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Rick Johnson and Kevin Martin are not the founders of the 112-unit franchise, Lenny’s Subs, but you wouldn’t know that from talking with them. In less than two years, the sandwich chain’s new owners have invested an incredible amount of time, energy, and capital to take the right steps to revitalize the veteran Lenny’s brand. It becomes immediately clear that both men eat, sleep, and breathe Lenny’s Subs, and the reason for that is simple: potential. Johnson and Martin recognized the growth possibilities in the brand and dedicated themselves to making them realities.
“We came across Lenny’s and quickly came to a decision to acquire the brand,” says Johnson, CEO of Lenny’s Subs. “What sealed the deal for us is the combination of the quality of the food and the value of the product. It’s what drives our guests to return to Lenny’s and we knew we could grow the business around this key value. We’re thrilled to kick our growth strategy into high gear and bring the brand to more guests hungry for high quality.”
When the duo acquired Lenny’s Subs in 2012, their first course of action was deciding how best to streamline operations for franchisees. The goal was to improve processes for existing Lenny’s franchise owners while illustrating the value of the updated business model to potential franchisees.
“After talking with our franchisees, we decided to focus on three key initiatives,” says Martin, CFO of Lenny’s Subs. “No. 1, we wanted to improve guest count. No. 2 was improving unit economics. And No. 3 was systematizing our processes, making sure best practices were consistent across the board for all our franchisees. These three initiatives work together and as one improves, so do the rest. It’s a win-win for both franchisees and the brand as a whole.”
Once you get Johnson and Martin talking about Lenny’s Subs, it won’t be long before they tell you about the simplicity of the business model, as well as how it positions franchisees for success.
“We make delicious deli sandwiches—that’s the model,” Johnson says. “We are constantly simplifying and making our operations easy to replicate. Coupled with a low investment threshold, minimal cost of execution, and ample territory availability, Lenny’s is an incredibly accessible franchise opportunity.”
The total investment necessary to begin operation of a Lenny’s Subs franchise ranges from $141,000 to $366,000. Additionally, franchisees that meet conditions to obtain the right to operate additional Lenny’s Subs can begin operation of subsequent stores based on a reduced franchise fee. Average sales for calendar year 2014 (of the brand’s top 50 percent of reporting franchised sub shops open before Jan. 1, 2013) were $729,895.94. Meanwhile, the average sales for the 2014 calendar year for all franchised sub shops before January 1, 2013 was $561,946.58.
And now sales are growing again thanks to the ambitious plans of Johnson and Martin. Before the duo came on board, Lenny’s Subs had been facing some bumps in the road, including decreasing guest counts. Johnson and Martin decided the best way to overcome this challenge was by bringing in a professional with experience in major brand turnarounds. Enter Jason Vaughn, the new president and COO of Lenny’s Subs, and former senior director of operations at Taco Bell and division vice president of Wendy’s International.
The new ownership team also designed a more sophisticated franchise strategy intended to take advantage of geographic areas where Lenny’s locations would be primed for success.
“The brand has always been serious about making great-tasting sandwiches with high-quality ingredients,” Johnson says. “We plan on continuing that tradition while also doing everything we can to introduce the brand in the right areas with the right people.”
To achieve this goal, the Lenny’s team has utilized a number of strategies, including focusing on promotion of the brand’s highly popular hero sandwiches, doubling down on rewards programs that encourage repeat visits, and streamlining operations. In short, the team puts its money where its mouth is, working out the kinks with simple, practical steps that are making business easier and more profitable for franchisees.
“Clarify, simplify, and integrate—that’s our strategy right now,” Vaughn says. “If something doesn’t fit a model that makes things better for franchisees and guests, then we get rid of it. We’re focused on being guest-centric and maintaining the quality of the food. We know we need to hold on to those core values even while the market dictates we have to be nimble and flexible.”
In the end, the success of Lenny’s Subs comes down to what’s right there in the name—the subs. In fact, 50 percent of store sales come from just four hero sandwich items: The Philly Cheesesteak, the various Clubs, Mile High Turkey, and Hot Italian, showing the simplicity and effectiveness of the chain’s approach to high-quality food.
With bread baked fresh daily, meats sliced to order, and fresh toppings and sauces, the team at Lenny’s knows quality doesn’t have to be complicated. Add in the fact that Lenny’s Subs offers a variety of sandwich sizes, 5-, 7-, 10.5-, and 15-inch, with affordable price tags, and it’s easy to see how Johnson and Martin, two men who had no prior relationship with the brand, could become believers so quickly.
“I had never even been to a Lenny’s before,” Martin says. “But once I tried it and saw the territory availability and the loyalty of guests, I knew buying was the right choice.”
Johnson agrees, saying he would make the decision to purchase Lenny’s Subs again in an instant.
“I make a habit of being unsatisfied,” Johnson says with a laugh. “But I’d do it all again, hands down.”
It’s this passion that attracted Bob Ritter to the role of vice president of development.
“I wouldn’t be here trying to recruit new franchisees to come on board if I didn’t know that Rick, Kevin and Jason were serious about the success of franchisees,” Ritter says. “They truly do believe in the brand—they’re committed to the idea that happy franchisees make for good business, and they’re willing to back it up with their actions.”
With the brand gearing up for significant growth in the years ahead—it currently has plans to open five new locations in 2015, 18 in 2016 and 25 in 2017—more franchisees will soon have their chance to experience what separates Lenny’s from the competition.
“We gauge our success based on the success of our franchisees,” Johnson says. “That’s where our focus is, and that’s where we plan to shine.”