1851

1851: How&rsquo;d you get your start in franchising?

Dunaway:&nbsp;I was playing basketball at a small school in Southern Indiana. A buddy of mine played baseball, and we&rsquo;d study accounting together in the athletics study hall and talk about how we were going to make our fortunes. We went our separate ways after college, then he joined the accounting firm where I worked.&nbsp; A mutual friend who was thinking of becoming a franchisee for what is now a leading pizza franchise asked him to put financial projections together. He told me we needed to quit dreaming of real estate and start dreaming of franchising. We decided to invest in that pizza franchise for ourselves. We were brand new to the game but somehow made money in spite of ourselves! Completely inexperienced, I had a knack for managing people and numbers, and my buddy ran operations. We were able to make money while learning about the industry and eventually worked up to 11 locations in the Cincinnati market.

1851: What brought you to Penn Station?

Dunaway:&nbsp;I was a partner at the accounting firm in Louisville, but my buddy and I were spending every weekend in Cincinnati visiting our pizza locations. That&rsquo;s where we&nbsp;<a href="http://www.penn-station.com/franchise/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=why-penn-stations-presidents-focus-starts-with-franchisees-bottom-line-2703914" target="_blank" rel="nofollow" target="_blank">discovered Penn Station</a>. We&rsquo;d met the founder, Jeff Osterfeld, who was interested in opening locations in Louisville, so it seemed like a perfect opportunity for all of us. Because the commute between Louisville and Cincinnati was hard on my partner, who was more focused on operations, we decided to sell the pizza restaurants and use the proceeds to invest in Penn Station instead. Over the course of two years, we opened five Penn Station restaurants in the Louisville area.&nbsp; Eventually, I bought out my partner and was asked to join Penn Station&rsquo;s Franchisee Advisory Council. Where most franchisees talked operations, I talked numbers. Jeff Osterfeld, our founder, apparently liked what he heard and asked me to join the system as President. When I found Penn Station, I realized I had an opportunity to try something different, and if I didn&rsquo;t seize it, I&rsquo;d be ignoring the advice I&rsquo;d always given to clients and employees, which is to avoid getting stuck in my comfort zone. So I stepped down as partner at the accounting firm. That was in August of 1999, and I&rsquo;ve never looked back!

1851: What makes <a href="http://pennstation.1851franchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=why-penn-stations-presidents-focus-starts-with-franchisees-bottom-line-2703914" target="_blank" rel="nofollow" target="_blank">Penn Station special</a>?

Dunaway:&nbsp;We are hypersensitive to a franchisee&rsquo;s profitability. We&rsquo;re able to give franchisees the tools necessary for them to monitor and track their costs and ultimate profits. We know what every line item on P&amp;L should look like, and we can help them identify waste. The restaurants do not run themselves, and the industry is difficult.&nbsp; However, it&rsquo;s a great system, and if a franchisee follows it, they&rsquo;ve got a strong shot at success.

Our operations are streamlined and entirely scalable. Everything is clean and simple. Our menu features a few simple products used in a number of different menu items. We have one type of bread, one type and cut of chicken, etc. So the simplicity behind our operations makes it less difficult for a new franchisee get up and running.

In terms of operating costs, we have exceptionally low food and paper costs compared with our competition.&nbsp; We negotiate all our supplier contracts, do not take rebates from vendors into our profits and we put any rebate money we do receive into a national advertising fund that benefits all franchisees. Last year we put about $2.4 million into an ad fund, compared to franchisee contributions of just under $1.9 million. We believe that is unheard of with most franchisors, who often pocket millions of dollars off the purchases of franchisees.&nbsp; That&rsquo;s a significant part of our national marketing budget, and it does a lot for top-of-mind recognition in every market. Lastly, we only have one company-owned unit, so really our only job is to help franchisees maximize their ROI.

Our royalty structure is also based on a sliding scale instead of a flat percentage. For franchisees making $30,000 or less a month, our royalty is reduced from 4% to 0%, and that savings is invested by franchisees directly into local marketing to support their restaurants.

1851: What&rsquo;s Penn Station&rsquo;s consumer point of differentiation?

Dunaway:&nbsp;Penn Station can match any top brand in terms of the quality and satisfaction of its cold sandwiches, but no other brand can match the quality and satisfaction of our hot sandwiches. Hot sandwiches make up the bulk of our 14-sandwich menu. Hot sandwiches served with a hot side, our delicious hand cut fries, make the meal hearty enough for dinner, and in many locations over half of franchisees&rsquo; sales come from the dinner crowd.&nbsp; &nbsp;In essence, we&rsquo;re not simply viewed as a sandwich shop, which primarily serves lunch, but a full meal that can accommodate both the lunch and dinner crowds.&nbsp;

1851: How does Penn Station support its franchisees operationally?&nbsp;

Dunaway:&nbsp;Most franchisors have area representatives who evaluate the operations of their franchisees.&nbsp; Often, an area rep. can evaluate over 100 individual restaurants spread across many states.&nbsp; In our case, we have 15 representatives that evaluate and consult with slightly more than 300 locations.&nbsp; We also have two regional franchise consultants (RFC&rsquo;s) to further support and consult with those same franchisees. Thus, Penn Station representatives have on average only about 19 restaurants, and this allows them to be in each store every 4 to 6 weeks, often as much as 10 times per year.&nbsp; Because they consult, they can offer advice on best practices, but also share with the owners deficiencies between their overall operations and the standards as laid out in our Operation&rsquo;s Manual.&nbsp; &nbsp;&nbsp;

1851: What kind of growth does&nbsp;Penn Station project for the near future?

Dunaway:&nbsp;Our growth projections are aggressive. We have the infrastructure to open about 40&ndash;50 locations a year, but our first priority is making sure each one is successful. We try to grow out in concentric circles; that helps with logistics, operations, and brand recognition. We want our franchisees to be as successful as possible, so we dedicate our resources and structure our growth strategy accordingly.

Why Penn Stations President’s Focus Starts with Franchisee’s Bottom Line

1851 Franchise

1851 Franchise sat down with Craig Dunaway to talk about what makes Penn Station the industry’s best bet

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

why-penn-stations-presidents-focus-starts-with-franchisees-bottom-line

Children's Lighthouse

How Children’s Lighthouse Stands Out Among Other Children’s Education, Childcare, and Daycare Franchises

how-childrens-lighthouse-stands-out-among-other-childrens-education-childcare-and-daycare-franchises

The Growth Coach

The Growth Coach Franchise Costs, Fees, Profit and Data for 2025

the-growth-coach-franchise-costs-fees-profit-and-data-for-2025

One Hour Heating and Air Conditioning

Why One Hour Heating & Air Conditioning Sees People as the Power Behind Franchise Growth

one-hour-heating-air-conditioning-franchise-growth

Lawn Doctor

Design with photo of John Perry and Lawn Doctor logo

How a 20-Year Industry Veteran Tripled His Sales With a Lawn Doctor Franchise

lawn-doctor-franchise-success-story-john-perry

Fitness Premier

The Secret to Fitness Franchise Success? It's Not Just the Workouts

fitness-premier-franchise-marketing-support

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Design with American and Federal Reserve flags against light blue background

Federal Reserve Expected To Cut Rates by Quarter Point, a Move That Could Boost Franchise Growth

fed-rate-cut-boosts-franchise-growth

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

Mike Revak - Chief Business Officer - Sky Zone - Franchise Marketing Leaders - 1851 Franchise

Top 25 Franchise Marketing Leaders: Mike Revak — President and Chief Business Officer, Sky Zone

top-25-franchise-marketing-leaders-mike-revak-chief-business-officer-sky-zone

BooXkeeping: Making Bookkeeping Cool for Franchisors, Franchisees, and Small Business Owners

booxkeeping-making-bookkeeping-cool-for-franchisors-franchisees-and-small-business-owners

Top 25 Franchise Marketing Leaders: Brittany Knollmiller — Head of Marketing, Yogurtland

top-25-franchise-marketing-leaders-brittany-knollmiller-head-of-marketing-yogurtland

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

Why Penn Stations President’s Focus Starts with Franchisee’s Bottom Line

MORE STORIES LIKE THIS