Denise Lee Yohn: QSR's Marketing Guru | January 2015 | By Bryan Reesman

Reeling in the Big Fish

Multi-brand franchisee Tony Lutfi reveals his equation for franchising success.
Quick service multiunit franchisee Tony Lutfi talks equation for franchising success.
Marlu Investment Group CEO Tony Lutfi looks to franchise with brands that share his core values. Marlu Investment Group

As CEO and president of Marlu Investment Group, Tony Lutfi has his hands more than full with a large quick-serve empire; his company operates 21 Jack in the Box, 47 Church’s Chicken, 53 Arby’s, five Little Caesars Pizza, and five Sizzler units. Most recently, Lutfi’s company acquired all five Captain D’s units in the Kansas City area.

Lutfi says he seeks out brands that are leaders within their category, have a good management team, believe in the same values, and offer opportunities in a market with potential for growth. He shares how he rose up the quick-serve ranks to live the American Dream by a sticking to a careful franchising equation.

1. Use technology, but don’t abuse it

I think what we do today would’ve been impossible to do 20 years ago because of the lack of technology then. Today, we use emails, webinars, and Skype to communicate constantly with our people. We’re able to improve the ability to get to speed faster by limiting as much face-to-face as possible, but we believe in relationships, meeting people, and having meetings, so it’s really about finding the balance between the two. We don’t want to be totally reliant on technology to where the relationship becomes impossible to manage, but we also don’t only want to depend on relationships and traveling, because it becomes impossible. We do business in 11 states, so we maintain the people structure that we have but improve communication through technology.

2. Don’t fixate on unit numbers

It’s never a number. I think if you set a number, then you go after the number and end up not really making the right decisions. So we never allow for the calendar or for a number to dictate what it is that we can do or what we should do. It is about the culture and creating opportunities for the people who have been so loyal to us over the years, because one of the reasons why we want to grow is to be diversified and minimize the risk.

At the same time, we want to create opportunities for the people who have been so loyal with us for so many years because without them, I would not be where I am. And because somebody during my early years of business took the time to mentor me, I feel that I have a duty to pay it forward to others. We want to find ways for others to grow in the business and to have opportunities similar to what I had.

3. Rely on the pillars of business for guidance

Remember what the business is all about. The business is about satisfying the customer, satisfying the employees, protecting the brands that we serve, and then making sure that you are profitable and never out of cash. Those are the business principles that we have. I call them the pillars. The pillars of the business are the satisfied and happy employee, the customer, the brand, and the profit. No one is more important than the other, and when we make decisions, we want to contribute almost equally to every one of those pillars.

You can’t be mistake free. Don’t be afraid of making mistakes, but avoid making the big mistake, because normally it’s the big mistake that takes you down. Whenever you are ready to make a big decision, go back and say, “What am I trying to accomplish? And how does that decision contribute to the four pillars of the business?”

4. Build value on history

I basically divide my time into four different categories. A quarter of what I do is seeking opportunity and looking for gems. The next quarter of my time is about managing risk. The third quarter of my time is in removing obstacles. Once I have the opportunity, once I understand the risk, and once I understand what it is going to take for us to move the company forward, then it’s my job to remove any obstacles that exist to get in the way of my people getting the job done. Then, finally, the last quarter of my time is about inspiring people.

We are involved in brands that have been around for 25 years or longer; we are in cities that have growth in population; we are in multicultural cities where we know there is going to be a shift in culture, and we know we’re going to be serving an entire population or a majority of it; we are in value-propositioned brands; we want to be within arm’s reach, so we are able to manage the business; and we want to be involved with a brand has a strong management team. The reason we choose them is because ultimately, when you have brands that have had successes and failures in the past, yet they are still around 30, 40, 50, or 60 years later, it proves that the brand and the consumer have a relationship together that even management over the years has not been able to screw up.

When you look at the brands that we have, almost every one of them have faced failure at one time or another, yet these brands are stronger today than they’ve ever been. We want to buy into a brand that has that kind of opportunity and maybe is at the cusp of making a turnaround or at the cusp of expansion or at the cusp of making a decision that could be advantageous for us.

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