When Cheating Works
The saying goes that two heads are better than one.
At Focus Brands Inc., where the leaders of five distinct concepts are leveraging the power of their collective experience to the benefit of their individual brands, this idea is working on overdrive.
Focus, which is owned by private equity firm Roark Capital Group, uses the management expertise of its collective portfolio—Moe’s Southwest Grill, Schlotzsky’s, Carvel, Cinnabon, and Seattle’s Best Coffee—to gain a competitive edge in marketing, operations, human resources, and other key areas of running a franchise.
Sharing is a regular part of daily life for the Atlanta-based company; common practices include ad hoc phone calls, impromptu meetings, and daily e-mails from one brand president to another. There are also regular monthly brainstorming sessions where presidents and other top executives vet strategies across the platforms, and open houses where the operations of each chain are put on display.
“It could be anything from personnel to acquisitions to IT infrastructure,” says Gary Bales, president of Carvel and interim head of Cinnabon, whom QSR interviewed shortly after a presidents’ meeting at Schlotzsky’s headquarters in Austin, Texas.
“You get five well-qualified individuals sitting down and talking about, ‘What do you see in your path, what can we do?’” he says. “We come out with a better answer to the problem or opportunity.”
The quarterback of the Focus team is CEO Russ Umphenour, whose role is to stay apprised of the big picture and help point out opportunities for synergies whenever possible.
“I view my role as teacher/facilitator,” says Umphenour, noting that recent presidents’ meetings focused on the best uses of social media. “In every discipline, we find opportunities to get better each month.”
Such a collective management model, which is also in force at quick-serve companies such as Yum! Brands and Wendy’s, can be a powerful one, as long as cultures match, other executives are close by, and management is careful to preserve the distinctive aspects of each brand, says Michael Seid, a franchise consultant based in West Hartford, Connecticut.
“You can leverage brain power; things that work in one brand may work in another,” he says. “It’s different from seeing it as an outsider to knowing how you executed it. Those details become really important and really clear.”
In the case of Focus, it helps that Roark’s restaurant leadership team brings an operational bent. Both managing director Steve Romaniello and vice president Geoff Hill have prior hands-on experience at Focus concepts.
“It’s a great environment to bring more power of people and experience together when you have that multibrand experience,” says Hill, who keeps his ear to the ground for franchise financing and related opportunities that can be passed along to the restaurant brands on his watch.
Hill learned the value of cross-platform sharing during his stint as president of Cinnabon. When Cinnabon undertook the development of a cupcake product last year, the advice of fellow brand presidents and their respective marketing teams was indispensable, he says, emphasizing the benefit of objective feedback from executives not directly involved in the process.
Despite the transparent environment, Focus, which began with just Carvel and Cinnabon, has progressively shifted away from shared functional leadership to a structure that might be described as open-door autonomy.
There are back-of-house efficiencies in accounting and purchasing, but certain functions must remain proprietary to each of the brands, Hill says, including marketing, operations, franchise sales, and real estate. The structure helps keep attention on the individual businesses after a new acquisition is made.
Cobranded concepts are sometimes a byproduct of this type of multiplatform brainstorming. Schlotzsky’s, for example, is rolling out Cinnabon Express modules inside its restaurants, a direct result of brainstorming during the monthly presidents’ meetings. The units, each utilizing less than 150 square feet, give more brand exposure to Cinnabon and help maximize the existing footprint for Schlotzsky’s stores, says Schlotzsky’s president Kelly Roddy.
“This thing is just unbelievably successful,” says Roddy, whose company has 58 Cinnabon Express units open and a pipeline of 31 more coming. “We figured out not only how to get in and do it, but how it cost less to put it in, and how to make it more profitable for the franchisees.”
There are also less-visible benefits from the sharing arrangement. Roddy says the presidents frequently rely on each other for insights on competitive information, such as pricing of commodities, when trying to lock down a new contract.
“I can call the president of one of our competitors and they’re not going to give me an answer,” he says.
Sharing ideas within Focus has been so successful that Roark is pushing the practice beyond the group to other companies in its portfolio, which also includes the restaurant concepts Wingstop and McAlister’s Deli and nonrestaurant names like direct couponing company Money Mailer, retailer Batteries Plus, and early childhood education chain Primrose Schools.
Nearly three years ago, at the suggestion of Batteries Plus CEO Russ Reynolds, Roark started bringing the heads of all of its companies, as well as their top management, together under one roof for what it dubbed the annual Roark Family Franchise Summit. In addition to private get-togethers for presidents and CEOs, there are sessions for top leadership in functional areas such as marketing, operational field support, information technology, and human resources, Hill says. Each has a designated chairman whose job it is to follow through with key takeaways, hosting regular teleconferences throughout the year. This year, the meeting is expected to bring together more than 100 executives from Roark-owned companies.
Once top executives have experienced the power of sharing collective resources, it’s hard to imagine going back to a stand-alone system.
“I can’t even tell you how many ideas I’ve stolen from other people because of the situation,” Schlotzsky’s Roddy says. “That is the one thing that we all know we have as an advantage.”
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