In the foodservice world, most multiunit franchise companies are content with filling out their portfolio with a suite of franchised brands. Fast-casual industry taking off? Sign on with one of the hot new upstarts. Need a pizza concept to complement your offerings? There are dozens of options available.
But Aurify Brands isn’t most multiunit franchise companies. The New York City–based firm that launched as a Subway franchisee in 2003 and eventually became the only Five Guys franchisee in Manhattan chose not to grow exclusively through franchised brands, but rather with both franchise partners and proprietary brands.
Today, Aurify—the word means “to turn to gold”—operates four such brands. There are three Fast Casual 2.0 concepts—The Little Beet, Melt Shop, and Fields Good Chicken—as well as a full-service restaurant, The Little Beet Table. Each concept is guided by its own managing partner; cofounders Franklin Becker and Andy Duddleston serve as managing partners for The Little Beet, while founder Spencer Rubin manages Melt Shop and Field Failing does the same for Fields Good Chicken.
Aurify cofounders and co-CEOs Andy Stern and John Rigos spoke with QSR about what they’ve learned from the franchise world, how they’ve used those lessons in their proprietary work, and how they’ve built an organization that incubates new ideas and leverages resources across a robust system.
How did Aurify come to be?
Andy Stern: John and I had worked together before in the technology world. Then we did some back-and-forth investing in different opportunities we had when we left those jobs. John bought a farm in upstate New York, and in that town where he was, people in the town were saying they wanted a Subway. So the thought process was: “Sure, let’s open one. How hard can it be?” Obviously, now we know it’s extremely hard, and thankfully it was with someone like Subway, who was really the grandfather of all franchising, as far as systems go, and being able to teach you.
From there, we saw an opportunity to learn more. There’s less risk, clearly, if you’re a franchisee than if you’re an original concept, because somebody’s already done the hard work in figuring all the business processes out. They most likely have all the contracts you need for purchasing. The better franchisors have done the homework as far as, here’s what scheduling should look like, here’s your optimum output and productivity levels based on sales, and here’s how you prep. We went from Subway to Dunkin’ Donuts and Baskin-Robbins. Then we got involved in Five Guys. Each one brought different things to the table as far as franchisor went. That really taught us a lot about the breadth of being a good franchisor.
John Rigos: I think it’s important to go a little bit further back. Andy and I met at a technology incubator, Idealab, and the whole premise was that there was a collective infrastructure that supported new-idea generation and helped test what businesses were viable. Yes, our first foray was as passive investors in the Subway franchise, then more actively in the Dunkin’ franchise. And then obviously we’re deep into Five Guys. But we always wanted to re-create the Idealab incubator model, using real-world businesses—brick-and-mortar-type businesses—to be developed rather than just technology companies.
The way Aurify has been structured is a common infrastructure with functional areas—accounting, finance, marketing, construction, HR, all that stuff—and our whole premise is that we can, with this collective knowledge, begin to develop new brands that focus on a specific market need within the fast-casual segment.
You’ve since exited the Subway and Dunkin’ franchises. Why exit? Why not build out the franchise portfolio more?
AS: Ultimately, for the two of us, we’re very entrepreneurial, and the downside to franchising is it’s very operationally driven and it’s not really pulling on your strategic insights and strategic capabilities.
JR: Or allowing you to be creative.
AS: Or being creative, yeah. So setting strategy both from a creative and menu side, and then setting all your business processes in-house, those are all checked at the door when you sign up for a franchise, which is part of the benefit of being a franchise: You don’t have to worry about that stuff. But that’s the stuff we like, and the stuff we think we’re pretty good at. It felt somewhat constraining to be in an environment where we weren’t allowed to use those skills. That’s really where we started thinking about making a pivot and developing some of our own brands, and the fact that we should own the intellectual property at the end of the day.
When you decided to open your own proprietary brands, did you have in mind what type of restaurant you wanted to open? What was that decision like?
JR: We were looking for holes in the existing marketplace. Obviously, sandwiches are one of the biggest categories in fast casual, but most of the sandwich concepts are derivatives of Subway. Melt Shop was our first foray into developing our own concept because we saw that there was really a need for artisanal sandwiches beyond your neighborhood deli, in a format that could be rapidly expanded and rolled out nationally—one that doesn’t just elevate the whole experience, but focuses on offering warm sandwiches, which I think is a great category.
Then the whole health thing started happening, so there was a huge opportunity to go with a healthy concept that was fast food. And that was something that historically nobody even thought was possible. How do you offer healthy food, which is generally more expensive, in a fast-food format and environment? That was when we partnered with Franklin Becker, our executive chef. He’s really big on the healthy category in terms of fine dining, but he wanted to transfer that knowledge into the fast-casual world. So we partnered with him in 2012 and launched The Little Beet.
That is the category that is most exciting, because people are becoming increasingly discerning about what they eat, where the food comes from, being healthy day to day. So we started looking for more opportunities there. That’s when we met Field Failing, who had the idea for Fields Good Chicken, which is basically the better-chicken category, which doesn’t even exist today. So that’s when we partnered with Field to do the same thing, catering to that healthy fast food category, with Field as our partner.