Stationed for Success: How Penn Station’s VP of Operations Supports Franchisees

“This is darn near all that I know,” laughed Lance Vaught, the Vice President of Operations at Cincinnati-based sandwich franchise brand Penn Station East Coast Subs.

Vaught, who has worn a variety of hats and held a number of roles in the company since starting as an intern, has been with the franchise company for 13 years and was first introduced to Penn Station by founder Jeff Osterfeld. At the time, Vaught was a student at Northern Kentucky University and working with his father’s golf course and athletic field construction company on the nascent golf course Osterfeld was designing and building at the time.

Osterfeld was impressed with Vaught and asked him probing questions about his career plan.   At the time, Vaught was studying management but contemplating a switch to finance to pursue a career as an investment banker.

“He said there was nothing worse he could think of as a career,” Vaught recalled with a smile. “We spent the rest of the summer getting to know each other. He knew I needed an internship to fulfill college requirements. He offered me the opportunity to work at a company-owned Penn Station unit to help with staff and later to help in training franchisees at that corporate training location.”

Vaught was instantly attracted to the camaraderie in the restaurant, the teaching aspect and came to believe in the power of Penn Station’s simplistic but effective business model. Cut to more than a dozen years later and Vaught is leading the more than 300 unit company’s efforts to provide franchisees with unparalleled support in the sandwich franchise space as the company’s Vice President of Operations.

That support starts with a 108 page operations manual, which Vaught said they “manage to the nth degree” while also continually looking for ways to simplify the brand’s processes and procedures for franchisees and their teams – all the way down to the hourly employees who Vaught said are ultimately the face of Penn Station to guests. In addition to the operations manual, Vaught also leads up a hands-on consultative approach across a team of 16 area representatives – roughly one area representative for every 21 restaurants, an advantageous ratio not frequently seen in the segment – whose sole jobs are to work with franchisees to help them enhance operations, improve their sales and drive profitability at the individual restaurant level.

“The typical ratio within the industry is significantly greater – in some cases as much as 100 restaurants for every area representative. We’ve structured our support system so that we’re able to visit six-to-eight times over the course of the year to evaluate and help them improve,” said Vaught. “That’s a big part of why a lot of franchisees decide to sign on with a particular concept, and we understand that, so two-thirds of our staff consists of operations-minded individuals.”

One of Vaught’s early mentors at Penn Station was Chris Bowen, who was an area representative when Vaught joined the company and helped train him. Eight years ago, Bowen made the transition to franchisee and today is the Managing Owner of 11 locations in and around Lexington, Kentucky; he sees the value in that support now that he’s on the other side.

“It’s critical,” said Bowen. “The area reps are consistently in the stores. When I was an area rep it was the same thing. There’s always been a solid relationship there. Now, as a franchisee, if I ever have questions or problems, they’re going to be able to provide support.”

Vaught oversees the operations and training departments, managing two regional franchise consultants who in turn manage the 16 area representatives. The team holds mid-year and annual review meetings with franchisees to discuss their performance against Penn Station’s standards and develop game plans to continually improve sales.

“We do a great job marketing but we know that if we don’t operate successfully, we won’t maximize the P&L. At his core, Jeff Osterfeld is an operations guy through and through. If ops are off, then everything is off. That mentality permeates throughout our entire system. We try to keep it simple and make sure our franchisees are running in the same direction,” said Vaught.

The support from Vaught’s team begins the moment new franchisees sign on to open a Penn Station restaurant and continues for existing franchisees opening more locations. Additionally, the area representatives serve as a conduit to introduce and marry franchisees together with complimentary skills and experience. Essentially, this provides mentorship opportunities and create mutually beneficial relationships within the Penn Station system.

“We’ve studied it and this is our sweet spot. We want to maximize the return. If franchisees are happy, they will open additional restaurants,” said Vaught. “There’s value there. There’s equity there. As we went from a chain dominating a few cities to a brand that is dominating a region and looking to become a national brand, it’s about relationships with corporate and with franchisees within the system that will ultimately generate success for Penn Station.”

Vaught’s drive to build that success is recognized by the franchisees he and his team work with on a daily basis.

“Lance is a consummate professional and he helps get people invested and excited about the brand and our pathway. His heart is in it and he truly believes in the Penn Station way and the Penn Station model. You never feel like he’s just throwing you a company line. He cares about your business and you individually,” said Bowen.

Start-up costs to open a Penn Station vary from market to market based primarily on the cost of real estate. The overall investment ranges from $293,102 to $593,027 per restaurant. This does not include lease expenses (see Note 2 in 2017 FDD Item 7), the optional Site Reservation Fee or the Territory Fee (see 2017 FDD, Item 5 regarding the terms and applicability of the Site Reservation Fee and the Territory Fee). More information can be found in the Item 7 of their Franchise Disclosure Document.

More information on the Penn Station franchise opportunity can be found at http://www.penn-station.com/franchise/.