Growth | April 2011 | By Sam Oches

A New Kind of Mom and Pop

Family operated quick-serve businesses could be just the thing to help the industry move past the recession. But such businesses aren’t always a walk in the park.

David Rutkauskas was fresh out of college when he decided to help his father fulfill his dream of opening a deli in Tulsa, Oklahoma. The Health Deli, which opened on the base floor of an office building in 1987, became a family affair, with Rutkauskas and his parents all pitching in to shop sandwiches, wraps, frozen yogurt, and smoothies to the office tenants.

“We became hugely successful, we had a cult following, and we expanded to a couple more locations,” Rutkauskas says. Through one of the additional Health Deli units, Rutkauskas met his future wife, Camille, and, having caught the restaurant-industry bug, the two spun their success with Health Deli into another fast-casual concept, Camille’s Sidewalk Café, which debuted in 1996.

The rest, of course, is history; David and Camille Rutkauskas turned their family formed operation into Beautiful Brands International (BBI), a global franchisor of 12 limited-service and casual-dining brands, including Camille’s, FreshBerry Frozen Yogurt Café, and Blazing Onion Burger Company.

The success of BBI reflects the power that a family run business can possess in the restaurant industry. Whether it’s a husband-wife team or a multigenerational operation, family businesses are helping to redefine the industry. And in an age when Americans are fed up with a corporate world that helped drive the nation into a recession, an innovative, refreshing take on business is just what folks are looking for.

“The last 36 months, particularly in the restaurant industry, have been brutal,” Rutkauskas says. “[But] we’ve been able to thrive in this market, and 2010 was our biggest revenue year we’ve ever had.

“The reason we were able to do that is we are so close, we know each other, we can talk freely, we don’t have to have a ton of meetings to discuss something. … That’s because we’re family—we think the same way, we want the same things.”

I Know the Kind of People They Are’

Rutkauskas describes his business attire as “jeans and a J. Crew shirt untucked,” and says the BBI environment is laid back, fostering creativity and innovation. BBI, he says, is in the “relationship-building business,” and that that’s the reason “we’re getting good quality deals done and we’re building great restaurants around the world.”

“We’re having a lot of fun along the way,” he says. “You see a bunch of smiling faces around here all day; people like this environment, we genuinely love each other, and we have great respect for each other.”

Although not all of BBI’s staff is related, Rutkauskas says several family members do populate the company, including his sister-in-law, Carolyn Archer, who is vice president of operations for BBI. Rutkauskas points to Archer as the biggest risk he’s taken for the sake of family business, noting that he hired her when she was just 16 and “had been working at Sonic for two weeks.”

Twenty years later, though, Archer, who is also a FreshBerry franchisee, is a critical part of the business, Rutkauskas says, responsible for much of the company’s marketing and social media success.

“If Camille and I had looked at 100 resumes and brought people in that we hadn’t known, there would have been a time that we had to get to know them and get to know what their strengths are,” Rutkauskas says. “The learning curve would have been much longer. Having worked with my family for 20 years … I know the kind of people they are. I know what their core strengths are. Ramping up our business has been so much easier because there’s not a lot of red tape here. It’s helped us achieve our goals much quicker than we would have if we had a bunch of folks that we hired that we didn’t know.”

Larry Colin is a principal at Faminomics LLC and the co-author of Family, Inc. with his wife, Laura. He says family managed companies like BBI will “outperform non-family businesses time and time again” because of the opportunities provided to employees and the ability to communicate with the top level of management.

“You have an opportunity to have a vision and a blueprint in your hands in making a difference,” Colin says. “Today, very few people are satisfied because they don’t get to set a vision, implement anything, and get rewarded both emotionally and financially.”

While Rutkauskas touts the fact that the family ties of BBI don’t get in the way of doing business, Colin’s experience paints a cautionary tale of how families must maintain certain safeguards when operating a family owned company. Once the CEO of Colin Service Systems Inc., an office-cleaning service that was founded by his grandfather in the early 1900s, Colin says the last seven of his 30-plus years with the company were awful, marred by painful disagreements with his brother, the co-owner of the company.

Colin Service Systems, which became a nearly $200 million business, was sold in 2004.

“The good part about family business is you bleed money and power,” Colin says. “The bad part of the family business is that you bleed money and power.”

The safeguards Colin recommends family businesses adhere to in order to protect the longevity of their own organizations include keeping up regular communications with family members, holding retreats at least once a year to get some rest from the business, and seeking outside help that can propel the business forward.

“What happens with most family businesses is, because you’re working with family, you have tunnel vision,” Colin says. “You have no new thoughts. You don’t move forward. So you need to go to trade shows together, bring in an outside speaker to talk to you, [or] go to a family business expert.”

Of course, assuring a family business will succeed starts with the foundation of the company. Colin warns anybody interested in starting a family business to think twice about the family members they plan to invest their time and money with.

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