Franchising | November 2010 | By Sam Oches

The Dirty Work

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“It’s not simple to do more than one brand, so we have to hire quality management, and we frankly have been committed to hiring very experienced managers so that we can rely on them,” says Mallet, whose company is focusing on nontraditional locations like military bases and airports.

“Too often in airports, we don’t see where there’s a commitment to the labor side and having managers for each brand. A lot of the multibrand operators don’t do that as much to try to save labor dollars. But we are committed to doing everything in our power to have managers that learn the brand and can execute the brand.”

how to comply with legal regulations
Obeying the Law & the Power of Democracy

The restaurant industry has long been at the mercy of legislative motions, but the last few years especially have thrown legal curveballs at operators, from health care reform to the menu-labeling mandate. Keeping apprised of all the mandates and complying with them in the stores is a responsibility that falls on the franchisee.

Hashim says legal regulations are usually things that his franchisors help move him through, but he says it is not something to turn a blind eye toward. He believes multiunit franchisees have the responsibility of using the democratic system to voice their opinion on matters that affect them.

“More and more I’m of the opinion that we need to do a lot at the local level as individual business people, especially multiunit franchisees, because we have some size—I have 1,000 employees,” Hashim says. “We can meet with individual legislators and congress people in our districts where our restaurants are located, and we can hammer them from this side.”

Of course, game-changing legislative moves like health care reform and the labeling mandate are not something that a franchisee can easily change. For regulations that are unavoidable, Hashim recommends franchisees keep one step ahead of the game.

“Banks have to lend money—that’s their business model. The thing now is that they’re being very careful about who they lend it to.”

“We can definitely put a number on the cost of health care, we can estimate right now,” he says. “We know how our [profit and loss statement] is going to change as a result of that legislation. If we know that now, then our decisions regarding how much we spend on building a store and what our unit economics should be changes. So I may take a little bit less risk now, because I know that a marginal unit is not something that will be able to absorb these new costs.”

how to cut back on Unnecessary Spending
Cost Cutting & the Cardinal Sin

It’s no secret that through the recession, operators have been forced to tighten their belts and cut down on costs. Streamlining effectively, however, takes some finesse.

“You’ve got to start looking at things that were luxuries—maybe a rug service or a laundry service, things like that,” Bertagnole says. “Things that you considered luxuries at the time, you cut. You take your trash from being picked up three days a week to two days a week. Instead of polishing your floors twice a month, you do it once a month. You can’t be exorbitant in these times.”

Jay Tortorice, president of Beaumont, Texas–based Jen-Tex Deli’s Inc., a 14-store Jason’s Deli franchise, says keeping costs low is crucial. But when streamlining, he says, franchise owners must leave certain things off the chopping block.

“Obviously, cutting back on portions or quality is the very last thing any restaurateur should do,” Tortorice says. “That is the cardinal sin in our business, to reduce food quality or portions.

“On the staffing side, obviously there’s the same concern, and that is hiring the right amount of staff to take care of the customers you have coming through the door,” he says. “Once you start pinching there, then it’s going to hurt service.”

Bertagnole says trimming the fat has a lot to do with reducing the waste in food and labor.

“Where we used to be able to say, ‘Oh, you’re a point off on your food costs, that’s OK,’ now that’s not acceptable. Now you better be within a half a point,” he says. “With labor, maybe you’d allow a few extra hours. You don’t anymore.”

how to juggle responsibilities
Learning to Share & a Man of Many Hats

When Tortorice—whose father, Joe Tortorice Jr., is the founder and CEO of Jason’s Deli—became a franchisee, he and his business partner were entrenched in the operations of their store. Now that he oversees 14 stores in Texas, Mississippi, Alabama, Tennessee, Kentucky, Ohio, and Indiana, Tortorice says his to-do list changes every day.