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Joined July 2024
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The Franalyst retweeted
Subway franchisees:
New, from me: A survey from an independent group of McDonald's franchisees highlights the challenges presented by the chain's recent weakness.
Profitability is down just as operators prepare to spend an expected $400k-$700k on a remodel. And franchisees don't think they're profitable enough to make it work.
restaurantbusinessonline.comā¦
The Franalyst retweeted
I really need to start an emerging franchise consulting company:
I'll charge $30,000 and tell you not to franchise.
So many concepts considering franchising that have zero differentiation and unattractive economics. My company will save you $100k and 2-4 years of your life!
The Franalyst retweeted
The double-edged sword of franchising is you can grow quickly, but once you hit scale, implementing change is a b*tch.
Any new strategy or long term plan requires the buy-in of hundreds of franchise owners.
Achieving their buy-in and getting them to "trust the process" is a time consuming and bureaucratic process.
Now depending on the brand / scenario, there are plenty of examples where franchisees rightly pushed back to a given initiative.
But it is undoubtedly far easier to implement change if you own your locations & don't have to convince franchisees to spend money on store level changes.
Chili's is only ~8% franchised, so they largely didn't have to deal with this.
Franchisee politics is also why Todd Graves stopped franchising Raising Cane's.
Rolling out operational improvements was taking far too long...so he bought every store back!
Chili's run is remarkable. But what's also notable about it all is how simple it really is. If you're a restaurant company, and you want some inspiration, just look at what they did.
Chili's formula is basically this: Ditch the gimmicks. Focus on unit economics. Simplify and improve the menu. Improve operations. Back it all up with strong marketing.
The company focused on a few key menu items and upgraded their quality. It spent money to fix issues in the restaurants and worked to improve the quality of in-store operations. It got rid of those dumb robot servers.
The CEO, Kevin Hochman, is one of the country's best marketing minds, and he brought in a CMO in George Felix who knows what he's doing. They took advantage of consumer frustration over prices and got a bit lucky with the cheese pull trend on social.
Because the company did all that work on operations, its stores were ready when all those customers came in. And they keep coming back. It is comping positive on insanely positive numbers right now.
Chili's 4-year stacked comps are 50%. By comparison, Wingstop, which also had an amazing run a couple of years ago, is up 34.1% over that same period after its sales started falling. It's tough to keep those sales when they boom like that.
Can everybody do this? No, because a lot of companies are overleveraged or they're franchised and refuse to make the kind of investments required for such a strategy. But the formula is honestly there. And there are chains following the same one, such as Burger King. $EAT
The Franalyst retweeted
Lot of Burger King victory laps on the timeline..
Reminder in 2025 in the U.S:
š McDonald's did 5x the revenue of BK
š 1 McDonald's did ~2.5x the sales of 1 Burger King
Great year so far for Burger King...but it's a long way to go before they're in the convo with Mickey D's
The Franalyst retweeted
This post from Pat Buckleyā¦ @EmpiresPod_ tells an incredible story about Jersey Mikesā¦(A Picture Is Worth 1,000 Words) or maybe $12 Billion USDā¦.. š¤·āāļøšš
$JMKE #QSR #IPO
The Franalyst retweeted
I scratch my head when franchise brands announce big unit growth targets (in this case to 4x unit count in two years). It generates hype but is so tough to execute while maintaining quality.
At BaseCamp, we have a view of how many units each of our brands could have long term, but we donāt have near term targets. We feel that if we focus on making existing stores as profitable and easy to run as possible, unit growth will be a natural output.
BTW shout out to @EmpiresPod_ - Pat has some of the best & most balanced views of anyone in franchising.
PopUp Bagels FDD is out šØ
They didn't share any financials....but they finished 2025 with 23 location open.
Given just a few months later, Tiger Global invested in at a *checks notes* ...
$300 MILLION VALUATION
You gotta assume each location is absolutely crushing.
PopUp is projecting 40 new units to open this year.
They're targeting 100+ by the end of 2027
The bagel wars rage on
The Franalyst retweeted
Well....Pizza Hut is officially sold.
Yum! Brands sold it for $2.7 billion via two transactions:
ā¢ Pizza Hut ChinašØš³ was sold to Yum China for $1.2B
ā¢ The rest of world (including the U.S.) was acquired by PE firm LongRange Capital for ~$1.5B
End of an era
The Franalyst retweeted
So this is Roark Capitalās portfolio -
They own so many brands you probably donāt even realize.
But some changes may be coming:
1) Inspire Brands filed to go public as of a few weeks ago
ā¢ 33k locations + $33.5B in systemwide sales will make that a massive IPO
Roark doesnāt exit often, unlike typical private equity.
They still own Carvel, which they acquired back in 2001!
2) Driven Brands has an acquisition offer from an activist investor
Roark took them public in 2021, and still owns 61% of the stock.
But a hedge fund is offering a 40% premium to buy the company.
Given Roark also sold Nothing Bundt Cakes to KKR for $2 billion in April, they've been unusually busy lately.
I'm writing more about them in my weekly newsletter that goes out every Sunday, subscribe via link in the next tweet!
ā
Notes on the graphic:
ā¢ Culverās is a minority investment
ā¢ Purpose Brands is a minority investment
ā¢ GoTo Foods was previously āFocus Brandsā
ā¢ The graphic doesn't include every single investment (too many for 1 image!)
The Franalyst retweeted
Frozen yogurt is definitely back
Franchises are growing again, and I've seen a few independent shops raising $$ off the back of crazy 4-wall numbers
Tough category though, buyers beware
The Franalyst retweeted
Brandon is awesome.
Don't miss this episode:
I interviewed someone who owns TWO Chick-Fil-Aās.
Here are some of the most interesting things I learned:
1) About ~20% of Chick-Fil-A operators have 2 stores
2) An elite ~2% of operators have THREE stores
3) You do *NOT* need to be a Christian to be accepted as a franchisee
4) The typical freestanding Chick-Fil-A requires 80 employees (mix of full time & part time)
5) Operators can hand in the equivalent of a ā30 day noticeā if they feel itās time to move on
I learned a ton more in my conversation with Brandon Hurst, who operates two Chick-Fil-A's in Brooklyn.
He moved to Chicago after college, and was making just $12/hour.
His journey is as interesting as the brand itself.
The full convo is below, and also on YouTube, Spotify, Apple, or wherever you get your podcasts.
Enjoy!
TIMESTAMPS
00:00 Intro
1:11 Cost to Become a Franchisee?
2:06 The Profit Sharing Model
4:29 Services Provided to Operators
5:40 Ownership: Chick-Fil-A vs Others
8:33 Using Chick-Fil-A Cashflow for Investments
9:45 Do you have to be in the restaurant all day?
10:30 Benefits of the Chick-Fil-A Model
13:35 Why You Need a Presence in the Restaurant
15:44 How many operators have more than 1 store?
17:53 The Selection Process
20:10 Caliber of Chick-Fil-A Operators
23:00 Do You Want to be a Chick-Fil-A Operator?
26:00 How Chick-Fil-A Tests for Hospitality
29:38 How Brandon Tests for Hospitality
31:40 Brandonās Start in Fast Food
37:30 Turning down His Masters & Moving to Chicago
45:35 Chick-FilāAās Leadership Development Program
56:00 Opening his 1st Store in Baltimore
1:04:30 Scaling lessons + leadership evolution (letting go, building systems)
1:12:10 The Brooklyn Opportunity
1:20:00 Launching in NYC
1:28:30 From COVID to Top Performing Chick-Fil-A
1:36:00 Building teams in NYC (hiring, culture challenges, leadership filters)
1:37:13 Brandonās culture system
1:45:00 How Brandon Hires and Maintains Culture
1:52:50 Influence from Truett Cathy
2:00:00 Investing in his Team
2:04:10 Back-of-house operations
2:09:02 Do you have to be a Christian?
2:12:32 My Closing Thoughts
The Franalyst retweeted
Greg Flynn was a multi-unit franchisee of an upstart brand in the 1990s
He exited because he felt he was playing the game on hard mode
"A top tier brand is a much better risk adjusted betā
He then paid up and acquired the hottest brand in the hottest sector at the time - Applebee's
And we all know how that turned out
Great lesson from the š
- @EmpiresPod_ newsletter š
The Franalyst retweeted
Drive-thru coffee is exploding.
The top 3 drive-thru coffee chains have added the bulk of their locations since 2020:
ā¢ Dutch Bros: +700
ā¢ Scooters: +600
ā¢ 7 Brew: +592
They'll keep growing rapidly, but damn..Starbucks & Dunkin' just have such a big lead
*U.S. only chart
The Franalyst retweeted
Darren Spicer's 1st job was as a barista at Dutch Bros.
2 months ago, they bought his coffee chain for $20M:
Originally on track to be a Dutch Bros franchisee, he was 9 months into their 12 month qualifying program.
But then Dutch Bros stopped franchising.
Darren was sh*t out of luck.
But he was to obsessed with the drive-thru coffee model to call it quits.
So he founded his own chain (with 2 partners), and opened the 1st Clutch Coffee in 2018.
He lived in California, but opened in North Carolina, and would spend 22 out of 30 days each month in NC.
Fast forward to January of this year, he had 20 stores open when Dutch Bros acquired his company.
Full conversation live on all platforms (Spotify, Apple, YouTube).
The Franalyst retweeted
This narrative is going to get more popular but it's dangerous advice.
Idk what the solution is for people who get laid off...
But signing a personal guarantee on a six or 7 figure loan, for your 1st ever business, when you have zero job to ever go back to....yikes
The Franalyst retweeted
Appreciate the time with Pat on his podcast. Give it a listen to here all the details about the good and bad along the way as we have grown Frios.
And how bright the future is!
Spotify: open.spotify.com/episode/3tIā¦
Apple:
podcasts.apple.com/us/podcasā¦
And give @FriosPopsGuy a follow!
The Franalyst retweeted
I posted this chart in April -
Subway has less locations today in the US than they did in 2007!
Roark Capital paid $9.6 billion for a DOG of a brand
Now they're paying the piper for growth decisions made decades ago
Let me explain Subway for a second. This is a brand that very, very aggressively sold investors on the idea that it could place a location anywhere. At its peak it operated like 27k+ locations. It had locations in community centers, churches and even a crane at the World Trade Center.
But it built too many locations even after average unit sales weakened. It also relied too heavily on the $5 footlong.
And then the Jared incident happened in 2015, the same year of the death of Fred DeLuca, the cofounder and the guy behind much of the chain's strategy. The company had a poor succession plan, then fired DeLuca's sister and didn't have a CEO in place for a full year.
The company brought in a CEO in John Chidsey whose last restaurant stop was more than a decade earlier, at Burger King, a tenure that ended in a flurry of franchisee bankruptcies and lawsuits but an ultimate sale to 3G Capital.
The pandemic happened. Then soaring costs happened. Now customers are cutting back because of inflation.
Subway's AUVs are only slightly higher than they were in 2012 and they're falling this year. Since 2015, 8,000 of the chain's U.S. stores have shut down, more than any other chain in history.
To put that into perspective: Taco Bell has 7,600 locations.
Lots of those franchisees are small-scale operators and many of them walked away from investments they'd hoped would help provide a retirement.
Suffice it to say, operators tend to be a bit skeptical about roughly anything by this point.
The Franalyst retweeted
Yum! Brands is trying to sell Pizza Hut bc things are *really* bad.
Over the last year:
š 3.2% of U.S. Pizza Hutās have failed
š U.S. same store sales are now down ~20%
Already at a low AUV of $839k...idk how operators are even staying float.
Failures will accelerate...
The Franalyst retweeted
Agape is the next big QSR. Founder is amazing, and heās surrounded himself with experienced franchise sales and support people. Proud to be on board as franchise counsel. Connect with Pat and @FranchiseMnA for more info.
If you're a multi-unit restaurant owner, there's a new "mediterranean Chipotle" that's franchising, founded by a former 25 unit franchisee.
Get in touch here if interested:
eatagape.com/franchise/
The Franalyst retweeted
Fun Day 2 of @MainStSummit with @FranDawgs, @TimTebow, @shainadenny, @SahilBloom and more. Appreciate those that came to hear me talk with @AaronHarperCEO.
Happy hour and an AMA franchising tonight 8 PM to 10 PM @LogboatBrewing sponsored by the @franchise_firm.
The Franalyst retweeted
If you're buying a franchise, you should be prepared for labor challenges.
No matter what industry you're in, labor will likely be your biggest constraint.
There's a ton of anti-restaurant bias due to the high labor turnover, but every franchisee I've spoken to, at some point is pulling their hair out over labor issues.
In OrangeTheory, I've heard how brutal it is managing class instructors with strong personalities (think - the "instagram influencer" type).
In Wingstop, you could have 20-30 people for a single store. A mix of part time and full time employees spanning high school, college, and other ages.
In home services, quality technicians in most fields (HVAC, plumbing, etc.) are a scare resource that your'e competing for.
Don't believe that you're dodging some silver bullet by picking a non-restaurant franchise.
You're simply taking on a different flavor of "difficult".
Ultimately it's all about which challenges you have the endurance to wake up and take on every day for 5-10+ years.
