10 Point Capital had its radar on Smalls Sliders from the very beginning.
There’s shared history. In 2020, the firm invested in Walk-On’s, a quickly growing sports bar started by Brandon Landry and backed by future Pro Football Hall-of-Famer Drew Brees. Those two are also involved in Smalls, which opened its first store in September 2019 in Baton Rouge, Louisiana. Morven Groves, managing partner of 10 Point Capital, says the organization immediately recognized the burger fast casual’s product quality and branding, but also its people. And why wouldn’t they? Landry and Brees have already proven their worth. Since 10 Point’s investment in Walk-On’s, the NextGen Casual has grown from 42 restaurants to nearly 70. If they believe in Smalls, so does 10 Point Capital.
With Smalls opening its first franchise restaurant this year, the firm found an opportunity to formally lock in an equity investment. Jacob Dugas, cofounder of Smalls and nephew of Landry, views it not so much as a dollar investment, but more as placing a stake in people—an aspect in which both sides are closely aligned.
“We’re going to get the ins and outs, the day to day of the restaurant business, but their guidance and their connection and their knowledge of the restaurant industry, they’ve been so successful with other brands,” Dugas says. “And we hope to really capitalize on that as well because they really build out companies from a people’s perspective, and we know that people is really what’s going to make us. Our food is incredible, but we really, really bank on our people, and so do they.”
Smalls has five locations—two corporate and three franchises—and two more are expected to open before the year is over. In 2023, the chain is shooting for 11 locations.
10 Point Capital will use its three-pronged Franchise Acceleration Plan to help Smalls achieve these growth benchmarks. The first part is franchise market planning, which identifies where the fast casual will go. With more than 10 years of franchise investment experience, Groves has seen her share of brands “scattershotting” around the country with little to no success. Up front, 10 Point Capital wants to explore the characteristics of each market, determine how many franchises should develop the territory, and how the area should be divided. The second step is sales execution, which is tied to what franchisee profile makes the most sense, and how is the brand sharing its story with these candidates. The third and final tenet is pipeline activation. This calls for heavy investments into analytics and support to ensure operators open quality locations as quickly as possible.
The strategy has proven fruitful on multiple occasions. In addition to Walk-On’s, 10 Point Capital is invested in Slim Chickens, a chain with more than 180 stores across the U.S. and the U.K. and 1,000-plus units in development, and Tropical Smoothie Cafe, which recently surpassed 1,100 shops and signed 139 agreements through Q2 of this year.
Smalls’ current growth plan fits well with 10 Point Capital’s framework. Dugas says the chain is determined not to get ahead of itself. The company has a pipeline of more than 40 restaurants, and almost all of those are coming in Louisiana. There are some that will open in nearby states Texas and Mississippi.
“There’s plenty of brands where the pipeline is 100 units, and five years later, there’s five units open. And so it’s really about, OK, once you sign up, now what are the next steps that take you from finding your franchise agreement all the way to opening?” Groves says. “Again, being very methodical and thoughtful working with the franchisees to help them through that process. If you can do those things well then you have your franchisees positioned for success.”
“It’s just great people, and that’s the exciting part,” says Smalls Sliders cofounder Jacob Dugas. “That’s been the vision from the beginning is to create this concept that puts out really quality food with even better people, and I think we’ve done that, especially with 10 Point, our senior leadership, and everyone that comes on our team.”
Groves owes the successes of Slim Chickens, Walk-On’s, and Tropical Smoothie to three main aspects—a distinctive brand with strong positioning, a great product, and valuable team. Dugas considers all those boxes checked. Smalls keeps a “simple on purpose” mindset with its brief menu and 800-square-foot bright orange shipping container design. Each location features a drive-thru, walk-up window, and outdoor patio for guests.
As for the team, Smalls is led by CEO Joe Lewis, chief marketing officer Katherine LeBlanc, and chief development officer Richard Leveille. Each comes from Twist Brands, a leader in the arts and crafts entertainment segment, with brands like Painting with a Twist, Color Me Mine, and Chesapeake Ceramics. All three have also spent time at Smoothie King. Lewis was CEO of the chain for three years; LeBlanc was director of brand marketing for four years; and Leveille was executive vice president of franchise development for 25 years.
“That’s part of why we’ve invested this early on because we see that foundation to grow,” Groves says. “So if you put the right team and the right processes and support in place early on, then you can position yourself to really grow. That’s why the equity investment at this point in time allows us to build the team in a way that you wouldn’t normally be able to with a small brand.”
Since Smalls opened its first restaurant three years ago, the chain hasn’t altered its menu or store design, but the fast casual has found efficiency opportunities in the back of house. For example, the first unit only had one grill; subsequent stores now include multiple stations to better meet demand. The brand has also considered the positioning of its drive-thru menuboards and how it communicates to employees inside. The brand adopted a model in which workers stand outside and take orders face to face as opposed to the speaker, similar to Chick-fil-A.
A big learning came in May, when the first franchised location opened in Thibodaux, Louisiana. The restaurant had a 60-75 car stack for almost two weeks. At the time, there were traffic issues and product shortages, and Smalls didn’t have answers, Dugas says. However, he says the company made it through because of its people, and now, the team doesn’t blink.
“We have processes for that now and how to answer and how to handle these things just so that guests can experience Smalls the right way because there’s so much excitement when we open these new locations,” Dugas says. “They are franchised, so there’s a lot more people involved. It’s different than our corporate stores, right? So we’re trying to get these things up to be as operationally efficient as possible, and we’re learning so much from store to store. And our franchise partners are amazing. We want experienced operators to come in who are truly invested in Smalls’ people side of what we do, and they are.”
Dugas can’t really put a quantitative metric on 10 Point’s involvement so far, but qualitatively speaking, the partnership has been “amazing” up to this point. He believes Smalls is now going places that “honestly we couldn’t have ever imagined.”
“It’s just great people, and that’s the exciting part,” Dugas says. “That’s been the vision from the beginning is to create this concept that puts out really quality food with even better people, and I think we’ve done that, especially with 10 Point, our senior leadership, and everyone that comes on our team.”