such
• 16:58
  Speaker 1: a rapid clip. That's oppressive. What do you doing have
• 17:02
  Speaker 1: Freddy's to attract some of the younger demographic cohorts like
• 17:05
  Speaker 1: gen Zs, the gen Zs of the world.
• 17:08
  Speaker 2: Yeah, you know, I think it's a great group there.
• 17:11
  Speaker 2: You know, gen Z is such a super smart, digitally
• 17:16
  Speaker 2: savvy group.
• 17:19
  Speaker 3: They're there.
• 17:21
  Speaker 2: We get the feeling that that's a group that really
• 17:23
  Speaker 2: loves the ability to, you know, make things their own.
• 17:27
  Speaker 2: They like to customize things they like. They like a
• 17:32
  Speaker 2: menu that's flexible that way, and so at Freddy's, everything
• 17:34
  Speaker 2: that we do, from our custard to our burgers, you
• 17:38
  Speaker 2: can make it your way. And we have tons of
• 17:41
  Speaker 2: great sauces and condiments that you can add to any
• 17:45
  Speaker 2: build to make make it special, make it yours. And
• 17:48
  Speaker 2: I know that that's definitely important to our our gen
• 17:51
  Speaker 2: Z guest. Also, when you look at you know, speed
• 17:56
  Speaker 2: and convenience, this is a fast paced group.
• 17:59
  Speaker 3: They're on the move.
• 18:01
  Speaker 2: They may not want to, you know, spend nine minutes
• 18:05
  Speaker 2: in a drive through line waiting for something, or you know,
• 18:08
  Speaker 2: ten minutes in the dining area waiting for a meal,
• 18:10
  Speaker 2: and so we focus heavily on being fast, and we
• 18:14
  Speaker 2: like to call it Freddy's Fast. It's made to order,
• 18:17
  Speaker 2: but it's fast, and we think that that's important to
• 18:21
  Speaker 2: our gen Z giest, you know, and then the restaurants,
• 18:24
  Speaker 2: you know, you've got to have a fun atmosphere or
• 18:27
  Speaker 2: something that they feel connected to. Gen Z loves to
• 18:30
  Speaker 2: to talk about what they're doing and put it out
• 18:32
  Speaker 2: there in social media, and so making sure that you
• 18:35
  Speaker 2: have spots in your restaurant that are friendly for photo
• 18:39
  Speaker 2: ops and and gathering and creating content. We make sure
• 18:44
  Speaker 2: that we're cognizant of that. And I would say that
• 18:47
  Speaker 2: the development.
• 18:48
  Speaker 3: Of our app.
• 18:49
  Speaker 2: You know, last year we launched a brand new app
• 18:51
  Speaker 2: that really puts us in the game digitally and and
• 18:55
  Speaker 2: is a great you know, medium for ordering, but it's
• 18:59
  Speaker 2: also a wonderful loyalty place where you can receive some
• 19:03
  Speaker 2: great awards for rewards for being a loyal fred Head
• 19:07
  Speaker 2: as we like to say. And so, you know, I
• 19:11
  Speaker 2: think that you've got to be digitally sound, you got
• 19:13
  Speaker 2: to have a great place that makes them feel connected,
• 19:16
  Speaker 2: and you've got to you've got to offer that customized
• 19:19
  Speaker 2: net meal opportunity.
• 19:21
  Speaker 3: Awesome.
• 19:22
  Speaker 1: Yeah, So we have gen Z to thank for those
• 19:26
  Speaker 1: what's it called the Ivy covered walls or fake Ivy
• 19:29
  Speaker 1: covered walls with the Neon signs on it, right.
• 19:32
  Speaker 2: Right, right, Well, and Freddie's. But luckily, part of our
• 19:36
  Speaker 2: interior to core has always been a super bright Freddie's
• 19:39
  Speaker 2: Neon sign. And when you go out there in the
• 19:43
  Speaker 2: world of social media, it's in a lot of backgrounds,
• 19:46
  Speaker 2: and so we'll take it.
• 19:47
  Speaker 3: We love it and and it works.
• 19:49
  Speaker 1: That's perfect, very cool. How's the pandemic change your business,
• 19:54
  Speaker 1: both inside the restaurants and where and the locations where
• 19:57
  Speaker 1: you're opening them?
• 19:58
  Speaker 2: Sure, I would say the the biggest change that we
• 20:01
  Speaker 2: saw through COVID was really a shift from our dining
• 20:05
  Speaker 2: rooms to our drive throughs now. Our loyal Freddy's guest
• 20:11
  Speaker 2: has been a dine in guest since the inception of
• 20:16
  Speaker 2: the concept, and we are very much fast casual, you know,
• 20:20
  Speaker 2: order at the counter, have a seat, and we'll call
• 20:22
  Speaker 2: it or bring it to you. And pre pandemic, we
• 20:26
  Speaker 2: were seeing levels of about sixty five percent of our
• 20:28
  Speaker 2: guests dining in the restaurant and only you know, call
• 20:31
  Speaker 2: it thirty percent through drive through. Folks preferred to come
• 20:34
  Speaker 2: into Freddie's and through pandemic, they were forced to drive
• 20:37
  Speaker 2: because the dining rooms were closed. And what they discovered
• 20:42
  Speaker 2: is that we are also hospitable in our drive through
• 20:45
  Speaker 2: and we are fast.
• 20:47
  Speaker 3: We you know, the style at which.
• 20:48
  Speaker 2: We press our burgers, we our patties are cooked quickly,
• 20:52
  Speaker 2: and so we can create a meal in you know,
• 20:55
  Speaker 2: less than five minutes, four and a half minutes on
• 20:58
  Speaker 2: average in some cases, you know, at four or lower,
• 21:02
  Speaker 2: which is right up there with fast food, and you're
• 21:04
  Speaker 2: getting a made to order product that's super fast. And
• 21:07
  Speaker 2: so coming out of pandemic, you know, we went to
• 21:10
  Speaker 2: you know, one hundred percent drive through at one point,
• 21:12
  Speaker 2: and now the business has really settled around you know,
• 21:15
  Speaker 2: forty eight forty nine percent drive Wow, so we kind
• 21:18
  Speaker 2: of move it is. It's quite a bit up and
• 21:21
  Speaker 2: we've seen our you know, dining rooms fill back up
• 21:24
  Speaker 2: and so you know, the dining room has come back.
• 21:28
  Speaker 2: The drive through has been mostly incremental and so, you know,
• 21:32
  Speaker 2: pre pandemic, this was a concept that had an average
• 21:35
  Speaker 2: unit volume of a million six and post pandemic two million,
• 21:40
  Speaker 2: and so we you know, we we feel like COVID
• 21:43
  Speaker 2: did a great job of highlighting to our guests that
• 21:46
  Speaker 2: our drive through is a great place to go as well.
• 21:49
  Speaker 1: Very cool. Do you have any initiatives in place now
• 21:51
  Speaker 1: to to you know, continue to improve on that speed
• 21:54
  Speaker 1: of service?
• 21:55
  Speaker 3: Absolutely.
• 21:57
  Speaker 2: You know, we have recently made several line improvements in
• 22:02
  Speaker 2: our kitchen, in our prototype, which starts with a grill
• 22:06
  Speaker 2: that we refer to as an accelerate, which is a
• 22:09
  Speaker 2: clamp or or press grill, and it is a much
• 22:15
  Speaker 2: more simple operation than hand pressing each one of the patties.
• 22:19
  Speaker 2: It's also significantly less labor intensive. And that was grill
• 22:23
  Speaker 2: was a position where you know, you had to you
• 22:25
  Speaker 2: had to go out and recruit a pretty specific individual
• 22:29
  Speaker 2: to press patties. And under the new design, you you
• 22:33
  Speaker 2: descal that and so and also you know, there's a
• 22:37
  Speaker 2: certain level of training that's not as critical because the
• 22:40
  Speaker 2: press is doing doing the work for you. And so
• 22:45
  Speaker 2: the grill press has been a huge addition. It also
• 22:47
  Speaker 2: shaves about thirty five seconds of cook time out of
• 22:50
  Speaker 2: each one of the burgers because it's cooking top and
• 22:52
  Speaker 2: bottom at the same time, and we end up with
• 22:55
  Speaker 2: a better, more consistent product that I think you know
• 22:59
  Speaker 2: has a has a wonderful When you bite into a
• 23:01
  Speaker 2: Freddy's burger, we want the center of that patty to
• 23:03
  Speaker 2: steam because it's hot, and the grill press does a
• 23:06
  Speaker 2: nice job of ensuring that. Also, we've made improvements in
• 23:10
  Speaker 2: our Make station, we've gone to a more simplified pictogram
• 23:15
  Speaker 2: make versus a written ticket, which gives our folks that
• 23:18
  Speaker 2: make the ability to see what they're building versus read
• 23:21
  Speaker 2: what they're building.
• 23:23
  Speaker 3: That has improved speed at Make.
• 23:25
  Speaker 2: And then we implemented the same technology in our bagging station,
• 23:29
  Speaker 2: where instead of looking at a list of things that
• 23:31
  Speaker 2: belong in the bag, we show you a pictogram of
• 23:34
  Speaker 2: what goes in the bag and in what order. That way,
• 23:37
  Speaker 2: we're ensuring that our guests are getting what they ordered
• 23:40
  Speaker 2: in the bag. It's improving our accuracy and again it
• 23:44
  Speaker 2: makes it faster and easier to register with that employee.
• 23:51
  Speaker 2: And so, you know, all the way through the line,
• 23:53
  Speaker 2: we've looked at how we can be faster and how
• 23:55
  Speaker 2: we can descal each one of the positions to make
• 23:59
  Speaker 2: it it'll be easier for our staff to jump in
• 24:03
  Speaker 2: there and and and be proficient from day one.
• 24:07
  Speaker 1: That's awesome, And you mentioned the app. Do you have
• 24:11
  Speaker 1: any other you know? And obviously all these equipment upgrades,
• 24:14
  Speaker 1: are there any other tech initiatives that you'd like the
• 24:17
  Speaker 1: listeners to know about.
• 24:18
  Speaker 2: Well, there's all kinds of great stuff out there, you know.
• 24:20
  Speaker 2: Yesterday I was reading a proposal from a group that's
• 24:24
  Speaker 2: a drone delivery concept and you've seen some of that
• 24:28
  Speaker 2: out there and and we actually participated in a beta
• 24:32
  Speaker 2: test years ago, probably two years ago, and that was
• 24:34
  Speaker 2: super cool. And so there's some more of that coming.
• 24:38
  Speaker 2: AI is something that we stay very close to. We
• 24:41
  Speaker 2: like AI and Drive through we haven't seen at work
• 24:46
  Speaker 2: as well as we really wanted to before we consider
• 24:50
  Speaker 2: adopting it. So we look at technology. For us, it's
• 24:55
  Speaker 2: it's about how can we be more efficient without jeopardizing
• 25:01
  Speaker 2: the hospitality that we provide our guests and also without
• 25:05
  Speaker 2: at all having an impact on our product in a
• 25:09
  Speaker 2: negative way. So as long as as it it kind
• 25:13
  Speaker 2: of clears those two bars, then it's something that we'll consider.
• 25:16
  Speaker 2: And so AI and Drive is a voice over a
• 25:19
  Speaker 2: loud speaker, and so if we can get a friendly
• 25:23
  Speaker 2: voice that is accurate, that's something that we would consider
• 25:26
  Speaker 2: for sure.
• 25:26
  Speaker 1: Very cool. All right, I think we're going to wrap
• 25:29
  Speaker 1: it up there. It's time for me to go eat something.
• 25:31
  Speaker 1: When you're talking about the center of the burger steam
• 25:33
  Speaker 1: and you're making me hungry, man, I haven't eaten yet,
• 25:35
  Speaker 1: So listen, man, it's a it's a great story, exciting
• 25:39
  Speaker 1: girls story. I love a good franchise system that treats
• 25:45
  Speaker 1: its franchisees well, so so I'm really excited, you know,
• 25:49
  Speaker 1: to continue following this story and hearing about all the
• 25:52
  Speaker 1: great things you and your team accomplish at Freddy's.
• 25:54
  Speaker 2: Well, Mike, I really appreciate the time and thank you
• 25:57
  Speaker 2: for having.
• 25:57
  Speaker 1: Me sure thing, Thanks again for joining, and thanks for listening. Everybody,
• 26:01
  Speaker 1: have a good day.