Franchise Leadership and Development Conference Profile: Steve Corp

By BRIAN DIGGELMANN For three days in October some of the best and brightest minds in the franchising community will assemble in Atlanta for the 14^th Annual Franchise Leadership and Development Conference. Experts from over 40 industries will gather to discuss the current state of franchising and how to take their businesses to the next level. We asked five franchise development professionals from attendee brands to share their wisdom and insights into how development strategy has evolved over the past twelve months and where their companies are headed. Steve Corp was a civil engineer until he met the now-former CEO of FOCUS Brands at a wedding. “He basically said you talk too much to be an engineer,” Corp recalls. The next thing he knew, he had quit his job as an engineer and moved to Chicago to sell hotel franchises. He made stops at other companies along the way but came back to FOCUS in 2003. Corp now serves as the Vice President of Sales and Franchising at Moe’s Southwest Grill. How is Moe’s doing this year in terms of development? We’re doing extremely well. We are going to sell a lot more deals this year than we did last year, and looking at 2013 I would assume we’ll sell more deals in ‘13 than in ‘12. We have some benefits – fast-casual as a segment is the place to be restaurant-wise.The fact that we’re a Mexican/Southwest fast-casual is also great. If you look at the big players in that segment it’s really Qdoba, Chipotle and us. Chipotle doesn’t franchise, so you have a segment that is established and is going to be successful but new enough that it’s still hot. Our same-store sales are also up significantly again for the third or fourth year in a row. Have there been any strategic changes that have complemented the favorable market conditions? Most of our growth is with existing multi-unit franchisees. These are guys that own bunches of Pizza Huts, Wendy’s or whatever chain and are looking for what’s hot in the market. Our success, growth and same-store sales combined with the Mexican/Southwest fast-casual segment has gotten us a lot of ideal candidates – multi-unit restaurant owners that, in their research, have found that this segment and specifically this brand is where they want to grow. Is that influx of interest a recent development? I think it’s getting more prevalent, especially with our growth. A year or two ago we were at 300 units. Now we’re going to be at 500 open restaurants early next year, and that 500 to 1,000 range is really where a bunch of growth is. It means you’re tried and true and a lot of people recognize the brand. We’ve always had people come and be interested in the brand, I just think the brand has gotten lot of publicity lately and we’ve been opening restaurants in new places that people haven’t seen. It’s common sense that it’s going to happen a little more as the brand gets open and exposed in new markets. How do you reach out to prospective franchisees? We mostly cold call. We’ve got something good to say, and the good thing about it is if I happen to call a multi-unit operator and they hear the words “Moe’s,” “opportunities” and “expanding,” we have a decent chance to be successful or at least have an audience. That’s all you want -- someone who will sit down with you. For the most part we’re an old-fashioned company in that regard. We get most of our leads because the brand is what it is. The ideal franchise partner for us is that guy that owns 5 to 15 of whatever restaurant chain or chains, and those guys that go fiddling around on websites. Those are guys you have to reach out and find. It sounds like social media isn’t your preferred development tool. We have our presence, but a lot of that is geared towards the consumer. Our company corporately is very tied into that. It’s part of what we do as a greater whole. The first thing has to be “who’s your ideal franchise partner?” Our ideal franchise partner is that multi-unit restaurant guy. We won’t even bring someone in without restaurant experience. If you know what that specific person looks like, you have to ask where they go to learn about brands. Everybody wants the same guy, but he’s not going on franchise.com and filling out a prospective so someone calls him up. How do you choose markets to target for development? Even though we might not be in Denver, for example, we have our development plan on where we want our restaurants to be in Denver. It’s mainly areas that have the most potential. I would go to Milwaukee if we can put 15 or 18 restaurants in that area well before I would go to Akron where we could put two or three. How much of your growth is coming from existing franchisees versus franchisees new to the system? It’s probably in the 50-50 range right now. I would venture to guess as we move forward next year it will be 40 percent existing and 60 percent new, because from where we are now, states like Florida, Georgia North Carolina and South Carolina don’t really have room to do anything. The handful of locations that we are going to do in those states will be existing franchisees. Shortly, even those few opportunities will be gone, so that means more of your growth is going to be in markets where you don’t have people or in adjacent markets. There will be a little bit of shift as we move out into the Midwest and upper Midwest. Has that 50-50 split been representative of your growth for a while? The first couple years we had the brand, we focused more on completing the development plan of existing markets. In places like Atlanta and South Florida, what we wanted to do was say “we have eight restaurants in this area and we think we can have 15.” Early on it was probably more organic from within our existing franchise partner base. Now that we’re growing out, if you want to open in Phoenix there aren’t any existing franchisees within 250 miles to grow within the system. Moe’s has been a part of FOCUS since 2007. Do you get any crossover franchisees from your partner brands? There are some, but I wouldn’t say there’s a lot. We’ve gone down that path, but if you look at where Schlotzsky's is strong, they’re expanding where we have no presence. That would potentially be something that we would want to look at, but if you’re looking at Cinnabon, Carvel or Auntie Anne’s, those are more non-traditional and Moe’s is growing more traditionally. It’s a lot easier for someone without significant restaurant experience to open up Auntie Anne’s, Cinnabon or Carvel than it is a Schlotzsky's or a Moe’s. The financial requirements, operational requirements - all of that stuff is different so crossover franchisees don’t work that easily. Do you put an emphasis on multi-unit agreements? We don’t sell singles. Typically three to five is our minimum number, but if someone was going to break into a market where we had no presence, that would have to be someone who had a big existing structure of people, plenty of financial wherewithal, a ton of restaurant experience and the ability to do 15 or 20 restaurants at a much more expedited pace than we would require for someone who would buy a three store deal. You have to get somebody that can do that and has done that. If you put someone in a market that has 30 Chipotles and 30 Qdobas and they’re going to try to open up one restaurant a year, they’re never going to be successful. We like to see them have five to seven restaurants open after three years. What are your most successful franchisees doing that sets them apart? If you go in to Bangor, Maine, or West Lebanon, New Hampshire, we’re not going to be able to have everybody in the town drive by Moe’s and know what it is. There are still people that will open up a restaurant and think, “I’ve built it, they will come.” The people that actually get out and make the five or 10 miles around their restaurant their own, have a wrapped car, do catering, do different things to drive people into their restaurants – the people that do that effectively are more successful than people that just sit inside their restaurant. What do you hope to gain from the Franchise Leadership and Development Conference? A lot of my counterparts will be there. We can and do work together, even across competition sometimes. Someone from Five Guys may have people that are great franchise partners that are looking for a new opportunity, but Five Guys is sold out in North America. If I have a relationship with one of their people, he might say,” I’ve got this great guy in Little Rock, do you have anything there?” So we may do some things back and forth. It’s also nice to get a little bit of an insight on what other brands are doing, how they’re doing it and share things that way.