After his first bite of Capriotti’s Cheese Steak, Ashley Morris, now chief executive officer of the brand, knew he had a potential winner on his hands. “Being a cheesesteak lover, I thought this would taste as expected. However, this particular cheesesteak was different,” he says. “The flavors were so good, and there was a perfect amount of cheese and spice. The bread was steamed and hot. I instantly fell in love and realized this was the best cheesesteak I had ever eaten.”
Morris proceeded to devour the cheese-steak deliciousness “day in and day out” for four years before he and friend Jason Smylie—now Capriotti’s president—decided to go into business together as franchisees in 2003. It took a year to get Capriotti’s founders and then-owners Lois and Alan Margolet to allow Morris and Smylie to build a second store in Las Vegas, Morris says. Once Morris and Smylie built the new store, the two made an offer on the original Las Vegas location they had dined at as college students. A year after that, they opened a third store in the area.
In 2007, the friends-turned-business partners purchased all of Capriotti’s, which first launched in Wilmington, Delaware, in 1976. At the time, they acquired 43 locations, and as of January 2018, they had grown the company to 106 locations.
More than a decade after purchasing Capriotti’s, Morris is still a big fan of the menu. The founders wanted to create a sandwich for “real turkey lovers,” Morris says, so they started roasting whole, fresh turkeys overnight for their Bobbie sandwich, which remains the brand’s signature item and features turkey, cranberry sauce, dressing, and mayonnaise.
Morris may still order the same Cheese Steak three times a week, but he’s learned on the path from fan to franchisee to CEO.
Time for a reboot
The brand before us had very little infrastructure. There was no corporate office—only three employees and a small handbook with recipes and operations instructions. Our first plan was to obtain a corporate office so we had a place to work, and then to begin building an infrastructure that could support not only the stores that existed, but also the growth we planned for.
The first five years we didn’t plan on big growth, but rather internal growth from existing franchisees and personal contacts. We had a lot of infrastructure to build, and growing too fast could have created a problem. After those first five years, we changed our growth model to begin focusing on new franchisee growth and new market growth. Today we are focused on franchising in 48 states and Mexico.
After purchasing the company, the original owners stayed on as franchisees of three locations. We spoke regularly and they stayed involved while owning their locations. They later sold their stores and retired. We have been and remain aligned on many aspects of the operations of the company. However, there were many things that we disagreed on, as well.
Historically, as the founders entered new markets, they sourced product from local distributors. The quality of the products was top-notch, but costs were high and the setup was impossible to sustain as we scaled. When we created our first national distributor agreement, we had to end some of the relationships they had established. It was the right call, because we were able to improve quality, improve our franchisees’ profitability, reduce risk, and create efficiencies that enabled the brand to grow. The previous owners did not agree with the change.
But one thing we’ve always agreed on is that the success of the brand is dependent on the quality of our product. We were always aligned on never sacrificing the taste of the food for more profitability.
Being in business with friends and family can be tricky. First and foremost, make sure you create a hierarchy. At the end of the day, one person should have the ultimate say if you can’t agree. Make sure you both fully agree that you will be OK if one person has to use that power. Second, make sure you both bring a different set of skills and acumen to the partnership. Third, make time to hang out outside of work like you used to before getting into business together. Fourth, make sure that when starting the business, you create your company vision, mission, and values together. The company values should be an extension of your personal values. Lastly, come to an agreement on an exit strategy if things go sideways before starting the business. If need be, get it in writing.